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<P STYLE="margin: 0; text-indent: 0.25in">&nbsp;</P>

<P STYLE="margin: 0; text-indent: 0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>As
       filed with the Securities and Exchange Commission on October 26, 2012</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><FONT STYLE="color: Black"><B>Registration
No. 333-</B>&nbsp;</FONT></P>

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    <TD STYLE="width: 100%; border-top: windowtext 2.25pt double"><P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>UNITED
                                                                  STATES </B></FONT></P>
        <P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>SECURITIES
        AND EXCHANGE COMMISSION</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Washington,
        D.C. 20549</B></FONT></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid"><P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>FORM
                                                    S-1</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>REGISTRATION
        STATEMENT UNDER THE SECURITIES ACT OF 1933</B></FONT></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>MusclePharm
Corporation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">(Exact name
of registrant as specified in its charter)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TR>
    <TD STYLE="vertical-align: top; width: 32%; font-weight: bold; text-align: center"><FONT STYLE="color: Black">Nevada</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 2%"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; width: 32%; font-weight: bold; text-align: center"><FONT STYLE="color: Black">2834</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 2%; font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; width: 32%; font-weight: bold; text-align: center"><FONT STYLE="color: Black">77-0664193</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="color: Black">(State or other jurisdiction</FONT></TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="color: Black">(Primary Standard Industrial</FONT></TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="color: Black">(I.R.S. Employer</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="color: Black">of incorporation or organization)</FONT></TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="color: Black">Classification Code Number)</FONT></TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="color: Black">Identification Number)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;<B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>4721 Ironton
Street, Building A</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Denver, Colorado
80239</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Telephone:
(303) 396-6100</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">(Address, including
zip code, and telephone number, including area code, of registrant&rsquo;s principal executive offices)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Brad J. Pyatt</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Co-Chairman,
Chief Executive Officer and President </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>MusclePharm
Corporation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>5348 Vegas
Drive</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Las Vegas,
Nevada 89108</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Telephone:
(702) 953-1890</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">(Name, address,
including zip code, and telephone number, including area code, of agent for service)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;<B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Copies to:</B></FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 43%; font-weight: bold; text-align: center"><FONT STYLE="color: Black">Reid A. Godbolt, Esq.</FONT></TD>
    <TD STYLE="width: 15%; font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="width: 42%; font-weight: bold; text-align: center"><FONT STYLE="color: Black">Yvan-Claude Pierre,&nbsp;Esq.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Jones &amp; Keller, P.C.</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Daniel I. Goldberg,&nbsp;Esq.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">1999 Broadway, Suite 3150</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Reed Smith LLP</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Denver, Colorado 80202</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">599 Lexington Avenue</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Telephone: (303) 573-1600</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">New York, New York 10022</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Facsimile: (303) 573-8133</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Telephone: (212) 549-5400</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Facsimile: (212) 521-5450</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Approximate
date of commencement of proposed sale to the public:</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">As soon as practicable
after this Registration Statement is declared effective.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">If any of the
securities being registered on this Form&nbsp;are to be offered on a delayed or continuous basis pursuant to Rule&nbsp;415 under
the Securities Act of 1933, check the following box:&nbsp;<FONT STYLE="font-family: Wingdings"> o</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">If this Form&nbsp;is
filed to register additional securities for an offering pursuant to Rule&nbsp;462(b)&nbsp;under the Securities Act, please check
the following box and list the Securities Act registration statement number of the earlier effective registration statement for
the same offering.<FONT STYLE="font-family: Wingdings"> o</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">If this Form&nbsp;is
a post-effective amendment filed pursuant to Rule&nbsp;462(c)&nbsp;under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.<FONT STYLE="font-family: Wingdings">
o</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">If this Form&nbsp;is
a post-effective amendment filed pursuant to Rule&nbsp;462(d)&nbsp;under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.<FONT STYLE="font-family: Wingdings">
o</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer,&rdquo; and &ldquo;smaller reporting
company&rdquo; in Rule&nbsp;12b-2 of the Exchange Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"></FONT></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 67%"><FONT STYLE="color: Black">Large accelerated filer&nbsp;&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">o</FONT></FONT></TD>
    <TD STYLE="width: 33%"><FONT STYLE="color: Black">Accelerated filer&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">o</FONT></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: Black">Non-accelerated filer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">o</FONT>
    (Do not check if a smaller reporting company)</FONT></TD>
    <TD STYLE="text-indent: 1.8pt"><FONT STYLE="color: Black">Smaller reporting company&nbsp;&nbsp;<FONT STYLE="font-family: Wingdings">x</FONT></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;<B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>CALCULATION
OF REGISTRATION FEE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center"></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Proposed Maximum</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="color: Black">Amount of</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: Black">Title of Each Class of</FONT><BR>
<FONT STYLE="color: Black">Securities to be Registered</FONT></TD><TD NOWRAP STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: Black"><B>Aggregate
    Offering Price </B>(1)</FONT><BR>
    <FONT STYLE="color: Black"><B>$</B></FONT></TD><TD NOWRAP STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD NOWRAP STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: Black"><B>Registration
    Fee </B>(2)</FONT><BR>
    <FONT STYLE="color: Black"><B>$</B></FONT></TD><TD NOWRAP STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%; text-indent: 0"><FONT STYLE="color: Black">Common Stock, par value $0.001 per share (2)(3)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: Black">$</FONT></TD><TD STYLE="width: 15%; text-align: right"><FONT STYLE="color: Black">19,550,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: Black">$</FONT></TD><TD STYLE="width: 15%; text-align: right"><FONT STYLE="color: Black">2,667</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: 0"><FONT STYLE="color: Black">Representative&rsquo;s Common Stock Purchase Warrant</FONT></TD><TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="color: Black">(4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="color: Black">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt; padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;Shares of Common Stock underlying Representative&rsquo;s
    Common Stock Purchase Warrant (2)(5)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: Black">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: Black">1,062,500</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="color: Black">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="color: Black">145</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: 0; padding-bottom: 2.5pt"><FONT STYLE="color: Black">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: Black">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: Black">20,612,500</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="color: Black">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="color: Black">2,812</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; text-align: justify"><FONT STYLE="color: Black">(1)</FONT></TD>
    <TD STYLE="width: 95%; text-align: justify"><FONT STYLE="color: Black">Estimated pursuant to Rule 457(o) under the Securities Act of 1933, as amended
    (the &ldquo;Securities Act&rdquo;), based on the proposed maximum aggregate offering price.</FONT></TD></TR>
<TR>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">(2)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Pursuant to Rule&nbsp;416 under the Securities Act, the securities being registered hereunder
    include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result
    of stock splits, stock dividends or similar transactions.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">(3)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Includes shares the underwriters have the option to purchase to cover over-allotments, if any.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">(4)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">No fee pursuant to Rule 457(g) under the Securities Act.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">(5)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Estimated solely for the purpose of calculating the registration fee pursuant to Rule&nbsp;457(g)&nbsp;under
    the Securities Act, based on an estimated proposed maximum aggregate offering price of $1,062,500 or 125% of $850,000 (5%
    of $17,000,000).</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B>The Registrant
hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in
accordance with Section&nbsp;8(a)&nbsp;of the Securities Act of 1933, as amended, or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting pursuant to Section&nbsp;8(a), may determine.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD COLSPAN="3" STYLE="color: #FF4040; text-align: justify"><FONT STYLE="color: Red">The information in this prospectus is not complete and may
    be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission
    is effective. This prospectus is not an offer to sell and is not soliciting an offer to buy these securities in any jurisdiction
    where the offer or sale is not permitted.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 34%; color: #FF4040; font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="color: Red">&nbsp;</FONT></TD>
    <TD STYLE="width: 33%; color: #FF4040; font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="color: Red">&nbsp;</FONT></TD>
    <TD STYLE="width: 33%; color: #FF4040; font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="color: Red">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="color: #FF4040; font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="color: Red">PRELIMINARY PROSPECTUS</FONT></TD>
    <TD STYLE="color: #FF4040; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: Red">SUBJECT
    TO COMPLETION</FONT></TD>
    <TD STYLE="color: #FF4040; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: Red">DATED
    OCTOBER 26, 2012</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0.5in; font-size: 12pt; font-weight: bold"><FONT STYLE="color: Black">Shares</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 12pt; font-weight: bold"><FONT STYLE="color: Black">Common Stock</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 12pt; font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 12pt; font-weight: bold"><FONT STYLE="color: Black"><img src="tlogo.jpg"></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; font-weight: bold"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">MusclePharm Corporation is offering
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of its common stock pursuant to this prospectus. We expect to effect a 1-for-650 reverse stock split of our common stock
prior to offering these securities. Information in this prospectus is provided on a post-reverse stock split basis giving effect
to such 1-for-650 reverse stock split as if it had occurred prior to the date hereof unless otherwise indicated.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our common stock is presently quoted
on the OTCBB under the symbol &ldquo;MSLP.OB&rdquo;. We have applied to list our common stock on The NASDAQ Capital Market under
the symbol &ldquo;MSPH&rdquo;. On October 25, 2012, the last reported sale price for our common stock on the OTC QB was $3.45
per share after giving pro forma effect to the 1-for-650 reverse stock split of our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Our business and an investment
in our securities involve a high degree of risk. See &ldquo;Risk Factors&rdquo; beginning on page 7 of this prospectus for a discussion
of information that you should consider before investing in our securities.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 89%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Per&nbsp;Share</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; color: Black">Public offering price</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left"><FONT STYLE="color: Black">Underwriting discounts and commissions <SUP>(1)</SUP></FONT></TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Proceeds, before expenses, to us</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"></FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 85%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%; text-align: right"><FONT STYLE="color: Black">(1)</FONT></TD>
    <TD STYLE="width: 2%"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="width: 95%"><FONT STYLE="color: Black">The underwriters will receive compensation in addition to the underwriting
    discount. See &ldquo;Underwriting&rdquo; beginning on page 61 of this prospectus for a description of compensation payable
    to the underwriter.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The underwriters may also purchase
up to an additional &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock from us at the public offering price, less the underwriting discount, within 45 days
from the date of this prospectus to cover over-allotments, if any.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The underwriters expect to deliver
the shares against payment therefor on or about , 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; font-size: 18pt; font-weight: bold; text-align: center"><FONT STYLE="color: Black">Aegis Capital Corp</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">The date of
this prospectus is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2012</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B><img src="tlogo1.jpg"></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>TABLE OF
CONTENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 93%; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="width: 7%; border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="color: Black">Page</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Prospectus Summary</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">1</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Risk Factors</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">7</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Cautionary Note Regarding Forward-Looking Statements and Industry
    Data</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">17</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Use of Proceeds</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">18</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Price Range of Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">19</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Dividend Policy</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">19</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Dilution</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">20</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Capitalization</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">21</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Management&rsquo;s Discussion and Analysis of Financial Condition
    and Results of Operations</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">22</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Business</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">31</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Management</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">43</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Security Ownership of Certain Beneficial Owners and Management</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">54</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Certain Relationships and Related Party Transactions</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">55</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-decoration: none"><FONT STYLE="color: Black">Description of Securities</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">57</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Underwriting</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">61</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Legal Matters</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">69</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Experts</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">69</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="color: Black">Where You Can Find More Information</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">70</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-decoration: none"><FONT STYLE="color: Black">Index to Financial Statements</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="color: Black">F-1</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">You should rely only on the information
contained in this prospectus or in any free writing prospectus that we may specifically authorize to be delivered or made available
to you. We have not, and the underwriters have not, authorized anyone to provide you with any information other than that contained
in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility
for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may
only be used where it is legal to offer and sell shares of our common stock. The information in this prospectus is accurate only
as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock.
Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and the underwriters
are not, making an offer of these securities in any jurisdiction where the offer is not permitted.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">For investors outside the United
States: We have not and the underwriters have not done anything that would permit this offering or possession or distribution
of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside
the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating
to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>









<DIV STYLE="padding-top: 3pt; padding-left: 3pt; border: Black 1pt solid">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0"><FONT STYLE="color: Black"><B>PROSPECTUS
SUMMARY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><I>This summary highlights information
contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment
decision. Before investing in our common stock, you should carefully read this entire prospectus, including our&nbsp;financial
statements and the related notes and the information set forth under the headings &ldquo;Risk Factors&rdquo; and &ldquo;Management&rsquo;s
Discussion and Analysis of Financial Condition and Results of Operations&rdquo; in each case included elsewhere in this prospectus.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><I>Unless otherwise stated or the
context requires otherwise, references in this prospectus to &ldquo;MusclePharm&rdquo;, the &ldquo;Company&rdquo;, &ldquo;we&rdquo;,
&ldquo;us&rdquo;, or &ldquo;our&rdquo; refer to MusclePharm Corporation. Unless otherwise stated or the context requires otherwise,
information in this prospectus gives effect to the 1-for-650 reverse stock split that we intend to effect prior to offering these
securities.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0"><FONT STYLE="color: Black"><B>MusclePharm
Corporation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><B>Business
Overview</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">We develop, market and sell athlete-focused,
high quality nutritional supplements primarily to specialty resellers. Our products have been formulated to enhance active fitness
regimens, including muscle building, weight loss and maintaining general fitness. Our nutritional supplements are available for
purchase in over 10,000 U.S. retail outlets, including Dick&rsquo;s Sporting Goods, GNC, Vitamin Shoppe and Vitamin World. We
also sell our products to over 100 online channels, including bodybuilding.com, amazon.com, gnc.com and vitacost.com. Internationally,
our nutritional supplements are sold in over 110 countries, and we expect that international sales will be a significant part
of our sales for the foreseeable future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">We started formulating our nutritional
supplements in 2008 for consumption by active individuals, high performance athletes and fitness enthusiasts. We launched our
sales and marketing programs in late 2008 through our internal sales executives and staff targeting specialty retail distributors.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">Our wide-range variety of nutritional
supplements, include Assault&trade;, Combat Powder&trade;, MusclePharm Musclegel<SUP>&reg;</SUP>, MusclePharm Shred Matrix<SUP>&reg;</SUP>,
and Re-Con<SUP>&reg;</SUP>. These products are comprised of amino acids, herbs, and proteins tested by our scientists for the
overall health of athletes. We developed these nutritional supplements to enhance the effects of workouts, repair muscles, and
nourish the body for optimal physical fitness.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><B>Our Growth and Core Marketing
Strategy</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">Our primary growth strategy is to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 95%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                                            our
                                                                                                                            product
                                                                                                                            distribution
                                                                                                                            and
                                                                                                                            sales
                                                                                                                            through
                                                                                                                            increased
                                                                                                                            market
                                                                                                                            penetrations
                                                                                                                            both
                                                                                                                            domestically
                                                                                                                            and
                                                                                                                            internationally;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 95%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                                            our
                                                                                                                            margins
                                                                                                                            by
                                                                                                                            focusing
                                                                                                                            on
                                                                                                                            streamlining
                                                                                                                            our
                                                                                                                            operations
                                                                                                                            and
                                                                                                                            seeking
                                                                                                                            operating
                                                                                                                            efficiencies
                                                                                                                            in
                                                                                                                            all
                                                                                                                            areas
                                                                                                                            of
                                                                                                                            our
                                                                                                                            operations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 95%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">continue
                                                                                                                            to
                                                                                                                            conduct
                                                                                                                            additional
                                                                                                                            testing
                                                                                                                            of
                                                                                                                            the
                                                                                                                            safety
                                                                                                                            and
                                                                                                                            efficacy
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products
                                                                                                                            and
                                                                                                                            formulate
                                                                                                                            new
                                                                                                                            products;
                                                                                                                            and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 95%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                                            awareness
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products
                                                                                                                            by
                                                                                                                            increasing
                                                                                                                            our
                                                                                                                            marketing
                                                                                                                            and
                                                                                                                            branding
                                                                                                                            opportunities
                                                                                                                            through
                                                                                                                            endorsements,
                                                                                                                            sponsorships
                                                                                                                            and
                                                                                                                            brand
                                                                                                                            extensions.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">Our core marketing strategy is to
brand MusclePharm as the &ldquo;must have&rdquo; fitness brand for workout enthusiasts and elite athletes. We seek to be known
as the athlete&rsquo;s company, run by athletes who create their products for other athletes both professional and otherwise.
We believe that our marketing mix of endorsers, sponsorships and providing sample products for our retail resellers to use is
an optimal strategy to increase sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><B>&nbsp;&nbsp;</B></FONT></P>

</DIV>









<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;&nbsp;&nbsp;</P>

<DIV STYLE="padding-top: 3pt; padding-left: 3pt; border: Black 1pt solid; width: 100%">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><B>Recent Developments</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">We have recently experienced significant
growth in our product sales. Our net sales for the years ended December 31, 2010 and 2011 were $3.2 million and $17.2 million,
respectively. Our net sales for the six months ended June 30, 2011 and 2012 were $6.4 million and $32.0 million, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><B>Conversion of Warrants into Common
Stock </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">In late September 2012, we issued
670,364 shares of our common stock to several accredited investors pursuant to conversions of warrants to purchase an aggregate
of 946,438 shares of common stock of the Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">As a result of these warrant conversions
and other extinguishments of derivative liabilities during the quarter ended September 30, 2012, our pro forma adjusted capitalization
as of June 30, 2012 reflects a decrease in stockholders&rsquo; deficit from approximately $11,417,000 to approximately $6,815,000
and a reduction in our derivative liabilities as of June 30, 2012 from approximately $7,909,000 to approximately $25,000. All
of these stock issuances, warrant conversions and extinguishments of derivative liabilities will be reflected in our financial
statements as of and for the three and nine months ended September 30, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><B>Proportionate Reverse Stock Split
and Increase in Number of Authorized Shares of Common Stock </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">On October 15, 2012, our board of
directors approved (i) a 1-for-650 reverse stock split of our common stock, including a proportionate reduction in the number
of authorized shares of our common stock from 2.5 billion shares to 3,846,153 shares of common stock, which we intend to effect
prior to the offering of these securities; and (ii) an amendment to our articles of incorporation to increase the number of authorized
common stock (post reverse stock-split) from 3,846,153 to 100 million, and recommended the proposal for approval to the holders
having the power to vote with respect to the common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">On October 18, 2012, the holders
of our Series B Preferred Stock, who hold approximately 50.99% of the total voting power of all issued and outstanding voting
capital of the Company, approved the amendment to the articles of incorporation by written consent in lieu of a meeting in accordance
with Nevada law. See &ldquo;Description of Securities&rdquo; beginning on page 57 of this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><B>Selected Risks Associated With
Our Business</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"><FONT STYLE="color: Black">Our business is subject to numerous
risks described in the section entitled &ldquo;Risk Factors&rdquo; and elsewhere in this prospectus. You should carefully consider
these risks before making an investment. Some of these risks include:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            independent
                                                                                                                            auditors
                                                                                                                            have
                                                                                                                            expressed
                                                                                                                            substantial
                                                                                                                            doubt
                                                                                                                            about
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            continue
                                                                                                                            as
                                                                                                                            a
                                                                                                                            going
                                                                                                                            concern,
                                                                                                                            which
                                                                                                                            may
                                                                                                                            hinder
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            obtain
                                                                                                                            future
                                                                                                                            financing;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            business
                                                                                                                            and
                                                                                                                            operations
                                                                                                                            are
                                                                                                                            experiencing
                                                                                                                            rapid
                                                                                                                            growth.
                                                                                                                            If
                                                                                                                            we
                                                                                                                            fail
                                                                                                                            to
                                                                                                                            effectively
                                                                                                                            manage
                                                                                                                            our
                                                                                                                            growth,
                                                                                                                            our
                                                                                                                            business
                                                                                                                            and
                                                                                                                            operating
                                                                                                                            results
                                                                                                                            could
                                                                                                                            be
                                                                                                                            harmed;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            failure
                                                                                                                            to
                                                                                                                            respond
                                                                                                                            appropriately
                                                                                                                            to
                                                                                                                            competitive
                                                                                                                            challenges,
                                                                                                                            changing
                                                                                                                            consumer
                                                                                                                            preferences
                                                                                                                            and
                                                                                                                            demand
                                                                                                                            for
                                                                                                                            new
                                                                                                                            products
                                                                                                                            could
                                                                                                                            significantly
                                                                                                                            harm
                                                                                                                            our
                                                                                                                            customer
                                                                                                                            relationships
                                                                                                                            and
                                                                                                                            product
                                                                                                                            sales;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            management
                                                                                                                            has
                                                                                                                            determined
                                                                                                                            that
                                                                                                                            our
                                                                                                                            disclosure
                                                                                                                            controls
                                                                                                                            and
                                                                                                                            procedures
                                                                                                                            are
                                                                                                                            ineffective
                                                                                                                            which
                                                                                                                            could
                                                                                                                            result
                                                                                                                            in
                                                                                                                            material
                                                                                                                            misstatements
                                                                                                                            in
                                                                                                                            our
                                                                                                                            financial
                                                                                                                            statements;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">If
                                                                                                                            we
                                                                                                                            fail
                                                                                                                            to
                                                                                                                            comply
                                                                                                                            with
                                                                                                                            the
                                                                                                                            rules
                                                                                                                            under
                                                                                                                            the
                                                                                                                            Sarbanes-Oxley
                                                                                                                            Act
                                                                                                                            of
                                                                                                                            2002
                                                                                                                            related
                                                                                                                            to
                                                                                                                            disclosure
                                                                                                                            controls
                                                                                                                            and
                                                                                                                            procedures,
                                                                                                                            or,
                                                                                                                            if
                                                                                                                            we
                                                                                                                            discover
                                                                                                                            material
                                                                                                                            weaknesses
                                                                                                                            and
                                                                                                                            other
                                                                                                                            deficiencies
                                                                                                                            in
                                                                                                                            our
                                                                                                                            internal
                                                                                                                            control
                                                                                                                            and
                                                                                                                            accounting
                                                                                                                            procedures,
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            could
                                                                                                                            decline
                                                                                                                            significantly
                                                                                                                            and
                                                                                                                            raising
                                                                                                                            capital
                                                                                                                            could
                                                                                                                            be
                                                                                                                            more
                                                                                                                            difficult;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            industry
                                                                                                                            is
                                                                                                                            highly
                                                                                                                            competitive,
                                                                                                                            and
                                                                                                                            our
                                                                                                                            failure
                                                                                                                            to
                                                                                                                            compete
                                                                                                                            effectively
                                                                                                                            could
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            market
                                                                                                                            share,
                                                                                                                            financial
                                                                                                                            condition
                                                                                                                            and
                                                                                                                            future
                                                                                                                            growth;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

</DIV>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<DIV STYLE="padding-top: 3pt; padding-left: 3pt; border: Black 1pt solid; width: 100%">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                                            rely
                                                                                                                            on
                                                                                                                            a
                                                                                                                            limited
                                                                                                                            number
                                                                                                                            of
                                                                                                                            customers
                                                                                                                            for
                                                                                                                            a
                                                                                                                            substantial
                                                                                                                            portion
                                                                                                                            of
                                                                                                                            our
                                                                                                                            sales,
                                                                                                                            and
                                                                                                                            the
                                                                                                                            loss
                                                                                                                            of
                                                                                                                            or
                                                                                                                            material
                                                                                                                            reduction
                                                                                                                            in
                                                                                                                            purchase
                                                                                                                            volume
                                                                                                                            by
                                                                                                                            any
                                                                                                                            of
                                                                                                                            these
                                                                                                                            customers
                                                                                                                            would
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            sales
                                                                                                                            and
                                                                                                                            operating
                                                                                                                            results;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Adverse
                                                                                                                            publicity
                                                                                                                            or
                                                                                                                            consumer
                                                                                                                            perception
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products
                                                                                                                            and
                                                                                                                            any
                                                                                                                            similar
                                                                                                                            products
                                                                                                                            distributed
                                                                                                                            by
                                                                                                                            others
                                                                                                                            could
                                                                                                                            harm
                                                                                                                            our
                                                                                                                            reputation
                                                                                                                            and
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            sales
                                                                                                                            and
                                                                                                                            revenues;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                                            rely
                                                                                                                            on
                                                                                                                            highly
                                                                                                                            skilled
                                                                                                                            personnel
                                                                                                                            and,
                                                                                                                            if
                                                                                                                            we
                                                                                                                            are
                                                                                                                            unable
                                                                                                                            to
                                                                                                                            retain
                                                                                                                            or
                                                                                                                            motivate
                                                                                                                            key
                                                                                                                            personnel,
                                                                                                                            hire
                                                                                                                            qualified
                                                                                                                            personnel,
                                                                                                                            we
                                                                                                                            may
                                                                                                                            not
                                                                                                                            be
                                                                                                                            able
                                                                                                                            to
                                                                                                                            grow
                                                                                                                            effectively;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">If
                                                                                                                            we
                                                                                                                            are
                                                                                                                            unable
                                                                                                                            to
                                                                                                                            retain
                                                                                                                            key
                                                                                                                            personnel,
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            manage
                                                                                                                            our
                                                                                                                            business
                                                                                                                            effectively
                                                                                                                            and
                                                                                                                            continue
                                                                                                                            our
                                                                                                                            growth
                                                                                                                            could
                                                                                                                            be
                                                                                                                            negatively
                                                                                                                            impacted;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">If
                                                                                                                            we
                                                                                                                            are
                                                                                                                            unable
                                                                                                                            to
                                                                                                                            retain
                                                                                                                            key
                                                                                                                            personnel,
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            manage
                                                                                                                            our
                                                                                                                            business
                                                                                                                            effectively
                                                                                                                            and
                                                                                                                            continue
                                                                                                                            our
                                                                                                                            growth
                                                                                                                            could
                                                                                                                            be
                                                                                                                            negatively
                                                                                                                            impacted;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            operating
                                                                                                                            results
                                                                                                                            may
                                                                                                                            fluctuate,
                                                                                                                            which
                                                                                                                            makes
                                                                                                                            our
                                                                                                                            results
                                                                                                                            difficult
                                                                                                                            to
                                                                                                                            predict
                                                                                                                            and
                                                                                                                            could
                                                                                                                            cause
                                                                                                                            our
                                                                                                                            results
                                                                                                                            to
                                                                                                                            fall
                                                                                                                            short
                                                                                                                            of
                                                                                                                            expectations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                                            may
                                                                                                                            be
                                                                                                                            exposed
                                                                                                                            to
                                                                                                                            material
                                                                                                                            product
                                                                                                                            liability
                                                                                                                            claims,
                                                                                                                            which
                                                                                                                            could
                                                                                                                            increase
                                                                                                                            our
                                                                                                                            costs
                                                                                                                            and
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            reputation
                                                                                                                            and
                                                                                                                            business;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            insurance
                                                                                                                            coverage
                                                                                                                            or
                                                                                                                            third
                                                                                                                            party
                                                                                                                            indemnification
                                                                                                                            rights
                                                                                                                            may
                                                                                                                            not
                                                                                                                            be
                                                                                                                            sufficient
                                                                                                                            to
                                                                                                                            cover
                                                                                                                            our
                                                                                                                            legal
                                                                                                                            claims
                                                                                                                            or
                                                                                                                            other
                                                                                                                            losses
                                                                                                                            that
                                                                                                                            we
                                                                                                                            may
                                                                                                                            incur
                                                                                                                            in
                                                                                                                            the
                                                                                                                            future;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            intellectual
                                                                                                                            property
                                                                                                                            rights
                                                                                                                            are
                                                                                                                            valuable,
                                                                                                                            and
                                                                                                                            any
                                                                                                                            inability
                                                                                                                            to
                                                                                                                            protect
                                                                                                                            them
                                                                                                                            could
                                                                                                                            reduce
                                                                                                                            the
                                                                                                                            value
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products
                                                                                                                            and
                                                                                                                            brand;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                                            may
                                                                                                                            be
                                                                                                                            subject
                                                                                                                            to
                                                                                                                            intellectual
                                                                                                                            property
                                                                                                                            rights
                                                                                                                            claims,
                                                                                                                            which
                                                                                                                            are
                                                                                                                            costly
                                                                                                                            to
                                                                                                                            defend,
                                                                                                                            could
                                                                                                                            require
                                                                                                                            us
                                                                                                                            to
                                                                                                                            pay
                                                                                                                            damages
                                                                                                                            and
                                                                                                                            could
                                                                                                                            limit
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            sell
                                                                                                                            some
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">An
                                                                                                                            increase
                                                                                                                            in
                                                                                                                            product
                                                                                                                            returns
                                                                                                                            could
                                                                                                                            negatively
                                                                                                                            impact
                                                                                                                            our
                                                                                                                            operating
                                                                                                                            results
                                                                                                                            and
                                                                                                                            profitability;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                                            have
                                                                                                                            no
                                                                                                                            manufacturing
                                                                                                                            capacity
                                                                                                                            and
                                                                                                                            anticipate
                                                                                                                            continued
                                                                                                                            reliance
                                                                                                                            on
                                                                                                                            third-party
                                                                                                                            manufacturers
                                                                                                                            for
                                                                                                                            the
                                                                                                                            development
                                                                                                                            and
                                                                                                                            commercialization
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">A
                                                                                                                            shortage
                                                                                                                            in
                                                                                                                            the
                                                                                                                            supply
                                                                                                                            of
                                                                                                                            key
                                                                                                                            raw
                                                                                                                            materials
                                                                                                                            could
                                                                                                                            increase
                                                                                                                            our
                                                                                                                            costs
                                                                                                                            or
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            sales
                                                                                                                            and
                                                                                                                            revenues;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                                            may
                                                                                                                            issue
                                                                                                                            additional
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            preferred
                                                                                                                            stock
                                                                                                                            in
                                                                                                                            the
                                                                                                                            future
                                                                                                                            that
                                                                                                                            may
                                                                                                                            adversely
                                                                                                                            impact
                                                                                                                            your
                                                                                                                            rights
                                                                                                                            as
                                                                                                                            holders
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            is
                                                                                                                            quoted
                                                                                                                            on
                                                                                                                            the
                                                                                                                            OTCBB
                                                                                                                            which
                                                                                                                            may
                                                                                                                            have
                                                                                                                            an
                                                                                                                            unfavorable
                                                                                                                            impact
                                                                                                                            on
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            and
                                                                                                                            liquidity;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Liability
                                                                                                                            of
                                                                                                                            directors
                                                                                                                            for
                                                                                                                            breach
                                                                                                                            of
                                                                                                                            duty
                                                                                                                            of
                                                                                                                            care
                                                                                                                            is
                                                                                                                            limited;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Because
                                                                                                                            we
                                                                                                                            will
                                                                                                                            have
                                                                                                                            broad
                                                                                                                            discretion
                                                                                                                            and
                                                                                                                            flexibility
                                                                                                                            in
                                                                                                                            how
                                                                                                                            the
                                                                                                                            net
                                                                                                                            proceeds
                                                                                                                            from
                                                                                                                            this
                                                                                                                            offering
                                                                                                                            are
                                                                                                                            used,
                                                                                                                            we
                                                                                                                            may
                                                                                                                            use
                                                                                                                            the
                                                                                                                            net
                                                                                                                            proceeds
                                                                                                                            in
                                                                                                                            ways
                                                                                                                            in
                                                                                                                            which
                                                                                                                            you
                                                                                                                            disagree;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Future
                                                                                                                            financings
                                                                                                                            through
                                                                                                                            debt
                                                                                                                            securities
                                                                                                                            and
                                                                                                                            preferred
                                                                                                                            stock
                                                                                                                            may
                                                                                                                            restrict
                                                                                                                            our
                                                                                                                            operations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            may
                                                                                                                            be
                                                                                                                            volatile
                                                                                                                            and
                                                                                                                            could
                                                                                                                            fluctuate
                                                                                                                            widely
                                                                                                                            in
                                                                                                                            price,
                                                                                                                            which
                                                                                                                            could
                                                                                                                            result
                                                                                                                            in
                                                                                                                            substantial
                                                                                                                            losses
                                                                                                                            for
                                                                                                                            investors;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">If
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            remains
                                                                                                                            subject
                                                                                                                            to
                                                                                                                            the
                                                                                                                            SEC&rsquo;s
                                                                                                                            penny
                                                                                                                            stock
                                                                                                                            rules,
                                                                                                                            broker-dealers
                                                                                                                            may
                                                                                                                            experience
                                                                                                                            difficulty
                                                                                                                            in
                                                                                                                            completing
                                                                                                                            customer
                                                                                                                            transactions
                                                                                                                            and
                                                                                                                            trading
                                                                                                                            activity
                                                                                                                            in
                                                                                                                            our
                                                                                                                            securities
                                                                                                                            may
                                                                                                                            be
                                                                                                                            adversely
                                                                                                                            affected;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

</DIV>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"></P>

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<DIV STYLE="padding-top: 3pt; padding-left: 3pt; border: Black 1pt solid; width: 100%">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Because
                                                                                                                            certain
                                                                                                                            of
                                                                                                                            our
                                                                                                                            stockholders
                                                                                                                            control
                                                                                                                            a
                                                                                                                            significant
                                                                                                                            number
                                                                                                                            of
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock,
                                                                                                                            they
                                                                                                                            may
                                                                                                                            have
                                                                                                                            effective
                                                                                                                            control
                                                                                                                            over
                                                                                                                            actions
                                                                                                                            requiring
                                                                                                                            stockholder
                                                                                                                            approval;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">If
                                                                                                                            securities
                                                                                                                            or
                                                                                                                            industry
                                                                                                                            analysts
                                                                                                                            do
                                                                                                                            not
                                                                                                                            publish
                                                                                                                            research
                                                                                                                            or
                                                                                                                            reports
                                                                                                                            about
                                                                                                                            our
                                                                                                                            business,
                                                                                                                            or
                                                                                                                            if
                                                                                                                            they
                                                                                                                            change
                                                                                                                            their
                                                                                                                            recommendations
                                                                                                                            regarding
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            adversely,
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            and
                                                                                                                            trading
                                                                                                                            volume
                                                                                                                            could
                                                                                                                            decline;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">A
                                                                                                                            sale
                                                                                                                            of
                                                                                                                            a
                                                                                                                            substantial
                                                                                                                            number
                                                                                                                            of
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            may
                                                                                                                            cause
                                                                                                                            the
                                                                                                                            price
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            to
                                                                                                                            decline
                                                                                                                            and
                                                                                                                            may
                                                                                                                            impair
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            raise
                                                                                                                            capital
                                                                                                                            in
                                                                                                                            the
                                                                                                                            future;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">You
                                                                                                                            will
                                                                                                                            experience
                                                                                                                            immediate
                                                                                                                            and
                                                                                                                            substantial
                                                                                                                            dilution
                                                                                                                            as
                                                                                                                            a
                                                                                                                            result
                                                                                                                            of
                                                                                                                            this
                                                                                                                            offering
                                                                                                                            and
                                                                                                                            may
                                                                                                                            experience
                                                                                                                            additional
                                                                                                                            dilution
                                                                                                                            in
                                                                                                                            the
                                                                                                                            future;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                                            intend
                                                                                                                            to
                                                                                                                            effect
                                                                                                                            a
                                                                                                                            1-for-650
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            of
                                                                                                                            our
                                                                                                                            outstanding
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            immediately
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            this
                                                                                                                            offering.
                                                                                                                            The
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            may
                                                                                                                            not
                                                                                                                            increase
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            sufficiently
                                                                                                                            and
                                                                                                                            we
                                                                                                                            may
                                                                                                                            not
                                                                                                                            be
                                                                                                                            able
                                                                                                                            to
                                                                                                                            list
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            on
                                                                                                                            The
                                                                                                                            NASDAQ
                                                                                                                            Capital
                                                                                                                            Market,
                                                                                                                            in
                                                                                                                            which
                                                                                                                            case
                                                                                                                            this
                                                                                                                            offering
                                                                                                                            will
                                                                                                                            not
                                                                                                                            be
                                                                                                                            completed;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Even
                                                                                                                            if
                                                                                                                            the
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            achieves
                                                                                                                            the
                                                                                                                            requisite
                                                                                                                            increase
                                                                                                                            in
                                                                                                                            the
                                                                                                                            market
                                                                                                                            price
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock,
                                                                                                                            we
                                                                                                                            cannot
                                                                                                                            assure
                                                                                                                            you
                                                                                                                            that
                                                                                                                            we
                                                                                                                            will
                                                                                                                            be
                                                                                                                            able
                                                                                                                            to
                                                                                                                            continue
                                                                                                                            to
                                                                                                                            comply
                                                                                                                            with
                                                                                                                            the
                                                                                                                            minimum
                                                                                                                            bid
                                                                                                                            price
                                                                                                                            requirement
                                                                                                                            of
                                                                                                                            The
                                                                                                                            NASDAQ
                                                                                                                            Capital
                                                                                                                            Market;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Even
                                                                                                                            if
                                                                                                                            the
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            increases
                                                                                                                            the
                                                                                                                            market
                                                                                                                            price
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock,
                                                                                                                            there
                                                                                                                            can
                                                                                                                            be
                                                                                                                            no
                                                                                                                            assurance
                                                                                                                            that
                                                                                                                            we
                                                                                                                            will
                                                                                                                            be
                                                                                                                            able
                                                                                                                            to
                                                                                                                            comply
                                                                                                                            with
                                                                                                                            other
                                                                                                                            continued
                                                                                                                            listing
                                                                                                                            standards
                                                                                                                            of
                                                                                                                            The
                                                                                                                            NASDAQ
                                                                                                                            Capital
                                                                                                                            Market;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">The
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            may
                                                                                                                            decrease
                                                                                                                            the
                                                                                                                            liquidity
                                                                                                                            of
                                                                                                                            the
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock;
                                                                                                                            and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Following
                                                                                                                            the
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split,
                                                                                                                            the
                                                                                                                            resulting
                                                                                                                            market
                                                                                                                            price
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            may
                                                                                                                            not
                                                                                                                            attract
                                                                                                                            new
                                                                                                                            investors,
                                                                                                                            including
                                                                                                                            institutional
                                                                                                                            investors,
                                                                                                                            and
                                                                                                                            may
                                                                                                                            not
                                                                                                                            satisfy
                                                                                                                            the
                                                                                                                            investing
                                                                                                                            requirements
                                                                                                                            of
                                                                                                                            those
                                                                                                                            investors.
                                                                                                                            Consequently,
                                                                                                                            the
                                                                                                                            trading
                                                                                                                            liquidity
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            may
                                                                                                                            not
                                                                                                                            improve.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black"><B>Corporate
Information</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">We were incorporated in the state
of Nevada on August 4, 2006, under the name &ldquo;Tone in Twenty&rdquo; for the purpose of engaging in the business of providing
personal fitness training using isometric techniques. On February 18, 2010, Tone in Twenty acquired all of the issued and outstanding
equity and voting interests of Muscle Pharm, LLC, a Colorado limited liability company, in exchange for 26,000,000 shares of its
common stock. As a result of this transaction, Muscle Pharm, LLC became a wholly owned subsidiary of Tone in Twenty, and Tone
in Twenty changed its name to &ldquo;MusclePharm Corporation.&rdquo; Our principal executive offices are located at 4721 Ironton
Street, Building A, Denver, Colorado 80239 and our telephone number is (303) 396-6100. Our website address is http://www.musclepharm.com.
The information on, or that can be accessed through, our website is not part of this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

</DIV>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<DIV STYLE="padding-top: 3pt; padding-left: 3pt; border: Black 1pt solid; width: 100%">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0"><B>Summary of the Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="color: black"><I>&nbsp;</I></FONT><I>&#9;</I><FONT STYLE="color: black"><B>&nbsp;</B></FONT><B>&#9;<FONT STYLE="color: black">&nbsp;</FONT></B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 97%; border-collapse: collapse; margin-left: 0.1in">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 45%; font-style: italic">Common stock offered by us</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 50%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of common stock (up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    if the underwriter exercises its over-allotment option in full).</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic">Common stock to be outstanding&nbsp;&nbsp;after this offering</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;shares (&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    shares if the underwriter exercises its over-allotment option in full).</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic">Use of proceeds</TD>
    <TD>&nbsp;</TD>
    <TD>We intend to use the net proceeds received from this offering to retire $3.5 of debt due on completion of this offering
    and for working capital and general corporate purposes. See &ldquo;Use of Proceeds&rdquo; on page 18 of this prospectus.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic">Risk factors</TD>
    <TD>&nbsp;</TD>
    <TD>See &ldquo;Risk Factors&rdquo; beginning on page 7 of this prospectus and the other information included in this prospectus
    for a discussion of factors you should carefully consider before investing in our securities.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic">OTC Bulletin Board trading symbol</TD>
    <TD>&nbsp;</TD>
    <TD>MSLP.OB</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic">Proposed symbol and listing</TD>
    <TD>&nbsp;</TD>
    <TD>We have applied for listing of our common stock on The NASDAQ Capital Market under the symbol &ldquo;MSPH&rdquo;.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">Unless we indicate otherwise, all information in this prospectus:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD>reflects
                                                                                                                            a
                                                                                                                            1-for-650
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            of
                                                                                                                            our
                                                                                                                            issued
                                                                                                                            and
                                                                                                                            outstanding
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock,
                                                                                                                            options
                                                                                                                            and
                                                                                                                            warrants
                                                                                                                            to
                                                                                                                            be
                                                                                                                            effected
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            offering
                                                                                                                            these
                                                                                                                            securities
                                                                                                                            and
                                                                                                                            the
                                                                                                                            corresponding
                                                                                                                            adjustment
                                                                                                                            of
                                                                                                                            all
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            per
                                                                                                                            share
                                                                                                                            and
                                                                                                                            stock
                                                                                                                            option
                                                                                                                            and
                                                                                                                            warrant
                                                                                                                            exercise
                                                                                                                            price
                                                                                                                            data;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD>is
                                                                                                                            based
                                                                                                                            on
                                                                                                                            3,527,178
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            issued
                                                                                                                            and
                                                                                                                            outstanding
                                                                                                                            as
                                                                                                                            of
                                                                                                                            October
                                                                                                                            25,
                                                                                                                            2012;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD>assumes
                                                                                                                            no
                                                                                                                            exercise
                                                                                                                            by
                                                                                                                            the
                                                                                                                            underwriters
                                                                                                                            of
                                                                                                                            their
                                                                                                                            option
                                                                                                                            to
                                                                                                                            purchase
                                                                                                                            up
                                                                                                                            to
                                                                                                                            an
                                                                                                                            additional
                                                                                                                            &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            to
                                                                                                                            cover
                                                                                                                            over-allotments,
                                                                                                                            if
                                                                                                                            any;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD>excludes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            issuable
                                                                                                                            upon
                                                                                                                            exercise
                                                                                                                            of
                                                                                                                            outstanding
                                                                                                                            warrants
                                                                                                                            at
                                                                                                                            a
                                                                                                                            weighted
                                                                                                                            average
                                                                                                                            exercise
                                                                                                                            price
                                                                                                                            of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
                                                                                                                            per
                                                                                                                            share
                                                                                                                            as
                                                                                                                            of
                                                                                                                            &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
                                                                                                                            2012;
                                                                                                                            and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD>excludes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            underlying
                                                                                                                            the
                                                                                                                            warrants
                                                                                                                            to
                                                                                                                            be
                                                                                                                            issued
                                                                                                                            to
                                                                                                                            the
                                                                                                                            underwriters
                                                                                                                            in
                                                                                                                            connection
                                                                                                                            with
                                                                                                                            this
                                                                                                                            offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>SUMMARY CONSOLIDATED
FINANCIAL DATA</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The following tables sets forth
our (i) summary statement of operations data for the years ended December 31, 2011 and 2010 and the six months ended June 30,
2012 and 2011 (unaudited) and (ii) summary consolidated balance sheet data as of June 30, 2012 (unaudited), derived from our audited
and unaudited consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated
financial data for the six months ended June 30, 2012 and 2011 and as of June 30, 2012 are not indicative of results to be expected
for the full year. Our financial statements are prepared and presented in accordance with generally accepted accounting principles
in the United States. All share amounts and per share amounts reflect the expected 1-for-650 reverse stock split that we intend
to effect prior to offering these securities. The results indicated below are not necessarily indicative of our future performance.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">You should read this information
together with the sections entitled &ldquo;Capitalization&rdquo;, &ldquo;Management&rsquo;s Discussion and Analysis of Financial
Condition&nbsp;and Results of Operations&rdquo; and our consolidated financial statements and related notes included elsewhere
in this prospectus.</FONT></P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six Months
    Ended June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended
    December 31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">(unaudited)</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black">&nbsp;</TD><TD NOWRAP STYLE="color: Black">&nbsp;</TD><TD NOWRAP STYLE="color: Black">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black">&nbsp;</TD><TD NOWRAP STYLE="color: Black">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; font-weight: bold">Statement of Operations:</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; color: Black; text-align: left; text-indent: 0">Sales &ndash; net</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">31,990,020</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">6,431,678</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">17,212,636</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">3,202,687</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Loss from operations</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(2,391,634</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(2,980,993</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(16,220,160</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(18,251,836</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Other income (expense)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(7,461,755</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(9,467,552</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(7,060,790</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(1,317,501</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">Net income (loss)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(9,853,389</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(12,448,545</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(23,280,950</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Series C preferred stock dividend</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(293</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Other comprehensive income</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">40,719</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">Total comprehensive income (loss)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(9,812,670</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(12,448,545</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(23,280,657</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Net income (loss) per share of common stock &ndash; basic and diluted</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(4.92</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(46.41</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(53.76</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(309.18</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Weighted average number of shares of common stock outstanding &ndash; basic and
    diluted</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">2,001,880</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">268,254</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">433,053</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">63,295</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-indent: 0">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As of June
    30, 2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: left; text-indent: 0">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Actual</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: Black"><B>Pro
    Forma, As Adjusted <SUP>(1)</SUP></B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-indent: 0">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">(unaudited)</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">(unaudited)</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; font-weight: bold; text-align: left; text-indent: 0">Balance Sheet Data:</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; color: Black; text-indent: 0">Cash</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">291,971</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; text-indent: 0">Cash &ndash; restricted</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">52,744</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; text-indent: 0">Total assets</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">4,725,828</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; text-indent: 0">Working Capital (Deficit)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(12,668,017</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; text-indent: 0">Long term debt</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">114,682</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; text-indent: 0">Stockholders&rsquo; deficit</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(11,013,113</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
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    <TD STYLE="width: 4%"><FONT STYLE="color: Black">(1)</FONT></TD>
    <TD STYLE="width: 2%"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="width: 94%"><FONT STYLE="color: Black">Pro forma, as adjusted amounts give effect to (i) the issuance of common
    stock and warrants from July 1, 2012 through and immediately prior to the date of this prospectus and (ii) the sale of the
    common stock in this offering at the assumed public offering price of $&nbsp;&nbsp;&nbsp;&nbsp; per share of common stock,
    which is based on the closing price of our common stock on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2012,
    and after deducting underwriting discounts and commissions and other estimated offering expenses payable by us.</FONT></TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>RISK FACTORS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Any investment in our common
stock involves a high degree of risk. Investors should carefully consider the risks described below and all of the information
contained in this prospectus before deciding whether to purchase our common stock. Our business, financial condition and results
of operations could be materially adversely affected by these risks if any of them actually occur. This prospectus also contains
forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere
in this prospectus.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Risks Related to Our Business
and Industry</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our independent auditors have
expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">As reflected in the accompanying
unaudited interim consolidated financial statements, we incurred a net loss of approximately $9.9 million for the six months ended
June 30, 2012, and we had a working capital deficit and stockholders&rsquo; deficit of approximately $12.7 million and $11.0 million
respectively, at June 30, 2012. Also as reflected in the accompanying financial statements we incurred a net loss of approximately
$23.3 million and used net cash in operations of approximately $5.8 million for the year ended December 31, 2011, and had a working
capital deficit and stockholders&rsquo; deficit of approximately $13.7 million and $13.0 million respectively, at December 31,
2011. These factors raise substantial doubt about our ability to continue as a going concern.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In their report dated April 13,
2012, except for note 1 as to which the date is June 28, 2012, our independent auditors stated that our financial statements for
the period ended December 31, 2011, were prepared assuming that we would continue as a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should
we be unable to continue as a going concern.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our ability to continue operations
is dependent on management&rsquo;s plans to raise more capital, which include this offering, until such time that funds provided
by operations are sufficient to fund working capital requirements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In addition to the net proceeds
from this offering, we could require additional funding to finance the growth of our future operations as well as to achieve our
strategic objectives. There can be no assurance that future financing will be available in amounts or terms acceptable to us,
if at all.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our business and operations
are experiencing rapid growth. If we fail to effectively manage our growth, our business and operating results could be harmed.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We have experienced and expect to
continue to experience rapid growth in our operations, which has placed, and will continue to place, significant demands on our
management, and our operational and financial infrastructure. If we do not effectively manage our growth, we may fail to attain
operational efficiencies we are seeking, timely deliver products to our customers in sufficient volume or the quality of our products
could suffer, which could negatively affect our operating results. To effectively manage this growth, we expect we will need to
hire additional persons, particularly in sales and marketing, and we will need to continue to improve significantly our operational,
financial and management controls and our reporting systems and procedures. These additional employees, systems enhancements and
improvements will require significant capital expenditures and management resources. Failure to implement these proposed growth
objectives would likely hurt our ability to manage our growth and our financial position.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our failure to respond appropriately
to competitive challenges, changing consumer preferences and demand for new products could significantly harm our customer relationships
and product sales.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The nutritional sports supplement
industry is characterized by intense competition for product offerings and rapid and frequent changes in consumer demand. Our
failure to predict accurately product trends could negatively impact our products and cause our revenues to decline.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our success with any particular
product offering (whether new or existing) depends upon a number of factors, including our ability to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">deliver
                                                                                                                            products
                                                                                                                            in
                                                                                                                            a
                                                                                                                            timely
                                                                                                                            manner
                                                                                                                            in
                                                                                                                            sufficient
                                                                                                                            volumes;</FONT></TD></TR>                                                                                                                                   <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">accurately
                                                                                                                            anticipate
                                                                                                                            customer
                                                                                                                            needs
                                                                                                                            and
                                                                                                                            forecast
                                                                                                                            accurately
                                                                                                                            to
                                                                                                                            our
                                                                                                                            manufacturers
                                                                                                                            in
                                                                                                                            an
                                                                                                                            expanding
                                                                                                                            business;</FONT></TD></TR>                                                                                                                                                    <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">differentiate
                                                                                                                            our
                                                                                                                            product
                                                                                                                            offerings
                                                                                                                            from
                                                                                                                            those
                                                                                                                            of
                                                                                                                            our
                                                                                                                            competitors;</FONT></TD></TR>                                                                                                                                                         <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">competitively
                                                                                                                            price
                                                                                                                            our
                                                                                                                            products;
                                                                                                                            and</FONT></TD></TR>                                                                                                                              <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">develop
                                                                                                                            new
                                                                                                                            products.</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Products often have to be promoted
heavily in stores or in the media to obtain visibility and consumer acceptance. Acquiring distribution for products is difficult
and often expensive due to slotting and other promotional charges mandated by retailers. Products can take substantial periods
of time to develop consumer awareness, consumer acceptance and sales volume. Accordingly, some products may fail to gain or maintain
sufficient sales volume and as a result may have to be discontinued. In a highly competitive marketplace it may be difficult to
have retailers open stock-keeping units (sku&rsquo;s) for new products.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our management has determined
that our disclosure controls and procedures are ineffective which could result in material misstatements in our financial statements.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our management is responsible for
establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities
Exchange Act of 1934, as amended, which we refer to as the Exchange Act. As of December&nbsp;31, 2011, our management determined
that our disclosure controls and procedures were ineffective due to weaknesses in our financial closing process.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We intend to implement remedial
measures designed to address the ineffectiveness of our disclosure controls and procedures. If these remedial measures are insufficient
to address the ineffectiveness of our disclosure controls and procedures, or if material weaknesses or significant deficiencies
in our internal control are discovered or occur in the future and the ineffectiveness of our disclosure controls and procedures
continues, we may fail to meet our future reporting obligations on a timely basis, our consolidated financial statements may contain
material misstatements, we could be required to restate our prior period financial results, our operating results may be harmed,
we may be subject to class action litigation, and if we gain a listing on The NASDAQ Capital Market, our common stock could be
delisted from that exchange. Any failure to address the ineffectiveness of our disclosure controls and procedures could also adversely
affect the results of the periodic management evaluations regarding the effectiveness of our internal control over financial reporting
and our disclosure controls and procedures that are required to be included in our annual report on Form 10-K. Internal control
deficiencies and ineffective disclosure controls and procedures could also cause investors to lose confidence in our reported
financial information. We can give no assurance that the measures we plan to take in the future will remediate the ineffectiveness
of our disclosure controls and procedures or that any material weaknesses or restatements of financial results will not arise
in the future due to a failure to implement and maintain adequate internal control over financial reporting or adequate disclosure
controls and procedures or circumvention of these controls. In addition, even if we are successful in strengthening our controls
and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors
or to facilitate the fair presentation of our consolidated financial statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>If we fail to comply with
the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover material weaknesses
and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising
capital could be more difficult.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">If we fail to comply with the rules
under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover additional material weaknesses
and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising
capital could be more difficult. Moreover, effective internal controls are necessary for us to produce reliable financial reports
and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business
and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading
price of our common stock could drop significantly. In addition, we cannot be certain that additional material weaknesses or significant
deficiencies in our internal controls will not be discovered in the future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our industry is highly competitive,
and our failure to compete effectively could adversely affect our market share, financial condition and future growth.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The nutritional supplement industry
is highly competitive with respect to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">price;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">shelf
                                                                                                                            space
                                                                                                                            and
                                                                                                                            store
                                                                                                                            placement;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">brand
                                                                                                                            and
                                                                                                                            product
                                                                                                                            recognition;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">new
                                                                                                                            product
                                                                                                                            introductions;
                                                                                                                            and</FONT></TD></TR>                                                                                                                              <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">raw
                                                                                                                            materials.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Most of our competitors are larger
more established and possess greater financial, personnel, distribution and other resources than we have. We face competition
in the health food channel from a limited number of large nationally known manufacturers, private label brands and many smaller
manufacturers of dietary supplements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We rely on a limited number
of customers for a substantial portion of our sales, and the loss of or material reduction in purchase volume by any of these
customers would adversely affect our sales and operating results.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">For the six months ended June 30,
2012, two of our customers accounted for approximately 46% of our sales. Our largest customer for the six months ended June 30,
2012, accounted for 35% of our sales. For the year ended December 31, 2011, two customers accounted for approximately 55% of sales
and our largest customer represented 41% of our sales. For the year ended December 31, 2010, three customers accounted for approximately
67% of our sales and the largest customer accounted for 45% of our sales. The loss of any of our major customers, a significant
reduction in purchases by any major customer, or, any serious financial difficulty of a major customer, could have a material
adverse effect on our sales and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Adverse publicity or consumer
perception of our products and any similar products distributed by others could harm our reputation and adversely affect our sales
and revenues.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We believe we are highly dependent
upon positive consumer perceptions of the safety and quality of our products as well as similar products distributed by other
sports nutrition supplement companies. Consumer perception of sports nutrition supplements and our products in particular can
be substantially influenced by scientific research or findings, national media attention and other publicity about product use.
Adverse publicity from these sources regarding the safety, quality or efficacy of nutritional supplements and our products could
harm our reputation and results of operations. The mere publication of news articles or reports asserting that such products may
be harmful or questioning their efficacy could have a material adverse effect on our business, financial condition and results
of operations, regardless of whether such news articles or reports are scientifically supported or whether the claimed harmful
effects would be present at the dosages recommended for such products.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We rely on highly skilled
personnel and, if we are unable to retain or motivate key personnel, hire qualified personnel, we may not be able to grow effectively.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our performance largely depends
on the talents and efforts of highly skilled individuals. Our future success depends on our continuing ability to identify, hire,
develop, motivate and retain highly skilled personnel for all areas of our organization, particularly sales and marketing. Competition
in our industry for qualified employees is intense. In addition, our compensation arrangements, such as our bonus programs, may
not always be successful in attracting new employees or retaining and motivating our existing employees. Our continued ability
to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>If we are unable to retain
key personnel, our ability to manage our business effectively and continue our growth could be negatively impacted.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our management employees include
Brad J. Pyatt, L. Gary Davis, John H. Bluher, Jeremy R. DeLuca and Cory J. Gregory. These key management employees are primarily
responsible for our day-to-day operations, and we believe our success depends in large part on our ability to retain them and
to continue to attract additional qualified individuals to our management team. Currently, we have executed employment agreements
with our key management employees. The loss or limitation of the services of any of our key management employees or the inability
to attract additional qualified personnel could have a material adverse effect on our business and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our operating results may
fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our operating results may fluctuate
as a result of a number of factors, many of which may be outside of our control. As a result, comparing our operating results
on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future
performance. Our quarterly, year-to-date, and annual expenses as a percentage of our revenues may differ significantly from our
historical or projected rates. Our operating results in future quarters may fall below expectations. Each of the following factors
may affect our operating results:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            deliver
                                                                                                                            products
                                                                                                                            in
                                                                                                                            a
                                                                                                                            timely
                                                                                                                            manner
                                                                                                                            in
                                                                                                                            sufficient
                                                                                                                            volumes;</FONT></TD></TR>                                                                                                                                              <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            recognize
                                                                                                                            product
                                                                                                                            trends;</FONT></TD></TR>                                                                                                                                          <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                                            loss
                                                                                                                            of
                                                                                                                            one
                                                                                                                            or
                                                                                                                            more
                                                                                                                            significant
                                                                                                                            customers;</FONT></TD></TR>                                                                                                                                                 <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">the
                                                                                                                            introduction
                                                                                                                            of
                                                                                                                            successful
                                                                                                                            new
                                                                                                                            products
                                                                                                                            by
                                                                                                                            our
                                                                                                                            competitors;
                                                                                                                            and</FONT></TD></TR>                                                                                                                                           <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">adverse
                                                                                                                            media
                                                                                                                            reports
                                                                                                                            on
                                                                                                                            the
                                                                                                                            use
                                                                                                                            or
                                                                                                                            efficacy
                                                                                                                            of
                                                                                                                            nutritional
                                                                                                                            supplements.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Because our business is changing
and evolving, our historical operating results may not be useful to you in predicting our future operating results.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>The continuing effects of
the most recent global economic crisis may impact our business, operating results, or financial condition.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The global economic crisis that
began in 2008 has caused disruptions and extreme volatility in global financial markets and increased rates of default and bankruptcy,
and has impacted levels of consumer spending. These macroeconomic developments could negatively affect our business, operating
results, and financial condition. For example, if consumer spending decreases, this may result in lower sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We may be exposed to material
product liability claims, which could increase our costs and adversely affect our reputation and business.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">As a marketer and distributor of
products designed for human consumption, we could be subject to product liability claims if the use of our products is alleged
to have resulted in injury. Our products consist of vitamins, minerals, herbs and other ingredients that are classified as dietary
supplements and in most cases are not subject to pre-market regulatory approval in the United States or internationally. Previously
unknown adverse reactions resulting from human consumption of these ingredients could occur.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We have not had any product liability
claims filed against us, but in the future we may be subject to various product liability claims, including among others that
our products had inadequate instructions for use, or inadequate warnings concerning possible side effects and interactions with
other substances. The cost of defense can be substantially higher than the cost of settlement even when claims are without merit.
The high cost to defend or settle product liability claims could have a material adverse effect on our business and operating
results.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our insurance coverage or
third party indemnification rights may not be sufficient to cover our legal claims or other losses that we may incur in the future.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We maintain insurance, including
property, general and product liability, and workers&rsquo; compensation to protect ourselves against potential loss exposures.
In the future, insurance coverage may not be available at adequate levels or on adequate terms to cover potential losses, including
on terms that meet our customer&rsquo;s requirements. If insurance coverage is inadequate or unavailable, we may face claims that
exceed coverage limits or that are not covered, which could increase our costs and adversely affect our operating results.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our intellectual property
rights are valuable, and any inability to protect them could reduce the value of our products and brand.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We have invested significant resources
to protect our brands and intellectual property rights. However, we may be unable or unwilling to strictly enforce our intellectual
property rights, including our trademarks, from infringement. Our failure to enforce our intellectual property rights could diminish
the value of our brands and product offerings and harm our business and future growth prospects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We may be subject to intellectual
property rights claims, which are costly to defend, could require us to pay damages and could limit our ability to sell some of
our products.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our industry is characterized by
vigorous pursuit and protection of intellectual property rights, which has resulted in protracted and expensive litigation for
several companies. Third parties may assert claims of misappropriation of trade secrets or infringement of intellectual property
rights against us or against our end customers or partners for which we may be liable.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">As our business expands, the number
of products and competitors in our markets increases and product overlaps occur, infringement claims may increase in number and
significance. Intellectual property lawsuits are subject to inherent uncertainties due to the complexity of the technical issues
involved, and we cannot be certain that we would be successful in defending ourselves against intellectual property claims. Further,
many potential litigants have the capability to dedicate substantially greater resources than we can to enforce their intellectual
property rights and to defend claims that may be brought against them. Furthermore, a successful claimant could secure a judgment
that requires us to pay substantial damages or prevents us from distributing products or performing certain services.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>An increase in product returns
could negatively impact our operating results and profitability.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We permit the return of damaged
or defective products and accept limited amounts of product returns in certain instances. While such returns have historically
been nominal and within management&rsquo;s expectations and the provisions established, future return rates may differ from those
experienced in the past. Any significant increase in damaged or defective products or expected returns could have a material adverse
effect on our operating results for the period or periods in which such returns materialize.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We have no manufacturing capacity
and anticipate continued reliance on third-party manufacturers for the development and commercialization of our products. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We do not currently operate manufacturing
facilities for production of our products. We lack the resources and the capabilities to manufacture our products on a commercial
scale. We do not intend to develop facilities for the manufacture of products in the foreseeable future. We rely on third-party
manufacturers to produce bulk products required to meet our sales needs. We plan to continue to rely upon contract manufacturers
to manufacture commercial quantities of our products.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our contract manufacturers&rsquo;
failure to achieve and maintain high manufacturing standards, in accordance with applicable regulatory requirements, or the incidence
of manufacturing errors, could result in consumer injury or death, product shortages, product recalls or withdrawals, delays or
failures in product testing or delivery, cost overruns or other problems that could seriously harm our business. Contract manufacturers
often encounter difficulties involving production yields, quality control and quality assurance, as well as shortages of qualified
personnel. Our existing manufacturers and any future contract manufacturers may not perform as agreed or may not remain in the
contract manufacturing business. In the event of a natural disaster, business failure, strike or other difficulty, we may be unable
to replace a third-party manufacturer in a timely manner and the production of our products would be interrupted, resulting in
delays, additional costs and reduced revenues.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>A shortage in the supply of
key raw materials could increase our costs or adversely affect our sales and revenues.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">All of our raw materials for our
products are obtained from third-party suppliers. Since all of the ingredients in our products are commonly used, we have not
experienced any shortages or delays in obtaining raw materials. If circumstances changed, shortages could result in materially
higher raw material prices or adversely affect our ability to have a product manufactured. Price increases from a supplier would
directly affect our profitability if we are not able to pass price increases on to customers. Our inability to obtain adequate
supplies of raw materials in a timely manner or a material increase in the price of our raw materials could have a material adverse
effect on our business, financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Because we are subject to
numerous laws and regulations, and we may become involved in litigation from time to time, we could incur substantial judgments,
fines, legal fees and other costs.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our industry is highly regulated.
The manufacture, labeling and advertising for our products are regulated by various federal, state and local agencies as well
as those of each foreign country to which we distribute. These governmental authorities may commence regulatory or legal proceedings,
which could restrict the permissible scope of our product claims or the ability to manufacture and sell our products in the future.
The U.S. Food and Drug Administration, or FDA, regulates our products to ensure that the products are not adulterated or misbranded.
Failure to comply with FDA requirements may result in, among other things, injunctions, product withdrawals, recalls, product
seizures, fines and criminal prosecutions. Our advertising is subject to regulation by the Federal Trade Commission, or FTC, under
the Federal Trade Commission Act. In recent years the FTC has initiated numerous investigations of dietary supplement and weight
loss products and companies. Additionally, some states also permit advertising and labeling laws to be enforced by private attorney
generals, who may seek relief for consumers, seek class action certifications, seek class wide damages and product recalls of
products sold by us. Any of these types of adverse actions against us by governmental authorities or private litigants could have
a material adverse effect on our business, financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Other Risks and Risks Relating
to this Offering</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We may, in the future, issue
additional shares of common stock, which would reduce investors&rsquo; percent of ownership and may dilute our share value.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our articles of incorporation, as
amended, authorize the issuance of 2,500,000,000 shares of common stock, 5,000,000 shares of Series A Convertible Preferred Stock,
51 shares of Series B Preferred Stock and 500 shares of Series C Convertible Preferred Stock. The future issuance of common stock
and preferred stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders.
We may value any common stock or preferred stock issued in the future on an arbitrary basis. The issuance of common stock for
future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our
investors, and might have an adverse effect on any trading market for our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We may issue additional shares
of preferred stock in the future that may adversely impact your rights as holders of our common stock.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our articles of incorporation, as
amended, authorize us to issue shares of preferred stock in various classes. Currently, we have 51 shares of Series B Preferred
Stock issued and outstanding, which has voting control of the Company. Each share of our Series A Preferred Stock is convertible
into 200 shares of our common stock. In addition, our board of directors will has the authority to fix and determine the relative
rights and preferences of preferred stock, as well as the authority to issue additional shares, without further stockholder approval.
As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock,
and the right to the redemption of such preferred stock, together with a premium, prior to the redemption of the common stock.
To the extent that we do issue such additional shares of preferred stock, your rights as holders of common stock could be impaired
thereby, including, without limitation, dilution of your ownership interests in us. In addition, shares of preferred stock could
be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may
not be in your interest as a holder of common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our common stock is quoted
on the OTCBB which may have an unfavorable impact on our stock price and liquidity.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our common stock is quoted on the
OTCBB. The OTCBB is a significantly more limited market than the New York Stock Exchange or the NASDAQ Stock Market. The quotation
of our shares on the OTCBB may result in a less liquid market available for existing and potential stockholders to trade shares
of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability
to raise capital in the future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Liability of directors for
breach of duty of care is limited.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Under Section 78.138(7) of the Nevada
Revised Statutes, all Nevada corporations limit the liability of directors and officers, including acts not in good faith. Our
stockholders&rsquo; ability to recover damages for fiduciary breaches may be reduced by this statute. In addition, we are obligated
to indemnify our directors and officers regarding stockholder suits which they successfully defend as set forth in Section 78.7502
of the Nevada Revised Statutes.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Because we will have broad
discretion and flexibility in how the net proceeds from this offering are used, we may use the net proceeds in ways in which you
disagree.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We currently intend to use the net
proceeds from this offering to repay $3.5 million of debt due upon completion of this offering, for working capital and other
general corporate purposes. See &ldquo;Use of Proceeds&rdquo; on page 18 of this prospectus. Other than the debt payments, we
have not allocated specific amounts of the net proceeds from this offering for any of the foregoing purposes. Accordingly, our
management will have significant discretion and flexibility in applying these proceeds. You will be relying on the judgment of
our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment
decision, to assess whether the net proceeds are being used appropriately. It is possible that the net proceeds will be invested
in a way that does not yield a favorable, or any, return for us. The failure of our management to use such funds effectively could
have a material adverse effect on our business, financial condition, operating results and cash flow.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 34.1pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Future financings through
debt securities and preferred stock may restrict our operations. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">If additional funds are raised through
a credit facility or the issuance of debt securities or preferred stock, lenders under the credit facility or holders of these
debt securities or preferred stock would likely have rights that are senior to the rights of holders of our common stock, and
any credit facility or additional securities could contain covenants that would restrict our operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our common stock price may
be volatile and could fluctuate widely in price, which could result in substantial losses for investors.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The market price of our common stock
has historically been and is likely to be highly volatile and could fluctuate widely in price in response to various factors,
many of which are beyond our control, including:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 22pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">new
                                                                                                                            products
                                                                                                                            and
                                                                                                                            services
                                                                                                                            by
                                                                                                                            us
                                                                                                                            or
                                                                                                                            our
                                                                                                                            competitors;</FONT></TD></TR>                                                                                                                                                    <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">additions
                                                                                                                            or
                                                                                                                            departures
                                                                                                                            of
                                                                                                                            key
                                                                                                                            personnel;</FONT></TD></TR>                                                                                                                                     <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">intellectual
                                                                                                                            property
                                                                                                                            disputes;</FONT></TD></TR>                                                                                                                                             <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">sales
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock;</FONT></TD></TR>                                                                                                                                               <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            integrate
                                                                                                                            operations,
                                                                                                                            technology,
                                                                                                                            products
                                                                                                                            and
                                                                                                                            services;</FONT></TD></TR>                                                                                                                                                 <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            execute
                                                                                                                            our
                                                                                                                            business
                                                                                                                            plan;</FONT></TD></TR>                                                                                                                                         <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">operating
                                                                                                                            results
                                                                                                                            below
                                                                                                                            expectations;</FONT></TD></TR>                                                                                                                                                      <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">loss
                                                                                                                            of
                                                                                                                            any
                                                                                                                            strategic
                                                                                                                            relationship;</FONT></TD></TR>                                                                                                                                                         <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">industry
                                                                                                                            developments;</FONT></TD></TR>                                                                                                                                        <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">economic
                                                                                                                            and
                                                                                                                            other
                                                                                                                            external
                                                                                                                            factors;
                                                                                                                            and</FONT></TD></TR>                                                                                                                              <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">period-to-period
                                                                                                                            fluctuations
                                                                                                                            in
                                                                                                                            our
                                                                                                                            financial
                                                                                                                            results.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>If our common stock remains
subject to the SEC&rsquo;s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and
trading activity in our securities may be adversely affected.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Unless our securities are listed
on a national securities exchange, or we have net tangible assets of $5.0 million or more and our common stock has a market price
per share of $5.00 or more, transactions in our common stock will be subject to the SEC&rsquo;s &ldquo;penny stock&rdquo; rules.
If our common stock remains subject to the &ldquo;penny stock&rdquo; rules&nbsp;promulgated under the Exchange Act, broker-dealers
may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Under these rules, broker-dealers
who recommend such securities to persons other than institutional accredited investors must:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">make
                                                                                                                            a
                                                                                                                            special
                                                                                                                            written
                                                                                                                            suitability
                                                                                                                            determination
                                                                                                                            for
                                                                                                                            the
                                                                                                                            purchaser;</FONT></TD></TR></TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0">&nbsp;</P>



<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">receive
                                                                                                                            the
                                                                                                                            purchaser&rsquo;s
                                                                                                                            written
                                                                                                                            agreement
                                                                                                                            to
                                                                                                                            the
                                                                                                                            transaction
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            sale;</FONT></TD></TR>                                                                                                                                   <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">provide
                                                                                                                            the
                                                                                                                            purchaser
                                                                                                                            with
                                                                                                                            risk
                                                                                                                            disclosure
                                                                                                                            documents
                                                                                                                            which
                                                                                                                            identify
                                                                                                                            certain
                                                                                                                            risks
                                                                                                                            associated
                                                                                                                            with
                                                                                                                            investing
                                                                                                                            in
                                                                                                                            &ldquo;penny
                                                                                                                            stocks&rdquo;
                                                                                                                            and
                                                                                                                            which
                                                                                                                            describe
                                                                                                                            the
                                                                                                                            market
                                                                                                                            for
                                                                                                                            these
                                                                                                                            &ldquo;penny
                                                                                                                            stocks&rdquo;
                                                                                                                            as
                                                                                                                            well
                                                                                                                            as
                                                                                                                            a
                                                                                                                            purchaser&rsquo;s
                                                                                                                            legal
                                                                                                                            remedies;
                                                                                                                            and</FONT></TD></TR>                                                                                                                                              <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">obtain
                                                                                                                            a
                                                                                                                            signed
                                                                                                                            and
                                                                                                                            dated
                                                                                                                            acknowledgment
                                                                                                                            from
                                                                                                                            the
                                                                                                                            purchaser
                                                                                                                            demonstrating
                                                                                                                            that
                                                                                                                            the
                                                                                                                            purchaser
                                                                                                                            has
                                                                                                                            actually
                                                                                                                            received
                                                                                                                            the
                                                                                                                            required
                                                                                                                            risk
                                                                                                                            disclosure
                                                                                                                            document
                                                                                                                            before
                                                                                                                            a
                                                                                                                            transaction
                                                                                                                            in
                                                                                                                            a
                                                                                                                            &ldquo;penny
                                                                                                                            stock&rdquo;
                                                                                                                            can
                                                                                                                            be
                                                                                                                            completed.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">As a result, if our common stock
becomes or remains subject to the penny stock rules, the market price of our securities may be depressed, and you may find it
more difficult to sell our securities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Because certain of our stockholders
control a significant number of shares of our common stock, they may have effective control over actions requiring stockholder
approval.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">As of October 25, 2012, our directors,
executive officers and principal stockholders, and their respective affiliates, beneficially own approximately 21.7% of our outstanding
shares of common stock. Also, two of our executive officers own 51 shares of our Series B Preferred Stock, which has voting control
of the Company. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted
to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially
all of our assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs
of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 36.3pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">delaying,
                                                                                                                            deferring
                                                                                                                            or
                                                                                                                            preventing
                                                                                                                            a
                                                                                                                            change
                                                                                                                            in
                                                                                                                            corporate
                                                                                                                            control;</FONT></TD></TR>                                                                                                                                   <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">impeding
                                                                                                                            a
                                                                                                                            merger,
                                                                                                                            consolidation,
                                                                                                                            takeover
                                                                                                                            or
                                                                                                                            other
                                                                                                                            business
                                                                                                                            combination
                                                                                                                            involving
                                                                                                                            us;
                                                                                                                            or</FONT></TD></TR>                                                                                                                                 <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">discouraging
                                                                                                                            a
                                                                                                                            potential
                                                                                                                            acquirer
                                                                                                                            from
                                                                                                                            making
                                                                                                                            a
                                                                                                                            tender
                                                                                                                            offer
                                                                                                                            or
                                                                                                                            otherwise
                                                                                                                            attempting
                                                                                                                            to
                                                                                                                            obtain
                                                                                                                            control
                                                                                                                            of
                                                                                                                            us.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -26.4pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We have not paid dividends
on our common stock in the past and do not expect to pay dividends on our common stock for the foreseeable future. Any return
on investment may be limited to the value of our common stock.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">No cash dividends have been paid
on our common stock. We expect that any income received from operations will be devoted to our future operations and growth. We
do not expect to pay cash dividends on our common stock in the near future. Payment of dividends would depend upon our profitability
at the time, cash available for those dividends, and other factors as our board of directors may consider relevant. If we do not
pay dividends, our common stock may be less valuable because a return on an investor&rsquo;s investment will only occur if our
stock price appreciates. Investors in our common stock should not rely on an investment in our company if they require dividend
income.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 26.4pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>If securities or industry
analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely,
our stock price and trading volume could decline.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The trading market for our common
stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We
do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence
coverage of us, the trading price of our stock would likely decrease. Even if we do obtain analyst coverage, if one or more of
the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage
of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could
cause our stock price or trading volume to decline.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>A sale of a substantial number
of shares of our common stock may cause the price of our common stock to decline and may impair our ability to raise capital in
the future.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our common stock is traded on the
OTCBB and, despite certain increases of trading volume from time to time, there have been periods when it could be considered
&ldquo;thinly-traded&rdquo;, meaning that the number of persons interested in purchasing our common stock at or near bid prices
at any given time may be relatively small or non-existent. Finance transactions resulting in a large amount of newly issued shares
that become readily tradable, or other events that cause current stockholders to sell shares, could place downward pressure on
the trading price of our stock. In addition, the lack of a robust resale market may require a stockholder who desires to sell
a large number of shares of common stock to sell the shares in increments over time to mitigate any adverse impact of the sales
on the market price of our stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 11pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 11pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 11pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">If our stockholders sell, or the
market perceives that our stockholders intend to sell for various reasons, including the ending of restrictions on resale of substantial
amounts of our common stock in the public market, including shares issued upon the exercise of outstanding options, the market
price of our common stock could fall. Sales of a substantial number of shares of our common stock may make it more difficult for
us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We may
become involved in securities class action litigation that could divert management&rsquo;s attention and harm our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 11pt"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>You will experience immediate
and substantial dilution as a result of this offering and may experience additional dilution in the future.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">You will incur immediate and substantial
dilution as a result of this offering. After giving effect to the sale by us of up to&nbsp; &nbsp;shares offered in this offering
at an assumed public offering price of $ per share, and after deducting the&nbsp;underwriter&rsquo;s discounts and commissions
and estimated offering expenses payable by us, investors in this offering can expect an immediate dilution of $ per share. In
addition, in the past, we issued options and warrants to acquire shares of common stock. To the extent these options are ultimately
exercised, you will sustain future dilution. We may also acquire or license other technologies or finance strategic alliances
by issuing equity, which may result in additional dilution to our stockholders.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Risks Related to Our Reverse
Stock Split</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We intend to effect a 1-for-650
reverse stock split of our outstanding common stock immediately prior to this offering. However, the reverse stock split may not
increase our stock price sufficiently and we may not be able to list our common stock on The NASDAQ Capital Market, in which case
this offering will not be completed.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We expect that the 1-for-650 reverse
stock split of our outstanding common stock will increase the market price of our common stock so that we will be able to meet
the minimum bid price requirement of the Listing Rules of The NASDAQ Capital Market. However, the effect of a reverse stock split
upon the market price of our common stock cannot be predicted with certainty, and the results of reverse stock splits by companies
in similar circumstances have been varied. It is possible that the market price of our common stock following the reverse stock
split will not increase sufficiently for us to be in compliance with the minimum bid price requirement. If we are unable meet
the minimum bid price requirement, we may be unable to list our shares on The NASDAQ Capital Market, in which case this offering
will not be completed.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 33pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Even if the reverse stock
split achieves the requisite increase in the market price of our common stock, we cannot assure you that we will be able to continue
to comply with the minimum bid price requirement of The NASDAQ Capital Market.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Even if the reverse stock split
achieves the requisite increase in the market price of our common stock to be in compliance with the minimum bid price of The
NASDAQ Capital Market, there can be no assurance that the market price of our common stock following the reverse stock split will
remain at the level required for continuing compliance with that requirement. It is not uncommon for the market price of a company&rsquo;s
common stock to decline in the period following a reverse stock split. If the market price of our common stock declines following
the effectuation of a reverse stock split, the percentage decline may be greater than would occur in the absence of a reverse
stock split. In any event, other factors unrelated to the number of shares of our common stock outstanding, such as negative financial
or operational results, could adversely affect the market price of our common stock and jeopardize our ability to meet or maintain
The NASDAQ Capital Market&rsquo;s minimum bid price requirement. In addition to specific listing and maintenance standards, The
NASDAQ Capital Market has broad discretionary authority over the initial and continued listing of securities, which it could exercise
with respect to the listing of our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 33pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Even if the reverse stock
split increases the market price of our common stock, there can be no assurance that we will be able to comply with other continued
listing standards of The NASDAQ Capital Market.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Even if the market price of our
common stock increases sufficiently so that we comply with the minimum bid price requirement, we cannot assure you that we will
be able to comply with the other standards that we are required to meet in order to maintain a listing of our common stock on
The NASDAQ Capital Market. Our failure to meet these requirements may result in our common stock being delisted from The NASDAQ
Capital Market, irrespective of our compliance with the minimum bid price requirement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>The reverse stock split may
decrease the liquidity of the shares of our common stock.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The liquidity of the shares of our
common stock may be affected adversely by the reverse stock split given the reduced number of shares that will be outstanding
following the reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse
stock split. In addition, the reverse stock split may increase the number of stockholders who own odd lots (less than 100 shares)
of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares
and greater difficulty effecting such sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 33pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Following the reverse stock
split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may
not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Although we believe that a higher
market price of our common stock may help generate greater or broader investor interest, there can be no assurance that the reverse
stock split will result in a share price that will attract new investors, including institutional investors. In addition, there
can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a
result, the trading liquidity of our common stock may not necessarily improve.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">This prospectus contains forward-looking
statements. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets
or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our
current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that
could cause actual results and developments to differ materially from those expressed or implied in such statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In some cases, you can identify
forward-looking statements by terminology, such as &ldquo;expects&rdquo;, &ldquo;anticipates&rdquo;, &ldquo;intends&rdquo;, &ldquo;estimates&rdquo;,
&ldquo;plans&rdquo;, &ldquo;potential&rdquo;, &ldquo;possible&rdquo;, &ldquo;probable&rdquo;, &ldquo;believes&rdquo;, &ldquo;seeks&rdquo;,
&ldquo;may&rdquo;, &ldquo;will&rdquo;, &ldquo;should&rdquo;, &ldquo;could&rdquo; or the negative of such terms or other similar
expressions.&nbsp;Accordingly, these statements involve estimates, assumptions and uncertainties that could cause actual results
to differ materially from those expressed in them.&nbsp;Any forward-looking statements are qualified in their entirety by reference
to the factors discussed throughout this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">You should read this prospectus
and the documents that we reference herein and therein and have filed as exhibits to the registration statement, of which this
prospectus is part, completely and with the understanding that our actual future results may be materially different from what
we expect.&nbsp;You should assume that the information appearing in this prospectus is accurate as of the date on the front cover
of this prospectus only. Because the risk factors referred to above could cause actual results or outcomes to differ materially
from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any
forward-looking statements.&nbsp;These risks and uncertainties, along with others, are described above under the heading &ldquo;Risk
Factors&rdquo; beginning on page 7 of this prospectus. Further, any forward-looking statement speaks only as of the date on which
it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the
date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time,
and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on
our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. We qualify all of the information presented in this prospectus, and particularly
our forward-looking statements, by these cautionary statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">This prospectus also includes estimates
of market size and industry data that we obtained from industry publications and surveys and internal company sources. The industry
publications and surveys used by management to determine market size and industry data contained in this prospectus have been
obtained from sources believed to be reliable.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>USE OF PROCEEDS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We estimate that our net proceeds
from the sale of the common stock offered pursuant to this prospectus will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, or approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
million if the underwriters exercise in full their option to purchase &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; additional shares, based upon the public offering
price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share and after deducting the underwriting discount and the estimated offering expenses that are payable
by us.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 33pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We currently intend to use the net
proceeds that we receive in this offering as follows: (i) $3.6 million for working capital; (ii) $3.4 million for repayment of
our outstanding debt balance principal amount of debt held by non-affiliated parties, which will be due upon completion of this
offering (as set forth below), (iii) to pay interest of approximately $0.1 million, representing interest payable, (iv) $1.4 million
for aged accounts payable; (v) $6.0 million for inventory and related items; (vi) $2.0 million for international marketing development;
and (vii) and the remainder for general corporate purposes.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our outstanding indebtedness that
will be repaid is as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Principal
    Amount <BR>($000&rsquo;s)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Interest
    Rate <BR>(per annum)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maturity <BR>Date</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 20%; color: Black; text-align: right">1,703</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 20%; color: Black; text-align: right">15</TD><TD STYLE="width: 1%; color: Black; text-align: left">%</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 54%; color: Black; text-align: center">October 2013</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">270</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">12</TD><TD STYLE="color: Black; text-align: left">%</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: center">July 2013</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">401</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">15</TD><TD STYLE="color: Black; text-align: left">%</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: center">July 2013</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">451</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">15</TD><TD STYLE="color: Black; text-align: left">%</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: center">August 2013</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">200</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">15</TD><TD STYLE="color: Black; text-align: left">%</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: center">April 2013</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">158</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">15</TD><TD STYLE="color: Black; text-align: left">%</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: center">May 2013</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">117</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">15</TD><TD STYLE="color: Black; text-align: left">%</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: center">June 2013</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">40</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">15</TD><TD STYLE="color: Black; text-align: left">%</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: center">September 2013</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>PRICE RANGE
OF COMMON STOCK</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our shares of common stock were
cleared for trading under the symbol &ldquo;TTWZ:OB&rdquo; on the OTCBB on November 24, 2008, and later began trading on the OTCBB
under the symbol &ldquo;MSLP:OB&rdquo; on April 22, 2010. Prior to this period, there was minimal trading in our common stock.
The following table shows the reported high and low bid quotations per share for our common stock based on information provided
by the OTCBB. These prices reflect the expected 1-for-650 reverse stock split that we intend to effect prior to the date of this
prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="margin-left: 0.5in; border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">High</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Low</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: justify">2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: justify">Fourth Quarter (though October 25, 2012)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4.68</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2.93</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Third Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.25</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Second Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.80</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">First Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24.05</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.90</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: justify">2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Fourth Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.55</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Third Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25.35</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.10</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Second Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52.65</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.25</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">First Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.40</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: justify">2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Fourth Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">585.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32.50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Third Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">669.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">266.50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Second Quarter (beginning April 22, 2010)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">767.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">617.50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: justify"><FONT STYLE="color: black">First Quarter <SUP>(1)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-left: 0.5in; margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 20%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.5in"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: black"><SUP>(1)</SUP></FONT></TD><TD><FONT STYLE="color: black">Prior
                                                                                                        to April 22, 2010, our
                                                                                                        common stock was not traded
                                                                                                        on the OTCBB or any other
                                                                                                        exchange.</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">Quotations
on the OTCBB reflect bid and ask quotations, may reflect inter-dealer prices, without retail markup, markdown or commission,
and may not represent actual transactions. In periods prior to April 22, 2010, there was no volume in our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">As of October
25, 2012, there were approximately 420 holders of record of our common stock. This figure does not take into account those stockholders
whose certificates are held in street name by brokers and other nominees. We estimate that such holders number approximately 3,700.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>DIVIDEND
POLICY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We have never declared dividends
on our common stock, and currently do not plan to declare dividends on shares of our common stock in the foreseeable future. We
expect to retain our future earnings, if any, for use in the operation and expansion of our business. Subject to the foregoing,
the payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon
such factors as earnings levels, capital requirements, our overall financial condition and any other factors deemed relevant by
our board of directors.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;<B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>DILUTION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">If you invest in our common stock,
your interest will be immediately and substantially diluted to the extent of the difference between the public offering price
per share of our common stock and the pro forma net tangible book value per share of our common stock after giving effect to this
offering.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our pro forma net tangible book
value as of June 30, 2012 was $(&nbsp;&nbsp;&nbsp;&nbsp; ) or $( &nbsp;&nbsp;&nbsp;&nbsp;) per share of common stock, based upon [&nbsp;&nbsp; ] shares outstanding, after giving effect to
issuances of common stock from July 1, 2012 through and immediately prior to the date of this offering. After giving effect to
the sale of the&nbsp;shares in this offering at the assumed public offering price of $ per share, at June 30, 2012, after deducting
underwriting discounts and commissions and other estimated offering expenses payable by us, our pro forma as adjusted net tangible
book value at June 30, 2012 would have been approximately , or $ per share. This represents an immediate increase in pro forma
net tangible book value of approximately $ per share to our existing stockholders, and an immediate dilution of $&nbsp; &nbsp;
per share to investors purchasing&nbsp;shares in the offering.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Dilution in pro forma net tangible
book value per share represents the difference between the amount per share paid by purchasers of our common stock in this offering
and the pro forma net tangible book value per share of our common stock immediately after this offering.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The following table illustrates
the per share dilution to investors purchasing shares in the offering:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; color: Black; padding-bottom: 1pt">Assumed public offering price per share</TD><TD STYLE="width: 1%; color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; padding-bottom: 1pt; color: Black; text-align: right"></TD><TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; color: Black; text-align: right"></TD><TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; padding-bottom: 1pt; padding-left: 9pt">Pro forma net tangible book value per share as of June 30,
    2012</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left"><FONT STYLE="color: Black">$</font></TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(____</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-left: 9pt">Increase in net tangible book value per
    share attributable to this offering</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Pro forma as adjusted net tangible book value per share after
    this offering</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right"></TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">Dilution in pro forma net tangible book value per share
    to new investors</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="color: Black; text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="color: Black; text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The information above assumes that
the underwriters do not exercise their over-allotment option.&nbsp;If the underwriters exercise their over-allotment option in
full, the pro forma as adjusted net tangible book value will increase to $ per share, representing an immediate increase to existing
stockholders of $ per share and an immediate dilution of $ per share to new investors. If any shares are issued upon exercise
of outstanding options or warrants, new investors will experience further dilution.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;<B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>CAPITALIZATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The following table sets forth our
capitalization as of June 30, 2012:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">on
                                                                                                                            an
                                                                                                                            actual
                                                                                                                            basis;</FONT></TD></TR>                                                                                                                                          <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">on
                                                                                                                            a
                                                                                                                            pro
                                                                                                                            forma
                                                                                                                            basis
                                                                                                                            to
                                                                                                                            give
                                                                                                                            effect
                                                                                                                            to
                                                                                                                            the
                                                                                                                            issuance
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            from
                                                                                                                            July
                                                                                                                            1,
                                                                                                                            2012
                                                                                                                            through
                                                                                                                            and
                                                                                                                            immediately
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            the
                                                                                                                            date
                                                                                                                            of
                                                                                                                            this
                                                                                                                            prospectus;
                                                                                                                            and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">on
                                                                                                                            a
                                                                                                                            pro
                                                                                                                            forma,
                                                                                                                            as
                                                                                                                            adjusted
                                                                                                                            basis
                                                                                                                            to
                                                                                                                            give
                                                                                                                            effect
                                                                                                                            to
                                                                                                                            (i)
                                                                                                                            the
                                                                                                                            issuance
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            from
                                                                                                                            July
                                                                                                                            1,
                                                                                                                            2012
                                                                                                                            through
                                                                                                                            and
                                                                                                                            immediately
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            the
                                                                                                                            date
                                                                                                                            of
                                                                                                                            this
                                                                                                                            prospectus,
                                                                                                                            and
                                                                                                                            (ii)
                                                                                                                            the
                                                                                                                            sale
                                                                                                                            of
                                                                                                                            the&nbsp;shares
                                                                                                                            in
                                                                                                                            this
                                                                                                                            offering
                                                                                                                            at
                                                                                                                            the
                                                                                                                            assumed
                                                                                                                            public
                                                                                                                            offering
                                                                                                                            price
                                                                                                                            of
                                                                                                                            $
                                                                                                                            &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
                                                                                                                            share,
                                                                                                                            after
                                                                                                                            deducting
                                                                                                                            underwriting
                                                                                                                            discounts
                                                                                                                            and
                                                                                                                            commissions
                                                                                                                            and
                                                                                                                            other
                                                                                                                            estimated
                                                                                                                            offering
                                                                                                                            expenses
                                                                                                                            payable
                                                                                                                            by
                                                                                                                            us.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">You should consider this table in
conjunction with &ldquo;Use of Proceeds&rdquo;, &ldquo;Description of Securities&rdquo; and our financial statements and the notes
to those financial statements included elsewhere in this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-indent: 0">&nbsp;</TD><TD NOWRAP STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" NOWRAP STYLE="color: Black; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="color: Black"><B>As&nbsp;of&nbsp;June
    30, 2012 </B><SUP>(1)</SUP></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-indent: 0">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Actual</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Pro&nbsp;Forma</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Pro Forma
    <BR>As Adjusted</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-indent: 0">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="10" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">(unaudited)</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; color: Black; text-align: left; text-indent: 0">Stockholders&rsquo; equity (deficiency)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: Black; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: Black; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; text-indent: -9pt; padding-left: 9pt">Preferred stock, $0.001 par value, Series
    A Convertible Preferred Stock, 5,000,000 shares authorized, none issued and outstanding</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; text-indent: -9pt; padding-left: 9pt">Preferred stock, $0.001 par value, Series
    B Preferred Stock; 51 shares authorized, issued and outstanding</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; text-indent: -9pt; padding-left: 9pt">Preferred stock, $0.001 par value, Series
    C Convertible Preferred Stock; 500 shares authorized, 190 and none, respectively, issued and outstanding</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; text-indent: -9pt; padding-left: 9pt">Common stock, $0.001 par value, 3,846,153
    shares authorized, 2,179,394 and 2,138,730 issued and outstanding at June 30, 2012 actual; 3,527,178 and 3,486,514 issued
    and outstanding, June 30, 2012 pro forma; and [&nbsp;&nbsp;&nbsp; ] and [&nbsp;&nbsp; ] issued and outstanding, June 30, 2012 pro forma
    as adjusted</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">2,179</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">3,527</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; text-indent: 0; padding-left: 0.12in">Treasury Stock, at cost; 40,664 shares</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(460,978</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(460,978</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; text-indent: 0; padding-left: 0.12in">Additional paid-in capital</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">44,415,038</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">54,186,615</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; text-indent: 0; padding-left: 0.12in">Deficit accumulated during the development stage</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(55,010,071</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(60,584,476</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt; text-indent: 0; padding-left: 0.12in">Accumulated other comprehensive income</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">40,719</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">40,719</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt; text-indent: 0; padding-left: 0.12in">Total stockholders&rsquo; equity (deficiency)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(11,013,113</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(6,814,593</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right"><FONT STYLE="color: Black">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in; text-align: center"><FONT STYLE="color: Black">(1)</FONT></TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">The par value per share of our common stock will not change as a result of the expected 1-for-650
    reverse stock split.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>MANAGEMENT&rsquo;S
DISCUSSION AND ANALYSIS </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>The following discussion and
analysis should be read together with our financial statements and the related notes appearing elsewhere in this prospectus. This
discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See &ldquo;Cautionary
Note Regarding Forward-Looking Statements and Industry Data&rdquo; for a discussion of the uncertainties, risks and assumptions
associated with these statements. Actual results and the timing of events could differ materially from those discussed in our
forward-looking statements as a result of many factors, including those set forth under &ldquo;Risk Factors&rdquo; and elsewhere
in this prospectus. All share amounts and per share amounts in &ldquo;Management&rsquo;s Discussion and Analysis of Financial
Condition and Results of Operations&rdquo; reflect the expected 1-for-650 reverse stock split that we intend to effect prior to
offering these securities. </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B>Plan of
Operation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">We develop,
market and sell athlete-focused, high quality nutritional supplements primarily to specialty resellers. Our propriety and award
winning products address active lifestyles including muscle building, weight loss, and maintaining general fitness through a daily
nutritional supplement regimen. Our products are sold in over 110 countries and available in over 10,000 U.S. retail outlets,
including Dick&rsquo;s Sporting Goods, GNC, Vitamin Shoppe and Vitamin World. We also sell our products in over 100 online channels,
including bodybuilding.com, amazon.com, gnc.com and vitacost.com. Internationally, our nutritional supplements are sold in approximately
110 countries, and we expect that international sales will be a significant part of our sales for the foreseeable future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our primary growth strategy is to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.5pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: Black">(1)</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                  our product distribution and
                                                                                                  sales through increased market
                                                                                                  penetrations both domestically
                                                                                                  and internationally;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: Black">(2)</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                  our margins by focusing on streamlining
                                                                                                  our operations and seeking operating
                                                                                                  efficiencies in all areas of
                                                                                                  our operations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: Black">(3)</FONT></TD><TD><FONT STYLE="color: Black">continue
                                                                                                  to conduct additional testing
                                                                                                  of the safety and efficacy of
                                                                                                  our products and formulate new
                                                                                                  products; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: Black">(4)</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                  awareness of our products by
                                                                                                  increasing our marketing and
                                                                                                  branding opportunities through
                                                                                                  endorsements, sponsorships and
                                                                                                  brand extensions.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our core marketing strategy is to
brand MusclePharm as the &ldquo;must have&rdquo; fitness brand for workout enthusiasts and elite athletes. We seek to be known
as the athlete&rsquo;s company, run by athletes who create their products for other athletes both professional and otherwise.
We believe that our marketing mix of endorsers, sponsorships and providing sample products for our retail resellers to use is
an optimal strategy to increase sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Results of Operations</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Six months ended June 30,
2012 compared to the six months ended June 30, 2011.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six Months
    Ended June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; text-align: center">(unaudited)</TD><TD NOWRAP STYLE="color: Black">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; color: Black; text-align: left">Sales &ndash; net</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">31,990,020</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">6,431,678</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; padding-bottom: 1pt">Cost of sales</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">25,837,767</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">4,914,361</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Gross profit</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">6,152,253</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">1,517,317</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">General and administrative expenses</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">8,543,887</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">4,498,310</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Loss from operations</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(2,391,634</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(2,980,993</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">Other income (expense)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(7,461,755</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(9,467,552</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Net income (loss)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(9,853,389</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(12,448,545</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">Other comprehensive income</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">40,719</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">Total comprehensive income (loss)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(9,812,670</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(12,448,545</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Net loss per share &ndash; basic and diluted</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(4.92</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(46.41</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Weighted average number of common shares outstanding during the period &ndash;
    basic and diluted</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">2,001,880</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">268,254</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Sales</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Sales increased approximately $25.6
million or 397%, to approximately $32.0 million for the six months ended June 30, 2012, compared to approximately $6.4 million
for the six months ended June 30, 2011. The increase in sales was primarily attributable to increased brand awareness, and our
continued efforts to expand sales by adding more customers. We have focused on a marketing plan to penetrate the market. As such,
new promotional efforts have been made to increase sales by adding new customers and expanding our product line. We have continued
to add new products to meet our customer&rsquo;s needs. The inclusion of new gel squeeze tubes in various flavors has increased
sales and more customers are now adding the MusclePharm Musclegel&reg; to their shelf line. We have added new sales staff familiar
with international sales, and this effort is now beginning to show results through increased sales in the international markets.
Overall, as a direct result of our aggressive marketing plan, our products are currently being offered in more retail stores,
both domestic and international, and our products are receiving better shelf placement. All of these efforts resulted in increased
sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Cost of Sales</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Cost of sales for the six months
ended June 30, 2012, was approximately $25.8 million compared to approximately $4.9 million for the six months ended June 30,
2011, an increase of 526%. Cost of sales as a percent of revenue increased from 76% for the six months ended June 30, 2011 to
81% of revenue for the six months ended June 30, 2012. This increase was the result of adding Canadian shipping, and product cost
for the second quarter of 2012 that had not previously existed, and an overall increase in shipping costs. There was also a slight
increase in product damages in the six months ended June 30, 2012 compared to the six months ended June 30, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Gross Profit</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Gross profit for the six months
ended June 30, 2012 was approximately $6.2 million an increase of approximately $4.6 million over the six months ended June 30,
2011, or an increase of 282%. Meanwhile the gross profit percentage decreased to approximately 19% during the six months ended
June 30, 2012 from 24% for the six months ended June 30, 2011 mainly as a result of providing deeper discounts for customer&rsquo;s
purchases in the second quarter of the six months ended June 30, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>General and Administrative Expenses</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">General and administrative expenses
for the six months ended June 30, 2012, increased to approximately $8.5 million or approximately $4.0 million or 90%, compared
to the six months ended June 30, 2011. The increased sales for 2012 had corresponding increases in the general and administrative
expenses compared to the six months ended June 30, 2011, mainly for foreign transaction fees and Canadian operations, while the
general and administrative costs rose correspondingly to the increase in sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Other major increases were approximately
$1.8 million in advertising, $.9 million in increases for stock based compensation $.8 million in salaries and benefits, $.2 million
in travel, $.2 million in depreciation and $.1 million in office expenses.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Loss from Operations</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The loss from operations for the
six months ended June 30, 2012 was approximately $2.4 million as compared to a loss of approximately $2.98 million for the six
months ended June 30, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Other Expenses</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Other net expenses for the six months
ended June 30, 2012 were approximately $7.5 million compared to approximately $9.5 million for the six months ended June 30, 2011.
The components of other expenses are shown in the table below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 97%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six Months
    Ended June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; color: Black; text-align: left">Derivative expense</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: Black; text-align: right">(2,486,451</TD><TD STYLE="width: 1%; color: Black; text-align: left">)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: Black; text-align: right">(4,057,859</TD><TD STYLE="width: 1%; color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Change in fair value of derivative liabilities</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">1,496,874</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">634,770</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Loss on settlement of accounts payable and debt</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(2,941,826</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(2,542,073</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Interest expense</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(3,547,202</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(3,502,390</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Foreign currency transaction loss</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(1,573</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">Other income</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">18,423</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">Total other expense &ndash; net</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(7,461,755</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(9,467,552</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The decrease in this expense category
of approximately $2.0 million was mainly attributed to the changes in fair value of derivative contracts and derivative expense
approximately $2.4 million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Net Loss</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Net loss for the six months ended
June 30, 2012, was approximately $9.9 million, or $(4.92) per share compared to approximately $12.4 million or loss per share
of $(46.41) for the six months ended June 30, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Other Comprehensive Income</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We recognized approximately $.014
million of other comprehensive income related to translation adjustments for transactions entered into in Canadian Dollars and
translated to U.S. Dollars for the six months ended June 30, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Year ended December 31, 2011
compared to the year ended December 31, 2010. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended
    December 31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; color: Black; text-align: left">Sales &ndash; net</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">17,212,636</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">3,202,687</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; padding-bottom: 1pt">Cost of sales</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">14,845,069</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">2,804,274</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Gross profit</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">2,367,567</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">398,413</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">General and administrative expenses</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">18,587,727</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">18,650,249</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Loss from operations</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(16,220,160</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(18,251,836</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">Other income (expense)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(7,060,790</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">(1,317,501</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">Net income (loss)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(23,280,950</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Net loss per share &ndash; basic and diluted</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(53.76</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">(309.18</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">Weighted average number of common shares outstanding during
    the period &ndash; basic and diluted</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">433,053</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">63,295</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Revenues </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our net revenues were approximately
$17.2 million for the year ended December 31, 2011, compared approximately $3.2 million for the year ended December 31, 2010,
an increase of 531%. Sales during the year ended December 31, 2011 increased due to our increased advertising and promotion efforts,
as well as the change in our manufacturers, which provided more consistent shipments to customers. The sales increase was also
the result of the significant capital spent on marketing with distributors and marketing and brand recognition with endorsements
and sponsorships.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Cost of Sales</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Cost of sales for the year ended
December 31, 2011 was approximately $14.8 million or 86% of revenue, compared to approximately $2.8 million or 88% of revenue
for the year ended December 31, 2010. This slight decrease was due to efficiencies from the larger scale of our operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>General and Administrative Expenses</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Operating expenses for the year
ended December 31, 2011 decreased slightly to $18.6 million, compared to $18.7 million for the year ended December 31, 2010, due
primarily to an increase in stock based compensation of approximately $3.7 million, an increase in depreciation expense of approximately
$0.2 million and an increase in travel, meetings and entertainment of approximately $0.3 million due to our increased activity,
offset by a decrease in investment advisory services of approximately $2.4 million, a decrease in research and development costs
of approximately $1.2 million and the decrease of advertising expense of $0.9 million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Operating Loss</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Operating loss for the year ended
December 31, 2011 was approximately $16.2 million, compared to approximately $18.3 million for the year ended December 31, 2010.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Interest Expense</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Interest expense for the year ended
December 31, 2011 was approximately $3.7 million, compared to approximately $0.5 million for the year ended December 31, 2010,
due primarily to amortization of the debt discounts and debt issue costs in the year ended December 31, 2011 of $3.5 million and
approximately $0.2 million in interest charges incurred on our debt instruments in the year ended December 31, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Other Expenses</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Other expenses for the year ended
December 31, 2011 were approximately $7.0 million, compared to approximately $1.3 million for the year ended December 31, 2010,
an increase of 538%. The $5.7 million increase in other expenses was primarily due to an increase in derivative expense of approximately
$4.7 million, an increase in interest expense of approximately $3.2 million and increases in the losses on settlement of accounts
payable of approximately $3.4 million, offset by changes in the fair value of derivative liabilities of approximately $5.3 million
and licensing income of approximately $0.2 million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Net Loss</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Net loss for the year ended December
31, 2011 was approximately $23.3 million, or $(53.76) per share, compared to the net loss of approximately $19.6 million or $(309.18)
per share, for the year ended December 31, 2010. Inflation did not have a material impact on our operations for the years ended
December 31, 2011 and 2010.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Liquidity and Capital Resources
</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The following table summarizes total
current assets, liabilities and working capital deficit at June 30, 2012, compared to December 31, 2011:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At June
    30, 2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At December
    31, 2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Increase/(Decrease)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">(unaudited)</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; color: Black; text-align: left">Current Assets</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: Black; text-align: right">2,956,242</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: Black; text-align: right">4,016,833</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: Black; text-align: right">(1,060,591</TD><TD STYLE="width: 1%; color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Current Liabilities</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">15,624,259</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">17,710,100</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(2,085,841</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Working Capital (Deficit)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(12,668,017</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(13,693,267</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">1,025,250</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our primary source of operating
cash has been through the sale of equity and the issuance of convertible secured promissory notes and other short term debt as
discussed below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">At June 30, 2012, we had cash of
approximately $.3 million and working capital deficit of approximately $12.7 million compared to cash of approximately $.7 million
and a working capital deficit of approximately $13.7 million at December 31, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Cash provided by operating activities
was approximately $.4 million for the six months ended June 30, 2012, compared to cash used in operating activities of approximately
$2.6 million for the six months ended June 30, 2011. The increase of approximately $3.0 million for the six months ended June
30, 2012, compared to the six months ended June 30, 2011, was primarily due to increased payables and deferred revenues of approximately
$1.0 million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Cash used in investing activities
increased to approximately $.6 million from approximately $.3 million for the six months ended June 30, 2012 and 2011, due to
slightly higher spending on fixed assets. Future investments in property and equipment, as well as further development of our
Internet presence will largely depend on available capital resources.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Cash flows used in financing activities
were approximately $.3 million for the six months ended June 30, 2012, compared to cash flows provided by financing activities
of approximately $3.4 million for six months ended June 30, 2011. The approximately $3.7 million decrease was due to the approximately
$4.1 million increase in repayments of debt.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six Months
    Ended June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; font-weight: bold; text-align: justify">Cash Flows From Financing Activities</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; color: Black; text-align: left">Proceeds from issuance of debt</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">4,073,950</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">3,648,083</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black">Repayment of debt</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(4,058,442</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">Debt issuance costs</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(106,950</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(204,093</TD><TD STYLE="color: Black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Repurchase of common stock</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">(460,978</TD><TD STYLE="color: Black; text-align: left">)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">-</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">Proceeds from issuance of common stock and warrants</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">285,760</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net Cash (Used In) Provided By Financing
    Activities</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">(266,660</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">)</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">3,443,990</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Going Concern </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">As reflected in the accompanying
unaudited interim consolidated financial statements, we had a net loss of approximately $9.9 million for the six months ended
June 30, 2012, and had a working capital deficit and stockholders&rsquo; deficit of $12.7 million and approximately $11.0 million
at June 30, 2012 and 2011, respectively. These factors raise substantial doubt about our ability to continue as a going concern.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our<FONT STYLE="color: Black"> ability to continue
our operations is dependent on management&rsquo;s plans, which include the raising of capital through debt and/or equity markets
with some additional funding from other traditional financing sources, including term notes, sale of aged debt to third parties
in exchange for stock, until such time that funds provided by operations are sufficient to fund working capital requirements.
We may need to incur liabilities with certain related parties to sustain our existence.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We will require additional funding
to finance the growth of our current and expected future operations as well as to achieve our strategic objectives. We believe
our current available cash along with anticipated revenues will be insufficient to meet our cash needs for the near future. There
can be no assurance that financing will be available in amounts or terms acceptable to us, if at all.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We anticipate that the net proceeds
from this offering will fund our operations for approximately [ ] months.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In response to these capital issues,
management has taken the following actions:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">seeking
                                                                                                                            additional
                                                                                                                            third
                                                                                                                            party
                                                                                                                            debt
                                                                                                                            and/or
                                                                                                                            equity
                                                                                                                            financing;</FONT></TD></TR>                                                                                                                                                       <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">continue
                                                                                                                            with
                                                                                                                            the
                                                                                                                            implementation
                                                                                                                            of
                                                                                                                            the
                                                                                                                            business
                                                                                                                            plan;
                                                                                                                            and</FONT></TD></TR>                                                                                                                             <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">allocate
                                                                                                                            sufficient
                                                                                                                            resources
                                                                                                                            to
                                                                                                                            continue
                                                                                                                            with
                                                                                                                            advertising
                                                                                                                            and
                                                                                                                            marketing
                                                                                                                            efforts.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Financing </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our primary source of operating
cash has been through the sale of equity and the issuance of secured and unsecured promissory notes. We continue to explore potential
sales expansion opportunities in order to boost sales, while leveraging distribution systems to consolidate lower costs. We need
to continue to raise capital in order execute the business plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Off-Balance Sheet Arrangements
</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">In
                                                                                                                            August
                                                                                                                            2010,
                                                                                                                            we
                                                                                                                            leased
                                                                                                                            office
                                                                                                                            space
                                                                                                                            under
                                                                                                                            a
                                                                                                                            non-cancelable
                                                                                                                            operating
                                                                                                                            lease,
                                                                                                                            expiring
                                                                                                                            in
                                                                                                                            December
                                                                                                                            2015
                                                                                                                            for
                                                                                                                            our
                                                                                                                            headquarters
                                                                                                                            in
                                                                                                                            Denver,
                                                                                                                            Colorado.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">In
                                                                                                                            February
                                                                                                                            2012,
                                                                                                                            we
                                                                                                                            leased
                                                                                                                            office
                                                                                                                            space
                                                                                                                            under
                                                                                                                            a
                                                                                                                            non-cancelable
                                                                                                                            operating
                                                                                                                            lease,
                                                                                                                            expiring
                                                                                                                            in
                                                                                                                            February
                                                                                                                            2013
                                                                                                                            for
                                                                                                                            a
                                                                                                                            warehouse
                                                                                                                            in
                                                                                                                            Idaho.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">In
                                                                                                                            April
                                                                                                                            2012,
                                                                                                                            we
                                                                                                                            leased
                                                                                                                            office
                                                                                                                            space
                                                                                                                            under
                                                                                                                            a
                                                                                                                            non-cancelable
                                                                                                                            operating
                                                                                                                            lease,
                                                                                                                            expiring
                                                                                                                            in
                                                                                                                            March
                                                                                                                            2012
                                                                                                                            for
                                                                                                                            an
                                                                                                                            office
                                                                                                                            in
                                                                                                                            Canada.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">In
                                                                                                                            June
                                                                                                                            2012,
                                                                                                                            we
                                                                                                                            leased
                                                                                                                            office
                                                                                                                            space
                                                                                                                            under
                                                                                                                            a
                                                                                                                            non-cancelable
                                                                                                                            operating
                                                                                                                            lease,
                                                                                                                            beginning
                                                                                                                            in
                                                                                                                            July
                                                                                                                            2012
                                                                                                                            and
                                                                                                                            expiring
                                                                                                                            in
                                                                                                                            August
                                                                                                                            2015
                                                                                                                            for
                                                                                                                            a
                                                                                                                            Tennessee
                                                                                                                            warehouse.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Future minimum annual lease payments
for the above leases are approximately as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 55%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; color: Black; text-align: left">2012 (6 months)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; color: Black; text-align: right">157,000</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left">2013</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">375,000</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">2014</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">402,000</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt">2015</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">306,000</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 2.5pt">Total minimum lease payments</TD><TD STYLE="color: Black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: Black; text-align: right">1,240,000</TD><TD STYLE="padding-bottom: 2.5pt; color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B>&nbsp;&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B>Critical
Accounting Policies and Estimates</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly
from estimates.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Risks and Uncertainties </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We operate in an industry that is
subject to rapid change and intense competition. Our operations are subject to significant risk and uncertainties including financial,
operational, technological, regulatory and other risks, including the potential risk of business failure.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Principles of Consolidation </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">All intercompany accounts and transactions
have been eliminated in consolidation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Accounts Receivable and Allowance
for Doubtful Accounts </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Accounts receivable represents trade
obligations from customers that are subject to normal trade collection terms. The accounts receivable are sent directly to our
third party manufacturer and netted with any outstanding liabilities to the manufacturer. Liabilities to the manufacturer totaled
approximately $2.4 million at June 30, 2012, and are included in accounts payable and accrued liabilities. We periodically evaluate
the collectability of our accounts receivable and consider the need to establish an allowance for doubtful accounts based upon
historical collection experience and specific customer information. Accordingly, the actual amounts could vary from the recorded
allowances. There is also a review of customer discounts at the period end and an accrual made for discounts earned but not yet
received by quarter end.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Fair Value of Financial Instruments
</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We measure assets and liabilities
at fair value based on an expected exit price which represents the amount that would be received on the sale of an asset or paid
to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be
based on assumptions that market participants would use in pricing an asset or liability. We believe the authoritative guidance
on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis
whereby inputs, used in valuation techniques, are assigned a hierarchical level.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The following are the hierarchical
levels of inputs to measure fair value:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Level
                                                                                                                            1:
                                                                                                                            Observable
                                                                                                                            inputs
                                                                                                                            that
                                                                                                                            reflect
                                                                                                                            quoted
                                                                                                                            prices
                                                                                                                            (unadjusted)
                                                                                                                            for
                                                                                                                            identical
                                                                                                                            assets
                                                                                                                            or
                                                                                                                            liabilities
                                                                                                                            in
                                                                                                                            active
                                                                                                                            markets.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Level
                                                                                                                            2:
                                                                                                                            Inputs
                                                                                                                            reflect
                                                                                                                            quoted
                                                                                                                            prices
                                                                                                                            for
                                                                                                                            identical
                                                                                                                            assets
                                                                                                                            or
                                                                                                                            liabilities
                                                                                                                            in
                                                                                                                            markets
                                                                                                                            that
                                                                                                                            are
                                                                                                                            not
                                                                                                                            active;
                                                                                                                            quoted
                                                                                                                            prices
                                                                                                                            for
                                                                                                                            similar
                                                                                                                            assets
                                                                                                                            or
                                                                                                                            liabilities
                                                                                                                            in
                                                                                                                            active
                                                                                                                            markets;
                                                                                                                            inputs
                                                                                                                            other
                                                                                                                            than
                                                                                                                            quoted
                                                                                                                            prices
                                                                                                                            that
                                                                                                                            are
                                                                                                                            observable
                                                                                                                            for
                                                                                                                            the
                                                                                                                            assets
                                                                                                                            or
                                                                                                                            liabilities;
                                                                                                                            or
                                                                                                                            inputs
                                                                                                                            that
                                                                                                                            are
                                                                                                                            derived
                                                                                                                            principally
                                                                                                                            from
                                                                                                                            or
                                                                                                                            corroborated
                                                                                                                            by
                                                                                                                            observable
                                                                                                                            market
                                                                                                                            data
                                                                                                                            by
                                                                                                                            correlation
                                                                                                                            or
                                                                                                                            other
                                                                                                                            means.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Level
                                                                                                                            3:
                                                                                                                            Unobservable
                                                                                                                            inputs
                                                                                                                            reflecting
                                                                                                                            our
                                                                                                                            assumptions
                                                                                                                            incorporated
                                                                                                                            in
                                                                                                                            valuation
                                                                                                                            techniques
                                                                                                                            used
                                                                                                                            to
                                                                                                                            determine
                                                                                                                            fair
                                                                                                                            value.
                                                                                                                            These
                                                                                                                            assumptions
                                                                                                                            are
                                                                                                                            required
                                                                                                                            to
                                                                                                                            be
                                                                                                                            consistent
                                                                                                                            with
                                                                                                                            market
                                                                                                                            participant
                                                                                                                            assumptions
                                                                                                                            that
                                                                                                                            are
                                                                                                                            reasonably
                                                                                                                            available.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">The following are the major categories
of liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, using quoted prices in active
markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs
(Level 3):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">As of June 30, 2012</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center">As of December 31, 2011</TD><TD NOWRAP STYLE="color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%; color: Black; text-align: left">Derivative liabilities (Level 2)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 15%; color: Black; text-align: right">7,908,860</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 15%; color: Black; text-align: right">7,061,238</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our financial instruments consisted
primarily of accounts receivable, prepaids, accounts payable and accrued liabilities, debt and customer deposits. Our debt approximates
fair value based upon current borrowing rates available to us for debt with similar maturities. The carrying amounts of our financial
instruments generally approximated their fair values as of June 30, 2012 and December 31, 2011, respectively, due to the short-term
nature of these instruments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Revenue Recognition </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We record revenue when all of the
following have occurred: (1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered, (3) the
sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Depending on individual customer
agreements, sales are recognized either upon shipment of products to customers or upon delivery. For all of our Canadian sales,
which represented 2.0% and 0% of sales for the six month periods ended June 30, 2012 and 2011, respectively, and for one of our
largest domestic customers, which represented 11% and 11% of our sales for the six month periods ended June 30, 2012 and 2011,
respectively, and 11% of our sales for the six months ended June 30, 2012, revenue is recognized upon delivery.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We have determined that advertising
related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 (&ldquo;<I>Revenue Recognition&rdquo;
&ndash; Customer Payments and Incentives &ndash; Implementation Guidance and Illustrations)</I>. The guidance indicates that,
absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and
not expensing as advertising expense.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We record store support, giveaways,
sales allowances and discounts as a direct reduction of sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We have an informal seven day right
of return for our products. There were nominal returns for the year ended December 31, 2011 and for the three and six months ended
June 30, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Foreign Currency </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We began operations in Canada in
April 2012. The Canadian Dollar was determined to be the functional currency as the majority of the transactions related to the
day to day operations of the business are exchanged in Canadian Dollars. At the end of the period, the financial results of the
Canadian operation are translated into the United States Dollar, which is the reporting currency, and added to the U.S. operations
for consolidated company financial results. The revenue and expense items are translated using the average rate for the period
and the assets and liabilities at the end of period rate. Transactions that have completed the accounting cycle and resulted in
a gain or loss related to translation are recorded in realized gain or loss due to foreign currency translation under other income
expense on the income statement. Transactions that have not completed their accounting cycle but appear to have gain or loss due
to the translation process are recorded as unrealized gain or loss due to translation and held in the equity section on the balance
sheet until such date the accounting cycle of a transaction is complete and the actual realized gain or loss is recognized.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Accounts Receivable </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We perform ongoing evaluations of
our customers&rsquo; financial condition and generally do not require collateral. Our management reviews accounts receivable periodically
and reduces the carrying amount by a valuation allowance that reflects management&rsquo;s best estimate of amounts that may not
be collectible. Allowances, if any, for uncollectible accounts receivable are determined based upon information available and
historical experience.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Beneficial Conversion Feature
</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">For conventional convertible debt
where the rate of conversion is below market value, we record a &ldquo;beneficial conversion feature&rdquo; (&ldquo;BCF&rdquo;)
and related debt discount.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">When we record a BCF, the relative
fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is
amortized to interest expense over the life of the debt.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Derivative Liabilities </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Fair value accounting requires bifurcation
of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their
fair value for accounting purposes. In determining the appropriate fair value, we use the Black-Scholes option-pricing model.
In assessing the convertible debt instruments, our management determines if the convertible debt host instrument is conventional
convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered
conventional convertible debt, we continue our evaluation process of these instruments as derivative financial instruments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Once determined, derivative liabilities
are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded
in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative
instruments such as warrants, are also valued using the Black-Scholes option-pricing model.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Debt Issue Costs and Debt Discount
</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We may pay debt issue costs, and
record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over
the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized
amounts is immediately expensed.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Original Issue Discount </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">For certain convertible debt issued,
we provide the debt holder with an original issue discount. The original issue discount is recorded to debt discount and additional
paid in capital at an amount not to exceed gross proceeds raised, reducing the face amount of the debt and is amortized to interest
expense over the life of the debt.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Share-Based Payments </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Generally, all forms of share-based
payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their
fair value on the awards&rsquo; grant date, based on estimated number of awards that are ultimately expected to vest. Share-based
compensation awards issued to non- employees for services rendered are recorded at either the fair value of the services rendered
or the fair value of the share-based payment, whichever is more readily determinable.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>Recent Accounting Pronouncements
</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In May 2011, the Financial Accounting
Standards Board issued Accounting Standards Update (&ldquo;ASU&rdquo;) No. 2011-04 &ldquo;Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (&ldquo;GAAP&rdquo;) and International
Financial Reporting Standards (&ldquo;IFRS&rdquo;). ASU 2011-04 includes common requirements for measurement of and disclosure
about fair value between U.S. GAAP and IFRS. ASU 2011-04 requires reporting entities to disclose additional information for fair
value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU 2011-04 requires reporting entities
to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The
new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>BUSINESS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>General</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">MusclePharm Corporation, a Nevada
corporation (&ldquo;MusclePharm&rdquo;, the &ldquo;Company&rdquo;, &ldquo;we&rdquo;, &ldquo;us&rdquo;, or &ldquo;our&rdquo;) was
incorporated in the state of Nevada on August 4, 2006, under the name &ldquo;Tone in Twenty&rdquo; for the purpose of engaging
in the business of providing personal fitness training using isometric techniques. On February 18, 2010, Tone in Twenty acquired
all of the issued and outstanding equity and voting interests of Muscle Pharm, LLC, a Colorado limited liability company, in exchange
for 26,000,000 shares of its common stock. As a result of this transaction, Muscle Pharm, LLC became a wholly owned subsidiary
of Tone in Twenty, and Tone in Twenty changed its name to &ldquo;MusclePharm Corporation.&rdquo; Our principal executive offices
are located at 4721 Ironton Street, Building A, Denver, Colorado 80239 and our telephone number is (303) 396-6100.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We develop, market and sell athlete-focused,
high quality nutritional supplements primarily to specialty resellers. Our products have been formulated to enhance active fitness
regimens, including muscle building, weight loss and maintaining general fitness. Our nutritional supplements are available for
purchase in over 10,000 U.S. retail outlets, including Dick&rsquo;s Sporting Goods, GNC, Vitamin Shoppe and Vitamin World. We
also sell our products to over 100 online channels, including bodybuilding.com, amazon.com, gnc.com and vitacost.com. Internationally,
our nutritional supplements are sold in approximately 110 countries, and we expect that international sales will be a significant
portion of our sales for the foreseeable future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We started formulating our nutritional
supplements in 2008 for consumption by active individuals, high performance athletes and fitness enthusiasts. We launched our
sales and marketing programs in late 2008 through our internal sales executives and staff targeting specialty retail distributors.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We supply our nutritional supplements
to elite athletes on teams in the National Football League, Major League Baseball and the National Basketball Association, as
well as Ultimate Fighting Championship fighters. While these endorsers and professional sports teams use our products, no endorsement
by any of them as to the merits of the securities offered by this prospectus should be inferred.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our products were created through
our six-stage process using the expertise of distinguished nutritional scientists we have retained and they are typically field
tested using a pool of several elite athletes on various teams in the National Football League, Major League Baseball and National
Basketball Association, as well as Ultimate Fighting Championship fighters. We do not directly manufacturer or ship our products
to most of our customers. Rather, we outsource our manufacturing to non-affiliated third parties who fulfill our orders and ship
product directly to our customers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We have recently experienced significant
growth in our product sales. Our net sales for the years ended December 31, 2010 and 2011 were $3.2 million and $17.2 million,
respectively. Our net sales for the six months ended June 30, 2011 and 2012 were $6.4 million and $32.0 million, respectively.
Additionally, during the second quarter of 2012, we commenced operations in Ontario, Canada, through our subsidiary Canada MusclePharm
Enterprises Corp.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">At the 2012 Bodybuilding.com Supplement
Awards, we received three Awards of Excellence; we received (i) the &ldquo;Brand of the Year&rdquo; award, (ii) the &ldquo;Packaging
of the Year&rdquo; award, and (iii) the &ldquo;Pre-Workout Supplement of the Year&rdquo; award for Assault<SUP>TM</SUP>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our headquarters in Denver, Colorado
has a state-of-the-art over 30,300 square feet medical and clinical testing department, complete with equipment for measuring
and conducting athletic clinical studies and supporting athletes. Our medical and clinical professionals consist of several nationally
recognized medical doctors and nutritional experts who oversee our product research, formulation, efficacy analysis and testing.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Recent Developments &ndash; Conversion
of Warrants into Common Stock </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In late September 2012, we issued
670,364 shares of our common stock to several accredited investors pursuant to conversions of warrants to purchase an aggregate
of 946,438 shares of common stock of the Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">As a result of these warrant conversions
and other extinguishments of derivative liabilities during the quarter ended September 30, 2012, our pro forma adjusted capitalization
as of June 30, 2012 reflects a decrease in stockholders&rsquo; deficit from approximately $11,417,000 to approximately $6,815,000
and our derivative liabilities as of June 30, 2012 from approximately $7,909,000 to approximately $25,000. All of these stock
issuances, warrant conversions and extinguishments of derivative liabilities will be reflected in our financial statements as
of and for the three and nine months ended September 30, 2012.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Sales and Distribution</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We sell our products both domestically
and internationally. Domestically, we use three distribution systems:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: Black">1.</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                 sell our products domestically
                                                                                                 to several distributors who operate
                                                                                                 over 100 online channels. Approximately
                                                                                                 41% of our sales in 2011 were
                                                                                                 to a domestic internet website,
                                                                                                 bodybuilding.com, a leading online
                                                                                                 retailer of sports nutrition
                                                                                                 products in the United States.
                                                                                                 As of October 18, 2012, we had
                                                                                                 the second best-selling brand
                                                                                                 on bodybuilding.com for 2012
                                                                                                 to date and had two products
                                                                                                 in top ten best sellers, and
                                                                                                 eight products in the top 50
                                                                                                 selling products out of over
                                                                                                 8,000 stock keeping units (&ldquo;sku&rsquo;s&rdquo;)
                                                                                                 from over 500 companies.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: Black">2.</FONT></TD><TD><FONT STYLE="color: Black">We
                                                                                                 sell through traditional brick
                                                                                                 and mortar stores, and our products
                                                                                                 are carried in Dick&rsquo;s Sporting
                                                                                                 Goods, GNC stores, Vitamin Shoppe
                                                                                                 outlets and Vitamin World retail
                                                                                                 stores.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: Black">3.</FONT></TD><TD><FONT STYLE="color: Black">Our
                                                                                                 regional sales teams throughout
                                                                                                 the United States support our
                                                                                                 wholesale distributors such as
                                                                                                 Europa Sports Products, selling
                                                                                                 in up to 10,000 smaller domestic
                                                                                                 retail or regional stores. We
                                                                                                 also work with other distributors
                                                                                                 who have placed our products
                                                                                                 in smaller retail stores and
                                                                                                 gyms across the United States.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Internationally, we are continuing
our sales expansion in Latin America, the Middle East, Europe, Russia, and the UK, and using Sportika Export as our international
distributor that services approximately 110 countries. In addition, we recently launched a corporate partnership with a division
of Eurpac Services, Inc. to distribute our supplements to approximately 130 U.S. military bases and 360 military stores throughout
the world. We expect that international sales will represent a significant portion of our sales for 2012 and thereafter.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Our Growth Strategy</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our primary growth strategy is to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                                        our product
                                                                                                                        distribution
                                                                                                                        and sales
                                                                                                                        through
                                                                                                                        increased
                                                                                                                        market
                                                                                                                        penetrations
                                                                                                                        both domestically
                                                                                                                        and internationally;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                                        our margins
                                                                                                                        by focusing
                                                                                                                        on streamlining
                                                                                                                        our operations
                                                                                                                        and seeking
                                                                                                                        operating
                                                                                                                        efficiencies
                                                                                                                        in all
                                                                                                                        areas
                                                                                                                        of our
                                                                                                                        operations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">continue
                                                                                                                        to conduct
                                                                                                                        additional
                                                                                                                        testing
                                                                                                                        of the
                                                                                                                        safety
                                                                                                                        and efficacy
                                                                                                                        of our
                                                                                                                        products
                                                                                                                        and formulate
                                                                                                                        new products;
                                                                                                                        and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">increase
                                                                                                                        awareness
                                                                                                                        of our
                                                                                                                        products
                                                                                                                        by increasing
                                                                                                                        our marketing
                                                                                                                        and branding
                                                                                                                        opportunities
                                                                                                                        through
                                                                                                                        endorsements,
                                                                                                                        sponsorships
                                                                                                                        and brand
                                                                                                                        extensions.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Core Marketing Strategy</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Our core marketing strategy is to
brand MusclePharm as the &ldquo;must have&rdquo; fitness brand for workout enthusiasts and elite athletes. We seek to be known
as the athlete&rsquo;s company, run by athletes who create their products for other athletes both professional and otherwise.
We believe that our marketing mix of endorsers, sponsorships and providing sample products for our retail resellers to use is
an optimal strategy to increase sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Sponsorships and Promotions</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In 2011, we became the official
supplement provider and sponsor of the Ultimate Fighting Championship, or UFC. Our sponsorship includes prominent logo placement
on the fighting mat, and our branding can be seen on FOX Television Stations, FX Networks, FUEL TV and Pay-Per-View television
worldwide. The UFC fighters we sponsor feature our brand on their uniforms and we also extensively advertise at the UFC events.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We are also currently engaged in
various in-store promotions, including point-of-purchase stands, aisle displays in retail outlets, as well as sample demonstrations
in Dick&rsquo;s Sporting Goods, GNC, Vitamin World and Vitamin Shoppe.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In 2011, we launched an advanced
website in seeking to tap into the social networking world and to further our brand and consumer awareness. The information in
our website is not part of this prospectus. We have included our website address as a factual reference and do not intend it to
be an active link to our website. Also, we currently have over 250,000 fans combined between our company and executive officer
Facebook and Twitter accounts.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Industry Overview</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">We operate
within the large and growing U.S. nutritional supplements industry. According to Nutrition Business Journal&rsquo;s 2012 Supplement
Business Report, our industry generated over $30 billion in sales in 2011 and $28.1 billion in 2010, and is projected to grow
at an average annual rate of approximately 6.0% through 2020.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">According to Nutrition Business
Journal, sports nutrition products represented approximately 12% of the total sales in the U.S. nutritional supplements industry
in 2011, and the category is expected to grow at a 9.1% compound annual growth rate (or CAGR) from 2012 to 2020, representing
the fastest growing product category in the nutritional supplements industry.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We believe there are several key
demographic, healthcare and lifestyle trends driving the continued growth of our industry. These trends include:</FONT></P>

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<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Increasing
                                                                                                                        awareness
                                                                                                                        of nutritional
                                                                                                                        supplements
                                                                                                                        across
                                                                                                                        major
                                                                                                                        age and
                                                                                                                        lifestyle
                                                                                                                        segments
                                                                                                                        of the
                                                                                                                        U.S. population.
                                                                                                                        We believe
                                                                                                                        that awareness
                                                                                                                        of the
                                                                                                                        benefits
                                                                                                                        of nutritional
                                                                                                                        supplements
                                                                                                                        is growing
                                                                                                                        among
                                                                                                                        active,
                                                                                                                        younger
                                                                                                                        populations,
                                                                                                                        providing
                                                                                                                        the foundation
                                                                                                                        for our
                                                                                                                        future
                                                                                                                        consumer
                                                                                                                        base.
                                                                                                                        In addition,
                                                                                                                        the average
                                                                                                                        age of
                                                                                                                        the U.S.
                                                                                                                        population
                                                                                                                        is increasing
                                                                                                                        and data
                                                                                                                        from the
                                                                                                                        United
                                                                                                                        States
                                                                                                                        Census
                                                                                                                        Bureau
                                                                                                                        indicates
                                                                                                                        that the
                                                                                                                        number
                                                                                                                        of Americans
                                                                                                                        age 65
                                                                                                                        or older
                                                                                                                        is expected
                                                                                                                        to increase
                                                                                                                        by approximately
                                                                                                                        36% from
                                                                                                                        2010 to
                                                                                                                        2020.
                                                                                                                        We believe
                                                                                                                        that these
                                                                                                                        consumers
                                                                                                                        are likely
                                                                                                                        to increasingly
                                                                                                                        use nutritional
                                                                                                                        supplements
                                                                                                                        and generally
                                                                                                                        have higher
                                                                                                                        levels
                                                                                                                        of disposable
                                                                                                                        income
                                                                                                                        to pursue
                                                                                                                        healthier
                                                                                                                        lifestyles.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Increased
                                                                                                                        focus
                                                                                                                        on fitness
                                                                                                                        and healthy
                                                                                                                        living.
                                                                                                                        We believe
                                                                                                                        that consumers
                                                                                                                        are trying
                                                                                                                        to lead
                                                                                                                        more active
                                                                                                                        lifestyles
                                                                                                                        and become
                                                                                                                        increasingly
                                                                                                                        focused
                                                                                                                        on healthy
                                                                                                                        living,
                                                                                                                        nutritional
                                                                                                                        and supplemental.
                                                                                                                        According
                                                                                                                        to the
                                                                                                                        Nutrition
                                                                                                                        Business
                                                                                                                        Journal&rsquo;s
                                                                                                                        2012 Supplement
                                                                                                                        Business
                                                                                                                        Report,
                                                                                                                        20% of
                                                                                                                        the U.S.
                                                                                                                        adult
                                                                                                                        population
                                                                                                                        (or 47
                                                                                                                        million
                                                                                                                        people)
                                                                                                                        were regular
                                                                                                                        or heavy
                                                                                                                        users
                                                                                                                        of vitamins
                                                                                                                        in 2011.
                                                                                                                        We believe
                                                                                                                        that growth
                                                                                                                        in our
                                                                                                                        industry
                                                                                                                        will continue
                                                                                                                        to be
                                                                                                                        driven
                                                                                                                        by consumers
                                                                                                                        who increasingly
                                                                                                                        embrace
                                                                                                                        health
                                                                                                                        and wellness
                                                                                                                        as an
                                                                                                                        important
                                                                                                                        part of
                                                                                                                        their
                                                                                                                        lifestyles.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Participants in our industry include
specialty retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations, online retailers, mail-order
companies and a variety of other small participants. The nutritional supplements sold through these channels are divided into
four major product categories: vitamins, minerals and health supplements; sports nutrition products; diet products; and other
wellness products. Most supermarkets, drugstores and mass merchants have narrow nutrition supplement product offerings limited
primarily to simple vitamins and herbs, with less knowledgeable sales associates than specialty retailers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B>Our Products</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We currently offer 20 athlete-focused,
high quality nutritional supplement products. None of our products are formulated to contain substances that have been the subject
of publicized health concerns by the medical community such as ephedra, androstene, androstenedione, aspartame, steroids or human
growth hormones. Our products are comprised of amino acids, herbs and proteins tested by our recognized scientists, and intended
to be safe and effective for the overall health of athletes. Moreover, our nutritional supplements are intended to enhance the
effects of workouts, repair muscles, and nourish the human body for optimal physical fitness. The following is a brief description
of our current products:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 22%; border-bottom: windowtext 1pt solid; font-weight: bold">Product Name</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 76%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Description and/or Intended Benefits</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Amino1<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Hydration sports recovery drink with amino acids, coconut water powder and electrolytes</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Armor-V<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Advanced multi-vitamin complex; multiple vitamins and minerals along with immune system support</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Assault<SUP>TM</SUP> </FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Fuel power for long-lasting energy to enhance focus and build lean muscle mass</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Battle Fuel<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Herbal formula to increase aggression and boost testosterone</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">BCAA<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Promote muscle development and maintenance through several amino acid complexes</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Bizzy Diet Stack<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Diet supplement stack</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Bullet Proof<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Promote deep sleep; optimize recovery; and stimulate growth hormone/testosterone output</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Casein</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Slow digesting protein with added digestive enzymes and pro-biotic blend</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">CLA Core<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Support body composition, aid in weight loss and increase metabolic rates</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Combat Powder<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>High protein supplement; enhance digestion of nutrients and maximize response to intense training</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Creatine</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Promote strength, power and endurance</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Fish Oil</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Blend of nutritional oils</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">GetSwole Stack<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Lean muscle mass combined products</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Glutamine</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Assist in recovery time, enhance muscle growth</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Hybrid N.O.<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Increase muscle fullness</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Live Shredded Stack<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Support lean muscle mass maintenance</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">MusclePharm Musclegel<SUP>&reg;</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Protein and nutrition supplement, contains several different proteins</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">Re-Con<SUP>&reg;</SUP> </FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Promote post-workout growth and repair; replenish nutrients</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">MusclePharm Shred Matrix<SUP>&reg;</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Multi-level weight-loss system; increase metabolism, suppress hunger, burn fat</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: black">ZMA Max<SUP>TM</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>Mineral support formula to increase testosterone and support deep sleep and healthy libido function</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>MusclePharm Apparel </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We granted an exclusive indefinite
license to market, manufacture, design and sell our existing apparel line. The licensee paid an initial fee of $250,000 in June,
2011 and will pay us a 10% net royalty based on the licensee&rsquo;s net income at the end of each fiscal year. As of June 30,
2012, we had not earned any royalty revenue under this licensing arrangement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Quality in Our Products </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">In seeking quality in our products,
we require that before a product is brought to market, all:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">supplements
                                                                                                                        are supported
                                                                                                                        with publicly
                                                                                                                        available
                                                                                                                        scientific
                                                                                                                        research
                                                                                                                        and references;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.2in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                                        manufacturers
                                                                                                                        carry
                                                                                                                        applicable
                                                                                                                        manufacturing
                                                                                                                        licenses;</FONT></TD></TR></TABLE>

<P STYLE="margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>ingredients are combined so that their effectiveness is not impaired;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.35in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>ingredients are in dosage levels that fall within tolerable upper intake levels established for healthy people by the Institute
of Medicine of the National Academies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.35in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>products do not contain any substances banned by major sporting organizations such as the World Anti-Doping Agent, or WADA,
NFL or MLB, or adulterated ingredients such as ephedra, androstenedione, aspartame, steroids or human growth hormones;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.35in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>formulations have a minimum two-year shelf life; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.35in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.1in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>tablets, capsules and soft gels are designed to readily dissolve in the body to facilitate absorption.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Future Products</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: yellow"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">New products are derived from a number of sources, including
our management, trade publications, scientific and health journals, consultants and distributors. Prior to introducing new products,
we investigate product formulations as they relate to regulatory compliance and other issues. We expect to formulate between 10
to 20 new products within the next 12 to 18 months after the date of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Research and Development</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each of our products is the end result of a six stage process
involving recognized nutrition scientists, doctors and professional athletes. Our expenses for research and development for the
years ended December 31, 2010 and 2011, were approximately $1.3 million and $.1 million, respectively, and $.1 million for the
six months ended June 30, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Management Information, Internet and Telecommunication Systems
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The ability to efficiently manage distribution, compensation,
inventory control, and communication functions through the use of sophisticated and dependable information processing systems is
critical to our success.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We continue to invest in applications and integrations to improve
and optimize business processes and to increase performance company wide.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Product Returns </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We provide an informal seven day right of return for our products.
Historically, product returns as a percentage of our net sales have been nominal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Trademarks and Patents</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We regard our trademarks and other proprietary rights as valuable
assets and believe that protecting our key trademarks is crucial to our business strategy of building strong brand name recognition.
These trademarks are crucial elements of our business, and have significant value in the marketing of our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our policy is to pursue registrations for all of the trademarks
associated with our products. Federally registered trademarks have a perpetual life, provided that they are maintained and renewed
on a timely basis and used correctly as trademarks, subject to the rights of third parties to attempt to cancel a trademark if
priority is claimed or there is confusion of usage. We rely on common law trademark rights to protect our unregistered trademarks.
Common law trademark rights generally are limited to the geographic area in which the trademark is actually used, while a United
States federal registration of a trademark enables the registrant to stop the unauthorized use of the trademark by any third party
anywhere in the United States. Furthermore, the protection available, if any, in foreign jurisdictions may not be as extensive
as the protection available to us in the United States.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although we seek to ensure that we do not infringe on the intellectual
property rights of others, there can be no assurance that third parties will not assert intellectual property infringement claims
against us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have obtained U.S. registration on trademarks for 20 of our
products. We have abandoned or not pursued efforts to register marks identifying other items in our product line for various reasons
including the inability of some names to qualify for registration. We also received federal trademark registration for 20 names
or expressions that we use or intend to use to distinguish ourselves from others. All trademark registrations are protected for
an initial period of five years and then are renewable after five years if still in use and every 10 years thereafter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have filed for a provisional patent to protect technology
used in certain of our products, including MusclePharm Musclegel&reg; and Re-Con&reg;. The patent was filed in the United States
as a Patent Cooperation Treaty (PCT) application to secure patent protection worldwide. We currently expect the International Search
Report (ISR)/Written Opinion to issue in December 2012 and publication at the International Bureau in February 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We also have filed for protection of various marks throughout
the world and are committed to a significant long-term strategy to build and protect the MusclePharm brand globally. The &ldquo;MusclePharm&rdquo;
mark is pending registration in 14 countries. The mark has been granted final trademark registration in three countries, and we
believe the remaining registrations will be granted within the next several months.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The &ldquo;MP&rdquo; logo has been filed and registration granted
in one country. The application for protection of the logo is expected to be filed in the near future in 26 additional countries.
Going forward, we expect to seek trademark registration for our best-selling international products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Competition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We compete with many companies engaged in selling nutritional
supplements. The sports nutrition business is highly competitive. Most of our competitors have significantly more financial and
human resources than we do, and have operating histories longer than ours. We seek to differentiate our products and marketing
from our competitors based on our product quality, the use of sports celebrity endorsers and through our marketing program. Competition
is based primarily on quality and assortment of products, marketing support, and availability of new products. Currently, our main
competitors are three private companies: Optimum Nutrition, Inc., or Optimum, Iovate Health Sciences, Inc., or IHS, and Bio-Engineered
Supplements and Nutrition, Inc., or BSN. Optimum is a wholly owned subsidiary of Glanbia Nutritionals, Inc., an international nutritional
ingredients group. Optimum owns and operates two brands of nutritional supplements (Optimum Nutrition and American Body Building),
providing a line of products across multiple categories. IHS is a nutritional supplement company that delivers a range of products
to the nutritional marketplace. Headquartered in Oakville, Ontario, Canada, IHS&rsquo;s line of products can be found in major
retail stores and include such brands as Hydroxy-Cut&trade;, Cell-Tech&trade;, Six Star Nutrition&trade;. BSN is also a sports
nutrition leader whose top products include No-Explode&trade; and Syntha Six Protein&trade;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The retail market for nutritional supplements is characterized
by a few dominant national companies, including GNC, Vitamin World, Vitamin Shoppe, and Great Earth Vitamin Stores. Others have
a presence within local markets, such as Vitamin Cottage in Denver, Colorado. Four companies dominate the online channel&mdash;bodybuilding.com,
vitamins.com (owned by Puritan&rsquo;s Pride), GNC.com and vitaminshoppe.com, the latter two having retail sales locations as well.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Major competitors in the sports nutrition and weight-loss markets
consist of companies such as EAS, Inc., Weider Nutrition International, Inc. and Twinlab Corporation, which dominate the market
with such products as Myoplex (EAS), Body Shaper (Weider) and Ripped Fuel (Twinlab).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We also compete with a number of large direct selling firms
selling nutritional, diet, health, personal care and environmental products, and numerous small competitors. The principal direct
selling competitors are Amway Corporation, Nature&rsquo;s Bounty, Inc., Sunrider Corporation, New Vision USA, Inc., Herbalife International
of America, Inc., USANA, Inc., and Melaleuca, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We intend to compete by aggressively marketing our brand, emphasizing
our relationships with professional athletes, and maximizing our relationships with those athletes, retail outlets and industry
publications that align with our vision.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our Manufacturers </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are committed to producing and selling highly efficacious
products that are trusted for their quality and safety. To date, our products have been outsourced to a third party manufacturer
where the products are manufactured in full compliance with the current good manufacturing practice, or cGMP, standards set by
the U.S. Food and Drug Administration, or FDA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We use four non-affiliated principal manufacturers for the components
of our products, and multiple vendors for packaging and labeling. We have an agreement in place with our primary manufacturer.
This agreement was designed to support our growth and ensure consistence in production and quality. Our primary manufacturer purchases
all needed raw materials from suppliers. Additionally, our primary manufacturer is responsible for acquisition and storage of all
product inventory (at both on and off-site facilities). We do not take title to our products until time of shipment to retailers.
The three non-primary manufacturers are governed by purchase order terms and can be terminated at any time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our relationship with any of our manufactures may be terminated
upon proper notice. We have established relationships with other manufacturers that we believe can satisfy our needs if our relationship
with any manufacturer terminates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Product Delivery </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">All of our products are shipped by our manufacturers directly
to our retailers. Our manufacturers collect sales tax on products based upon the address of the consumer to whom products are sent
regardless of how the order is placed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Regulatory Matters</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Government Regulation and Statutes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Product Regulation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Domestic</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The manufacture, packaging, labeling, advertising, promotion,
distribution and sale of our products are subject to regulation by one or more federal agencies, including the FDA, Consumer Product
Safety Commission, or CPSC, and the U.S. Department of Agriculture, or USDA. Advertising and other forms of promotion and methods
of marketing are subject to regulation primarily by the U.S. Federal Trade Commission, or FTC, which regulates these activities
under the Federal Trade Commission Act, or FTCA. The foregoing matters regarding our products are also regulated by various state
and local agencies as well as those of each foreign country to which we distribute our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">The Dietary Supplement Health and
Education Act of 1994, or DSHEA, amended the Federal Food, Drug, and Cosmetic Act, or FFDC Act, to establish a new framework </FONT>governing
the composition, safety, labeling, manufacturing and marketing of dietary supplements.<FONT STYLE="color: black"> All of the products
we market are regulated as dietary supplements under the FFDC Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Generally, under the FFDC Act, dietary ingredients that were
marketed in the United States prior to October 15, 1994 may be used in dietary supplements without notifying the FDA. &ldquo;New&rdquo;
dietary ingredients (i.e., dietary ingredients that were &ldquo;not marketed in the United States before October 15, 1994&rdquo;)
must be the subject of a new dietary ingredient notification submitted to the FDA unless the ingredient has been &ldquo;present
in the food supply as an article used for food&rdquo; without being &ldquo;chemically altered&rdquo;. A new dietary ingredient
notification must provide the FDA with evidence of a &ldquo;history of use or other evidence of safety&rdquo; establishing that
use of the dietary ingredient &ldquo;will reasonably be expected to be safe&rdquo;. A new dietary ingredient notification must
be submitted to the FDA at least 75 days before it is initially marketed. The FDA may determine that a new dietary ingredient notification
does not provide an adequate basis to conclude that the ingredient is reasonably expected to be safe. Such a determination could
prevent the marketing of the dietary ingredient. The FDA recently issued draft guidance governing the notification for new dietary
ingredients. Although FDA guidance is not mandatory, and companies are free to use an alternative approach if the approach satisfies
the requirements of applicable laws and regulations, FDA guidance is a strong indication of the FDA&rsquo;s &ldquo;current thinking&rdquo;
on the topic discussed in the guidance, including its position on enforcement. At this time, it is difficult to determine whether
the draft guidance, if finalized, would have a material impact on our operations. However, if the FDA were to enforce the applicable
statutes and regulations in accordance with the draft guidance as written, this manner of enforcement could require us to incur
additional expenses, which could be significant, and negatively impact our business in several ways, including, but not limited
to, enjoining the manufacturing of our products until the FDA determines that we are in compliance and can resume manufacturing,
which could increase our liability and reduce our growth prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Dietary Supplement Labeling Act of 2011, which was introduced
in July 2011 (S1310), would amend the FFDC Act to, among other things, (i) require dietary supplement manufacturers to register
the dietary supplements that they manufacture with the FDA (and provide a list of the ingredients in and copies of the labels and
labeling of the supplements), (ii) mandate the FDA and the Institute of Medicine (a non-governmental, nonprofit organization that
provides advice to the public and decision makers, such as the FDA, concerning health issues) to identify dietary ingredients that
cause potentially serious adverse effects, (iii) require warning statements for dietary supplements containing potentially unsafe
ingredients and (iv) require that the FDA define the term &ldquo;conventional food&rdquo;. If the bill is reintroduced and enacted,
it could restrict the number of dietary supplements available for sale, increase our costs, liabilities and potential penalties
associated with manufacturing and selling dietary supplements, and reduce our growth prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Dietary Supplement Safety Act (S3002) was introduced in
February 2010 and would repeal the provision of DSHEA that permits the sale of all dietary ingredients sold in dietary supplements
marketed in the United States prior to October 15, 1994, and instead permit the sale of only those dietary ingredients included
on a list of Accepted Dietary Ingredients to be issued and maintained by the FDA. The bill also would allow the FDA to: impose
a fine of twice the gross profits earned by a distributor on sales of any dietary supplement found to violate the law; require
a distributor to submit a yearly report on all non-serious adverse event reports received during the year to the FDA; and allow
the FDA to recall any dietary supplement it determines with &ldquo;a reasonable probability&rdquo; would cause serious adverse
health consequences or is adulterated or misbranded. The bill also would require any dietary supplement distributor to register
with the FDA and submit a list of the ingredients in and copies of the labels of its dietary supplements to the FDA and thereafter
update such disclosures yearly and submit any new dietary supplement product labels to the FDA before marketing any dietary supplement
product. If this bill is reintroduced and enacted, it could severely restrict the number of dietary supplements available for sale
and increase our costs and potential penalties associated with selling dietary supplements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The FDA or other agencies could take actions against products
or product ingredients that in its determination present an unreasonable health risk to consumers that would make it illegal for
us to sell such products. In addition, the FDA could issue consumer warnings with respect to the products or ingredients in such
products at the point they are sold to end users. Such actions or warnings could be based on information received through FFDC
Act-mandated reporting of serious adverse events. The FDA in recent years has applied these procedures to require that consumers
be warned to stop using certain dietary supplements. For businesses that have been subjected to these regulatory actions, sales
have been reduced and the businesses have been required to pay refunds for recalled products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In general, we seek representations and warranties, indemnification
and/or insurance from our vendors. However, even with adequate insurance and indemnification, any claims of non-compliance could
significantly damage our reputation and consumer confidence in our products. In addition, the failure of such products to comply
with applicable regulatory and legislative requirements could prevent us from marketing the products or require us to recall or
remove such products from the market, which in certain cases could materially and adversely affect our business, financial condition
and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">Under the current provisions of the
FFDC Act, there are four categories of claims that pertain to the regulation of dietary supplements. First are health claims that
describe the relationship between a nutrient or dietary ingredient and a disease or health related condition and can be made on
the labeling of dietary supplements if supported by significant scientific agreement and authorized by the FDA in advance via notice
and comment rulemaking. Second are nutrient content claims which describe the nutritional value of the product and may be made
if defined by the FDA through notice and comment rulemaking and if one serving of the product meets the definition. Third are statements
of nutritional support or product performance. </FONT>The FFDC Act permits &ldquo;statements of nutritional support&rdquo; to be
included in labeling for dietary supplements without FDA pre-market approval. These statements must be submitted to the FDA within
30 days of marketing and may describe how a particular dietary ingredient affects the structure, function or general well-being
of the body, or the mechanism of action by which a dietary ingredient may affect body structure, function or well-being, but may
not expressly or implicitly represent that a dietary supplement will diagnose, cure, mitigate, treat or prevent a disease. A company
that uses a statement of nutritional support in labeling must possess scientific evidence substantiating that the statement is
truthful and not misleading.<FONT STYLE="color: black"> The fourth category are drug claims, representations that a product is
intended to diagnose, mitigate, treat, cure or prevent a disease, are prohibited from use in the labeling of dietary supplements,
and we make no drug claims regarding our products. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">We may make claims for our dietary
supplement products regarding three of the four categories, that are statements of nutritional support, health claims and nutrient
content claims when authorized by the FDA, or that otherwise are allowed by law. The FDA&rsquo;s interpretation of what constitutes
an acceptable statement of nutritional support may change in the future, thereby requiring that we revise our labeling. These regulatory
activities include those discussed above concerning products marketed before October 15, 1994 or afterwards, and the requirements
of 75 days advance notice to the FDA before marketing products containing new dietary ingredients. There is no assurance that the
FDA will accept the evidence of safety for any new dietary ingredients that we may wish to market, and the FDA&rsquo;s refusal
to accept that evidence could prevent the marketing of the new dietary ingredients and dietary supplements containing a new dietary
ingredient.</FONT> If the FDA determines that a particular statement of nutritional support is an unacceptable drug claim, conventional
food claim or an unauthorized version of a &ldquo;health claim&rdquo;, or, if the FDA determines that a particular claim is not
adequately supported by existing scientific data or is false or misleading, we would be prevented from using the claim.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, DSHEA provides that so-called &ldquo;third-party
literature&rdquo;, e.g., a reprint of a peer-reviewed scientific publication linking a particular dietary ingredient with health
benefits, may be used &ldquo;in connection with the sale of a dietary supplement to consumers&rdquo; without the literature being
subject to regulation as labeling. The literature: (1) must not be false or misleading; (2) may not &ldquo;promote&rdquo; a particular
manufacturer or brand of dietary supplement; (3) must present a balanced view of the available scientific information on the subject
matter; (4) if displayed in an establishment, must be physically separate from the dietary supplements; and (5) should not have
appended to it any information by sticker or any other method. If the literature fails to satisfy each of these requirements, we
may be prevented from disseminating such literature with our products, and any dissemination could subject our product to regulatory
action as an illegal drug.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our dietary supplements must also comply with the Dietary Supplement
and Nonprescription Drug Consumer Protection Act, which became effective on December 22, 2007. This law amends the FFDC Act to
mandate that we report to the FDA any reports of serious adverse events that we receive. Under the law, an &ldquo;adverse event&rdquo;
is any health-related event associated with the use of a dietary supplement that is adverse, and a &ldquo;serious adverse event&rdquo;
is any adverse event that results in death, a life-threatening experience, inpatient hospitalization, a persistent or significant
disability or incapacity, or a congenital anomaly or birth defect, or requires, based on reasonable medical judgment, a medical
or surgical intervention to prevent one of these outcomes. Serious adverse event reports received through the address or phone
number on the label of a dietary supplement, as well as all follow-up reports of new medical information received within one year
after the initial report, must be submitted to the FDA no later than 15 business days after the report is received. The law also
requires recordkeeping for reports of non-serious adverse events as well as serious adverse events for six years following the
event, and these records are subject to FDA inspection.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In June 2007, pursuant to the authority granted by the FFDC
Act as amended by DSHEA, the FDA published detailed current good manufacturing practice, or cGMP, regulations that govern the manufacturing,
packaging, labeling and holding operations of dietary supplement manufacturers. The cGMP regulations, among other things, impose
significant recordkeeping requirements on manufacturers. The cGMP requirements are in effect for all manufacturers, and the FDA
is conducting inspections of dietary supplement manufacturers pursuant to these requirements. There remains considerable uncertainty
with respect to the FDA&rsquo;s interpretation of the regulations and their actual implementation in manufacturing facilities.
The failure of a manufacturing facility to comply with the cGMP regulations renders products manufactured in such facility &ldquo;adulterated&rdquo;,
and subjects such products and the manufacturer to a variety of potential FDA enforcement actions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The <FONT STYLE="color: black">FDA has also announced its intention
to promulgate new cGMPs specific to dietary supplements, to fully enforce DSHEA and monitor compliance with the Bioterrorism Act
of 2002. We intend to comply with the new cGMPs once they are adopted. The new cGMPs, predicted to be finalized shortly, would
be more detailed and stringent than the cGMPs that currently apply to dietary supplements and may, among other things, require
dietary supplements to be prepared, packaged, produced and held in compliance with regulations similar to the cGMP regulations
for drugs. There can be no assurance that, if the FDA adopts cGMP regulations for dietary supplements, we will be able to comply
with the new regulations without incurring a substantial expense.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, under the Food Safety Modernization Act, or FSMA,
which was enacted on January 4, 2011, the manufacturing of dietary ingredients contained in dietary supplements will be subject
to similar or even more burdensome manufacturing requirements, which will likely increase the costs of dietary ingredients and
will subject suppliers of such ingredients to more rigorous inspections and enforcement. The FSMA will also require importers of
food, including dietary supplements and dietary ingredients, to conduct verification activities to ensure that the food they might
import meets applicable domestic requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The FDA has broad authority to enforce the provisions of federal
law applicable to dietary supplements, including powers to issue a public warning or notice of violation letter to a company, publicize
information about illegal products, detain products intended for import, require the reporting of serious adverse events, require
a recall of illegal or unsafe products from the market, and request the Department of Justice to initiate a seizure action, an
injunction action or a criminal prosecution in the U.S. courts. The FSMA expands the reach and regulatory powers of the FDA with
respect to the production and importation of food, including dietary supplements. The expanded reach and regulatory powers include
the FDA&rsquo;s ability to order mandatory recalls, administratively detain domestic products, require certification of compliance
with domestic requirements for imported foods associated with safety issues and administratively revoke manufacturing facility
registrations, effectively enjoining manufacturing of dietary ingredients and dietary supplements without judicial process. The
regulation of dietary supplements may increase or become more restrictive in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our failure to comply with applicable FDA regulatory requirements
could result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our advertising of dietary supplement products is subject to
regulation by the FTC under the FTCA. Section 5 of the FTCA empowers the FTC to prohibit unfair methods of competition and unfair
or deceptive acts or practices in or affecting commerce. Section 12 of the FTCA provides that the dissemination of any false advertisement
for the purpose of inducing, directly or indirectly, the purchase of drugs or foods, which would include dietary supplements, is
an unfair or deceptive act or practice. Additionally, under the FTC&rsquo;s Substantiation Doctrine, an advertiser is required
to have a &ldquo;reasonable basis&rdquo; for all objective product claims before the claims are made. Failure to adequately substantiate
claims may also be considered an unfair or deceptive practice. Pursuant to this FTC requirement, we are required to have adequate
substantiation for all material advertising claims made for our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 18, 1998, the FTC issued &ldquo;Dietary Supplements:
An Advertising Guide for Industry.&rdquo; This guide provides marketers of dietary supplements with guidelines for applying FTC
law to dietary supplement advertising and reiterates and explains the FTC&rsquo;s &ldquo;reasonable basis&rdquo; determination.
It includes examples of the principles that should be used when interpreting and substantiating dietary supplement advertising.
Although the guide provides additional explanation, it does not substantively change the FTC&rsquo;s existing policy that all supplement
marketers have an obligation to ensure that claims are presented truthfully and to verify that such claims are adequately substantiated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The FTC has a variety of processes and remedies available to
it for enforcement, both administratively and judicially, including compulsory process, cease and desist orders and injunctions.
FTC enforcement can result in orders requiring, among other things, limits on advertising, corrective advertising, consumer redress,
divestiture of assets, rescission of contracts and such other relief as may be deemed necessary. Any violation could have a material
adverse effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As a result of our efforts to comply with applicable statutes
and regulations in the United States and elsewhere, we have from time to time reformulated, eliminated or relabeled certain of
our products and revised certain advertising claims. We cannot predict the nature of any future laws, regulations, interpretations
or applications, nor can we determine what effect additional governmental regulations or administrative orders, when and if promulgated,
would have on our business in the future. They could, however, require the reformulation of certain products to meet new standards,
the recall or discontinuance of certain products not capable of reformulation, additional record keeping, expanded documentation
of the properties of certain products, expanded or different labeling, and/or scientific substantiation. Any or all of such requirements
could have a material adverse effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Advertising and labeling for dietary supplements and conventional
foods are also regulated by state, county and other local governmental authorities. Some states also permit these laws to be enforced
by private attorney generals. These private attorney generals may seek relief for consumers, seek class action certifications,
seek class-wide damages, seek class-wide refunds and product recalls of products sold by us. There can be no assurance that state
and local authorities will not commence regulatory action, which could restrict the permissible scope of our product advertising
claims, or products that can be sold in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Foreign </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our products which we sell or may make plans to sell in foreign
countries are also subject to regulation under various national, local and international laws that include provisions governing,
among other things, the formulation, manufacturing, packaging, labeling, advertising and distribution of dietary supplements and
over-the-counter drugs. These regulations may prevent or delay entry into the market or prevent or delay the introduction, or require
the reformulation, of certain of our products. Compliance with such foreign governmental regulations is generally the responsibility
of our distributors for those countries. These distributors are independent contractors over whom we have limited control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Possible New Legislation or Regulation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">Legislation may be introduced which,
if passed, would impose substantial new regulatory requirements on dietary supplements. For example, although not yet reintroduced
in this session of Congress, bills have been repeatedly proposed in past sessions of Congress which would subject the dietary ingredient
dehydroepiandrosterone, or DHEA, to the requirements of the Controlled Substances Act, which would prevent the sale of products
containing DHEA. In March 2009, the General Accounting Office, or GAO, issued a report that made four recommendations to enhance
the FDA&rsquo;s oversight of dietary supplements. The GAO recommended that the Secretary of the Department of Health and Human
Services direct the Commissioner of the FDA to: (1) request authority to require dietary supplement companies to identify themselves
as a dietary supplement company and update this information annually, provide a list of all dietary supplement products they sell
and a copy of the labels and update this information annually, and report all adverse events related to dietary supplements, not
just serious adverse events; (2) issue guidance to clarify when an ingredient is considered a new dietary ingredient, the evidence
needed to document the safety of new dietary ingredients, and appropriate methods for establishing ingredient identity; (3) provide
guidance to industry to clarify when products should be marketed as either dietary supplements or conventional foods formulated
with added dietary ingredients; and (4) coordinate with stakeholder groups involved in consumer outreach to identify additional
mechanisms for educating consumers about the safety, efficacy, and labeling of dietary supplements, implement these mechanisms,
and </FONT>assess their effectiveness. These recommendations could lead to increased regulation by the FDA or future legislation
concerning dietary supplements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We cannot determine what effect additional domestic or international
governmental legislation, regulations, or administrative orders, when and if promulgated, would have on our business in the future.
New legislation or regulations may require the reformulation of certain products to meet new standards, require the recall or discontinuance
of certain products not capable of reformulation, impose additional record keeping or require expanded documentation of the properties
of certain products, expanded or different labeling or scientific substantiation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We believe that our success will depend significantly on our
ability to identify, attract, and retain capable employees. As of October 25, 2012, we had 45 full time employees. Our employees
are not represented by any collective bargaining unit, and we believe our relations with our employees are good. We have recently
completed staffing for the in-house medical and physiology center on-site in our training facilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Insurance </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We maintain commercial liability, including product liability
coverage, and property insurance. Our policy provides for a general liability of $1.0 million per occurrence, and $2.0 million
annual aggregate coverage which includes our main corporate facility. We carry property coverage on our main office facility to
cover our legal liability, tenant&rsquo;s improvements, business property, and inventory.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Properties </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our corporate headquarters is located in Denver, Colorado. This
commercial office building is 30,302 square feet and includes, a full performance training center, medical laboratory and a 96-seat
theatre room. The term of the lease is 65 months, expiring on December 31, 2015. We currently pay approximately $13,500 in lease
payments per month.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We lease an office and distribution warehouse in Boise, Idaho.
The warehouse is 6,035 square feet we pay approximately $3,500 per month in rent, expires in February 2013. We also lease a 500
square foot office space in Boise, Idaho on a month-to-month basis for $500 per month.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We lease a 152,562 square foot warehouse facility in Franklin,
Tennessee. The term of the lease is through August 31, 2015. We currently pay approximately $8,867 per month for rent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Through our Ontario, Canada subsidiary, Canada MusclePharm Enterprises
Corp., we lease a 10,000 square foot office and warehouse facility in Hamilton, Ontario, Canada. The term of the lease expires
on March 31, 2013. We currently pay 6,655 in Canadian dollars (or the U.S. dollar equivalent of about $6,544) per month for rent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Legal Proceedings </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From time to time, we have become involved in various legal
proceedings that arise in the ordinary course of business or otherwise. Legal proceedings are subject to inherent uncertainties
as to timing, outcomes, costs, expenses and time expenditures by our management and others on our behalf. Although there can be
no assurance, based on information currently available, we believe that the outcome of legal proceedings that are pending or threatened
against us will not have a material effect on our financial condition. However, the outcome of any of these matters is neither
probable nor reasonably estimable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of October 25, 2012, we were a defendant in the following
legal proceedings, each of which we: (a) believe are without merit; and (b) intend to defend vigorously:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>Environmental Research Center v. MusclePharm LLC, et al.</U>, Los Angeles Superior Court, California. Date instituted: February
4, 2011. Plaintiff Environmental Research Center (&ldquo;ERC&rdquo;) filed notices of intent to commence litigation against over
200 sports nutrition and dietary supplement companies in the United States and Canada, including us. ERC alleges violations of
California&rsquo;s Proposition 65.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>William Bossung and Bishop Equity Partners LLC v. MusclePharm Corporation</U>, Clark County, Nevada District Court. Date
instituted: January 17, 2012. Plaintiff alleges that additional monetary payments are due in respect of a settlement for outstanding
warrants.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of October 25, 2012, we are a plaintiff in the following
legal matter:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>MusclePharm Corporation v. Swole Sports Nutrition, LLC</U>, United States District Court for the Southern District of Florida.
Date instituted: March 15, 2012. We filed this action for trademark infringement and unfair competition against the defendant after
the defendant started marketing and selling a dietary supplement named &ldquo;Turbo Shred&rdquo;. We have sold &ldquo;Shred Matrix&rdquo;
since April 2, 2008, and the mark &ldquo;MusclePharm Shred Matrix&rdquo; was granted registration by the USPTO on September 21,
2010.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Directors, Named Executive Officers and Key Management
Personnel</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table and text sets forth the names and ages of
all our directors, named executive officers and our key management personnel as of October 25, 2012. All of our directors serve
until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death,
retirement, resignation or removal. Named executive officers serve at the discretion of the board of directors, and are elected
or appointed to serve until the next board of directors meeting following the annual meeting of stockholders. Also provided is
a brief description of the business experience of each director, named executive officer and the key management personnel during
the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements
under the federal securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 95%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 20%; font-weight: bold; border-bottom: Black 1pt solid">Name</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Age</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 66%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Position</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Brad J. Pyatt</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">32</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Co-Chairman of the Board, Chief Executive Officer and President</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>L. Gary Davis</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">59</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Chief Financial Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John H. Bluher</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">55</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Co-Chairman of the Board and Executive Vice President &ndash; Chief Operating Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Jeremy R. DeLuca</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">33</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Executive Vice President &ndash; Chief Marketing Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Cory J. Gregory</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">34</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Executive Vice President</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Lawrence S. Meer</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">52</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Treasurer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Gordon G. Burr</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">63</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>James J. Greenwell</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">53</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Donald W. Prosser</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">62</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Director</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Brad J. Pyatt</B> has served as our Chief Executive Officer
and Director since February 18, 2010 and as our President since October 2012. Prior to our acquisition of Muscle Pharm, LLC, Mr.
Pyatt was President and Chief Executive Officer of Muscle Pharm, LLC, since its inception in April 2008. His background includes
seven years of experience as a professional athlete, and more than five years of experience in the sports nutrition arena. Mr.
Pyatt played in National Football League for the Indianapolis Colts during the 2003, 2004, and 2005 NFL seasons as well for the
Miami Dolphins during the 2006 NFL season. Mr. Pyatt played in the Arena Football League for the Colorado Crush during the 2007
and 2008 AFL seasons. Mr. Pyatt attended the University of Kentucky from 1999 to 2002, where he studied kinesiology exercise science,
as well the University of Northern Colorado, from 2002 to 2003. Mr. Pyatt filed for protection under Chapter 7 of the federal bankruptcy
laws in 2008. He received a discharge relating to the matter in 2009.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>L. Gary Davis </B>has served as our Chief Financial Officer
since July 2012. From January, 2010 to prior to joining us, Mr. Davis worked as a certified public accountant for various clients,
specializing in mergers and acquisitions.<FONT STYLE="color: black"> From November,</FONT> 2004 to January, 2010, Mr. Davis served
as executive vice president and chief financial officer of Bodybuilding.com, a sports, fitness and nutritional supplement on-line
retail store. He previously was vice president and chief financial officer of U.S. Ecology Corporation. Mr. Davis has a Bachelor&rsquo;s
Degree in Accounting from Boise State University and is near completion of a Master&rsquo;s Degree in Finance from Rochester Institute
of Technology. He is a licensed certified public accountant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>John H. Bluher </B>has served as our Executive Vice President
&ndash; Chief Operating Officer since September 2011 and as Co-Chairman of our board of directors since July 2012. From February
2011 to August 2012, he served on the board of directors of Targeted Medical Pharma, Inc. From August 2010 to September 2011, he
was managing director of AFH Holdings &amp; Advisory LLC, a business consulting company. From December 2009 to August 2010, Mr.
Bluher assisted in raising capital, marketing and co-managed Coachman Energy Funds at Caddis Capital, LLC, a private equity portfolio
focused on oil and gas investments. From February 2010 to August 2010, Mr. Bluher acted as investment banker and special financial
advisor to the AARP Mutual Fund Board of Trustees in a platform divestiture. From December 2007 to May 2009, Mr. Bluher served
as managing director and general counsel at Lehman Brothers, Inc.&rsquo;s investment management division. Mr. Bluher also served
as global chief legal and compliance officer and managing director of Neuberger Berman during this period. From August 2004 to
June 2007, Mr. Bluher served as general counsel and director of risk and Janus Capital, Inc. From June 2002 to July 2004, Mr. Bluher
served as executive vice president, general counsel and corporate secretary and director of risk management of Knight Trading Group.
From January 2001 to May 2002, Mr. Bluher served as senior vice president and global chief compliance officer for Prudential Securities,
Inc. From October 1997 to January 2001, Mr. Bluher served as general counsel and chief compliance officer of Sun America, Inc.,
later AIG. From 1992 through 1997, Mr. Bluher served as Senior Vice President, Regional and Divisional Counsel at Prudential Securities,
Inc. From 1987 to 1992, Mr. Bluher was senior counsel for the Division of Enforcement at the Securities and Exchange Commission.
Mr. Bluher holds a Bachelor of Science and a J.D. degree from the University of Wyoming and holds FINRA Series 7, Series 24 and
Series 14 licenses. He has served on the boards of ICI Mutual Insurance Company, the NASDAQ Chairman&rsquo;s Advisory Board, Cherry
Hills Founders Group, Inc., Safe Communications, Inc., and the University of Wyoming Foundation Board, and College of Law Advisory
Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Jeremy R. DeLuca </B>has been our Senior Vice President and
Chief Marketing Officer (former President and Chief Marketing Officer) since November 2010. Prior to joining the Company, from
April 1999 to November 2010, Mr. DeLuca served as the President of Bodybuilding.com, an online sports nutrition and supplements
company, which he co-founded in 1999. There, Mr. DeLuca was actively involved in all aspects of Bodybuilding.com&rsquo;s business,
with a focus on marketing, sales, and e-commerce. Mr. DeLuca&rsquo;s responsibilities also included managing vendor relations,
marketing strategies, sales promotions, store content and store site development. During Mr. DeLuca&rsquo;s tenure, Bodybuilding.com
experienced significant growth, achieving annual sales of over $200 million in 2010. In August 2012, Mr. DeLuca was fined $600,000
by the FDA in connection with a plea agreement on six misdemeanor counts relating to the FDA&rsquo;s investigation into allegations
that Bodybuilding.com misbranded five dietary supplements.&nbsp; In connection with the plea, Mr. DeLuca agreed to serve three
years&rsquo; probation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Cory J. Gregory </B>has served as an executive officer of
Muscle Pharm, LLC, since its inception in 2008 and our Senior Vice President (formerly Senior President) since May 2010. Prior
to joining us, Mr. Gregory served as President, managing member, and owner of T3 Personal Training LLC, or T3, from April 2009
until November 2011. T3 was a personal training service that managed and oversaw over 40 clients using seven trainers over a ten-year
period. During the same period, Mr. Gregory served as President of the Ohio Natural Bodybuilding Federation, a federation founded
by Mr. Gregory in 2004 which hosted 14 bodybuilding competitions over a six-year period. He consulted for Agile Enterprises, a
nutritional supplement company from January 2006 through January 2008. In 2004, Mr. Gregory purchased the Old School Gym, located
in Pataskala, Ohio, which he continues to own at present day.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Lawrence S. Meer</B> has served as our Chief Financial Officer
from July 2010 to July 3, 2012 when he became our Treasurer. Prior to becoming the Chief Financial Officer he was the Director
of Finance at Muscle Pharm, LLC from October 2009 to July 2010. His other past experience includes daily cash management and treasury
functions, including the establishment of credit and collection procedures. He previously served as President and Chief Financial
Officer in Miami, Florida, at Color It, Inc., a textile finishing business, from March 2002 to December 2008.<FONT STYLE="font: 10pt Times New Roman, Times, Serif">
</FONT>From January 2008 until September 2009 Mr. Meer served as an independent financial consultant where he assisted in the preparation
of business plans, budgets, forecasts and other financial areas. Mr. Meer also previously served as Executive Vice President at
Customer Assets in Denver, Colorado, an India-based call center, from 2000 to 2002. Prior to joining Customer Assets, he was Chief
Financial Officer and Chief Operating Officer at GS Sportswear in Denver, Colorado, a sportswear promotional company, from 1998
to 2000. Mr. Meer also served as Chief Financial Officer at Davis Audio-Visual, Inc., a retailer of audio-visual equipment, from
1996 to 1998; and Vice President of Finance at Pacer Cats in Englewood, Colorado, a ticketing and concession software provider
from 1991 to 1996. Mr. Meer earned a BS in accounting from the University of Colorado at Boulder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Gordon G. Burr </B>has served as a director on our board
of directors since July 2012. He is the founder and president of the B-Mex/Exciting Games group, which is a group of U.S. and Mexican
companies that constructed, own and operate casinos in Mexico. Mr. Burr occupies a principal role in both corporate strategy and
in daily operations and has served as President of the B-Mex/Exciting Games group since its inception in 2005. From 2003 to 2004,
he was VP of Business Development for Pelion Systems, Inc., a software company providing manufacturing optimization software and
solutions that merged with JCIT International to form DemandPoint. Between 2001 and 2003, Mr. Burr was Manager of Business Development
for C2 Media, a corporate printing roll-up, and was involved in fundraising and later operations. Mr. Burr also serves on the board
of directors for the Colorado Honor Corps, a local division of the Tragedy Assistance Program for Survivors, which provides assistance
for persons who have lost a military loved one. Mr. Burr is also a co-founder and Vice Chairman of <I>Fundaci&oacute;n Curando
a M&eacute;xico, </I>a non-profit charity in Mexico partnered with Project C.U.R.E. in the U.S. to bring medical equipment, supplies,
training and other services to hospitals serving the low-income population in Mexico.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>James J. Greenwell</B> has served as a director since October
15, 2012. Since 2000, he has been the Chief Executive Officer of Datria Systems Inc., a speech recognition application software
company. He has also served as the Datria Systems&rsquo; Chairman since 2002. In prior employment, he served as a technology executive
in a number of private and public companies .He has served on the Board of the Cherry Creek School Foundation since September 2010.
He was a founding member of Friends of Denver Fire and served on its Board from 2007 through 2010. Mr. Greenwell served on the
Board of the Denver Chapter of the American Heart Association from 2002 through 2008 and was Chairman of the board in 2007. He
also served on the Board of Trustees of the Bonfils Blood Center Foundation from 1999 through 2003. Mr. Greenwell earned a BS from
the College of Business at Michigan State University and an MBA degree from Saint Mary&rsquo;s College.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Donald W. Prosser </B>has served as a director on our board
of directors since July 2012 and has been the principal executive officer of Ar&ecirc;te Industries, Inc. since January 2011 and
a director of Ar&ecirc;te since September, 2003. Ar&ecirc;te is a voluntary filer with the SEC under the Securities Exchange Act
of 1934. Mr. Prosser owns a certified public accounting firm, Donald W. Prosser, P.C., specializing in tax services and accounting
and has represented a number of private and public companies serving in the capacity of accountant, member of boards of directors,
and as chief financial officer. From 1997 to 1999, Mr. Prosser served as CFO and Director for Chartwell International, Inc., a
public company publishing high school athletic information and providing athletic recruiting services. From 1999 to 2000, he served
as CFO and Director for Anything Internet, Inc. and from 2000 to 2001, served as CFO and Director for its successor, Inform Worldwide
Holdings, Inc., a publicly traded company. From November 2002 through June 2008, Mr. Prosser served as CFO of VCG Holding Corp.,
a public company. From July 2008 through August 2009 Mr. Prosser was chief financial officer of Iptimize, Inc., a provider of broadband
and data services that filed a petition under federal bankruptcy laws in October 2009. He also has served on the board of directors
of Veracity Management Global, Inc., a publicly traded company, since January, 2008. Mr. Prosser has been a certified public accountant
since 1975. Mr. Prosser attended the University of Colorado from 1970 to 1971 and Western State College of Colorado from 1972 to
1975, where he earned a Bachelor&rsquo;s Degree in Accounting and History (1973) and a Master&rsquo;s Degree in Accounting &ndash;
Income Taxation (1975).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Advisory Board</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have established an Advisory Board currently consisting of
nine members, which serves to advise management with respect to product formulations, product ideas, marketing and related matters.
Members of the Advisory Board do not meet on a formal or regular basis. Our management team consults with one or more members of
the Advisory Board as needed, from time to time, by means of meetings or telephone conference calls.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Following is a brief description of the background of our advisory
board members:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Dr. Eric Serrano &ndash;</I></B> <B>Chief Formulator Medical
Advisor.</B> Dr. Serrano has been practicing medicine in the State of Ohio for over 22 years and is considered one of the leading
sports nutrition doctors in the country. His clients include a wide array of athletes from the NFL, NHL, and MLB, in addition to
many elite amateur athletes. Dr. Serrano was a professor of family practice medicine at Ohio State University, where he was awarded
Professor of The Year and Preceptor of The Year. Dr. Serrano currently lectures across the country to universities, medical groups
and health and fitness conferences on the topics of sports nutrition, performance enhancement, and injury prevention. He has formulated
numerous nutritional supplements for some of the leading nutritional companies on the market and also been a contributing writer
for some of the leading U.S. health and fitness magazines, including <I>Muscle &amp; Fitness</I>. Dr. Serrano has been involved
in the formulations for each of our products. Dr. Serrano received his B.A. from Kansas State University in Biology, his M.A. from
Kansas State University in Exercise Physiology, and his M.D. from the University of Kansas Medical School.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Dr. Mauro Di Pasquale &ndash; </I>Director of Product
Development and Research.<I> </I> </B>Dr. Di Pasquale brings five decades of personal, clinical and university teaching and learning,
combined with leadership gained from medical directorships of important sports organizations to us. Dr. Di Pasquale has written
over a dozen books on athletic performance, focusing mainly on diet and supplementation, most notably his books, <I>The Anabolic
Diet</I> and <I>The Metabolic Diet</I>. He has received an Honors M.D., Honors B.Sc. (majoring in genetics and molecular biochemistry),
both from the University of Toronto. He has also published 1,000 articles in magazines such as <I>Muscle &amp; Fitness</I>, <I>Flex
</I>and <I>Powerlifting USA</I>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Dr. Roscoe M. Moore, Jr.</I></B> <B>&ndash; Chief Scientific
Director.</B> A Former U.S. Assistant Surgeon General, Dr. Moore served with the United States Department of Health and Human Services
(HHS) and was for the last 12 years of his career there the principal person responsible for global development support within
the Office of the Secretary, HHS, with primary emphasis on Continental Africa and other less developed countries of the world.
He was the principal liaison person between the HHS and Ministries of Health in Africa with regard to the development of infrastructure
and technical support for the delivery of preventive and curative health needs for the continent. Dr. Moore received his undergraduate
and Doctor of Veterinary Medicine degrees from Tuskegee Institute; his Master of Public Health degree in Epidemiology from the
University of Michigan; and his Doctor of Philosophy degree in Epidemiology from the Johns Hopkins University. He was awarded the
Doctor of Science degree (Honoris Causa) in recognition of his distinguished public health career by Tuskegee University. Dr. Moore
was a career officer within the Commissioned Corps of the United States Public Health Service (USPHS) entering with the U.S. National
Institutes of Health and rising to the rank of Assistant United States Surgeon General (Rear Admiral, USPHS) within the Immediate
Office of the Secretary, HHS. He was selected as Chief Veterinary Medical Officer, USPHS, by Surgeon General C. Everett Koop.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Dr. Richard Ogden (CSCS)</I> &ndash; Medical Advisor.</B>
Dr. Odgen&rsquo;s career in clinical research and development spans nearly 40 years. After earning a Ph.D. from Cambridge University,
his career started with postdoctoral research studying ribonucleic acid transcription and processing. Following that, he undertook
independent research, funded by the National Science Foundation. In 1984, he joined Agouron Pharmaceuticals, Inc. as one of its
founding scientists. Following Agouron&rsquo;s merger with Pfizer, he served as a Senior Director and was the scientific liaison
for the Agouron/Pfizer commercial and corporate organizations. In 2006, Dr. Ogden, co-founded RORR Inc., a medical, scientific
consulting and education company with clients in the U.S. and Europe. In addition to publication in numerous medical journals,
he is co-editor of two books relating to AIDS therapy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Dr. Michael R. Stevens</I></B> <B>&ndash; Director of
Therapeutic Nutrition. </B> Dr. Stevens has over 20 years of well-diversified experience in the healthcare and pharmaceutical industry.
Dr. Stevens spent 17 years at Bristol-Myers Squibb, where he held positions of increasing responsibility in the areas of Market
Research (Oncology and HIV), Marketing (Oncology), and Medical Affairs (HIV). In addition served as a member of the Executive Council
for the Forum for Collaborative HIV Research &mdash; a public-private partnership facilitating discussion on emerging issues in
HIV clinical research and working to translate research results into patient care. He has also served on 15 Protocol Committees
within the Adult AIDS Clinical Trials Group (ACTG). Michael received his B.S. Pharmacy and Doctor of Pharmacy degrees from Purdue
University.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Dr. Ron Sekura &ndash;</I></B> <B>Director of Therapeutic
Research.</B> Dr. Sekura is the former Chief of the Pharmaceutical and Regulatory Affairs Branch of the Division of AIDS at The
National Institute of Allergy and Infectious Diseases (NIAID) of the National Institute of Health (NIH) as well as a former Research
Chemist at The National Institutes of Child Health and Human Development (NICHD) at the NIH and the Center for Biologics Evaluation
and Research (CBER). He received his Bachelor of Science and Master of Science in Biochemistry degrees at Pennsylvania State University
and his PhD at Cornell University. Dr. Sekura is the author of over 60 scientific publications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Mariel Selbovitz</I></B> <B>&ndash; Director of Global
Therapeutics Product Procurement Development.</B> Ms. Selbovitz is a graduate of Cornell University and received her Master&rsquo;s
in Public Health at the Johns Hopkins University Bloomberg School of Health. She worked as the Client Intake Specialist at Positive
Health Project and Syringe Exchange Program Coordinator at the Foundation for Research on Sexually Transmitted Diseases and is
a partner in BioEquity Partners. Selbovitz is a member of the Cornell AIDS Clinical Trials Group Community Advisory Board and AIDS
Treatment Advocacy Coalition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>James Sapirstein, R.Ph., MBA</I>
&ndash; Strategic Advisor. </B>Mr. Sapirstein has been the Chief Executive Officer of Alliqua Inc. since October 2012. He was the
President and Chief Executive Officer of Tobira Therapeutics, Inc., or Tobira, from August 2007 through April 2011 and founded
Tobira in October 2006. Prior to Tobira, Mr. Sapirstein worked at Paramount BioCapital from May 2005 to September 2006 in the company
creation group. Mr. Sapirstein was the Executive Vice President of the Metabolic and Endocrinology Business Unit from 2002 through
April 2005. Mr. Sapirstein was the Director of Global Marketing at Gilead Sciences from July 2000 through May 2002, where he was
responsible for the global launch of Viread<SUP>&reg;</SUP>. He was the head of the international infectious disease marketing
teams during his time at Bristol-Myers Squibb from August 1996 to July 2000. Mr. Sapirstein was with Hoffmann-LaRoche from October
1987 to July 1996, where he worked in a variety of capacities ranging from marketing and sales positions to international posts.
Prior to working at Hoffmann LaRoche, he worked at Eli Lilly and Company in a sales capacity from June 1984 to October 1987. Mr.
Sapirstein earned his Bachelor of Science in Pharmacy from the Ernest Mario School of Pharmacy at Rutgers University and an MBA
from Farleigh Dickinson University.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Michael Kim, D.O.</I> &ndash; Executive Director of Medicine,
Research and Education. </B>Dr. Kim has been our Executive Director of Medicine, Research and Education since August 2011. He oversees
our research. He analyzes formulations, research protocols and strength and performance protocols. He also advises our athlete
endorsers regarding nutrient, diet and supplementation. He received a B.A. in Economics from University of California &ndash; Davis,
and a Doctor of Osteopathy degree from Touro University.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Corporate Governance </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Director Independence</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each director and named executive officer is obligated to disclose,
on an annual basis, any transactions with our Company and any of its subsidiaries in which a director or executive officer, or
any member of his or her immediate family, have a direct or indirect material interest. Following completion of these disclosures,
our board of directors make a determination as to the independence of each director using the current standards for &ldquo;independence&rdquo;
that satisfy both the criteria for the NASDAQ Stock Market and the NYSE MKT.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of October 15, 2012, our board of directors conducted an
annual review and affirmatively determined that Messrs. Prosser and Greenwell are &ldquo;independent&rdquo; as that term is defined
in the NASDAQ listing standards.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Committees of the Board </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth the three standing committees
of our board and the members of each committee as of October 25, 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 25%; border-bottom: windowtext 1pt solid; font-weight: bold">Director&nbsp;</TD>
    <TD NOWRAP STYLE="width: 2%; font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 9%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Board</TD>
    <TD NOWRAP STYLE="width: 2%; font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 12%; border-bottom: windowtext 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Audit</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Committee</B></P></TD>
    <TD NOWRAP STYLE="width: 2%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 14%; border-bottom: windowtext 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Compensation</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Committee</B></P></TD>
    <TD NOWRAP STYLE="width: 2%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 32%; border-bottom: windowtext 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Nominating&nbsp;and&nbsp;Corporate</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Governance&nbsp;Committee</B></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">Brad J. Pyatt</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">Co-Chair</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">John H. Bluher</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">Co-Chair</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">Gordon G. Burr</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">James J. Greenwell</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Chair</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">Donald W. Prosser</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">Chair*</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">Chair</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in">*</TD><TD>Audit Committee Financial Expert.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To assist it in carrying out its duties, the board has delegated
certain authority to an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee as the functions
of each are described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Audit Committee </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Messrs. Prosser and Greenwell serve on our Audit Committee.
Our Audit Committee&rsquo;s main function is to oversee our accounting and financial reporting processes, internal systems of control,
independent auditor relationships and the audits of our financial statements. The Audit Committee&rsquo;s responsibilities include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>selecting, hiring, and compensating our independent auditors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>evaluating the qualifications, independence and performance of our independent auditors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements
as they relate to financial statements or accounting matters;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>approving the audit and non-audit services to be performed by our independent auditor;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>reviewing with the independent auditor the design, implementation, adequacy and effectiveness of our internal controls and
our critical accounting policies; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>preparing the report that the SEC requires in our annual proxy statement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The board of directors has adopted an Audit Committee Charter.
The Audit Committee members meet NASDAQ&rsquo;s financial literacy requirements, and the board has further determined that Mr.&nbsp;Prosser
(i)&nbsp;is an &ldquo;audit committee financial expert&rdquo; as such term is defined in Item&nbsp;407(d) of Regulation&nbsp;S-K
promulgated by the SEC and (ii)&nbsp;also meets NASDAQ&rsquo;s financial sophistication requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Compensation Committee </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Messrs. Burr, Greenwell and Prosser serve on the Compensation
Committee. Our Compensation Committee&rsquo;s main functions are assisting our board of directors in discharging its responsibilities
relating to the compensation of outside directors, the Chief Executive Officer and other executive officers, as well as administering
any stock incentive plans we may adopt. The Compensation Committee&rsquo;s responsibilities include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>reviewing and recommending to our board of directors the compensation of our Chief Executive Officer and other executive officers,
and the outside directors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>conducting a performance review of our Chief Executive Officer;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>reviewing our compensation policies; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>if required, preparing the report of the Compensation Committee for inclusion in our annual proxy statement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The board of directors has adopted a Compensation Committee
Charter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Compensation Committee&rsquo;s policy is to offer our executive
officers competitive compensation packages that will permit us to attract and retain highly qualified individuals and to motivate
and reward these individuals in an appropriate fashion aligned with the long-term interests of our Company and our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Compensation Committee Risk Assessment</I>. </B>We have
assessed our compensation programs and concluded that our compensation practices do not create risks that are reasonably likely
to have a material adverse effect on us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Nominating and Corporate Governance Committee</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Messrs. Prosser and Greenwell serve on our Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance Committee&rsquo;s responsibilities include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD><FONT STYLE="color: black">identify qualified </FONT>individuals<FONT STYLE="color: black"> to serve as members of the Company&rsquo;s
board of directors; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD><FONT STYLE="color: black">review the qualifications </FONT>and<FONT STYLE="color: black"> performance of incumbent directors;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD><FONT STYLE="color: black">review and consider </FONT>candidates<FONT STYLE="color: black"> who may be suggested by any director
or executive officer or by any stockholder of the Company; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD><FONT STYLE="color: black">review considerations </FONT>relating<FONT STYLE="color: black"> to board composition, including
size of the board, term and age limits, and the criteria for membership on the board; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD><FONT STYLE="color: black">review periodically the </FONT>management<FONT STYLE="color: black"> succession plan of; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD><FONT STYLE="color: black">review and recommend </FONT>corporate<FONT STYLE="color: black"> governance policies; and </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD><FONT STYLE="color: black">monitor, oversee and </FONT>review<FONT STYLE="color: black"> compliance with the Company&rsquo;s
code of ethics. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The board of directors has adopted a Nominating and Corporate
Governance Committee Charter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>EXECUTIVE COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Summary Compensation Table for 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following summary compensation tables sets forth all compensation
awarded to, earned by, or paid to each person serving as a named executive officer of the Company during the year ended December
31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt">Name&nbsp;and&nbsp;Principal&nbsp;Position</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt">Year</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt">Salary
    <BR>($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt">Bonus
    <BR>($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>Stock&nbsp;Awards&nbsp;<SUP>(1)</SUP></B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>($)</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>Option&nbsp;Awards&nbsp;<SUP>(1)</SUP></B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>($)</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt">All&nbsp;Other
    <BR>Compensation <BR>($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt">Total
    <BR>($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 23%; text-align: left"><FONT STYLE="font-size: 8pt">Brad J. Pyatt</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">140,099</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(2)</SUP></FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">1,400,995</FONT></TD><TD NOWRAP STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(2)
                                                                                                                                                                                       (3)</SUP></FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">4,308</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">(15)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">1,795,402</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Chief Executive Officer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">194,821</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,650,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(4)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,844,821</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2009</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">133,992</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">133,992</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Cory J. Gregory</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">150,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">140,099</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(5)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,400,995</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(5)
                                                                                                                                                                (6)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,691,094</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Executive Vice President</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">78,892</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,650,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(7)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,728,892</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2009</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">17,846</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">17,846</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Lawrence S. Meer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">74,400</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">74,400</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Chief Financial Officer</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,493</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">228,000
                                                                                </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(8)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">303,493</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Leonard K. Armenta <SUP>(9)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">86,400</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">86,400</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Former Executive Vice President</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">83,215</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">228,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(8)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">311,215</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2009</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">54,799</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">54,799</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Jeremy R. DeLuca</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">65,833</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(10)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">140,099</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(11)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,400,995</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(12)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,606,927</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Executive Vice President and CMO</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">John H. Bluher</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">36,458</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(13)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><SUP>(14)</SUP></FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">86,458</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204); text-decoration: none">
    <TD STYLE="text-decoration: none; text-align: left"><FONT STYLE="font-size: 8pt">Executive Vice President and COO</FONT></TD><TD STYLE="text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; text-decoration: none"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%; text-align: justify">(1)</TD>
    <TD STYLE="width: 2%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 94%; text-align: justify">Amounts reflect the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718. The grant date fair value of each stock award is measured based on the closing price of our common stock on the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(2)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">The amounts reflect the amount that was returned to the Company as a result of restated revenues for the years ended December 31, 2011 and 2010. Subsequent to the filing of our amended Annual Report on Form 10-K/A filed on July 9, 2012, which restated our revenue for the years ended December 31, 2011 and 2010, Mr. Pyatt voluntarily agreed to return (i) $30,311 of his cash bonus and (ii) $303,109 worth of his stock bonus (equal to a total of 40,550 shares of common stock).</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(3)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Mr. Pyatt received a stock award of $1,704,104, equal to 227,974 shares of common stock, at a price per share of $7.48, which was the closing price of our common stock on January 27, 2012, the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(4)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Mr. Pyatt received a stock award of 7,692 shares of common stock at a price per share of $344.50, which was the closing price of our common stock on October 18, 2010, the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(5)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">The amounts reflect the amount that was returned to the Company as a result of restated revenues for the years ended December 31, 2011 and 2010. Subsequent to the filing of our amended Annual Report on Form 10-K/A filed on July 9, 2012, which restated our revenue for the years ended December 31, 2011 and 2010, Mr. Gregory voluntarily agreed to return (i) $30,311 of his cash bonus and (ii) $303,109 worth of his stock bonus (equal to a total of 40,550 shares of common stock).</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(6)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Mr. Gregory received a stock award of $1,704,104, equal to 227,974 shares of common stock, at a price per share of $7.48, which was the closing price of our common stock on January 27, 2012, the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(7)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Mr. Gregory received a stock award of 7,692 shares of common stock at a price per share of $344.50, which was the closing price of our common stock on October 18, 2010, the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(8)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Represents options exercisable for 1,538 shares of common stock, valued on the date of grant, April 2, 2010. For a discussion of the valuation assumptions used, see Note 9 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December&nbsp;31, 2010.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(9)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Mr. Armenta resigned from his position as our Executive Vice President on September 16, 2011.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(10)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">This figure is based on a pro-rated annual salary of $125,000.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(11)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">The amounts reflect the amount that was returned to the Company as a result of restated revenues for the years ended December 31, 2011 and 2010. Subsequent to the filing of our amended Annual Report on Form 10-K/A filed on July 9, 2012, which restated our revenue for the years ended December 31, 2011 and 2010, Mr. DeLuca voluntarily agreed to return (i) $30,311 of his cash bonus (which had not yet been paid to him) and (ii) $303,109 worth of his stock bonus (equal to a total of 40,550 shares of common stock).</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(12)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Mr. DeLuca received a stock award of $1,704,104, equal to 227,974 shares of common stock, at a price per share of $7.48, which was the closing price of our common stock on January 27, 2012, the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(13)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">This figure is based on a pro-rated annual salary of $175,000.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(14)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Mr. Bluher received this bonus pursuant to the terms of his employment agreement.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">(15)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Amount represents private golf club membership dues of $4,308 for 2011.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Outstanding Equity Awards at 2011 Fiscal Year-End </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">None of our named executive officers other than Mr. Meer had
outstanding equity awards at December 31, 2011. At December 31, 2011, Mr. Meer had options (granted on April 2, 2010) to purchase
1,538 shares of our common stock at an exercise price of $325.00 per share, which expire April 2, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Recent Changes to Employment Arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 18, 2012, the Compensation Committee approved 2012
target bonuses for its executive officers, including its principal executive officer, principal financial officer and other named
executive officers as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Executive Officer</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012 Target Bonuses (gross)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left">Brad J. Pyatt</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">160,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">John H. Bluher</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">130,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cory J. Gregory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">130,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Jeremy R. DeLuca</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">130,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">L. Gary Davis</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Also, on October 18, 2012, the Company entered into amended
and restated employment agreements (except for Mr. Davis, which was an initial employment agreement) with the following executive
officers of the Company, which include its principal executive officer, principal financial officer and other named executive officers:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 80%; border-collapse: collapse">
<TR STYLE="vertical-align: top; text-decoration: none">
    <TD STYLE="width: 21%; font-weight: bold; text-decoration: none; text-align: center; border-bottom: Black 1pt solid">Name</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD STYLE="width: 77%; font-weight: bold; text-decoration: none; text-align: center; border-bottom: Black 1pt solid">Position</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Brad J. Pyatt</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Executive Officer and President</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>L. Gary Davis</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Financial Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John H. Bluher</TD>
    <TD>&nbsp;</TD>
    <TD>Executive Vice President &ndash; Chief Operating Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Jeremy R. DeLuca</TD>
    <TD>&nbsp;</TD>
    <TD>Executive Vice President &ndash; Chief Marketing Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Cory J. Gregory</TD>
    <TD>&nbsp;</TD>
    <TD>Executive Vice President</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The employment agreements were executed based upon a form employment
agreement approved by the Compensation Committee of the board. The employment agreements are for an initial term ending December
31, 2014. However, the employment agreements entered into with Mr. Pyatt and Mr. DeLuca provide for an initial term ending December
31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Under the terms of the employment agreements, each officer will
receive an annual base salary in the amount set forth below, subject to any increase the Compensation Committee may deem appropriate
from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 70%; border-collapse: collapse">
<TR STYLE="vertical-align: top; text-decoration: none">
    <TD STYLE="width: 21%; font-weight: bold; text-decoration: none; text-align: center; border-bottom: Black 1pt solid">Name</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center; text-decoration: none; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 77%; font-weight: bold; text-decoration: none; text-align: center; border-bottom: Black 1pt solid">Annual Base Salary</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Brad J. Pyatt</TD>
    <TD>&nbsp;</TD>
    <TD>$350,000</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>L. Gary Davis</TD>
    <TD>&nbsp;</TD>
    <TD>$130,000 ($200,000 beginning January 1, 2013)</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>John H. Bluher</TD>
    <TD>&nbsp;</TD>
    <TD>$300,000</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>Jeremy R. DeLuca</TD>
    <TD>&nbsp;</TD>
    <TD>$175,000 ($320,000 beginning January 1, 2013)</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Cory J. Gregory</TD>
    <TD>&nbsp;</TD>
    <TD>$212,000</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, the officers will be eligible to receive one or
more annual cash bonuses and grants of stock options, restricted stock or other equity-related awards from the Company&rsquo;s
various equity compensation plans, as determined by the Compensation Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If the employment of an officer is terminated due to the officer&rsquo;s
death or inability to perform, the employment agreements provide for payment to the officer of any unpaid portion of the Officer&rsquo;s
base salary and benefits accrued through the date of death or inability to perform and, at the discretion of the Compensation Committee,
a bonus. The officer or his representatives will also be entitled to receive a reimbursement of up to 12 months of Consolidated
Omnibus Reconciliation Act, or COBRA, premiums, if the officer or his representatives timely elect and remain eligible for COBRA.
If the officer&rsquo;s employment is terminated due to inability to perform, the officer will also be entitled to (i) a lump sum
payment equal to the greater of (A)&nbsp;the target bonus payable to the Officer for the year in which the date of termination
occurs or if no target bonus has been set, the officer&rsquo;s most recent annual bonus, and (B) a bonus for such year as may be
determined by the Compensation Committee in its sole discretion; and (ii) a severance payment (payable over six months) equal to
six months of the officer&rsquo;s base salary in effect as of the date of termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If the officer&rsquo;s employment is terminated for &ldquo;cause&rdquo;
or if an Officer terminates his employment without &ldquo;good reason&rdquo; (as such terms are defined in the employment agreement),
the officer will not be entitled to a severance payment or any other termination benefits. However, the Company will pay the officer
any unpaid portion of the officer&rsquo;s base salary and benefits accrued through the date of such termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon a termination of an officer&rsquo;s employment (except
for Mr. Pyatt) by the Company without cause and without a change in control or by the officer for good reason without a change
in control, the employment agreements provide that such officer will be entitled to (i) any unpaid portion of the officer&rsquo;s
base salary and benefits accrued through the date of termination; (ii) an amount payable over three months and equal to the lesser
of (A) nine months of the officer&rsquo;s base salary in effect as of the date of termination, or (B) the officer&rsquo;s base
salary remaining under the term of his employment agreement; (iii) a lump sum payment equal to 25% of the officer&rsquo;s target
bonus (or if no target bonus has been set, the Officer&rsquo;s most recent annual bonus) if the termination is between January
1 and June 30 or 50% of the Officer&rsquo;s target bonus (or if no target bonus has been set, the Officer&rsquo;s most recent annual
bonus) if the termination is between July 1 and December 31; (iv)&nbsp;acceleration of the officer&rsquo;s outstanding equity awards,
unless otherwise provided in the equity award agreement for a particular equity award; and (v) the officer will also be entitled
to receive a reimbursement of up to 12 months of COBRA premiums, if the officer timely elects and remains eligible for COBRA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon a termination of Mr. Pyatt&rsquo;s employment by the Company
without cause and without a change in control or by Mr. Pyatt for good reason without a change in control, Mr. Pyatt&rsquo;s employment
agreement provides that he will be entitled to (i) any unpaid portion of his base salary and benefits accrued through the date
of termination; (ii) an amount payable over three months and equal to two times his base salary on the date of termination; (iii)
a lump sum payment equal to the greater of (A) two times his target bonus for the for the year in which the date of termination
occurs or if no target bonus has been set, then two times Mr. Pyatt&rsquo;s most recent annual bonus, and (B) a bonus for such
year as may be determined by the Compensation Committee in its sole discretion; (iv)&nbsp;acceleration of his outstanding equity
awards, unless otherwise provided in the equity award agreement for a particular equity award; and (v) he will also be entitled
to receive a reimbursement of up to 12 months of COBRA premiums, if he timely elects and remains eligible for COBRA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon a termination of an officer&rsquo;s employment (except
for Mr. Pyatt) by the Company without cause and with a change in control or by the officer for good reason after a change in control,
the employment agreement provides that such officer will be entitled to (i) any unpaid portion of the officer&rsquo;s base salary
and benefits accrued through the date of termination; (ii) a severance payment (payable over 12 months) equal to 12 months of the
officer&rsquo;s base salary in effect as of the date of termination; (iii) a lump sum payment equal to the greater of (A) 100%
of the officer&rsquo;s target bonus in the year of termination<FONT STYLE="color: black"> </FONT>or if no target bonus has been
set, then 100% of the officer&rsquo;s most recent annual bonus, and (B) a bonus for such year as may be determined by the Committee
in its sole discretion; (iv)&nbsp;a severance payment of $500,000 (payable within 30 days of the date of termination); (v) acceleration
of the officer&rsquo;s outstanding equity awards; and (vi) the officer will also be entitled to receive a reimbursement of up to
12 months of COBRA premiums, if the officer timely elects and remains eligible for COBRA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon a termination of Mr. Pyatt&rsquo;s employment by the Company
without cause and with a change in control or by Mr. Pyatt for good reason after a change in control, Mr. Pyatt&rsquo;s employment
agreement provides that he will be entitled to (i) any unpaid portion of his base salary and benefits accrued through the date
of termination; (ii) a severance payment (payable over 12 months) equal to three times his base salary in effect as of the date
of termination; (iii)&nbsp;a severance payment of $2 million (payable within 30 days of the date of termination); (v) acceleration
of Mr. Pyatt&rsquo;s outstanding equity awards; and (vi) he will also be entitled to receive a reimbursement of up to 12 months
of COBRA premiums, if he timely elects and remains eligible for COBRA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The employment agreements also contain customary confidentiality,
non-competition and non-solicitation provisions. Under the non-compete provisions, during the term of his employment agreement
and for a period of six months after termination of employment, the officer is prohibited from, directly or indirectly, engaging
in or becoming interested financially in, as a principal, employee, partner, contractor, shareholder, agent, manager, owner, advisor,
lender, guarantor, officer or director, any business that is engaged in the nutritional supplement industry and/or related products,
subject to certain exceptions for passive investments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Additionally, the non-solicitation provisions of the employment
agreements prohibit the officer from soliciting for employment any employee of the Company or any person who was an employee of
the Company in the 90-day period before such solicitation. This prohibition applies during the officer&rsquo;s employment with
the Company and for 12 months following the termination of the officer&rsquo;s employment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Change in Control Payments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Employment Agreements referenced in
the above provide for payments upon termination or employment after a change in control in certain situations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>DIRECTOR COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Compensation in 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No compensation was paid to our directors in 2011 or 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2012 Non-Employee Director Compensation Program </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In October 2012, our board of directors adopted a non-employee
director compensation program. Directors who are employees of the Company receive no additional compensation for their services
as directors. Non-employee directors are compensated for their service on our board of directors as described below. The following
table describes the components of compensation for non-employee directors in effect beginning October 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Compensation Element</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012 Compensation Program ($)</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 79%; text-align: left">Annual Cash Retainer</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 18%; text-align: right">20,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Annual Equity Retainer Award</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Board Meeting Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Audit Committee Chair Committee Meeting Fee</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">New Director Fee (one-time equity grant)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Annual Cash Retainer and Meeting Fees</I>. </B>Beginning
in October 2012, each non-employee director who continues to serve as a director will receive an annual cash retainer fee of $20,000
per year, pro rata for service less than one year. Non-employee directors will also receive $1,000 per meeting attended for all
in-person and telephonic meetings of the Board subject to a $6,000 per-year cap on meeting fees. Further, the Audit Committee Chair
will receive $1,000 per Audit Committee meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Annual Equity Retainer Award.</I></B> Beginning in January
2013 and pro-rata for the fourth quarter of 2012, each non-employee director will receive $30,000 of the annual board retainer
fee in the form of restricted common stock with the number of shares of restricted common stock determined by dividing that dollar
amount by the closing price of our common stock on the date of grant. These shares restricted common stock will vest in four equal
quarterly installments. The restricted common stock awards will be forfeitable during that vesting period, though directors who
leave the board during the year will receive any vested restricted common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>New Director Fee (one-time equity grant).</I></B> Beginning
in October 2012, each non-employee director will receive a one-time equity grant of restricted common stock with a value of approximately
$2,000 with the number of shares of restricted common stock determined by dividing that dollar amount by the closing price of our
common stock on the date of grant. These shares restricted common stock will be fully vested upon grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Compensation Committee Interlocks and Insider Participation
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: yellow"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our board of directors did not have a compensation committee
during the year ended December 31, 2011. Our two directors during the year ended December 31, 2011 were Brad J. Pyatt and Cory
J. Gregory, both of whom were also executive officers of the Company and determined the compensation for our executive officers.
None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one
or more of its executive officers serving as a member of our board of directors or Compensation Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITY OWNERSHIP OF CERTAIN</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0"><B>BENEFICIAL OWNERS
AND MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth information known to MusclePharm
with respect to the beneficial ownership of our common stock, $0.001 par value per share, as of October 25, 2012, unless otherwise
noted, by:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each stockholder known to MusclePharm to own beneficially more than 5% of MusclePharm&rsquo;s common stock;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each of MusclePharm&rsquo;s directors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each of MusclePharm&rsquo;s named executive officers; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>all of MusclePharm&rsquo;s current directors and named executive officers as a group.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have determined beneficial ownership in accordance with the
rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons
and entities named in the table below have sole voting and investment power with respect to all shares of common stock or Series
B Preferred Stock that they beneficially own, subject to applicable community property laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Applicable percentage ownership is based on 3,527,178 shares
of common stock (which reflects the 1-for-650 reverse stock split that we intend to effect prior to the offering these securities)
and 51 shares of Series B Preferred Stock outstanding at October 25, 2012. For purposes of computing total voting percentage, each
share of Series B Preferred Stock has 71,980.13 votes, resulting in total outstanding shares for purposes of calculating voting
percentages of 7,198,164. Except as set forth below, the address of the beneficial owner listed in the table below is c/o MusclePharm
Corporation, 4721 Ironton Street, Building A, Denver, Colorado 80239.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="14" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none">Shares Beneficially
    Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><B>Common Stock <SUP>(1)
    </SUP></B></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><B>Series B Preferred
    Stock <SUP>(1)</SUP> </B></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-decoration: none">Name of Beneficial Owner</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none">Shares</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><B>% <SUP>(2)</SUP></B></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none">Shares</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><B>% <SUP>(3)</SUP></B></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><B>Total Voting % <SUP>(4)</SUP></B></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Named Executive Officers:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; text-align: left">Brad J. Pyatt</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">216,316</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">6.1</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">31</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">60.78</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">34.0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">L. Gary Davis</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">96</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">John H. Bluher</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,616</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Jeremy R. DeLuca</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">187,424</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cory J. Gregory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">203,552</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.8</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39.22</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22.8</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Lawrence S. Meer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">Non-Employee Directors:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Gordon G. Burr <SUP>(5)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.8</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">James J. Greenwell</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Donald W. Prosser</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">*</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">*</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Officers and Directors as a Group (nine persons):</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">766,202</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21.7</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">51</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">61.6</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: super; width: 4%; font-weight: bold"><SUP>*</SUP></TD>
    <TD STYLE="vertical-align: top; width: 96%; text-align: justify">Represents less than one percent.&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: super"><SUP>(1)</SUP></TD>
    <TD STYLE="vertical-align: top; text-align: justify">This column lists beneficial ownership of voting securities as calculated under SEC rules. Otherwise, except to the extent noted below, each director, named executive officer or entity has sole voting and investment power over the shares reported. The shares are not subject to any pledge. Standard brokerage accounts may include nonnegotiable provisions regarding set-offs or similar&nbsp;rights.</TD></TR>
<TR>
    <TD STYLE="vertical-align: super"><SUP>(2)</SUP></TD>
    <TD STYLE="vertical-align: top; text-align: justify">Percent of class based on 3,527,178 shares of common stock outstanding as of October 25, 2012. This percentage does not include preferred stock ownership and reflects the 1-for-650 reverse stock split that we intend to effect prior to the offering of these securities.</TD></TR>
<TR>
    <TD STYLE="vertical-align: super"><SUP>(3)</SUP></TD>
    <TD STYLE="vertical-align: top; text-align: justify">Percent of Series B Preferred Stock based on 51 shares of Series B Preferred Stock outstanding as of October 25, 2012.</TD></TR>
<TR>
    <TD STYLE="vertical-align: super"><SUP>(4)</SUP></TD>
    <TD STYLE="vertical-align: top; text-align: justify">Percentage of total voting power represents voting power with respect to all shares of our common stock and Series B Preferred Stock voting together as a single class. The holders of our Series B Preferred Stock are entitled to 71,980.13 votes per share, and holders of our common stock are entitled to one vote per share. For more information about the voting rights of our common stock and our Series B Preferred Stock, see &ldquo;Description of Securities&mdash;Common Stock&rdquo; and Description of Securities&mdash;Preferred Stock.&rdquo; &nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: super"><SUP>(5)</SUP></TD>
    <TD STYLE="vertical-align: top; text-align: justify">The common stock is held in the name of El Chichon Partners, LLC, a Colorado limited liability company (&ldquo;El Chichon&rdquo;). Mr. Burr is the manager of El Chichon, and as such, holds sole dispositive voting power over such securities. The address of El Chichon is 5031 S. Ulster Street, Denver, Colorado 80237.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition to the named executive officer and director compensation
arrangements discussed in &ldquo;Executive Compensation&rdquo;, below we describe transactions since January 1, 2011, to which
we have been a participant, in which the amount involved in the transaction exceeds or will exceed $120,000 and in which any of
our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person
sharing the household with, any of these individuals, had or will have a direct or indirect material interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Consulting Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 23, 2011, we entered into a
consulting agreement with El Chichon Partners, LLC and Gordon G. Burr, prior to Mr. Burr becoming a director of the Company.
The consulting agreement provides that Mr. Burr will identify potential financing sources for us. The amount paid under
this agreement in the year ended December&nbsp;31, 2011 was $200,000, which was paid in the form of a warrant issued in the
name of El Chichon Partners, LLC and exercisable for 153,846 shares of common stock at an exercise price of $7.80 per share of
common stock. Further, this agreement was amended on April 20, 2012 and added an additional warrant exercisable for 46,154
shares of common stock at an exercise price of $9.75 per share of common stock. Each warrant issued in the
name of El Chichon Partners, LLC and has a lock-up of one year after
exercise thereof. The shares of common stock underlying each warrant have demand registration rights after 12 months and
piggy-back registration rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On July 12, 2012, we entered into a consulting agreement with
Melechdavid, Inc. (&ldquo;Melechdavid&rdquo;), an affiliate of Mark E. Groussman, prior to Mr. Groussman becoming a director of
the Company. The consulting agreement provides that Melechdavid will provide consulting services to us related to strategic acquisitions,
capital restructuring and Mr. Groussman will serve as a member of the board of directors. Mr. Groussman was appointed to our board
of directors on July 19, 2012, and resigned from our board effective October 18, 2012. The consulting agreement provides that we
will issue to Melechdavid shares of common stock in an amount equal to 4.20% of our outstanding common stock on a fully diluted
(as-converted) basis and after giving effect to our contemplated reverse stock split and the financing that occurred in July 2012.
The term of the consulting agreement is 12 months.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Indemnification Agreements </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have entered into indemnification agreements with each of
our directors and named executive officers. The indemnification agreements and our bylaws will require us to indemnify our directors
to the fullest extent permitted by Nevada law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Share Exchange / Common Stock Issuances </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Muscle Pharm, LLC was formed as a Colorado limited liability
company on April 22, 2008. The initial owners of Muscle Pharm, LLC were Brad J. Pyatt and Cory J. Gregory. Mr. Pyatt received a
60% membership interest in exchange for his contribution of formulations for potential products, contacts with GNC Canada and other
potential customers, and contacts with professional athletes. Mr. Gregory received a 40% membership interest in exchange for his
contacts with Dr. Serrano, Louie Simmons, potential distributors, professional athletes and potential investors. Neither Mr. Pyatt
nor Mr. Gregory contributed any cash and no value was placed on their respective contributions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On February 18, 2010, we issued a total of 40,000 shares of
our common stock to the 12 former owners of Muscle Pharm, LLC and of that amount Brad J. Pyatt received 20,000 shares of common
stock and Cory J. Gregory received 10,000 shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Named Executive Officer Loan to the Company </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 18, 2010, Brad J. Pyatt, loaned the Company $100,000
and received an 8% Convertible Promissory Note in exchange. On November 23, 2010, Mr. Pyatt loaned the Company $256,250 and received
an 8% Convertible Promissory Note in exchange. On December 14, 2010, Mr. Pyatt converted all principal and accrued interest underlying
the notes ($358,077) into 11,018 shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Warrant Conversion</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 20, 2012, we entered into a warrant conversion
agreement with Mr. Bluher, our Executive Vice President and Chief Operating Officer, for the conversion of warrants to purchase
38,462 shares of our common stock into 25,615 shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 12, 2012, we entered into a warrant
conversion agreement with El Chichon Partners, LLC (an entity affiliated with  Mr. Burr, a director of the Company) for
the conversion of warrants to purchase 200,000 shares of our common stock into 133,200 shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 30, 2012, we entered into a warrant conversion
agreement with Mr. Groussman, a director of the Company, at the time, for the conversion of warrants to purchase 5,769 shares of
our common stock into 4,904 shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Review, Approval or Ratification of Transactions with Related
Parties</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We intend to adopt a written related person transactions policy
that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of our common stock,
and any members of the immediate family of and any entity affiliated with any of the foregoing persons, are not permitted to enter
into a material related person transaction with us without the review and approval of our audit committee, or a committee composed
solely of independent directors in the event it is inappropriate for our audit committee to review such transaction due to a conflict
of interest. We expect the policy to provide that any request for us to enter into a transaction with an executive officer, director,
nominee for election as a director, beneficial owner of more than 5% of our common stock or with any of their immediate family
members or affiliates, in which the amount involved exceeds $120,000 will be presented to our audit committee for review, consideration
and approval. In approving or rejecting any such proposal, we expect that our audit committee will consider the relevant facts
and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction
is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances
and the extent of the related person&rsquo;s interest in the transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although we have not had a written policy for the review and
approval of transactions with related persons, our board of directors has historically reviewed and approved any transaction where
a director or officer had a financial interest, including all of the transactions described above. Prior to approving such a transaction,
the material facts as to a director&rsquo;s or officer&rsquo;s relationship or interest as to the agreement or transaction were
disclosed to our board of directors. Our board of directors would take this information into account when evaluating the transaction
and in determining whether such transaction was fair to us and in the best interest of all of our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>General</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Prior to effecting the 1-for-650 reverse stock split and
filing an amendment to our articles of incorporation, our authorized capital stock consists of 2,500,000,000 shares of common
stock, par value $0.001 (2,359,265,998 of which are issued and outstanding as of October 25, 2012); and 10,000,000 shares of
Preferred Stock, 5,000,000 shares of which are designated Series A Convertible Preferred Stock (none of which are issued and
outstanding as of October 25, 2012); 51 shares of which are designated Series B Preferred Stock (all of which are issued and
outstanding as of October 25, 2012); 500 shares of which are designated Series C Preferred Stock (none of which are issued
and outstanding as of October 25, 2012); and 4,999,449 shares of which are undesignated as of October 25, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Proportionate Reverse Stock Split and Increase in Number
of Authorized Shares of Common Stock </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 15, 2012, our board of directors approved (i) a 1-for-650
reverse stock split of our common stock, including a proportionate reduction in the number of authorized shares of our common stock
from 2.5 billion shares to 3,846,153 shares of common stock, which we intend to effect prior to the offering of these securities;
and (ii) an amendment to our articles of incorporation to increase the number of authorized common stock (post reverse stock-split)
from 3,846,153 to 100 million, and recommended the proposal for approval to the holders having the power to vote with respect to
the common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 18, 2012, the holders of our Series B
Preferred Stock, who hold approximately 50.99% of the total voting power of all issued and outstanding voting capital of the
Company, approved the amendment to the articles of incorporation by written consent in lieu of a meeting in accordance with
Nevada law. We intend to effect the amendment to the articles of incorporation immediately after implementing the reverse
stock split described above, all of which will occur prior to the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The holders of common stock: (i) have equal rights to dividends
from funds legally available therefore, ratably when as and if declared by our board of directors; (ii) are entitled to share ratably
in all of our assets available for distribution to holders of common stock upon liquidation, dissolution, or winding up of our
affairs; (iii) do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions
applicable thereto; (iv) are entitled to one non-cumulative vote per share of common stock, on all matters which stockholders may
vote on at all meetings of stockholders; and (v) the holders of common stock have no conversion, preemptive or other subscription
rights. There is no cumulative voting for the election of directors. Each holder of our common stock is entitled to one vote for
each share of our common stock held on all matters submitted to a vote of stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our blank check preferred stock may be issued from time to time
without prior approval by our stockholders. Our preferred stock may be issued for such consideration as may be fixed from time
to time by our board of directors. Our board of directors may issue our blank check preferred stock in one or more series, with
such voting powers, designations, preferences and rights or qualifications, limitations or restrictions thereof, and for such consideration
as will be stated in the resolution or resolutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Series A Convertible Preferred Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">These shares are non-voting, and have no dividend or liquidation
rights. Each share is convertible into 200 shares of common stock, provided, however, no holder of the Series A Convertible preferred
stock will have the right to convert any of such shares to the extent that after giving effect to such conversion, the beneficial
owner of such shares would beneficially own in excess of 4.9% of the shares of the common stock outstanding immediately after giving
effect to such conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Series B Preferred Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">According to the Certificate of Designation filed with the Nevada
Secretary of State, these shares have no dividend rights, liquidation rights on a pro rata basis, no conversion rights and rank
senior to our common stock. Each 1 share of Series B Preferred Stock has voting rights equal to (x) 0.019607<I> multiplied by</I>
the total issued and outstanding common stock eligible to vote at the time of the respective vote (the &ldquo;Numerator&rdquo;)<I>
divided by</I> (y) 0.49,<I> minus</I> (z) the Numerator. The 51 shares of Series B Preferred Stock entitle the holders to voting
rights equivalent to 51% of the shares of common stock then outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Series C Convertible Preferred Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The summary of the rights, privileges and preferences of the
Series C Preferred Stock described above is qualified in its entirety by reference to the applicable certificates of designation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Representative&rsquo;s Warrants </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are registering the warrants we have agreed to sell to the
representative of the underwriters in this offering to purchase up to a total of shares of common stock (5% of the shares sold
in this offering and based on an aggregate offering amount of $17,000,000). See &ldquo;Underwriting&mdash;Representative's Warrants&rdquo; on page 62 of this prospectus for a description of these warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Anti-Takeover Provisions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Nevada Revised Statutes</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Nevada Revised Statutes provide state regulation over the acquisition
of a controlling interest in certain Nevada corporations. The statutes create a number of restrictions on the ability of a person
or entity to acquire control of a Nevada corporation by setting down certain rules of conduct and voting restrictions in any acquisition
attempt, among other things.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Acquisition of Controlling Interest. The Nevada Revised Statutes
provide generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada
corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a
majority of the disinterested stockholders of the corporation elects to restore such voting rights in whole or in part. The control
share acquisition law provides that a person or entity acquires &ldquo;control shares&rdquo; whenever it acquires shares that,
but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges:
(i) 20% to 33 1/3%, (ii) 33 1/3% to 50%, or (iii) more than 50%. A &ldquo;control share acquisition&rdquo; is generally defined
as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The stockholders or board of directors of a corporation may
elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision
to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not contain
such an exemption. The control share acquisition law is applicable only to shares of corporations which: (a) have 200 or more stockholders,
with at least 100 of such stockholders being both stockholders of record and residents of Nevada; and (b) do business in Nevada
directly or through an affiliated corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At this time, we do not have 100 stockholders of record with
addresses in the State of Nevada. Therefore, the provisions of the control share acquisition law do not apply to acquisitions of
our shares and will not until such time as these requirements have been met. If the ever does apply to us, it may discourage companies
or persons interested in acquiring a significant interest in or control of the Company, regardless of whether such acquisition
may be in the interest of our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Combination with Interested Stockholders. The Nevada Revised
Statutes contain provisions governing the combination of a Nevada corporation that has 200 or more stockholders of record with
an interested stockholder. These provisions may have the effect of delaying or making it more difficult to affect a change in control
of our company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A corporation affected by these provisions may not engage in
a combination within three years after the interested stockholder acquires his, her or its shares unless the combination or purchase
is approved by the board of directors before the interested stockholder acquired such shares. Generally, if approval is not obtained,
then after the expiration of the three-year period, the business combination may be consummated with the approval of the board
of directors before the person became an interested stockholder or a majority of the voting power held by disinterested stockholders,
or if the consideration to be received per share by disinterested stockholders is at least equal to the highest of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Symbol; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the
announcement of the combination or within three years immediately before, or in, the transaction in which he, she or it became
an interested stockholder, whichever is higher;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the market value per share on the date of announcement of the combination or the date the person became an interested stockholder,
whichever is higher; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>if higher for the holders of preferred stock, the highest liquidation value of the preferred stock, if any.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Generally, these provisions define an interested stockholder
as a person who is the beneficial owner, directly or indirectly of 10% or more of the voting power of the outstanding voting shares
of a corporation. Generally, these provisions define combination to include any merger or consolidation with an interested stockholder,
or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with
an interested stockholder of assets of the corporation having:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>representing 10% or more of the earning power or net income of the corporation.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The effect of Nevada&rsquo;s business combination law is to
potentially discourage parties interested in taking control of the Company from doing so if it cannot obtain the approval of our
board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Articles of Incorporation, as Amended, and Bylaw Provisions</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our articles of incorporation, as amended, and bylaws contain
provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing
a change in control, including changes a stockholder might consider favorable. In particular, the articles of incorporation and
bylaws, as applicable, among other things:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>provide our board of directors with the ability to alter its bylaws without stockholder approval; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Such provisions may have the effect of discouraging a third-party
from acquiring us, even if doing so would be beneficial to our stockholders. These provisions are intended to enhance the likelihood
of continuity and stability in the composition of our board of directors and in the policies formulated by them, and to discourage
some types of transactions that may involve an actual or threatened change in control of our company. These provisions are designed
to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used in proxy fights.
We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly
or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging such proposals because,
among other things, negotiation of such proposals could result in an improvement of their terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">However, these provisions could have the effect of discouraging
others from making tender offers for our shares that could result from actual or rumored takeover attempts. These provisions also
may have the effect of preventing changes in our management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Transfer Agent and Registrar</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The transfer agent and registrar for our common stock is Corporate
Stock Transfer, 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Listing</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The shares of our common stock are currently quoted on the
OTC QB under the symbol &ldquo;MSLP.OB&rdquo;. We have applied for the listing of our common stock on The NASDAQ Capital Market under the symbol
&ldquo;MSPH&rdquo;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNDERWRITING</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Aegis Capital Corp. is acting as the representative of the underwriters
of the offering. We have entered into an underwriting agreement dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2012 with the representative. Subject to the terms and
conditions of the underwriting agreement, we have agreed to sell to each underwriter named below and each underwriter named below
has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the
cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Number&nbsp;of</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Name&nbsp;of&nbsp;Underwriter</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Shares</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left; padding-bottom: 1pt">Aegis Capital Corp.</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none; width: 1%; border-bottom: Black 1pt solid"></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none; border-bottom: Black 1pt solid; width: 15%">&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The underwriters are committed to purchase all the shares of
common stock offered by us other than those covered by the option to purchase additional shares described below, if it purchases
any shares. The obligations of the underwriters may be terminated upon the occurrence of certain events specified in the underwriting
agreement. Furthermore, pursuant to the underwriting agreement, the underwriters&rsquo; obligations are subject to customary conditions,
representations and warranties contained in the underwriting agreement, such as receipt by the underwriters of officers&rsquo;
certificates and legal opinions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have agreed to indemnify the underwriters against specified
liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to
make in respect thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The underwriters are offering the shares, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel and other conditions specified
in the underwriting agreement. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject
orders in whole or in part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">We have granted the underwriters an over-allotment option. This
option, which is exercisable for up to 45 days after the date of this prospectus, permits the underwriters to purchase a maximum
of  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares (15% of the shares sold in this offering) from us to cover over-allotments, if any. If the underwriters exercise
all or part of this option, they will purchase shares covered by the option at the public offering price that appears on the cover
page of this prospectus, less the underwriting discount. If this option is exercised in full, the total price to the public will
be $  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and the total net proceeds, before expenses, to us will be $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Discounts and Commissions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table shows the public offering price, underwriting
discount and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriters
of their over-allotment option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none">Total</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none"><B>&nbsp;</B></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none"><B>Per
                                                                                                                                                                                                                 Share</B></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none">Without <BR>Over-Allotment</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none">With <BR>Over-Allotment</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%">Public offering price</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&nbsp;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Underwriting discount (7%)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black"><FONT STYLE="color: black">Non-accountable expenses (1%)<SUP>(1)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Proceeds, before expenses, to us</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 20%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(1)</TD><TD>The expense allowance of 1% is not payable with respect to the shares sold upon exercise of the underwriters&rsquo; over-allotment
option.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The underwriters propose to offer the shares offered by us to
the public at the public offering price set forth on the cover of this prospectus. In addition, the underwriters may offer some
of the shares to other securities dealers at such price less a concession of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. If all of the shares offered by us are
not sold at the public offering price, the underwriters may change the offering price and other selling terms by means of a further
supplement to this prospectus supplement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have paid an expense deposit of $25,000 to the representative,
which will be applied against the accountable expenses that will be paid by us to the underwriters in connection with this offering.
The underwriting agreement, however, provides that in the event the offering is terminated, the $25,000 expense deposit paid to
the representative will be returned to the extent offering expenses are not actually incurred in accordance with FINRA Rule 5110(f)(2)(C).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have also agreed to pay the underwriters&rsquo; expenses
relating to the offering, including (a) all fees, expenses and disbursements relating to background checks of our officers and
directors in an amount not to exceed $2,500 per individual or $15,000 in the aggregate; (b) all fees incurred in clearing this
offering with FINRA; (c) all fees, expenses and disbursements relating to the registration, qualification or exemption of securities
offered under the securities laws of foreign jurisdictions designated by the underwriters; (d) upon successfully completing this
offering, $21,775 for the underwriters&rsquo; use of Ipreo&rsquo;s book-building, prospectus tracking and compliance software for
this offering; and (e) upon successfully completing this offering, up to $20,000 of the representative&rsquo;s actual accountable
road show expenses for the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We estimate that the total expenses of the offering payable
by us, excluding the total underwriting discount and expense reimbursement, will be approximately $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Discretionary Accounts</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The underwriters do not intend to confirm sales of the securities
offered hereby to any accounts over which they have discretionary authority.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Lock-Up Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to certain &ldquo;lock-up&rdquo; agreements, we, our
named executive officers and directors, and certain of our stockholders have agreed, subject to certain exceptions, not to offer,
sell, assign, transfer, pledge, contract to sell, or otherwise dispose of or announce the intention to otherwise dispose of, or
enter into any swap, hedge or similar agreement or arrangement that transfers, in whole or in part, the economic risk of ownership
of, directly or indirectly, engage in any short selling of any common stock or securities convertible into or exchangeable or exercisable
for any common stock, whether currently owned or subsequently acquired, without the prior written consent of the underwriter, for
a period of ninety (90) days after the date of the underwriting agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The lock-up period described in the preceding paragraph will
be automatically extended if: (1) during the last 17 days of the restricted period, we issue an earnings release or announce material
news or a material event; or (2) prior to the expiration of the lock-up period, we announce that we will release earnings results
during the 16-day period beginning on the last day of the lock-up period, in which case the restrictions described in the preceding
paragraph will continue to apply until the expiration of the 18-day period beginning on the date of the earnings release, unless
the representative waives this extension in writing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Representative&rsquo;s Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have agreed to issue to the representative warrants to purchase
up to a total of  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of common stock (5% of the shares of common stock sold in this offering). The warrants are exercisable
at a per share price equal to 125% of the public offering price per share in the offering, at any time, and from time to time,
in whole or in part, during the four-year period commencing one year from the effective date of the offering, which period shall
not extend further than five years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(i). The
warrants have been deemed compensation by FINRA and are therefore subject to a one-year lock-up pursuant to Rule 5110(g)(1) of
FINRA. The representative (or permitted assignees under Rule 5110(g)(1)) will not sell, transfer, assign, pledge, or hypothecate
these warrants or the securities underlying these warrants, nor will they engage in any hedging, short sale, derivative, put, or
call transaction that would result in the effective economic disposition of the warrants or the underlying securities for a period
of 180 days from the date of this prospectus. In addition, the warrants provide for registration rights upon request, in certain
cases. In addition, the warrants provide for registration rights upon request, in certain cases. The demand registration right
provided will not be greater than five years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(iv).
The piggyback registration right provided will not be greater than seven years from the effective date of the offering in compliance
with FINRA Rule 5110(f)(2)(H)(v).&nbsp;We will bear all fees and expenses attendant to registering the securities issuable on exercise
of the warrants other than underwriting commissions incurred and payable by the holders. The exercise price and number of shares
issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary
cash dividend or our recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying
shares will not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Right of First Refusal</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Until 12 months after the closing date of the offering, the
representative shall have a right of first refusal to purchase for its account or to sell for our account, or any subsidiary or
successor, any securities of our company or any such subsidiary or successor which we or any subsidiary or successor may seek to
sell in public or private equity and public debt offerings during such 12-month period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may, however, in lieu of granting a right of first refusal,
designate the representative as lead underwriter or co-manager of any underwriting group or co-placement agent of any proposed
financing, and the representative shall be entitled to receive as its compensation 50% of the compensation payable to the underwriting
or placement agent group when serving as co-manager or co-placement agent, and 33% of the compensation payable to the underwriting
or placement agent group when serving as co-manager or co-placement agent with respect to a proposed financing in which there are
three co-managing or lead underwriters or co-placement agents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Electronic Offer, Sale and Distribution of Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A prospectus in electronic format may be made available on the
websites maintained by one or more of the underwriters or selling group members, if any, participating in this offering and one
or more of the underwriters participating in this offering may distribute prospectuses electronically. The representative may agree
to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet
distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same
basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of, nor
incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been
approved or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Stabilization</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with this offering, the underwriters may engage
in stabilizing transactions, over-allotment transactions, syndicate-covering transactions, penalty bids and purchases to cover
positions created by short sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Stabilizing transactions permit bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum,
and are engaged in for the purpose of preventing or retarding a decline in the market price of the shares while the offering is
in progress.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Over-allotment transactions involve sales by the underwriters of shares in excess of the number of shares the underwriters
are obligated to purchase. This creates a syndicate short position which may be either a covered short position or a naked short
position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of
shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater
than the number of shares in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment
option and/or purchasing shares in the open market.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Syndicate covering transactions involve purchases of shares in the open market after the distribution has been completed in
order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters
will consider, among other things, the price of shares available for purchase in the open market as compared with the price at
which they may purchase shares through exercise of the over-allotment option. If the underwriters sell more shares than could be
covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only
by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that
after pricing there could be downward pressure on the price of the shares in the open market that could adversely affect investors
who purchase in the offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the shares originally sold
by that syndicate member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of raising or maintaining the market price of our shares or common stock or preventing or
retarding a decline in the market price of our shares or common stock. As a result, the price of our common stock in the open market
may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters make any representation
or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions
may be effected on The NASDAQ Capital Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued
at any time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Passive market making </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with this offering, underwriters and selling group
members may engage in passive market making transactions in our common stock on The NASDAQ Capital Market or on the OTC QB in accordance
with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the shares
and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess
of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker&rsquo;s
bid, then that bid must then be lowered when specified purchase limits are exceeded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Other Relationships</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Certain of the underwriters and their affiliates have provided,
and may in the future provide, various investment banking, commercial banking and other financial services for us and our affiliates
for which they have received, and may in the future receive, customary fees; however, except as disclosed in this prospectus, we
have no present arrangements with any of the underwriters for any further services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Offer Restrictions Outside the United States</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other than in the United States, no action has been taken by
us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where
action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly,
nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities
be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable
rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves
about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction
in which such an offer or a solicitation is unlawful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Australia</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus is not a disclosure document under Chapter 6D
of the Australian Corporations Act, has not been lodged with the Australian Securities and Investments Commission and does not
purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly,
(i) the offer of the common stock under this prospectus is only made to persons to whom it is lawful to offer the common stock
without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in section 708 of the
Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in clause (i)
above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that
the offeree is such a person as set forth in clause (i) above, and, unless permitted under the Australian Corporations Act, agrees
not to sell or offer for sale within Australia any of the common stock sold to the offeree within 12 months after its transfer
to the offeree under this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>China</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The information in this document does not constitute a public
offer of the common stock, whether by way of sale or subscription, in the People&rsquo;s Republic of China (excluding, for purposes
of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The common stock may
not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to &ldquo;qualified domestic
institutional investors.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>European Economic Area&nbsp;&mdash;&nbsp;Belgium, Germany,
Luxembourg and Netherlands</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The information in this document has been prepared on the basis
that all offers of common stock will be made pursuant to an exemption under the Directive 2003/71/EC (&ldquo;Prospectus Directive&rdquo;),
as implemented in Member States of the European Economic Area (each, a &ldquo;Relevant Member State&rdquo;), from the requirement
to produce a prospectus for offers of securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">An offer to the public of common stock has not been made, and
may not be made, in a Relevant Member State except pursuant to one of the following exemptions under the Prospectus Directive as
implemented in that Relevant Member State:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(a)</TD><TD>to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(b)</TD><TD>to any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total
balance sheet of more than &euro;43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements) and
(iii) an annual net turnover of more than &euro;50,000,000 (as shown on its last annual unconsolidated or consolidated financial
statements);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(c)</TD><TD>to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus
Directive) subject to obtaining the prior consent of MusclePharm Corporation.&nbsp; or any underwriter for any such offer; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(d)</TD><TD>in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of common stock
shall result in a requirement for the publication by MusclePharm Corporation of a prospectus pursuant to Article&nbsp;3 of the
Prospectus Directive.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>France</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This document is not being distributed in the context of a public
offering of financial securities (offre au public de titres financiers) in France within the meaning of Article&nbsp;L.411-1 of
the French Monetary and Financial Code (<I>Code mon&eacute;taire et financier</I>) and Articles 211-1<I> et seq</I>. of the General
Regulation of the French Autorit&eacute; des march&eacute;s financiers (&ldquo;AMF&rdquo;). The common stock have not been offered
or sold and will not be offered or sold, directly or indirectly, to the public in France.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This document and any other offering material relating to the
common stock have not been, and will not be, submitted to the AMF for approval in France and, accordingly, may not be distributed
or caused to distributed, directly or indirectly, to the public in France.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Such offers, sales and distributions have been and shall only
be made in France to (i) qualified investors (<I>investisseurs qualifi&eacute;s</I>) acting for their own account, as defined in
and in accordance with Articles L.411-2-II-2&deg; and D.411-1 to D.411-3, D. 744-1, D.754-1 and D.764-1 of the French Monetary
and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors (cercle restreint
d&rsquo;investisseurs) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2&deg; and D.411-4,
D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to Article 211-3 of the General Regulation of the AMF,
investors in France are informed that the common stock cannot be distributed (directly or indirectly) to the public by the investors
otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial
Code.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Ireland</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The information in this document does not constitute a prospectus
under any Irish laws or regulations and this document has not been filed with or approved by any Irish regulatory authority as
the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish
Prospectus (Directive 2003/71/EC) Regulations 2005 (the &ldquo;Prospectus Regulations&rdquo;). The common stock have not been offered
or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to (i)
qualified investors as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than 100 natural or legal persons
who are not qualified investors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Israel</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The common stock offered by this prospectus have not been approved
or disapproved by the Israeli Securities Authority (the ISA), or ISA, nor have such common stock been registered for sale in Israel.
The shares may not be offered or sold, directly or indirectly, to the public in Israel, absent the publication of a prospectus.
The ISA has not issued permits, approvals or licenses in connection with the offering or publishing the prospectus; nor has it
authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality
of the common stock being offered. Any resale in Israel, directly or indirectly, to the public of the common stock offered by this
prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws
and regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Italy</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The offering of the common stock in the Republic of Italy has
not been authorized by the Italian Securities and Exchange Commission (<I>Commissione Nazionale per le Societe la Borsa</I>, &ldquo;CONSOB&rdquo;)
pursuant to the Italian securities legislation and, accordingly, no offering material relating to the common stock may be distributed
in Italy and such securities may not be offered or sold in Italy in a public offer within the meaning of Article 1.1(t) of Legislative
Decree No. 58 of 24 February 1998 (&ldquo;Decree No. 58&rdquo;), other than:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>to Italian qualified investors, as defined in Article 100 of Decree no.58 by reference to Article 34-ter of CONSOB Regulation
no. 11971 of 14 May&nbsp;1999 (&ldquo;Regulation no. 1197l&rdquo;) as amended (&ldquo;Qualified Investors&rdquo;); and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>in other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article
34-ter of Regulation No. 11971 as amended.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 0">Any offer, sale or delivery
of the common stock or distribution of any offer document relating to the common stock in Italy (excluding placements where a Qualified
Investor solicits an offer from the issuer) under the paragraphs above must be:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>made by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with
Legislative Decree No. 385 of 1 September 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of 29 October 2007 and
any other applicable laws; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Any subsequent distribution of the common stock in Italy must
be made in compliance with the public offer and prospectus requirement rules provided under Decree No. 58 and the Regulation No.
11971 as amended, unless an exception from those rules applies. Failure to comply with such rules may result in the sale of such
common stock being declared null and void and in the liability of the entity transferring the common stock for any damages suffered
by the investors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Japan</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The common stock have not been and will not be registered under
Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the &ldquo;FIEL&rdquo;)
pursuant to an exemption from the registration requirements applicable to a private placement of securities to Qualified Institutional
Investors (as defined in and in accordance with Article 2, paragraph 3 of the FIEL and the regulations promulgated thereunder).
Accordingly, the common stock may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident
of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires common stock may not resell
them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of common stock
is conditional upon the execution of an agreement to that effect.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Portugal</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This document is not being distributed in the context of a public
offer of financial securities (<I>oferta p&uacute;blica de valores mobili&aacute;rios</I>) in Portugal, within the meaning of Article
109 of the Portuguese Securities Code (<I>C&oacute;digo dos Valores Mobili&aacute;rios</I>). The common stock have not been offered
or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document and any other offering
material relating to the common stock have not been, and will not be, submitted to the Portuguese Securities Market Commission
(<I>Comiss&#259;o do Mercado de Valores Mobili&aacute;rios</I>) for approval in Portugal and, accordingly, may not be distributed
or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances that are deemed not
to qualify as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of common stock in Portugal
are limited to persons who are &ldquo;qualified investors&rdquo; (as defined in the Portuguese Securities Code). Only such investors
may receive this document and they may not distribute it or the information contained in it to any other person.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Sweden</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This document has not been, and will not be, registered with
or approved by <I>Finansinspektionen</I> (the Swedish Financial Supervisory Authority). Accordingly, this document may not be made
available, nor may the common stock be offered for sale in Sweden, other than under circumstances that are deemed not to require
a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980) <I>om handel med finansiella instrument</I>).
Any offering of common stock in Sweden is limited to persons who are &ldquo;qualified investors&rdquo; (as defined in the Financial
Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the information contained
in it to any other person.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Switzerland</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The common stock may not be publicly offered in Switzerland
and will not be listed on the SIX Swiss Exchange (&ldquo;SIX&rdquo;) or on any other stock exchange or regulated trading facility
in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art.
652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the
SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document
nor any other offering material relating to the common stock may be publicly distributed or otherwise made publicly available in
Switzerland.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Neither this document nor any other offering material relating
to the common stock have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document
will not be filed with, and the offer of common stock will not be supervised by, the Swiss Financial Market Supervisory Authority
(&ldquo;FINMA&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This document is personal to the recipient only and not for
general circulation in Switzerland.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>United Arab Emirates</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Neither this document nor the common stock have been approved,
disapproved or passed on in any way by the Central Bank of the United Arab Emirates or any other governmental authority in the
United Arab Emirates, nor has MusclePharm Corporation received authorization or licensing from the Central Bank of the United Arab
Emirates or any other governmental authority in the United Arab Emirates to market or sell the common stock within the United Arab
Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. No services relating
to the common stock, including the receipt of applications and/or the allotment or redemption of such shares, may be rendered within
the United Arab Emirates by MusclePharm Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No offer or invitation to subscribe for common stock is valid
or permitted in the Dubai International Financial Centre.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>United Kingdom</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Neither the information in this document nor any other document
relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus
(within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended (&ldquo;FSMA&rdquo;)) has been published
or is intended to be published in respect of the common stock. This document is issued on a confidential basis to &ldquo;qualified
investors&rdquo; (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the common stock may not be offered or
sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances which
do not require the publication of a prospectus pursuant to section 86(1) FSMA. This document should not be distributed, published
or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Any invitation or inducement to engage in investment activity
(within the meaning of section 21 of FSMA) received in connection with the issue or sale of the common stock has only been communicated
or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances
in which section 21(1) of FSMA does not apply to MusclePharm Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the United Kingdom, this document is being distributed only
to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article
19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (&ldquo;FPO&rdquo;),
(ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated
associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together &ldquo;relevant persons&rdquo;).
The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase will be
engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any
of its contents.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The validity of the securities being offered by this prospectus
has been passed upon for us by Jones &amp; Keller, P.C., Denver, Colorado. Certain legal matters in connection with this offering
will be passed upon for the underwriters by Reed Smith LLP, New York, New York.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXPERTS </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The consolidated financial statements of MusclePharm Corporation
as of and for the years ended December&nbsp;31, 2011 and 2010 appearing in this prospectus have been audited by Berman &amp; Company,
P.A., independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included
in reliance upon such report given on the authority of such firm as experts in accounting and auditing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Changes in Registrant&rsquo;s Certifying Accountant </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 14, 2012, following a competitive process undertaken
by our audit committee in accordance with its charter, the audit committee approved the appointment of Ehrhardt Keefe Steiner &amp;
Hottman PC, effective September 14, 2012, as our independent registered public accounting firm for the fiscal year ending December&nbsp;31,
2012. On September 14, 2012, Ehrhardt Keefe Steiner &amp; Hottman PC accepted the engagement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During our fiscal year ended December&nbsp;31, 2011, and the
subsequent interim period prior to the engagement of Ehrhardt Keefe Steiner &amp; Hottman PC, the Company did not consult Ehrhardt
Keefe Steiner &amp; Hottman PC regarding (1)&nbsp;the application of accounting principles to a specific completed or contemplated
transaction, (2) the type of audit opinion that might be rendered on our financial statements, or (3)&nbsp;any matter that was
either the subject of a &ldquo;disagreement&rdquo; (as such term is described in Item&nbsp;304(a)(1)(iv) of Regulation S-K) or
a &ldquo;reportable event&rdquo; with Berman &amp; Company, P.A. (as such term is described in Item&nbsp;304(a)(1)(v) of Regulation
S-K).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 18, 2012, our audit committee approved the dismissal
of Berman &amp; Company, P.A. as our independent registered public accounting firm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Berman &amp; Company, P.A.&rsquo;s report on the financial statements
for the fiscal years ended December 31, 2011 and 2010, contained no adverse opinion or disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting principle, except that the report contained a modification to the effect
that there was substantial doubt as to the Company&rsquo;s ability to continue as a going concern. During the fiscal years ended
December 31, 2011 and 2010, and through September 18, 2012, there were no &ldquo;disagreements&rdquo; (as such term is described
in Item&nbsp;304(a)(1)(iv) of Regulation S-K) with Berman &amp; Company, P.A. on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Berman
&amp; Company, P.A., would have caused it to make reference thereto in their reports on the consolidated financial statements for
such years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the fiscal years ended December&nbsp;31, 2010 and 2011
and through September 18, 2012, there were no &ldquo;reportable events&rdquo; (as such term is defined in Item&nbsp;304(a)(1)(v)
of Regulation S-K).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We provided Berman &amp; Company, P.A. with a copy of the foregoing
disclosures and requested that Berman &amp; Company, P.A. furnish us with a letter addressed to the SEC whether or not it agreed
with the above statements. A copy of such letter is filed as Exhibit 16 to the registration statement of which this prospectus
is a part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>WHERE YOU CAN FIND MORE INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are a reporting company and file annual, quarterly and special
reports, and other information with the SEC. Copies of the reports and other information may be read and copied at the SEC&rsquo;s
Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. You can request copies of such documents by writing to the
SEC and paying a fee for the copying cost. You may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC maintains a web site at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the SEC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus is part of a registration statement on Form
S-1 that we filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance
with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration statement that are excluded
from this prospectus. For further information you may:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC&rsquo;s Public Reference
Room; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>obtain a copy from the SEC upon payment of the fees prescribed by the SEC.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Index to Consolidated Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="width: 90%; text-decoration: none"><FONT STYLE="text-underline-style: none; color: windowtext">Consolidated Balance Sheets as of June</FONT> 30, 2012 (unaudited) and December 31, 2011</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right"><FONT STYLE="color: black">F-<FONT STYLE="text-underline-style: none">2</FONT></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2012 and 2011 (unaudited)</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="color: black">F-<FONT STYLE="text-underline-style: none">3</FONT></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Statements of Cash Flows for the Six Months ended June 30, 2012 and 2011 (unaudited)</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">F-4</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Notes to Consolidated Financial Statements (June 30, 2012) (unaudited)</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">F-5</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Report of Independent Registered Public Accounting Firm</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">F-25</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Balance Sheets as of December 31, 2011 and 2010</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">F-26</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Statements of Operations as for the Years Ended December 31, 2011 and 2010</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">F-27</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Statement of Stockholders&rsquo; Deficit for the Years Ended December 31, 2011 and 2010</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">F-28</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Statements of Cash Flows for the Years Ended December 31, 2011 and 2010</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">F-29</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Notes to Consolidated Financial Statements</TD>
    <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right">F-30</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm</B> <B>Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Consolidated Balance Sheets</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">June 30, 2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(unaudited)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: center">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current Assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; padding-left: 9pt">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">291,971</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">659,764</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Cash &ndash; restricted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,744</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts receivable &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,057,409</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,569,092</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">219,276</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Prepaid stock compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">204,510</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">534,456</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Prepaid sponsorship fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,329</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">203,333</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">83,003</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">50,188</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,956,242</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,016,833</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Property and equipment &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,252,630</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">907,522</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Debt issue costs &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">418,866</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68,188</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">98,090</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">53,585</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total assets</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">4,725,828</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">5,046,128</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: center">Liabilities and Stockholders&rsquo; Deficit</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,211,373</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,359,073</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Customer deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,150,473</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,047</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Debt &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,353,553</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,281,742</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Derivative liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,908,860</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,061,238</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total Current Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,624,259</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,710,100</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Long Term Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;&nbsp;Debt &ndash; net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">114,682</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">307,240</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total Liabilities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,738,941</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">18,017,340</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stockholders&rsquo; Deficit:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Series A, Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Series B, Preferred Stock, $0.001 par value; 51 shares authorized, 51 and none, respectively, issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Series C, Convertible Preferred Stock, $0.001 par value; 500 shares authorized, 190 and none, respectively, issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Common Stock, $0.001 par value; 2,500,000,000 shares authorized, 1,416,605,782 and 605,930,613 issued and 1,390,174,207 and 605,930,613 outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,416,605</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">605,931</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Treasury Stock, at cost; 26,431,575 and zero shares</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(460,978</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,000,612</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,579,538</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accumulated deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(55,010,071</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(45,156,681</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Accumulated other comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,719</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Total Stockholders&rsquo; Deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(11,013,113</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(12,971,212</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total Liabilities and Stockholders&rsquo; Deficit</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">4,725,828</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">5,046,128</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to unaudited financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Consolidated Statements of Operations</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the three Months Ended June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Six Months Ended June 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; font-weight: bold; text-align: left">Sales - net</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,429,340</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,397,742</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">31,990,020</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,431,678</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">Cost of sales</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,942,605</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,512,828</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25,837,767</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,914,361</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Gross profit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,486,735</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">884,914</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,152,253</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,517,317</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">General and administrative expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,151,076</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,778,682</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,543,887</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,498,310</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Loss from operations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,664,341</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,893,768</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,391,634</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,980,993</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Derivative expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,029,541</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,698,490</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,486,451</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,057,859</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Change in fair value of derivative liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,854,045</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">766,487</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,496,874</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">634,770</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Loss on settlement of accounts payable, debt and conversion of Series C preferred stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(627,384</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,941,826</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,542,073</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(976,686</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,983,468</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,547,202</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,502,390</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Foreign currency transaction loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,573</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,573</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,423</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 9pt">Total other income (expense) - net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,846,245</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,542,855</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,461,755</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(9,467,552</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net income (loss)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,181,904</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,436,623</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(9,853,389</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(12,448,545</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Other comprehensive income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net change in Foreign currency translation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,719</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,719</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Total other comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,719</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,719</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total comprehensive income (loss)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,222,623</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(7,436,623</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(9,812,670</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(12,448,545</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share available to common stockholders - basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.04</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.01</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Weighted average number of common shares outstanding during the period &ndash; basic and diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,388,624,267</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">201,864,655</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,301,222,184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">174,365,323</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to unaudited financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>



<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Consolidated Statements of Cash Flows</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(unaudited)</U></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Six&nbsp;Months&nbsp;Ended</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">June&nbsp;30,&nbsp;2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">June&nbsp;30,&nbsp;2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Operating Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(9,853,389</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(12,448,545</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">199,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,393</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Bad debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,490</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,203</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stock based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">758,826</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Amortization of prepaid stock compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">456,903</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,039,925</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Amortization of debt discount</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,083,437</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,899,959</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Amortization of debt issue costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">184,031</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">134,233</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Loss on settlement of accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,542,073</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Loss on settlement of accounts payable, debt and conversion of Series C preferred stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,941,826</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Derivative expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,486,451</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,057,859</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Change in fair value of derivative liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,496,874</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(634,770</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-style: italic; text-align: left">Changes in operating assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">(Increase) decrease in:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Restricted cash balance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(52,744</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">502,193</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,967,133</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Prepaid and other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">186,725</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(48,359</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(219,276</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Increase (decrease) in:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">867,058</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,057,640</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,142,426</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(57,493</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Due to factor</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,853</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net Cash Provided by (Used In) Operating Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">438,007</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,645,448</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Investing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Purchase of property and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(544,859</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(324,435</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Purchase of trademark</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(35,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net Cash Used In Investing Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(579,859</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(324,435</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Financing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Proceeds from issuance of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,073,950</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,648,083</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Debt issue costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(106,950</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(204,093</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Repayment of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,058,442</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Repurchase of common stock (treasury stock)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(460,978</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Proceeds from issuance of common stock and warrants</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">285,760</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net Cash (Used In) Provided by Financing Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(266,660</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,443,990</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Equity Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Foreign currency translation loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,719</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net (decrease) increase in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(367,793</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">474,107</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Cash at beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">659,764</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43,704</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Cash at end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">291,971</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">517,811</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Supplemental disclosures of cash flow information:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Cash paid for interest</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">265,078</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,518,761</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Cash paid for taxes</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Supplemental disclosure of non-cash investing and financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued for future services - third parties</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">200,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">251,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Warrants issued in conjunction with debt issue costs</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">427,759</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Debt discount recorded on convertible and unsecured debt accounted for as a derivative liability</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,554,672</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,258,108</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to settle accounts payable and accrued interest &ndash; third parties</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,393,868</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Conversion of convertible debt and accrued interest for common stock</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,069,402</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,454,635</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Reclassification of convertible notes to demand loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">278,600</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to settle accrued executive compensation</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,667,764</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Conversion of notes to common stock payable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Reclassification of derivative liability to additional paid in capital</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,124,387</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,284,928</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to acquire equipment</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">82,811</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Share cancellation</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">350</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to settle contracts</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,932</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to settle accrued liabilities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">135,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to unaudited financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>MusclePharm Corporation
and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated
Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>(June 30, 2012)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 1: Nature of Operations and Basis of Presentation</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Nature of Operations</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">MusclePharm Corporation (the &ldquo;Company&rdquo;,
&ldquo;we&rdquo;, &ldquo;our&rdquo;, or &ldquo;MP&rdquo;), was initially incorporated in the State of Nevada on August 4, 2006,
under the name Tone in Twenty, for the purpose of engaging in the business of providing personal fitness training using isometric
techniques. The Company is headquartered in Denver, Colorado.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">MusclePharm currently manufactures and markets a wide-ranging
variety of high-quality sports nutrition products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Basis of Presentation</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying unaudited interim consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
and the rules and regulations of the United States Securities and Exchange Act of 1934, as amended for interim financial information.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The financial information as of December
31, 2011 is derived from the audited financial statements presented in the Company&rsquo;s Annual Report on Form 10-K/A for the
years ended December 31, 2011 and 2010. The unaudited interim consolidated financial statements should be read in conjunction with
the Company&rsquo;s Annual Report on Form 10-K/A, which contains the audited financial statements and notes thereto, together with
Management&rsquo;s Discussion and Analysis, for the years ended December 31, 2011 and 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain information or footnote disclosures
normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States
of America have been or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial
position, results of operations, or cash flows. It is management&rsquo;s opinion, however, that all material adjustments (consisting
of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results
for the six months ended June 30, 2012 are not necessarily indicative of results for the full fiscal year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>MusclePharm Corporation
and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated
Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 2: Summary of Significant Accounting
Policies</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Principles of Consolidation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All intercompany accounts and transactions
have been eliminated in consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Use of Estimates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements
in conformity with United States of America generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Making estimates requires management to
exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or
set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly
from estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Risks and Uncertainties</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates in an industry that
is subject to rapid change and intense competition. The Company&rsquo;s operations will be subject to significant risk and uncertainties
including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Cash and Cash Equivalents</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company considers all highly liquid
instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents. At June
30, 2012 and December 31, 2011, respectively, the Company had no cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Accounts Receivable and Allowance for
Doubtful Accounts</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable represents trade obligations
from customers that are subject to normal trade collection terms. The accounts receivable are sent directly to the Company&rsquo;s
third party manufacturer and netted with any outstanding liabilities to the manufacturer. Liabilities to the manufacturer totaled
$2,351,060 at June 30, 2012 and are included in accounts payable and accrued liabilities. The Company periodically evaluates the
collectability of its accounts receivable and considers the need to establish an allowance for doubtful accounts based upon historical
collection experience and specific customer information. Accordingly, the actual amounts could vary from the recorded allowances.
There is also a review of customer discounts at the period end and an accrual made for discounts earned but not yet received by
quarter end.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company does not charge interest on past due receivables.
Receivables are determined to be past due based on the payment terms of the original invoices. Accounts receivable consisted of
the following at June 30, 2012 and December 31, 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of<BR> June&nbsp;30,&nbsp;2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of<BR> December&nbsp;31,&nbsp;2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Accounts receivable</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,758,236</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,766,776</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Less: allowance for discounts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,686,254</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: allowance for doubtful accounts</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(14,573</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(197,684</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Accounts receivable &ndash; net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,057,409</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,569,092</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At June 30, 2012 and December 31, 2011, the Company had the
following concentrations of accounts receivable with customers:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Customer</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of&nbsp;June&nbsp;30,&nbsp;2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of&nbsp;December&nbsp;31,&nbsp;2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: center">A</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">31</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">7</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">B</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">C</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">D</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">E</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Inventory</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #333333">Inventory is valued at the lower of cost or
market value. Product-related inventories are primarily maintained using the average cost method.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #333333">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Prepaid Sponsorship Fees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Prepaid sponsorship fees represents fees paid in connection
with future advertising to be received.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Property and Equipment</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment are stated at cost
and depreciated to their estimated residual value over their estimated useful lives. When assets are retired or otherwise disposed
of, the assets and related accumulated depreciation are relieved from the accounts and the resulting gains or losses are included
in operating income in the statements of operations. Repairs and maintenance costs are expensed as incurred. Depreciation is provided
using the straight-line method for all property and equipment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Long-Lived Assets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company reviews long-lived assets for
impairment whenever events or changes in circumstances, such as service discontinuance or technological obsolescence, indicate
that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying
amount of the asset to the undiscounted expected future cash flows related to the asset. If the comparison indicates that impairment
is present, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair
value of the asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash
flows attributable to the asset. During the six months ended June 30, 2012 and 2011, the Company recorded no impairment expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Fair Value of Financial Instruments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company measures assets and liabilities
at fair value based on an expected exit price which represents the amount that would be received on the sale of an asset or paid
to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be
based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value
measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs,
used in valuation techniques, are assigned a hierarchical level.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following are the hierarchical levels
of inputs to measure fair value:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities
in active markets.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not
active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable
for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation
or other means.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -0.25in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Level 3: Unobservable inputs reflecting the Company&rsquo;s assumptions incorporated in valuation
techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that
are reasonably available.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following are the major categories
of liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, using quoted prices in active
markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs
(Level 3):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="margin-left: 0.5in; border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of&nbsp;June&nbsp;30,&nbsp;2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of&nbsp;December&nbsp;31,&nbsp;2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Derivative liabilities (Level 2)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,908,860</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,061,238</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s financial instruments
consisted primarily of accounts receivable, prepaids, accounts payable and accrued liabilities, debt and customer deposits. The
Company&rsquo;s debt approximates fair value based upon current borrowing rates available to the Company for debt with similar
maturities. The carrying amounts of the Company&rsquo;s financial instruments generally approximated their fair values as of June
30, 2012 and December 31, 2011, respectively, due to the short-term nature of these instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Revenue Recognition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company records revenue when all of
the following have occurred: (1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered, (3) the
sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depending on individual customer agreements,
sales are recognized either upon shipment of products to customers or upon delivery. For all of our Canadian sales, which represents
2% of total sales, and for one of our largest domestic customers (See customer &ldquo;B&rdquo; below under concentrations), which
represents 11% of our total revenue for the six months ended June 30, 2012 and 2011, revenue is recognized upon delivery.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has determined that advertising
related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 (&ldquo; <I>Revenue Recognition&rdquo;
&ndash; Customer Payments and Incentives &ndash; Implementation Guidance and Illustrations)</I> . The guidance indicates that,
absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not
expensing as advertising expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company records store support, giveaways,
sales allowances and discounts as a direct reduction of sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Sales for the three and six months ended
June 30, 2012 and 2011 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Three&nbsp;Months&nbsp;Ended&nbsp;June&nbsp;30,</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Six&nbsp;Months&nbsp;Ended&nbsp;June&nbsp;30,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; font-weight: bold">Sales</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">18,869,103</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,838,374</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">38,171,872</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,509,589</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">Discounts</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,439,763</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(440,632</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6,181,852</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,077,911</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Sales - Net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,429,340</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,397,742</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">31,990,020</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,431,678</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has an informal 7-day right
of return for products. There were nominal returns for the three and six months ended June 30, 2012 and 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the six months ended June 30, 2012
and 2011, the Company had the following concentrations of revenues with customers:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six&nbsp;Months&nbsp;Ended&nbsp;June&nbsp;30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Customer</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: center">A</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">35</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">40</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">B</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Licensing Income and Royalty Revenue</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 5, 2011, the Company granted an
exclusive indefinite term license to a third party for $250,000. The licensee may market, manufacture, design and sell the Company&rsquo;s
existing apparel line. The licensee is to pay the Company a 10% net royalty based on its net income at the end of each fiscal year.
To date, no royalty revenue has been earned.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Cost of Sales</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cost of sales represents costs directly related to the production,
manufacturing and freight of the Company&rsquo;s products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>MusclePharm Corporation
and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated
Financial Statements</B><BR>
<B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Shipping and Handling</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Domestic product sold is shipped directly
to the customer from the manufacturer. Costs associated to the shipments are recorded in cost of sales. For Canadian sales, the
product is shipped from our Canadian warehouse to our customers. Costs associated with the shipments are recorded as shipping.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Advertising</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company expenses advertising costs when incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Advertising expense for the three months and six months ended
June 30, 2012 and 2011 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Three&nbsp;Months&nbsp;Ended&nbsp;June&nbsp;30,</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Six&nbsp;Months&nbsp;Ended&nbsp;June&nbsp;30,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; padding-bottom: 2.5pt">Advertising</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">2,044,005</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">1,613,040</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">3,976,840</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">2,195,235</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Beneficial Conversion Feature</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For conventional convertible debt where
the rate of conversion is below market value, the Company records a &ldquo;beneficial conversion feature&rdquo; (&ldquo;BCF&rdquo;)
and related debt discount.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">When the Company records a BCF, the relative
fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is
amortized to interest expense over the life of the debt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Derivative Liabilities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Fair value accounting requires bifurcation
of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their
fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the
convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and
further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible
debt, the Company continues its evaluation process of these instruments as derivative financial instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Once derivative liabilities are determined,
they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded
in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative
instruments such as warrants, are also valued using the Black-Scholes option-pricing model. Once a derivative liability ceases
to exist any remaining fair value is reclassified to additional paid in capital.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Debt Issue Costs and Debt Discount</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company may pay debt issue costs, and
record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over
the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized
amounts is immediately expensed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>MusclePharm Corporation
and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated
Financial Statements</B><BR>
<B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Original Issue Discount</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For certain convertible debt issued, the
Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount and
additional paid-in capital at an amount not to exceed gross proceeds raised, reducing the face amount of the debt, and is amortized
to interest expense over the life of the debt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Share-Based Payments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Generally, all forms of share-based payments,
including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value
on the awards&rsquo; grant date, based on estimated number of awards that are ultimately expected to vest. Share-based compensation
awards issued to non- employees for services rendered are recorded at either the fair value of the services rendered or the fair
value of the share-based payment, whichever is more readily determinable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Earnings (loss) Per Share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Net earnings (loss) per share is computed
by dividing net income (loss) less preferred dividends for the period by the weighted average number of common stock outstanding
during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) less preferred dividends for the
period by the weighted average number of common stock, common stock equivalents and potentially dilutive securities outstanding
during each period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company uses an &ldquo;if converted&rdquo;
method to determine whether there is a dilutive effect of outstanding option and warrant contracts. For the three months ended
June 30, 2012, all of the Company&rsquo;s convertible debt options and 531,274,066 warrants had exercise prices below of the Company&rsquo;s
period end market price of the common stock into which they convert. The adjusted dilutive net loss reflects the add back of approximately
$349 of interest expense related to the convertible debt and the reduction of $9,449,050 of gains on derivative contracts for the
three months ended June 30, 2012. For the three months ended June 30, 2012 and 2011 and six months ended June 30, 2012 and 2011,
the Company reflected an dilutive net loss and net loss, respectively, and the effect of considering any common stock equivalents
would have been anti-dilutive for these periods. Therefore, separate computation of diluted earnings (loss) per share is not presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s dilutive net loss for the three months ended
June 30, 2012 is as follows:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three&nbsp;Months&nbsp;Ended&nbsp;June&nbsp;30,&nbsp;2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">6,181,904</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Dilutive effect of warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,981,756</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Dilutive effect of conversion options</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(41,432</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Convertible debt interest add-back</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">349</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Adjusted net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,840,935</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has the following common stock equivalents for the
six months ended June 30, 2012 and 2011, respectively:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Six&nbsp;Months&nbsp;Ended&nbsp;June&nbsp;30,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%">Stock options (exercise price - $0.50/share)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,567,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2,767,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Warrants (exercise price $0.236 - $1.50/share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,708,232</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">59,843,333</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Convertible debt (exercise price $0.002- $0.02/share)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,100,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43,933,988</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total common stock equivalents</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">154,375,732</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">106,544,821</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the above table, some of the outstanding
instruments from 2012 and 2011, contain ratchet provisions that would cause variability in the exercise price at the balance sheet
date. As a result, common stock equivalents could change at each reporting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Foreign Currency</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">MusclePharm began operations in Canada
in April of 2012. The Canadian Dollar was determined to be the functional currency as the majority of the transactions related
to the day to day operations of the business are exchanged in Canadian Dollars. At the end of the period, the financial results
of the Canadian operation are translated into the United States Dollar, which is the reporting currency, and added to the US operations
for consolidated company financial results. The revenue and expense items are translated using the average rate for the period
and the assets and liabilities at the end of period rate. Transactions that have completed the accounting cycle and resulted in
a gain or loss related to translation are recorded in realized gain or loss due to foreign currency translation under other income
expense on the income statement. Transactions that have not completed their accounting cycle but appear to have gain or loss due
to the translation process are recorded as unrealized gain or loss due to translation and held in the equity section on the balance
sheet until such date the accounting cycle of the transaction is complete and the actual realized gain or loss is recognized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Reclassification</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has reclassified certain prior
period amounts to conform to the current period presentation. These reclassifications had no effect on the financial position,
results of operations or cash flows for the periods presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Recent Accounting Pronouncements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In May 2011, the Financial Accounting Standards
Board issued Accounting Standards Update (&ldquo;ASU&rdquo;) No. 2011-04 &ldquo;Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (&ldquo;GAAP&rdquo;) and International Financial Reporting
Standards (&ldquo;IFRS&rdquo;). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between
U.S. GAAP and IFRS. ASU 2011-04 requires reporting entities to disclose additional information for fair value measurements categorized
within Level 3 of the fair value hierarchy. In addition, ASU 2011-04 requires reporting entities to make disclosures about amounts
and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective
for interim and annual reporting periods beginning after December 15, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>MusclePharm Corporation
and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated
Financial Statements</B><BR>
<B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 3: Going Concern</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As reflected in the accompanying unaudited
interim consolidated financial statements, the Company had a net loss of $9,853,389 for the six months ended June 30, 2012 and
a working capital deficit and stockholders&rsquo; deficit of $12,668,017 and $11,013,113 respectively, at June 30, 2012. These
factors raise substantial doubt about the Company&rsquo;s ability to continue as a going concern.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The ability of the Company to continue
its operations is dependent on Management&rsquo;s plans, which include the raising of capital through debt and/or equity markets
with some additional funding from other traditional financing sources, including term notes, until such time that funds provided
by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related
parties to sustain the Company&rsquo;s existence.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company will require additional funding
to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company
believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future.
There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In response to these problems, management
has taken the following actions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">seek additional third party debt and/or equity financing,</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">continue with the implementation of the business plan,</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">allocate sufficient resources to continue with advertising and marketing efforts</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets
or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 4: Property and Equipment</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment consisted of the
following at June 30, 2012 and December 31, 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="margin-left: 0.5in; border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of&nbsp;June&nbsp;30,&nbsp;2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of&nbsp;December&nbsp;31,&nbsp;2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Estimated&nbsp;Useful&nbsp;Life</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 33%; text-align: left; vertical-align: top">Furniture, fixtures and gym equipment</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 18%; text-align: right">967,698</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 18%; text-align: right">781,786</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 24%; text-align: center">3 years</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Leasehold improvements</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">540,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">244,770</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">From 42 to 64 months</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-align: left">Vehicles</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,584</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,068</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">5 years</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left">Displays</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,057</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,057</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">5 years</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; vertical-align: top; text-align: left">Website</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,462</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,462</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt">3 years</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 8.65pt; vertical-align: top; text-align: left">Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,652,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,107,143</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: top">Less: Accumulated depreciation and amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(399,371</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(199,621</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,252,630</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">907,522</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 5: Debt</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At June 30, 2012 and December 31, 2011, debt consists of the
following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">As&nbsp;of&nbsp;June&nbsp;30,&nbsp;2012</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">As&nbsp;of&nbsp;December&nbsp;31,&nbsp;2011</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: justify">Convertible debt - secured</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">14,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,749,764</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Less: debt discount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,932</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,395,707</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Convertible debt - net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,068</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">354,057</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Auto loan - secured</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,808</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26,236</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Unsecured debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,471,996</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,380,315</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Less: debt discount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,033,637</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,171,626</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Unsecured debt - net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,438,359</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,208,689</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Total debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,468,235</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,588,982</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Less: current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,353,553</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,281,742</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Long term debt</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">114,682</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">307,240</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Debt in default of $50,600 and $505,600, at June 30, 2012 and
December 31, 2011 respectively, is included as a component of short-term debt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">Future&nbsp;annual&nbsp;principal&nbsp;payments&nbsp;for&nbsp;the&nbsp;above&nbsp;debt&nbsp;is&nbsp;as&nbsp;follows:</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Years Ended December 31,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left">2012 (6 months)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1,853,662</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,648,618</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,524</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">2015</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total annual principal payments</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,506,804</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Convertible Debt &ndash; Secured - Derivative Liabilities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the six months ended June 30, 2012
and the year ended December 31, 2011, the Company issued convertible debt totaling $519,950 and $4,679,253, respectively. The convertible
debt includes the following terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Six&nbsp;Months&nbsp;Ended</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Year&nbsp;Ended</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">June&nbsp;30,&nbsp;2012</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">December&nbsp;31,&nbsp;2011</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Amount&nbsp;of</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Amount&nbsp;of</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Principal&nbsp;Raised</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Principal&nbsp;Raised</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Interest Rate</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8% - 10%</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0% - 18%</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Default interest rate</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0% - 20%</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0% - 25%</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">Maturity</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-size: 8pt">January 3, 2012 to October
                                            11, 2014</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-size: 8pt">June 30, 2011 to June 29,
                                            2015</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 16%; text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 1</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 33%; text-align: left"><FONT STYLE="font-size: 8pt">Lesser of (1) a fifty percent (50%) discount to the
    two lowest closing bid prices of the five days trading days immediately preceding the date of conversion or (ii) Two and One-Half
    Cents ($0.025) per share</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 22%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 22%; text-align: right"><FONT STYLE="font-size: 8pt">525,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 2</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">200% - The &ldquo;market price&rdquo; will be equal to the average
    of (i) the average of the closing price of Company&rsquo;s common stock during the 10 trading days immediately preceding the
    date hereof and (ii) the average of the 10 trading days immediately subsequent to the date hereof.</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">537,600</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 3</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">200% of face. Average of the trading price 10 trading days immediately
    preceding the closing of the transaction</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">177,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 4</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">200% of face. Fixed conversion price of $0.02</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">105,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 5</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 8pt">300% of face. Fixed conversion price of $0.02</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 6</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">35% of the three lowest trading prices for previous 10 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 7</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">45% of the three lowest trading prices for previous 10 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">327,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 8</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">50% of average closing prices for 10 preceding trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">76,353</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 9</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">50% of lowest trade price for the last 20 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">45,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 10</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">50% of the 3 lowest trades for previous 20 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">33,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 11</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">50% of the lowest closing price for previous 5 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 12</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">60% multiplied by the average of the lowest 3 trading prices for
    common stock during the ten trading days prior to the conversion date</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">233,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 13</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">62% of lowest trade price for the last 7 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">40,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 14</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">65% of the lowest trade price in the 30 trading days previous to
    the conversion</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">19,950</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">335,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 15</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">65% of the three lowest trading price for previous 30 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">153,800</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 16</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">70% of lowest average trading price for 30 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,366,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 17</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">No fixed conversion option</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">35,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Conversion terms 18</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">35% multiplied by the average of the lowest three (3) trading prices
    (as defined below) for the common stock during the ten (10) trading day period ending on the latest complete trading day prior
    to the conversion date.</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Conversion terms 19</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Fixed conversion price of $0.03</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">519,950</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">4,679,253</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The debt holders are entitled, at their
option, to convert all or part of the principal and accrued interest into shares of the Company&rsquo;s common stock at the conversion
prices and terms discussed above. The Company classifies embedded conversion features in these notes as a derivative liability
due to management&rsquo;s assessment that the Company may not have sufficient authorized number of shares of common stock required
to net-share settle or due to the existence of a ratchet due to an anti-dilution provision. See Note 6 regarding accounting for
derivative liabilities.<BR CLEAR="ALL" STYLE="page-break-before: always"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated
Financial Statements</B><BR>
<B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the six months ended June 30, 2012,
the Company converted debt and accrued interest, totaling $1,420,422 into 247,308,238 shares of common stock. The resulting loss
on conversion of $351,201 is included in the $2,941,826 loss on settlement of accounts payable and debt as shown in the consolidated
statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Convertible debt consisted of the following activity and terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="margin-left: 27pt; border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Interest&nbsp;Rate</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maturity</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 51%">Balance - December 31, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,749,764</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 12%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 20%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Borrowings during the six months ended June 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">519,950</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">8% - 10%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">January 3, 2012 to October 11, 2014</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Conversion of debt to into 209,732,083 shares of common stock with a valuation of $950,739 ($0.0035 - $0.0095/share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(759,095</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Repayment of convertible debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,518,343</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Interest and accrued interest (Included in total repayment)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,632</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loss on repayment (Included in total repayment)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,006,092</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Balance &ndash; June 30, 2012</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><B>(B) Unsecured Debt</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Unsecured debt consisted of the following activity and terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 27pt">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Interest&nbsp;Rate</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maturity</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 51%">Balance - December 31, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: left">$</TD><TD NOWRAP STYLE="width: 10%; text-align: right">2,380,432</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 20%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Borrowings during the three months ended June 30, 2012</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">3,554,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">January 13, 2012 &ndash; October 1, 2013</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Conversion of debt to into 37,576,155 shares of common stock with a valuation of $469,683 ($0.0095 - $0.016/share)</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">(150,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Repayments</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">(1,534,670</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Interest and accrued interest (Included in total repayment)</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">32,005</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loss on repayment (Included in total repayment)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="border-bottom: Black 1pt solid; text-align: right">190,229</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Balance - June 30, 2012</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD NOWRAP STYLE="border-bottom: Black 2.5pt double; text-align: right">4,471,996</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Of the $3,554,000 unsecured notes raised
during the 6 months ended June 30, 2012, $1,539,000 of the notes were in default. During August of 2012, the Company obtained waivers
and entered into settlement agreements related to the default. In connection with the proposed terms of the settlement, the Company
will cancel 147,487,500 warrants and issue 98,315,168 shares of common stock. The promissory notes previously issued by the Company
in favor those investors will remain in place as written.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(C) Auto Loan</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Auto loan account consisted of the following activity and terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Interest&nbsp;Rate</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Maturity</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 50%">Balance - December 31, 2011</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 10%; text-align: right">26,236</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right">6.99</TD>
    <TD STYLE="width: 1%">%</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 21%; text-align: right">26 payments of $1,008</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Repayments</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">(5,428</TD>
    <TD STYLE="padding-bottom: 1pt">)</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Balance - June 30, 2012</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">$</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right">20,808</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>MusclePharm Corporation
and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated Financial Statements</B><BR>
<B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(D) Debt Issue Costs</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the six months ended June 30, 2012 and 2011, the Company
paid debt issue costs totaling $106,950 and $204,093, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the six months ended June 30, 2012
the company issued 19,237,500 warrants as cost associated with a debt raise. The initial derivative liability value of $427,759
was recorded as debt issue costs and derivative liability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following is a summary of the Company&rsquo;s
debt issue costs for the six months ended June 30, 2012 and year ended December 31, 2011 as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: justify">Debt issue costs</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">724,423</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">305,283</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Accumulated amortization of debt issue costs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(305,557</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(237,095</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Debt issue costs &ndash; net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">418,866</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">68,188</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the six months ended June 30, 2012
and 2011, the Company amortized $184,031 and $134,233, respectively in debt issue costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>(E) Debt Discount</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the six months ended June 30, 2012
and 2011, the Company recorded debt discounts totaling $3,554,673 and $3,258,106, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The debt discounts recorded in 2012 and
2011, pertain to convertible debt and warrants that contain embedded conversion options that are required to be bifurcated and
reported at fair value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company amortized $3,083,437 and $2,899,959
to interest expense in the six months ended June 30, 2012 and 2011 as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: justify">Debt&nbsp;discount-December&nbsp;31,&nbsp;2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,567,333</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Additional debt discount &ndash; Six months ended June 30,2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,554,673</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Amortization of debt discount &ndash; Six months ended June 30,2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,083,437</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Debt discount June 30, 2012</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,038,569</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 6: Derivative Liabilities</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company identified conversion features
embedded within convertible debt, warrants and series A preferred stock issued in 2012, 2011 and 2010 (see Notes 5 and 7). The
Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as
a derivative liability as the Company could not determine if a sufficient number of shares would be available to settle all transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of the conversion feature
is summarized as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; font-weight: bold">Derivative liability - December 31, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,061,238</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Fair value at the commitment date for debt instruments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,096,808</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Fair value at the commitment date for warrants issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,372,075</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Fair value mark to market adjustment for debt instruments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,564,850</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Fair value mark to market adjustment for warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68,035</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Fair value mark to market adjustment for Series A, Preferred Stock issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(59</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Reclassification to additional paid-in capital for financial instruments conversions and maturities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,124,387</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Derivative liability &ndash; June 30, 2012</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,908,860</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recorded the debt discount
to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross
proceeds of the note. The Company recorded a derivative expense of $2,486,451 and $4,057,859 for the six months ended June 30,
2012 and 2011, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value at the commitment and re-measurement
dates for the Company&rsquo;s derivative liabilities were based upon the following management assumptions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Commitment&nbsp;Date</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Re-measurement&nbsp;Date</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 54%">Expected dividends</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 20%; text-align: right">0</TD>
    <TD STYLE="width: 1%">%</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 20%; text-align: right">0</TD>
    <TD STYLE="width: 1%">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Expected volatility</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">228% -251%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">257</TD>
    <TD>%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Expected term:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">6 months &ndash; 4 years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">6 months &ndash; 4 years</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Risk free interest rate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0.09% - 0.72 %</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0.33</TD>
    <TD>%</TD></TR>
</TABLE>
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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>MusclePharm Corporation
and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated
Financial Statements</B><BR>
<B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 7: Stockholders&rsquo; deficit</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has three separate series of
authorized preferred stock:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>(A) Series A, Convertible Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This class of stock has the following provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Non-voting,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>No rights to dividends,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>No liquidation value,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Convertible into 200 shares of common stock</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(B) Series B, Preferred
Stock (Related Parties)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2011, the Company issued an aggregate
51 shares of Series B, preferred stock to 2 of its officers and directors. The Company accounted for the share issuance at par
value as there was no future economic value that could be associated with the issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This class of stock has the following provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol"><B>&middot;</B></FONT></TD><TD>Voting rights entitling the holders to an aggregate 51% voting control,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.15pt; text-indent: -20.15pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Initially no rights to dividends,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.15pt; text-indent: -20.15pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Stated value of $0.001 per share,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.15pt; text-indent: -20.15pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Liquidation rights entitle the receipt of net assets on a pro-rata basis; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.15pt; text-indent: -20.15pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Non-convertible</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(C) Series C, Convertible
Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2011, the Company issued 190
shares of Series C, preferred stock, having a fair value of $190,000. Of the total shares issued, 100 shares were issued for $100,000
($1,000 /share). The remaining 90 shares were issued for services rendered having a fair value of $90,000 ($1,000 /share), based
upon the stated value per share. In March 2012, all 190 shares were converted into 19,000,000 common shares at a conversion price
of $0.00001 per share and a loss of $614,984.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This class of stock has the following provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Stated Value - $1,000 per share,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.15pt; text-indent: -20.15pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Non-voting,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.15pt; text-indent: -20.15pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Liquidation rights entitle an amount equal to the stated value, plus any accrued and unpaid dividends,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>As long as any Series C, convertible preferred stock is outstanding, the Company is prohibited from executing various corporate
actions without the majority consent of the Series C, convertible preferred stockholders authorization; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.15pt; text-indent: -20.15pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.6in"></TD><TD STYLE="width: 20.15pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Convertible at the higher of (a) $0.01 or (b) such price that is a 50% discount to market using the average of the low 2 closing
bid prices, 5 days preceding conversion</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Due to the existence of an option to convert
at a variable amount, the Company treated this series of preferred stock as a derivative liability due to the potential for settlement
in a variable quantity of shares. Additionally, the Company computed the fair value of the derivative liability at the commitment
date and remeasurement date, which was $293 and $175, respectively, using the Black-Scholes assumptions below. This transaction
is analogous to a dividend with a direct charge to retained earnings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>MusclePharm Corporation
and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><B>Notes to Consolidated
Financial Statements</B><BR>
<B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(D) Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the six months ended June 30, 2012,
the Company issued the following common stock:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Transaction&nbsp;Type</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Quantity</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Valuation<BR> ($)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Loss&nbsp;on<BR> Settlement<BR> ($)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Range&nbsp;of&nbsp;Value<BR> per&nbsp;Share<BR> ($)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; text-align: left">Conversion of convertible debt</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">209,732,083</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">950,739</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">61,124</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="width: 10%; text-align: right">0.0035&ndash;0.0095</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Conversion of unsecured/secured debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,576,155</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">469,683</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">289,897</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0.0095&ndash;0.016</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Forbearance of agreement terms</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,196,604</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">918,432</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0.0084-0.0324</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash and warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">285,760</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0.0089</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Executive compensation <SUP>(1)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">444,548,916</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,667,764</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0.0105</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock issued for future services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,621,411</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0.0115-0.025</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Conversion of Series C, preferred stock to common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">614,984</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">614,984</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0.0324</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">810,675,169</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,107,362</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">966,005</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0.0035&ndash;.0324</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 77.95pt; text-indent: -41.95pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0%"></TD><TD STYLE="width: 41.95pt">(1)</TD><TD>Represents stock issued for prior year 2011 accrued compensation settled in 2012.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of all stock issuances above
is based upon the quoted closing trading price on the date of issuance, except for stock and warrants issued for cash, which is
based on the cash received.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The forbearance of agreement terms represents
settlement of debt and accrued liabilities and includes a valuation of $918,432 which is reduced by an $135,000 accrual and reduced
by $3,932 stock issued to settle contracts for items expensed in the year ended December 31, 2011, but are treated in the current
period as a non-cash settlement, which nets to $779,500 as shown in the statement of cash flows as loss on debt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>(E) Stock Options</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company applied fair value accounting
for all shares based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes
option-pricing model. The Black-Scholes assumptions used when the options were issued in the year ended December 31, 2010 are as
follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%">Exercise price</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.50</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected dividends</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Expected volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74.8</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Risk fee interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Expected life of option</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5 years</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected forfeiture</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following is a summary of the Company&rsquo;s stock option
activity:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Options</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted&nbsp;Average<BR> Exercise&nbsp;Price</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted&nbsp;Average<BR> Remaining<BR> Contractual&nbsp;Life</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Aggregate&nbsp;Intrinsic<BR> Value</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%">Balance &ndash; December 31, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,617,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.50</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">3.25 years</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Forfeited/Cancelled</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Balance &ndash; June 30, 2012 &ndash; outstanding</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,567,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.50</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2.75 years</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Balance &ndash; June 30, 2012 &ndash; exercisable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,567,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.50</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2.75 years</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Outstanding options held by related parties &ndash; 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Exercisable options held by related parties &ndash; 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(F) Stock Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All warrants issued during the six months
ended June 30, 2012 were accounted for as derivative liabilities. See Note 6.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the six months ended June 30, 2012,
the Company entered into convertible and unsecured note agreements. As part of these agreements, the Company issued warrants to
purchase 301,445,833 shares of common stock. Each warrant vests six month after issuance and expire July 13, 2014 &ndash; October
16, 2014, with exercise prices ranging from $0.012 - $0.015. All warrants contain anti-dilution rights, and are treated as derivative
liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of warrant activity for the Company for the six months
ended June 30, 2012 is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of&nbsp;Warrants</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted&nbsp;Average&nbsp;Exercise&nbsp;Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%">Outstanding &ndash; December 31, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">283,338,233</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">.02</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301,445,833</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">.013</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Exercised</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(32,000,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.0089</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Balance as June 30, 2012</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">552,784,066</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">.016</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="13" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Warrants&nbsp;Outstanding</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="5" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Warrants&nbsp;Exercisable</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Range&nbsp;of<BR> Exercise&nbsp;Prices</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number<BR> Outstanding</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted&nbsp;Average<BR> Remaining<BR> Contractual&nbsp;Life&nbsp;(in<BR>
years)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted&nbsp;Average<BR> Exercise&nbsp;Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number<BR> Exercisable</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted<BR> Average<BR> Exercise&nbsp;Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Intrinsic&nbsp;Value</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 14%; text-align: right">$0.012-$1.50</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">552,784,066</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">2.33</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">0.016</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 13%; text-align: right">150,708,232</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">0.026</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">2,049,125</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>(G) Treasury Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the six months ended June 30, 2012,
the Company repurchased 26,431,575 shares of its common stock for the total sum of $460,978 or an average of $0.0174 per share.
The Company records the value of its common stock held in treasury at cost. The Company has not cancelled or retired these shares,
and they remain available for reissuance. The Company has a stock repurchase plan in place.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 8 Commitments, Contingencies and Other Matters</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 9pt"><B>(A) Operating Lease</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has various non-cancelable
leases with terms expiring through 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Future minimum annual lease payments for
the above leases are approximately as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Years Ended December 31,</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 79%; text-align: left">2012 (6 months)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 18%; text-align: right">157,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">375,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">402,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">2015</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">306,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total minimum lease payments</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,240,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Rent expense for the six months ended June 30, 2012 and 2011,
was $117,247 and $78,872, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>(B) Legal Matters</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, the Company is or may
become involved in various legal proceedings that arise in the ordinary course of business or otherwise. Legal proceedings are
subject to inherent uncertainties as to timing, outcomes, costs, expenses and time expenditures by the Company&rsquo;s management
and others on behalf of the Company. Although there can be no assurance, based on information currently available the Company&rsquo;s
management believes that the outcome of legal proceedings that are pending or threatened against the Company will not have a material
effect on the Company&rsquo;s financial condition. However, the outcome of any of these matters is neither probable nor reasonably
estimable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of August 20, 2012, the Company is a
party defendant in the following legal proceedings, each of which the Company: (a) believes is without merit; and (b) intends to
defend vigorously:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>Environmental Research Center v. MusclePharm LLC, et al.</U>, Los Angeles Superior Court, California. Date instituted: February
4, 2011. Plaintiff Environmental Research Center (&ldquo;ERC&rdquo;) filed notices of intent to commence litigation against over
200 sports nutrition and dietary supplement companies in the United States and Canada, including the Company. ERC alleges violations
of California&rsquo;s Proposition 65.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>USA Nutraceuticals Group, Inc. et al. v. MusclePharm, Inc.</U>, United States District Court for the Southern District of
Florida. Date instituted: September 21, 2011. Plaintiff USA Nutraceuticals (d/b/a Beast Sports) alleges that the Company&rsquo;s
use of the tagline &ldquo;Train like an unchained beast&rdquo; infringes on its mark &ldquo;Beast&rdquo; for dietary supplements.
Plaintiff&rsquo;s primary goal is not to recover monetary damages, but rather that the Company cease using the tagline in the Company&rsquo;s
product marketing.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>John&rsquo;s Lone Star Distribution v. MusclePharm Corporation</U>, United States District Court for the Eastern District
of Texas. Date instituted: April 5, 2012. Plaintiff is a former domestic distributor for the Company. Plaintiff seeks injunctive
relief to allow it to continue to purchase products from the Company. Plaintiff does not seek monetary damages.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>William Bossung and Bishop Equity Partners LLC v. MusclePharm Corporation</U>, Clark County, Nevada District Court. Date
instituted: January 17, 2012. Plaintiff alleges that additional monetary payments are due in respect of a settlement for outstanding
warrants.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>Inter-Mountain Capital Corp. v. MusclePharm Corporation</U>, United States District Court for the District of Utah. Date
instituted: May 2, 2012. Plaintiff alleges breach of contract regarding a warrant and purchase agreement, and seeks monetary damages
related thereto.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; color: black">&middot;</FONT></TD><TD><FONT STYLE="color: black"><U>Justin Keener d/b/a JMJ Financial v. MusclePharm Corporation</U>, Miami-Dade County, Florida.
</FONT>Date instituted: June 13, 2012. <FONT STYLE="color: black">Plaintiff alleges claims for monetary compensation associated
with an investment in the Company.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of August 20, 2012, the Company is a party plaintiff in the
following legal matters:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>MusclePharm Corporation v. Swole Sports Nutrition, LLC</U>, United States District Court for the Southern District of Florida.
Date instituted: March 15, 2012. The Company filed this action for trademark infringement against after the Defendant started marketing
and selling a dietary supplement named &ldquo;Turbo Shred&rdquo;. The Company has sold &ldquo;Shred Matrix&rdquo; since April 2,
2008, and the mark &ldquo;MusclePharm Shred Matrix&rdquo; was granted registration by the USPTO on September 21, 2010.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><U>MusclePharm Corporation v. Fuse Science, Inc</U>., United States District Court for the Southern District of Florida. Date
instituted: March 15, 2012. Defendant recently began marketing and selling a product &ldquo;Enerjel&rdquo; as a topical analgesic.
The Company has sold a dietary supplement &ldquo;Energel&rdquo; since 2009 and acquired a trademark registration with the USPTO
for &ldquo;MusclePharm Energel&rdquo; (Registration number: 4,077,299). The Company seeks to protect its intellectual property
rights and prevent Defendant from trademark infringement. Additionally, the Company filed an objection with the USPTO to Defendant&rsquo;s
attempt to register the mark &ldquo;Enerjel&rdquo;.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(C) Payroll Taxes</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June 30, 2012, accounts payable and
accrued expenses included $166,745 pertaining to accrued payroll taxes. The taxes represent employee withholdings that have yet
to be remitted to the taxing agencies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Included in the $166,745 is an amount due
prior to the Company becoming a publicly traded company in February 2010, when the Company existed as an LLC, which at that time
had accrued payroll taxes/penalties and interest of approximately $53,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(D) Product Liability</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a manufacturer of nutritional supplements
and other consumer products that are ingested by consumers, the Company has been and is currently subject to various product liability
claims. Although the effects of these claims to date have not been material, it is possible that current and future product liability
claims could have a material adverse effect on our business or financial condition, results of operations or cash flows. The Company
currently maintains product liability insurance with a deductible/retention of $10,000 per claim with an aggregate cap on retained
loss of $5,000,000. At June 30, 2012 the Company had not recorded any accruals for product liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 9 Defined Contribution Plan</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has a 401(k) defined contribution
plan, in which all eligible employees participate. The 401(k) plan is a contributory plan. Matching contributions are based upon
the amount of the employees&rsquo; contributions. Beginning January 1, 2012, the Company may make an additional discretionary 401(k)
plan matching contribution to eligible employees. During the six months ended June 30, 2012 and 2011 the Company&rsquo;s matching
contribution was $18,251 and $0, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 10 Restricted Cash</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A restricted fund was established in compliance
with the unsecured debt agreements. The restricted fund at June 30, 2012 has a balance of $52,744. This fund is used to pay principal
and interest for the unsecured debt agreements which had a principal balance of $4,471,996 as of June 30, 2012. Ten percent of
all cash receipts from operations are put into this fund under the terms of the debt agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Consolidated Financial Statements</B><BR>
<B>June 30, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(Unaudited)</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 11 Subsequent Events</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Share Issuances</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 12, 2012, the Company entered into
a settlement agreement with an accredited investor pursuant to which the Company issued 7,000,000 shares of common stock, having
a fair value of $129,500 ($0.0185/share), based upon the quoted closing trading price, to satisfy a dispute related to an outstanding
common stock purchase warrant. The Company recorded a loss on settlement of $129,500.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In July 2012, the Company issued 10,000,000
shares to settle a contract valued at approximately $120,000 ($0.012/share), based upon the quoted closing trading price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2012, the Company issued 20,833,333
shares to settle warrant contract disputes. On August 20, 2012, the Company repaid debt totaling $119,503 issued by the Company
to an accredited investor in April 2012. In connection therewith, the investor agreed to cancel 12,500,000 warrants in return for
12,500,000 restricted shares of the Company&rsquo;s common stock. Both parties entered into a standard mutual release agreement.
Then, on August 20, 2012, the Company repaid debt totaling $80,233 issued by the Company to an accredited investor in April 2012.
In connection therewith, the investor agreed to cancel 8,333,333 warrants in return for 8,333,333 restricted shares of the Company&rsquo;s
common stock. The parties entered into a standard mutual release agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In July 2012, the Company entered into
a securities purchase agreement with six investors to sell up to 200,000,000 shares of the Company&rsquo;s common stock at a share
price of $0.01, which may be adjusted, and shall be issued warrants to purchase 100,000,000 shares of common stock at an exercise
price of $0.01. As of August 2012, the Company sold 100,000,000 shares of common stock for net proceeds of $870,000 net of debt
issue costs totaling $130,000. In conjunction with this sale, the Company issued 54,500,000 stock purchase warrants with an exercise
price of $0.01 per share. The securities purchase agreement also bears a purchase price reset and price protection on the common
stock issued. In accordance with the agreement, the Company also agreed to effectuate a reverse stock split within 20 days of entering
into this agreement which has not been met. In connection with the agreement, the Company also entered into the following consulting
agreements:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Consulting agreement to issue shares worth
8.4% of the Company to two consultants, one of whom was appointed to the Company&rsquo;s board of directors, on a fully diluted
basis after giving effect to the contemplated reverse stock split. Until the Company has issued and outstanding 3.5 billion shares
of Common Stock (subject to adjustment for stock splits), the Company shall ensure that the Consultant shall maintain 8.4% fully
diluted equity position. The consultant shall be promptly issued additional shares of Common stock of the Company so that Consultant
shall continue to own 8.4% of the Company on a fully diluted basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In July 2012, the Company executed a note
for $750,000 bearing interest at 12%. In an event of default, at the option of the holder, the note may be converted into common
stock equal to 95% of the average daily volume weighted average price of the Company&rsquo;s common stock during the five trading
days immediately prior to the conversion date. The Company paid debt issue costs of $90,975 in cash and 7,500,000 common shares,
having a fair value of $150,000, based on the quoted closing trading price. In connection with the debt agreement, the Company
agreed to assign all future receivables from the Company&rsquo;s customers to the note holder until the note is fully repaid. The
note is collateralized by all assets of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Treasury Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During July 2012, three executive officers of the Company voluntarily
returned 79,071,984 shares of common stock issued at par value and expensed during the year ended December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><img src="tpg104a.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Board of Directors and Stockholders of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">MusclePharm Corporation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of MusclePharm Corporation and Subsidiary as of December 31, 2011 and 2010, and the related consolidated statements
of operations, stockholders&rsquo; deficit and cash flows for the years then ended. These financial statements are the responsibility
of the Company&rsquo;s management. Our responsibility is to express an opinion on these financial statements based on our audits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company&rsquo;s internal control
over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><BR>
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
MusclePharm Corporation and Subsidiary as of December 31, 2011 and 2010, and the results of its operations and its cash flows for
the years then ended, in conformity with accounting principles generally accepted in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the
Company has a net loss of $23,280,950 and net cash used in operations of $5,801,761 for the year ended December 31, 2011; and has
a working capital deficit of $13,693,267, and a stockholders&rsquo; deficit of $12,971,212 at December 31, 2011. These factors
raise substantial doubt about the Company&rsquo;s ability to continue as a going concern. Management&rsquo;s plan in regards to
these matters is also described in Note 2.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Berman &amp; Company, P.A.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><img src="tpg104b.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Boca Raton, Florida</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">April 13, 2012 except for note 1 as to which the date is June
28, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">551 NW 77th Street Suite 201 <FONT STYLE="font-family: Wingdings">&Yuml;</FONT>
Boca Raton, FL 33487</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Phone: (561) 864-4444 <FONT STYLE="font-family: Wingdings">&Yuml;</FONT>
Fax: (561) 892-3715</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">www.bermanscpas.com <FONT STYLE="font-family: Wingdings">&Yuml;</FONT>
info@bermancaps.com</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>Registered with the</I> PCAOB <FONT STYLE="font-family: Wingdings">&Yuml;</FONT>
<I>Member</I> AICPA <I>Center for Audit Quality</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>Member American Institute of Certified
Public Accountants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>Member Florida Institute of Certified
Public Accountants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Consolidated Balance Sheets</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">December&nbsp;31,&nbsp;2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">December&nbsp;31,&nbsp;2010</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: center">Assets</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current Assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; padding-left: 0.25in">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">659,764</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">43,704</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts receivable &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,569,092</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">426,761</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Prepaid stock compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">534,456</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,965,911</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Prepaid sponsorship fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">203,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 0.25in">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">50,188</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">58,065</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,016,833</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,494,441</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Property and equipment - net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">907,522</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138,551</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Debt issue costs - net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68,188</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,404</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">53,585</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">53,585</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total assets</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">5,046,128</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">2,720,981</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: center">Liabilities and Stockholders&rsquo; Deficit</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,359,073</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,227,483</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Customer deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,047</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,733</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Debt &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,281,742</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">289,488</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Derivative liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,061,238</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">622,944</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Total Current Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,710,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,215,648</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Long Term Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Debt &ndash; net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">307,240</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">250,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total Liabilities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">18,017,340</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,465,648</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stockholders&rsquo; Deficit:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 34.2pt">Series A, Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 34.2pt">Series B, Preferred Stock, $0.001 par value; 51 shares authorized, 51 and none, respectively, issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 34.2pt">Series C, Convertible Preferred Stock, $0.001 par value; 500 shares authorized, 190 and none, respectively, issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 34.2pt">Common Stock, $0.001 par value; 2,500,000,000 shares authorized, 605,930,613 and 118,649,439 issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">605,931</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">118,649</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 34.2pt">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,579,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,012,122</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 34.2pt">Accumulated deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(45,156,681</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(21,875,438</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Total Stockholders&rsquo; Deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(12,971,212</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,744,667</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total Liabilities and Stockholders&rsquo; Deficit</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">5,046,128</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">2,720,981</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated financial
statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<!-- Field: Page; Sequence: 101; Value: 1 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Consolidated Statements of Operations</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For&nbsp;The&nbsp;Year&nbsp;Ended&nbsp;December&nbsp;31,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; font-weight: bold; text-align: left">Sales - net</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">17,212,636</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,202,687</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">Cost of sales</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,845,069</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,804,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Gross profit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,367,567</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">398,413</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">General and administrative expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,587,727</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,650,249</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Loss from operations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(16,220,160</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(18,251,836</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Other income (expense):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Derivative expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,777,654</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(93,638</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Change in fair value of derivative liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,162,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(149,306</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Loss on settlement of accounts payable and debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,862,458</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(433,400</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,711,278</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(480,589</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Other expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(121,500</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(160,568</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Licensing income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 0.24in; text-indent: 0">Total other income (expense) - net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,060,790</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,317,501</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(23,280,950</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Net income (loss) available to common stockholders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(23,280,950</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(19,569,337</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Series C preferred stock dividend</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(293</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) available to common stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(23,280,657</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share available to common stockholders - basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.08</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.48</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Weighted average number of common shares outstanding during the year &ndash; basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">281,484,658</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41,141,549</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated financial
statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<!-- Field: Page; Sequence: 102; Value: 1 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated</B> <B>Statement of Stockholders&rsquo;
Equity (Deficit)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Years Ended December 31, 2011 and
2010</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">Series&nbsp;A,&nbsp;Convertible<BR>
    Preferred&nbsp;Stock</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">Series&nbsp;B,&nbsp;Preferred&nbsp;<BR>
    Stock</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">Series&nbsp;C,&nbsp;<BR>
    Convertible&nbsp;<BR> Preferred&nbsp;Stock</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">Common&nbsp;Stock</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">Additional&nbsp;<BR> Paid-</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">Accumulated</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">Total<BR> Stockholders&rsquo;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Shares</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Amount</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Shares</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Amount</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Shares</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Amount</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Shares</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Amount</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">in&nbsp;Capital</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Deficit</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Deficit</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 23%"><FONT STYLE="font-size: 7pt">Balance - December 31, 2009</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">26,000,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">26,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">1,099,508</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">(2,306,101</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 4%; text-align: right"><FONT STYLE="font-size: 7pt">(1,180,593</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Recapitalization and deemed issuance</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">83,333</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">83</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">70,838</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">71</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(25,261</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(25,107</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Issuance of common stock:</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Conversion of preferred stock to common stock</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(83,333</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(83</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">16,666,600</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">16,667</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(16,584</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Conversion of convertible debt to common stock</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">7,708,906</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">7,709</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,025,791</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,033,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Stock and warrants</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,167,767</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,168</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,524,508</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,528,676</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Services - third parties</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">22,457,214</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">22,457</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,532,158</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,554,615</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Services - third parties - future services</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">10,545,200</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">10,545</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">2,724,003</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">2,734,548</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Services - related parties</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">10,000,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">10,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">5,290,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">5,300,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Services paid with previously issued stock
    to related parties</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,039,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,039,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Settlement of debt - third parties</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,165,571</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,166</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,186,898</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,191,064</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Settlement of debt - related party</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">7,161,548</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">7,161</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">350,916</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">358,077</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Settlement of accounts payable</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">9,014,286</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">9,014</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">424,386</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">433,400</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Debt offering - additional interest expense</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">50,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">50</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">30,450</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">30,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Extension of debt maturity date</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">130,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">130</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">95,370</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">95,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Contract settlement in connection with lawsuit</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">511,509</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">511</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">99,489</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Share based payments</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">630,990</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">630,990</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Net loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">(19,569,337</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">(19,569,337</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 7pt">Balance - December 31, 2010</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">118,649,439</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">118,649</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">20,012,122</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(21,875,438</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(1,744,667</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Issuance of common and preferred stock:</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Conversion of convertible debt</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">254,061,743</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">254,062</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,014,795</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,268,857</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Conversion of secured/unsecured debt</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">40,277,378</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">40,277</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">817,675</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">857,952</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Cash</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">82,000,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">82,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">793,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">875,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Cash</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">100</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">100,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Services - third parties</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">46,521,157</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">46,522</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,153,322</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,199,844</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Services - third parties</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">90</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">90,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">90,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Services - third parties - future services</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,000,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">210,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">214,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Extension of debt maturity date</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">9,375,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">9,375</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">151,875</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">161,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Settlement of accounts payable</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">54,545,896</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">54,546</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">3,592,173</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">3,646,719</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Cancellation of shares</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(3,500,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(3,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">3,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Share based payments - related parties</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">51</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Dividends on series C preferred stock - related
    parties</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(293</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(293</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Reclassification of derivative liability to
    additional paid in capital</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">640,826</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">640,826</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 8.65pt"><FONT STYLE="font-size: 7pt">Net loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">(23,280,950</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">(23,280,950</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">Balance - December 31, 2011</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">51</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">190</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">605,930,613</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">605,931</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">31,579,538</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">(45,156,681</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 7pt">(12,971,212</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated
financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Consolidated Statements of Cash Flows</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">For&nbsp;the&nbsp;Year&nbsp;Ended&nbsp;December&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: italic">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Operating Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(23,280,950</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(19,569,337</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">171,587</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,567</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Bad debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">120,477</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119,468</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Warrants issued for services - third parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,989,982</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stock issued for services - third parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,289,844</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,554,615</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock issued for services - related parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,300,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Services paid with previously issued stock to related parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,039,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock issued to extend maturity date of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">161,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">95,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stock issued as settlement in connection with lawsuit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock issued with unsecured debt offering-additional interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Share based payments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">630,990</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Amortization of prepaid stock compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,745,705</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">768,637</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Amortization of debt discount and debt issue costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,466,718</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">485,689</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Loss on settlement of accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,123,129</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">433,400</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Loss on conversion of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,739,329</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Derivative expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,777,654</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">93,638</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Change in fair value of derivative liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,162,100</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">149,306</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-style: italic; text-align: left">Changes in operating assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">(Increase) decrease in:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,262,808</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(434,753</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Prepaid sponsorship fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(203,333</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,245</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,116</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,877</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(66,703</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-style: italic; text-align: left">Increase (decrease) in:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,581,564</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,358,430</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Customer deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(67,686</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,715</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net Cash Used In Operating Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,801,761</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,795,477</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Investing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Purchase of property and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(831,511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(117,303</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net Used In Investing Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(831,511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(117,303</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Financing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash overdraft</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(17,841</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Due to related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(27,929</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Proceeds from issuance of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,612,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,140,608</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Proceeds from issuance of debt - related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">358,077</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Repayment of debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(75,285</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash paid for debt issue costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(263,283</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Proceeds from issuance of preferred stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Proceeds from issuance of common stock and warrants-net of recapitalization payment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">875,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,503,569</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Net Cash Provided By Financing Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,249,332</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,956,484</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net increase in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">616,060</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,704</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Cash at beginning of year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43,704</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Cash at end of year</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">659,764</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">43,704</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Supplemental disclosures of cash flow information:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Cash paid for interest</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">28,806</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,882</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Supplemental disclosure of non-cash investing and financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued for future services - third parties</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">214,250</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,734,548</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Non cash increase in accounts payable related to future services to be paid for with common stock</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Debt discount recorded on convertible and unsecured debt accounted for as a derivative liability</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,473,291</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">380,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Conversion of convertible debt and accrued interest for common stock</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,387,480</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,033,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to settle debt - third parties</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,191,064</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to settle debt - related party</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">358,077</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to settle accounts payable and due to factor</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,440,779</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">433,400</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Reclassification of derivative liability to additional paid in capital</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">640,826</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Conversion of preferred stock to common stock</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">83</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock issued to acquire equipment</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">82,811</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Auto acquired through financing</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">26,236</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Dividends on series C preferred stock - related parties</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">293</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Original issue discount</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">37,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated financial
statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 1: Nature of Operations and Summary of Significant
Accounting Policies</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Nature of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">MusclePharm Corporation (the &ldquo;Company&rdquo;,
&ldquo;We&rdquo;, &ldquo;Our&rdquo; or &ldquo;MP&rdquo;), was organized as a limited liability company in the State of Colorado
on April 22, 2008. On February 18, 2010, the Company executed a reverse recapitalization with Tone in Twenty, Inc. and changed
its name to MP (See Note 3).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company markets branded sports nutrition
products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Restatement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 14, 2012, the Company determined
that a material misstatement exists in the Company&rsquo;s 2011 quarterly and 2011 and 2010 annual financial statements. The Company
concluded that the following financial statements contained material misstatements: (i) the Company&rsquo;s audited financial statements
for the year ended December 31, 2011, filed in an annual report on Form 10-K with the U.S. Securities and Exchange Commission (the
&ldquo;SEC&rdquo;) on April 16, 2012; (ii) the Company&rsquo;s audited financial statements for the year ended December 31, 2010,
filed in an annual report on Form 10-K with the SEC on April 1, 2011; (iii) the Company&rsquo;s unaudited financial statements
for the period ended September 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on November 14, 2011; (iv) the Company&rsquo;s
unaudited financial statements for the period ended June 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on August
16, 2011; and (v) the Company&rsquo;s unaudited financial statements for the period ended March 31, 2011, filed in a quarterly
report on Form 10-Q with the SEC on May 23, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The foregoing financial statements contained
material misstatements pertaining to the Company&rsquo;s calculation of net sales and presentation of general and administrative
expenses and cost of sales. The Company has determined that advertising related credits that were granted to customers fell within
the guidance of ASC No. 605-50-55 (&ldquo; <I>Revenue Recognition&rdquo; &ndash; Customer Payments and Incentives &ndash; Implementation
Guidance and Illustrations)</I>. The guidance indicates that, absent evidence of benefit to the vendor, appropriate treatment requires
netting these types of payments against revenues and not expensing as advertising expense. The Company also noted other credits
and discounts that, upon further review, had been previously classified as advertising expense as a component of general and administrative
expense that require a reallocation of presentation as amounts to be netted against revenues. The Company&rsquo;s net loss and
loss per share will not be affected by this reallocation in the statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Promotions, credits and non-specific advertising
with its customers have been reclassified from general and administrative expenses to revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Samples shipped to customers not clearly
identifiable were reclassified from general and administrative expense to cost of sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended<BR> December 31,<BR> 2011<BR> As Restated</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Adjustments</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended<BR> December 31,<BR> 2011<BR> As Issued</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended<BR> December 31,<BR> 2010<BR> As Restated</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Adjustments</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended<BR> December 31,<BR> 2010<BR> As Issued</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; font-weight: bold; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Sales - net</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">17,212,636</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">(3,625,701</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">20,838,337</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">3,202,687</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">(844,608</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">4,047,295</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Cost of sales</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,845,069</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">374,455</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,470,614</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,804,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,804,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Gross profit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,367,567</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,000,156</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,367,723</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">398,413</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(844,608</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,243,021</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">General and administrative expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,587,727</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,000,156</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,587,883</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,650,249</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(844,608</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,494,857</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Loss from operations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(16,220,160</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(16,220,160</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(18,251,836</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(18,251,836</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Derivative expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,777,654</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,777,654</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(93,638</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(93,638</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Change in fair value of derivative liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,162,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,162,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(149,306</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(149,306</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Loss on settlement of accounts payable and debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,862,458</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,862,458</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(433,400</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(433,400</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,711,278</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,711,278</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(480,589</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(480,589</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Other expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(121,500</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(121,500</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(160,568</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(160,568</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Licensing income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 9pt">Total other income (expense) - net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,060,790</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,060,790</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,317,501</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,317,501</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 9.35pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(23,280,950</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(23,280,950</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Net loss available to common stockholders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Net loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(23,280,950</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(23,280,950</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(19,569,337</TD><TD STYLE="text-align: left">)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(19,569,337</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Series C preferred stock dividend</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(293</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(293</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 9.35pt">Net loss available to common stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(23,280,657</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(23,280,657</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(19,569,337</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 9.35pt">Net loss per share available to common stockholders - basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.08</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.08</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.48</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.48</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 9.35pt">Weighted average number of common shares outstanding during the year &ndash; basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">281,484,658</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">281,484,658</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41,141,549</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41,141,549</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Risks and Uncertainties</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates in an industry that
is subject to rapid change and intense competition. The Company&rsquo;s operations will be subject to significant risk and uncertainties
including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Use of Estimates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Making estimates requires management to
exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or
set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly
from estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Principles of Consolidation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">All inter-company accounts and transactions have been eliminated
in consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Cash and Cash Equivalents</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company considers all highly liquid
instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents. At December
31, 2011 and 2010, the Company had no cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company minimizes its credit risk associated
with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally
insured limits. At December 31, 2011 there was one account that had a balance that exceeded the federally insured limit by approximately
$378,000. In 2010, there were no balances that exceeded the federally insured limit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Accounts Receivable and Allowance for
Doubtful Accounts</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable represent trade obligations
from customers that are subject to normal trade collection terms. The Company periodically evaluates the collectability of its
accounts receivable and considers the need to establish an allowance for doubtful accounts based upon historical collection experience
and specific customer information. Accordingly, the actual amounts could vary from the recorded allowances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not charge interest on
past due receivables. Receivables are determined to be past due based on the payment terms of the original invoices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable at December 31, 2011
and 2010 were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: justify">Accounts receivable</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,766,776</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">542,863</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Less: allowance for doubtful accounts</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(197,684</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(116,102</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Accounts receivable &ndash; net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,569,092</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">426,761</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2011 and 2010, the Company
had the following concentrations of accounts receivable with customers:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Customer</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: center">A</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">36</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">24</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">B</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">C</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">D</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">E</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Property and Equipment</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Property and equipment are stated at cost and depreciated to
their estimated residual value over their estimated useful lives. When assets are retired or otherwise disposed of, the assets
and related accumulated depreciation are relieved from the accounts and the resulting gains or losses are included in operating
income in the statements of operations. Repairs and maintenance costs are expensed as incurred. Depreciation is provided using
the straight-line method for all property and equipment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Website Development Costs</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Costs incurred in the planning stage of a website are expensed,
while costs incurred in the development stage are capitalized and amortized over the estimated useful life of the asset.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Long-Lived Assets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company reviews long-lived assets for impairment whenever
events or changes in circumstances, such as service discontinuance or technological obsolescence, indicate that the carrying amount
of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to
the undiscounted expected future cash flows related to the asset. If the comparison indicates that impairment is present, the amount
of impairment is calculated as the difference between the excess of the carrying amount over the fair value of the asset. If a
readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to
the asset.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Fair Value of Financial Instruments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company measures assets and liabilities at fair value based
on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that
would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between
market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or
liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on
either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following are the hierarchical levels of inputs to measure
fair value:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.2in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Level 1:</B> Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.2in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Level 2:</B> Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices
for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities;
or inputs that are derived principally from or corroborated by observable market data by correlation or other means.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.2in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B>Level 3:</B> Unobservable inputs reflecting the Company&rsquo;s assumptions incorporated in valuation techniques used to
determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following are the major categories of liabilities measured
at fair value on a recurring basis as of December 31, 2011 and 2010, using quoted prices in active markets for identical liabilities
(Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of&nbsp;December&nbsp;31,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 46%; text-align: justify; padding-bottom: 2.5pt; padding-left: 0.7pt">Derivative liabilities</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 25%; padding-bottom: 2.5pt; text-align: left">Level 2</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">7,061,238</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">622,944</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s financial instruments consisted primarily
of accounts receivable, prepaids, accounts payable and accrued liabilities, derivative liabilities and debt. The carrying amounts
of the Company&rsquo;s financial instruments generally approximated their fair values as of December 31, 2011 and 2010, respectively,
due to the short-term nature of these instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Revenue Recognition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company records revenue when all of the following have occurred:
(1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered by the third party manufacturer, (3)
the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Depending on individual customer agreements, sales are recognized
either upon shipment of products to customers or upon delivery. For one of our largest customers, which represent 14% of total
revenue in 2011, revenue is recognized upon delivery.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has determined that advertising related credits
that were granted to customers fell within the guidance of ASC No. 605-50-55 (&ldquo; <I>Revenue Recognition&rdquo; &ndash; Customer
Payments and Incentives &ndash; Implementation Guidance and Illustrations)</I>. The guidance indicates that, absent evidence of
benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not expensing as advertising
expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company records store support, giveaways, sales allowances
and discounts as a direct reduction of sales. The Company recorded reductions to gross revenues totaling approximately $4,000,000
and $1,000,000 for the years ended December 31, 2011 and 2010, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company grants volume incentive rebates to certain customers
based on contractually agreed percentages ranging from 2.5% - 5.5% as a percentage of sales once a certain threshold has been met.
The credits are recorded as a direct reduction to sales. Included in the reductions to revenues above are volume incentive rebates.
Total volume incentive rebates granted for the years ended December 31, 2011 and 2010 were approximately $500,000 and $0, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has an informal 7-day right of return for products.
There were nominal returns in 2011 and 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the years ended December 31, 2011 and 2010, the Company
had the following concentrations of revenues with customers:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Customer</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%">A</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">41</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">45</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>B</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>C</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not manufacture or physically
hold any inventory. Inventory is held and distributed by the Company&rsquo;s third party manufacturer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Licensing Income and Royalty Revenue</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 5, 2011, the Company granted an
exclusive indefinite term license to a third party for $250,000. The licensee may market, manufacture, design and sell the Company&rsquo;s
existing apparel line. The licensee will pay the Company a 10% net royalty based on its net income at the end of each fiscal year.
To date, no royalty revenue has been earned.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Cost of Sales</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cost of sales represents costs directly
related to the production and third party manufacturing of the Company&rsquo;s products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2011, cost of sales increased due to
a reclassification from advertising expense in the amount of $374,454.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">See discussion of restatement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Shipping and Handling</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Product sold is typically shipped directly
to the customer from the manufacturer. Any freight billed to customers is offset against shipping costs and included in cost of
sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Freight billed to customers for the years
ended December 31, 2011 and 2010 was $309,690 and $71,983, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Advertising</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company expenses advertising costs
when incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">Advertising
for the years ended December 31, 2011 and 2010 are as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year&nbsp;Ended<BR> December 31,<BR> 2011<BR> As Restated</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Adjustments</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended<BR> December 31,<BR> 2011<BR> As Issued</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended<BR> December&nbsp;31,&nbsp;2010<BR>
As Restated</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Adjustments</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year Ended<BR> December 31, 2010<BR>
As Issued</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%; text-align: justify">Advertising</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,241,585</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(4,000,156</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">9,241,741</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,240,347</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(844,608</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,084,955</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">See discussion of restatement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Income Taxes</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Through February 18, 2010, the Company was taxed as a pass-through
entity (LLC) under the Internal Revenue Code and was not subject to federal and state income taxes; accordingly, no provision was
made. The financial statements reflect the LLC&rsquo;s transactions without adjustment, if any, required for income tax purposes
for the period ended February 18, 2010. In computing the expected tax benefit, the Company reflected a net loss of $23,280,950
in the year ended December 31, 2011 and $19,169,454 for the period from February 18, 2010 to December 31, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In 2011, and the period from February 18, 2010 through December
31, 2010, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, operating loss and tax credit carry-forwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Beginning with the adoption of FASB Interpretation No. 48, <I>Accounting
for Uncertainty in Income Taxes</I> , (included in FASB ASC Subtopic 740-10, <I>Income Taxes &mdash; Overall</I> ), the Company
recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income
tax positions are measured at the largest amount that is greater than 50% likely to be realized. Changes in recognition or measurement
are reflected in the period in which the change in judgment occurs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company records interest and penalties related to unrecognized
tax benefits in income tax expense. There were none for the years ended December 31, 2011 and 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Beneficial Conversion Feature</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For conventional convertible debt where the rate of conversion
is below market value, the Company records a &ldquo;beneficial conversion feature&rdquo; (&ldquo;BCF&rdquo;) and related debt discount.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">When the Company records a BCF, the relative fair value of the
BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest
expense over the life of the debt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Derivative Liabilities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fair value accounting requires bifurcation of embedded derivative
instruments, such as ratchet provisions or conversion features in convertible debt or equity instruments, and measurement of their
fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the
convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and
further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible
debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Once derivative liabilities are determined, they are adjusted
to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of
operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such
as warrants, are also valued using the Black-Scholes option-pricing model.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Debt Issue Costs and Debt Discount</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company may pay debt issue costs, and record debt discounts
in connection with raising funds through the issuance of convertible debt. These costs are amortized to interest expense over the
life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately
expensed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Original Issue Discount</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For certain convertible debt issued, the Company provides the
debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount
of the note and is amortized to interest expense over the life of the debt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Share-based payments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has incentive plans that reward employees with stock
options, warrants, restricted stock and stock appreciation rights. The amount of compensation cost for these share-based awards
is measured based on the fair value of the awards, as of the date that the share-based awards are issued and adjusted to the estimated
number of awards that are expected to vest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fair value of stock options, warrants, and stock appreciation
rights, is generally determined using a Black-Scholes option pricing model, which incorporates assumptions about expected volatility,
risk free rate, dividend yield, and expected life. Compensation cost for share-based awards is recognized on a straight-line basis
over the vesting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Net Earnings (Loss) per Share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Net earnings (loss) per share is computed by dividing net income
(loss) less preferred dividends for the period by weighted average number of shares of common stock outstanding during each period.
Diluted earnings (loss) per share is computed by dividing net income (loss) less preferred dividends by the weighted average number
of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Since the Company reflected a net loss in 2011 and 2010, respectively,
the effect of considering any common stock equivalents, if exercisable, would have been anti-dilutive. A separate computation of
diluted earnings (loss) per share is not presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has the following common stock equivalents at December
31, 2011 and 2010:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At&nbsp;December&nbsp;31,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%">Stock options (exercise price - $0.50/share)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">1,617,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">2,767,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Warrants (exercise price $0.015- $1.50/share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,696,327</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">750,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Convertible preferred series C shares (exercise price $0.01/share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Convertible debt (exercise price $0.002- $0.02/share)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">448,592,711</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,197,139</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total common stock equivalents</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">511,925,538</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,714,639</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the above table, some of the outstanding convertible debt
from 2011 and 2010 contains ratchet provisions that would cause variability in the exercise price at the balance sheet date. As
a result, common stock equivalents could change at each reporting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Reclassification</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has reclassified certain prior period amounts to
conform to the current period presentation. These reclassifications had no effect on the financial position, results of operations
or cash flows for the periods presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B>&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Recent Accounting Pronouncements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In May 2011, the FASB issued ASU No. 2011-04,
which amended ASC Topic 820 to achieve common fair value measurements and disclosure requirements in U.S. GAAP and International
Financial Reporting Standards (&ldquo;IFRS&rdquo;). The amendments in ASU No. 2011-05 result in common fair value measurement and
disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements
in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This amendment is effective
for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not anticipate this
amendment will have a material impact on its financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 2: Going Concern</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As reflected in the accompanying financial
statements, the Company had a net loss of $23,280,950 and net cash used in operations of $5,801,761 for the year ended December
31, 2011; and a working capital deficit and stockholders&rsquo; deficit of $13,693,267 and $12,971,212, respectively, at December
31, 2011. These factors raise substantial doubt about the Company&rsquo;s ability to continue as a going concern.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The ability of the Company to continue
its operations is dependent on Management&rsquo;s plans, which include the raising of capital through debt and/or equity markets
with some additional funding from other traditional financing sources, including term notes, until such time that funds provided
by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related
parties to sustain the Company&rsquo;s existence.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company will require additional funding
to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company
believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future.
There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In response to these problems, management
has taken the following actions:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 7%; font: 10pt Symbol">&middot;</TD>
    <TD STYLE="width: 86%; font-size: 10pt">seeking additional third party debt and/or equity financing,</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 7%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%">continue with the implementation of the business plan,</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 7%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%">generate new sales from international customers; and</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 7%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 86%">allocate sufficient resources to continue with advertising and marketing efforts</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets
or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 3: Reverse Recapitalization</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 18, 2010, the Company merged
with Tone in Twenty, Inc. (&ldquo;TIT&rdquo;), a then public shell corporation, and MP became the surviving corporation, in a transaction
treated as a reverse recapitalization. TIT did not have any operations and majority-voting control was transferred to MP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the recapitalization, MP acquired 26,000,000
shares of common stock from TIT in exchange for all member units in MP. Prior to the transaction, the Company paid approximately
$25,000 to a former executive of TIT to acquire 366,662 of the 437,500 shares issued and outstanding, these shares were then immediately
cancelled and retired. The remaining 70,838 shares were held by the selling stockholders as a deemed issuance in the recapitalization.
After the transaction, there were 26,070,838 shares issued and outstanding. The transaction resulted in MP acquiring 99.7% control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The transaction also requires a recapitalization
of MP. Since MP acquired a controlling voting interest, it was deemed the accounting acquirer, while TIT was deemed the legal acquirer.
The historical financial statements of the Company are those of MP and of the consolidated entities from the date of recapitalization
and subsequent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since the transaction is considered a reverse
recapitalization, the presentation of pro-forma financial information was not required.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 4: Property and Equipment</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment consisted of the
following at December 31, 2011 and 2010:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Estimated<BR>
 Useful Life</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 47%; text-align: left">Furniture, fixtures and gym equipment</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">781,786</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">55,305</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 15%; text-align: right">3 years</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Leasehold improvements</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">244,770</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">67,760</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Auto</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,068</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">5 years</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Displays</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,057</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,057</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">5 years</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Website</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,462</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,462</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right; padding-bottom: 1pt">3 years</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 8.65pt">Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,107,143</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">166,584</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: Accumulated depreciation and amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(199,621</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(28,033</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">907,522</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">138,551</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">* The shorter of 5 years or the life of
the lease.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 5: Debt</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2011 and 2010, debt consists
of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 50%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%; text-align: justify">Convertible debt - secured</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1,749,764</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">605,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Less: debt discount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,395,707</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(331,261</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Convertible debt - net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">354,057</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">273,739</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Auto loan - secured</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26,236</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Secured debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">187,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Unsecured debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,380,315</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78,249</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Less: debt discount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,171,626</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Unsecured debt - net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,208,689</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">78,249</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Total debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,588,982</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">539,488</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Less: current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,281,742</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(289,488</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Long term debt</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">307,240</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">250,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2011 and 2010, total
debt in default as a component of short-term debt was $505,600 and $427,500, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(A) Convertible Debt &ndash; Secured
- Derivative Liabilities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the years ended December 31, 2011
and 2010, the Company issued convertible notes totaling $4,679,253, (including non-cash convertible note and accrued interest of
$26,353 related to a reclassification from unsecured debt), and $846,000, respectively. The Convertible notes consist of the following
terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Year ended</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Year ended</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">December 31, 2011</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">December 31, 2010</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Amount of</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Amount of</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Principal Raised</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Principal Raised</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 17%; text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Interest Rate</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 40%; padding-left: 10pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="width: 18%; text-align: right"><FONT STYLE="font-size: 8pt">0% - 18</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">%</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 20%; text-align: right"><FONT STYLE="font-size: 8pt">8</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Default interest rate</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 10pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0% - 25</FONT></TD><TD><FONT STYLE="font-size: 8pt">%</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0% - 22</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-size: 8pt">Maturity</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 10pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">June 30, 2011 to June 29, 2015</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">December 31, 2010 - December
                                            1, 2013</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 1</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">Lesser of (1) a Fifty Percent (50%) discount
    to the two lowest closing bid prices of the five days trading days immediately preceding the date of conversion or (ii) Two
    and One-Half Cents ($0.025) per share</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">525,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 2</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">200% - The &ldquo;market price&rdquo; will be
    equal to the average of (i) the average of the closing price of Company&rsquo;s common stock during the 10 trading days immediately
    preceding the date hereof and (ii) the average of the 10 trading days immediately subsequent to the date hereof.</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">537,600</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 3</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">200% of Face. Average of the trading price 10
    trading days immediately preceding the closing of the transaction</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">177,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 4</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 10pt"><FONT STYLE="font-size: 8pt">200% of Face. Fixed conversion price of $0.02</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">105,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 5</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 10pt"><FONT STYLE="font-size: 8pt">300% of Face. Fixed conversion price of $0.02</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 6</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">35% of the three lowest trading prices for previous
    10 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 7</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">45% of the three lowest trading prices for previous
    10 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">327,500</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 8</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">50% of average closing prices for 10 preceding
    trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">76,353</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 9</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">50% of lowest trade price for the last 20 trading
    days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">45,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 10</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">50% of the 3 lowest trades for previous 20 trading
    days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">33,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 11</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">50% of the lowest closing price for previous
    5 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 12</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">60% Multiplied by the average of the lowest
    3 trading prices for common stock during the ten trading days prior to the conversion date</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">233,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">130,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 13</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">62% of lowest trade price for the last 7 trading
    days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">40,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 14</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">65% of the lowest trade price in the 30 trading
    days previous to the conversion</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">335,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 15</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">65% of the three lowest trading price for previous
    30 trading days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">153,800</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 16</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">70% of lowest average trading price for 30 trading
    days</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,366,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 17</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">No fixed conversion option</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">35,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 18</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 8pt">35% multiplied by the average of the lowest
    three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest
    complete Trading Day prior to the Conversion Date. &ldquo;</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 19</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 10pt"><FONT STYLE="font-size: 8pt">Fixed conversion price of $0.03</FONT></TD><TD><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">100,000</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 20</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 10pt"><FONT STYLE="font-size: 8pt">150% of Face</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 21</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 10pt"><FONT STYLE="font-size: 8pt">200% of Face</FONT></TD><TD><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">426,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: top"><FONT STYLE="font-size: 8pt">Conversion terms 22</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; padding-left: 10pt"><FONT STYLE="font-size: 8pt">300% of Face</FONT></TD><TD STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt; color: #000000">$</FONT></TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">35,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; vertical-align: top; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 10pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD>
    <TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">4,679,253</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">846,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The debt holders are entitled, at their option, to convert all
or part of the principal and accrued interest into shares of the Company&rsquo;s common stock at conversion prices and terms discussed
above. The Company classifies embedded conversion features in these notes as a derivative liability due to management&rsquo;s assessment
that the Company may not have sufficient authorized number of shares of common stock required to net-share settle or due to the
existence of a ratchet due to an anti-dilution provision. See Note 6 regarding accounting for derivative liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the year ended December 31, 2011, the Company converted
debt and accrued interest, totaling $5,126,809 into 294,339,121 shares of common stock resulting in a loss on conversion of $1,739,329.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Convertible debt consisted of the following activity and terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the year ended December 31, 2011, $585,000 of convertible
notes matured without conversion. These notes became demand loans and were reclassified as unsecured debt. Derivative liabilities
associated with these notes were eliminated given the expiration of the embedded conversion option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center; vertical-align: bottom">Interest Rate</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maturity</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 53%; vertical-align: top; text-align: left">Convertible Debt balance as of December 31, 2009</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">897,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="width: 10%; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 18%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left">Borrowings during the year ended December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">846,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; vertical-align: bottom">8%</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">March 3, 2010 - December 1, 2013</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: top">Conversion of debt into 9,908,906 shares of common stock with a valuation of $1,143,500 ( $0.045 - $0.667 /share)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,138,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left">Balance as of December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">605,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-align: left">Borrowings during the year ended December 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,652,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; vertical-align: bottom">0% - 18%</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">January 30, 2011 - June 29, 2015</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Reclassifications from convertible notes to unsecured demand notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(585,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: top">Conversion of debt to into 254,061,743 shares of common stock with a valuation of $4,268,857 ($0.0032 - $0.101/share)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,923,136</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; vertical-align: top; text-align: left">Convertible Debt balance as of December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,749,764</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<!-- Field: Page; Sequence: 118; Value: 1 -->
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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(B) Secured Debt</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Secured debt consisted of the following activity and terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Interest Rate</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maturity</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-align: left">Secured Debt balance as of December 31, 2009</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 53%; padding-bottom: 1pt; vertical-align: top; text-align: left">Borrowings during the year ended December 31, 2010</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">187,500</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; padding-bottom: 1pt; text-align: right">0</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="width: 18%; padding-bottom: 1pt; text-align: center">May 18, 2010 - May 26, 2010</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-align: left">Balance as of December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">187,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: top">Conversion of debt to into 7,500,000 shares of common stock with a valuation of $437,500 ($0.058 - $0.059/share)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(187,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt; vertical-align: top; text-align: left">Secured Debt balance as of December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(C) Unsecured Debt</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Unsecured debt consisted of the following activity and terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Interest Rate</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maturity</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 55%; vertical-align: top; text-align: left">Unsecured Debt balance as of December 31, 2009</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">30,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 18%; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left">Borrowings during the year ended December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,177,499</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0% - 10%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">On Demand - September 29, 2011</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: top">Conversion of debt into 9,127,119 shares of common stock with a valuation of $1,439,141 ( $0.50/share)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,129,250</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left">Unsecured Debt balance as of December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78,249</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-align: left">Borrowings during the year ended December 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,960,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">8% - 15 %</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">February 8, 2011 - June 21, 2014</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Reclassifications from convertible notes to unsecured demand notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">585,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top">Conversion of debt to into 32,777,378 shares of common stock with a valuation of $420,452 ($0.01 - $0.05/share)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(167,649</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; vertical-align: top; text-align: left">Repayments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(75,285</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt; vertical-align: top; text-align: left">Unsecured Debt balance as of December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,380,315</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(D) Auto Loan</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Auto loan account consisted of the following activity and terms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="RIGHT" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="vertical-align: top; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Interest<BR> Rate</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maturity</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; text-align: left">Auto loan balance as of December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 53%; text-align: left; vertical-align: top">Non-Cash fixed assets additions during the year ended December 31, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">32,568</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">6.99</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 18%; text-align: center">36 payments of $1,008</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; vertical-align: top; text-align: left">Repayments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6,332</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; vertical-align: top; text-align: left">Auto loan balance as of December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">26,236</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE><BR STYLE="clear: both">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(E) Debt Issue Costs</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the years ended 2011 and 2010, the Company paid debt
issue costs totaling $263,283 and $42,000, respectively. The following is a summary of the Company&rsquo;s debt issue costs:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: justify">Debt issue costs</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">305,283</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">42,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Accumulated amortization of debt issue costs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(237,095</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,596</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Debt issue costs &ndash; net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">68,188</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">34,404</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2011 and 2010, the Company amortized
$229,499 and $7,596.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(F) Debt Discount</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the years ended 2011 and 2010, the
Company recorded debt discounts totaling $5,473,291 and $380,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The debt discount recorded in 2011 and
2010 pertains to convertible debt that contains embedded conversion options that are required to bifurcated and reported at fair
value (See Note 9).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company amortized $3,237,219 in 2011
and $48,739 in 2010 to interest expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: justify">Debt discount</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,804,552</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">380,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Amortization of debt discounts</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,237,219</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(48,739</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Debt discount &ndash; net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,567,333</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">331,261</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 6: Derivative Liabilities</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company identified conversion features
embedded within convertible debt, warrants and series A, preferred stock issued in 2011 and 2010 (see Notes 5 and 9). The Company
has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative
liability as the Company could not determine if a sufficient number of shares would be available to settle all transactions. Additionally,
at one point during 2011, the Company had received conversion notices from investors for which sufficient authorized shares were
not available.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of the application of ASC No.
815, the fair value of the conversion feature is summarized as follow:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">Derivative liability - December 31, 2009</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 87%; text-align: left">Fair value at the commitment date for convertible instruments</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">473,638</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Fair value mark to market adjustment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">149,306</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">Derivative liability - December 31, 2010</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">622,944</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Fair value at the commitment date for convertible instruments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,590,351</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Fair value at the commitment date for warrants issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,650,576</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Fair value at the commitment date for Series A, Preferred Stock issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">293</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Fair value mark to market adjustment for convertible instruments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,293,164</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Fair value mark to market adjustment for warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,868,818</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Fair value mark to market adjustment for Series A, Preferred Stock issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(118</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(640,826</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Derivative liability - December 31, 2011</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">7,061,238</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recorded the debt discount
to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross
proceeds of the note. The Company recorded a derivative expense of $4,777,654 and $93,638 for 2011 and 2010 respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The fair value at the commitment and re-measurement dates for
the Company&rsquo;s derivative liabilities were based upon the following management assumptions as of December 31, 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Commitment Date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Re-measurement Date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%; text-align: left">Expected dividends</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150% -226 </TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150% -226 </TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Expected term:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.02 &ndash; 5 years</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.02 &ndash; 5 years</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Risk free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.06% - 2.76 </TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.09% - 0.31 </TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The fair value at the commitment and re-measurement dates
for the Company&rsquo;s derivative liabilities were based upon the following management assumptions as of December 31, 2010:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Commitment Date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Re-measurement Date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 64%; text-align: left">Expected dividends</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Expected term:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.75 &ndash; 3 years</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.37 &ndash; 2.92 years</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Risk free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.18% - 2.76 </TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.19</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<!-- Field: Page; Sequence: 121; Value: 1 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 7: Income Taxes</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Income taxes are provided for the tax effects
of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes relate to differences between
the basis of assets and liabilities for financial and income tax reporting which will be either taxable or deductible when the
assets or liabilities are recovered or settled.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2011, the Company has a
net operating loss carry-forward of approximately $16,355,000 available to offset future taxable income expiring through 2031.
Utilization of future net operating losses may be limited due to potential ownership changes under Section 382 of the Internal
Revenue Code.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The valuation allowance at December 31,
2010 was $ 2,495,000. The net change in valuation allowance during the year ended December 31, 2011 was an increase of approximately
$6,075,000. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that
some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets
is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty
exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance
as of December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The effects of temporary differences that gave rise to significant
portions of deferred tax assets at December 31, 2011 and 2010 are approximately as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Net operating loss carry forward</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,061,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,986,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Amortization of debt discount and debt issue costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,465,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">465,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Stock options and warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">971,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Bad debt</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">73,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">44,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(8,570,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,495,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net deferred tax asset</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There was no income tax expense for the
year ended December 31, 2011 and 2010 due to the Company&rsquo;s net losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s tax expense differs
from the &ldquo;expected&rdquo; tax expense for the years ended December 31, 2011 and 2010, (computed by applying the Federal Corporate
tax rate of 34% to loss before taxes and 4.63% for Colorado State Corporate Taxes, the blended rate used was 37.1%), are approximately
as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Federal tax benefit at statutory rate</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(7,916,000</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(6,216,000</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">State tax benefit &ndash; net of federal tax effect</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(501,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(888,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Derivative expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,625,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Change in fair value of derivative liability</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,755,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Loss on settlement of accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,313,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">161,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Non-deductible stock compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,091,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,354,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other non-deductible expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Change in valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,075,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,495,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Income tax benefit</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 8: Commitments, Contingencies and other matters</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(A) Operating Lease</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2010, the Company leased office
space under a non-cancelable operating lease, expiring in December 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Future minimum annual rental payments for
the years ended December 31, are approximately as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">86,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">98,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total minimum lease payments</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">381,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Rent expense for the years ended December 31, 2011 and 2010
was $154,155 and $138,357, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(B) Factoring Agreement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2010, the Company entered into
a factoring agreement and sold its accounts receivable. During 2010, the Company was subject legal proceedings with the factor,
as a result of the Company&rsquo;s customers not remitting funds directly to the factor. At December 31, 2010, the Company no longer
factored its accounts receivable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A settlement, of $96,783, was reached. During 2010, the Company
repaid $25,000, leaving a balance of $71,783 due to factor. In 2011, the Company paid $10,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 28, 2011, the remaining $65,930,
inclusive of fees and interest, was settled with the issuance of 2,187,666 shares of common stock, having a fair value of $131,206
($0.06/share), based upon the quoted closing trading price. The Company recorded a loss on settlement of accounts payable $65,330.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(C) Legal Matters</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, the Company may become
involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is
party to the following legal matters as of December 31, 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 2%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 96%; text-align: justify">Plaintiff alleges the Company use of Creatine Nitrate in product infringed on a patent held by the Plaintiff. The Company believes the Plaintiffs case is without merit.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 2%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 96%; text-align: justify">Plaintiff alleges the Company&rsquo;s use of the tagline &ldquo;Train like an unchained beast&rdquo; infringes on their mark &ldquo;Beast&rdquo; for dietary supplements. Plaintiff&rsquo;s primary goal is not damages, but rather that the Company cease using the tagline. Settlement discussions are ongoing in this case and the Company intends to defend its position.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 2%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 96%; text-align: justify">Plaintiff has filed notices of intent to commence litigation on over 200 sports nutrition and dietary supplement companies in the US and Canada, including the Company. Plaintiff alleges violations of California&rsquo;s Proposition 65. The Company considers this case without merit and merely an attempt by a commercial plaintiff to pressure settlements. Plaintiff conveyed a settlement offer in the amount of $121,500 to which the Company has not yet responded. The Company has recorded an accrual in the amount of $121,500 as of December 31, 2011.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 2%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 96%; text-align: justify">Beginning in October 2009, the Company engaged in various business dealings regarding the manufacturing, sale and distribution of products with Fit Foods Manufacturing, Ltd. and Fit Foods Distribution, Inc. Jointly, &ldquo;Fit Foods&rdquo;). MusclePharm and Fit Foods subsequently became involved in a business dispute regarding their respective obligations and filed claims against each other in District Court. The Parties settled their dispute on December 22, 2010. The Company issued 13,987,393 shares of common stock having a fair value of $676,980 ($0.048/share), based upon the quoted closing trading price which settled outstanding accounts payable of $333,666, resulting in a loss on settlement of $343,314 All settlement payments have been made and the case was dismissed on July 1, 2011.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(D) Payroll Taxes</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2011 and 2010, accounts
payable and accrued expenses included approximately $168,000 and $367,860, respectively, pertaining to accrued payroll taxes. The
taxes represent employee withholdings that have yet to be remitted to the taxing agencies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 9: Stockholders&rsquo; Deficit</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has three separate series of
authorized preferred stock:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(A) Series A, Convertible Preferred
Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2010, the Company issued 16,666,600
shares of common stock in connection with the conversion of 83,333 shares of Series A Convertible Preferred Stock. There was no
gain or loss on conversion as the transaction was accounted for at par value in connection with the reverse recapitalization in
2010. (See Note 3)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This class of stock has the following provisions:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="width: 5%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 90%">Non-voting;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>No rights to dividends;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>No liquidation value; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Convertible into 200 shares of common stock.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(B) Series B, Preferred Stock (Related
Parties)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2011, the Company issued an aggregate
51 shares of Series B Preferred Stock to two of its officers and directors. The Company accounted for the share issuance at par
value since there was no future economic value that could be associated with the issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This class of stock has the following provisions:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="width: 5%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 90%">Voting rights entitling the holders to an aggregate 51% voting control;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Initially no rights to dividends;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Stated value of $0.001 per share;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Liquidation rights entitle the receipt of net assets on a pro-rata basis; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Non-convertible.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(C) Series C, Convertible Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2011, the Company issued 190
shares of Series C, preferred stock, having a fair value of $190,000. Of the total shares issued, 100 shares were issued for $100,000
($1,000 /share). The remaining 90 shares were issued for services rendered having a fair value of $90,000 ($1,000 /share), based
upon the stated value per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This class of stock has the following provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 5%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 90%; text-align: justify">Stated Value - $1,000 per share;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">Non-voting;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">Liquidation rights entitle an amount equal to the stated value, plus any accrued and unpaid dividends;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">As long as any Series C, convertible preferred stock is outstanding, the Company is prohibited from executing various corporate actions with the majority consent of the Series C, convertible preferred stockholders authorization; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD STYLE="text-align: justify">Convertible at the higher of (a) $0.01 or (b) such price that is a 50% discount to market using the average of the low 2 closing bid prices, 5 days preceding conversion.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Due to the existence of an option to convert
at a variable amount, the Company has applied ASC No. 815, and treated this series of preferred stock as a derivative liability
due to the potential for settlement in a variable quantity of shares. Additionally, the Company computed the fair value of the
derivative liability at the commitment date and remeasurement date, which was $293 and $175, respectively, using the Black-Scholes
assumptions below. This transaction is analogous to a dividend with a direct charge to retained earnings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(D) Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended December 31, 2011,
the Company issued the following common stock:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Transaction Type</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Quantity <BR>(#)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Valuation <BR>($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Range of Values Per <BR>
Share ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left">Conversion of convertible debt</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">254,061,743</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">4,268,857</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right; padding-right: 0; padding-left: 0; text-indent: 0">0.003&ndash;0.10</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Conversion of unsecured/secured debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,277,378</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">857,952</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.05&ndash;0.06</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Settlement of accounts payable and accrued expenses <SUP>(1)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,545,896</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,646,719</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.03&ndash;0.12</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Extension of debt maturity date</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,375,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">161,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.017&ndash;0.02</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Services &ndash; rendered</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,521,157</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,199,844</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00&ndash;1.15</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash and warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">82,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">875,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.03</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Services &ndash; prepaid stock compensation <SUP>(2)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">214,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.05&ndash;.08</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Cancelled shares <SUP>(3)</SUP></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,500,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">0.03</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">487,281,174</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,223,872</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">0.00&ndash;1.15</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of all stock issuances above
is based upon the quoted closing trading price on the date of issuance, except for stock issued for cash and warrants, which was
based upon the cash received. Stock issued in the conversion of preferred stock was recorded at par value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following is a more detailed description
of some of the Company&rsquo;s stock issuances from the table above:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(1) Settlement of Accounts Payable and
Accrued Expenses and Loss on Settlement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company settled $1,523,590 in accounts
payable and recorded a loss on settlement of $2,123,129.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left">Loss on settlement of accounts payable and accrued expenses</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">2,123,129</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loss on settlement of debt (Note 5)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,739,329</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total loss on settlement</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,862,458</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(2) Prepaid Stock Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following represents the allocation
of prepaid stock compensation as of December 31, 2011 and 2010:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="margin-left: 0.5in; border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Prepaid stock compensation &ndash; December 31, 2009</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 87%; text-align: left">Prepaid stock compensation additions during the year ended December 31, 2010</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2,734,548</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Amortization of prepaid stock compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(768,637</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Prepaid stock compensation &ndash; December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,965,911</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Prepaid stock compensation additions during the year ended December 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">214,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Non cash increase in accounts payable related to future services to be paid for with common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Amortization of prepaid stock compensation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,745,705</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Prepaid stock compensation &ndash; December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">534,456</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The agreements commenced during the periods
February 2011 through July 2011 and terminate August 2011 through July 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following represents the allocation
of prepaid stock compensation at December 31, 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="margin-left: 0.5in; font: 10pt Times New Roman, Times, Serif; width: 70%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 85%; text-align: justify">Prepaid expense that will be amortized in 2012</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 12%; text-align: right">534,456</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(3) Cancelled Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company cancelled 3,500,000 shares during the year ended
December 31, 2011, valued at par ($0.001). The Company has disputed the issuance of these shares due to non-performance by a consultant.
These shares were originally issued in 2010 as a component of stock issued for services rendered.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended December 31, 2010,
the Company issued the following common stock:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Transaction Type</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Quantity <BR>(#)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Valuation <BR>($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Range of Values Per <BR>
Share ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left">Reverse recapitalization</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">26,070,838</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Conversion of preferred stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666,600</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,667</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.001</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Conversion of convertible debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,708,906</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,033,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.05&ndash;0.67</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Settlement of accounts payable <SUP>(1)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,014,286</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">433,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.05&ndash;0.42</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Settlement of notes payable <SUP>(2)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,165,571</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,191,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.05&ndash;0.55</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Settlement of notes payable &ndash; officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,161,548</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">358,077</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.05</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash and warrants &ndash; net of payment in recapitalization of ($25,107)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,167,767</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,503,569</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.27-0.50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Services &ndash; rendered</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,457,214</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,554,615</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.05&ndash;1.16</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Services &ndash; rendered &ndash; officers (bonus)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,300,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.53</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Services &ndash; prepaid stock compensation <SUP>(5)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,545,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,734,548</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.06&ndash;1.16</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Contract settlement <SUP>(3)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">511,509</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Extension of debt maturity date <SUP>(4)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">130,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">95,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.61&ndash;1.15</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Secured debt offering</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">50,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">30,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.61</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">118,649,439</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,376,547</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">Range: 0.001&ndash;1.16</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of all stock issuances above
is based upon the quoted closing trading price on the date of issuance, except for stock issued for cash and warrants, which was
based upon the cash received. Stock issued in the conversion of preferred stock was recorded at par value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD COLSPAN="3" STYLE="text-align: justify">The following is a more detailed description of some of the Company&rsquo;s stock issuances from the table above:</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 2%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 94%; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">(1)</TD>
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: justify">Settlement of Accounts Payable and Loss on Settlement</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Of the total shares issued to settle accounts payable, the Company issued 8,928,571 shares of common stock having a fair value of $400,000 ($0.045/share), based upon the quoted closing trading price. The Company settled $375,000 in accounts payable, paid a fee of $25,000, and recorded a loss on settlement of $112,500. The Company also paid cash to settle accounts payable of $84,715 and recorded a gain on settlement, as a result, the Company has recorded a total net loss on settlement of accounts payable of $27,785.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">(2)</TD>
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: justify">Settlement of Notes payable</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">In connection with the stock issued to settle notes payable, the Company issued 1,965,571 shares of common stock having a fair value of $1,081,064 ($0.55/share), based upon the quoted closing trading price. The Company settled $678,325 in notes payable and recorded a loss on settlement of $402,739.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">(3)</TD>
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: justify">Contract Settlement</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">In connection with litigation (See Note 8), the Company issued stock that has been accounted for as a settlement expense and a component of other expense.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">(4)</TD>
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: justify">Extension of Debt Maturity</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">The Company issued stock to extend the maturity date of certain notes and recorded additional interest expense.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">(5)</TD>
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: justify">Prepaid Stock Compensation</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">The agreements commenced during the periods March &ndash; December 2010 and terminate during the periods March 2011 through November 2012. Prepaid stock compensation is included as a component of prepaid and other current and long term assets.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>(E) Stock Options</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 1, 2010, the Company&rsquo;s
board of directors and stockholders approved the 2010 Stock Incentive Plan (&ldquo;2010 Plan&rdquo;). The 2010 Plan allows the
Company to grant incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and stock
appreciation rights to key employees and directors of the Company or its subsidiaries, consultants, advisors and service providers.
Any stock option granted in the form of an incentive stock option will be intended to comply with the requirements of Section 422
of the Internal Revenue Code of 1986, as amended. Only stock options granted to employees qualify for incentive stock option treatment.
No incentive stock option shall be granted after February 1, 2020, which is 10 years from the date the 2010 Plan was initially
adopted. A stock option may be exercised in whole or in installments, which may be cumulative. Shares of common stock purchased
upon the exercise of a stock option must be paid for in full at the time of the exercise in cash or such other consideration determined
by the compensation committee. Payment may include tendering shares of common stock or surrendering of a stock award, or a combination
of methods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The 2010 Plan will be administered by the
compensation committee. The compensation committee has full and exclusive power within the limitations set forth in the 2010 Plan
to make all decisions and determinations regarding the selection of participants and the granting of awards; establishing the terms
and conditions relating to each award; adopting rules, regulations and guidelines; and interpreting the 2010 Plan. The Compensation
Committee will determine the appropriate mix of stock options and stock awards to be granted to best achieve the objectives of
the Plan. The 2010 Plan may be amended by the Board or the compensation committee, without the approval of stockholders, but no
such amendments may increase the number of shares issuable under the 2010 Plan or adversely affect any outstanding awards without
the consent of the holders thereof. The total number of shares that may be issued shall not exceed 5,000,000, subject to adjustment
in the event of certain recapitalizations, reorganizations and similar transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 2, 2010, the Company issued 2,767,500
stock options, having a fair value of $630,990, which was expensed immediately since all stock options vested immediately. These
options expire on April 2, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company applied fair value accounting
for all share based payment awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes
option-pricing model. The Black-Scholes assumptions used in the year ended December 31, 2010 is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 50%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%">Exercise price</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD NOWRAP STYLE="width: 15%; text-align: right">0.50</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected dividends</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Expected volatility</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">74.8</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Risk fee interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">1.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Expected life of option</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">2.5 years</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected forfeitures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">0</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following is a summary of the Company&rsquo;s stock option
activity for the years ended December 31, 2011, 2010 and 2009:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Number of <BR>
Shares</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Weighted <BR>
Average<BR>
 Exercise Price</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Weighted Average <BR>
Remaining <BR>
Contractual Life<BR>
 (year)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Aggregate<BR>
 Intrinsic <BR>
Value</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Balance &ndash; December 31, 2009</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%">Granted</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2,767,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.50</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">4.25</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Forfeited/Cancelled</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Outstanding, December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,767,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Forfeited/Cancelled</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,150,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Outstanding, December 31, 2011 &ndash; outstanding</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,617,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.50</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Outstanding, December 31, 2011 &ndash; exercisable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,617,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.50</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Grant date fair value of options granted &ndash; 2010</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">630,990</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Weighted average grant date fair value &ndash; 2010</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.50</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Outstanding options held by related parties &ndash; 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,000,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Exercisable options held by related parties &ndash; 2010</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,000,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Outstanding options held by related parties &ndash; 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,000,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Exercisable options held by related parties &ndash; 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,000,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>(F) Stock Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2010, the Company issued 750,000
five-year warrants, with a weighted average exercise price of $0.021/share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All warrants issued during 2011 were accounted
for as derivative liabilities. See Note 6.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2011, the Company entered into convertible
and unsecured note agreements. As part of these agreements, the Company issued warrants to purchase 162,388,233 shares of common
stock. Each warrant vests six month after issuance and expire July 14, 2013 &ndash; June 28, 2016, with exercise prices ranging
from $0.015 - $0.06.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2011, the Company issued 120,200,000
warrants for services performed. The warrants have a vesting range of immediate to six months after issuance and expire February
28, 2014 &ndash; April 15, 2016, with exercise prices ranging from $0.002 - $0.1. The value of the warrants, $1,989,982, calculated
using the below black-scholes assumptions, was expensed as compensation with the offset being recorded to derivative liabilities,
since the Company applied the provisions of ASC No. 815, pertaining to the potential settlement in a variable amount of shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MusclePharm Corporation and Subsidiary
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Notes to Financial Statements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>December 31, 2011 and 2010</U> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of warrant activity for the Company for the year ended
December 31, 2010 and for the year ended December 31, 2011 is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number of Warrants</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted Average Exercise Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Balance at December 31, 2009</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 64%">Granted</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">750,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">1.5</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Balance as December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">750,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">282,588,233</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">.02</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Balance as December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">283,338,233</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">.02</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="13" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Warrants
    Outstanding</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="5" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Warrants
    Exercisable</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Range
    of <BR>Exercise Prices</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number<BR>
    Outstanding</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted
    Average <BR>Remaining <BR>Contractual Life (in<BR>
    years)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted
    Average <BR>
    Exercise Price</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number
    <BR>
    Exercisable</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted
    <BR>Average <BR>Exercise Price</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Intrinsic
    Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 14%; text-align: right"><FONT STYLE="font-size: 8pt">$0.012-$1.50</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-size: 8pt">283,338,233</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-size: 8pt">2.85</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 11%; text-align: right"><FONT STYLE="font-size: 8pt">0.021</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 13%; text-align: right"><FONT STYLE="font-size: 8pt">61,696,327</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 11%; text-align: right"><FONT STYLE="font-size: 8pt">0.042</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 11%; text-align: right"><FONT STYLE="font-size: 8pt">875,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Note 10: Subsequent Events</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(A) Common Stock </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 26, 2012, the Company increase
the Company&rsquo;s authorized common stock from 1,000,000,000 shares to 2,500,000,000 shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the 1<SUP>st</SUP> quarter of 2012,
the Company issued 20,000,000 shares of common stock to an officer, having a fair value of $280,000 ($0.014/share), based upon
the quoted closing trading price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(B) Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the 1<SUP>st</SUP> quarter of 2012,
the Company issued 32,000,000 shares of common stock for $285,760 ($0.00893/share) in connection with the exercise of warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(C) Debt, Debt Conversion and Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Notes</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the 1<SUP>st</SUP> quarter of 2012,
the Company executed notes payable and received net proceeds of $3,061,000. The notes are unsecured, bear interest at 15% and mature
18 months from issuance. In connection with this debt issuance, the Company granted 241,125,000, 2.5 year warrants, with exercise
prices ranging from $0.012/share - $0.015/share, and vest 6 months from grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Convertible Notes</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the first quarter of 2012, the Company
executed convertible notes for $519,950 resulting in net cash proceeds of $489,950, ($30,000 paid as debt issue costs). The notes
mature between 6 months &ndash; 1 year. The notes bear interest ranging from 8% - 10%, with default interest rates ranging from
20% - 24%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These notes may be convertible as follows,
depending upon the terms of each issuance:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 5%; text-align: center">&bull;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 85%; text-align: justify">35% of the average, 3 lowest trading days, prior to the 10 days before conversion,</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&bull;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">62% of the lowest trading price during the 7 days before conversion; and</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&bull;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">65% of the lowest trading price during the 30 days before conversion</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Debt Conversions</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the 1st quarter of 2012, the Company settled $2,443,214
of secured convertible debt, unsecured debt and accrued interest with the payment of $2,895,576 and the issuance of 267,308,200
shares of common stock. In addition, all related 58,971,327 warrants were cancelled. As a result of the debt conversion and cancellation
of warrants, all associated derivative liabilities underlying these instruments cease to exist.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the 1st quarter of 2012, the Company repurchased 14,542,939
shares of common stock from an investor for $230,400 ($0.0158/share). The Company has paid $100,000; the balance will be paid in
the 2<SUP>nd</SUP> quarter of 2012. In connection with the repurchase, the Company has accounted for this transaction in accordance
with ASC 505-30, &ldquo;<I>treasury stock&rdquo;</I>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><img src="tpg139.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 12pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;<B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>Shares</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt">&nbsp;<B>Common
Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><img src="tpg140.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<!-- Field: Rule-Page --><DIV ALIGN="CENTER" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;<B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<!-- Field: Rule-Page --><DIV ALIGN="CENTER" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Aegis Capital Corp</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 3pt; margin-bottom: 12pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; border-bottom: Black 2pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART&nbsp;II</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 13. <I>Other Expenses of Issuance and Distribution</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth all expenses to be paid by the
Registrant, other than estimated underwriting discounts and commissions, in connection with our public offering. All amounts shown
are estimates except for the SEC registration fee, the NASDAQ listing fee and the FINRA filing fee:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left">SEC registration fee</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,812</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">FINRA filing fee</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,592</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">NASDAQ listing fee</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Legal fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accounting fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Transfer agent and registrar fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Printing and engraving expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Miscellaneous fees and expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">*</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">*</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">* To be filed by amendment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 14.<I> Indemnification of Directors and Officers</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Nevada Law</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Section 78.7502 of the Nevada Revised Statutes contains provisions
authorizing indemnification by the Company of directors, officers, employees or agents against certain liabilities and expenses
that they may incur as directors, officers, employees or agents of the Company or of certain other entities. Section 78.7502(3)
provides for mandatory indemnification, including attorney&rsquo;s fees, if the director, officer, employee or agent has been successful
on the merits or otherwise in defense of any action, suit or proceeding or in defense of any claim, issue or matter therein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Section 78.751 of the Nevada Revised Statutes provides that
such indemnification may include payment by the Company of expenses incurred in defending a civil or criminal action or proceeding
in advance of the final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay
such payment if he shall be ultimately found not to be entitled to indemnification under the Section. Indemnification may be provided
even though the person to be indemnified is no longer a director, officer, employee or agent of the Company or such other entities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Section 78.752 of the Nevada Revised Statutes authorizes the
Company to obtain insurance on behalf of any such director, officer employee or agent against liabilities, whether or not the Company
would have the power to indemnify such person against such liabilities under the provisions of the Section 78.7502. The indemnification
and advancement of expenses provided pursuant to Sections 78.7502 and 78.751 are not exclusive, and subject to certain conditions,
the Company may make other or further indemnification or advancement of expenses of any of its directors, officers, employees or
agents. Because neither the articles of incorporation, as amended, or Bylaws of the Company otherwise provide, notwithstanding
the failure of the Company to provide indemnification and despite a contrary determination by the board of directors or its stockholders
in a specific case, a director, officer, employee or agent of the Company who is or was a party to a proceeding may apply to a
court of competent jurisdiction for indemnification or advancement of expenses or both, and the court may order indemnification
and advancement of expenses, including expenses incurred in seeking court- ordered indemnification or advancement of expenses if
it determines that the petitioner is entitled to mandatory indemnification pursuant to Section 78.7502(3) because he has been successful
on the merits, or because the Company has the power to indemnify on a discretionary basis pursuant to Section 78.7502 or because
the court determines that the petitioner is fairly and reasonably entitled to indemnification or advancement of expenses or both
in view of all the relevant circumstances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Articles of Incorporation and Bylaws</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our articles of incorporation and bylaws, as amended, empower
us to indemnify our current or former directors, officers, employees or agents or persons serving by our request in such capacities
in any other enterprise or persons who have served by our request is in such capacities in any other enterprise to the full extent
permitted by the laws of the State of Nevada. Pursuant to Nevada law and our articles of incorporation and bylaws, our officers
and directors (and former officers and directors) are entitled to indemnification from us to the full extent permitted by law.
Our articles of incorporation and bylaws generally provide for such indemnification for claims arising out of the acts or omissions
of our officers and directors in their capacity as such, undertaken in good faith and in a manner reasonably believed to be in,
or not opposed to, our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful. The conditions and extent of indemnification are set forth in the articles of incorporation and
bylaws. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to officers, directors or
persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Indemnification Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have also entered into individual indemnification agreements
with our directors and named executive officers. These agreements indemnify those directors and officers to the fullest extent
permitted by law against inordinate risks of claims and actions against them arising out of their service to and activities on
behalf of MusclePharm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 15.<I> Recent Sales of Unregistered Securities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Issuance of Shares Pursuant to a
Share Exchange Agreement</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 18, 2010, the Company issued
a total of 40,000 shares of its common stock to the 12 former owners of Muscle Pharm, LLC, in exchange for all of the Muscle Pharm,
LLC units.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Issuance of Common Stock in Exchange
for Cancellation of Warrant Agreements</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Between May 17, 2012 and August 9, 2012,
the Company issued 43,123 shares of common stock to holders of warrant agreements in exchange for the cancellation of such agreements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Conversion of Preferred Stock into
Shares of Common Stock</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From February 26, 2010 to March 28, 2012,
the Company&rsquo;s Series A Convertible Preferred Stock was converted into 54,733 shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Conversion of Convertible Notes into
Shares of Common Stock</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From March 22, 2010 through December 14,
2010, holders of convertible notes converted an aggregate of $1,033,500 in principal into an aggregate of 11,860 shares of common
stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From January 25, 2011 through December
31 2011, holders of convertible notes converted an aggregate of $3,393,346 in principal into an aggregate of 440,645 shares of
common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From January 4, 2012 through March 22,
2012, holders of convertible notes converted an aggregate of $941,785 in principal into an aggregate of 380,474 shares of common
stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Exercise of Warrants</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 26, 2012, warrant holders exercised
warrants for an aggregate of 49,231 shares of common stock at an exercise price of $5.80 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Convertible Debt Issuance</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Date of Sale</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount Sold ($)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; text-align: center">8/12/10</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 47%; text-align: right">50,000</TD><TD STYLE="width: 1%; text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">9/14/10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">12/1/10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,650,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">12/21/10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">1/5/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">1/14/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left"><SUP>(1)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">1/20/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">1/21/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">1/23/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">1/24/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">1/25/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">1/25/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left"><SUP>(2)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">1/26/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">1/28/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">1/31/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2/1/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">2/2/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2/4/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">130,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">2/10/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2/28/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/1/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/4/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/8/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">140,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/11/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/14/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/21/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/22/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/23/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/24/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/25/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/27/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">5/6/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">246,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">5/31/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">6/7/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">900,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">6/14/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">6/24/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">6/25/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">441,833</TD><TD STYLE="text-align: left"><SUP>(3)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">8/28/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">8/31/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">560,000</TD><TD STYLE="text-align: left"><SUP>(4)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">10/4/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">10/5/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">135,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">10/6/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">10/12/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">10/28/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">11/1/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">605,000</TD><TD STYLE="text-align: left"><SUP>(5)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">11/14/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">1/3/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">1/13/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">440,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">1/13/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">400,000</TD><TD STYLE="text-align: left"><SUP>(6)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2/12/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">252,000</TD><TD STYLE="text-align: left"><SUP>(7)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">2/28/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62,500</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/18/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,000</TD><TD STYLE="text-align: left"><SUP>(8)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/21/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left"><SUP>(9)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/23/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">379,500</TD><TD STYLE="text-align: left"><SUP>(10)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/27/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left"><SUP>(11)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/28/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">175,000</TD><TD STYLE="text-align: left"><SUP>(12)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">3/29/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left"><SUP>(13)</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">3/30/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">4/6/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,231,000</TD><TD STYLE="text-align: left"><SUP>(14)</SUP></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">1. The Company also issued warrants
in respect of 1,923 shares of our common stock at an exercise price of $42.25 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">2. The Company also issued warrants
in respect of 1,777 shares of our common stock at an exercise price of $42.25 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">3. The Company also issued a
warrant to purchase $800,000 of common stock pursuant to a formula based on the market price of common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">4. The Company also issued warrants
in respect of 28,718 shares of common stock at an exercise price of $19.50 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">5. The Company also issued warrants
in respect of 43,385 shares of common stock at an exercise price of $11.38 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">6. The Company also issued warrants
in respect of 25,641 shares of common stock at an exercise price of $9.75 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">7. The Company also issued warrants
in respect of 53,846 shares of common stock at an exercise price of $9.75 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">8. The Company also issued warrants
in respect of 6,410 shares of common stock at an exercise price of $7.80 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">9. The Company also issued warrants
in respect of 12,821 shares of common stock at an exercise price of $7.80 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">10. The Company also issued warrants
in respect of 48,654 shares of common stock at an exercise price of $7.80 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">11. The Company also issued warrants
in respect of 3,846 shares of common stock at an exercise price of $7.80 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">12. The Company also issued warrants
in respect of 22,436 shares of common stock at an exercise price of $7.80 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">13. The Company also issued warrants
in respect of 38,462 shares of common stock at an exercise price of $7.80 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Shares to Extend Debt Agreements</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 5, 2010, the Company issued a noteholder 23 shares of
common stock in consideration for an extension of the noteholder&rsquo;s note. The issuance was recorded as interest at a fair
value of $17,250 ($747.50 per share) based upon the quoted closing price of the common stock on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 5, 2010, the Company issued a noteholder 23 shares of
common stock in consideration for an extension of the noteholder&rsquo;s note. The issuance was recorded as interest at a fair
value of $17,250 ($747.50 per share) based upon the quoted closing price of the common stock on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 21, 2010, the Company issued a noteholder 115 shares
of common stock in consideration for an extension of the noteholder&rsquo;s note. The issuance was recorded as interest at a fair
value of $45,750 ($396.50 per share) based upon the quoted closing price of the common stock on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 21, 2010, the Company issued a noteholder 19 shares
of common stock in consideration for an extension of the noteholder&rsquo;s note. The issuance was recorded as interest at a fair
value of $7,625 ($396.50 per share) based upon the quoted closing price of the common stock on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 21, 2010, the Company issued a noteholder 19 shares
of common stock in consideration for an extension of the noteholder&rsquo;s note. The issuance was recorded as interest at a fair
value of $7,625 ($396.50 per share) based upon the quoted closing price of the common stock on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On June 7, 2011, the Company issued a noteholder 619 shares
of common stock in consideration for an extension of the noteholder&rsquo;s note. The issuance was recorded as interest at a fair
value of $14,778 ($24.05 per share) based upon the quoted closing price of the common stock on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Shares to Settle Notes Payable</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 29, 2010, the Company issued an aggregate of 17,426
shares of common stock to note holders in settlement of principal and accrued interest in the aggregate amount of $1,549,141.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Issuance of Shares to Settle Contract</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 23, 2010, the Company issued
787 shares of common stock in settlement of an outstanding contract with a vendor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Warrants to Settle Contract</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 15, 2011, Company issued warrants to purchase 15,385
shares of common stock with an exercise price of $5.20 per share as settlement of an outstanding contract provision with management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Shares to Settle Aged Debt</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From December 27, 2010 through August 4, 2011, the Company issued
securities exempt from the registration requirements of the Securities Act pursuant to Section 3(a)(9) of the Securities Act, to
third party funds. Pursuant to these transactions, the Company directed its transfer agent to issue and deliver to the third parties
102,810 shares of the Company&rsquo;s common stock, subject to adjustment, in satisfaction of a debt in the amount of $2,099,001.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Shares as Performance Bonus</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 18, 2010, the Company issued an officer and director
7,692 shares of common stock as a performance bonus at a fair value of $2,650,000 ($344.50 per share), based upon the quoted closing
price of common stock on October 18, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 18, 2010, the Company issued an officer and director
7,692 shares of common stock as a performance bonus at a fair value of $2,650,000 ($344.50 per share), based upon the quoted closing
price of common stock on October 18, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 27, 2012, the Company issued officers
and a director 683,921 shares of common stock as a performance bonus at a fair value of $4,667,764 ($6.83 per share), based upon
the quoted closing price of common stock on December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Shares to Debt Holders</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 21, 2010, the Company issued one investor 51 shares
of common stock as further consideration for the investor to enter into a debt agreement with the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 21, 2010, the Company issued one investor 26 shares
of common stock as further consideration for the investor to enter into a debt agreement with the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On February 15, 2012, the Company issued one investor 30,769
shares of common stock as further consideration related to the prepayment of a debt agreement with the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 28, 2012, the Company issued one investor 15,385 shares
of common stock as further consideration related to the prepayment of a debt agreement with the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 30, 2012, the Company issued one investor 38,462 shares
of common stock as further consideration related to the prepayment of a debt agreement with the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Shares for Services</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On the dates set forth below, the Company issued the number
of shares of common stock at the aggregate offering prices as set forth below to consultants for services rendered to the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Date of Sale</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number of Shares Sold</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Aggregate Offering Price ($)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center">2010</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 31%; text-align: center">4/1</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 31%; text-align: right">231</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 30%; text-align: right">174,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">5/1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">185</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">5/5-5/8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">594</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">397,940</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">6/28</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">462</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">309,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">6/30-7/10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,855</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,924,278</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">7/22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">7/22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">7/29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,700</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">177</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,350</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,275</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,760</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">131</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,650</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">9/29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,900</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">9/29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">9/29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,408</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">769</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/14</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">658</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">357,600</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/26</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">288</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,710</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/28</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">177,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">11/2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">11/18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,385</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">840,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,385</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">220,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/14</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/14</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">11/17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">960,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/15</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/15</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,308</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">120,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/15</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">385</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,692</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">350,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,692</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center">2011</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">1/7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,723</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">1/7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">231</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,335</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">1/7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,723</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">2/17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">231</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,335</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">2/28</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">398</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">3/31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,650</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">3/31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">726</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">3/31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">350</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">4/15</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,100</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">4/30</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">491</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">5/1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,728</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">175,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">5/31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">513</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">6/30</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">769</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">7/12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,050</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">577</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/30</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/30</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,053</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">9/6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,979</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">9/30</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,100</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">12/7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,945</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">170,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center">2012</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">5/1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,806</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">5/9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,689</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">6/1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,846</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">7/10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,769</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">311,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">8/20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,846</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">9/3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,385</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">9/11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,574</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">9/13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,238</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">285,519</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,902</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,231</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">10/18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,692</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Issuances for Prepaid Services</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 11, 2011, the Company issued
1,538 shares of common stock to a consultant for services to be rendered at a fair value of $78,000 ($50.70 per share), based upon
the quoted closing price of the Company&rsquo;s common stock on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 9, 2011, the Company issued consultants
3,846 shares of common stock for services to be rendered at a fair value of $150,000 ($42.90 per share) based upon the quoted closing
price trading price on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 1, 2011, the Company issued 769
shares of common stock to a consultant for services to be rendered at a fair value of $23,500 ($30.55 per share), based upon the
quoted closing price trading price on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 1, 2012, the Company issued 3,077
shares of common stock to a consultant for services to be rendered at a fair value of $50,000 ($16.25 per share), based upon the
quoted closing price trading price on the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 1, 2012, the Company issued
1,538 shares of common stock to a consultant for services to be rendered at a fair value of $10,000 ($6.50 per share), based upon
contract value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On September 18, 2012, the Company issued
7,692 shares of common stock to a consultant for services to be rendered at a fair value of $50,000 ($6.50 per share), based upon
contract value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Issuance of Shares for Cash</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From May 1, 2010 to June 23, 2010, the
Company entered into stock purchase agreements with investors for an aggregate of 969 shares of common stock at $227.50 per share
for an aggregate purchase price of $315,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 25, 2010, the Company entered into
a stock purchase agreement with an investor for 162 shares of common stock, for an aggregate purchase price of $30,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 14, 2010, the Company entered into
stock purchase agreements with an investor for 50,000 shares of common stock, for an aggregate purchase price of $13,250.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From June 17, 2010 to November 2, 2010,
the Company entered into stock purchase agreements with investors for an aggregate of 5,152 shares of common stock at $227.50 per
share for an aggregate purchase price of $1,172,156.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From July 16, 2012 to August 29, 2012,
the Company entered into stock purchase agreements with investors for an aggregate of 211,538 shares of common stock at $6.50 per
share for an aggregate purchase price of $1,375,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Common Stock to Settle Disputes Regarding
Warrants</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On August 21, 2012, the Company issued 23,669 shares of common
stock to Ellis International, LP in exchange for the cancellation of a warrant to purchase common stock and entering into a settlement
agreement between Ellis International and the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On August 27, 2012, the Company issued 24,616 shares of common
stock to JMJ Financial in exchange for the cancellation of a warrant to purchase common stock and entering into a settlement agreement
between JMJ Financial and the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 14, 2012, the Company issued 153,847 shares of
common stock to Southridge Partners II, LP in exchange for the cancellation of a warrant to purchase common stock and entering
into a settlement agreement between Southridge Partners and the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 12, 2012, the Company issued 220,000 shares of common
stock to Inter-Mountain Capital Corp. in exchange for the cancellation of a warrant to purchase common stock and entering into
a settlement agreement between Inter-Mountain and the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Issuance of Common Stock as a Result of the Warrant Conversions</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From September 28, 2012 to September 30, 2012, the Company issued
670,364 shares of common stock in exchange for cancellation of warrants exercisable for 946,438 shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Unless otherwise stated, the sales of the above securities were
deemed to be exempt from registration under the Securities Act in reliance upon Section&nbsp;4(2) of the Securities Act (or Regulation
D or Regulation S promulgated thereunder), or Rule 701 promulgated under Section&nbsp;3(b) of the Securities Act as transactions
by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities
for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were
placed upon the stock certificates issued in these transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 16.<I> Exhibits and Financial Statement Schedules</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
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    <TD NOWRAP STYLE="vertical-align: bottom; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="7" NOWRAP STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">Incorporated by Reference</TD>
    <TD NOWRAP STYLE="text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 6%; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">Exhibit<BR>
No.</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 38%; vertical-align: bottom; text-align: center; border-bottom: Black 1pt solid">Description</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 5%; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">Form</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 13%; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">SEC File No.</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 5%; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">Exhibit</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">Filing Date</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 5%; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">Filed<BR>
Herewith</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center; vertical-align: bottom; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 5%; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">Furnished<BR>
Herewith</TD></TR>
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    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
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<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">1.1*</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Form of Underwriting Agreement.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
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    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
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    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
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    <TD STYLE="text-align: center">&nbsp;</TD>
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    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">2.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Agreement Concerning the Exchange of Securities by and Among Tone in Twenty and Muscle Pharm, LLC and the Security Holders of Muscle Pharm, LLC, dated February 1, 2010.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">2.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">February 2, 2010</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
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    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Articles of Incorporation of MusclePharm Corporation (successor to Tone In Twenty).</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">333-147111</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">November 2, 2007</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Bylaws of MusclePharm Corporation (successor to Tone In Twenty). (Amended on March 1, 2010 to change fiscal year end to December 31 &ndash; set forth on Form 8-K filed on 03-03-2010.)</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">333-147111</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">November 2, 2007</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.3</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">333-147111</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.3</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">November 2, 2007</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.4</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amendment to the Articles of Incorporation</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.3</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">February 24, 2010</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.5</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Certificate of Designation relating to the Series A Convertible Preferred Stock.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.4</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">February 24, 2010</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.6</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">10-Q</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">May 23, 2011</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.7</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Certificate of Designation of Series B Convertible Preferred Stock.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">10-Q</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">August 16, 2011</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.8</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Certificate of Designation of Series C Convertible Preferred Stock.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">November 4, 2011</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.9</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">November 23, 2011</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.10</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">January 27, 2012</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.11</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">March 30, 2012</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.1*</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Specimen of certificate for MusclePharm Corporation Common Stock</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Form of Promissory Note, dated July 13, 2012, issued by MusclePharm Corporation in favor of TCA Global Credit Master Fund LP.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">4.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">July 20, 2012</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">5.1*</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Opinion of Jones &amp; Keller, P.C.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Purchasing Agreement with General Nutrition Corporation dated December 16, 2009.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">February 24, 2010</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Order Approving Stipulation for Settlement of Claim, dated December 8, 2010, between MusclePharm Corporation and Socius CG II, Ltd.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">December 9, 2010</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.3</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Endorsement Agreement, dated July 20, 2011, between MusclePharm Corporation and Michael Vick, individually.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">000-53166</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">July 22, 2011</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.4</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>Convertible Promissory Note between MusclePharm Corporation and Brad J. Pyatt, dated November 18, 2010.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">S-1/A</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">333-176771</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">4.2</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">September 27, 2011</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>


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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 6%; text-align: center">10.5</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 38%">Convertible Promissory Note between MusclePharm Corporation and Brad J. Pyatt, dated November 23, 2010.</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">S-1/A</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 13%; text-align: center">333-176771</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">4.3</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 16%; text-align: center">September 27, 2011</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 5%; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.6+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated November 14, 2011, between MusclePharm Corporation and Brad J. Pyatt.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.6</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 14, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.7+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated November 14, 2011, between MusclePharm Corporation and Cory J. Gregory.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.7</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 14, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.8+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Employment Agreement, dated September 15, 2011, by and between MusclePharm Corporation and John H. Bluher.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.4</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 14, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.9+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Employment Agreement, dated November 14, 2011, by and between MusclePharm Corporation and Jeremy R. DeLuca.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.5</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 14, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.10</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Securities Purchase Agreement, dated July 10, 2012, between MusclePharm Corporation and Subscribers set forth therein.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 19, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.11</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Consulting Agreement, dated July 12, 2012, between MusclePharm Corporation and Melechdavid, Inc.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 19, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.12</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Consulting Agreement, dated July 12, 2012, between MusclePharm Corporation and GRQ Consultants, Inc.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.3</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 19, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.13</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Committed Equity Facility Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 20, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.14</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Registration Rights Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 20, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.15</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Security Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 20, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.16+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Indemnification Agreement.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">August 27, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.17+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Brad J. Pyatt.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.18+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and L. Gary Davis.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.19+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and John H. Bluher.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.3</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>

<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center; width: 6%">10.20+</TD>
    <TD STYLE="vertical-align: top; text-align: justify; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 38%">Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Jeremy R. DeLuca.</TD>
    <TD STYLE="vertical-align: top; text-align: justify; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center; width: 5%">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center; width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center; width: 13%">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center; width: 5%">10.4</TD>
    <TD STYLE="vertical-align: top; text-align: center; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center; width: 16%">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center; width: 5%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center; width: 5%">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.21+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Cory J. Gregory.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.5</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">21</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Subsidiary of the Registrant.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">X</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">23.1</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Consent of Berman &amp; Company, P.A.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">X</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">23.2*</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Consent of Jones &amp; Keller, P.C. (included in Exhibit 5.1).</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">24.1</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Power of Attorney (included on signature page hereof).</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 0pt; margin-bottom: 0pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 5%">*</TD>
    <TD STYLE="width: 93%">To be filed by amendment.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>+</TD>
    <TD>Indicates management contract or compensatory plan.</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Item 17. Undertakings</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the &ldquo;Act&rdquo;) may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities, other than the payment by the registrant of expenses incurred and paid
by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding, is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The undersigned Registrant hereby undertakes that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in">(1)&nbsp;for purposes of determining any liability under the
Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule&nbsp;430A
and contained in a form of prospectus filed by the registrant pursuant to Rule&nbsp;424(b)(1), or (4)&nbsp;or 497(h)&nbsp;under
the Act shall be deemed to be part of this registration statement as of the time it was declared effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in">(2)&nbsp;for purposes of determining any liability under the
Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial <I>bona fide</I>
offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized
in the City of Denver, State of Colorado, on October 26, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-weight: bold; text-align: justify">MUSCLEPHARM CORPORATION</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 51%">&nbsp;</TD>
    <TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 34%">&nbsp;</TD>
    <TD STYLE="width: 7%">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 0.7pt; padding-left: 0.7pt; text-align: right">By:</TD>
    <TD STYLE="vertical-align: top; border-bottom: black 1pt solid; text-align: justify">&nbsp;/s/ Brad J. Pyatt</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-right: 0.7pt; padding-left: 0.7pt; text-align: right">Name:</TD>
    <TD STYLE="text-align: justify">&nbsp;Brad J. Pyatt</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-right: 0.7pt; padding-left: 0.7pt; text-align: right">Title:</TD>
    <TD STYLE="text-align: justify">&nbsp;Chief Executive Officer and President</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;(Principal Executive Officer)</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>POWER OF ATTORNEY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We, the undersigned officers and directors of MusclePharm Corporation
hereby severally constitute and appoint Brad J. Pyatt and John H. Bluher, our true and lawful attorney-in-fact and agents, with
full power of substitution and resubstitution for him and in his name, place and stead, and in any and all capacities, to sign
for us and in our names in the capacities indicated below any and all amendments (including post-effective amendments) to this
registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant
to Rule&nbsp;462(b)&nbsp;under the Securities Act of 1933, as amended), and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent,
full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises,
as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact
and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: bottom; width: 26%; font-weight: bold; text-align: center">Signature</TD>
    <TD STYLE="vertical-align: top; width: 3%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 45%; font-weight: bold; text-align: center">Title</TD>
    <TD STYLE="vertical-align: bottom; width: 3%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 23%; font-weight: bold; text-align: center">Date</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"> </TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid; text-align: justify">/s/ Brad J. Pyatt</TD>
    <TD>&nbsp;</TD>
    <TD ROWSPAN="2" STYLE="text-align: justify">Co-Chairman, Chief Executive Officer, President and Principal Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD ROWSPAN="2" STYLE="text-align: center">October 26, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">Brad J. Pyatt</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid; text-align: justify">/s/ L. Gary Davis</TD>
    <TD>&nbsp;</TD>
    <TD ROWSPAN="2">Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer</TD>
    <TD>&nbsp;</TD>
    <TD ROWSPAN="2" STYLE="text-align: center">October 26, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">L. Gary Davis</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ John H. Bluher</TD>
    <TD>&nbsp;</TD>
    <TD>Co-Chairman, Executive Vice President and Chief</TD>
    <TD>&nbsp;</TD>
    <TD ROWSPAN="2" STYLE="text-align: center">October 26, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John H. Bluher</TD>
    <TD>&nbsp;</TD>
    <TD> Operating Officer</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Donald W. Prosser</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD ROWSPAN="2" STYLE="text-align: center">October 26, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Donald W. Prosser</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; border-bottom: windowtext 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;/s/ Gordon G. Burr</P></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD ROWSPAN="2" STYLE="vertical-align: bottom; text-align: center">October 26, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Gordon G. Burr</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; border-bottom: windowtext 1pt solid">/s/ James J. Greenwell</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD ROWSPAN="2" STYLE="vertical-align: bottom; text-align: center">October 26, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>James J. Greenwell</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXHIBIT&nbsp;INDEX</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="7" STYLE="text-align: center">Incorporated by Reference</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 6%; border-bottom: windowtext 1pt solid; text-align: center">Exhibit<BR>
No.</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 38%; border-bottom: windowtext 1pt solid; text-align: center">Description</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 5%; border-bottom: windowtext 1pt solid; text-align: center">Form</TD>
    <TD NOWRAP STYLE="width: 1%; border-top: windowtext 1pt solid; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 13%; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; text-align: center">SEC File No.</TD>
    <TD NOWRAP STYLE="width: 1%; border-top: windowtext 1pt solid; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 5%; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; text-align: center">Exhibit</TD>
    <TD NOWRAP STYLE="width: 1%; border-top: windowtext 1pt solid; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%; border-top: windowtext 1pt solid; border-bottom: windowtext 1pt solid; text-align: center">Filing&nbsp;Date</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 5%; border-bottom: windowtext 1pt solid; text-align: center">Filed<BR>
Herewith</TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 5%; border-bottom: windowtext 1pt solid; text-align: center">Furnished<BR>
Herewith</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">1.1*</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Underwriting Agreement.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">2.1</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Agreement Concerning the Exchange of Securities by and Among Tone in Twenty and Muscle Pharm, LLC and the Security Holders of Muscle Pharm, LLC, dated February 1, 2010.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">2.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">February 2, 2010</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.1</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Articles of Incorporation of MusclePharm Corporation (successor to Tone In Twenty).</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">SB-2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">333-147111</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 2, 2007</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.2</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Bylaws of MusclePharm Corporation (successor to Tone In Twenty). (Amended on March 1, 2010 to change fiscal year end to December 31 &ndash; set forth on Form 8-K filed on 03-03-2010.)</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">SB-2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">333-147111</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 2, 2007</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.3</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">SB-2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">333-147111</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.3</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 2, 2007</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.4</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amendment to the Articles of Incorporation</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.3</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">February 24, 2010</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.5</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Certificate of Designation relating to the Series A Convertible Preferred Stock.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.4</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">February 24, 2010</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.6</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">May 23, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.7</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Certificate of Designation of Series B Convertible Preferred Stock.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">August 16, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.8</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Certificate of Designation of Series C Convertible Preferred Stock.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 4, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.9</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 23, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.10</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">January 27, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">3.11</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amendment to the Articles of Incorporation.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">3.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">March 30, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">4.1*</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Specimen of certificate for MusclePharm Corporation Common Stock</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">4.2</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Promissory Note, dated July 13, 2012, issued by MusclePharm Corporation in favor of TCA Global Credit Master Fund LP.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">4.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 20, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">5.1*</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Opinion of Jones &amp; Keller, P.C.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Purchasing Agreement with General Nutrition Corporation dated December 16, 2009.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">February 24, 2010</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.2</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Order Approving Stipulation for Settlement of Claim, dated December 8, 2010, between MusclePharm Corporation and Socius CG II, Ltd.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">December 9, 2010</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
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<TR>
    <TD STYLE="vertical-align: top; width: 6%; text-align: center">10.3</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 38%">Endorsement Agreement, dated July 20, 2011, between MusclePharm Corporation and Michael Vick, individually.</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 13%; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 16%; text-align: center">July 22, 2011</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 5%; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.4</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Convertible Promissory Note between MusclePharm Corporation and Brad J. Pyatt, dated November 18, 2010.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">S-1/A</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">333-176771</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">4.2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">September 27, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.5</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Convertible Promissory Note between MusclePharm Corporation and Brad J. Pyatt, dated November 23, 2010.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">S-1/A</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">333-176771</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">4.3</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">September 27, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.6+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated November 14, 2011, between MusclePharm Corporation and Brad J. Pyatt.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.6</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 14, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.7+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated November 14, 2011, between MusclePharm Corporation and Cory J. Gregory.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.7</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 14, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.8+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Employment Agreement, dated September 15, 2011, by and between MusclePharm Corporation and John H. Bluher.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.4</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 14, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.9+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Employment Agreement, dated November 14, 2011, by and between MusclePharm Corporation and Jeremy R. DeLuca.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10-Q</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.5</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">November 14, 2011</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.10</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Securities Purchase Agreement, dated July 10, 2012, between MusclePharm Corporation and Subscribers set forth therein.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 19, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.11</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Consulting Agreement, dated July 12, 2012, between MusclePharm Corporation and Melechdavid, Inc.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 19, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.12</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Consulting Agreement, dated July 12, 2012, between MusclePharm Corporation and GRQ Consultants, Inc.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.3</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 19, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.13</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Committed Equity Facility Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 20, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.14</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Registration Rights Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 20, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.15</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Security Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">July 20, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.16+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Form of Indemnification Agreement.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">August 27, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.17+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Brad J. Pyatt.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.1</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.18+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and L. Gary Davis.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.2</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.19+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and John H. Bluher.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.3</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
</TABLE>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 6%; text-align: center">10.20+</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 38%">Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Jeremy R. DeLuca.</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 13%; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">10.4</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 16%; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 5%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 5%; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">10.21+</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Cory J. Gregory.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">8-K</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">000-53166</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">10.5</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">October 23, 2012</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">21</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Subsidiary of the Registrant.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">X</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">23.1</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Consent of Berman &amp; Company, P.A.</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">X</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
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    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
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    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">23.2*</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Consent of Jones &amp; Keller, P.C. (included in Exhibit 5.1).</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
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    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: center">24.1</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top">Power of Attorney (included on signature page hereof).</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
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<TD STYLE="width: 3%"></TD><TD STYLE="width: 5%; text-align: left">*</TD><TD STYLE="text-align: justify">To be filed by amendment.</TD>
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[{"type": "S-1", "sequence": "1", "filename": "v326728_s1.htm", "description": "FORM S-1", "secsgml_size_bytes": 2093966}]
{"company-data": {"conformed-name": "MusclePharm Corp", "cik": "0001415684", "assigned-sic": "2834", "irs-number": "770664193", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-184625", "film-number": "121165230"}, "business-address": {"street1": "4721 IRONTON STREET", "city": "DENVER", "state": "CO", "zip": "80239", "phone": "(800) 210-7369"}, "mail-address": {"street1": "4721 IRONTON STREET", "city": "DENVER", "state": "CO", "zip": "80239"}, "former-company": {"former-conformed-name": "Tone in Twenty", "date-changed": "20071018"}}
As
       filed with the Securities and Exchange Commission on October 26, 2012
Registration
No. 333-
UNITED
                                                                  STATES
SECURITIES
        AND EXCHANGE COMMISSION
Washington,
        D.C. 20549
FORM
                                                    S-1
REGISTRATION
        STATEMENT UNDER THE SECURITIES ACT OF 1933
MusclePharm
Corporation
(Exact name
of registrant as specified in its charter)
Nevada
2834
77-0664193
(State or other jurisdiction
(Primary Standard Industrial
(I.R.S. Employer
of incorporation or organization)
Classification Code Number)
Identification Number)
4721 Ironton
Street, Building A
Denver, Colorado
80239
Telephone:
(303) 396-6100
(Address, including
zip code, and telephone number, including area code, of registrant's principal executive offices)
Brad J. Pyatt
Co-Chairman,
Chief Executive Officer and President
MusclePharm
Corporation
5348 Vegas
Drive
Las Vegas,
Nevada 89108
Telephone:
(702) 953-1890
(Name, address,
including zip code, and telephone number, including area code, of agent for service)
Copies to:
Reid A. Godbolt, Esq.
Yvan-Claude Pierre, Esq.
Jones & Keller, P.C.
Daniel I. Goldberg, Esq.
1999 Broadway, Suite 3150
Reed Smith LLP
Denver, Colorado 80202
599 Lexington Avenue
Telephone: (303) 573-1600
New York, New York 10022
Facsimile: (303) 573-8133
Telephone: (212) 549-5400
Facsimile: (212) 521-5450
Approximate
date of commencement of proposed sale to the public:
As soon as practicable
after this Registration Statement is declared effective.
If any of the
securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box:
o
If this Form is
filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement number of the earlier effective registration statement for
the same offering.
o
If this Form is
a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is
a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
(Do not check if a smaller reporting company)
Smaller reporting company
x
CALCULATION
OF REGISTRATION FEE
Proposed Maximum
Amount of
Title of Each Class of
Securities to be Registered
Aggregate
    Offering Price
(1)
$
Registration
    Fee
(2)
$
Common Stock, par value $0.001 per share (2)(3)
$
19,550,000
$
2,667
Representative's Common Stock Purchase Warrant
(4
)
Shares of Common Stock underlying Representative's
    Common Stock Purchase Warrant (2)(5)
$
1,062,500
$
145
Total
$
20,612,500
$
2,812
(1)
Estimated pursuant to Rule 457(o) under the Securities Act of 1933, as amended
    (the "Securities Act"), based on the proposed maximum aggregate offering price.
(2)
Pursuant to Rule 416 under the Securities Act, the securities being registered hereunder
    include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result
    of stock splits, stock dividends or similar transactions.
(3)
Includes shares the underwriters have the option to purchase to cover over-allotments, if any.
(4)
No fee pursuant to Rule 457(g) under the Securities Act.
(5)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under
    the Securities Act, based on an estimated proposed maximum aggregate offering price of $1,062,500 or 125% of $850,000 (5%
    of $17,000,000).
The Registrant
hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.
The information in this prospectus is not complete and may
    be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission
    is effective. This prospectus is not an offer to sell and is not soliciting an offer to buy these securities in any jurisdiction
    where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT
    TO COMPLETION
DATED
    OCTOBER 26, 2012
Shares
Common Stock
MusclePharm Corporation is offering
       shares of its common stock pursuant to this prospectus. We expect to effect a 1-for-650 reverse stock split of our common stock
prior to offering these securities. Information in this prospectus is provided on a post-reverse stock split basis giving effect
to such 1-for-650 reverse stock split as if it had occurred prior to the date hereof unless otherwise indicated.
Our common stock is presently quoted
on the OTCBB under the symbol "MSLP.OB". We have applied to list our common stock on The NASDAQ Capital Market under
the symbol "MSPH". On October 25, 2012, the last reported sale price for our common stock on the OTC QB was $3.45
per share after giving pro forma effect to the 1-for-650 reverse stock split of our common stock.
Our business and an investment
in our securities involve a high degree of risk. See "Risk Factors" beginning on page 7 of this prospectus for a discussion
of information that you should consider before investing in our securities.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
Per Share
Total
Public offering price
Underwriting discounts and commissions
(1)
Proceeds, before expenses, to us
(1)
The underwriters will receive compensation in addition to the underwriting
    discount. See "Underwriting" beginning on page 61 of this prospectus for a description of compensation payable
    to the underwriter.
The underwriters may also purchase
up to an additional       shares of common stock from us at the public offering price, less the underwriting discount, within 45 days
from the date of this prospectus to cover over-allotments, if any.
The underwriters expect to deliver
the shares against payment therefor on or about , 2012.
Aegis Capital Corp
The date of
this prospectus is             , 2012
TABLE OF
CONTENTS
Page
Prospectus Summary
1
Risk Factors
7
Cautionary Note Regarding Forward-Looking Statements and Industry
    Data
17
Use of Proceeds
18
Price Range of Common Stock
19
Dividend Policy
19
Dilution
20
Capitalization
21
Management's Discussion and Analysis of Financial Condition
    and Results of Operations
22
Business
31
Management
43
Security Ownership of Certain Beneficial Owners and Management
54
Certain Relationships and Related Party Transactions
55
Description of Securities
57
Underwriting
61
Legal Matters
69
Experts
69
Where You Can Find More Information
70
Index to Financial Statements
F-1
You should rely only on the information
contained in this prospectus or in any free writing prospectus that we may specifically authorize to be delivered or made available
to you. We have not, and the underwriters have not, authorized anyone to provide you with any information other than that contained
in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility
for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may
only be used where it is legal to offer and sell shares of our common stock. The information in this prospectus is accurate only
as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock.
Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and the underwriters
are not, making an offer of these securities in any jurisdiction where the offer is not permitted.
For investors outside the United
States: We have not and the underwriters have not done anything that would permit this offering or possession or distribution
of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside
the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating
to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.
PROSPECTUS
SUMMARY
This summary highlights information
contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment
decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial
statements and the related notes and the information set forth under the headings "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in each case included elsewhere in this prospectus.
Unless otherwise stated or the
context requires otherwise, references in this prospectus to "MusclePharm", the "Company", "we",
"us", or "our" refer to MusclePharm Corporation. Unless otherwise stated or the context requires otherwise,
information in this prospectus gives effect to the 1-for-650 reverse stock split that we intend to effect prior to offering these
securities.
MusclePharm
Corporation
Business
Overview
We develop, market and sell athlete-focused,
high quality nutritional supplements primarily to specialty resellers. Our products have been formulated to enhance active fitness
regimens, including muscle building, weight loss and maintaining general fitness. Our nutritional supplements are available for
purchase in over 10,000 U.S. retail outlets, including Dick's Sporting Goods, GNC, Vitamin Shoppe and Vitamin World. We
also sell our products to over 100 online channels, including bodybuilding.com, amazon.com, gnc.com and vitacost.com. Internationally,
our nutritional supplements are sold in over 110 countries, and we expect that international sales will be a significant part
of our sales for the foreseeable future.
We started formulating our nutritional
supplements in 2008 for consumption by active individuals, high performance athletes and fitness enthusiasts. We launched our
sales and marketing programs in late 2008 through our internal sales executives and staff targeting specialty retail distributors.
Our wide-range variety of nutritional
supplements, include Assault™, Combat Powder™, MusclePharm Musclegel
®
, MusclePharm Shred Matrix
®
,
and Re-Con
®
. These products are comprised of amino acids, herbs, and proteins tested by our scientists for the
overall health of athletes. We developed these nutritional supplements to enhance the effects of workouts, repair muscles, and
nourish the body for optimal physical fitness.
Our Growth and Core Marketing
Strategy
Our primary growth strategy is to:
·
increase
                                                                                                                            our
                                                                                                                            product
                                                                                                                            distribution
                                                                                                                            and
                                                                                                                            sales
                                                                                                                            through
                                                                                                                            increased
                                                                                                                            market
                                                                                                                            penetrations
                                                                                                                            both
                                                                                                                            domestically
                                                                                                                            and
                                                                                                                            internationally;
·
increase
                                                                                                                            our
                                                                                                                            margins
                                                                                                                            by
                                                                                                                            focusing
                                                                                                                            on
                                                                                                                            streamlining
                                                                                                                            our
                                                                                                                            operations
                                                                                                                            and
                                                                                                                            seeking
                                                                                                                            operating
                                                                                                                            efficiencies
                                                                                                                            in
                                                                                                                            all
                                                                                                                            areas
                                                                                                                            of
                                                                                                                            our
                                                                                                                            operations;
·
continue
                                                                                                                            to
                                                                                                                            conduct
                                                                                                                            additional
                                                                                                                            testing
                                                                                                                            of
                                                                                                                            the
                                                                                                                            safety
                                                                                                                            and
                                                                                                                            efficacy
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products
                                                                                                                            and
                                                                                                                            formulate
                                                                                                                            new
                                                                                                                            products;
                                                                                                                            and
·
increase
                                                                                                                            awareness
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products
                                                                                                                            by
                                                                                                                            increasing
                                                                                                                            our
                                                                                                                            marketing
                                                                                                                            and
                                                                                                                            branding
                                                                                                                            opportunities
                                                                                                                            through
                                                                                                                            endorsements,
                                                                                                                            sponsorships
                                                                                                                            and
                                                                                                                            brand
                                                                                                                            extensions.
Our core marketing strategy is to
brand MusclePharm as the "must have" fitness brand for workout enthusiasts and elite athletes. We seek to be known
as the athlete's company, run by athletes who create their products for other athletes both professional and otherwise.
We believe that our marketing mix of endorsers, sponsorships and providing sample products for our retail resellers to use is
an optimal strategy to increase sales.
1
Recent Developments
We have recently experienced significant
growth in our product sales. Our net sales for the years ended December 31, 2010 and 2011 were $3.2 million and $17.2 million,
respectively. Our net sales for the six months ended June 30, 2011 and 2012 were $6.4 million and $32.0 million, respectively.
Conversion of Warrants into Common
Stock
In late September 2012, we issued
670,364 shares of our common stock to several accredited investors pursuant to conversions of warrants to purchase an aggregate
of 946,438 shares of common stock of the Company.
As a result of these warrant conversions
and other extinguishments of derivative liabilities during the quarter ended September 30, 2012, our pro forma adjusted capitalization
as of June 30, 2012 reflects a decrease in stockholders' deficit from approximately $11,417,000 to approximately $6,815,000
and a reduction in our derivative liabilities as of June 30, 2012 from approximately $7,909,000 to approximately $25,000. All
of these stock issuances, warrant conversions and extinguishments of derivative liabilities will be reflected in our financial
statements as of and for the three and nine months ended September 30, 2012.
Proportionate Reverse Stock Split
and Increase in Number of Authorized Shares of Common Stock
On October 15, 2012, our board of
directors approved (i) a 1-for-650 reverse stock split of our common stock, including a proportionate reduction in the number
of authorized shares of our common stock from 2.5 billion shares to 3,846,153 shares of common stock, which we intend to effect
prior to the offering of these securities; and (ii) an amendment to our articles of incorporation to increase the number of authorized
common stock (post reverse stock-split) from 3,846,153 to 100 million, and recommended the proposal for approval to the holders
having the power to vote with respect to the common stock.
On October 18, 2012, the holders
of our Series B Preferred Stock, who hold approximately 50.99% of the total voting power of all issued and outstanding voting
capital of the Company, approved the amendment to the articles of incorporation by written consent in lieu of a meeting in accordance
with Nevada law. See "Description of Securities" beginning on page 57 of this prospectus.
Selected Risks Associated With
Our Business
Our business is subject to numerous
risks described in the section entitled "Risk Factors" and elsewhere in this prospectus. You should carefully consider
these risks before making an investment. Some of these risks include:
·
Our
                                                                                                                            independent
                                                                                                                            auditors
                                                                                                                            have
                                                                                                                            expressed
                                                                                                                            substantial
                                                                                                                            doubt
                                                                                                                            about
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            continue
                                                                                                                            as
                                                                                                                            a
                                                                                                                            going
                                                                                                                            concern,
                                                                                                                            which
                                                                                                                            may
                                                                                                                            hinder
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            obtain
                                                                                                                            future
                                                                                                                            financing;
·
Our
                                                                                                                            business
                                                                                                                            and
                                                                                                                            operations
                                                                                                                            are
                                                                                                                            experiencing
                                                                                                                            rapid
                                                                                                                            growth.
                                                                                                                            If
                                                                                                                            we
                                                                                                                            fail
                                                                                                                            to
                                                                                                                            effectively
                                                                                                                            manage
                                                                                                                            our
                                                                                                                            growth,
                                                                                                                            our
                                                                                                                            business
                                                                                                                            and
                                                                                                                            operating
                                                                                                                            results
                                                                                                                            could
                                                                                                                            be
                                                                                                                            harmed;
·
Our
                                                                                                                            failure
                                                                                                                            to
                                                                                                                            respond
                                                                                                                            appropriately
                                                                                                                            to
                                                                                                                            competitive
                                                                                                                            challenges,
                                                                                                                            changing
                                                                                                                            consumer
                                                                                                                            preferences
                                                                                                                            and
                                                                                                                            demand
                                                                                                                            for
                                                                                                                            new
                                                                                                                            products
                                                                                                                            could
                                                                                                                            significantly
                                                                                                                            harm
                                                                                                                            our
                                                                                                                            customer
                                                                                                                            relationships
                                                                                                                            and
                                                                                                                            product
                                                                                                                            sales;
·
Our
                                                                                                                            management
                                                                                                                            has
                                                                                                                            determined
                                                                                                                            that
                                                                                                                            our
                                                                                                                            disclosure
                                                                                                                            controls
                                                                                                                            and
                                                                                                                            procedures
                                                                                                                            are
                                                                                                                            ineffective
                                                                                                                            which
                                                                                                                            could
                                                                                                                            result
                                                                                                                            in
                                                                                                                            material
                                                                                                                            misstatements
                                                                                                                            in
                                                                                                                            our
                                                                                                                            financial
                                                                                                                            statements;
·
If
                                                                                                                            we
                                                                                                                            fail
                                                                                                                            to
                                                                                                                            comply
                                                                                                                            with
                                                                                                                            the
                                                                                                                            rules
                                                                                                                            under
                                                                                                                            the
                                                                                                                            Sarbanes-Oxley
                                                                                                                            Act
                                                                                                                            of
                                                                                                                            2002
                                                                                                                            related
                                                                                                                            to
                                                                                                                            disclosure
                                                                                                                            controls
                                                                                                                            and
                                                                                                                            procedures,
                                                                                                                            or,
                                                                                                                            if
                                                                                                                            we
                                                                                                                            discover
                                                                                                                            material
                                                                                                                            weaknesses
                                                                                                                            and
                                                                                                                            other
                                                                                                                            deficiencies
                                                                                                                            in
                                                                                                                            our
                                                                                                                            internal
                                                                                                                            control
                                                                                                                            and
                                                                                                                            accounting
                                                                                                                            procedures,
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            could
                                                                                                                            decline
                                                                                                                            significantly
                                                                                                                            and
                                                                                                                            raising
                                                                                                                            capital
                                                                                                                            could
                                                                                                                            be
                                                                                                                            more
                                                                                                                            difficult;
·
Our
                                                                                                                            industry
                                                                                                                            is
                                                                                                                            highly
                                                                                                                            competitive,
                                                                                                                            and
                                                                                                                            our
                                                                                                                            failure
                                                                                                                            to
                                                                                                                            compete
                                                                                                                            effectively
                                                                                                                            could
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            market
                                                                                                                            share,
                                                                                                                            financial
                                                                                                                            condition
                                                                                                                            and
                                                                                                                            future
                                                                                                                            growth;
2
·
We
                                                                                                                            rely
                                                                                                                            on
                                                                                                                            a
                                                                                                                            limited
                                                                                                                            number
                                                                                                                            of
                                                                                                                            customers
                                                                                                                            for
                                                                                                                            a
                                                                                                                            substantial
                                                                                                                            portion
                                                                                                                            of
                                                                                                                            our
                                                                                                                            sales,
                                                                                                                            and
                                                                                                                            the
                                                                                                                            loss
                                                                                                                            of
                                                                                                                            or
                                                                                                                            material
                                                                                                                            reduction
                                                                                                                            in
                                                                                                                            purchase
                                                                                                                            volume
                                                                                                                            by
                                                                                                                            any
                                                                                                                            of
                                                                                                                            these
                                                                                                                            customers
                                                                                                                            would
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            sales
                                                                                                                            and
                                                                                                                            operating
                                                                                                                            results;
·
Adverse
                                                                                                                            publicity
                                                                                                                            or
                                                                                                                            consumer
                                                                                                                            perception
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products
                                                                                                                            and
                                                                                                                            any
                                                                                                                            similar
                                                                                                                            products
                                                                                                                            distributed
                                                                                                                            by
                                                                                                                            others
                                                                                                                            could
                                                                                                                            harm
                                                                                                                            our
                                                                                                                            reputation
                                                                                                                            and
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            sales
                                                                                                                            and
                                                                                                                            revenues;
·
We
                                                                                                                            rely
                                                                                                                            on
                                                                                                                            highly
                                                                                                                            skilled
                                                                                                                            personnel
                                                                                                                            and,
                                                                                                                            if
                                                                                                                            we
                                                                                                                            are
                                                                                                                            unable
                                                                                                                            to
                                                                                                                            retain
                                                                                                                            or
                                                                                                                            motivate
                                                                                                                            key
                                                                                                                            personnel,
                                                                                                                            hire
                                                                                                                            qualified
                                                                                                                            personnel,
                                                                                                                            we
                                                                                                                            may
                                                                                                                            not
                                                                                                                            be
                                                                                                                            able
                                                                                                                            to
                                                                                                                            grow
                                                                                                                            effectively;
·
If
                                                                                                                            we
                                                                                                                            are
                                                                                                                            unable
                                                                                                                            to
                                                                                                                            retain
                                                                                                                            key
                                                                                                                            personnel,
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            manage
                                                                                                                            our
                                                                                                                            business
                                                                                                                            effectively
                                                                                                                            and
                                                                                                                            continue
                                                                                                                            our
                                                                                                                            growth
                                                                                                                            could
                                                                                                                            be
                                                                                                                            negatively
                                                                                                                            impacted;
·
If
                                                                                                                            we
                                                                                                                            are
                                                                                                                            unable
                                                                                                                            to
                                                                                                                            retain
                                                                                                                            key
                                                                                                                            personnel,
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            manage
                                                                                                                            our
                                                                                                                            business
                                                                                                                            effectively
                                                                                                                            and
                                                                                                                            continue
                                                                                                                            our
                                                                                                                            growth
                                                                                                                            could
                                                                                                                            be
                                                                                                                            negatively
                                                                                                                            impacted;
·
Our
                                                                                                                            operating
                                                                                                                            results
                                                                                                                            may
                                                                                                                            fluctuate,
                                                                                                                            which
                                                                                                                            makes
                                                                                                                            our
                                                                                                                            results
                                                                                                                            difficult
                                                                                                                            to
                                                                                                                            predict
                                                                                                                            and
                                                                                                                            could
                                                                                                                            cause
                                                                                                                            our
                                                                                                                            results
                                                                                                                            to
                                                                                                                            fall
                                                                                                                            short
                                                                                                                            of
                                                                                                                            expectations;
·
We
                                                                                                                            may
                                                                                                                            be
                                                                                                                            exposed
                                                                                                                            to
                                                                                                                            material
                                                                                                                            product
                                                                                                                            liability
                                                                                                                            claims,
                                                                                                                            which
                                                                                                                            could
                                                                                                                            increase
                                                                                                                            our
                                                                                                                            costs
                                                                                                                            and
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            reputation
                                                                                                                            and
                                                                                                                            business;
·
Our
                                                                                                                            insurance
                                                                                                                            coverage
                                                                                                                            or
                                                                                                                            third
                                                                                                                            party
                                                                                                                            indemnification
                                                                                                                            rights
                                                                                                                            may
                                                                                                                            not
                                                                                                                            be
                                                                                                                            sufficient
                                                                                                                            to
                                                                                                                            cover
                                                                                                                            our
                                                                                                                            legal
                                                                                                                            claims
                                                                                                                            or
                                                                                                                            other
                                                                                                                            losses
                                                                                                                            that
                                                                                                                            we
                                                                                                                            may
                                                                                                                            incur
                                                                                                                            in
                                                                                                                            the
                                                                                                                            future;
·
Our
                                                                                                                            intellectual
                                                                                                                            property
                                                                                                                            rights
                                                                                                                            are
                                                                                                                            valuable,
                                                                                                                            and
                                                                                                                            any
                                                                                                                            inability
                                                                                                                            to
                                                                                                                            protect
                                                                                                                            them
                                                                                                                            could
                                                                                                                            reduce
                                                                                                                            the
                                                                                                                            value
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products
                                                                                                                            and
                                                                                                                            brand;
·
We
                                                                                                                            may
                                                                                                                            be
                                                                                                                            subject
                                                                                                                            to
                                                                                                                            intellectual
                                                                                                                            property
                                                                                                                            rights
                                                                                                                            claims,
                                                                                                                            which
                                                                                                                            are
                                                                                                                            costly
                                                                                                                            to
                                                                                                                            defend,
                                                                                                                            could
                                                                                                                            require
                                                                                                                            us
                                                                                                                            to
                                                                                                                            pay
                                                                                                                            damages
                                                                                                                            and
                                                                                                                            could
                                                                                                                            limit
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            sell
                                                                                                                            some
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products;
·
An
                                                                                                                            increase
                                                                                                                            in
                                                                                                                            product
                                                                                                                            returns
                                                                                                                            could
                                                                                                                            negatively
                                                                                                                            impact
                                                                                                                            our
                                                                                                                            operating
                                                                                                                            results
                                                                                                                            and
                                                                                                                            profitability;
·
We
                                                                                                                            have
                                                                                                                            no
                                                                                                                            manufacturing
                                                                                                                            capacity
                                                                                                                            and
                                                                                                                            anticipate
                                                                                                                            continued
                                                                                                                            reliance
                                                                                                                            on
                                                                                                                            third-party
                                                                                                                            manufacturers
                                                                                                                            for
                                                                                                                            the
                                                                                                                            development
                                                                                                                            and
                                                                                                                            commercialization
                                                                                                                            of
                                                                                                                            our
                                                                                                                            products;
·
A
                                                                                                                            shortage
                                                                                                                            in
                                                                                                                            the
                                                                                                                            supply
                                                                                                                            of
                                                                                                                            key
                                                                                                                            raw
                                                                                                                            materials
                                                                                                                            could
                                                                                                                            increase
                                                                                                                            our
                                                                                                                            costs
                                                                                                                            or
                                                                                                                            adversely
                                                                                                                            affect
                                                                                                                            our
                                                                                                                            sales
                                                                                                                            and
                                                                                                                            revenues;
·
We
                                                                                                                            may
                                                                                                                            issue
                                                                                                                            additional
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            preferred
                                                                                                                            stock
                                                                                                                            in
                                                                                                                            the
                                                                                                                            future
                                                                                                                            that
                                                                                                                            may
                                                                                                                            adversely
                                                                                                                            impact
                                                                                                                            your
                                                                                                                            rights
                                                                                                                            as
                                                                                                                            holders
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock;
·
Our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            is
                                                                                                                            quoted
                                                                                                                            on
                                                                                                                            the
                                                                                                                            OTCBB
                                                                                                                            which
                                                                                                                            may
                                                                                                                            have
                                                                                                                            an
                                                                                                                            unfavorable
                                                                                                                            impact
                                                                                                                            on
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            and
                                                                                                                            liquidity;
·
Liability
                                                                                                                            of
                                                                                                                            directors
                                                                                                                            for
                                                                                                                            breach
                                                                                                                            of
                                                                                                                            duty
                                                                                                                            of
                                                                                                                            care
                                                                                                                            is
                                                                                                                            limited;
·
Because
                                                                                                                            we
                                                                                                                            will
                                                                                                                            have
                                                                                                                            broad
                                                                                                                            discretion
                                                                                                                            and
                                                                                                                            flexibility
                                                                                                                            in
                                                                                                                            how
                                                                                                                            the
                                                                                                                            net
                                                                                                                            proceeds
                                                                                                                            from
                                                                                                                            this
                                                                                                                            offering
                                                                                                                            are
                                                                                                                            used,
                                                                                                                            we
                                                                                                                            may
                                                                                                                            use
                                                                                                                            the
                                                                                                                            net
                                                                                                                            proceeds
                                                                                                                            in
                                                                                                                            ways
                                                                                                                            in
                                                                                                                            which
                                                                                                                            you
                                                                                                                            disagree;
·
Future
                                                                                                                            financings
                                                                                                                            through
                                                                                                                            debt
                                                                                                                            securities
                                                                                                                            and
                                                                                                                            preferred
                                                                                                                            stock
                                                                                                                            may
                                                                                                                            restrict
                                                                                                                            our
                                                                                                                            operations;
·
Our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            may
                                                                                                                            be
                                                                                                                            volatile
                                                                                                                            and
                                                                                                                            could
                                                                                                                            fluctuate
                                                                                                                            widely
                                                                                                                            in
                                                                                                                            price,
                                                                                                                            which
                                                                                                                            could
                                                                                                                            result
                                                                                                                            in
                                                                                                                            substantial
                                                                                                                            losses
                                                                                                                            for
                                                                                                                            investors;
·
If
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            remains
                                                                                                                            subject
                                                                                                                            to
                                                                                                                            the
                                                                                                                            SEC's
                                                                                                                            penny
                                                                                                                            stock
                                                                                                                            rules,
                                                                                                                            broker-dealers
                                                                                                                            may
                                                                                                                            experience
                                                                                                                            difficulty
                                                                                                                            in
                                                                                                                            completing
                                                                                                                            customer
                                                                                                                            transactions
                                                                                                                            and
                                                                                                                            trading
                                                                                                                            activity
                                                                                                                            in
                                                                                                                            our
                                                                                                                            securities
                                                                                                                            may
                                                                                                                            be
                                                                                                                            adversely
                                                                                                                            affected;
3
·
Because
                                                                                                                            certain
                                                                                                                            of
                                                                                                                            our
                                                                                                                            stockholders
                                                                                                                            control
                                                                                                                            a
                                                                                                                            significant
                                                                                                                            number
                                                                                                                            of
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock,
                                                                                                                            they
                                                                                                                            may
                                                                                                                            have
                                                                                                                            effective
                                                                                                                            control
                                                                                                                            over
                                                                                                                            actions
                                                                                                                            requiring
                                                                                                                            stockholder
                                                                                                                            approval;
·
If
                                                                                                                            securities
                                                                                                                            or
                                                                                                                            industry
                                                                                                                            analysts
                                                                                                                            do
                                                                                                                            not
                                                                                                                            publish
                                                                                                                            research
                                                                                                                            or
                                                                                                                            reports
                                                                                                                            about
                                                                                                                            our
                                                                                                                            business,
                                                                                                                            or
                                                                                                                            if
                                                                                                                            they
                                                                                                                            change
                                                                                                                            their
                                                                                                                            recommendations
                                                                                                                            regarding
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            adversely,
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            and
                                                                                                                            trading
                                                                                                                            volume
                                                                                                                            could
                                                                                                                            decline;
·
A
                                                                                                                            sale
                                                                                                                            of
                                                                                                                            a
                                                                                                                            substantial
                                                                                                                            number
                                                                                                                            of
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            may
                                                                                                                            cause
                                                                                                                            the
                                                                                                                            price
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            to
                                                                                                                            decline
                                                                                                                            and
                                                                                                                            may
                                                                                                                            impair
                                                                                                                            our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            raise
                                                                                                                            capital
                                                                                                                            in
                                                                                                                            the
                                                                                                                            future;
·
You
                                                                                                                            will
                                                                                                                            experience
                                                                                                                            immediate
                                                                                                                            and
                                                                                                                            substantial
                                                                                                                            dilution
                                                                                                                            as
                                                                                                                            a
                                                                                                                            result
                                                                                                                            of
                                                                                                                            this
                                                                                                                            offering
                                                                                                                            and
                                                                                                                            may
                                                                                                                            experience
                                                                                                                            additional
                                                                                                                            dilution
                                                                                                                            in
                                                                                                                            the
                                                                                                                            future;
·
We
                                                                                                                            intend
                                                                                                                            to
                                                                                                                            effect
                                                                                                                            a
                                                                                                                            1-for-650
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            of
                                                                                                                            our
                                                                                                                            outstanding
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            immediately
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            this
                                                                                                                            offering.
                                                                                                                            The
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            may
                                                                                                                            not
                                                                                                                            increase
                                                                                                                            our
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            sufficiently
                                                                                                                            and
                                                                                                                            we
                                                                                                                            may
                                                                                                                            not
                                                                                                                            be
                                                                                                                            able
                                                                                                                            to
                                                                                                                            list
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            on
                                                                                                                            The
                                                                                                                            NASDAQ
                                                                                                                            Capital
                                                                                                                            Market,
                                                                                                                            in
                                                                                                                            which
                                                                                                                            case
                                                                                                                            this
                                                                                                                            offering
                                                                                                                            will
                                                                                                                            not
                                                                                                                            be
                                                                                                                            completed;
·
Even
                                                                                                                            if
                                                                                                                            the
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            achieves
                                                                                                                            the
                                                                                                                            requisite
                                                                                                                            increase
                                                                                                                            in
                                                                                                                            the
                                                                                                                            market
                                                                                                                            price
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock,
                                                                                                                            we
                                                                                                                            cannot
                                                                                                                            assure
                                                                                                                            you
                                                                                                                            that
                                                                                                                            we
                                                                                                                            will
                                                                                                                            be
                                                                                                                            able
                                                                                                                            to
                                                                                                                            continue
                                                                                                                            to
                                                                                                                            comply
                                                                                                                            with
                                                                                                                            the
                                                                                                                            minimum
                                                                                                                            bid
                                                                                                                            price
                                                                                                                            requirement
                                                                                                                            of
                                                                                                                            The
                                                                                                                            NASDAQ
                                                                                                                            Capital
                                                                                                                            Market;
·
Even
                                                                                                                            if
                                                                                                                            the
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            increases
                                                                                                                            the
                                                                                                                            market
                                                                                                                            price
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock,
                                                                                                                            there
                                                                                                                            can
                                                                                                                            be
                                                                                                                            no
                                                                                                                            assurance
                                                                                                                            that
                                                                                                                            we
                                                                                                                            will
                                                                                                                            be
                                                                                                                            able
                                                                                                                            to
                                                                                                                            comply
                                                                                                                            with
                                                                                                                            other
                                                                                                                            continued
                                                                                                                            listing
                                                                                                                            standards
                                                                                                                            of
                                                                                                                            The
                                                                                                                            NASDAQ
                                                                                                                            Capital
                                                                                                                            Market;
·
The
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            may
                                                                                                                            decrease
                                                                                                                            the
                                                                                                                            liquidity
                                                                                                                            of
                                                                                                                            the
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock;
                                                                                                                            and
·
Following
                                                                                                                            the
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split,
                                                                                                                            the
                                                                                                                            resulting
                                                                                                                            market
                                                                                                                            price
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            may
                                                                                                                            not
                                                                                                                            attract
                                                                                                                            new
                                                                                                                            investors,
                                                                                                                            including
                                                                                                                            institutional
                                                                                                                            investors,
                                                                                                                            and
                                                                                                                            may
                                                                                                                            not
                                                                                                                            satisfy
                                                                                                                            the
                                                                                                                            investing
                                                                                                                            requirements
                                                                                                                            of
                                                                                                                            those
                                                                                                                            investors.
                                                                                                                            Consequently,
                                                                                                                            the
                                                                                                                            trading
                                                                                                                            liquidity
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            may
                                                                                                                            not
                                                                                                                            improve.
Corporate
Information
We were incorporated in the state
of Nevada on August 4, 2006, under the name "Tone in Twenty" for the purpose of engaging in the business of providing
personal fitness training using isometric techniques. On February 18, 2010, Tone in Twenty acquired all of the issued and outstanding
equity and voting interests of Muscle Pharm, LLC, a Colorado limited liability company, in exchange for 26,000,000 shares of its
common stock. As a result of this transaction, Muscle Pharm, LLC became a wholly owned subsidiary of Tone in Twenty, and Tone
in Twenty changed its name to "MusclePharm Corporation." Our principal executive offices are located at 4721 Ironton
Street, Building A, Denver, Colorado 80239 and our telephone number is (303) 396-6100. Our website address is http://www.musclepharm.com.
The information on, or that can be accessed through, our website is not part of this prospectus.
4
Summary of the Offering
Common stock offered by us
shares of common stock (up to           shares
    if the underwriter exercises its over-allotment option in full).
Common stock to be outstanding  after this offering
shares (          
    shares if the underwriter exercises its over-allotment option in full).
Use of proceeds
We intend to use the net proceeds received from this offering to retire $3.5 of debt due on completion of this offering
    and for working capital and general corporate purposes. See "Use of Proceeds" on page 18 of this prospectus.
Risk factors
See "Risk Factors" beginning on page 7 of this prospectus and the other information included in this prospectus
    for a discussion of factors you should carefully consider before investing in our securities.
OTC Bulletin Board trading symbol
MSLP.OB
Proposed symbol and listing
We have applied for listing of our common stock on The NASDAQ Capital Market under the symbol "MSPH".
Unless we indicate otherwise, all information in this prospectus:
·
reflects
                                                                                                                            a
                                                                                                                            1-for-650
                                                                                                                            reverse
                                                                                                                            stock
                                                                                                                            split
                                                                                                                            of
                                                                                                                            our
                                                                                                                            issued
                                                                                                                            and
                                                                                                                            outstanding
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock,
                                                                                                                            options
                                                                                                                            and
                                                                                                                            warrants
                                                                                                                            to
                                                                                                                            be
                                                                                                                            effected
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            offering
                                                                                                                            these
                                                                                                                            securities
                                                                                                                            and
                                                                                                                            the
                                                                                                                            corresponding
                                                                                                                            adjustment
                                                                                                                            of
                                                                                                                            all
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            price
                                                                                                                            per
                                                                                                                            share
                                                                                                                            and
                                                                                                                            stock
                                                                                                                            option
                                                                                                                            and
                                                                                                                            warrant
                                                                                                                            exercise
                                                                                                                            price
                                                                                                                            data;
·
is
                                                                                                                            based
                                                                                                                            on
                                                                                                                            3,527,178
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            issued
                                                                                                                            and
                                                                                                                            outstanding
                                                                                                                            as
                                                                                                                            of
                                                                                                                            October
                                                                                                                            25,
                                                                                                                            2012;
·
assumes
                                                                                                                            no
                                                                                                                            exercise
                                                                                                                            by
                                                                                                                            the
                                                                                                                            underwriters
                                                                                                                            of
                                                                                                                            their
                                                                                                                            option
                                                                                                                            to
                                                                                                                            purchase
                                                                                                                            up
                                                                                                                            to
                                                                                                                            an
                                                                                                                            additional
                                                                                                                                           shares
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            to
                                                                                                                            cover
                                                                                                                            over-allotments,
                                                                                                                            if
                                                                                                                            any;
·
excludes           
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            issuable
                                                                                                                            upon
                                                                                                                            exercise
                                                                                                                            of
                                                                                                                            outstanding
                                                                                                                            warrants
                                                                                                                            at
                                                                                                                            a
                                                                                                                            weighted
                                                                                                                            average
                                                                                                                            exercise
                                                                                                                            price
                                                                                                                            of           
                                                                                                                            per
                                                                                                                            share
                                                                                                                            as
                                                                                                                            of
                                                                                                                                      ,
                                                                                                                            2012;
                                                                                                                            and
·
excludes           
                                                                                                                            shares
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            underlying
                                                                                                                            the
                                                                                                                            warrants
                                                                                                                            to
                                                                                                                            be
                                                                                                                            issued
                                                                                                                            to
                                                                                                                            the
                                                                                                                            underwriters
                                                                                                                            in
                                                                                                                            connection
                                                                                                                            with
                                                                                                                            this
                                                                                                                            offering.
5
SUMMARY CONSOLIDATED
FINANCIAL DATA
The following tables sets forth
our (i) summary statement of operations data for the years ended December 31, 2011 and 2010 and the six months ended June 30,
2012 and 2011 (unaudited) and (ii) summary consolidated balance sheet data as of June 30, 2012 (unaudited), derived from our audited
and unaudited consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated
financial data for the six months ended June 30, 2012 and 2011 and as of June 30, 2012 are not indicative of results to be expected
for the full year. Our financial statements are prepared and presented in accordance with generally accepted accounting principles
in the United States. All share amounts and per share amounts reflect the expected 1-for-650 reverse stock split that we intend
to effect prior to offering these securities. The results indicated below are not necessarily indicative of our future performance.
You should read this information
together with the sections entitled "Capitalization", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere
in this prospectus.
Six Months
    Ended June 30,
Year Ended
    December 31,
2012
2011
2011
2010
(unaudited)
Statement of Operations:
Sales – net
$
31,990,020
$
6,431,678
$
17,212,636
$
3,202,687
Loss from operations
(2,391,634
)
(2,980,993
)
(16,220,160
)
(18,251,836
)
Other income (expense)
(7,461,755
)
(9,467,552
)
(7,060,790
)
(1,317,501
)
Net income (loss)
(9,853,389
)
(12,448,545
)
(23,280,950
)
(19,569,337
)
Series C preferred stock dividend
-
-
(293
)
-
Other comprehensive income
40,719
-
-
-
Total comprehensive income (loss)
(9,812,670
)
(12,448,545
)
(23,280,657
)
(19,569,337
)
Net income (loss) per share of common stock – basic and diluted
$
(4.92
)
$
(46.41
)
$
(53.76
)
$
(309.18
)
Weighted average number of shares of common stock outstanding – basic and
    diluted
2,001,880
268,254
433,053
63,295
As of June
    30, 2012
Actual
Pro
    Forma, As Adjusted
(1)
(unaudited)
(unaudited)
Balance Sheet Data:
Cash
$
291,971
Cash – restricted
52,744
Total assets
4,725,828
Working Capital (Deficit)
(12,668,017
)
Long term debt
114,682
Stockholders' deficit
$
(11,013,113
)
(1)
Pro forma, as adjusted amounts give effect to (i) the issuance of common
    stock and warrants from July 1, 2012 through and immediately prior to the date of this prospectus and (ii) the sale of the
    common stock in this offering at the assumed public offering price of $     per share of common stock,
    which is based on the closing price of our common stock on           , 2012,
    and after deducting underwriting discounts and commissions and other estimated offering expenses payable by us.
6
RISK FACTORS
Any investment in our common
stock involves a high degree of risk. Investors should carefully consider the risks described below and all of the information
contained in this prospectus before deciding whether to purchase our common stock. Our business, financial condition and results
of operations could be materially adversely affected by these risks if any of them actually occur. This prospectus also contains
forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere
in this prospectus.
Risks Related to Our Business
and Industry
Our independent auditors have
expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
As reflected in the accompanying
unaudited interim consolidated financial statements, we incurred a net loss of approximately $9.9 million for the six months ended
June 30, 2012, and we had a working capital deficit and stockholders' deficit of approximately $12.7 million and $11.0 million
respectively, at June 30, 2012. Also as reflected in the accompanying financial statements we incurred a net loss of approximately
$23.3 million and used net cash in operations of approximately $5.8 million for the year ended December 31, 2011, and had a working
capital deficit and stockholders' deficit of approximately $13.7 million and $13.0 million respectively, at December 31,
2011. These factors raise substantial doubt about our ability to continue as a going concern.
In their report dated April 13,
2012, except for note 1 as to which the date is June 28, 2012, our independent auditors stated that our financial statements for
the period ended December 31, 2011, were prepared assuming that we would continue as a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should
we be unable to continue as a going concern.
Our ability to continue operations
is dependent on management's plans to raise more capital, which include this offering, until such time that funds provided
by operations are sufficient to fund working capital requirements.
In addition to the net proceeds
from this offering, we could require additional funding to finance the growth of our future operations as well as to achieve our
strategic objectives. There can be no assurance that future financing will be available in amounts or terms acceptable to us,
if at all.
Our business and operations
are experiencing rapid growth. If we fail to effectively manage our growth, our business and operating results could be harmed.
We have experienced and expect to
continue to experience rapid growth in our operations, which has placed, and will continue to place, significant demands on our
management, and our operational and financial infrastructure. If we do not effectively manage our growth, we may fail to attain
operational efficiencies we are seeking, timely deliver products to our customers in sufficient volume or the quality of our products
could suffer, which could negatively affect our operating results. To effectively manage this growth, we expect we will need to
hire additional persons, particularly in sales and marketing, and we will need to continue to improve significantly our operational,
financial and management controls and our reporting systems and procedures. These additional employees, systems enhancements and
improvements will require significant capital expenditures and management resources. Failure to implement these proposed growth
objectives would likely hurt our ability to manage our growth and our financial position.
Our failure to respond appropriately
to competitive challenges, changing consumer preferences and demand for new products could significantly harm our customer relationships
and product sales.
The nutritional sports supplement
industry is characterized by intense competition for product offerings and rapid and frequent changes in consumer demand. Our
failure to predict accurately product trends could negatively impact our products and cause our revenues to decline.
7
Our success with any particular
product offering (whether new or existing) depends upon a number of factors, including our ability to:
·
deliver
                                                                                                                            products
                                                                                                                            in
                                                                                                                            a
                                                                                                                            timely
                                                                                                                            manner
                                                                                                                            in
                                                                                                                            sufficient
                                                                                                                            volumes;
·
accurately
                                                                                                                            anticipate
                                                                                                                            customer
                                                                                                                            needs
                                                                                                                            and
                                                                                                                            forecast
                                                                                                                            accurately
                                                                                                                            to
                                                                                                                            our
                                                                                                                            manufacturers
                                                                                                                            in
                                                                                                                            an
                                                                                                                            expanding
                                                                                                                            business;
·
differentiate
                                                                                                                            our
                                                                                                                            product
                                                                                                                            offerings
                                                                                                                            from
                                                                                                                            those
                                                                                                                            of
                                                                                                                            our
                                                                                                                            competitors;
·
competitively
                                                                                                                            price
                                                                                                                            our
                                                                                                                            products;
                                                                                                                            and
·
develop
                                                                                                                            new
                                                                                                                            products.
Products often have to be promoted
heavily in stores or in the media to obtain visibility and consumer acceptance. Acquiring distribution for products is difficult
and often expensive due to slotting and other promotional charges mandated by retailers. Products can take substantial periods
of time to develop consumer awareness, consumer acceptance and sales volume. Accordingly, some products may fail to gain or maintain
sufficient sales volume and as a result may have to be discontinued. In a highly competitive marketplace it may be difficult to
have retailers open stock-keeping units (sku's) for new products.
Our management has determined
that our disclosure controls and procedures are ineffective which could result in material misstatements in our financial statements.
Our management is responsible for
establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities
Exchange Act of 1934, as amended, which we refer to as the Exchange Act. As of December 31, 2011, our management determined
that our disclosure controls and procedures were ineffective due to weaknesses in our financial closing process.
We intend to implement remedial
measures designed to address the ineffectiveness of our disclosure controls and procedures. If these remedial measures are insufficient
to address the ineffectiveness of our disclosure controls and procedures, or if material weaknesses or significant deficiencies
in our internal control are discovered or occur in the future and the ineffectiveness of our disclosure controls and procedures
continues, we may fail to meet our future reporting obligations on a timely basis, our consolidated financial statements may contain
material misstatements, we could be required to restate our prior period financial results, our operating results may be harmed,
we may be subject to class action litigation, and if we gain a listing on The NASDAQ Capital Market, our common stock could be
delisted from that exchange. Any failure to address the ineffectiveness of our disclosure controls and procedures could also adversely
affect the results of the periodic management evaluations regarding the effectiveness of our internal control over financial reporting
and our disclosure controls and procedures that are required to be included in our annual report on Form 10-K. Internal control
deficiencies and ineffective disclosure controls and procedures could also cause investors to lose confidence in our reported
financial information. We can give no assurance that the measures we plan to take in the future will remediate the ineffectiveness
of our disclosure controls and procedures or that any material weaknesses or restatements of financial results will not arise
in the future due to a failure to implement and maintain adequate internal control over financial reporting or adequate disclosure
controls and procedures or circumvention of these controls. In addition, even if we are successful in strengthening our controls
and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors
or to facilitate the fair presentation of our consolidated financial statements.
If we fail to comply with
the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover material weaknesses
and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising
capital could be more difficult.
If we fail to comply with the rules
under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover additional material weaknesses
and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising
capital could be more difficult. Moreover, effective internal controls are necessary for us to produce reliable financial reports
and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business
and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading
price of our common stock could drop significantly. In addition, we cannot be certain that additional material weaknesses or significant
deficiencies in our internal controls will not be discovered in the future.
8
Our industry is highly competitive,
and our failure to compete effectively could adversely affect our market share, financial condition and future growth.
The nutritional supplement industry
is highly competitive with respect to:
·
price;
·
shelf
                                                                                                                            space
                                                                                                                            and
                                                                                                                            store
                                                                                                                            placement;
·
brand
                                                                                                                            and
                                                                                                                            product
                                                                                                                            recognition;
·
new
                                                                                                                            product
                                                                                                                            introductions;
                                                                                                                            and
·
raw
                                                                                                                            materials.
Most of our competitors are larger
more established and possess greater financial, personnel, distribution and other resources than we have. We face competition
in the health food channel from a limited number of large nationally known manufacturers, private label brands and many smaller
manufacturers of dietary supplements.
We rely on a limited number
of customers for a substantial portion of our sales, and the loss of or material reduction in purchase volume by any of these
customers would adversely affect our sales and operating results.
For the six months ended June 30,
2012, two of our customers accounted for approximately 46% of our sales. Our largest customer for the six months ended June 30,
2012, accounted for 35% of our sales. For the year ended December 31, 2011, two customers accounted for approximately 55% of sales
and our largest customer represented 41% of our sales. For the year ended December 31, 2010, three customers accounted for approximately
67% of our sales and the largest customer accounted for 45% of our sales. The loss of any of our major customers, a significant
reduction in purchases by any major customer, or, any serious financial difficulty of a major customer, could have a material
adverse effect on our sales and results of operations.
Adverse publicity or consumer
perception of our products and any similar products distributed by others could harm our reputation and adversely affect our sales
and revenues.
We believe we are highly dependent
upon positive consumer perceptions of the safety and quality of our products as well as similar products distributed by other
sports nutrition supplement companies. Consumer perception of sports nutrition supplements and our products in particular can
be substantially influenced by scientific research or findings, national media attention and other publicity about product use.
Adverse publicity from these sources regarding the safety, quality or efficacy of nutritional supplements and our products could
harm our reputation and results of operations. The mere publication of news articles or reports asserting that such products may
be harmful or questioning their efficacy could have a material adverse effect on our business, financial condition and results
of operations, regardless of whether such news articles or reports are scientifically supported or whether the claimed harmful
effects would be present at the dosages recommended for such products.
We rely on highly skilled
personnel and, if we are unable to retain or motivate key personnel, hire qualified personnel, we may not be able to grow effectively.
Our performance largely depends
on the talents and efforts of highly skilled individuals. Our future success depends on our continuing ability to identify, hire,
develop, motivate and retain highly skilled personnel for all areas of our organization, particularly sales and marketing. Competition
in our industry for qualified employees is intense. In addition, our compensation arrangements, such as our bonus programs, may
not always be successful in attracting new employees or retaining and motivating our existing employees. Our continued ability
to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees.
If we are unable to retain
key personnel, our ability to manage our business effectively and continue our growth could be negatively impacted.
Our management employees include
Brad J. Pyatt, L. Gary Davis, John H. Bluher, Jeremy R. DeLuca and Cory J. Gregory. These key management employees are primarily
responsible for our day-to-day operations, and we believe our success depends in large part on our ability to retain them and
to continue to attract additional qualified individuals to our management team. Currently, we have executed employment agreements
with our key management employees. The loss or limitation of the services of any of our key management employees or the inability
to attract additional qualified personnel could have a material adverse effect on our business and results of operations.
9
Our operating results may
fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations.
Our operating results may fluctuate
as a result of a number of factors, many of which may be outside of our control. As a result, comparing our operating results
on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future
performance. Our quarterly, year-to-date, and annual expenses as a percentage of our revenues may differ significantly from our
historical or projected rates. Our operating results in future quarters may fall below expectations. Each of the following factors
may affect our operating results:
·
our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            deliver
                                                                                                                            products
                                                                                                                            in
                                                                                                                            a
                                                                                                                            timely
                                                                                                                            manner
                                                                                                                            in
                                                                                                                            sufficient
                                                                                                                            volumes;
·
our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            recognize
                                                                                                                            product
                                                                                                                            trends;
·
our
                                                                                                                            loss
                                                                                                                            of
                                                                                                                            one
                                                                                                                            or
                                                                                                                            more
                                                                                                                            significant
                                                                                                                            customers;
·
the
                                                                                                                            introduction
                                                                                                                            of
                                                                                                                            successful
                                                                                                                            new
                                                                                                                            products
                                                                                                                            by
                                                                                                                            our
                                                                                                                            competitors;
                                                                                                                            and
·
adverse
                                                                                                                            media
                                                                                                                            reports
                                                                                                                            on
                                                                                                                            the
                                                                                                                            use
                                                                                                                            or
                                                                                                                            efficacy
                                                                                                                            of
                                                                                                                            nutritional
                                                                                                                            supplements.
Because our business is changing
and evolving, our historical operating results may not be useful to you in predicting our future operating results.
The continuing effects of
the most recent global economic crisis may impact our business, operating results, or financial condition.
The global economic crisis that
began in 2008 has caused disruptions and extreme volatility in global financial markets and increased rates of default and bankruptcy,
and has impacted levels of consumer spending. These macroeconomic developments could negatively affect our business, operating
results, and financial condition. For example, if consumer spending decreases, this may result in lower sales.
We may be exposed to material
product liability claims, which could increase our costs and adversely affect our reputation and business.
As a marketer and distributor of
products designed for human consumption, we could be subject to product liability claims if the use of our products is alleged
to have resulted in injury. Our products consist of vitamins, minerals, herbs and other ingredients that are classified as dietary
supplements and in most cases are not subject to pre-market regulatory approval in the United States or internationally. Previously
unknown adverse reactions resulting from human consumption of these ingredients could occur.
We have not had any product liability
claims filed against us, but in the future we may be subject to various product liability claims, including among others that
our products had inadequate instructions for use, or inadequate warnings concerning possible side effects and interactions with
other substances. The cost of defense can be substantially higher than the cost of settlement even when claims are without merit.
The high cost to defend or settle product liability claims could have a material adverse effect on our business and operating
results.
Our insurance coverage or
third party indemnification rights may not be sufficient to cover our legal claims or other losses that we may incur in the future.
We maintain insurance, including
property, general and product liability, and workers' compensation to protect ourselves against potential loss exposures.
In the future, insurance coverage may not be available at adequate levels or on adequate terms to cover potential losses, including
on terms that meet our customer's requirements. If insurance coverage is inadequate or unavailable, we may face claims that
exceed coverage limits or that are not covered, which could increase our costs and adversely affect our operating results.
10
Our intellectual property
rights are valuable, and any inability to protect them could reduce the value of our products and brand.
We have invested significant resources
to protect our brands and intellectual property rights. However, we may be unable or unwilling to strictly enforce our intellectual
property rights, including our trademarks, from infringement. Our failure to enforce our intellectual property rights could diminish
the value of our brands and product offerings and harm our business and future growth prospects.
We may be subject to intellectual
property rights claims, which are costly to defend, could require us to pay damages and could limit our ability to sell some of
our products.
Our industry is characterized by
vigorous pursuit and protection of intellectual property rights, which has resulted in protracted and expensive litigation for
several companies. Third parties may assert claims of misappropriation of trade secrets or infringement of intellectual property
rights against us or against our end customers or partners for which we may be liable.
As our business expands, the number
of products and competitors in our markets increases and product overlaps occur, infringement claims may increase in number and
significance. Intellectual property lawsuits are subject to inherent uncertainties due to the complexity of the technical issues
involved, and we cannot be certain that we would be successful in defending ourselves against intellectual property claims. Further,
many potential litigants have the capability to dedicate substantially greater resources than we can to enforce their intellectual
property rights and to defend claims that may be brought against them. Furthermore, a successful claimant could secure a judgment
that requires us to pay substantial damages or prevents us from distributing products or performing certain services.
An increase in product returns
could negatively impact our operating results and profitability.
We permit the return of damaged
or defective products and accept limited amounts of product returns in certain instances. While such returns have historically
been nominal and within management's expectations and the provisions established, future return rates may differ from those
experienced in the past. Any significant increase in damaged or defective products or expected returns could have a material adverse
effect on our operating results for the period or periods in which such returns materialize.
We have no manufacturing capacity
and anticipate continued reliance on third-party manufacturers for the development and commercialization of our products.
We do not currently operate manufacturing
facilities for production of our products. We lack the resources and the capabilities to manufacture our products on a commercial
scale. We do not intend to develop facilities for the manufacture of products in the foreseeable future. We rely on third-party
manufacturers to produce bulk products required to meet our sales needs. We plan to continue to rely upon contract manufacturers
to manufacture commercial quantities of our products.
Our contract manufacturers'
failure to achieve and maintain high manufacturing standards, in accordance with applicable regulatory requirements, or the incidence
of manufacturing errors, could result in consumer injury or death, product shortages, product recalls or withdrawals, delays or
failures in product testing or delivery, cost overruns or other problems that could seriously harm our business. Contract manufacturers
often encounter difficulties involving production yields, quality control and quality assurance, as well as shortages of qualified
personnel. Our existing manufacturers and any future contract manufacturers may not perform as agreed or may not remain in the
contract manufacturing business. In the event of a natural disaster, business failure, strike or other difficulty, we may be unable
to replace a third-party manufacturer in a timely manner and the production of our products would be interrupted, resulting in
delays, additional costs and reduced revenues.
A shortage in the supply of
key raw materials could increase our costs or adversely affect our sales and revenues.
All of our raw materials for our
products are obtained from third-party suppliers. Since all of the ingredients in our products are commonly used, we have not
experienced any shortages or delays in obtaining raw materials. If circumstances changed, shortages could result in materially
higher raw material prices or adversely affect our ability to have a product manufactured. Price increases from a supplier would
directly affect our profitability if we are not able to pass price increases on to customers. Our inability to obtain adequate
supplies of raw materials in a timely manner or a material increase in the price of our raw materials could have a material adverse
effect on our business, financial condition and results of operations.
11
Because we are subject to
numerous laws and regulations, and we may become involved in litigation from time to time, we could incur substantial judgments,
fines, legal fees and other costs.
Our industry is highly regulated.
The manufacture, labeling and advertising for our products are regulated by various federal, state and local agencies as well
as those of each foreign country to which we distribute. These governmental authorities may commence regulatory or legal proceedings,
which could restrict the permissible scope of our product claims or the ability to manufacture and sell our products in the future.
The U.S. Food and Drug Administration, or FDA, regulates our products to ensure that the products are not adulterated or misbranded.
Failure to comply with FDA requirements may result in, among other things, injunctions, product withdrawals, recalls, product
seizures, fines and criminal prosecutions. Our advertising is subject to regulation by the Federal Trade Commission, or FTC, under
the Federal Trade Commission Act. In recent years the FTC has initiated numerous investigations of dietary supplement and weight
loss products and companies. Additionally, some states also permit advertising and labeling laws to be enforced by private attorney
generals, who may seek relief for consumers, seek class action certifications, seek class wide damages and product recalls of
products sold by us. Any of these types of adverse actions against us by governmental authorities or private litigants could have
a material adverse effect on our business, financial condition and results of operations.
Other Risks and Risks Relating
to this Offering
We may, in the future, issue
additional shares of common stock, which would reduce investors' percent of ownership and may dilute our share value.
Our articles of incorporation, as
amended, authorize the issuance of 2,500,000,000 shares of common stock, 5,000,000 shares of Series A Convertible Preferred Stock,
51 shares of Series B Preferred Stock and 500 shares of Series C Convertible Preferred Stock. The future issuance of common stock
and preferred stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders.
We may value any common stock or preferred stock issued in the future on an arbitrary basis. The issuance of common stock for
future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our
investors, and might have an adverse effect on any trading market for our common stock.
We may issue additional shares
of preferred stock in the future that may adversely impact your rights as holders of our common stock.
Our articles of incorporation, as
amended, authorize us to issue shares of preferred stock in various classes. Currently, we have 51 shares of Series B Preferred
Stock issued and outstanding, which has voting control of the Company. Each share of our Series A Preferred Stock is convertible
into 200 shares of our common stock. In addition, our board of directors will has the authority to fix and determine the relative
rights and preferences of preferred stock, as well as the authority to issue additional shares, without further stockholder approval.
As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock,
and the right to the redemption of such preferred stock, together with a premium, prior to the redemption of the common stock.
To the extent that we do issue such additional shares of preferred stock, your rights as holders of common stock could be impaired
thereby, including, without limitation, dilution of your ownership interests in us. In addition, shares of preferred stock could
be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may
not be in your interest as a holder of common stock.
Our common stock is quoted
on the OTCBB which may have an unfavorable impact on our stock price and liquidity.
Our common stock is quoted on the
OTCBB. The OTCBB is a significantly more limited market than the New York Stock Exchange or the NASDAQ Stock Market. The quotation
of our shares on the OTCBB may result in a less liquid market available for existing and potential stockholders to trade shares
of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability
to raise capital in the future.
Liability of directors for
breach of duty of care is limited.
Under Section 78.138(7) of the Nevada
Revised Statutes, all Nevada corporations limit the liability of directors and officers, including acts not in good faith. Our
stockholders' ability to recover damages for fiduciary breaches may be reduced by this statute. In addition, we are obligated
to indemnify our directors and officers regarding stockholder suits which they successfully defend as set forth in Section 78.7502
of the Nevada Revised Statutes.
12
Because we will have broad
discretion and flexibility in how the net proceeds from this offering are used, we may use the net proceeds in ways in which you
disagree.
We currently intend to use the net
proceeds from this offering to repay $3.5 million of debt due upon completion of this offering, for working capital and other
general corporate purposes. See "Use of Proceeds" on page 18 of this prospectus. Other than the debt payments, we
have not allocated specific amounts of the net proceeds from this offering for any of the foregoing purposes. Accordingly, our
management will have significant discretion and flexibility in applying these proceeds. You will be relying on the judgment of
our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment
decision, to assess whether the net proceeds are being used appropriately. It is possible that the net proceeds will be invested
in a way that does not yield a favorable, or any, return for us. The failure of our management to use such funds effectively could
have a material adverse effect on our business, financial condition, operating results and cash flow.
Future financings through
debt securities and preferred stock may restrict our operations.
If additional funds are raised through
a credit facility or the issuance of debt securities or preferred stock, lenders under the credit facility or holders of these
debt securities or preferred stock would likely have rights that are senior to the rights of holders of our common stock, and
any credit facility or additional securities could contain covenants that would restrict our operations.
Our common stock price may
be volatile and could fluctuate widely in price, which could result in substantial losses for investors.
The market price of our common stock
has historically been and is likely to be highly volatile and could fluctuate widely in price in response to various factors,
many of which are beyond our control, including:
·
new
                                                                                                                            products
                                                                                                                            and
                                                                                                                            services
                                                                                                                            by
                                                                                                                            us
                                                                                                                            or
                                                                                                                            our
                                                                                                                            competitors;
·
additions
                                                                                                                            or
                                                                                                                            departures
                                                                                                                            of
                                                                                                                            key
                                                                                                                            personnel;
·
intellectual
                                                                                                                            property
                                                                                                                            disputes;
·
sales
                                                                                                                            of
                                                                                                                            our
                                                                                                                            common
                                                                                                                            stock;
·
our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            integrate
                                                                                                                            operations,
                                                                                                                            technology,
                                                                                                                            products
                                                                                                                            and
                                                                                                                            services;
·
our
                                                                                                                            ability
                                                                                                                            to
                                                                                                                            execute
                                                                                                                            our
                                                                                                                            business
                                                                                                                            plan;
·
operating
                                                                                                                            results
                                                                                                                            below
                                                                                                                            expectations;
·
loss
                                                                                                                            of
                                                                                                                            any
                                                                                                                            strategic
                                                                                                                            relationship;
·
industry
                                                                                                                            developments;
·
economic
                                                                                                                            and
                                                                                                                            other
                                                                                                                            external
                                                                                                                            factors;
                                                                                                                            and
·
period-to-period
                                                                                                                            fluctuations
                                                                                                                            in
                                                                                                                            our
                                                                                                                            financial
                                                                                                                            results.
If our common stock remains
subject to the SEC's penny stock rules, broker-dealers may experience difficulty in completing customer transactions and
trading activity in our securities may be adversely affected.
Unless our securities are listed
on a national securities exchange, or we have net tangible assets of $5.0 million or more and our common stock has a market price
per share of $5.00 or more, transactions in our common stock will be subject to the SEC's "penny stock" rules.
If our common stock remains subject to the "penny stock" rules promulgated under the Exchange Act, broker-dealers
may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected.
Under these rules, broker-dealers
who recommend such securities to persons other than institutional accredited investors must:
·
make
                                                                                                                            a
                                                                                                                            special
                                                                                                                            written
                                                                                                                            suitability
                                                                                                                            determination
                                                                                                                            for
                                                                                                                            the
                                                                                                                            purchaser;
13
·
receive
                                                                                                                            the
                                                                                                                            purchaser's
                                                                                                                            written
                                                                                                                            agreement
                                                                                                                            to
                                                                                                                            the
                                                                                                                            transaction
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            sale;
·
provide
                                                                                                                            the
                                                                                                                            purchaser
                                                                                                                            with
                                                                                                                            risk
                                                                                                                            disclosure
                                                                                                                            documents
                                                                                                                            which
                                                                                                                            identify
                                                                                                                            certain
                                                                                                                            risks
                                                                                                                            associated
                                                                                                                            with
                                                                                                                            investing
                                                                                                                            in
                                                                                                                            "penny
                                                                                                                            stocks"
                                                                                                                            and
                                                                                                                            which
                                                                                                                            describe
                                                                                                                            the
                                                                                                                            market
                                                                                                                            for
                                                                                                                            these
                                                                                                                            "penny
                                                                                                                            stocks"
                                                                                                                            as
                                                                                                                            well
                                                                                                                            as
                                                                                                                            a
                                                                                                                            purchaser's
                                                                                                                            legal
                                                                                                                            remedies;
                                                                                                                            and
·
obtain
                                                                                                                            a
                                                                                                                            signed
                                                                                                                            and
                                                                                                                            dated
                                                                                                                            acknowledgment
                                                                                                                            from
                                                                                                                            the
                                                                                                                            purchaser
                                                                                                                            demonstrating
                                                                                                                            that
                                                                                                                            the
                                                                                                                            purchaser
                                                                                                                            has
                                                                                                                            actually
                                                                                                                            received
                                                                                                                            the
                                                                                                                            required
                                                                                                                            risk
                                                                                                                            disclosure
                                                                                                                            document
                                                                                                                            before
                                                                                                                            a
                                                                                                                            transaction
                                                                                                                            in
                                                                                                                            a
                                                                                                                            "penny
                                                                                                                            stock"
                                                                                                                            can
                                                                                                                            be
                                                                                                                            completed.
As a result, if our common stock
becomes or remains subject to the penny stock rules, the market price of our securities may be depressed, and you may find it
more difficult to sell our securities.
Because certain of our stockholders
control a significant number of shares of our common stock, they may have effective control over actions requiring stockholder
approval.
As of October 25, 2012, our directors,
executive officers and principal stockholders, and their respective affiliates, beneficially own approximately 21.7% of our outstanding
shares of common stock. Also, two of our executive officers own 51 shares of our Series B Preferred Stock, which has voting control
of the Company. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted
to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially
all of our assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs
of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:
·
delaying,
                                                                                                                            deferring
                                                                                                                            or
                                                                                                                            preventing
                                                                                                                            a
                                                                                                                            change
                                                                                                                            in
                                                                                                                            corporate
                                                                                                                            control;
·
impeding
                                                                                                                            a
                                                                                                                            merger,
                                                                                                                            consolidation,
                                                                                                                            takeover
                                                                                                                            or
                                                                                                                            other
                                                                                                                            business
                                                                                                                            combination
                                                                                                                            involving
                                                                                                                            us;
                                                                                                                            or
·
discouraging
                                                                                                                            a
                                                                                                                            potential
                                                                                                                            acquirer
                                                                                                                            from
                                                                                                                            making
                                                                                                                            a
                                                                                                                            tender
                                                                                                                            offer
                                                                                                                            or
                                                                                                                            otherwise
                                                                                                                            attempting
                                                                                                                            to
                                                                                                                            obtain
                                                                                                                            control
                                                                                                                            of
                                                                                                                            us.
We have not paid dividends
on our common stock in the past and do not expect to pay dividends on our common stock for the foreseeable future. Any return
on investment may be limited to the value of our common stock.
No cash dividends have been paid
on our common stock. We expect that any income received from operations will be devoted to our future operations and growth. We
do not expect to pay cash dividends on our common stock in the near future. Payment of dividends would depend upon our profitability
at the time, cash available for those dividends, and other factors as our board of directors may consider relevant. If we do not
pay dividends, our common stock may be less valuable because a return on an investor's investment will only occur if our
stock price appreciates. Investors in our common stock should not rely on an investment in our company if they require dividend
income.
If securities or industry
analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely,
our stock price and trading volume could decline.
The trading market for our common
stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We
do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence
coverage of us, the trading price of our stock would likely decrease. Even if we do obtain analyst coverage, if one or more of
the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage
of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could
cause our stock price or trading volume to decline.
A sale of a substantial number
of shares of our common stock may cause the price of our common stock to decline and may impair our ability to raise capital in
the future.
Our common stock is traded on the
OTCBB and, despite certain increases of trading volume from time to time, there have been periods when it could be considered
"thinly-traded", meaning that the number of persons interested in purchasing our common stock at or near bid prices
at any given time may be relatively small or non-existent. Finance transactions resulting in a large amount of newly issued shares
that become readily tradable, or other events that cause current stockholders to sell shares, could place downward pressure on
the trading price of our stock. In addition, the lack of a robust resale market may require a stockholder who desires to sell
a large number of shares of common stock to sell the shares in increments over time to mitigate any adverse impact of the sales
on the market price of our stock.
14
If our stockholders sell, or the
market perceives that our stockholders intend to sell for various reasons, including the ending of restrictions on resale of substantial
amounts of our common stock in the public market, including shares issued upon the exercise of outstanding options, the market
price of our common stock could fall. Sales of a substantial number of shares of our common stock may make it more difficult for
us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We may
become involved in securities class action litigation that could divert management's attention and harm our business.
You will experience immediate
and substantial dilution as a result of this offering and may experience additional dilution in the future.
You will incur immediate and substantial
dilution as a result of this offering. After giving effect to the sale by us of up to   shares offered in this offering
at an assumed public offering price of $ per share, and after deducting the underwriter's discounts and commissions
and estimated offering expenses payable by us, investors in this offering can expect an immediate dilution of $ per share. In
addition, in the past, we issued options and warrants to acquire shares of common stock. To the extent these options are ultimately
exercised, you will sustain future dilution. We may also acquire or license other technologies or finance strategic alliances
by issuing equity, which may result in additional dilution to our stockholders.
Risks Related to Our Reverse
Stock Split
We intend to effect a 1-for-650
reverse stock split of our outstanding common stock immediately prior to this offering. However, the reverse stock split may not
increase our stock price sufficiently and we may not be able to list our common stock on The NASDAQ Capital Market, in which case
this offering will not be completed.
We expect that the 1-for-650 reverse
stock split of our outstanding common stock will increase the market price of our common stock so that we will be able to meet
the minimum bid price requirement of the Listing Rules of The NASDAQ Capital Market. However, the effect of a reverse stock split
upon the market price of our common stock cannot be predicted with certainty, and the results of reverse stock splits by companies
in similar circumstances have been varied. It is possible that the market price of our common stock following the reverse stock
split will not increase sufficiently for us to be in compliance with the minimum bid price requirement. If we are unable meet
the minimum bid price requirement, we may be unable to list our shares on The NASDAQ Capital Market, in which case this offering
will not be completed.
Even if the reverse stock
split achieves the requisite increase in the market price of our common stock, we cannot assure you that we will be able to continue
to comply with the minimum bid price requirement of The NASDAQ Capital Market.
Even if the reverse stock split
achieves the requisite increase in the market price of our common stock to be in compliance with the minimum bid price of The
NASDAQ Capital Market, there can be no assurance that the market price of our common stock following the reverse stock split will
remain at the level required for continuing compliance with that requirement. It is not uncommon for the market price of a company's
common stock to decline in the period following a reverse stock split. If the market price of our common stock declines following
the effectuation of a reverse stock split, the percentage decline may be greater than would occur in the absence of a reverse
stock split. In any event, other factors unrelated to the number of shares of our common stock outstanding, such as negative financial
or operational results, could adversely affect the market price of our common stock and jeopardize our ability to meet or maintain
The NASDAQ Capital Market's minimum bid price requirement. In addition to specific listing and maintenance standards, The
NASDAQ Capital Market has broad discretionary authority over the initial and continued listing of securities, which it could exercise
with respect to the listing of our common stock.
Even if the reverse stock
split increases the market price of our common stock, there can be no assurance that we will be able to comply with other continued
listing standards of The NASDAQ Capital Market.
Even if the market price of our
common stock increases sufficiently so that we comply with the minimum bid price requirement, we cannot assure you that we will
be able to comply with the other standards that we are required to meet in order to maintain a listing of our common stock on
The NASDAQ Capital Market. Our failure to meet these requirements may result in our common stock being delisted from The NASDAQ
Capital Market, irrespective of our compliance with the minimum bid price requirement.
15
The reverse stock split may
decrease the liquidity of the shares of our common stock.
The liquidity of the shares of our
common stock may be affected adversely by the reverse stock split given the reduced number of shares that will be outstanding
following the reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse
stock split. In addition, the reverse stock split may increase the number of stockholders who own odd lots (less than 100 shares)
of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares
and greater difficulty effecting such sales.
Following the reverse stock
split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may
not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.
Although we believe that a higher
market price of our common stock may help generate greater or broader investor interest, there can be no assurance that the reverse
stock split will result in a share price that will attract new investors, including institutional investors. In addition, there
can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a
result, the trading liquidity of our common stock may not necessarily improve.
16
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This prospectus contains forward-looking
statements. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets
or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our
current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that
could cause actual results and developments to differ materially from those expressed or implied in such statements.
In some cases, you can identify
forward-looking statements by terminology, such as "expects", "anticipates", "intends", "estimates",
"plans", "potential", "possible", "probable", "believes", "seeks",
"may", "will", "should", "could" or the negative of such terms or other similar
expressions. Accordingly, these statements involve estimates, assumptions and uncertainties that could cause actual results
to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference
to the factors discussed throughout this prospectus.
You should read this prospectus
and the documents that we reference herein and therein and have filed as exhibits to the registration statement, of which this
prospectus is part, completely and with the understanding that our actual future results may be materially different from what
we expect. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover
of this prospectus only. Because the risk factors referred to above could cause actual results or outcomes to differ materially
from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any
forward-looking statements. These risks and uncertainties, along with others, are described above under the heading "Risk
Factors" beginning on page 7 of this prospectus. Further, any forward-looking statement speaks only as of the date on which
it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the
date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time,
and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on
our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. We qualify all of the information presented in this prospectus, and particularly
our forward-looking statements, by these cautionary statements.
This prospectus also includes estimates
of market size and industry data that we obtained from industry publications and surveys and internal company sources. The industry
publications and surveys used by management to determine market size and industry data contained in this prospectus have been
obtained from sources believed to be reliable.
17
USE OF PROCEEDS
We estimate that our net proceeds
from the sale of the common stock offered pursuant to this prospectus will be approximately $          million, or approximately $         
million if the underwriters exercise in full their option to purchase          additional shares, based upon the public offering
price of $          per share and after deducting the underwriting discount and the estimated offering expenses that are payable
by us.
We currently intend to use the net
proceeds that we receive in this offering as follows: (i) $3.6 million for working capital; (ii) $3.4 million for repayment of
our outstanding debt balance principal amount of debt held by non-affiliated parties, which will be due upon completion of this
offering (as set forth below), (iii) to pay interest of approximately $0.1 million, representing interest payable, (iv) $1.4 million
for aged accounts payable; (v) $6.0 million for inventory and related items; (vi) $2.0 million for international marketing development;
and (vii) and the remainder for general corporate purposes.
Our outstanding indebtedness that
will be repaid is as follows:
Principal
    Amount
($000's)
Interest
    Rate
(per annum)
Maturity
Date
1,703
15
%
October 2013
270
12
%
July 2013
401
15
%
July 2013
451
15
%
August 2013
200
15
%
April 2013
158
15
%
May 2013
117
15
%
June 2013
40
15
%
September 2013
18
PRICE RANGE
OF COMMON STOCK
Our shares of common stock were
cleared for trading under the symbol "TTWZ:OB" on the OTCBB on November 24, 2008, and later began trading on the OTCBB
under the symbol "MSLP:OB" on April 22, 2010. Prior to this period, there was minimal trading in our common stock.
The following table shows the reported high and low bid quotations per share for our common stock based on information provided
by the OTCBB. These prices reflect the expected 1-for-650 reverse stock split that we intend to effect prior to the date of this
prospectus.
High
Low
2012
Fourth Quarter (though October 25, 2012)
$
4.68
$
2.93
Third Quarter
13.00
3.25
Second Quarter
19.50
7.80
First Quarter
24.05
3.90
2011
Fourth Quarter
16.90
4.55
Third Quarter
25.35
9.10
Second Quarter
52.65
16.25
First Quarter
84.50
23.40
2010
Fourth Quarter
585.00
32.50
Third Quarter
669.50
266.50
Second Quarter (beginning April 22, 2010)
767.00
617.50
First Quarter
(1)
-
-
(1)
Prior
                                                                                                        to April 22, 2010, our
                                                                                                        common stock was not traded
                                                                                                        on the OTCBB or any other
                                                                                                        exchange.
Quotations
on the OTCBB reflect bid and ask quotations, may reflect inter-dealer prices, without retail markup, markdown or commission,
and may not represent actual transactions. In periods prior to April 22, 2010, there was no volume in our common stock.
As of October
25, 2012, there were approximately 420 holders of record of our common stock. This figure does not take into account those stockholders
whose certificates are held in street name by brokers and other nominees. We estimate that such holders number approximately 3,700.
DIVIDEND
POLICY
We have never declared dividends
on our common stock, and currently do not plan to declare dividends on shares of our common stock in the foreseeable future. We
expect to retain our future earnings, if any, for use in the operation and expansion of our business. Subject to the foregoing,
the payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon
such factors as earnings levels, capital requirements, our overall financial condition and any other factors deemed relevant by
our board of directors.
19
DILUTION
If you invest in our common stock,
your interest will be immediately and substantially diluted to the extent of the difference between the public offering price
per share of our common stock and the pro forma net tangible book value per share of our common stock after giving effect to this
offering.
Our pro forma net tangible book
value as of June 30, 2012 was $(     ) or $(     ) per share of common stock, based upon [   ] shares outstanding, after giving effect to
issuances of common stock from July 1, 2012 through and immediately prior to the date of this offering. After giving effect to
the sale of the shares in this offering at the assumed public offering price of $ per share, at June 30, 2012, after deducting
underwriting discounts and commissions and other estimated offering expenses payable by us, our pro forma as adjusted net tangible
book value at June 30, 2012 would have been approximately , or $ per share. This represents an immediate increase in pro forma
net tangible book value of approximately $ per share to our existing stockholders, and an immediate dilution of $   
per share to investors purchasing shares in the offering.
Dilution in pro forma net tangible
book value per share represents the difference between the amount per share paid by purchasers of our common stock in this offering
and the pro forma net tangible book value per share of our common stock immediately after this offering.
The following table illustrates
the per share dilution to investors purchasing shares in the offering:
Assumed public offering price per share
$
Pro forma net tangible book value per share as of June 30,
    2012
$
(____
)
Increase in net tangible book value per
    share attributable to this offering
Pro forma as adjusted net tangible book value per share after
    this offering
Dilution in pro forma net tangible book value per share
    to new investors
The information above assumes that
the underwriters do not exercise their over-allotment option. If the underwriters exercise their over-allotment option in
full, the pro forma as adjusted net tangible book value will increase to $ per share, representing an immediate increase to existing
stockholders of $ per share and an immediate dilution of $ per share to new investors. If any shares are issued upon exercise
of outstanding options or warrants, new investors will experience further dilution.
20
CAPITALIZATION
The following table sets forth our
capitalization as of June 30, 2012:
·
on
                                                                                                                            an
                                                                                                                            actual
                                                                                                                            basis;
·
on
                                                                                                                            a
                                                                                                                            pro
                                                                                                                            forma
                                                                                                                            basis
                                                                                                                            to
                                                                                                                            give
                                                                                                                            effect
                                                                                                                            to
                                                                                                                            the
                                                                                                                            issuance
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            from
                                                                                                                            July
                                                                                                                            1,
                                                                                                                            2012
                                                                                                                            through
                                                                                                                            and
                                                                                                                            immediately
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            the
                                                                                                                            date
                                                                                                                            of
                                                                                                                            this
                                                                                                                            prospectus;
                                                                                                                            and
·
on
                                                                                                                            a
                                                                                                                            pro
                                                                                                                            forma,
                                                                                                                            as
                                                                                                                            adjusted
                                                                                                                            basis
                                                                                                                            to
                                                                                                                            give
                                                                                                                            effect
                                                                                                                            to
                                                                                                                            (i)
                                                                                                                            the
                                                                                                                            issuance
                                                                                                                            of
                                                                                                                            common
                                                                                                                            stock
                                                                                                                            from
                                                                                                                            July
                                                                                                                            1,
                                                                                                                            2012
                                                                                                                            through
                                                                                                                            and
                                                                                                                            immediately
                                                                                                                            prior
                                                                                                                            to
                                                                                                                            the
                                                                                                                            date
                                                                                                                            of
                                                                                                                            this
                                                                                                                            prospectus,
                                                                                                                            and
                                                                                                                            (ii)
                                                                                                                            the
                                                                                                                            sale
                                                                                                                            of
                                                                                                                            the shares
                                                                                                                            in
                                                                                                                            this
                                                                                                                            offering
                                                                                                                            at
                                                                                                                            the
                                                                                                                            assumed
                                                                                                                            public
                                                                                                                            offering
                                                                                                                            price
                                                                                                                            of
                                                                                                                            $
                                                                                                                                 per
                                                                                                                            share,
                                                                                                                            after
                                                                                                                            deducting
                                                                                                                            underwriting
                                                                                                                            discounts
                                                                                                                            and
                                                                                                                            commissions
                                                                                                                            and
                                                                                                                            other
                                                                                                                            estimated
                                                                                                                            offering
                                                                                                                            expenses
                                                                                                                            payable
                                                                                                                            by
                                                                                                                            us.
You should consider this table in
conjunction with "Use of Proceeds", "Description of Securities" and our financial statements and the notes
to those financial statements included elsewhere in this prospectus.
As of June
    30, 2012
(1)
Actual
Pro Forma
Pro Forma
As Adjusted
(unaudited)
Stockholders' equity (deficiency)
Preferred stock, $0.001 par value, Series
    A Convertible Preferred Stock, 5,000,000 shares authorized, none issued and outstanding
-
-
Preferred stock, $0.001 par value, Series
    B Preferred Stock; 51 shares authorized, issued and outstanding
-
-
Preferred stock, $0.001 par value, Series
    C Convertible Preferred Stock; 500 shares authorized, 190 and none, respectively, issued and outstanding
-
-
Common stock, $0.001 par value, 3,846,153
    shares authorized, 2,179,394 and 2,138,730 issued and outstanding at June 30, 2012 actual; 3,527,178 and 3,486,514 issued
    and outstanding, June 30, 2012 pro forma; and [    ] and [   ] issued and outstanding, June 30, 2012 pro forma
    as adjusted
2,179
3,527
Treasury Stock, at cost; 40,664 shares
(460,978
)
(460,978
)
Additional paid-in capital
44,415,038
54,186,615
Deficit accumulated during the development stage
(55,010,071
)
(60,584,476
)
Accumulated other comprehensive income
40,719
40,719
Total stockholders' equity (deficiency)
(11,013,113
)
(6,814,593
)
$
(1)
The par value per share of our common stock will not change as a result of the expected 1-for-650
    reverse stock split.
21
MANAGEMENT'S
DISCUSSION AND ANALYSIS
OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and
analysis should be read together with our financial statements and the related notes appearing elsewhere in this prospectus. This
discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See "Cautionary
Note Regarding Forward-Looking Statements and Industry Data" for a discussion of the uncertainties, risks and assumptions
associated with these statements. Actual results and the timing of events could differ materially from those discussed in our
forward-looking statements as a result of many factors, including those set forth under "Risk Factors" and elsewhere
in this prospectus. All share amounts and per share amounts in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" reflect the expected 1-for-650 reverse stock split that we intend to effect prior to
offering these securities.
Plan of
Operation
We develop,
market and sell athlete-focused, high quality nutritional supplements primarily to specialty resellers. Our propriety and award
winning products address active lifestyles including muscle building, weight loss, and maintaining general fitness through a daily
nutritional supplement regimen. Our products are sold in over 110 countries and available in over 10,000 U.S. retail outlets,
including Dick's Sporting Goods, GNC, Vitamin Shoppe and Vitamin World. We also sell our products in over 100 online channels,
including bodybuilding.com, amazon.com, gnc.com and vitacost.com. Internationally, our nutritional supplements are sold in approximately
110 countries, and we expect that international sales will be a significant part of our sales for the foreseeable future.
Our primary growth strategy is to:
(1)
increase
                                                                                                  our product distribution and
                                                                                                  sales through increased market
                                                                                                  penetrations both domestically
                                                                                                  and internationally;
(2)
increase
                                                                                                  our margins by focusing on streamlining
                                                                                                  our operations and seeking operating
                                                                                                  efficiencies in all areas of
                                                                                                  our operations;
(3)
continue
                                                                                                  to conduct additional testing
                                                                                                  of the safety and efficacy of
                                                                                                  our products and formulate new
                                                                                                  products; and
(4)
increase
                                                                                                  awareness of our products by
                                                                                                  increasing our marketing and
                                                                                                  branding opportunities through
                                                                                                  endorsements, sponsorships and
                                                                                                  brand extensions.
Our core marketing strategy is to
brand MusclePharm as the "must have" fitness brand for workout enthusiasts and elite athletes. We seek to be known
as the athlete's company, run by athletes who create their products for other athletes both professional and otherwise.
We believe that our marketing mix of endorsers, sponsorships and providing sample products for our retail resellers to use is
an optimal strategy to increase sales.
22
Results of Operations
Six months ended June 30,
2012 compared to the six months ended June 30, 2011.
Six Months
    Ended June 30,
2012
2011
(unaudited)
Sales – net
$
31,990,020
$
6,431,678
Cost of sales
25,837,767
4,914,361
Gross profit
6,152,253
1,517,317
General and administrative expenses
8,543,887
4,498,310
Loss from operations
(2,391,634
)
(2,980,993
)
Other income (expense)
(7,461,755
)
(9,467,552
)
Net income (loss)
(9,853,389
)
(12,448,545
)
Other comprehensive income
40,719
-
Total comprehensive income (loss)
$
(9,812,670
)
$
(12,448,545
)
Net loss per share – basic and diluted
$
(4.92
)
$
(46.41
)
Weighted average number of common shares outstanding during the period –
    basic and diluted
2,001,880
268,254
Sales
Sales increased approximately $25.6
million or 397%, to approximately $32.0 million for the six months ended June 30, 2012, compared to approximately $6.4 million
for the six months ended June 30, 2011. The increase in sales was primarily attributable to increased brand awareness, and our
continued efforts to expand sales by adding more customers. We have focused on a marketing plan to penetrate the market. As such,
new promotional efforts have been made to increase sales by adding new customers and expanding our product line. We have continued
to add new products to meet our customer's needs. The inclusion of new gel squeeze tubes in various flavors has increased
sales and more customers are now adding the MusclePharm Musclegel® to their shelf line. We have added new sales staff familiar
with international sales, and this effort is now beginning to show results through increased sales in the international markets.
Overall, as a direct result of our aggressive marketing plan, our products are currently being offered in more retail stores,
both domestic and international, and our products are receiving better shelf placement. All of these efforts resulted in increased
sales.
Cost of Sales
Cost of sales for the six months
ended June 30, 2012, was approximately $25.8 million compared to approximately $4.9 million for the six months ended June 30,
2011, an increase of 526%. Cost of sales as a percent of revenue increased from 76% for the six months ended June 30, 2011 to
81% of revenue for the six months ended June 30, 2012. This increase was the result of adding Canadian shipping, and product cost
for the second quarter of 2012 that had not previously existed, and an overall increase in shipping costs. There was also a slight
increase in product damages in the six months ended June 30, 2012 compared to the six months ended June 30, 2011.
Gross Profit
Gross profit for the six months
ended June 30, 2012 was approximately $6.2 million an increase of approximately $4.6 million over the six months ended June 30,
2011, or an increase of 282%. Meanwhile the gross profit percentage decreased to approximately 19% during the six months ended
June 30, 2012 from 24% for the six months ended June 30, 2011 mainly as a result of providing deeper discounts for customer's
purchases in the second quarter of the six months ended June 30, 2012.
General and Administrative Expenses
General and administrative expenses
for the six months ended June 30, 2012, increased to approximately $8.5 million or approximately $4.0 million or 90%, compared
to the six months ended June 30, 2011. The increased sales for 2012 had corresponding increases in the general and administrative
expenses compared to the six months ended June 30, 2011, mainly for foreign transaction fees and Canadian operations, while the
general and administrative costs rose correspondingly to the increase in sales.
23
Other major increases were approximately
$1.8 million in advertising, $.9 million in increases for stock based compensation $.8 million in salaries and benefits, $.2 million
in travel, $.2 million in depreciation and $.1 million in office expenses.
Loss from Operations
The loss from operations for the
six months ended June 30, 2012 was approximately $2.4 million as compared to a loss of approximately $2.98 million for the six
months ended June 30, 2011.
Other Expenses
Other net expenses for the six months
ended June 30, 2012 were approximately $7.5 million compared to approximately $9.5 million for the six months ended June 30, 2011.
The components of other expenses are shown in the table below:
Six Months
    Ended June 30,
2012
2011
Derivative expense
(2,486,451
)
(4,057,859
)
Change in fair value of derivative liabilities
1,496,874
634,770
Loss on settlement of accounts payable and debt
(2,941,826
)
(2,542,073
)
Interest expense
(3,547,202
)
(3,502,390
)
Foreign currency transaction loss
(1,573
)
-
Other income
18,423
-
Total other expense – net
(7,461,755
)
(9,467,552
)
The decrease in this expense category
of approximately $2.0 million was mainly attributed to the changes in fair value of derivative contracts and derivative expense
approximately $2.4 million.
Net Loss
Net loss for the six months ended
June 30, 2012, was approximately $9.9 million, or $(4.92) per share compared to approximately $12.4 million or loss per share
of $(46.41) for the six months ended June 30, 2011.
Other Comprehensive Income
We recognized approximately $.014
million of other comprehensive income related to translation adjustments for transactions entered into in Canadian Dollars and
translated to U.S. Dollars for the six months ended June 30, 2012.
Year ended December 31, 2011
compared to the year ended December 31, 2010.
Year Ended
    December 31,
2011
2010
Sales – net
$
17,212,636
$
3,202,687
Cost of sales
14,845,069
2,804,274
Gross profit
2,367,567
398,413
General and administrative expenses
18,587,727
18,650,249
Loss from operations
(16,220,160
)
(18,251,836
)
Other income (expense)
(7,060,790
)
(1,317,501
)
Net income (loss)
(23,280,950
)
(19,569,337
)
Net loss per share – basic and diluted
$
(53.76
)
$
(309.18
)
Weighted average number of common shares outstanding during
    the period – basic and diluted
433,053
63,295
Revenues
Our net revenues were approximately
$17.2 million for the year ended December 31, 2011, compared approximately $3.2 million for the year ended December 31, 2010,
an increase of 531%. Sales during the year ended December 31, 2011 increased due to our increased advertising and promotion efforts,
as well as the change in our manufacturers, which provided more consistent shipments to customers. The sales increase was also
the result of the significant capital spent on marketing with distributors and marketing and brand recognition with endorsements
and sponsorships.
24
Cost of Sales
Cost of sales for the year ended
December 31, 2011 was approximately $14.8 million or 86% of revenue, compared to approximately $2.8 million or 88% of revenue
for the year ended December 31, 2010. This slight decrease was due to efficiencies from the larger scale of our operations.
General and Administrative Expenses
Operating expenses for the year
ended December 31, 2011 decreased slightly to $18.6 million, compared to $18.7 million for the year ended December 31, 2010, due
primarily to an increase in stock based compensation of approximately $3.7 million, an increase in depreciation expense of approximately
$0.2 million and an increase in travel, meetings and entertainment of approximately $0.3 million due to our increased activity,
offset by a decrease in investment advisory services of approximately $2.4 million, a decrease in research and development costs
of approximately $1.2 million and the decrease of advertising expense of $0.9 million.
Operating Loss
Operating loss for the year ended
December 31, 2011 was approximately $16.2 million, compared to approximately $18.3 million for the year ended December 31, 2010.
Interest Expense
Interest expense for the year ended
December 31, 2011 was approximately $3.7 million, compared to approximately $0.5 million for the year ended December 31, 2010,
due primarily to amortization of the debt discounts and debt issue costs in the year ended December 31, 2011 of $3.5 million and
approximately $0.2 million in interest charges incurred on our debt instruments in the year ended December 31, 2011.
Other Expenses
Other expenses for the year ended
December 31, 2011 were approximately $7.0 million, compared to approximately $1.3 million for the year ended December 31, 2010,
an increase of 538%. The $5.7 million increase in other expenses was primarily due to an increase in derivative expense of approximately
$4.7 million, an increase in interest expense of approximately $3.2 million and increases in the losses on settlement of accounts
payable of approximately $3.4 million, offset by changes in the fair value of derivative liabilities of approximately $5.3 million
and licensing income of approximately $0.2 million.
Net Loss
Net loss for the year ended December
31, 2011 was approximately $23.3 million, or $(53.76) per share, compared to the net loss of approximately $19.6 million or $(309.18)
per share, for the year ended December 31, 2010. Inflation did not have a material impact on our operations for the years ended
December 31, 2011 and 2010.
25
Liquidity and Capital Resources
The following table summarizes total
current assets, liabilities and working capital deficit at June 30, 2012, compared to December 31, 2011:
At June
    30, 2012
At December
    31, 2011
Increase/(Decrease)
(unaudited)
Current Assets
2,956,242
4,016,833
(1,060,591
)
Current Liabilities
15,624,259
17,710,100
(2,085,841
)
Working Capital (Deficit)
(12,668,017
)
(13,693,267
)
1,025,250
Our primary source of operating
cash has been through the sale of equity and the issuance of convertible secured promissory notes and other short term debt as
discussed below.
At June 30, 2012, we had cash of
approximately $.3 million and working capital deficit of approximately $12.7 million compared to cash of approximately $.7 million
and a working capital deficit of approximately $13.7 million at December 31, 2011.
Cash provided by operating activities
was approximately $.4 million for the six months ended June 30, 2012, compared to cash used in operating activities of approximately
$2.6 million for the six months ended June 30, 2011. The increase of approximately $3.0 million for the six months ended June
30, 2012, compared to the six months ended June 30, 2011, was primarily due to increased payables and deferred revenues of approximately
$1.0 million.
Cash used in investing activities
increased to approximately $.6 million from approximately $.3 million for the six months ended June 30, 2012 and 2011, due to
slightly higher spending on fixed assets. Future investments in property and equipment, as well as further development of our
Internet presence will largely depend on available capital resources.
Cash flows used in financing activities
were approximately $.3 million for the six months ended June 30, 2012, compared to cash flows provided by financing activities
of approximately $3.4 million for six months ended June 30, 2011. The approximately $3.7 million decrease was due to the approximately
$4.1 million increase in repayments of debt.
Six Months
    Ended June 30,
2012
2011
Cash Flows From Financing Activities
Proceeds from issuance of debt
$
4,073,950
$
3,648,083
Repayment of debt
(4,058,442
)
-
Debt issuance costs
(106,950
)
(204,093
)
Repurchase of common stock
(460,978
)
-
Proceeds from issuance of common stock and warrants
285,760
-
Net Cash (Used In) Provided By Financing
    Activities
$
(266,660
)
$
3,443,990
Going Concern
As reflected in the accompanying
unaudited interim consolidated financial statements, we had a net loss of approximately $9.9 million for the six months ended
June 30, 2012, and had a working capital deficit and stockholders' deficit of $12.7 million and approximately $11.0 million
at June 30, 2012 and 2011, respectively. These factors raise substantial doubt about our ability to continue as a going concern.
Our
ability to continue
our operations is dependent on management's plans, which include the raising of capital through debt and/or equity markets
with some additional funding from other traditional financing sources, including term notes, sale of aged debt to third parties
in exchange for stock, until such time that funds provided by operations are sufficient to fund working capital requirements.
We may need to incur liabilities with certain related parties to sustain our existence.
We will require additional funding
to finance the growth of our current and expected future operations as well as to achieve our strategic objectives. We believe
our current available cash along with anticipated revenues will be insufficient to meet our cash needs for the near future. There
can be no assurance that financing will be available in amounts or terms acceptable to us, if at all.
26
We anticipate that the net proceeds
from this offering will fund our operations for approximately [ ] months.
In response to these capital issues,
management has taken the following actions:
·
seeking
                                                                                                                            additional
                                                                                                                            third
                                                                                                                            party
                                                                                                                            debt
                                                                                                                            and/or
                                                                                                                            equity
                                                                                                                            financing;
·
continue
                                                                                                                            with
                                                                                                                            the
                                                                                                                            implementation
                                                                                                                            of
                                                                                                                            the
                                                                                                                            business
                                                                                                                            plan;
                                                                                                                            and
·
allocate
                                                                                                                            sufficient
                                                                                                                            resources
                                                                                                                            to
                                                                                                                            continue
                                                                                                                            with
                                                                                                                            advertising
                                                                                                                            and
                                                                                                                            marketing
                                                                                                                            efforts.
Financing
Our primary source of operating
cash has been through the sale of equity and the issuance of secured and unsecured promissory notes. We continue to explore potential
sales expansion opportunities in order to boost sales, while leveraging distribution systems to consolidate lower costs. We need
to continue to raise capital in order execute the business plan.
Off-Balance Sheet Arrangements
·
In
                                                                                                                            August
                                                                                                                            2010,
                                                                                                                            we
                                                                                                                            leased
                                                                                                                            office
                                                                                                                            space
                                                                                                                            under
                                                                                                                            a
                                                                                                                            non-cancelable
                                                                                                                            operating
                                                                                                                            lease,
                                                                                                                            expiring
                                                                                                                            in
                                                                                                                            December
                                                                                                                            2015
                                                                                                                            for
                                                                                                                            our
                                                                                                                            headquarters
                                                                                                                            in
                                                                                                                            Denver,
                                                                                                                            Colorado.
·
In
                                                                                                                            February
                                                                                                                            2012,
                                                                                                                            we
                                                                                                                            leased
                                                                                                                            office
                                                                                                                            space
                                                                                                                            under
                                                                                                                            a
                                                                                                                            non-cancelable
                                                                                                                            operating
                                                                                                                            lease,
                                                                                                                            expiring
                                                                                                                            in
                                                                                                                            February
                                                                                                                            2013
                                                                                                                            for
                                                                                                                            a
                                                                                                                            warehouse
                                                                                                                            in
                                                                                                                            Idaho.
·
In
                                                                                                                            April
                                                                                                                            2012,
                                                                                                                            we
                                                                                                                            leased
                                                                                                                            office
                                                                                                                            space
                                                                                                                            under
                                                                                                                            a
                                                                                                                            non-cancelable
                                                                                                                            operating
                                                                                                                            lease,
                                                                                                                            expiring
                                                                                                                            in
                                                                                                                            March
                                                                                                                            2012
                                                                                                                            for
                                                                                                                            an
                                                                                                                            office
                                                                                                                            in
                                                                                                                            Canada.
·
In
                                                                                                                            June
                                                                                                                            2012,
                                                                                                                            we
                                                                                                                            leased
                                                                                                                            office
                                                                                                                            space
                                                                                                                            under
                                                                                                                            a
                                                                                                                            non-cancelable
                                                                                                                            operating
                                                                                                                            lease,
                                                                                                                            beginning
                                                                                                                            in
                                                                                                                            July
                                                                                                                            2012
                                                                                                                            and
                                                                                                                            expiring
                                                                                                                            in
                                                                                                                            August
                                                                                                                            2015
                                                                                                                            for
                                                                                                                            a
                                                                                                                            Tennessee
                                                                                                                            warehouse.
Future minimum annual lease payments
for the above leases are approximately as follows:
2012 (6 months)
$
157,000
2013
375,000
2014
402,000
2015
306,000
Total minimum lease payments
$
1,240,000
Critical
Accounting Policies and Estimates
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly
from estimates.
27
Risks and Uncertainties
We operate in an industry that is
subject to rapid change and intense competition. Our operations are subject to significant risk and uncertainties including financial,
operational, technological, regulatory and other risks, including the potential risk of business failure.
Principles of Consolidation
All intercompany accounts and transactions
have been eliminated in consolidation.
Accounts Receivable and Allowance
for Doubtful Accounts
Accounts receivable represents trade
obligations from customers that are subject to normal trade collection terms. The accounts receivable are sent directly to our
third party manufacturer and netted with any outstanding liabilities to the manufacturer. Liabilities to the manufacturer totaled
approximately $2.4 million at June 30, 2012, and are included in accounts payable and accrued liabilities. We periodically evaluate
the collectability of our accounts receivable and consider the need to establish an allowance for doubtful accounts based upon
historical collection experience and specific customer information. Accordingly, the actual amounts could vary from the recorded
allowances. There is also a review of customer discounts at the period end and an accrual made for discounts earned but not yet
received by quarter end.
Fair Value of Financial Instruments
We measure assets and liabilities
at fair value based on an expected exit price which represents the amount that would be received on the sale of an asset or paid
to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be
based on assumptions that market participants would use in pricing an asset or liability. We believe the authoritative guidance
on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis
whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical
levels of inputs to measure fair value:
·
Level
                                                                                                                            1:
                                                                                                                            Observable
                                                                                                                            inputs
                                                                                                                            that
                                                                                                                            reflect
                                                                                                                            quoted
                                                                                                                            prices
                                                                                                                            (unadjusted)
                                                                                                                            for
                                                                                                                            identical
                                                                                                                            assets
                                                                                                                            or
                                                                                                                            liabilities
                                                                                                                            in
                                                                                                                            active
                                                                                                                            markets.
·
Level
                                                                                                                            2:
                                                                                                                            Inputs
                                                                                                                            reflect
                                                                                                                            quoted
                                                                                                                            prices
                                                                                                                            for
                                                                                                                            identical
                                                                                                                            assets
                                                                                                                            or
                                                                                                                            liabilities
                                                                                                                            in
                                                                                                                            markets
                                                                                                                            that
                                                                                                                            are
                                                                                                                            not
                                                                                                                            active;
                                                                                                                            quoted
                                                                                                                            prices
                                                                                                                            for
                                                                                                                            similar
                                                                                                                            assets
                                                                                                                            or
                                                                                                                            liabilities
                                                                                                                            in
                                                                                                                            active
                                                                                                                            markets;
                                                                                                                            inputs
                                                                                                                            other
                                                                                                                            than
                                                                                                                            quoted
                                                                                                                            prices
                                                                                                                            that
                                                                                                                            are
                                                                                                                            observable
                                                                                                                            for
                                                                                                                            the
                                                                                                                            assets
                                                                                                                            or
                                                                                                                            liabilities;
                                                                                                                            or
                                                                                                                            inputs
                                                                                                                            that
                                                                                                                            are
                                                                                                                            derived
                                                                                                                            principally
                                                                                                                            from
                                                                                                                            or
                                                                                                                            corroborated
                                                                                                                            by
                                                                                                                            observable
                                                                                                                            market
                                                                                                                            data
                                                                                                                            by
                                                                                                                            correlation
                                                                                                                            or
                                                                                                                            other
                                                                                                                            means.
·
Level
                                                                                                                            3:
                                                                                                                            Unobservable
                                                                                                                            inputs
                                                                                                                            reflecting
                                                                                                                            our
                                                                                                                            assumptions
                                                                                                                            incorporated
                                                                                                                            in
                                                                                                                            valuation
                                                                                                                            techniques
                                                                                                                            used
                                                                                                                            to
                                                                                                                            determine
                                                                                                                            fair
                                                                                                                            value.
                                                                                                                            These
                                                                                                                            assumptions
                                                                                                                            are
                                                                                                                            required
                                                                                                                            to
                                                                                                                            be
                                                                                                                            consistent
                                                                                                                            with
                                                                                                                            market
                                                                                                                            participant
                                                                                                                            assumptions
                                                                                                                            that
                                                                                                                            are
                                                                                                                            reasonably
                                                                                                                            available.
The following are the major categories
of liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, using quoted prices in active
markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs
(Level 3):
As of June 30, 2012
As of December 31, 2011
Derivative liabilities (Level 2)
$
7,908,860
$
7,061,238
Our financial instruments consisted
primarily of accounts receivable, prepaids, accounts payable and accrued liabilities, debt and customer deposits. Our debt approximates
fair value based upon current borrowing rates available to us for debt with similar maturities. The carrying amounts of our financial
instruments generally approximated their fair values as of June 30, 2012 and December 31, 2011, respectively, due to the short-term
nature of these instruments.
Revenue Recognition
We record revenue when all of the
following have occurred: (1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered, (3) the
sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.
28
Depending on individual customer
agreements, sales are recognized either upon shipment of products to customers or upon delivery. For all of our Canadian sales,
which represented 2.0% and 0% of sales for the six month periods ended June 30, 2012 and 2011, respectively, and for one of our
largest domestic customers, which represented 11% and 11% of our sales for the six month periods ended June 30, 2012 and 2011,
respectively, and 11% of our sales for the six months ended June 30, 2012, revenue is recognized upon delivery.
We have determined that advertising
related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 ("
Revenue Recognition"
– Customer Payments and Incentives – Implementation Guidance and Illustrations)
. The guidance indicates that,
absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and
not expensing as advertising expense.
We record store support, giveaways,
sales allowances and discounts as a direct reduction of sales.
We have an informal seven day right
of return for our products. There were nominal returns for the year ended December 31, 2011 and for the three and six months ended
June 30, 2012.
Foreign Currency
We began operations in Canada in
April 2012. The Canadian Dollar was determined to be the functional currency as the majority of the transactions related to the
day to day operations of the business are exchanged in Canadian Dollars. At the end of the period, the financial results of the
Canadian operation are translated into the United States Dollar, which is the reporting currency, and added to the U.S. operations
for consolidated company financial results. The revenue and expense items are translated using the average rate for the period
and the assets and liabilities at the end of period rate. Transactions that have completed the accounting cycle and resulted in
a gain or loss related to translation are recorded in realized gain or loss due to foreign currency translation under other income
expense on the income statement. Transactions that have not completed their accounting cycle but appear to have gain or loss due
to the translation process are recorded as unrealized gain or loss due to translation and held in the equity section on the balance
sheet until such date the accounting cycle of a transaction is complete and the actual realized gain or loss is recognized.
Accounts Receivable
We perform ongoing evaluations of
our customers' financial condition and generally do not require collateral. Our management reviews accounts receivable periodically
and reduces the carrying amount by a valuation allowance that reflects management's best estimate of amounts that may not
be collectible. Allowances, if any, for uncollectible accounts receivable are determined based upon information available and
historical experience.
Beneficial Conversion Feature
For conventional convertible debt
where the rate of conversion is below market value, we record a "beneficial conversion feature" ("BCF")
and related debt discount.
When we record a BCF, the relative
fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is
amortized to interest expense over the life of the debt.
Derivative Liabilities
Fair value accounting requires bifurcation
of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their
fair value for accounting purposes. In determining the appropriate fair value, we use the Black-Scholes option-pricing model.
In assessing the convertible debt instruments, our management determines if the convertible debt host instrument is conventional
convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered
conventional convertible debt, we continue our evaluation process of these instruments as derivative financial instruments.
Once determined, derivative liabilities
are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded
in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative
instruments such as warrants, are also valued using the Black-Scholes option-pricing model.
29
Debt Issue Costs and Debt Discount
We may pay debt issue costs, and
record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over
the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized
amounts is immediately expensed.
Original Issue Discount
For certain convertible debt issued,
we provide the debt holder with an original issue discount. The original issue discount is recorded to debt discount and additional
paid in capital at an amount not to exceed gross proceeds raised, reducing the face amount of the debt and is amortized to interest
expense over the life of the debt.
Share-Based Payments
Generally, all forms of share-based
payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their
fair value on the awards' grant date, based on estimated number of awards that are ultimately expected to vest. Share-based
compensation awards issued to non- employees for services rendered are recorded at either the fair value of the services rendered
or the fair value of the share-based payment, whichever is more readily determinable.
Recent Accounting Pronouncements
In May 2011, the Financial Accounting
Standards Board issued Accounting Standards Update ("ASU") No. 2011-04 "Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles ("GAAP") and International
Financial Reporting Standards ("IFRS"). ASU 2011-04 includes common requirements for measurement of and disclosure
about fair value between U.S. GAAP and IFRS. ASU 2011-04 requires reporting entities to disclose additional information for fair
value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU 2011-04 requires reporting entities
to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The
new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011.
30
BUSINESS
General
MusclePharm Corporation, a Nevada
corporation ("MusclePharm", the "Company", "we", "us", or "our") was
incorporated in the state of Nevada on August 4, 2006, under the name "Tone in Twenty" for the purpose of engaging
in the business of providing personal fitness training using isometric techniques. On February 18, 2010, Tone in Twenty acquired
all of the issued and outstanding equity and voting interests of Muscle Pharm, LLC, a Colorado limited liability company, in exchange
for 26,000,000 shares of its common stock. As a result of this transaction, Muscle Pharm, LLC became a wholly owned subsidiary
of Tone in Twenty, and Tone in Twenty changed its name to "MusclePharm Corporation." Our principal executive offices
are located at 4721 Ironton Street, Building A, Denver, Colorado 80239 and our telephone number is (303) 396-6100.
We develop, market and sell athlete-focused,
high quality nutritional supplements primarily to specialty resellers. Our products have been formulated to enhance active fitness
regimens, including muscle building, weight loss and maintaining general fitness. Our nutritional supplements are available for
purchase in over 10,000 U.S. retail outlets, including Dick's Sporting Goods, GNC, Vitamin Shoppe and Vitamin World. We
also sell our products to over 100 online channels, including bodybuilding.com, amazon.com, gnc.com and vitacost.com. Internationally,
our nutritional supplements are sold in approximately 110 countries, and we expect that international sales will be a significant
portion of our sales for the foreseeable future.
We started formulating our nutritional
supplements in 2008 for consumption by active individuals, high performance athletes and fitness enthusiasts. We launched our
sales and marketing programs in late 2008 through our internal sales executives and staff targeting specialty retail distributors.
We supply our nutritional supplements
to elite athletes on teams in the National Football League, Major League Baseball and the National Basketball Association, as
well as Ultimate Fighting Championship fighters. While these endorsers and professional sports teams use our products, no endorsement
by any of them as to the merits of the securities offered by this prospectus should be inferred.
Our products were created through
our six-stage process using the expertise of distinguished nutritional scientists we have retained and they are typically field
tested using a pool of several elite athletes on various teams in the National Football League, Major League Baseball and National
Basketball Association, as well as Ultimate Fighting Championship fighters. We do not directly manufacturer or ship our products
to most of our customers. Rather, we outsource our manufacturing to non-affiliated third parties who fulfill our orders and ship
product directly to our customers.
We have recently experienced significant
growth in our product sales. Our net sales for the years ended December 31, 2010 and 2011 were $3.2 million and $17.2 million,
respectively. Our net sales for the six months ended June 30, 2011 and 2012 were $6.4 million and $32.0 million, respectively.
Additionally, during the second quarter of 2012, we commenced operations in Ontario, Canada, through our subsidiary Canada MusclePharm
Enterprises Corp.
At the 2012 Bodybuilding.com Supplement
Awards, we received three Awards of Excellence; we received (i) the "Brand of the Year" award, (ii) the "Packaging
of the Year" award, and (iii) the "Pre-Workout Supplement of the Year" award for Assault
TM
.
Our headquarters in Denver, Colorado
has a state-of-the-art over 30,300 square feet medical and clinical testing department, complete with equipment for measuring
and conducting athletic clinical studies and supporting athletes. Our medical and clinical professionals consist of several nationally
recognized medical doctors and nutritional experts who oversee our product research, formulation, efficacy analysis and testing.
Recent Developments – Conversion
of Warrants into Common Stock
In late September 2012, we issued
670,364 shares of our common stock to several accredited investors pursuant to conversions of warrants to purchase an aggregate
of 946,438 shares of common stock of the Company.
31
As a result of these warrant conversions
and other extinguishments of derivative liabilities during the quarter ended September 30, 2012, our pro forma adjusted capitalization
as of June 30, 2012 reflects a decrease in stockholders' deficit from approximately $11,417,000 to approximately $6,815,000
and our derivative liabilities as of June 30, 2012 from approximately $7,909,000 to approximately $25,000. All of these stock
issuances, warrant conversions and extinguishments of derivative liabilities will be reflected in our financial statements as
of and for the three and nine months ended September 30, 2012.
Sales and Distribution
We sell our products both domestically
and internationally. Domestically, we use three distribution systems:
1.
We
                                                                                                 sell our products domestically
                                                                                                 to several distributors who operate
                                                                                                 over 100 online channels. Approximately
                                                                                                 41% of our sales in 2011 were
                                                                                                 to a domestic internet website,
                                                                                                 bodybuilding.com, a leading online
                                                                                                 retailer of sports nutrition
                                                                                                 products in the United States.
                                                                                                 As of October 18, 2012, we had
                                                                                                 the second best-selling brand
                                                                                                 on bodybuilding.com for 2012
                                                                                                 to date and had two products
                                                                                                 in top ten best sellers, and
                                                                                                 eight products in the top 50
                                                                                                 selling products out of over
                                                                                                 8,000 stock keeping units ("sku's")
                                                                                                 from over 500 companies.
2.
We
                                                                                                 sell through traditional brick
                                                                                                 and mortar stores, and our products
                                                                                                 are carried in Dick's Sporting
                                                                                                 Goods, GNC stores, Vitamin Shoppe
                                                                                                 outlets and Vitamin World retail
                                                                                                 stores.
3.
Our
                                                                                                 regional sales teams throughout
                                                                                                 the United States support our
                                                                                                 wholesale distributors such as
                                                                                                 Europa Sports Products, selling
                                                                                                 in up to 10,000 smaller domestic
                                                                                                 retail or regional stores. We
                                                                                                 also work with other distributors
                                                                                                 who have placed our products
                                                                                                 in smaller retail stores and
                                                                                                 gyms across the United States.
Internationally, we are continuing
our sales expansion in Latin America, the Middle East, Europe, Russia, and the UK, and using Sportika Export as our international
distributor that services approximately 110 countries. In addition, we recently launched a corporate partnership with a division
of Eurpac Services, Inc. to distribute our supplements to approximately 130 U.S. military bases and 360 military stores throughout
the world. We expect that international sales will represent a significant portion of our sales for 2012 and thereafter.
Our Growth Strategy
Our primary growth strategy is to:
·
increase
                                                                                                                        our product
                                                                                                                        distribution
                                                                                                                        and sales
                                                                                                                        through
                                                                                                                        increased
                                                                                                                        market
                                                                                                                        penetrations
                                                                                                                        both domestically
                                                                                                                        and internationally;
·
increase
                                                                                                                        our margins
                                                                                                                        by focusing
                                                                                                                        on streamlining
                                                                                                                        our operations
                                                                                                                        and seeking
                                                                                                                        operating
                                                                                                                        efficiencies
                                                                                                                        in all
                                                                                                                        areas
                                                                                                                        of our
                                                                                                                        operations;
·
continue
                                                                                                                        to conduct
                                                                                                                        additional
                                                                                                                        testing
                                                                                                                        of the
                                                                                                                        safety
                                                                                                                        and efficacy
                                                                                                                        of our
                                                                                                                        products
                                                                                                                        and formulate
                                                                                                                        new products;
                                                                                                                        and
·
increase
                                                                                                                        awareness
                                                                                                                        of our
                                                                                                                        products
                                                                                                                        by increasing
                                                                                                                        our marketing
                                                                                                                        and branding
                                                                                                                        opportunities
                                                                                                                        through
                                                                                                                        endorsements,
                                                                                                                        sponsorships
                                                                                                                        and brand
                                                                                                                        extensions.
Core Marketing Strategy
Our core marketing strategy is to
brand MusclePharm as the "must have" fitness brand for workout enthusiasts and elite athletes. We seek to be known
as the athlete's company, run by athletes who create their products for other athletes both professional and otherwise.
We believe that our marketing mix of endorsers, sponsorships and providing sample products for our retail resellers to use is
an optimal strategy to increase sales.
Sponsorships and Promotions
In 2011, we became the official
supplement provider and sponsor of the Ultimate Fighting Championship, or UFC. Our sponsorship includes prominent logo placement
on the fighting mat, and our branding can be seen on FOX Television Stations, FX Networks, FUEL TV and Pay-Per-View television
worldwide. The UFC fighters we sponsor feature our brand on their uniforms and we also extensively advertise at the UFC events.
32
We are also currently engaged in
various in-store promotions, including point-of-purchase stands, aisle displays in retail outlets, as well as sample demonstrations
in Dick's Sporting Goods, GNC, Vitamin World and Vitamin Shoppe.
In 2011, we launched an advanced
website in seeking to tap into the social networking world and to further our brand and consumer awareness. The information in
our website is not part of this prospectus. We have included our website address as a factual reference and do not intend it to
be an active link to our website. Also, we currently have over 250,000 fans combined between our company and executive officer
Facebook and Twitter accounts.
Industry Overview
We operate
within the large and growing U.S. nutritional supplements industry. According to Nutrition Business Journal's 2012 Supplement
Business Report, our industry generated over $30 billion in sales in 2011 and $28.1 billion in 2010, and is projected to grow
at an average annual rate of approximately 6.0% through 2020.
According to Nutrition Business
Journal, sports nutrition products represented approximately 12% of the total sales in the U.S. nutritional supplements industry
in 2011, and the category is expected to grow at a 9.1% compound annual growth rate (or CAGR) from 2012 to 2020, representing
the fastest growing product category in the nutritional supplements industry.
We believe there are several key
demographic, healthcare and lifestyle trends driving the continued growth of our industry. These trends include:
·
Increasing
                                                                                                                        awareness
                                                                                                                        of nutritional
                                                                                                                        supplements
                                                                                                                        across
                                                                                                                        major
                                                                                                                        age and
                                                                                                                        lifestyle
                                                                                                                        segments
                                                                                                                        of the
                                                                                                                        U.S. population.
                                                                                                                        We believe
                                                                                                                        that awareness
                                                                                                                        of the
                                                                                                                        benefits
                                                                                                                        of nutritional
                                                                                                                        supplements
                                                                                                                        is growing
                                                                                                                        among
                                                                                                                        active,
                                                                                                                        younger
                                                                                                                        populations,
                                                                                                                        providing
                                                                                                                        the foundation
                                                                                                                        for our
                                                                                                                        future
                                                                                                                        consumer
                                                                                                                        base.
                                                                                                                        In addition,
                                                                                                                        the average
                                                                                                                        age of
                                                                                                                        the U.S.
                                                                                                                        population
                                                                                                                        is increasing
                                                                                                                        and data
                                                                                                                        from the
                                                                                                                        United
                                                                                                                        States
                                                                                                                        Census
                                                                                                                        Bureau
                                                                                                                        indicates
                                                                                                                        that the
                                                                                                                        number
                                                                                                                        of Americans
                                                                                                                        age 65
                                                                                                                        or older
                                                                                                                        is expected
                                                                                                                        to increase
                                                                                                                        by approximately
                                                                                                                        36% from
                                                                                                                        2010 to
                                                                                                                        2020.
                                                                                                                        We believe
                                                                                                                        that these
                                                                                                                        consumers
                                                                                                                        are likely
                                                                                                                        to increasingly
                                                                                                                        use nutritional
                                                                                                                        supplements
                                                                                                                        and generally
                                                                                                                        have higher
                                                                                                                        levels
                                                                                                                        of disposable
                                                                                                                        income
                                                                                                                        to pursue
                                                                                                                        healthier
                                                                                                                        lifestyles.
·
Increased
                                                                                                                        focus
                                                                                                                        on fitness
                                                                                                                        and healthy
                                                                                                                        living.
                                                                                                                        We believe
                                                                                                                        that consumers
                                                                                                                        are trying
                                                                                                                        to lead
                                                                                                                        more active
                                                                                                                        lifestyles
                                                                                                                        and become
                                                                                                                        increasingly
                                                                                                                        focused
                                                                                                                        on healthy
                                                                                                                        living,
                                                                                                                        nutritional
                                                                                                                        and supplemental.
                                                                                                                        According
                                                                                                                        to the
                                                                                                                        Nutrition
                                                                                                                        Business
                                                                                                                        Journal's
                                                                                                                        2012 Supplement
                                                                                                                        Business
                                                                                                                        Report,
                                                                                                                        20% of
                                                                                                                        the U.S.
                                                                                                                        adult
                                                                                                                        population
                                                                                                                        (or 47
                                                                                                                        million
                                                                                                                        people)
                                                                                                                        were regular
                                                                                                                        or heavy
                                                                                                                        users
                                                                                                                        of vitamins
                                                                                                                        in 2011.
                                                                                                                        We believe
                                                                                                                        that growth
                                                                                                                        in our
                                                                                                                        industry
                                                                                                                        will continue
                                                                                                                        to be
                                                                                                                        driven
                                                                                                                        by consumers
                                                                                                                        who increasingly
                                                                                                                        embrace
                                                                                                                        health
                                                                                                                        and wellness
                                                                                                                        as an
                                                                                                                        important
                                                                                                                        part of
                                                                                                                        their
                                                                                                                        lifestyles.
Participants in our industry include
specialty retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations, online retailers, mail-order
companies and a variety of other small participants. The nutritional supplements sold through these channels are divided into
four major product categories: vitamins, minerals and health supplements; sports nutrition products; diet products; and other
wellness products. Most supermarkets, drugstores and mass merchants have narrow nutrition supplement product offerings limited
primarily to simple vitamins and herbs, with less knowledgeable sales associates than specialty retailers.
33
Our Products
We currently offer 20 athlete-focused,
high quality nutritional supplement products. None of our products are formulated to contain substances that have been the subject
of publicized health concerns by the medical community such as ephedra, androstene, androstenedione, aspartame, steroids or human
growth hormones. Our products are comprised of amino acids, herbs and proteins tested by our recognized scientists, and intended
to be safe and effective for the overall health of athletes. Moreover, our nutritional supplements are intended to enhance the
effects of workouts, repair muscles, and nourish the human body for optimal physical fitness. The following is a brief description
of our current products:
Product Name
Description and/or Intended Benefits
Amino1
TM
Hydration sports recovery drink with amino acids, coconut water powder and electrolytes
Armor-V
TM
Advanced multi-vitamin complex; multiple vitamins and minerals along with immune system support
Assault
TM
Fuel power for long-lasting energy to enhance focus and build lean muscle mass
Battle Fuel
TM
Herbal formula to increase aggression and boost testosterone
BCAA
TM
Promote muscle development and maintenance through several amino acid complexes
Bizzy Diet Stack
TM
Diet supplement stack
Bullet Proof
TM
Promote deep sleep; optimize recovery; and stimulate growth hormone/testosterone output
Casein
Slow digesting protein with added digestive enzymes and pro-biotic blend
CLA Core
TM
Support body composition, aid in weight loss and increase metabolic rates
Combat Powder
TM
High protein supplement; enhance digestion of nutrients and maximize response to intense training
Creatine
Promote strength, power and endurance
Fish Oil
Blend of nutritional oils
GetSwole Stack
TM
Lean muscle mass combined products
Glutamine
Assist in recovery time, enhance muscle growth
Hybrid N.O.
TM
Increase muscle fullness
Live Shredded Stack
TM
Support lean muscle mass maintenance
MusclePharm Musclegel
®
Protein and nutrition supplement, contains several different proteins
Re-Con
®
Promote post-workout growth and repair; replenish nutrients
MusclePharm Shred Matrix
®
Multi-level weight-loss system; increase metabolism, suppress hunger, burn fat
ZMA Max
TM
Mineral support formula to increase testosterone and support deep sleep and healthy libido function
MusclePharm Apparel
We granted an exclusive indefinite
license to market, manufacture, design and sell our existing apparel line. The licensee paid an initial fee of $250,000 in June,
2011 and will pay us a 10% net royalty based on the licensee's net income at the end of each fiscal year. As of June 30,
2012, we had not earned any royalty revenue under this licensing arrangement.
Quality in Our Products
In seeking quality in our products,
we require that before a product is brought to market, all:
·
supplements
                                                                                                                        are supported
                                                                                                                        with publicly
                                                                                                                        available
                                                                                                                        scientific
                                                                                                                        research
                                                                                                                        and references;
·
our
                                                                                                                        manufacturers
                                                                                                                        carry
                                                                                                                        applicable
                                                                                                                        manufacturing
                                                                                                                        licenses;
34
·
ingredients are combined so that their effectiveness is not impaired;
·
ingredients are in dosage levels that fall within tolerable upper intake levels established for healthy people by the Institute
of Medicine of the National Academies;
·
products do not contain any substances banned by major sporting organizations such as the World Anti-Doping Agent, or WADA,
NFL or MLB, or adulterated ingredients such as ephedra, androstenedione, aspartame, steroids or human growth hormones;
·
formulations have a minimum two-year shelf life; and
·
tablets, capsules and soft gels are designed to readily dissolve in the body to facilitate absorption.
Future Products
New products are derived from a number of sources, including
our management, trade publications, scientific and health journals, consultants and distributors. Prior to introducing new products,
we investigate product formulations as they relate to regulatory compliance and other issues. We expect to formulate between 10
to 20 new products within the next 12 to 18 months after the date of this prospectus.
Research and Development
Each of our products is the end result of a six stage process
involving recognized nutrition scientists, doctors and professional athletes. Our expenses for research and development for the
years ended December 31, 2010 and 2011, were approximately $1.3 million and $.1 million, respectively, and $.1 million for the
six months ended June 30, 2012.
Management Information, Internet and Telecommunication Systems
The ability to efficiently manage distribution, compensation,
inventory control, and communication functions through the use of sophisticated and dependable information processing systems is
critical to our success.
We continue to invest in applications and integrations to improve
and optimize business processes and to increase performance company wide.
Product Returns
We provide an informal seven day right of return for our products.
Historically, product returns as a percentage of our net sales have been nominal.
Trademarks and Patents
We regard our trademarks and other proprietary rights as valuable
assets and believe that protecting our key trademarks is crucial to our business strategy of building strong brand name recognition.
These trademarks are crucial elements of our business, and have significant value in the marketing of our products.
Our policy is to pursue registrations for all of the trademarks
associated with our products. Federally registered trademarks have a perpetual life, provided that they are maintained and renewed
on a timely basis and used correctly as trademarks, subject to the rights of third parties to attempt to cancel a trademark if
priority is claimed or there is confusion of usage. We rely on common law trademark rights to protect our unregistered trademarks.
Common law trademark rights generally are limited to the geographic area in which the trademark is actually used, while a United
States federal registration of a trademark enables the registrant to stop the unauthorized use of the trademark by any third party
anywhere in the United States. Furthermore, the protection available, if any, in foreign jurisdictions may not be as extensive
as the protection available to us in the United States.
Although we seek to ensure that we do not infringe on the intellectual
property rights of others, there can be no assurance that third parties will not assert intellectual property infringement claims
against us.
35
We have obtained U.S. registration on trademarks for 20 of our
products. We have abandoned or not pursued efforts to register marks identifying other items in our product line for various reasons
including the inability of some names to qualify for registration. We also received federal trademark registration for 20 names
or expressions that we use or intend to use to distinguish ourselves from others. All trademark registrations are protected for
an initial period of five years and then are renewable after five years if still in use and every 10 years thereafter.
We have filed for a provisional patent to protect technology
used in certain of our products, including MusclePharm Musclegel® and Re-Con®. The patent was filed in the United States
as a Patent Cooperation Treaty (PCT) application to secure patent protection worldwide. We currently expect the International Search
Report (ISR)/Written Opinion to issue in December 2012 and publication at the International Bureau in February 2013.
We also have filed for protection of various marks throughout
the world and are committed to a significant long-term strategy to build and protect the MusclePharm brand globally. The "MusclePharm"
mark is pending registration in 14 countries. The mark has been granted final trademark registration in three countries, and we
believe the remaining registrations will be granted within the next several months.
The "MP" logo has been filed and registration granted
in one country. The application for protection of the logo is expected to be filed in the near future in 26 additional countries.
Going forward, we expect to seek trademark registration for our best-selling international products.
Competition
We compete with many companies engaged in selling nutritional
supplements. The sports nutrition business is highly competitive. Most of our competitors have significantly more financial and
human resources than we do, and have operating histories longer than ours. We seek to differentiate our products and marketing
from our competitors based on our product quality, the use of sports celebrity endorsers and through our marketing program. Competition
is based primarily on quality and assortment of products, marketing support, and availability of new products. Currently, our main
competitors are three private companies: Optimum Nutrition, Inc., or Optimum, Iovate Health Sciences, Inc., or IHS, and Bio-Engineered
Supplements and Nutrition, Inc., or BSN. Optimum is a wholly owned subsidiary of Glanbia Nutritionals, Inc., an international nutritional
ingredients group. Optimum owns and operates two brands of nutritional supplements (Optimum Nutrition and American Body Building),
providing a line of products across multiple categories. IHS is a nutritional supplement company that delivers a range of products
to the nutritional marketplace. Headquartered in Oakville, Ontario, Canada, IHS's line of products can be found in major
retail stores and include such brands as Hydroxy-Cut™, Cell-Tech™, Six Star Nutrition™. BSN is also a sports
nutrition leader whose top products include No-Explode™ and Syntha Six Protein™.
The retail market for nutritional supplements is characterized
by a few dominant national companies, including GNC, Vitamin World, Vitamin Shoppe, and Great Earth Vitamin Stores. Others have
a presence within local markets, such as Vitamin Cottage in Denver, Colorado. Four companies dominate the online channel—bodybuilding.com,
vitamins.com (owned by Puritan's Pride), GNC.com and vitaminshoppe.com, the latter two having retail sales locations as well.
Major competitors in the sports nutrition and weight-loss markets
consist of companies such as EAS, Inc., Weider Nutrition International, Inc. and Twinlab Corporation, which dominate the market
with such products as Myoplex (EAS), Body Shaper (Weider) and Ripped Fuel (Twinlab).
We also compete with a number of large direct selling firms
selling nutritional, diet, health, personal care and environmental products, and numerous small competitors. The principal direct
selling competitors are Amway Corporation, Nature's Bounty, Inc., Sunrider Corporation, New Vision USA, Inc., Herbalife International
of America, Inc., USANA, Inc., and Melaleuca, Inc.
We intend to compete by aggressively marketing our brand, emphasizing
our relationships with professional athletes, and maximizing our relationships with those athletes, retail outlets and industry
publications that align with our vision.
36
Our Manufacturers
We are committed to producing and selling highly efficacious
products that are trusted for their quality and safety. To date, our products have been outsourced to a third party manufacturer
where the products are manufactured in full compliance with the current good manufacturing practice, or cGMP, standards set by
the U.S. Food and Drug Administration, or FDA.
We use four non-affiliated principal manufacturers for the components
of our products, and multiple vendors for packaging and labeling. We have an agreement in place with our primary manufacturer.
This agreement was designed to support our growth and ensure consistence in production and quality. Our primary manufacturer purchases
all needed raw materials from suppliers. Additionally, our primary manufacturer is responsible for acquisition and storage of all
product inventory (at both on and off-site facilities). We do not take title to our products until time of shipment to retailers.
The three non-primary manufacturers are governed by purchase order terms and can be terminated at any time.
Our relationship with any of our manufactures may be terminated
upon proper notice. We have established relationships with other manufacturers that we believe can satisfy our needs if our relationship
with any manufacturer terminates.
Product Delivery
All of our products are shipped by our manufacturers directly
to our retailers. Our manufacturers collect sales tax on products based upon the address of the consumer to whom products are sent
regardless of how the order is placed.
Regulatory Matters
Government Regulation and Statutes
Product Regulation
Domestic
The manufacture, packaging, labeling, advertising, promotion,
distribution and sale of our products are subject to regulation by one or more federal agencies, including the FDA, Consumer Product
Safety Commission, or CPSC, and the U.S. Department of Agriculture, or USDA. Advertising and other forms of promotion and methods
of marketing are subject to regulation primarily by the U.S. Federal Trade Commission, or FTC, which regulates these activities
under the Federal Trade Commission Act, or FTCA. The foregoing matters regarding our products are also regulated by various state
and local agencies as well as those of each foreign country to which we distribute our products.
The Dietary Supplement Health and
Education Act of 1994, or DSHEA, amended the Federal Food, Drug, and Cosmetic Act, or FFDC Act, to establish a new framework
governing
the composition, safety, labeling, manufacturing and marketing of dietary supplements.
All of the products
we market are regulated as dietary supplements under the FFDC Act.
Generally, under the FFDC Act, dietary ingredients that were
marketed in the United States prior to October 15, 1994 may be used in dietary supplements without notifying the FDA. "New"
dietary ingredients (i.e., dietary ingredients that were "not marketed in the United States before October 15, 1994")
must be the subject of a new dietary ingredient notification submitted to the FDA unless the ingredient has been "present
in the food supply as an article used for food" without being "chemically altered". A new dietary ingredient
notification must provide the FDA with evidence of a "history of use or other evidence of safety" establishing that
use of the dietary ingredient "will reasonably be expected to be safe". A new dietary ingredient notification must
be submitted to the FDA at least 75 days before it is initially marketed. The FDA may determine that a new dietary ingredient notification
does not provide an adequate basis to conclude that the ingredient is reasonably expected to be safe. Such a determination could
prevent the marketing of the dietary ingredient. The FDA recently issued draft guidance governing the notification for new dietary
ingredients. Although FDA guidance is not mandatory, and companies are free to use an alternative approach if the approach satisfies
the requirements of applicable laws and regulations, FDA guidance is a strong indication of the FDA's "current thinking"
on the topic discussed in the guidance, including its position on enforcement. At this time, it is difficult to determine whether
the draft guidance, if finalized, would have a material impact on our operations. However, if the FDA were to enforce the applicable
statutes and regulations in accordance with the draft guidance as written, this manner of enforcement could require us to incur
additional expenses, which could be significant, and negatively impact our business in several ways, including, but not limited
to, enjoining the manufacturing of our products until the FDA determines that we are in compliance and can resume manufacturing,
which could increase our liability and reduce our growth prospects.
37
The Dietary Supplement Labeling Act of 2011, which was introduced
in July 2011 (S1310), would amend the FFDC Act to, among other things, (i) require dietary supplement manufacturers to register
the dietary supplements that they manufacture with the FDA (and provide a list of the ingredients in and copies of the labels and
labeling of the supplements), (ii) mandate the FDA and the Institute of Medicine (a non-governmental, nonprofit organization that
provides advice to the public and decision makers, such as the FDA, concerning health issues) to identify dietary ingredients that
cause potentially serious adverse effects, (iii) require warning statements for dietary supplements containing potentially unsafe
ingredients and (iv) require that the FDA define the term "conventional food". If the bill is reintroduced and enacted,
it could restrict the number of dietary supplements available for sale, increase our costs, liabilities and potential penalties
associated with manufacturing and selling dietary supplements, and reduce our growth prospects.
The Dietary Supplement Safety Act (S3002) was introduced in
February 2010 and would repeal the provision of DSHEA that permits the sale of all dietary ingredients sold in dietary supplements
marketed in the United States prior to October 15, 1994, and instead permit the sale of only those dietary ingredients included
on a list of Accepted Dietary Ingredients to be issued and maintained by the FDA. The bill also would allow the FDA to: impose
a fine of twice the gross profits earned by a distributor on sales of any dietary supplement found to violate the law; require
a distributor to submit a yearly report on all non-serious adverse event reports received during the year to the FDA; and allow
the FDA to recall any dietary supplement it determines with "a reasonable probability" would cause serious adverse
health consequences or is adulterated or misbranded. The bill also would require any dietary supplement distributor to register
with the FDA and submit a list of the ingredients in and copies of the labels of its dietary supplements to the FDA and thereafter
update such disclosures yearly and submit any new dietary supplement product labels to the FDA before marketing any dietary supplement
product. If this bill is reintroduced and enacted, it could severely restrict the number of dietary supplements available for sale
and increase our costs and potential penalties associated with selling dietary supplements.
The FDA or other agencies could take actions against products
or product ingredients that in its determination present an unreasonable health risk to consumers that would make it illegal for
us to sell such products. In addition, the FDA could issue consumer warnings with respect to the products or ingredients in such
products at the point they are sold to end users. Such actions or warnings could be based on information received through FFDC
Act-mandated reporting of serious adverse events. The FDA in recent years has applied these procedures to require that consumers
be warned to stop using certain dietary supplements. For businesses that have been subjected to these regulatory actions, sales
have been reduced and the businesses have been required to pay refunds for recalled products.
In general, we seek representations and warranties, indemnification
and/or insurance from our vendors. However, even with adequate insurance and indemnification, any claims of non-compliance could
significantly damage our reputation and consumer confidence in our products. In addition, the failure of such products to comply
with applicable regulatory and legislative requirements could prevent us from marketing the products or require us to recall or
remove such products from the market, which in certain cases could materially and adversely affect our business, financial condition
and results of operations.
Under the current provisions of the
FFDC Act, there are four categories of claims that pertain to the regulation of dietary supplements. First are health claims that
describe the relationship between a nutrient or dietary ingredient and a disease or health related condition and can be made on
the labeling of dietary supplements if supported by significant scientific agreement and authorized by the FDA in advance via notice
and comment rulemaking. Second are nutrient content claims which describe the nutritional value of the product and may be made
if defined by the FDA through notice and comment rulemaking and if one serving of the product meets the definition. Third are statements
of nutritional support or product performance.
The FFDC Act permits "statements of nutritional support" to be
included in labeling for dietary supplements without FDA pre-market approval. These statements must be submitted to the FDA within
30 days of marketing and may describe how a particular dietary ingredient affects the structure, function or general well-being
of the body, or the mechanism of action by which a dietary ingredient may affect body structure, function or well-being, but may
not expressly or implicitly represent that a dietary supplement will diagnose, cure, mitigate, treat or prevent a disease. A company
that uses a statement of nutritional support in labeling must possess scientific evidence substantiating that the statement is
truthful and not misleading.
The fourth category are drug claims, representations that a product is
intended to diagnose, mitigate, treat, cure or prevent a disease, are prohibited from use in the labeling of dietary supplements,
and we make no drug claims regarding our products.
38
We may make claims for our dietary
supplement products regarding three of the four categories, that are statements of nutritional support, health claims and nutrient
content claims when authorized by the FDA, or that otherwise are allowed by law. The FDA's interpretation of what constitutes
an acceptable statement of nutritional support may change in the future, thereby requiring that we revise our labeling. These regulatory
activities include those discussed above concerning products marketed before October 15, 1994 or afterwards, and the requirements
of 75 days advance notice to the FDA before marketing products containing new dietary ingredients. There is no assurance that the
FDA will accept the evidence of safety for any new dietary ingredients that we may wish to market, and the FDA's refusal
to accept that evidence could prevent the marketing of the new dietary ingredients and dietary supplements containing a new dietary
ingredient.
If the FDA determines that a particular statement of nutritional support is an unacceptable drug claim, conventional
food claim or an unauthorized version of a "health claim", or, if the FDA determines that a particular claim is not
adequately supported by existing scientific data or is false or misleading, we would be prevented from using the claim.
In addition, DSHEA provides that so-called "third-party
literature", e.g., a reprint of a peer-reviewed scientific publication linking a particular dietary ingredient with health
benefits, may be used "in connection with the sale of a dietary supplement to consumers" without the literature being
subject to regulation as labeling. The literature: (1) must not be false or misleading; (2) may not "promote" a particular
manufacturer or brand of dietary supplement; (3) must present a balanced view of the available scientific information on the subject
matter; (4) if displayed in an establishment, must be physically separate from the dietary supplements; and (5) should not have
appended to it any information by sticker or any other method. If the literature fails to satisfy each of these requirements, we
may be prevented from disseminating such literature with our products, and any dissemination could subject our product to regulatory
action as an illegal drug.
Our dietary supplements must also comply with the Dietary Supplement
and Nonprescription Drug Consumer Protection Act, which became effective on December 22, 2007. This law amends the FFDC Act to
mandate that we report to the FDA any reports of serious adverse events that we receive. Under the law, an "adverse event"
is any health-related event associated with the use of a dietary supplement that is adverse, and a "serious adverse event"
is any adverse event that results in death, a life-threatening experience, inpatient hospitalization, a persistent or significant
disability or incapacity, or a congenital anomaly or birth defect, or requires, based on reasonable medical judgment, a medical
or surgical intervention to prevent one of these outcomes. Serious adverse event reports received through the address or phone
number on the label of a dietary supplement, as well as all follow-up reports of new medical information received within one year
after the initial report, must be submitted to the FDA no later than 15 business days after the report is received. The law also
requires recordkeeping for reports of non-serious adverse events as well as serious adverse events for six years following the
event, and these records are subject to FDA inspection.
In June 2007, pursuant to the authority granted by the FFDC
Act as amended by DSHEA, the FDA published detailed current good manufacturing practice, or cGMP, regulations that govern the manufacturing,
packaging, labeling and holding operations of dietary supplement manufacturers. The cGMP regulations, among other things, impose
significant recordkeeping requirements on manufacturers. The cGMP requirements are in effect for all manufacturers, and the FDA
is conducting inspections of dietary supplement manufacturers pursuant to these requirements. There remains considerable uncertainty
with respect to the FDA's interpretation of the regulations and their actual implementation in manufacturing facilities.
The failure of a manufacturing facility to comply with the cGMP regulations renders products manufactured in such facility "adulterated",
and subjects such products and the manufacturer to a variety of potential FDA enforcement actions.
The
FDA has also announced its intention
to promulgate new cGMPs specific to dietary supplements, to fully enforce DSHEA and monitor compliance with the Bioterrorism Act
of 2002. We intend to comply with the new cGMPs once they are adopted. The new cGMPs, predicted to be finalized shortly, would
be more detailed and stringent than the cGMPs that currently apply to dietary supplements and may, among other things, require
dietary supplements to be prepared, packaged, produced and held in compliance with regulations similar to the cGMP regulations
for drugs. There can be no assurance that, if the FDA adopts cGMP regulations for dietary supplements, we will be able to comply
with the new regulations without incurring a substantial expense.
In addition, under the Food Safety Modernization Act, or FSMA,
which was enacted on January 4, 2011, the manufacturing of dietary ingredients contained in dietary supplements will be subject
to similar or even more burdensome manufacturing requirements, which will likely increase the costs of dietary ingredients and
will subject suppliers of such ingredients to more rigorous inspections and enforcement. The FSMA will also require importers of
food, including dietary supplements and dietary ingredients, to conduct verification activities to ensure that the food they might
import meets applicable domestic requirements.
39
The FDA has broad authority to enforce the provisions of federal
law applicable to dietary supplements, including powers to issue a public warning or notice of violation letter to a company, publicize
information about illegal products, detain products intended for import, require the reporting of serious adverse events, require
a recall of illegal or unsafe products from the market, and request the Department of Justice to initiate a seizure action, an
injunction action or a criminal prosecution in the U.S. courts. The FSMA expands the reach and regulatory powers of the FDA with
respect to the production and importation of food, including dietary supplements. The expanded reach and regulatory powers include
the FDA's ability to order mandatory recalls, administratively detain domestic products, require certification of compliance
with domestic requirements for imported foods associated with safety issues and administratively revoke manufacturing facility
registrations, effectively enjoining manufacturing of dietary ingredients and dietary supplements without judicial process. The
regulation of dietary supplements may increase or become more restrictive in the future.
Our failure to comply with applicable FDA regulatory requirements
could result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions.
Our advertising of dietary supplement products is subject to
regulation by the FTC under the FTCA. Section 5 of the FTCA empowers the FTC to prohibit unfair methods of competition and unfair
or deceptive acts or practices in or affecting commerce. Section 12 of the FTCA provides that the dissemination of any false advertisement
for the purpose of inducing, directly or indirectly, the purchase of drugs or foods, which would include dietary supplements, is
an unfair or deceptive act or practice. Additionally, under the FTC's Substantiation Doctrine, an advertiser is required
to have a "reasonable basis" for all objective product claims before the claims are made. Failure to adequately substantiate
claims may also be considered an unfair or deceptive practice. Pursuant to this FTC requirement, we are required to have adequate
substantiation for all material advertising claims made for our products.
On November 18, 1998, the FTC issued "Dietary Supplements:
An Advertising Guide for Industry." This guide provides marketers of dietary supplements with guidelines for applying FTC
law to dietary supplement advertising and reiterates and explains the FTC's "reasonable basis" determination.
It includes examples of the principles that should be used when interpreting and substantiating dietary supplement advertising.
Although the guide provides additional explanation, it does not substantively change the FTC's existing policy that all supplement
marketers have an obligation to ensure that claims are presented truthfully and to verify that such claims are adequately substantiated.
The FTC has a variety of processes and remedies available to
it for enforcement, both administratively and judicially, including compulsory process, cease and desist orders and injunctions.
FTC enforcement can result in orders requiring, among other things, limits on advertising, corrective advertising, consumer redress,
divestiture of assets, rescission of contracts and such other relief as may be deemed necessary. Any violation could have a material
adverse effect on our business, financial condition and results of operations.
As a result of our efforts to comply with applicable statutes
and regulations in the United States and elsewhere, we have from time to time reformulated, eliminated or relabeled certain of
our products and revised certain advertising claims. We cannot predict the nature of any future laws, regulations, interpretations
or applications, nor can we determine what effect additional governmental regulations or administrative orders, when and if promulgated,
would have on our business in the future. They could, however, require the reformulation of certain products to meet new standards,
the recall or discontinuance of certain products not capable of reformulation, additional record keeping, expanded documentation
of the properties of certain products, expanded or different labeling, and/or scientific substantiation. Any or all of such requirements
could have a material adverse effect on our business, financial condition and results of operations.
Advertising and labeling for dietary supplements and conventional
foods are also regulated by state, county and other local governmental authorities. Some states also permit these laws to be enforced
by private attorney generals. These private attorney generals may seek relief for consumers, seek class action certifications,
seek class-wide damages, seek class-wide refunds and product recalls of products sold by us. There can be no assurance that state
and local authorities will not commence regulatory action, which could restrict the permissible scope of our product advertising
claims, or products that can be sold in the future.
Foreign
Our products which we sell or may make plans to sell in foreign
countries are also subject to regulation under various national, local and international laws that include provisions governing,
among other things, the formulation, manufacturing, packaging, labeling, advertising and distribution of dietary supplements and
over-the-counter drugs. These regulations may prevent or delay entry into the market or prevent or delay the introduction, or require
the reformulation, of certain of our products. Compliance with such foreign governmental regulations is generally the responsibility
of our distributors for those countries. These distributors are independent contractors over whom we have limited control.
40
Possible New Legislation or Regulation
Legislation may be introduced which,
if passed, would impose substantial new regulatory requirements on dietary supplements. For example, although not yet reintroduced
in this session of Congress, bills have been repeatedly proposed in past sessions of Congress which would subject the dietary ingredient
dehydroepiandrosterone, or DHEA, to the requirements of the Controlled Substances Act, which would prevent the sale of products
containing DHEA. In March 2009, the General Accounting Office, or GAO, issued a report that made four recommendations to enhance
the FDA's oversight of dietary supplements. The GAO recommended that the Secretary of the Department of Health and Human
Services direct the Commissioner of the FDA to: (1) request authority to require dietary supplement companies to identify themselves
as a dietary supplement company and update this information annually, provide a list of all dietary supplement products they sell
and a copy of the labels and update this information annually, and report all adverse events related to dietary supplements, not
just serious adverse events; (2) issue guidance to clarify when an ingredient is considered a new dietary ingredient, the evidence
needed to document the safety of new dietary ingredients, and appropriate methods for establishing ingredient identity; (3) provide
guidance to industry to clarify when products should be marketed as either dietary supplements or conventional foods formulated
with added dietary ingredients; and (4) coordinate with stakeholder groups involved in consumer outreach to identify additional
mechanisms for educating consumers about the safety, efficacy, and labeling of dietary supplements, implement these mechanisms,
and
assess their effectiveness. These recommendations could lead to increased regulation by the FDA or future legislation
concerning dietary supplements.
We cannot determine what effect additional domestic or international
governmental legislation, regulations, or administrative orders, when and if promulgated, would have on our business in the future.
New legislation or regulations may require the reformulation of certain products to meet new standards, require the recall or discontinuance
of certain products not capable of reformulation, impose additional record keeping or require expanded documentation of the properties
of certain products, expanded or different labeling or scientific substantiation.
Employees
We believe that our success will depend significantly on our
ability to identify, attract, and retain capable employees. As of October 25, 2012, we had 45 full time employees. Our employees
are not represented by any collective bargaining unit, and we believe our relations with our employees are good. We have recently
completed staffing for the in-house medical and physiology center on-site in our training facilities.
Insurance
We maintain commercial liability, including product liability
coverage, and property insurance. Our policy provides for a general liability of $1.0 million per occurrence, and $2.0 million
annual aggregate coverage which includes our main corporate facility. We carry property coverage on our main office facility to
cover our legal liability, tenant's improvements, business property, and inventory.
Properties
Our corporate headquarters is located in Denver, Colorado. This
commercial office building is 30,302 square feet and includes, a full performance training center, medical laboratory and a 96-seat
theatre room. The term of the lease is 65 months, expiring on December 31, 2015. We currently pay approximately $13,500 in lease
payments per month.
We lease an office and distribution warehouse in Boise, Idaho.
The warehouse is 6,035 square feet we pay approximately $3,500 per month in rent, expires in February 2013. We also lease a 500
square foot office space in Boise, Idaho on a month-to-month basis for $500 per month.
We lease a 152,562 square foot warehouse facility in Franklin,
Tennessee. The term of the lease is through August 31, 2015. We currently pay approximately $8,867 per month for rent.
41
Through our Ontario, Canada subsidiary, Canada MusclePharm Enterprises
Corp., we lease a 10,000 square foot office and warehouse facility in Hamilton, Ontario, Canada. The term of the lease expires
on March 31, 2013. We currently pay 6,655 in Canadian dollars (or the U.S. dollar equivalent of about $6,544) per month for rent.
Legal Proceedings
From time to time, we have become involved in various legal
proceedings that arise in the ordinary course of business or otherwise. Legal proceedings are subject to inherent uncertainties
as to timing, outcomes, costs, expenses and time expenditures by our management and others on our behalf. Although there can be
no assurance, based on information currently available, we believe that the outcome of legal proceedings that are pending or threatened
against us will not have a material effect on our financial condition. However, the outcome of any of these matters is neither
probable nor reasonably estimable.
As of October 25, 2012, we were a defendant in the following
legal proceedings, each of which we: (a) believe are without merit; and (b) intend to defend vigorously:
·
Environmental Research Center v. MusclePharm LLC, et al.
, Los Angeles Superior Court, California. Date instituted: February
4, 2011. Plaintiff Environmental Research Center ("ERC") filed notices of intent to commence litigation against over
200 sports nutrition and dietary supplement companies in the United States and Canada, including us. ERC alleges violations of
California's Proposition 65.
·
William Bossung and Bishop Equity Partners LLC v. MusclePharm Corporation
, Clark County, Nevada District Court. Date
instituted: January 17, 2012. Plaintiff alleges that additional monetary payments are due in respect of a settlement for outstanding
warrants.
As of October 25, 2012, we are a plaintiff in the following
legal matter:
·
MusclePharm Corporation v. Swole Sports Nutrition, LLC
, United States District Court for the Southern District of Florida.
Date instituted: March 15, 2012. We filed this action for trademark infringement and unfair competition against the defendant after
the defendant started marketing and selling a dietary supplement named "Turbo Shred". We have sold "Shred Matrix"
since April 2, 2008, and the mark "MusclePharm Shred Matrix" was granted registration by the USPTO on September 21,
2010.
42
MANAGEMENT
Directors, Named Executive Officers and Key Management
Personnel
The following table and text sets forth the names and ages of
all our directors, named executive officers and our key management personnel as of October 25, 2012. All of our directors serve
until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death,
retirement, resignation or removal. Named executive officers serve at the discretion of the board of directors, and are elected
or appointed to serve until the next board of directors meeting following the annual meeting of stockholders. Also provided is
a brief description of the business experience of each director, named executive officer and the key management personnel during
the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements
under the federal securities laws.
Name
Age
Position
Brad J. Pyatt
32
Co-Chairman of the Board, Chief Executive Officer and President
L. Gary Davis
59
Chief Financial Officer
John H. Bluher
55
Co-Chairman of the Board and Executive Vice President – Chief Operating Officer
Jeremy R. DeLuca
33
Executive Vice President – Chief Marketing Officer
Cory J. Gregory
34
Executive Vice President
Lawrence S. Meer
52
Treasurer
Gordon G. Burr
63
Director
James J. Greenwell
53
Director
Donald W. Prosser
62
Director
Brad J. Pyatt
has served as our Chief Executive Officer
and Director since February 18, 2010 and as our President since October 2012. Prior to our acquisition of Muscle Pharm, LLC, Mr.
Pyatt was President and Chief Executive Officer of Muscle Pharm, LLC, since its inception in April 2008. His background includes
seven years of experience as a professional athlete, and more than five years of experience in the sports nutrition arena. Mr.
Pyatt played in National Football League for the Indianapolis Colts during the 2003, 2004, and 2005 NFL seasons as well for the
Miami Dolphins during the 2006 NFL season. Mr. Pyatt played in the Arena Football League for the Colorado Crush during the 2007
and 2008 AFL seasons. Mr. Pyatt attended the University of Kentucky from 1999 to 2002, where he studied kinesiology exercise science,
as well the University of Northern Colorado, from 2002 to 2003. Mr. Pyatt filed for protection under Chapter 7 of the federal bankruptcy
laws in 2008. He received a discharge relating to the matter in 2009.
L. Gary Davis
has served as our Chief Financial Officer
since July 2012. From January, 2010 to prior to joining us, Mr. Davis worked as a certified public accountant for various clients,
specializing in mergers and acquisitions.
From November,
2004 to January, 2010, Mr. Davis served
as executive vice president and chief financial officer of Bodybuilding.com, a sports, fitness and nutritional supplement on-line
retail store. He previously was vice president and chief financial officer of U.S. Ecology Corporation. Mr. Davis has a Bachelor's
Degree in Accounting from Boise State University and is near completion of a Master's Degree in Finance from Rochester Institute
of Technology. He is a licensed certified public accountant.
43
John H. Bluher
has served as our Executive Vice President
– Chief Operating Officer since September 2011 and as Co-Chairman of our board of directors since July 2012. From February
2011 to August 2012, he served on the board of directors of Targeted Medical Pharma, Inc. From August 2010 to September 2011, he
was managing director of AFH Holdings & Advisory LLC, a business consulting company. From December 2009 to August 2010, Mr.
Bluher assisted in raising capital, marketing and co-managed Coachman Energy Funds at Caddis Capital, LLC, a private equity portfolio
focused on oil and gas investments. From February 2010 to August 2010, Mr. Bluher acted as investment banker and special financial
advisor to the AARP Mutual Fund Board of Trustees in a platform divestiture. From December 2007 to May 2009, Mr. Bluher served
as managing director and general counsel at Lehman Brothers, Inc.'s investment management division. Mr. Bluher also served
as global chief legal and compliance officer and managing director of Neuberger Berman during this period. From August 2004 to
June 2007, Mr. Bluher served as general counsel and director of risk and Janus Capital, Inc. From June 2002 to July 2004, Mr. Bluher
served as executive vice president, general counsel and corporate secretary and director of risk management of Knight Trading Group.
From January 2001 to May 2002, Mr. Bluher served as senior vice president and global chief compliance officer for Prudential Securities,
Inc. From October 1997 to January 2001, Mr. Bluher served as general counsel and chief compliance officer of Sun America, Inc.,
later AIG. From 1992 through 1997, Mr. Bluher served as Senior Vice President, Regional and Divisional Counsel at Prudential Securities,
Inc. From 1987 to 1992, Mr. Bluher was senior counsel for the Division of Enforcement at the Securities and Exchange Commission.
Mr. Bluher holds a Bachelor of Science and a J.D. degree from the University of Wyoming and holds FINRA Series 7, Series 24 and
Series 14 licenses. He has served on the boards of ICI Mutual Insurance Company, the NASDAQ Chairman's Advisory Board, Cherry
Hills Founders Group, Inc., Safe Communications, Inc., and the University of Wyoming Foundation Board, and College of Law Advisory
Board.
Jeremy R. DeLuca
has been our Senior Vice President and
Chief Marketing Officer (former President and Chief Marketing Officer) since November 2010. Prior to joining the Company, from
April 1999 to November 2010, Mr. DeLuca served as the President of Bodybuilding.com, an online sports nutrition and supplements
company, which he co-founded in 1999. There, Mr. DeLuca was actively involved in all aspects of Bodybuilding.com's business,
with a focus on marketing, sales, and e-commerce. Mr. DeLuca's responsibilities also included managing vendor relations,
marketing strategies, sales promotions, store content and store site development. During Mr. DeLuca's tenure, Bodybuilding.com
experienced significant growth, achieving annual sales of over $200 million in 2010. In August 2012, Mr. DeLuca was fined $600,000
by the FDA in connection with a plea agreement on six misdemeanor counts relating to the FDA's investigation into allegations
that Bodybuilding.com misbranded five dietary supplements.  In connection with the plea, Mr. DeLuca agreed to serve three
years' probation.
Cory J. Gregory
has served as an executive officer of
Muscle Pharm, LLC, since its inception in 2008 and our Senior Vice President (formerly Senior President) since May 2010. Prior
to joining us, Mr. Gregory served as President, managing member, and owner of T3 Personal Training LLC, or T3, from April 2009
until November 2011. T3 was a personal training service that managed and oversaw over 40 clients using seven trainers over a ten-year
period. During the same period, Mr. Gregory served as President of the Ohio Natural Bodybuilding Federation, a federation founded
by Mr. Gregory in 2004 which hosted 14 bodybuilding competitions over a six-year period. He consulted for Agile Enterprises, a
nutritional supplement company from January 2006 through January 2008. In 2004, Mr. Gregory purchased the Old School Gym, located
in Pataskala, Ohio, which he continues to own at present day.
Lawrence S. Meer
has served as our Chief Financial Officer
from July 2010 to July 3, 2012 when he became our Treasurer. Prior to becoming the Chief Financial Officer he was the Director
of Finance at Muscle Pharm, LLC from October 2009 to July 2010. His other past experience includes daily cash management and treasury
functions, including the establishment of credit and collection procedures. He previously served as President and Chief Financial
Officer in Miami, Florida, at Color It, Inc., a textile finishing business, from March 2002 to December 2008.
From January 2008 until September 2009 Mr. Meer served as an independent financial consultant where he assisted in the preparation
of business plans, budgets, forecasts and other financial areas. Mr. Meer also previously served as Executive Vice President at
Customer Assets in Denver, Colorado, an India-based call center, from 2000 to 2002. Prior to joining Customer Assets, he was Chief
Financial Officer and Chief Operating Officer at GS Sportswear in Denver, Colorado, a sportswear promotional company, from 1998
to 2000. Mr. Meer also served as Chief Financial Officer at Davis Audio-Visual, Inc., a retailer of audio-visual equipment, from
1996 to 1998; and Vice President of Finance at Pacer Cats in Englewood, Colorado, a ticketing and concession software provider
from 1991 to 1996. Mr. Meer earned a BS in accounting from the University of Colorado at Boulder.
Gordon G. Burr
has served as a director on our board
of directors since July 2012. He is the founder and president of the B-Mex/Exciting Games group, which is a group of U.S. and Mexican
companies that constructed, own and operate casinos in Mexico. Mr. Burr occupies a principal role in both corporate strategy and
in daily operations and has served as President of the B-Mex/Exciting Games group since its inception in 2005. From 2003 to 2004,
he was VP of Business Development for Pelion Systems, Inc., a software company providing manufacturing optimization software and
solutions that merged with JCIT International to form DemandPoint. Between 2001 and 2003, Mr. Burr was Manager of Business Development
for C2 Media, a corporate printing roll-up, and was involved in fundraising and later operations. Mr. Burr also serves on the board
of directors for the Colorado Honor Corps, a local division of the Tragedy Assistance Program for Survivors, which provides assistance
for persons who have lost a military loved one. Mr. Burr is also a co-founder and Vice Chairman of
Fundación Curando
a México,
a non-profit charity in Mexico partnered with Project C.U.R.E. in the U.S. to bring medical equipment, supplies,
training and other services to hospitals serving the low-income population in Mexico.
44
James J. Greenwell
has served as a director since October
15, 2012. Since 2000, he has been the Chief Executive Officer of Datria Systems Inc., a speech recognition application software
company. He has also served as the Datria Systems' Chairman since 2002. In prior employment, he served as a technology executive
in a number of private and public companies .He has served on the Board of the Cherry Creek School Foundation since September 2010.
He was a founding member of Friends of Denver Fire and served on its Board from 2007 through 2010. Mr. Greenwell served on the
Board of the Denver Chapter of the American Heart Association from 2002 through 2008 and was Chairman of the board in 2007. He
also served on the Board of Trustees of the Bonfils Blood Center Foundation from 1999 through 2003. Mr. Greenwell earned a BS from
the College of Business at Michigan State University and an MBA degree from Saint Mary's College.
Donald W. Prosser
has served as a director on our board
of directors since July 2012 and has been the principal executive officer of Arête Industries, Inc. since January 2011 and
a director of Arête since September, 2003. Arête is a voluntary filer with the SEC under the Securities Exchange Act
of 1934. Mr. Prosser owns a certified public accounting firm, Donald W. Prosser, P.C., specializing in tax services and accounting
and has represented a number of private and public companies serving in the capacity of accountant, member of boards of directors,
and as chief financial officer. From 1997 to 1999, Mr. Prosser served as CFO and Director for Chartwell International, Inc., a
public company publishing high school athletic information and providing athletic recruiting services. From 1999 to 2000, he served
as CFO and Director for Anything Internet, Inc. and from 2000 to 2001, served as CFO and Director for its successor, Inform Worldwide
Holdings, Inc., a publicly traded company. From November 2002 through June 2008, Mr. Prosser served as CFO of VCG Holding Corp.,
a public company. From July 2008 through August 2009 Mr. Prosser was chief financial officer of Iptimize, Inc., a provider of broadband
and data services that filed a petition under federal bankruptcy laws in October 2009. He also has served on the board of directors
of Veracity Management Global, Inc., a publicly traded company, since January, 2008. Mr. Prosser has been a certified public accountant
since 1975. Mr. Prosser attended the University of Colorado from 1970 to 1971 and Western State College of Colorado from 1972 to
1975, where he earned a Bachelor's Degree in Accounting and History (1973) and a Master's Degree in Accounting –
Income Taxation (1975).
Advisory Board
We have established an Advisory Board currently consisting of
nine members, which serves to advise management with respect to product formulations, product ideas, marketing and related matters.
Members of the Advisory Board do not meet on a formal or regular basis. Our management team consults with one or more members of
the Advisory Board as needed, from time to time, by means of meetings or telephone conference calls.
Following is a brief description of the background of our advisory
board members:
Dr. Eric Serrano –
Chief Formulator Medical
Advisor.
Dr. Serrano has been practicing medicine in the State of Ohio for over 22 years and is considered one of the leading
sports nutrition doctors in the country. His clients include a wide array of athletes from the NFL, NHL, and MLB, in addition to
many elite amateur athletes. Dr. Serrano was a professor of family practice medicine at Ohio State University, where he was awarded
Professor of The Year and Preceptor of The Year. Dr. Serrano currently lectures across the country to universities, medical groups
and health and fitness conferences on the topics of sports nutrition, performance enhancement, and injury prevention. He has formulated
numerous nutritional supplements for some of the leading nutritional companies on the market and also been a contributing writer
for some of the leading U.S. health and fitness magazines, including
Muscle & Fitness
. Dr. Serrano has been involved
in the formulations for each of our products. Dr. Serrano received his B.A. from Kansas State University in Biology, his M.A. from
Kansas State University in Exercise Physiology, and his M.D. from the University of Kansas Medical School.
Dr. Mauro Di Pasquale –
Director of Product
Development and Research.
Dr. Di Pasquale brings five decades of personal, clinical and university teaching and learning,
combined with leadership gained from medical directorships of important sports organizations to us. Dr. Di Pasquale has written
over a dozen books on athletic performance, focusing mainly on diet and supplementation, most notably his books,
The Anabolic
Diet
and
The Metabolic Diet
. He has received an Honors M.D., Honors B.Sc. (majoring in genetics and molecular biochemistry),
both from the University of Toronto. He has also published 1,000 articles in magazines such as
Muscle & Fitness
,
Flex
and
Powerlifting USA
.
45
Dr. Roscoe M. Moore, Jr.
– Chief Scientific
Director.
A Former U.S. Assistant Surgeon General, Dr. Moore served with the United States Department of Health and Human Services
(HHS) and was for the last 12 years of his career there the principal person responsible for global development support within
the Office of the Secretary, HHS, with primary emphasis on Continental Africa and other less developed countries of the world.
He was the principal liaison person between the HHS and Ministries of Health in Africa with regard to the development of infrastructure
and technical support for the delivery of preventive and curative health needs for the continent. Dr. Moore received his undergraduate
and Doctor of Veterinary Medicine degrees from Tuskegee Institute; his Master of Public Health degree in Epidemiology from the
University of Michigan; and his Doctor of Philosophy degree in Epidemiology from the Johns Hopkins University. He was awarded the
Doctor of Science degree (Honoris Causa) in recognition of his distinguished public health career by Tuskegee University. Dr. Moore
was a career officer within the Commissioned Corps of the United States Public Health Service (USPHS) entering with the U.S. National
Institutes of Health and rising to the rank of Assistant United States Surgeon General (Rear Admiral, USPHS) within the Immediate
Office of the Secretary, HHS. He was selected as Chief Veterinary Medical Officer, USPHS, by Surgeon General C. Everett Koop.
Dr. Richard Ogden (CSCS)
– Medical Advisor.
Dr. Odgen's career in clinical research and development spans nearly 40 years. After earning a Ph.D. from Cambridge University,
his career started with postdoctoral research studying ribonucleic acid transcription and processing. Following that, he undertook
independent research, funded by the National Science Foundation. In 1984, he joined Agouron Pharmaceuticals, Inc. as one of its
founding scientists. Following Agouron's merger with Pfizer, he served as a Senior Director and was the scientific liaison
for the Agouron/Pfizer commercial and corporate organizations. In 2006, Dr. Ogden, co-founded RORR Inc., a medical, scientific
consulting and education company with clients in the U.S. and Europe. In addition to publication in numerous medical journals,
he is co-editor of two books relating to AIDS therapy.
Dr. Michael R. Stevens
– Director of
Therapeutic Nutrition.
Dr. Stevens has over 20 years of well-diversified experience in the healthcare and pharmaceutical industry.
Dr. Stevens spent 17 years at Bristol-Myers Squibb, where he held positions of increasing responsibility in the areas of Market
Research (Oncology and HIV), Marketing (Oncology), and Medical Affairs (HIV). In addition served as a member of the Executive Council
for the Forum for Collaborative HIV Research — a public-private partnership facilitating discussion on emerging issues in
HIV clinical research and working to translate research results into patient care. He has also served on 15 Protocol Committees
within the Adult AIDS Clinical Trials Group (ACTG). Michael received his B.S. Pharmacy and Doctor of Pharmacy degrees from Purdue
University.
Dr. Ron Sekura –
Director of Therapeutic
Research.
Dr. Sekura is the former Chief of the Pharmaceutical and Regulatory Affairs Branch of the Division of AIDS at The
National Institute of Allergy and Infectious Diseases (NIAID) of the National Institute of Health (NIH) as well as a former Research
Chemist at The National Institutes of Child Health and Human Development (NICHD) at the NIH and the Center for Biologics Evaluation
and Research (CBER). He received his Bachelor of Science and Master of Science in Biochemistry degrees at Pennsylvania State University
and his PhD at Cornell University. Dr. Sekura is the author of over 60 scientific publications.
Mariel Selbovitz
– Director of Global
Therapeutics Product Procurement Development.
Ms. Selbovitz is a graduate of Cornell University and received her Master's
in Public Health at the Johns Hopkins University Bloomberg School of Health. She worked as the Client Intake Specialist at Positive
Health Project and Syringe Exchange Program Coordinator at the Foundation for Research on Sexually Transmitted Diseases and is
a partner in BioEquity Partners. Selbovitz is a member of the Cornell AIDS Clinical Trials Group Community Advisory Board and AIDS
Treatment Advocacy Coalition.
James Sapirstein, R.Ph., MBA
– Strategic Advisor.
Mr. Sapirstein has been the Chief Executive Officer of Alliqua Inc. since October 2012. He was the
President and Chief Executive Officer of Tobira Therapeutics, Inc., or Tobira, from August 2007 through April 2011 and founded
Tobira in October 2006. Prior to Tobira, Mr. Sapirstein worked at Paramount BioCapital from May 2005 to September 2006 in the company
creation group. Mr. Sapirstein was the Executive Vice President of the Metabolic and Endocrinology Business Unit from 2002 through
April 2005. Mr. Sapirstein was the Director of Global Marketing at Gilead Sciences from July 2000 through May 2002, where he was
responsible for the global launch of Viread
®
. He was the head of the international infectious disease marketing
teams during his time at Bristol-Myers Squibb from August 1996 to July 2000. Mr. Sapirstein was with Hoffmann-LaRoche from October
1987 to July 1996, where he worked in a variety of capacities ranging from marketing and sales positions to international posts.
Prior to working at Hoffmann LaRoche, he worked at Eli Lilly and Company in a sales capacity from June 1984 to October 1987. Mr.
Sapirstein earned his Bachelor of Science in Pharmacy from the Ernest Mario School of Pharmacy at Rutgers University and an MBA
from Farleigh Dickinson University.
Michael Kim, D.O.
– Executive Director of Medicine,
Research and Education.
Dr. Kim has been our Executive Director of Medicine, Research and Education since August 2011. He oversees
our research. He analyzes formulations, research protocols and strength and performance protocols. He also advises our athlete
endorsers regarding nutrient, diet and supplementation. He received a B.A. in Economics from University of California – Davis,
and a Doctor of Osteopathy degree from Touro University.
46
Corporate Governance
Director Independence
Each director and named executive officer is obligated to disclose,
on an annual basis, any transactions with our Company and any of its subsidiaries in which a director or executive officer, or
any member of his or her immediate family, have a direct or indirect material interest. Following completion of these disclosures,
our board of directors make a determination as to the independence of each director using the current standards for "independence"
that satisfy both the criteria for the NASDAQ Stock Market and the NYSE MKT.
As of October 15, 2012, our board of directors conducted an
annual review and affirmatively determined that Messrs. Prosser and Greenwell are "independent" as that term is defined
in the NASDAQ listing standards.
Committees of the Board
The following table sets forth the three standing committees
of our board and the members of each committee as of October 25, 2012:
Director
Board
Audit
Committee
Compensation
Committee
Nominating and Corporate
Governance Committee
Brad J. Pyatt
Co-Chair
John H. Bluher
Co-Chair
Gordon G. Burr
X
X
James J. Greenwell
X
X
Chair
X
Donald W. Prosser
X
Chair*
X
Chair
*
Audit Committee Financial Expert.
To assist it in carrying out its duties, the board has delegated
certain authority to an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee as the functions
of each are described below.
Audit Committee
Messrs. Prosser and Greenwell serve on our Audit Committee.
Our Audit Committee's main function is to oversee our accounting and financial reporting processes, internal systems of control,
independent auditor relationships and the audits of our financial statements. The Audit Committee's responsibilities include:
·
selecting, hiring, and compensating our independent auditors;
·
evaluating the qualifications, independence and performance of our independent auditors;
·
overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements
as they relate to financial statements or accounting matters;
·
approving the audit and non-audit services to be performed by our independent auditor;
·
reviewing with the independent auditor the design, implementation, adequacy and effectiveness of our internal controls and
our critical accounting policies; and
·
preparing the report that the SEC requires in our annual proxy statement.
The board of directors has adopted an Audit Committee Charter.
The Audit Committee members meet NASDAQ's financial literacy requirements, and the board has further determined that Mr. Prosser
(i) is an "audit committee financial expert" as such term is defined in Item 407(d) of Regulation S-K
promulgated by the SEC and (ii) also meets NASDAQ's financial sophistication requirements.
47
Compensation Committee
Messrs. Burr, Greenwell and Prosser serve on the Compensation
Committee. Our Compensation Committee's main functions are assisting our board of directors in discharging its responsibilities
relating to the compensation of outside directors, the Chief Executive Officer and other executive officers, as well as administering
any stock incentive plans we may adopt. The Compensation Committee's responsibilities include the following:
·
reviewing and recommending to our board of directors the compensation of our Chief Executive Officer and other executive officers,
and the outside directors;
·
conducting a performance review of our Chief Executive Officer;
·
reviewing our compensation policies; and
·
if required, preparing the report of the Compensation Committee for inclusion in our annual proxy statement.
The board of directors has adopted a Compensation Committee
Charter.
The Compensation Committee's policy is to offer our executive
officers competitive compensation packages that will permit us to attract and retain highly qualified individuals and to motivate
and reward these individuals in an appropriate fashion aligned with the long-term interests of our Company and our stockholders.
Compensation Committee Risk Assessment
.
We have
assessed our compensation programs and concluded that our compensation practices do not create risks that are reasonably likely
to have a material adverse effect on us.
Nominating and Corporate Governance Committee
Messrs. Prosser and Greenwell serve on our Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance Committee's responsibilities include:
·
identify qualified
individuals
to serve as members of the Company's
board of directors;
·
review the qualifications
and
performance of incumbent directors;
·
review and consider
candidates
who may be suggested by any director
or executive officer or by any stockholder of the Company;
·
review considerations
relating
to board composition, including
size of the board, term and age limits, and the criteria for membership on the board;
·
review periodically the
management
succession plan of;
·
review and recommend
corporate
governance policies; and
·
monitor, oversee and
review
compliance with the Company's
code of ethics.
The board of directors has adopted a Nominating and Corporate
Governance Committee Charter.
48
EXECUTIVE COMPENSATION
Summary Compensation Table for 2011
The following summary compensation tables sets forth all compensation
awarded to, earned by, or paid to each person serving as a named executive officer of the Company during the year ended December
31, 2011.
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock Awards
(1)
($)
Option Awards
(1)
($)
All Other
Compensation
($)
Total
($)
Brad J. Pyatt
2011
250,000
140,099
(2)
1,400,995
(2)
                                                                                                                                                                                       (3)
-
4,308
(15)
1,795,402
Chief Executive Officer
2010
194,821
-
2,650,000
(4)
-
-
2,844,821
2009
133,992
-
-
-
-
133,992
Cory J. Gregory
2011
150,000
140,099
(5)
1,400,995
(5)
                                                                                                                                                                (6)
-
-
1,691,094
Executive Vice President
2010
78,892
-
2,650,000
(7)
-
-
2,728,892
2009
17,846
-
-
-
-
17,846
Lawrence S. Meer
2011
74,400
-
-
-
-
74,400
Chief Financial Officer
2010
75,493
-
-
228,000
(8)
-
303,493
Leonard K. Armenta
(9)
2011
86,400
-
-
-
-
86,400
Former Executive Vice President
2010
83,215
-
-
228,000
(8)
-
311,215
2009
54,799
-
-
-
-
54,799
Jeremy R. DeLuca
2011
65,833
(10)
140,099
(11)
1,400,995
(12)
-
-
1,606,927
Executive Vice President and CMO
John H. Bluher
2011
36,458
(13)
50,000
(14)
-
-
-
86,458
Executive Vice President and COO
(1)
Amounts reflect the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718. The grant date fair value of each stock award is measured based on the closing price of our common stock on the date of grant.
(2)
The amounts reflect the amount that was returned to the Company as a result of restated revenues for the years ended December 31, 2011 and 2010. Subsequent to the filing of our amended Annual Report on Form 10-K/A filed on July 9, 2012, which restated our revenue for the years ended December 31, 2011 and 2010, Mr. Pyatt voluntarily agreed to return (i) $30,311 of his cash bonus and (ii) $303,109 worth of his stock bonus (equal to a total of 40,550 shares of common stock).
(3)
Mr. Pyatt received a stock award of $1,704,104, equal to 227,974 shares of common stock, at a price per share of $7.48, which was the closing price of our common stock on January 27, 2012, the date of grant.
(4)
Mr. Pyatt received a stock award of 7,692 shares of common stock at a price per share of $344.50, which was the closing price of our common stock on October 18, 2010, the date of grant.
(5)
The amounts reflect the amount that was returned to the Company as a result of restated revenues for the years ended December 31, 2011 and 2010. Subsequent to the filing of our amended Annual Report on Form 10-K/A filed on July 9, 2012, which restated our revenue for the years ended December 31, 2011 and 2010, Mr. Gregory voluntarily agreed to return (i) $30,311 of his cash bonus and (ii) $303,109 worth of his stock bonus (equal to a total of 40,550 shares of common stock).
(6)
Mr. Gregory received a stock award of $1,704,104, equal to 227,974 shares of common stock, at a price per share of $7.48, which was the closing price of our common stock on January 27, 2012, the date of grant.
(7)
Mr. Gregory received a stock award of 7,692 shares of common stock at a price per share of $344.50, which was the closing price of our common stock on October 18, 2010, the date of grant.
(8)
Represents options exercisable for 1,538 shares of common stock, valued on the date of grant, April 2, 2010. For a discussion of the valuation assumptions used, see Note 9 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2010.
(9)
Mr. Armenta resigned from his position as our Executive Vice President on September 16, 2011.
(10)
This figure is based on a pro-rated annual salary of $125,000.
(11)
The amounts reflect the amount that was returned to the Company as a result of restated revenues for the years ended December 31, 2011 and 2010. Subsequent to the filing of our amended Annual Report on Form 10-K/A filed on July 9, 2012, which restated our revenue for the years ended December 31, 2011 and 2010, Mr. DeLuca voluntarily agreed to return (i) $30,311 of his cash bonus (which had not yet been paid to him) and (ii) $303,109 worth of his stock bonus (equal to a total of 40,550 shares of common stock).
(12)
Mr. DeLuca received a stock award of $1,704,104, equal to 227,974 shares of common stock, at a price per share of $7.48, which was the closing price of our common stock on January 27, 2012, the date of grant.
(13)
This figure is based on a pro-rated annual salary of $175,000.
(14)
Mr. Bluher received this bonus pursuant to the terms of his employment agreement.
(15)
Amount represents private golf club membership dues of $4,308 for 2011.
49
Outstanding Equity Awards at 2011 Fiscal Year-End
None of our named executive officers other than Mr. Meer had
outstanding equity awards at December 31, 2011. At December 31, 2011, Mr. Meer had options (granted on April 2, 2010) to purchase
1,538 shares of our common stock at an exercise price of $325.00 per share, which expire April 2, 2015.
Recent Changes to Employment Arrangements
On October 18, 2012, the Compensation Committee approved 2012
target bonuses for its executive officers, including its principal executive officer, principal financial officer and other named
executive officers as follows:
Executive Officer
2012 Target Bonuses (gross)
Brad J. Pyatt
$
160,000
John H. Bluher
$
130,000
Cory J. Gregory
$
130,000
Jeremy R. DeLuca
$
130,000
L. Gary Davis
$
75,000
Also, on October 18, 2012, the Company entered into amended
and restated employment agreements (except for Mr. Davis, which was an initial employment agreement) with the following executive
officers of the Company, which include its principal executive officer, principal financial officer and other named executive officers:
Name
Position
Brad J. Pyatt
Chief Executive Officer and President
L. Gary Davis
Chief Financial Officer
John H. Bluher
Executive Vice President – Chief Operating Officer
Jeremy R. DeLuca
Executive Vice President – Chief Marketing Officer
Cory J. Gregory
Executive Vice President
The employment agreements were executed based upon a form employment
agreement approved by the Compensation Committee of the board. The employment agreements are for an initial term ending December
31, 2014. However, the employment agreements entered into with Mr. Pyatt and Mr. DeLuca provide for an initial term ending December
31, 2015.
Under the terms of the employment agreements, each officer will
receive an annual base salary in the amount set forth below, subject to any increase the Compensation Committee may deem appropriate
from time to time.
Name
Annual Base Salary
Brad J. Pyatt
$350,000
L. Gary Davis
$130,000 ($200,000 beginning January 1, 2013)
John H. Bluher
$300,000
Jeremy R. DeLuca
$175,000 ($320,000 beginning January 1, 2013)
Cory J. Gregory
$212,000
In addition, the officers will be eligible to receive one or
more annual cash bonuses and grants of stock options, restricted stock or other equity-related awards from the Company's
various equity compensation plans, as determined by the Compensation Committee.
If the employment of an officer is terminated due to the officer's
death or inability to perform, the employment agreements provide for payment to the officer of any unpaid portion of the Officer's
base salary and benefits accrued through the date of death or inability to perform and, at the discretion of the Compensation Committee,
a bonus. The officer or his representatives will also be entitled to receive a reimbursement of up to 12 months of Consolidated
Omnibus Reconciliation Act, or COBRA, premiums, if the officer or his representatives timely elect and remain eligible for COBRA.
If the officer's employment is terminated due to inability to perform, the officer will also be entitled to (i) a lump sum
payment equal to the greater of (A) the target bonus payable to the Officer for the year in which the date of termination
occurs or if no target bonus has been set, the officer's most recent annual bonus, and (B) a bonus for such year as may be
determined by the Compensation Committee in its sole discretion; and (ii) a severance payment (payable over six months) equal to
six months of the officer's base salary in effect as of the date of termination.
50
If the officer's employment is terminated for "cause"
or if an Officer terminates his employment without "good reason" (as such terms are defined in the employment agreement),
the officer will not be entitled to a severance payment or any other termination benefits. However, the Company will pay the officer
any unpaid portion of the officer's base salary and benefits accrued through the date of such termination.
Upon a termination of an officer's employment (except
for Mr. Pyatt) by the Company without cause and without a change in control or by the officer for good reason without a change
in control, the employment agreements provide that such officer will be entitled to (i) any unpaid portion of the officer's
base salary and benefits accrued through the date of termination; (ii) an amount payable over three months and equal to the lesser
of (A) nine months of the officer's base salary in effect as of the date of termination, or (B) the officer's base
salary remaining under the term of his employment agreement; (iii) a lump sum payment equal to 25% of the officer's target
bonus (or if no target bonus has been set, the Officer's most recent annual bonus) if the termination is between January
1 and June 30 or 50% of the Officer's target bonus (or if no target bonus has been set, the Officer's most recent annual
bonus) if the termination is between July 1 and December 31; (iv) acceleration of the officer's outstanding equity awards,
unless otherwise provided in the equity award agreement for a particular equity award; and (v) the officer will also be entitled
to receive a reimbursement of up to 12 months of COBRA premiums, if the officer timely elects and remains eligible for COBRA.
Upon a termination of Mr. Pyatt's employment by the Company
without cause and without a change in control or by Mr. Pyatt for good reason without a change in control, Mr. Pyatt's employment
agreement provides that he will be entitled to (i) any unpaid portion of his base salary and benefits accrued through the date
of termination; (ii) an amount payable over three months and equal to two times his base salary on the date of termination; (iii)
a lump sum payment equal to the greater of (A) two times his target bonus for the for the year in which the date of termination
occurs or if no target bonus has been set, then two times Mr. Pyatt's most recent annual bonus, and (B) a bonus for such
year as may be determined by the Compensation Committee in its sole discretion; (iv) acceleration of his outstanding equity
awards, unless otherwise provided in the equity award agreement for a particular equity award; and (v) he will also be entitled
to receive a reimbursement of up to 12 months of COBRA premiums, if he timely elects and remains eligible for COBRA.
Upon a termination of an officer's employment (except
for Mr. Pyatt) by the Company without cause and with a change in control or by the officer for good reason after a change in control,
the employment agreement provides that such officer will be entitled to (i) any unpaid portion of the officer's base salary
and benefits accrued through the date of termination; (ii) a severance payment (payable over 12 months) equal to 12 months of the
officer's base salary in effect as of the date of termination; (iii) a lump sum payment equal to the greater of (A) 100%
of the officer's target bonus in the year of termination
or if no target bonus has been
set, then 100% of the officer's most recent annual bonus, and (B) a bonus for such year as may be determined by the Committee
in its sole discretion; (iv) a severance payment of $500,000 (payable within 30 days of the date of termination); (v) acceleration
of the officer's outstanding equity awards; and (vi) the officer will also be entitled to receive a reimbursement of up to
12 months of COBRA premiums, if the officer timely elects and remains eligible for COBRA.
Upon a termination of Mr. Pyatt's employment by the Company
without cause and with a change in control or by Mr. Pyatt for good reason after a change in control, Mr. Pyatt's employment
agreement provides that he will be entitled to (i) any unpaid portion of his base salary and benefits accrued through the date
of termination; (ii) a severance payment (payable over 12 months) equal to three times his base salary in effect as of the date
of termination; (iii) a severance payment of $2 million (payable within 30 days of the date of termination); (v) acceleration
of Mr. Pyatt's outstanding equity awards; and (vi) he will also be entitled to receive a reimbursement of up to 12 months
of COBRA premiums, if he timely elects and remains eligible for COBRA.
The employment agreements also contain customary confidentiality,
non-competition and non-solicitation provisions. Under the non-compete provisions, during the term of his employment agreement
and for a period of six months after termination of employment, the officer is prohibited from, directly or indirectly, engaging
in or becoming interested financially in, as a principal, employee, partner, contractor, shareholder, agent, manager, owner, advisor,
lender, guarantor, officer or director, any business that is engaged in the nutritional supplement industry and/or related products,
subject to certain exceptions for passive investments.
51
Additionally, the non-solicitation provisions of the employment
agreements prohibit the officer from soliciting for employment any employee of the Company or any person who was an employee of
the Company in the 90-day period before such solicitation. This prohibition applies during the officer's employment with
the Company and for 12 months following the termination of the officer's employment.
Change in Control Payments
The Employment Agreements referenced in
the above provide for payments upon termination or employment after a change in control in certain situations.
52
DIRECTOR COMPENSATION
Director Compensation in 2011
No compensation was paid to our directors in 2011 or 2010.
2012 Non-Employee Director Compensation Program
In October 2012, our board of directors adopted a non-employee
director compensation program. Directors who are employees of the Company receive no additional compensation for their services
as directors. Non-employee directors are compensated for their service on our board of directors as described below. The following
table describes the components of compensation for non-employee directors in effect beginning October 2012:
Compensation Element
2012 Compensation Program ($)
Annual Cash Retainer
20,000
Annual Equity Retainer Award
30,000
Board Meeting Fees
1,000
Audit Committee Chair Committee Meeting Fee
1,000
New Director Fee (one-time equity grant)
2,000
Annual Cash Retainer and Meeting Fees
.
Beginning
in October 2012, each non-employee director who continues to serve as a director will receive an annual cash retainer fee of $20,000
per year, pro rata for service less than one year. Non-employee directors will also receive $1,000 per meeting attended for all
in-person and telephonic meetings of the Board subject to a $6,000 per-year cap on meeting fees. Further, the Audit Committee Chair
will receive $1,000 per Audit Committee meeting.
Annual Equity Retainer Award.
Beginning in January
2013 and pro-rata for the fourth quarter of 2012, each non-employee director will receive $30,000 of the annual board retainer
fee in the form of restricted common stock with the number of shares of restricted common stock determined by dividing that dollar
amount by the closing price of our common stock on the date of grant. These shares restricted common stock will vest in four equal
quarterly installments. The restricted common stock awards will be forfeitable during that vesting period, though directors who
leave the board during the year will receive any vested restricted common stock.
New Director Fee (one-time equity grant).
Beginning
in October 2012, each non-employee director will receive a one-time equity grant of restricted common stock with a value of approximately
$2,000 with the number of shares of restricted common stock determined by dividing that dollar amount by the closing price of our
common stock on the date of grant. These shares restricted common stock will be fully vested upon grant.
Compensation Committee Interlocks and Insider Participation
Our board of directors did not have a compensation committee
during the year ended December 31, 2011. Our two directors during the year ended December 31, 2011 were Brad J. Pyatt and Cory
J. Gregory, both of whom were also executive officers of the Company and determined the compensation for our executive officers.
None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one
or more of its executive officers serving as a member of our board of directors or Compensation Committee.
53
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information known to MusclePharm
with respect to the beneficial ownership of our common stock, $0.001 par value per share, as of October 25, 2012, unless otherwise
noted, by:
·
each stockholder known to MusclePharm to own beneficially more than 5% of MusclePharm's common stock;
·
each of MusclePharm's directors;
·
each of MusclePharm's named executive officers; and
·
all of MusclePharm's current directors and named executive officers as a group.
We have determined beneficial ownership in accordance with the
rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons
and entities named in the table below have sole voting and investment power with respect to all shares of common stock or Series
B Preferred Stock that they beneficially own, subject to applicable community property laws.
Applicable percentage ownership is based on 3,527,178 shares
of common stock (which reflects the 1-for-650 reverse stock split that we intend to effect prior to the offering these securities)
and 51 shares of Series B Preferred Stock outstanding at October 25, 2012. For purposes of computing total voting percentage, each
share of Series B Preferred Stock has 71,980.13 votes, resulting in total outstanding shares for purposes of calculating voting
percentages of 7,198,164. Except as set forth below, the address of the beneficial owner listed in the table below is c/o MusclePharm
Corporation, 4721 Ironton Street, Building A, Denver, Colorado 80239.
Shares Beneficially
    Owned
Common Stock
(1)
Series B Preferred
    Stock
(1)
Name of Beneficial Owner
Shares
%
(2)
Shares
%
(3)
Total Voting %
(4)
Named Executive Officers:
Brad J. Pyatt
216,316
6.1
%
31
60.78
%
34.0
%
L. Gary Davis
96
*
-
-
*
John H. Bluher
25,616
*
-
-
*
Jeremy R. DeLuca
187,424
5.3
%
-
-
2.6
%
Cory J. Gregory
203,552
5.8
%
20
39.22
%
22.8
%
Lawrence S. Meer
0
*
-
-
*
Non-Employee Directors:
Gordon G. Burr
(5)
133,200
3.8
%
-
-
1.9
%
James J. Greenwell
0
*
-
-
*
Donald W. Prosser
0
*
-
-
*
Officers and Directors as a Group (nine persons):
766,202
21.7
%
51
100
%
61.6
%
*
Represents less than one percent.
(1)
This column lists beneficial ownership of voting securities as calculated under SEC rules. Otherwise, except to the extent noted below, each director, named executive officer or entity has sole voting and investment power over the shares reported. The shares are not subject to any pledge. Standard brokerage accounts may include nonnegotiable provisions regarding set-offs or similar rights.
(2)
Percent of class based on 3,527,178 shares of common stock outstanding as of October 25, 2012. This percentage does not include preferred stock ownership and reflects the 1-for-650 reverse stock split that we intend to effect prior to the offering of these securities.
(3)
Percent of Series B Preferred Stock based on 51 shares of Series B Preferred Stock outstanding as of October 25, 2012.
(4)
Percentage of total voting power represents voting power with respect to all shares of our common stock and Series B Preferred Stock voting together as a single class. The holders of our Series B Preferred Stock are entitled to 71,980.13 votes per share, and holders of our common stock are entitled to one vote per share. For more information about the voting rights of our common stock and our Series B Preferred Stock, see "Description of Securities—Common Stock" and Description of Securities—Preferred Stock."
(5)
The common stock is held in the name of El Chichon Partners, LLC, a Colorado limited liability company ("El Chichon"). Mr. Burr is the manager of El Chichon, and as such, holds sole dispositive voting power over such securities. The address of El Chichon is 5031 S. Ulster Street, Denver, Colorado 80237.
54
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
In addition to the named executive officer and director compensation
arrangements discussed in "Executive Compensation", below we describe transactions since January 1, 2011, to which
we have been a participant, in which the amount involved in the transaction exceeds or will exceed $120,000 and in which any of
our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person
sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
Consulting Agreements
On November 23, 2011, we entered into a
consulting agreement with El Chichon Partners, LLC and Gordon G. Burr, prior to Mr. Burr becoming a director of the Company.
The consulting agreement provides that Mr. Burr will identify potential financing sources for us. The amount paid under
this agreement in the year ended December 31, 2011 was $200,000, which was paid in the form of a warrant issued in the
name of El Chichon Partners, LLC and exercisable for 153,846 shares of common stock at an exercise price of $7.80 per share of
common stock. Further, this agreement was amended on April 20, 2012 and added an additional warrant exercisable for 46,154
shares of common stock at an exercise price of $9.75 per share of common stock. Each warrant issued in the
name of El Chichon Partners, LLC and has a lock-up of one year after
exercise thereof. The shares of common stock underlying each warrant have demand registration rights after 12 months and
piggy-back registration rights.
On July 12, 2012, we entered into a consulting agreement with
Melechdavid, Inc. ("Melechdavid"), an affiliate of Mark E. Groussman, prior to Mr. Groussman becoming a director of
the Company. The consulting agreement provides that Melechdavid will provide consulting services to us related to strategic acquisitions,
capital restructuring and Mr. Groussman will serve as a member of the board of directors. Mr. Groussman was appointed to our board
of directors on July 19, 2012, and resigned from our board effective October 18, 2012. The consulting agreement provides that we
will issue to Melechdavid shares of common stock in an amount equal to 4.20% of our outstanding common stock on a fully diluted
(as-converted) basis and after giving effect to our contemplated reverse stock split and the financing that occurred in July 2012.
The term of the consulting agreement is 12 months.
Indemnification Agreements
We have entered into indemnification agreements with each of
our directors and named executive officers. The indemnification agreements and our bylaws will require us to indemnify our directors
to the fullest extent permitted by Nevada law.
Share Exchange / Common Stock Issuances
Muscle Pharm, LLC was formed as a Colorado limited liability
company on April 22, 2008. The initial owners of Muscle Pharm, LLC were Brad J. Pyatt and Cory J. Gregory. Mr. Pyatt received a
60% membership interest in exchange for his contribution of formulations for potential products, contacts with GNC Canada and other
potential customers, and contacts with professional athletes. Mr. Gregory received a 40% membership interest in exchange for his
contacts with Dr. Serrano, Louie Simmons, potential distributors, professional athletes and potential investors. Neither Mr. Pyatt
nor Mr. Gregory contributed any cash and no value was placed on their respective contributions.
On February 18, 2010, we issued a total of 40,000 shares of
our common stock to the 12 former owners of Muscle Pharm, LLC and of that amount Brad J. Pyatt received 20,000 shares of common
stock and Cory J. Gregory received 10,000 shares of common stock.
Named Executive Officer Loan to the Company
On November 18, 2010, Brad J. Pyatt, loaned the Company $100,000
and received an 8% Convertible Promissory Note in exchange. On November 23, 2010, Mr. Pyatt loaned the Company $256,250 and received
an 8% Convertible Promissory Note in exchange. On December 14, 2010, Mr. Pyatt converted all principal and accrued interest underlying
the notes ($358,077) into 11,018 shares of our common stock.
55
Warrant Conversion
On September 20, 2012, we entered into a warrant conversion
agreement with Mr. Bluher, our Executive Vice President and Chief Operating Officer, for the conversion of warrants to purchase
38,462 shares of our common stock into 25,615 shares of our common stock.
On September 12, 2012, we entered into a warrant
conversion agreement with El Chichon Partners, LLC (an entity affiliated with  Mr. Burr, a director of the Company) for
the conversion of warrants to purchase 200,000 shares of our common stock into 133,200 shares of our common stock.
On September 30, 2012, we entered into a warrant conversion
agreement with Mr. Groussman, a director of the Company, at the time, for the conversion of warrants to purchase 5,769 shares of
our common stock into 4,904 shares of our common stock.
Review, Approval or Ratification of Transactions with Related
Parties
We intend to adopt a written related person transactions policy
that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of our common stock,
and any members of the immediate family of and any entity affiliated with any of the foregoing persons, are not permitted to enter
into a material related person transaction with us without the review and approval of our audit committee, or a committee composed
solely of independent directors in the event it is inappropriate for our audit committee to review such transaction due to a conflict
of interest. We expect the policy to provide that any request for us to enter into a transaction with an executive officer, director,
nominee for election as a director, beneficial owner of more than 5% of our common stock or with any of their immediate family
members or affiliates, in which the amount involved exceeds $120,000 will be presented to our audit committee for review, consideration
and approval. In approving or rejecting any such proposal, we expect that our audit committee will consider the relevant facts
and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction
is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances
and the extent of the related person's interest in the transaction.
Although we have not had a written policy for the review and
approval of transactions with related persons, our board of directors has historically reviewed and approved any transaction where
a director or officer had a financial interest, including all of the transactions described above. Prior to approving such a transaction,
the material facts as to a director's or officer's relationship or interest as to the agreement or transaction were
disclosed to our board of directors. Our board of directors would take this information into account when evaluating the transaction
and in determining whether such transaction was fair to us and in the best interest of all of our stockholders.
56
DESCRIPTION OF SECURITIES
General
Prior to effecting the 1-for-650 reverse stock split and
filing an amendment to our articles of incorporation, our authorized capital stock consists of 2,500,000,000 shares of common
stock, par value $0.001 (2,359,265,998 of which are issued and outstanding as of October 25, 2012); and 10,000,000 shares of
Preferred Stock, 5,000,000 shares of which are designated Series A Convertible Preferred Stock (none of which are issued and
outstanding as of October 25, 2012); 51 shares of which are designated Series B Preferred Stock (all of which are issued and
outstanding as of October 25, 2012); 500 shares of which are designated Series C Preferred Stock (none of which are issued
and outstanding as of October 25, 2012); and 4,999,449 shares of which are undesignated as of October 25, 2012.
Proportionate Reverse Stock Split and Increase in Number
of Authorized Shares of Common Stock
On October 15, 2012, our board of directors approved (i) a 1-for-650
reverse stock split of our common stock, including a proportionate reduction in the number of authorized shares of our common stock
from 2.5 billion shares to 3,846,153 shares of common stock, which we intend to effect prior to the offering of these securities;
and (ii) an amendment to our articles of incorporation to increase the number of authorized common stock (post reverse stock-split)
from 3,846,153 to 100 million, and recommended the proposal for approval to the holders having the power to vote with respect to
the common stock.
On October 18, 2012, the holders of our Series B
Preferred Stock, who hold approximately 50.99% of the total voting power of all issued and outstanding voting capital of the
Company, approved the amendment to the articles of incorporation by written consent in lieu of a meeting in accordance with
Nevada law. We intend to effect the amendment to the articles of incorporation immediately after implementing the reverse
stock split described above, all of which will occur prior to the offering.
Common Stock
The holders of common stock: (i) have equal rights to dividends
from funds legally available therefore, ratably when as and if declared by our board of directors; (ii) are entitled to share ratably
in all of our assets available for distribution to holders of common stock upon liquidation, dissolution, or winding up of our
affairs; (iii) do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions
applicable thereto; (iv) are entitled to one non-cumulative vote per share of common stock, on all matters which stockholders may
vote on at all meetings of stockholders; and (v) the holders of common stock have no conversion, preemptive or other subscription
rights. There is no cumulative voting for the election of directors. Each holder of our common stock is entitled to one vote for
each share of our common stock held on all matters submitted to a vote of stockholders.
Preferred Stock
Our blank check preferred stock may be issued from time to time
without prior approval by our stockholders. Our preferred stock may be issued for such consideration as may be fixed from time
to time by our board of directors. Our board of directors may issue our blank check preferred stock in one or more series, with
such voting powers, designations, preferences and rights or qualifications, limitations or restrictions thereof, and for such consideration
as will be stated in the resolution or resolutions.
Series A Convertible Preferred Stock
These shares are non-voting, and have no dividend or liquidation
rights. Each share is convertible into 200 shares of common stock, provided, however, no holder of the Series A Convertible preferred
stock will have the right to convert any of such shares to the extent that after giving effect to such conversion, the beneficial
owner of such shares would beneficially own in excess of 4.9% of the shares of the common stock outstanding immediately after giving
effect to such conversion.
Series B Preferred Stock
According to the Certificate of Designation filed with the Nevada
Secretary of State, these shares have no dividend rights, liquidation rights on a pro rata basis, no conversion rights and rank
senior to our common stock. Each 1 share of Series B Preferred Stock has voting rights equal to (x) 0.019607
multiplied by
the total issued and outstanding common stock eligible to vote at the time of the respective vote (the "Numerator")
divided by
(y) 0.49,
minus
(z) the Numerator. The 51 shares of Series B Preferred Stock entitle the holders to voting
rights equivalent to 51% of the shares of common stock then outstanding.
57
Series C Convertible Preferred Stock
The summary of the rights, privileges and preferences of the
Series C Preferred Stock described above is qualified in its entirety by reference to the applicable certificates of designation.
Warrants
Representative's Warrants
We are registering the warrants we have agreed to sell to the
representative of the underwriters in this offering to purchase up to a total of shares of common stock (5% of the shares sold
in this offering and based on an aggregate offering amount of $17,000,000). See "Underwriting—Representative's Warrants" on page 62 of this prospectus for a description of these warrants.
Anti-Takeover Provisions
Nevada Revised Statutes
Nevada Revised Statutes provide state regulation over the acquisition
of a controlling interest in certain Nevada corporations. The statutes create a number of restrictions on the ability of a person
or entity to acquire control of a Nevada corporation by setting down certain rules of conduct and voting restrictions in any acquisition
attempt, among other things.
Acquisition of Controlling Interest. The Nevada Revised Statutes
provide generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada
corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a
majority of the disinterested stockholders of the corporation elects to restore such voting rights in whole or in part. The control
share acquisition law provides that a person or entity acquires "control shares" whenever it acquires shares that,
but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges:
(i) 20% to 33 1/3%, (ii) 33 1/3% to 50%, or (iii) more than 50%. A "control share acquisition" is generally defined
as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares.
The stockholders or board of directors of a corporation may
elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision
to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not contain
such an exemption. The control share acquisition law is applicable only to shares of corporations which: (a) have 200 or more stockholders,
with at least 100 of such stockholders being both stockholders of record and residents of Nevada; and (b) do business in Nevada
directly or through an affiliated corporation.
At this time, we do not have 100 stockholders of record with
addresses in the State of Nevada. Therefore, the provisions of the control share acquisition law do not apply to acquisitions of
our shares and will not until such time as these requirements have been met. If the ever does apply to us, it may discourage companies
or persons interested in acquiring a significant interest in or control of the Company, regardless of whether such acquisition
may be in the interest of our stockholders.
Combination with Interested Stockholders. The Nevada Revised
Statutes contain provisions governing the combination of a Nevada corporation that has 200 or more stockholders of record with
an interested stockholder. These provisions may have the effect of delaying or making it more difficult to affect a change in control
of our company.
A corporation affected by these provisions may not engage in
a combination within three years after the interested stockholder acquires his, her or its shares unless the combination or purchase
is approved by the board of directors before the interested stockholder acquired such shares. Generally, if approval is not obtained,
then after the expiration of the three-year period, the business combination may be consummated with the approval of the board
of directors before the person became an interested stockholder or a majority of the voting power held by disinterested stockholders,
or if the consideration to be received per share by disinterested stockholders is at least equal to the highest of:
58
·
the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the
announcement of the combination or within three years immediately before, or in, the transaction in which he, she or it became
an interested stockholder, whichever is higher;
·
the market value per share on the date of announcement of the combination or the date the person became an interested stockholder,
whichever is higher; or
·
if higher for the holders of preferred stock, the highest liquidation value of the preferred stock, if any.
Generally, these provisions define an interested stockholder
as a person who is the beneficial owner, directly or indirectly of 10% or more of the voting power of the outstanding voting shares
of a corporation. Generally, these provisions define combination to include any merger or consolidation with an interested stockholder,
or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with
an interested stockholder of assets of the corporation having:
·
an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation;
·
an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation; or
·
representing 10% or more of the earning power or net income of the corporation.
The effect of Nevada's business combination law is to
potentially discourage parties interested in taking control of the Company from doing so if it cannot obtain the approval of our
board of directors.
Articles of Incorporation, as Amended, and Bylaw Provisions
Our articles of incorporation, as amended, and bylaws contain
provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing
a change in control, including changes a stockholder might consider favorable. In particular, the articles of incorporation and
bylaws, as applicable, among other things:
·
provide our board of directors with the ability to alter its bylaws without stockholder approval; and
·
provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum.
Such provisions may have the effect of discouraging a third-party
from acquiring us, even if doing so would be beneficial to our stockholders. These provisions are intended to enhance the likelihood
of continuity and stability in the composition of our board of directors and in the policies formulated by them, and to discourage
some types of transactions that may involve an actual or threatened change in control of our company. These provisions are designed
to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used in proxy fights.
We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly
or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging such proposals because,
among other things, negotiation of such proposals could result in an improvement of their terms.
However, these provisions could have the effect of discouraging
others from making tender offers for our shares that could result from actual or rumored takeover attempts. These provisions also
may have the effect of preventing changes in our management.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Corporate
Stock Transfer, 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209.
59
Listing
The shares of our common stock are currently quoted on the
OTC QB under the symbol "MSLP.OB". We have applied for the listing of our common stock on The NASDAQ Capital Market under the symbol
"MSPH".
60
UNDERWRITING
Aegis Capital Corp. is acting as the representative of the underwriters
of the offering. We have entered into an underwriting agreement dated            , 2012 with the representative. Subject to the terms and
conditions of the underwriting agreement, we have agreed to sell to each underwriter named below and each underwriter named below
has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the
cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:
Number of
Name of Underwriter
Shares
Aegis Capital Corp.
Total
The underwriters are committed to purchase all the shares of
common stock offered by us other than those covered by the option to purchase additional shares described below, if it purchases
any shares. The obligations of the underwriters may be terminated upon the occurrence of certain events specified in the underwriting
agreement. Furthermore, pursuant to the underwriting agreement, the underwriters' obligations are subject to customary conditions,
representations and warranties contained in the underwriting agreement, such as receipt by the underwriters of officers'
certificates and legal opinions.
We have agreed to indemnify the underwriters against specified
liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to
make in respect thereof.
The underwriters are offering the shares, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel and other conditions specified
in the underwriting agreement. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject
orders in whole or in part.
We have granted the underwriters an over-allotment option. This
option, which is exercisable for up to 45 days after the date of this prospectus, permits the underwriters to purchase a maximum
of            additional shares (15% of the shares sold in this offering) from us to cover over-allotments, if any. If the underwriters exercise
all or part of this option, they will purchase shares covered by the option at the public offering price that appears on the cover
page of this prospectus, less the underwriting discount. If this option is exercised in full, the total price to the public will
be $            and the total net proceeds, before expenses, to us will be $            .
Discounts and Commissions
The following table shows the public offering price, underwriting
discount and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriters
of their over-allotment option.
Total
Per
                                                                                                                                                                                                                 Share
Without
Over-Allotment
With
Over-Allotment
Public offering price
$
$
$
Underwriting discount (7%)
$
$
$
Non-accountable expenses (1%)
(1)
$
$
$
Proceeds, before expenses, to us
$
$
$
(1)
The expense allowance of 1% is not payable with respect to the shares sold upon exercise of the underwriters' over-allotment
option.
The underwriters propose to offer the shares offered by us to
the public at the public offering price set forth on the cover of this prospectus. In addition, the underwriters may offer some
of the shares to other securities dealers at such price less a concession of $           per share. If all of the shares offered by us are
not sold at the public offering price, the underwriters may change the offering price and other selling terms by means of a further
supplement to this prospectus supplement.
We have paid an expense deposit of $25,000 to the representative,
which will be applied against the accountable expenses that will be paid by us to the underwriters in connection with this offering.
The underwriting agreement, however, provides that in the event the offering is terminated, the $25,000 expense deposit paid to
the representative will be returned to the extent offering expenses are not actually incurred in accordance with FINRA Rule 5110(f)(2)(C).
61
We have also agreed to pay the underwriters' expenses
relating to the offering, including (a) all fees, expenses and disbursements relating to background checks of our officers and
directors in an amount not to exceed $2,500 per individual or $15,000 in the aggregate; (b) all fees incurred in clearing this
offering with FINRA; (c) all fees, expenses and disbursements relating to the registration, qualification or exemption of securities
offered under the securities laws of foreign jurisdictions designated by the underwriters; (d) upon successfully completing this
offering, $21,775 for the underwriters' use of Ipreo's book-building, prospectus tracking and compliance software for
this offering; and (e) upon successfully completing this offering, up to $20,000 of the representative's actual accountable
road show expenses for the offering.
We estimate that the total expenses of the offering payable
by us, excluding the total underwriting discount and expense reimbursement, will be approximately $           .
Discretionary Accounts
The underwriters do not intend to confirm sales of the securities
offered hereby to any accounts over which they have discretionary authority.
Lock-Up Agreements
Pursuant to certain "lock-up" agreements, we, our
named executive officers and directors, and certain of our stockholders have agreed, subject to certain exceptions, not to offer,
sell, assign, transfer, pledge, contract to sell, or otherwise dispose of or announce the intention to otherwise dispose of, or
enter into any swap, hedge or similar agreement or arrangement that transfers, in whole or in part, the economic risk of ownership
of, directly or indirectly, engage in any short selling of any common stock or securities convertible into or exchangeable or exercisable
for any common stock, whether currently owned or subsequently acquired, without the prior written consent of the underwriter, for
a period of ninety (90) days after the date of the underwriting agreement.
The lock-up period described in the preceding paragraph will
be automatically extended if: (1) during the last 17 days of the restricted period, we issue an earnings release or announce material
news or a material event; or (2) prior to the expiration of the lock-up period, we announce that we will release earnings results
during the 16-day period beginning on the last day of the lock-up period, in which case the restrictions described in the preceding
paragraph will continue to apply until the expiration of the 18-day period beginning on the date of the earnings release, unless
the representative waives this extension in writing.
Representative's Warrants
We have agreed to issue to the representative warrants to purchase
up to a total of             shares of common stock (5% of the shares of common stock sold in this offering). The warrants are exercisable
at a per share price equal to 125% of the public offering price per share in the offering, at any time, and from time to time,
in whole or in part, during the four-year period commencing one year from the effective date of the offering, which period shall
not extend further than five years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(i). The
warrants have been deemed compensation by FINRA and are therefore subject to a one-year lock-up pursuant to Rule 5110(g)(1) of
FINRA. The representative (or permitted assignees under Rule 5110(g)(1)) will not sell, transfer, assign, pledge, or hypothecate
these warrants or the securities underlying these warrants, nor will they engage in any hedging, short sale, derivative, put, or
call transaction that would result in the effective economic disposition of the warrants or the underlying securities for a period
of 180 days from the date of this prospectus. In addition, the warrants provide for registration rights upon request, in certain
cases. In addition, the warrants provide for registration rights upon request, in certain cases. The demand registration right
provided will not be greater than five years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(iv).
The piggyback registration right provided will not be greater than seven years from the effective date of the offering in compliance
with FINRA Rule 5110(f)(2)(H)(v). We will bear all fees and expenses attendant to registering the securities issuable on exercise
of the warrants other than underwriting commissions incurred and payable by the holders. The exercise price and number of shares
issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary
cash dividend or our recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying
shares will not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.
62
Right of First Refusal
Until 12 months after the closing date of the offering, the
representative shall have a right of first refusal to purchase for its account or to sell for our account, or any subsidiary or
successor, any securities of our company or any such subsidiary or successor which we or any subsidiary or successor may seek to
sell in public or private equity and public debt offerings during such 12-month period.
We may, however, in lieu of granting a right of first refusal,
designate the representative as lead underwriter or co-manager of any underwriting group or co-placement agent of any proposed
financing, and the representative shall be entitled to receive as its compensation 50% of the compensation payable to the underwriting
or placement agent group when serving as co-manager or co-placement agent, and 33% of the compensation payable to the underwriting
or placement agent group when serving as co-manager or co-placement agent with respect to a proposed financing in which there are
three co-managing or lead underwriters or co-placement agents.
Electronic Offer, Sale and Distribution of Shares
A prospectus in electronic format may be made available on the
websites maintained by one or more of the underwriters or selling group members, if any, participating in this offering and one
or more of the underwriters participating in this offering may distribute prospectuses electronically. The representative may agree
to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet
distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same
basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of, nor
incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been
approved or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.
Stabilization
In connection with this offering, the underwriters may engage
in stabilizing transactions, over-allotment transactions, syndicate-covering transactions, penalty bids and purchases to cover
positions created by short sales.
·
Stabilizing transactions permit bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum,
and are engaged in for the purpose of preventing or retarding a decline in the market price of the shares while the offering is
in progress.
·
Over-allotment transactions involve sales by the underwriters of shares in excess of the number of shares the underwriters
are obligated to purchase. This creates a syndicate short position which may be either a covered short position or a naked short
position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of
shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater
than the number of shares in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment
option and/or purchasing shares in the open market.
·
Syndicate covering transactions involve purchases of shares in the open market after the distribution has been completed in
order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters
will consider, among other things, the price of shares available for purchase in the open market as compared with the price at
which they may purchase shares through exercise of the over-allotment option. If the underwriters sell more shares than could be
covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only
by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that
after pricing there could be downward pressure on the price of the shares in the open market that could adversely affect investors
who purchase in the offering.
·
Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the shares originally sold
by that syndicate member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.
63
These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of raising or maintaining the market price of our shares or common stock or preventing or
retarding a decline in the market price of our shares or common stock. As a result, the price of our common stock in the open market
may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters make any representation
or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions
may be effected on The NASDAQ Capital Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued
at any time.
Passive market making
In connection with this offering, underwriters and selling group
members may engage in passive market making transactions in our common stock on The NASDAQ Capital Market or on the OTC QB in accordance
with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the shares
and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess
of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker's
bid, then that bid must then be lowered when specified purchase limits are exceeded.
Other Relationships
Certain of the underwriters and their affiliates have provided,
and may in the future provide, various investment banking, commercial banking and other financial services for us and our affiliates
for which they have received, and may in the future receive, customary fees; however, except as disclosed in this prospectus, we
have no present arrangements with any of the underwriters for any further services.
Offer Restrictions Outside the United States
Other than in the United States, no action has been taken by
us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where
action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly,
nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities
be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable
rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves
about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction
in which such an offer or a solicitation is unlawful.
Australia
This prospectus is not a disclosure document under Chapter 6D
of the Australian Corporations Act, has not been lodged with the Australian Securities and Investments Commission and does not
purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly,
(i) the offer of the common stock under this prospectus is only made to persons to whom it is lawful to offer the common stock
without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in section 708 of the
Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in clause (i)
above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that
the offeree is such a person as set forth in clause (i) above, and, unless permitted under the Australian Corporations Act, agrees
not to sell or offer for sale within Australia any of the common stock sold to the offeree within 12 months after its transfer
to the offeree under this prospectus.
China
The information in this document does not constitute a public
offer of the common stock, whether by way of sale or subscription, in the People's Republic of China (excluding, for purposes
of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The common stock may
not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to "qualified domestic
institutional investors."
64
European Economic Area — Belgium, Germany,
Luxembourg and Netherlands
The information in this document has been prepared on the basis
that all offers of common stock will be made pursuant to an exemption under the Directive 2003/71/EC ("Prospectus Directive"),
as implemented in Member States of the European Economic Area (each, a "Relevant Member State"), from the requirement
to produce a prospectus for offers of securities.
An offer to the public of common stock has not been made, and
may not be made, in a Relevant Member State except pursuant to one of the following exemptions under the Prospectus Directive as
implemented in that Relevant Member State:
(a)
to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
(b)
to any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total
balance sheet of more than €43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements) and
(iii) an annual net turnover of more than €50,000,000 (as shown on its last annual unconsolidated or consolidated financial
statements);
(c)
to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus
Directive) subject to obtaining the prior consent of MusclePharm Corporation.  or any underwriter for any such offer; or
(d)
in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of common stock
shall result in a requirement for the publication by MusclePharm Corporation of a prospectus pursuant to Article 3 of the
Prospectus Directive.
France
This document is not being distributed in the context of a public
offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of
the French Monetary and Financial Code (
Code monétaire et financier
) and Articles 211-1
et seq
. of the General
Regulation of the French Autorité des marchés financiers ("AMF"). The common stock have not been offered
or sold and will not be offered or sold, directly or indirectly, to the public in France.
This document and any other offering material relating to the
common stock have not been, and will not be, submitted to the AMF for approval in France and, accordingly, may not be distributed
or caused to distributed, directly or indirectly, to the public in France.
Such offers, sales and distributions have been and shall only
be made in France to (i) qualified investors (
investisseurs qualifiés
) acting for their own account, as defined in
and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3, D. 744-1, D.754-1 and D.764-1 of the French Monetary
and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors (cercle restreint
d'investisseurs) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-4,
D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation.
Pursuant to Article 211-3 of the General Regulation of the AMF,
investors in France are informed that the common stock cannot be distributed (directly or indirectly) to the public by the investors
otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial
Code.
Ireland
The information in this document does not constitute a prospectus
under any Irish laws or regulations and this document has not been filed with or approved by any Irish regulatory authority as
the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish
Prospectus (Directive 2003/71/EC) Regulations 2005 (the "Prospectus Regulations"). The common stock have not been offered
or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to (i)
qualified investors as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than 100 natural or legal persons
who are not qualified investors.
65
Israel
The common stock offered by this prospectus have not been approved
or disapproved by the Israeli Securities Authority (the ISA), or ISA, nor have such common stock been registered for sale in Israel.
The shares may not be offered or sold, directly or indirectly, to the public in Israel, absent the publication of a prospectus.
The ISA has not issued permits, approvals or licenses in connection with the offering or publishing the prospectus; nor has it
authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality
of the common stock being offered. Any resale in Israel, directly or indirectly, to the public of the common stock offered by this
prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws
and regulations.
Italy
The offering of the common stock in the Republic of Italy has
not been authorized by the Italian Securities and Exchange Commission (
Commissione Nazionale per le Societe la Borsa
, "CONSOB")
pursuant to the Italian securities legislation and, accordingly, no offering material relating to the common stock may be distributed
in Italy and such securities may not be offered or sold in Italy in a public offer within the meaning of Article 1.1(t) of Legislative
Decree No. 58 of 24 February 1998 ("Decree No. 58"), other than:
·
to Italian qualified investors, as defined in Article 100 of Decree no.58 by reference to Article 34-ter of CONSOB Regulation
no. 11971 of 14 May 1999 ("Regulation no. 1197l") as amended ("Qualified Investors"); and
·
in other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article
34-ter of Regulation No. 11971 as amended.
Any offer, sale or delivery
of the common stock or distribution of any offer document relating to the common stock in Italy (excluding placements where a Qualified
Investor solicits an offer from the issuer) under the paragraphs above must be:
·
made by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with
Legislative Decree No. 385 of 1 September 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of 29 October 2007 and
any other applicable laws; and
·
in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws.
Any subsequent distribution of the common stock in Italy must
be made in compliance with the public offer and prospectus requirement rules provided under Decree No. 58 and the Regulation No.
11971 as amended, unless an exception from those rules applies. Failure to comply with such rules may result in the sale of such
common stock being declared null and void and in the liability of the entity transferring the common stock for any damages suffered
by the investors.
Japan
The common stock have not been and will not be registered under
Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the "FIEL")
pursuant to an exemption from the registration requirements applicable to a private placement of securities to Qualified Institutional
Investors (as defined in and in accordance with Article 2, paragraph 3 of the FIEL and the regulations promulgated thereunder).
Accordingly, the common stock may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident
of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires common stock may not resell
them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of common stock
is conditional upon the execution of an agreement to that effect.
Portugal
This document is not being distributed in the context of a public
offer of financial securities (
oferta pública de valores mobiliários
) in Portugal, within the meaning of Article
109 of the Portuguese Securities Code (
Código dos Valores Mobiliários
). The common stock have not been offered
or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document and any other offering
material relating to the common stock have not been, and will not be, submitted to the Portuguese Securities Market Commission
(
Comissăo do Mercado de Valores Mobiliários
) for approval in Portugal and, accordingly, may not be distributed
or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances that are deemed not
to qualify as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of common stock in Portugal
are limited to persons who are "qualified investors" (as defined in the Portuguese Securities Code). Only such investors
may receive this document and they may not distribute it or the information contained in it to any other person.
66
Sweden
This document has not been, and will not be, registered with
or approved by
Finansinspektionen
(the Swedish Financial Supervisory Authority). Accordingly, this document may not be made
available, nor may the common stock be offered for sale in Sweden, other than under circumstances that are deemed not to require
a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980)
om handel med finansiella instrument
).
Any offering of common stock in Sweden is limited to persons who are "qualified investors" (as defined in the Financial
Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the information contained
in it to any other person.
Switzerland
The common stock may not be publicly offered in Switzerland
and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility
in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art.
652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the
SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document
nor any other offering material relating to the common stock may be publicly distributed or otherwise made publicly available in
Switzerland.
Neither this document nor any other offering material relating
to the common stock have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document
will not be filed with, and the offer of common stock will not be supervised by, the Swiss Financial Market Supervisory Authority
("FINMA").
This document is personal to the recipient only and not for
general circulation in Switzerland.
United Arab Emirates
Neither this document nor the common stock have been approved,
disapproved or passed on in any way by the Central Bank of the United Arab Emirates or any other governmental authority in the
United Arab Emirates, nor has MusclePharm Corporation received authorization or licensing from the Central Bank of the United Arab
Emirates or any other governmental authority in the United Arab Emirates to market or sell the common stock within the United Arab
Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. No services relating
to the common stock, including the receipt of applications and/or the allotment or redemption of such shares, may be rendered within
the United Arab Emirates by MusclePharm Corporation.
No offer or invitation to subscribe for common stock is valid
or permitted in the Dubai International Financial Centre.
United Kingdom
Neither the information in this document nor any other document
relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus
(within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended ("FSMA")) has been published
or is intended to be published in respect of the common stock. This document is issued on a confidential basis to "qualified
investors" (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the common stock may not be offered or
sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances which
do not require the publication of a prospectus pursuant to section 86(1) FSMA. This document should not be distributed, published
or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.
Any invitation or inducement to engage in investment activity
(within the meaning of section 21 of FSMA) received in connection with the issue or sale of the common stock has only been communicated
or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances
in which section 21(1) of FSMA does not apply to MusclePharm Corporation.
67
In the United Kingdom, this document is being distributed only
to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article
19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 ("FPO"),
(ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated
associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together "relevant persons").
The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase will be
engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any
of its contents.
68
LEGAL MATTERS
The validity of the securities being offered by this prospectus
has been passed upon for us by Jones & Keller, P.C., Denver, Colorado. Certain legal matters in connection with this offering
will be passed upon for the underwriters by Reed Smith LLP, New York, New York.
EXPERTS
The consolidated financial statements of MusclePharm Corporation
as of and for the years ended December 31, 2011 and 2010 appearing in this prospectus have been audited by Berman & Company,
P.A., independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included
in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
Changes in Registrant's Certifying Accountant
On September 14, 2012, following a competitive process undertaken
by our audit committee in accordance with its charter, the audit committee approved the appointment of Ehrhardt Keefe Steiner &
Hottman PC, effective September 14, 2012, as our independent registered public accounting firm for the fiscal year ending December 31,
2012. On September 14, 2012, Ehrhardt Keefe Steiner & Hottman PC accepted the engagement.
During our fiscal year ended December 31, 2011, and the
subsequent interim period prior to the engagement of Ehrhardt Keefe Steiner & Hottman PC, the Company did not consult Ehrhardt
Keefe Steiner & Hottman PC regarding (1) the application of accounting principles to a specific completed or contemplated
transaction, (2) the type of audit opinion that might be rendered on our financial statements, or (3) any matter that was
either the subject of a "disagreement" (as such term is described in Item 304(a)(1)(iv) of Regulation S-K) or
a "reportable event" with Berman & Company, P.A. (as such term is described in Item 304(a)(1)(v) of Regulation
S-K).
On September 18, 2012, our audit committee approved the dismissal
of Berman & Company, P.A. as our independent registered public accounting firm.
Berman & Company, P.A.'s report on the financial statements
for the fiscal years ended December 31, 2011 and 2010, contained no adverse opinion or disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting principle, except that the report contained a modification to the effect
that there was substantial doubt as to the Company's ability to continue as a going concern. During the fiscal years ended
December 31, 2011 and 2010, and through September 18, 2012, there were no "disagreements" (as such term is described
in Item 304(a)(1)(iv) of Regulation S-K) with Berman & Company, P.A. on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Berman
& Company, P.A., would have caused it to make reference thereto in their reports on the consolidated financial statements for
such years.
During the fiscal years ended December 31, 2010 and 2011
and through September 18, 2012, there were no "reportable events" (as such term is defined in Item 304(a)(1)(v)
of Regulation S-K).
We provided Berman & Company, P.A. with a copy of the foregoing
disclosures and requested that Berman & Company, P.A. furnish us with a letter addressed to the SEC whether or not it agreed
with the above statements. A copy of such letter is filed as Exhibit 16 to the registration statement of which this prospectus
is a part.
69
WHERE YOU CAN FIND MORE INFORMATION
We are a reporting company and file annual, quarterly and special
reports, and other information with the SEC. Copies of the reports and other information may be read and copied at the SEC's
Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. You can request copies of such documents by writing to the
SEC and paying a fee for the copying cost. You may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC maintains a web site at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the SEC.
This prospectus is part of a registration statement on Form
S-1 that we filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance
with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration statement that are excluded
from this prospectus. For further information you may:
·
read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC's Public Reference
Room; or
·
obtain a copy from the SEC upon payment of the fees prescribed by the SEC.
70
MusclePharm Corporation and Subsidiary
Index to Consolidated Financial Statements
Consolidated Balance Sheets as of June
30, 2012 (unaudited) and December 31, 2011
F-
2
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2012 and 2011 (unaudited)
F-
3
Consolidated Statements of Cash Flows for the Six Months ended June 30, 2012 and 2011 (unaudited)
F-4
Notes to Consolidated Financial Statements (June 30, 2012) (unaudited)
F-5
Report of Independent Registered Public Accounting Firm
F-25
Consolidated Balance Sheets as of December 31, 2011 and 2010
F-26
Consolidated Statements of Operations as for the Years Ended December 31, 2011 and 2010
F-27
Consolidated Statement of Stockholders' Deficit for the Years Ended December 31, 2011 and 2010
F-28
Consolidated Statements of Cash Flows for the Years Ended December 31, 2011 and 2010
F-29
Notes to Consolidated Financial Statements
F-30
F-
1
MusclePharm
Corporation and Subsidiary
Consolidated Balance Sheets
June 30, 2012
December 31, 2011
(unaudited)
Assets
Current Assets:
Cash
291,971
659,764
Cash – restricted
52,744
-
Accounts receivable – net
2,057,409
2,569,092
Inventory
219,276
-
Prepaid stock compensation
204,510
534,456
Prepaid sponsorship fees
47,329
203,333
Other
83,003
50,188
Total current assets
2,956,242
4,016,833
Property and equipment – net
1,252,630
907,522
Debt issue costs – net
418,866
68,188
Other assets
98,090
53,585
Total assets
$
4,725,828
$
5,046,128
Liabilities and Stockholders' Deficit
Current Liabilities:
Accounts payable and accrued liabilities
$
5,211,373
$
9,359,073
Customer deposits
1,150,473
8,047
Debt – net
1,353,553
1,281,742
Derivative liabilities
7,908,860
7,061,238
Total Current Liabilities
15,624,259
17,710,100
Long Term Liabilities:
Debt – net
114,682
307,240
Total Liabilities
15,738,941
18,017,340
Stockholders' Deficit:
Series A, Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding
-
-
Series B, Preferred Stock, $0.001 par value; 51 shares authorized, 51 and none, respectively, issued and outstanding
-
-
Series C, Convertible Preferred Stock, $0.001 par value; 500 shares authorized, 190 and none, respectively, issued and outstanding
-
-
Common Stock, $0.001 par value; 2,500,000,000 shares authorized, 1,416,605,782 and 605,930,613 issued and 1,390,174,207 and 605,930,613 outstanding
1,416,605
605,931
Treasury Stock, at cost; 26,431,575 and zero shares
(460,978
)
-
Additional paid-in capital
43,000,612
31,579,538
Accumulated deficit
(55,010,071
)
(45,156,681
)
Accumulated other comprehensive income
40,719
-
Total Stockholders' Deficit
(11,013,113
)
(12,971,212
)
Total Liabilities and Stockholders' Deficit
$
4,725,828
$
5,046,128
See accompanying notes to unaudited financial
statements.
F-
2
MusclePharm Corporation and Subsidiary
Consolidated Statements of Operations
(unaudited)
For the three Months Ended June 30,
For the Six Months Ended June 30,
2012
2011
2012
2011
Sales - net
$
15,429,340
$
3,397,742
$
31,990,020
$
6,431,678
Cost of sales
12,942,605
2,512,828
25,837,767
4,914,361
Gross profit
2,486,735
884,914
6,152,253
1,517,317
General and administrative expenses
4,151,076
2,778,682
8,543,887
4,498,310
Loss from operations
(1,664,341
)
(1,893,768
)
(2,391,634
)
(2,980,993
)
Other income (expense)
Derivative expense
(1,029,541
)
(2,698,490
)
(2,486,451
)
(4,057,859
)
Change in fair value of derivative liabilities
9,854,045
766,487
1,496,874
634,770
Loss on settlement of accounts payable, debt and conversion of Series C preferred stock
-
(627,384
)
(2,941,826
)
(2,542,073
)
Interest expense
(976,686
)
(2,983,468
)
(3,547,202
)
(3,502,390
)
Foreign currency transaction loss
(1,573
)
-
(1,573
)
-
Other income
-
-
18,423
-
Total other income (expense) - net
7,846,245
(5,542,855
)
(7,461,755
)
(9,467,552
)
Net income (loss)
6,181,904
(7,436,623
)
(9,853,389
)
(12,448,545
)
Other comprehensive income
Net change in Foreign currency translation
40,719
-
40,719
-
Total other comprehensive income
40,719
-
40,719
-
Total comprehensive income (loss)
$
6,222,623
$
(7,436,623
)
$
(9,812,670
)
$
(12,448,545
)
Net income (loss) per share available to common stockholders - basic and diluted
$
0.00
$
(0.04
)
$
(0.01
)
$
(0.07
)
Weighted average number of common shares outstanding during the period – basic and diluted
1,388,624,267
201,864,655
1,301,222,184
174,365,323
See accompanying notes to unaudited financial
statements.
F-
3
MusclePharm Corporation and Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended
June 30, 2012
June 30, 2011
Cash Flows From Operating Activities:
Net loss
$
(9,853,389
)
$
(12,448,545
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
199,750
31,393
Bad debt
9,490
(5,203
)
Stock based compensation
-
758,826
Amortization of prepaid stock compensation
456,903
1,039,925
Amortization of debt discount
3,083,437
2,899,959
Amortization of debt issue costs
184,031
134,233
Loss on settlement of accounts payable
-
2,542,073
Loss on settlement of accounts payable, debt and conversion of Series C preferred stock
2,941,826
-
Derivative expense
2,486,451
4,057,859
Change in fair value of derivative liabilities
(1,496,874
)
(634,770
)
Changes in operating assets and liabilities:
(Increase) decrease in:
Restricted cash balance
(52,744
)
-
Accounts receivable
502,193
(1,967,133
)
Prepaid and other
186,725
(48,359
)
Inventory
(219,276
)
-
Increase (decrease) in:
Accounts payable and accrued liabilities
867,058
1,057,640
Deferred revenue
1,142,426
(57,493
)
Due to factor
-
(5,853
)
Net Cash Provided by (Used In) Operating Activities
438,007
(2,645,448
)
Cash Flows From Investing Activities:
Purchase of property and equipment
(544,859
)
(324,435
)
Purchase of trademark
(35,000
)
-
Net Cash Used In Investing Activities
(579,859
)
(324,435
)
Cash Flows From Financing Activities:
Proceeds from issuance of debt
4,073,950
3,648,083
Debt issue costs
(106,950
)
(204,093
)
Repayment of debt
(4,058,442
)
-
Repurchase of common stock (treasury stock)
(460,978
)
-
Proceeds from issuance of common stock and warrants
285,760
-
Net Cash (Used In) Provided by Financing Activities
(266,660
)
3,443,990
Cash Flows From Equity Activities:
Foreign currency translation loss
40,719
-
Net (decrease) increase in cash
(367,793
)
474,107
Cash at beginning of period
659,764
43,704
Cash at end of period
$
291,971
$
517,811
Supplemental disclosures of cash flow information:
Cash paid for interest
$
265,078
$
2,518,761
Cash paid for taxes
$
-
$
-
Supplemental disclosure of non-cash investing and financing activities:
Stock issued for future services - third parties
$
200,000
$
251,500
Warrants issued in conjunction with debt issue costs
$
427,759
$
-
Debt discount recorded on convertible and unsecured debt accounted for as a derivative liability
$
3,554,672
$
3,258,108
Stock issued to settle accounts payable and accrued interest – third parties
$
-
$
1,393,868
Conversion of convertible debt and accrued interest for common stock
$
1,069,402
$
1,454,635
Reclassification of convertible notes to demand loans
$
-
$
278,600
Stock issued to settle accrued executive compensation
$
4,667,764
$
-
Conversion of notes to common stock payable
$
-
$
-
Reclassification of derivative liability to additional paid in capital
$
4,124,387
$
1,284,928
Stock issued to acquire equipment
$
-
$
82,811
Share cancellation
$
-
$
350
Stock issued to settle contracts
$
3,932
$
-
Stock issued to settle accrued liabilities
$
135,000
$
-
See accompanying notes to unaudited financial
statements.
F-
4
MusclePharm Corporation
and Subsidiary
Notes to Consolidated
Financial Statements
(June 30, 2012)
(Unaudited)
Note 1: Nature of Operations and Basis of Presentation
Nature of Operations
MusclePharm Corporation (the "Company",
"we", "our", or "MP"), was initially incorporated in the State of Nevada on August 4, 2006,
under the name Tone in Twenty, for the purpose of engaging in the business of providing personal fitness training using isometric
techniques. The Company is headquartered in Denver, Colorado.
MusclePharm currently manufactures and markets a wide-ranging
variety of high-quality sports nutrition products.
Basis of Presentation
The accompanying unaudited interim consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
and the rules and regulations of the United States Securities and Exchange Act of 1934, as amended for interim financial information.
The financial information as of December
31, 2011 is derived from the audited financial statements presented in the Company's Annual Report on Form 10-K/A for the
years ended December 31, 2011 and 2010. The unaudited interim consolidated financial statements should be read in conjunction with
the Company's Annual Report on Form 10-K/A, which contains the audited financial statements and notes thereto, together with
Management's Discussion and Analysis, for the years ended December 31, 2011 and 2010.
Certain information or footnote disclosures
normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States
of America have been or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial
position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting
of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results
for the six months ended June 30, 2012 are not necessarily indicative of results for the full fiscal year.
F-
5
MusclePharm Corporation
and Subsidiary
Notes to Consolidated
Financial Statements
June 30, 2012
(Unaudited)
Note 2: Summary of Significant Accounting
Policies
Principles of Consolidation
All intercompany accounts and transactions
have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements
in conformity with United States of America generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to
exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or
set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly
from estimates.
Risks and Uncertainties
The Company operates in an industry that
is subject to rapid change and intense competition. The Company's operations will be subject to significant risk and uncertainties
including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.
Cash and Cash Equivalents
The Company considers all highly liquid
instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents. At June
30, 2012 and December 31, 2011, respectively, the Company had no cash equivalents.
Accounts Receivable and Allowance for
Doubtful Accounts
Accounts receivable represents trade obligations
from customers that are subject to normal trade collection terms. The accounts receivable are sent directly to the Company's
third party manufacturer and netted with any outstanding liabilities to the manufacturer. Liabilities to the manufacturer totaled
$2,351,060 at June 30, 2012 and are included in accounts payable and accrued liabilities. The Company periodically evaluates the
collectability of its accounts receivable and considers the need to establish an allowance for doubtful accounts based upon historical
collection experience and specific customer information. Accordingly, the actual amounts could vary from the recorded allowances.
There is also a review of customer discounts at the period end and an accrual made for discounts earned but not yet received by
quarter end.
The Company does not charge interest on past due receivables.
Receivables are determined to be past due based on the payment terms of the original invoices. Accounts receivable consisted of
the following at June 30, 2012 and December 31, 2011:
As of
June 30, 2012
As of
December 31, 2011
Accounts receivable
$
3,758,236
$
2,766,776
Less: allowance for discounts
(1,686,254
)
-
Less: allowance for doubtful accounts
(14,573
)
(197,684
)
Accounts receivable – net
$
2,057,409
$
2,569,092
F-
6
At June 30, 2012 and December 31, 2011, the Company had the
following concentrations of accounts receivable with customers:
Customer
As of June 30, 2012
As of December 31, 2011
A
31
%
7
%
B
25
%
3
%
C
16
%
12
%
D
6
%
10
%
E
2
%
36
%
Inventory
Inventory is valued at the lower of cost or
market value. Product-related inventories are primarily maintained using the average cost method.
Prepaid Sponsorship Fees
Prepaid sponsorship fees represents fees paid in connection
with future advertising to be received.
Property and Equipment
Property and equipment are stated at cost
and depreciated to their estimated residual value over their estimated useful lives. When assets are retired or otherwise disposed
of, the assets and related accumulated depreciation are relieved from the accounts and the resulting gains or losses are included
in operating income in the statements of operations. Repairs and maintenance costs are expensed as incurred. Depreciation is provided
using the straight-line method for all property and equipment.
Long-Lived Assets
The Company reviews long-lived assets for
impairment whenever events or changes in circumstances, such as service discontinuance or technological obsolescence, indicate
that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying
amount of the asset to the undiscounted expected future cash flows related to the asset. If the comparison indicates that impairment
is present, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair
value of the asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash
flows attributable to the asset. During the six months ended June 30, 2012 and 2011, the Company recorded no impairment expense.
Fair Value of Financial Instruments
The Company measures assets and liabilities
at fair value based on an expected exit price which represents the amount that would be received on the sale of an asset or paid
to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be
based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value
measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs,
used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical levels
of inputs to measure fair value:
·
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities
in active markets.
·
Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not
active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable
for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation
or other means.
·
Level 3: Unobservable inputs reflecting the Company's assumptions incorporated in valuation
techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that
are reasonably available.
F-
7
The following are the major categories
of liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, using quoted prices in active
markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs
(Level 3):
As of June 30, 2012
As of December 31, 2011
Derivative liabilities (Level 2)
$
7,908,860
$
7,061,238
The Company's financial instruments
consisted primarily of accounts receivable, prepaids, accounts payable and accrued liabilities, debt and customer deposits. The
Company's debt approximates fair value based upon current borrowing rates available to the Company for debt with similar
maturities. The carrying amounts of the Company's financial instruments generally approximated their fair values as of June
30, 2012 and December 31, 2011, respectively, due to the short-term nature of these instruments.
Revenue Recognition
The Company records revenue when all of
the following have occurred: (1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered, (3) the
sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.
Depending on individual customer agreements,
sales are recognized either upon shipment of products to customers or upon delivery. For all of our Canadian sales, which represents
2% of total sales, and for one of our largest domestic customers (See customer "B" below under concentrations), which
represents 11% of our total revenue for the six months ended June 30, 2012 and 2011, revenue is recognized upon delivery.
The Company has determined that advertising
related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 ("
Revenue Recognition"
– Customer Payments and Incentives – Implementation Guidance and Illustrations)
. The guidance indicates that,
absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not
expensing as advertising expense.
The Company records store support, giveaways,
sales allowances and discounts as a direct reduction of sales.
Sales for the three and six months ended
June 30, 2012 and 2011 are as follows:
Three Months Ended June 30,
Six Months Ended June 30,
2012
2011
2012
2011
Sales
$
18,869,103
$
3,838,374
$
38,171,872
$
7,509,589
Discounts
(3,439,763
)
(440,632
)
(6,181,852
)
(1,077,911
)
Sales - Net
$
15,429,340
$
3,397,742
$
31,990,020
$
6,431,678
The Company has an informal 7-day right
of return for products. There were nominal returns for the three and six months ended June 30, 2012 and 2011.
For the six months ended June 30, 2012
and 2011, the Company had the following concentrations of revenues with customers:
Six Months Ended June 30,
Customer
2012
2011
A
35
%
40
%
B
11
%
11
%
F-
8
Licensing Income and Royalty Revenue
On May 5, 2011, the Company granted an
exclusive indefinite term license to a third party for $250,000. The licensee may market, manufacture, design and sell the Company's
existing apparel line. The licensee is to pay the Company a 10% net royalty based on its net income at the end of each fiscal year.
To date, no royalty revenue has been earned.
Cost of Sales
Cost of sales represents costs directly related to the production,
manufacturing and freight of the Company's products.
F-
9
MusclePharm Corporation
and Subsidiary
Notes to Consolidated
Financial Statements
June 30, 2012
(Unaudited)
Shipping and Handling
Domestic product sold is shipped directly
to the customer from the manufacturer. Costs associated to the shipments are recorded in cost of sales. For Canadian sales, the
product is shipped from our Canadian warehouse to our customers. Costs associated with the shipments are recorded as shipping.
Advertising
The Company expenses advertising costs when incurred.
Advertising expense for the three months and six months ended
June 30, 2012 and 2011 are as follows:
Three Months Ended June 30,
Six Months Ended June 30,
2012
2011
2012
2011
Advertising
$
2,044,005
$
1,613,040
$
3,976,840
$
2,195,235
Beneficial Conversion Feature
For conventional convertible debt where
the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF")
and related debt discount.
When the Company records a BCF, the relative
fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is
amortized to interest expense over the life of the debt.
Derivative Liabilities
Fair value accounting requires bifurcation
of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their
fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the
convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and
further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible
debt, the Company continues its evaluation process of these instruments as derivative financial instruments.
Once derivative liabilities are determined,
they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded
in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative
instruments such as warrants, are also valued using the Black-Scholes option-pricing model. Once a derivative liability ceases
to exist any remaining fair value is reclassified to additional paid in capital.
Debt Issue Costs and Debt Discount
The Company may pay debt issue costs, and
record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over
the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized
amounts is immediately expensed.
F-
10
MusclePharm Corporation
and Subsidiary
Notes to Consolidated
Financial Statements
June 30, 2012
(Unaudited)
Original Issue Discount
For certain convertible debt issued, the
Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount and
additional paid-in capital at an amount not to exceed gross proceeds raised, reducing the face amount of the debt, and is amortized
to interest expense over the life of the debt.
Share-Based Payments
Generally, all forms of share-based payments,
including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value
on the awards' grant date, based on estimated number of awards that are ultimately expected to vest. Share-based compensation
awards issued to non- employees for services rendered are recorded at either the fair value of the services rendered or the fair
value of the share-based payment, whichever is more readily determinable.
Earnings (loss) Per Share
Net earnings (loss) per share is computed
by dividing net income (loss) less preferred dividends for the period by the weighted average number of common stock outstanding
during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) less preferred dividends for the
period by the weighted average number of common stock, common stock equivalents and potentially dilutive securities outstanding
during each period.
The Company uses an "if converted"
method to determine whether there is a dilutive effect of outstanding option and warrant contracts. For the three months ended
June 30, 2012, all of the Company's convertible debt options and 531,274,066 warrants had exercise prices below of the Company's
period end market price of the common stock into which they convert. The adjusted dilutive net loss reflects the add back of approximately
$349 of interest expense related to the convertible debt and the reduction of $9,449,050 of gains on derivative contracts for the
three months ended June 30, 2012. For the three months ended June 30, 2012 and 2011 and six months ended June 30, 2012 and 2011,
the Company reflected an dilutive net loss and net loss, respectively, and the effect of considering any common stock equivalents
would have been anti-dilutive for these periods. Therefore, separate computation of diluted earnings (loss) per share is not presented.
The Company's dilutive net loss for the three months ended
June 30, 2012 is as follows:
Three Months Ended June 30, 2012
Net income
6,181,904
Dilutive effect of warrants
(7,981,756
)
Dilutive effect of conversion options
(41,432
)
Convertible debt interest add-back
349
Adjusted net loss
(1,840,935
)
The Company has the following common stock equivalents for the
six months ended June 30, 2012 and 2011, respectively:
Six Months Ended June 30,
2012
2011
Stock options (exercise price - $0.50/share)
1,567,500
2,767,500
Warrants (exercise price $0.236 - $1.50/share)
150,708,232
59,843,333
Convertible debt (exercise price $0.002- $0.02/share)
2,100,000
43,933,988
Total common stock equivalents
154,375,732
106,544,821
F-
11
In the above table, some of the outstanding
instruments from 2012 and 2011, contain ratchet provisions that would cause variability in the exercise price at the balance sheet
date. As a result, common stock equivalents could change at each reporting period.
Foreign Currency
MusclePharm began operations in Canada
in April of 2012. The Canadian Dollar was determined to be the functional currency as the majority of the transactions related
to the day to day operations of the business are exchanged in Canadian Dollars. At the end of the period, the financial results
of the Canadian operation are translated into the United States Dollar, which is the reporting currency, and added to the US operations
for consolidated company financial results. The revenue and expense items are translated using the average rate for the period
and the assets and liabilities at the end of period rate. Transactions that have completed the accounting cycle and resulted in
a gain or loss related to translation are recorded in realized gain or loss due to foreign currency translation under other income
expense on the income statement. Transactions that have not completed their accounting cycle but appear to have gain or loss due
to the translation process are recorded as unrealized gain or loss due to translation and held in the equity section on the balance
sheet until such date the accounting cycle of the transaction is complete and the actual realized gain or loss is recognized.
Reclassification
The Company has reclassified certain prior
period amounts to conform to the current period presentation. These reclassifications had no effect on the financial position,
results of operations or cash flows for the periods presented.
Recent Accounting Pronouncements
In May 2011, the Financial Accounting Standards
Board issued Accounting Standards Update ("ASU") No. 2011-04 "Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. Generally Accepted Accounting Principles ("GAAP") and International Financial Reporting
Standards ("IFRS"). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between
U.S. GAAP and IFRS. ASU 2011-04 requires reporting entities to disclose additional information for fair value measurements categorized
within Level 3 of the fair value hierarchy. In addition, ASU 2011-04 requires reporting entities to make disclosures about amounts
and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective
for interim and annual reporting periods beginning after December 15, 2011.
F-
12
MusclePharm Corporation
and Subsidiary
Notes to Consolidated
Financial Statements
June 30, 2012
(Unaudited)
Note 3: Going Concern
As reflected in the accompanying unaudited
interim consolidated financial statements, the Company had a net loss of $9,853,389 for the six months ended June 30, 2012 and
a working capital deficit and stockholders' deficit of $12,668,017 and $11,013,113 respectively, at June 30, 2012. These
factors raise substantial doubt about the Company's ability to continue as a going concern.
The ability of the Company to continue
its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets
with some additional funding from other traditional financing sources, including term notes, until such time that funds provided
by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related
parties to sustain the Company's existence.
The Company will require additional funding
to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company
believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future.
There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.
In response to these problems, management
has taken the following actions:
·
seek additional third party debt and/or equity financing,
·
continue with the implementation of the business plan,
·
allocate sufficient resources to continue with advertising and marketing efforts
The accompanying financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets
or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4: Property and Equipment
Property and equipment consisted of the
following at June 30, 2012 and December 31, 2011:
As of June 30, 2012
As of December 31, 2011
Estimated Useful Life
Furniture, fixtures and gym equipment
$
967,698
$
781,786
3 years
Leasehold improvements
540,200
244,770
From 42 to 64 months
Vehicles
100,584
37,068
5 years
Displays
32,057
32,057
5 years
Website
11,462
11,462
3 years
Total
1,652,001
1,107,143
Less: Accumulated depreciation and amortization
(399,371
)
(199,621
)
$
1,252,630
$
907,522
F-
13
Note 5: Debt
At June 30, 2012 and December 31, 2011, debt consists of the
following:
As of June 30, 2012
As of December 31, 2011
Convertible debt - secured
$
14,000
$
1,749,764
Less: debt discount
(4,932
)
(1,395,707
)
Convertible debt - net
9,068
354,057
Auto loan - secured
20,808
26,236
Unsecured debt
4,471,996
2,380,315
Less: debt discount
(3,033,637
)
(1,171,626
)
Unsecured debt - net
1,438,359
1,208,689
Total debt
1,468,235
1,588,982
Less: current portion
(1,353,553
)
(1,281,742
)
Long term debt
$
114,682
$
307,240
Debt in default of $50,600 and $505,600, at June 30, 2012 and
December 31, 2011 respectively, is included as a component of short-term debt.
Future annual principal payments for the above debt is as follows:
Years Ended December 31,
2012 (6 months)
$
1,853,662
2013
2,648,618
2014
4,524
2015
-
Total annual principal payments
$
4,506,804
F-
14
Convertible Debt – Secured - Derivative Liabilities
During the six months ended June 30, 2012
and the year ended December 31, 2011, the Company issued convertible debt totaling $519,950 and $4,679,253, respectively. The convertible
debt includes the following terms:
Six Months Ended
Year Ended
June 30, 2012
December 31, 2011
Amount of
Amount of
Principal Raised
Principal Raised
Interest Rate
8% - 10%
0% - 18%
Default interest rate
0% - 20%
0% - 25%
Maturity
January 3, 2012 to October
                                            11, 2014
June 30, 2011 to June 29,
                                            2015
Conversion terms 1
Lesser of (1) a fifty percent (50%) discount to the
    two lowest closing bid prices of the five days trading days immediately preceding the date of conversion or (ii) Two and One-Half
    Cents ($0.025) per share
$
-
$
525,000
Conversion terms 2
200% - The "market price" will be equal to the average
    of (i) the average of the closing price of Company's common stock during the 10 trading days immediately preceding the
    date hereof and (ii) the average of the 10 trading days immediately subsequent to the date hereof.
-
537,600
Conversion terms 3
200% of face. Average of the trading price 10 trading days immediately
    preceding the closing of the transaction
-
177,000
Conversion terms 4
200% of face. Fixed conversion price of $0.02
-
105,000
Conversion terms 5
300% of face. Fixed conversion price of $0.02
-
15,000
Conversion terms 6
35% of the three lowest trading prices for previous 10 trading days
250,000
Conversion terms 7
45% of the three lowest trading prices for previous 10 trading days
-
327,500
Conversion terms 8
50% of average closing prices for 10 preceding trading days
-
76,353
Conversion terms 9
50% of lowest trade price for the last 20 trading days
-
45,000
Conversion terms 10
50% of the 3 lowest trades for previous 20 trading days
-
33,000
Conversion terms 11
50% of the lowest closing price for previous 5 trading days
-
250,000
Conversion terms 12
60% multiplied by the average of the lowest 3 trading prices for
    common stock during the ten trading days prior to the conversion date
-
233,000
Conversion terms 13
62% of lowest trade price for the last 7 trading days
100,000
40,000
Conversion terms 14
65% of the lowest trade price in the 30 trading days previous to
    the conversion
19,950
335,000
Conversion terms 15
65% of the three lowest trading price for previous 30 trading days
-
153,800
Conversion terms 16
70% of lowest average trading price for 30 trading days
-
1,366,000
Conversion terms 17
No fixed conversion option
-
35,000
Conversion terms 18
35% multiplied by the average of the lowest three (3) trading prices
    (as defined below) for the common stock during the ten (10) trading day period ending on the latest complete trading day prior
    to the conversion date.
400,000
75,000
Conversion terms 19
Fixed conversion price of $0.03
-
100,000
$
519,950
$
4,679,253
The debt holders are entitled, at their
option, to convert all or part of the principal and accrued interest into shares of the Company's common stock at the conversion
prices and terms discussed above. The Company classifies embedded conversion features in these notes as a derivative liability
due to management's assessment that the Company may not have sufficient authorized number of shares of common stock required
to net-share settle or due to the existence of a ratchet due to an anti-dilution provision. See Note 6 regarding accounting for
derivative liabilities.
F-
15
MusclePharm Corporation and Subsidiary
Notes to Consolidated
Financial Statements
June 30, 2012
(Unaudited)
During the six months ended June 30, 2012,
the Company converted debt and accrued interest, totaling $1,420,422 into 247,308,238 shares of common stock. The resulting loss
on conversion of $351,201 is included in the $2,941,826 loss on settlement of accounts payable and debt as shown in the consolidated
statement of operations.
Convertible debt consisted of the following activity and terms:
Interest Rate
Maturity
Balance - December 31, 2011
$
1,749,764
Borrowings during the six months ended June 30, 2012
519,950
8% - 10%
January 3, 2012 to October 11, 2014
Conversion of debt to into 209,732,083 shares of common stock with a valuation of $950,739 ($0.0035 - $0.0095/share)
(759,095
)
Repayment of convertible debt
(2,518,343
)
Interest and accrued interest (Included in total repayment)
15,632
Loss on repayment (Included in total repayment)
1,006,092
Balance – June 30, 2012
$
14,000
(B) Unsecured Debt
Unsecured debt consisted of the following activity and terms:
Interest Rate
Maturity
Balance - December 31, 2011
$
2,380,432
Borrowings during the three months ended June 30, 2012
3,554,000
15
%
January 13, 2012 – October 1, 2013
Conversion of debt to into 37,576,155 shares of common stock with a valuation of $469,683 ($0.0095 - $0.016/share)
(150,000
)
Repayments
(1,534,670
)
Interest and accrued interest (Included in total repayment)
32,005
Loss on repayment (Included in total repayment)
190,229
Balance - June 30, 2012
$
4,471,996
Of the $3,554,000 unsecured notes raised
during the 6 months ended June 30, 2012, $1,539,000 of the notes were in default. During August of 2012, the Company obtained waivers
and entered into settlement agreements related to the default. In connection with the proposed terms of the settlement, the Company
will cancel 147,487,500 warrants and issue 98,315,168 shares of common stock. The promissory notes previously issued by the Company
in favor those investors will remain in place as written.
(C) Auto Loan
Auto loan account consisted of the following activity and terms:
Interest Rate
Maturity
Balance - December 31, 2011
$
26,236
6.99
%
26 payments of $1,008
Repayments
(5,428
)
Balance - June 30, 2012
$
20,808
F-
16
MusclePharm Corporation
and Subsidiary
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
(D) Debt Issue Costs
During the six months ended June 30, 2012 and 2011, the Company
paid debt issue costs totaling $106,950 and $204,093, respectively.
For the six months ended June 30, 2012
the company issued 19,237,500 warrants as cost associated with a debt raise. The initial derivative liability value of $427,759
was recorded as debt issue costs and derivative liability.
The following is a summary of the Company's
debt issue costs for the six months ended June 30, 2012 and year ended December 31, 2011 as follows:
2012
2011
Debt issue costs
$
724,423
$
305,283
Accumulated amortization of debt issue costs
(305,557
)
(237,095
)
Debt issue costs – net
$
418,866
$
68,188
During the six months ended June 30, 2012
and 2011, the Company amortized $184,031 and $134,233, respectively in debt issue costs.
(E) Debt Discount
During the six months ended June 30, 2012
and 2011, the Company recorded debt discounts totaling $3,554,673 and $3,258,106, respectively.
The debt discounts recorded in 2012 and
2011, pertain to convertible debt and warrants that contain embedded conversion options that are required to be bifurcated and
reported at fair value.
The Company amortized $3,083,437 and $2,899,959
to interest expense in the six months ended June 30, 2012 and 2011 as follows:
Debt discount-December 31, 2011
$
2,567,333
Additional debt discount – Six months ended June 30,2012
3,554,673
Amortization of debt discount – Six months ended June 30,2012
(3,083,437
)
Debt discount June 30, 2012
$
3,038,569
Note 6: Derivative Liabilities
The Company identified conversion features
embedded within convertible debt, warrants and series A preferred stock issued in 2012, 2011 and 2010 (see Notes 5 and 7). The
Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as
a derivative liability as the Company could not determine if a sufficient number of shares would be available to settle all transactions.
The fair value of the conversion feature
is summarized as follows:
Derivative liability - December 31, 2011
$
7,061,238
Fair value at the commitment date for debt instruments
1,096,808
Fair value at the commitment date for warrants issued
5,372,075
Fair value mark to market adjustment for debt instruments
(1,564,850
)
Fair value mark to market adjustment for warrants
68,035
Fair value mark to market adjustment for Series A, Preferred Stock issued
(59
)
Reclassification to additional paid-in capital for financial instruments conversions and maturities
(4,124,387
)
Derivative liability – June 30, 2012
$
7,908,860
F-
17
The Company recorded the debt discount
to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross
proceeds of the note. The Company recorded a derivative expense of $2,486,451 and $4,057,859 for the six months ended June 30,
2012 and 2011, respectively.
The fair value at the commitment and re-measurement
dates for the Company's derivative liabilities were based upon the following management assumptions:
Commitment Date
Re-measurement Date
Expected dividends
0
%
0
%
Expected volatility
228% -251%
257
%
Expected term:
6 months – 4 years
6 months – 4 years
Risk free interest rate
0.09% - 0.72 %
0.33
%
F-
18
MusclePharm Corporation
and Subsidiary
Notes to Consolidated
Financial Statements
June 30, 2012
(Unaudited)
Note 7: Stockholders' deficit
The Company has three separate series of
authorized preferred stock:
(A) Series A, Convertible Preferred Stock
This class of stock has the following provisions:
·
Non-voting,
·
No rights to dividends,
·
No liquidation value,
·
Convertible into 200 shares of common stock
(B) Series B, Preferred
Stock (Related Parties)
In August 2011, the Company issued an aggregate
51 shares of Series B, preferred stock to 2 of its officers and directors. The Company accounted for the share issuance at par
value as there was no future economic value that could be associated with the issuance.
This class of stock has the following provisions:
·
Voting rights entitling the holders to an aggregate 51% voting control,
·
Initially no rights to dividends,
·
Stated value of $0.001 per share,
·
Liquidation rights entitle the receipt of net assets on a pro-rata basis; and
·
Non-convertible
(C) Series C, Convertible
Preferred Stock
In October 2011, the Company issued 190
shares of Series C, preferred stock, having a fair value of $190,000. Of the total shares issued, 100 shares were issued for $100,000
($1,000 /share). The remaining 90 shares were issued for services rendered having a fair value of $90,000 ($1,000 /share), based
upon the stated value per share. In March 2012, all 190 shares were converted into 19,000,000 common shares at a conversion price
of $0.00001 per share and a loss of $614,984.
This class of stock has the following provisions:
·
Stated Value - $1,000 per share,
·
Non-voting,
·
Liquidation rights entitle an amount equal to the stated value, plus any accrued and unpaid dividends,
·
As long as any Series C, convertible preferred stock is outstanding, the Company is prohibited from executing various corporate
actions without the majority consent of the Series C, convertible preferred stockholders authorization; and
·
Convertible at the higher of (a) $0.01 or (b) such price that is a 50% discount to market using the average of the low 2 closing
bid prices, 5 days preceding conversion
Due to the existence of an option to convert
at a variable amount, the Company treated this series of preferred stock as a derivative liability due to the potential for settlement
in a variable quantity of shares. Additionally, the Company computed the fair value of the derivative liability at the commitment
date and remeasurement date, which was $293 and $175, respectively, using the Black-Scholes assumptions below. This transaction
is analogous to a dividend with a direct charge to retained earnings.
F-
19
MusclePharm Corporation
and Subsidiary
Notes to Consolidated
Financial Statements
June 30, 2012
(Unaudited)
(D) Common Stock
During the six months ended June 30, 2012,
the Company issued the following common stock:
Transaction Type
Quantity
Valuation
($)
Loss on
Settlement
($)
Range of Value
per Share
($)
Conversion of convertible debt
209,732,083
950,739
61,124
0.0035–0.0095
Conversion of unsecured/secured debt
37,576,155
469,683
289,897
0.0095–0.016
Forbearance of agreement terms
55,196,604
918,432
-
0.0084-0.0324
Cash and warrants
32,000,000
285,760
-
0.0089
Executive compensation
(1)
444,548,916
4,667,764
-
0.0105
Stock issued for future services
12,621,411
200,000
-
0.0115-0.025
Conversion of Series C, preferred stock to common stock
19,000,000
614,984
614,984
0.0324
Total
810,675,169
8,107,362
966,005
0.0035–.0324
(1)
Represents stock issued for prior year 2011 accrued compensation settled in 2012.
The fair value of all stock issuances above
is based upon the quoted closing trading price on the date of issuance, except for stock and warrants issued for cash, which is
based on the cash received.
The forbearance of agreement terms represents
settlement of debt and accrued liabilities and includes a valuation of $918,432 which is reduced by an $135,000 accrual and reduced
by $3,932 stock issued to settle contracts for items expensed in the year ended December 31, 2011, but are treated in the current
period as a non-cash settlement, which nets to $779,500 as shown in the statement of cash flows as loss on debt.
(E) Stock Options
The Company applied fair value accounting
for all shares based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes
option-pricing model. The Black-Scholes assumptions used when the options were issued in the year ended December 31, 2010 are as
follows:
Exercise price
$
0.50
Expected dividends
0
%
Expected volatility
74.8
%
Risk fee interest rate
1.4
%
Expected life of option
5 years
Expected forfeiture
0
%
The following is a summary of the Company's stock option
activity:
Options
Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Life
Aggregate Intrinsic
Value
Balance – December 31, 2011
1,617,500
$
0.50
3.25 years
-
Granted
-
Exercised
-
Forfeited/Cancelled
(100,000
$
0.50
Balance – June 30, 2012 – outstanding
1,567,500
$
0.50
2.75 years
-
Balance – June 30, 2012 – exercisable
1,567,500
$
0.50
2.75 years
-
Outstanding options held by related parties – 2012
1,000,000
Exercisable options held by related parties – 2012
1,000,000
F-
20
(F) Stock Warrants
All warrants issued during the six months
ended June 30, 2012 were accounted for as derivative liabilities. See Note 6.
During the six months ended June 30, 2012,
the Company entered into convertible and unsecured note agreements. As part of these agreements, the Company issued warrants to
purchase 301,445,833 shares of common stock. Each warrant vests six month after issuance and expire July 13, 2014 – October
16, 2014, with exercise prices ranging from $0.012 - $0.015. All warrants contain anti-dilution rights, and are treated as derivative
liabilities.
A summary of warrant activity for the Company for the six months
ended June 30, 2012 is as follows:
Number of Warrants
Weighted Average Exercise Price
Outstanding – December 31, 2011
283,338,233
.02
Granted
301,445,833
.013
Exercised
(32,000,000
0.0089
Balance as June 30, 2012
552,784,066
.016
Warrants Outstanding
Warrants Exercisable
Range of
Exercise Prices
Number
Outstanding
Weighted Average
Remaining
Contractual Life (in
years)
Weighted Average
Exercise Price
Number
Exercisable
Weighted
Average
Exercise Price
Intrinsic Value
$0.012-$1.50
552,784,066
2.33
$
0.016
150,708,232
$
0.026
2,049,125
(G) Treasury Stock
During the six months ended June 30, 2012,
the Company repurchased 26,431,575 shares of its common stock for the total sum of $460,978 or an average of $0.0174 per share.
The Company records the value of its common stock held in treasury at cost. The Company has not cancelled or retired these shares,
and they remain available for reissuance. The Company has a stock repurchase plan in place.
Note 8 Commitments, Contingencies and Other Matters
(A) Operating Lease
The Company has various non-cancelable
leases with terms expiring through 2015.
Future minimum annual lease payments for
the above leases are approximately as follows:
Years Ended December 31,
2012 (6 months)
$
157,000
2013
375,000
2014
402,000
2015
306,000
Total minimum lease payments
$
1,240,000
Rent expense for the six months ended June 30, 2012 and 2011,
was $117,247 and $78,872, respectively.
F-
21
(B) Legal Matters
From time to time, the Company is or may
become involved in various legal proceedings that arise in the ordinary course of business or otherwise. Legal proceedings are
subject to inherent uncertainties as to timing, outcomes, costs, expenses and time expenditures by the Company's management
and others on behalf of the Company. Although there can be no assurance, based on information currently available the Company's
management believes that the outcome of legal proceedings that are pending or threatened against the Company will not have a material
effect on the Company's financial condition. However, the outcome of any of these matters is neither probable nor reasonably
estimable.
As of August 20, 2012, the Company is a
party defendant in the following legal proceedings, each of which the Company: (a) believes is without merit; and (b) intends to
defend vigorously:
·
Environmental Research Center v. MusclePharm LLC, et al.
, Los Angeles Superior Court, California. Date instituted: February
4, 2011. Plaintiff Environmental Research Center ("ERC") filed notices of intent to commence litigation against over
200 sports nutrition and dietary supplement companies in the United States and Canada, including the Company. ERC alleges violations
of California's Proposition 65.
·
USA Nutraceuticals Group, Inc. et al. v. MusclePharm, Inc.
, United States District Court for the Southern District of
Florida. Date instituted: September 21, 2011. Plaintiff USA Nutraceuticals (d/b/a Beast Sports) alleges that the Company's
use of the tagline "Train like an unchained beast" infringes on its mark "Beast" for dietary supplements.
Plaintiff's primary goal is not to recover monetary damages, but rather that the Company cease using the tagline in the Company's
product marketing.
·
John's Lone Star Distribution v. MusclePharm Corporation
, United States District Court for the Eastern District
of Texas. Date instituted: April 5, 2012. Plaintiff is a former domestic distributor for the Company. Plaintiff seeks injunctive
relief to allow it to continue to purchase products from the Company. Plaintiff does not seek monetary damages.
·
William Bossung and Bishop Equity Partners LLC v. MusclePharm Corporation
, Clark County, Nevada District Court. Date
instituted: January 17, 2012. Plaintiff alleges that additional monetary payments are due in respect of a settlement for outstanding
warrants.
·
Inter-Mountain Capital Corp. v. MusclePharm Corporation
, United States District Court for the District of Utah. Date
instituted: May 2, 2012. Plaintiff alleges breach of contract regarding a warrant and purchase agreement, and seeks monetary damages
related thereto.
·
Justin Keener d/b/a JMJ Financial v. MusclePharm Corporation
, Miami-Dade County, Florida.
Date instituted: June 13, 2012.
Plaintiff alleges claims for monetary compensation associated
with an investment in the Company.
As of August 20, 2012, the Company is a party plaintiff in the
following legal matters:
·
MusclePharm Corporation v. Swole Sports Nutrition, LLC
, United States District Court for the Southern District of Florida.
Date instituted: March 15, 2012. The Company filed this action for trademark infringement against after the Defendant started marketing
and selling a dietary supplement named "Turbo Shred". The Company has sold "Shred Matrix" since April 2,
2008, and the mark "MusclePharm Shred Matrix" was granted registration by the USPTO on September 21, 2010.
·
MusclePharm Corporation v. Fuse Science, Inc
., United States District Court for the Southern District of Florida. Date
instituted: March 15, 2012. Defendant recently began marketing and selling a product "Enerjel" as a topical analgesic.
The Company has sold a dietary supplement "Energel" since 2009 and acquired a trademark registration with the USPTO
for "MusclePharm Energel" (Registration number: 4,077,299). The Company seeks to protect its intellectual property
rights and prevent Defendant from trademark infringement. Additionally, the Company filed an objection with the USPTO to Defendant's
attempt to register the mark "Enerjel".
(C) Payroll Taxes
As of June 30, 2012, accounts payable and
accrued expenses included $166,745 pertaining to accrued payroll taxes. The taxes represent employee withholdings that have yet
to be remitted to the taxing agencies.
Included in the $166,745 is an amount due
prior to the Company becoming a publicly traded company in February 2010, when the Company existed as an LLC, which at that time
had accrued payroll taxes/penalties and interest of approximately $53,000.
F-
22
(D) Product Liability
As a manufacturer of nutritional supplements
and other consumer products that are ingested by consumers, the Company has been and is currently subject to various product liability
claims. Although the effects of these claims to date have not been material, it is possible that current and future product liability
claims could have a material adverse effect on our business or financial condition, results of operations or cash flows. The Company
currently maintains product liability insurance with a deductible/retention of $10,000 per claim with an aggregate cap on retained
loss of $5,000,000. At June 30, 2012 the Company had not recorded any accruals for product liabilities.
Note 9 Defined Contribution Plan
The Company has a 401(k) defined contribution
plan, in which all eligible employees participate. The 401(k) plan is a contributory plan. Matching contributions are based upon
the amount of the employees' contributions. Beginning January 1, 2012, the Company may make an additional discretionary 401(k)
plan matching contribution to eligible employees. During the six months ended June 30, 2012 and 2011 the Company's matching
contribution was $18,251 and $0, respectively.
Note 10 Restricted Cash
A restricted fund was established in compliance
with the unsecured debt agreements. The restricted fund at June 30, 2012 has a balance of $52,744. This fund is used to pay principal
and interest for the unsecured debt agreements which had a principal balance of $4,471,996 as of June 30, 2012. Ten percent of
all cash receipts from operations are put into this fund under the terms of the debt agreement.
F-
23
MusclePharm Corporation and Subsidiary
Notes to Consolidated Financial Statements
June 30, 2012
(Unaudited)
Note 11 Subsequent Events
Share Issuances
On July 12, 2012, the Company entered into
a settlement agreement with an accredited investor pursuant to which the Company issued 7,000,000 shares of common stock, having
a fair value of $129,500 ($0.0185/share), based upon the quoted closing trading price, to satisfy a dispute related to an outstanding
common stock purchase warrant. The Company recorded a loss on settlement of $129,500.
In July 2012, the Company issued 10,000,000
shares to settle a contract valued at approximately $120,000 ($0.012/share), based upon the quoted closing trading price.
In August 2012, the Company issued 20,833,333
shares to settle warrant contract disputes. On August 20, 2012, the Company repaid debt totaling $119,503 issued by the Company
to an accredited investor in April 2012. In connection therewith, the investor agreed to cancel 12,500,000 warrants in return for
12,500,000 restricted shares of the Company's common stock. Both parties entered into a standard mutual release agreement.
Then, on August 20, 2012, the Company repaid debt totaling $80,233 issued by the Company to an accredited investor in April 2012.
In connection therewith, the investor agreed to cancel 8,333,333 warrants in return for 8,333,333 restricted shares of the Company's
common stock. The parties entered into a standard mutual release agreement.
In July 2012, the Company entered into
a securities purchase agreement with six investors to sell up to 200,000,000 shares of the Company's common stock at a share
price of $0.01, which may be adjusted, and shall be issued warrants to purchase 100,000,000 shares of common stock at an exercise
price of $0.01. As of August 2012, the Company sold 100,000,000 shares of common stock for net proceeds of $870,000 net of debt
issue costs totaling $130,000. In conjunction with this sale, the Company issued 54,500,000 stock purchase warrants with an exercise
price of $0.01 per share. The securities purchase agreement also bears a purchase price reset and price protection on the common
stock issued. In accordance with the agreement, the Company also agreed to effectuate a reverse stock split within 20 days of entering
into this agreement which has not been met. In connection with the agreement, the Company also entered into the following consulting
agreements:
Consulting agreement to issue shares worth
8.4% of the Company to two consultants, one of whom was appointed to the Company's board of directors, on a fully diluted
basis after giving effect to the contemplated reverse stock split. Until the Company has issued and outstanding 3.5 billion shares
of Common Stock (subject to adjustment for stock splits), the Company shall ensure that the Consultant shall maintain 8.4% fully
diluted equity position. The consultant shall be promptly issued additional shares of Common stock of the Company so that Consultant
shall continue to own 8.4% of the Company on a fully diluted basis.
In July 2012, the Company executed a note
for $750,000 bearing interest at 12%. In an event of default, at the option of the holder, the note may be converted into common
stock equal to 95% of the average daily volume weighted average price of the Company's common stock during the five trading
days immediately prior to the conversion date. The Company paid debt issue costs of $90,975 in cash and 7,500,000 common shares,
having a fair value of $150,000, based on the quoted closing trading price. In connection with the debt agreement, the Company
agreed to assign all future receivables from the Company's customers to the note holder until the note is fully repaid. The
note is collateralized by all assets of the Company.
Treasury Shares
During July 2012, three executive officers of the Company voluntarily
returned 79,071,984 shares of common stock issued at par value and expensed during the year ended December 31, 2011.
F-
24
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders of:
MusclePharm Corporation
We have audited the accompanying consolidated
balance sheets of MusclePharm Corporation and Subsidiary as of December 31, 2011 and 2010, and the related consolidated statements
of operations, stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
MusclePharm Corporation and Subsidiary as of December 31, 2011 and 2010, and the results of its operations and its cash flows for
the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the
Company has a net loss of $23,280,950 and net cash used in operations of $5,801,761 for the year ended December 31, 2011; and has
a working capital deficit of $13,693,267, and a stockholders' deficit of $12,971,212 at December 31, 2011. These factors
raise substantial doubt about the Company's ability to continue as a going concern. Management's plan in regards to
these matters is also described in Note 2.
Berman & Company, P.A.
Boca Raton, Florida
April 13, 2012 except for note 1 as to which the date is June
28, 2012
551 NW 77th Street Suite 201
Ÿ
Boca Raton, FL 33487
Phone: (561) 864-4444
Ÿ
Fax: (561) 892-3715
www.bermanscpas.com
Ÿ
info@bermancaps.com
Registered with the
PCAOB
Ÿ
Member
AICPA
Center for Audit Quality
Member American Institute of Certified
Public Accountants
Member Florida Institute of Certified
Public Accountants
F-
25
MusclePharm Corporation and Subsidiary
Consolidated Balance Sheets
December 31, 2011
December 31, 2010
Assets
Current Assets:
Cash
659,764
43,704
Accounts receivable – net
2,569,092
426,761
Prepaid stock compensation
534,456
1,965,911
Prepaid sponsorship fees
203,333
-
Other
50,188
58,065
Total current assets
4,016,833
2,494,441
Property and equipment - net
907,522
138,551
Debt issue costs - net
68,188
34,404
Other assets
53,585
53,585
Total assets
$
5,046,128
$
2,720,981
Liabilities and Stockholders' Deficit
Current Liabilities:
Accounts payable and accrued liabilities
9,359,073
3,227,483
Customer deposits
8,047
75,733
Debt – net
1,281,742
289,488
Derivative liabilities
7,061,238
622,944
Total Current Liabilities
17,710,100
4,215,648
Long Term Liabilities:
Debt – net
307,240
250,000
Total Liabilities
18,017,340
4,465,648
Stockholders' Deficit:
Series A, Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding
-
-
Series B, Preferred Stock, $0.001 par value; 51 shares authorized, 51 and none, respectively, issued and outstanding
-
-
Series C, Convertible Preferred Stock, $0.001 par value; 500 shares authorized, 190 and none, respectively, issued and outstanding
-
-
Common Stock, $0.001 par value; 2,500,000,000 shares authorized, 605,930,613 and 118,649,439 issued and outstanding
605,931
118,649
Additional paid-in capital
31,579,538
20,012,122
Accumulated deficit
(45,156,681
)
(21,875,438
)
Total Stockholders' Deficit
(12,971,212
)
(1,744,667
)
Total Liabilities and Stockholders' Deficit
5,046,128
2,720,981
See accompanying notes to consolidated financial
statements
F-
26
MusclePharm Corporation and Subsidiary
Consolidated Statements of Operations
For The Year Ended December 31,
2011
2010
Sales - net
$
17,212,636
$
3,202,687
Cost of sales
14,845,069
2,804,274
Gross profit
2,367,567
398,413
General and administrative expenses
18,587,727
18,650,249
Loss from operations
(16,220,160
)
(18,251,836
)
Other income (expense):
Derivative expense
(4,777,654
)
(93,638
)
Change in fair value of derivative liabilities
5,162,100
(149,306
)
Loss on settlement of accounts payable and debt
(3,862,458
)
(433,400
)
Interest expense
(3,711,278
)
(480,589
)
Other expense
(121,500
)
(160,568
)
Licensing income
250,000
-
Total other income (expense) - net
(7,060,790
)
(1,317,501
)
Net income (loss)
$
(23,280,950
)
$
(19,569,337
)
Net income (loss) available to common stockholders
Net income (loss)
$
(23,280,950
)
$
(19,569,337
)
Series C preferred stock dividend
(293
)
-
Net income (loss) available to common stockholders
$
(23,280,657
)
$
(19,569,337
)
Net income (loss) per share available to common stockholders - basic and diluted
$
(0.08
)
$
(0.48
)
Weighted average number of common shares outstanding during the year – basic and diluted
281,484,658
41,141,549
See accompanying notes to consolidated financial
statements
F-
27
MusclePharm Corporation and Subsidiary
Consolidated
Statement of Stockholders'
Equity (Deficit)
Years Ended December 31, 2011 and
2010
Series A, Convertible
Preferred Stock
Series B, Preferred
Stock
Series C,
Convertible
Preferred Stock
Common Stock
Additional
Paid-
Accumulated
Total
Stockholders'
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
in Capital
Deficit
Deficit
Balance - December 31, 2009
-
$
-
-
$
-
-
$
-
26,000,000
$
26,000
$
1,099,508
$
(2,306,101
)
$
(1,180,593
)
Recapitalization and deemed issuance
83,333
83
-
-
-
-
70,838
71
(25,261
)
-
(25,107
)
Issuance of common stock:
Conversion of preferred stock to common stock
(83,333
)
(83
)
-
-
-
-
16,666,600
16,667
(16,584
)
-
-
Conversion of convertible debt to common stock
-
-
-
-
-
-
7,708,906
7,709
1,025,791
-
1,033,500
Stock and warrants
-
-
-
-
-
-
4,167,767
4,168
1,524,508
-
1,528,676
Services - third parties
-
-
-
-
-
-
22,457,214
22,457
4,532,158
-
4,554,615
Services - third parties - future services
-
-
-
-
-
-
10,545,200
10,545
2,724,003
-
2,734,548
Services - related parties
-
-
-
-
-
-
10,000,000
10,000
5,290,000
-
5,300,000
Services paid with previously issued stock
    to related parties
-
-
-
-
-
-
-
-
1,039,500
-
1,039,500
Settlement of debt - third parties
-
-
-
-
-
-
4,165,571
4,166
1,186,898
-
1,191,064
Settlement of debt - related party
-
-
-
-
-
-
7,161,548
7,161
350,916
-
358,077
Settlement of accounts payable
-
-
-
-
-
-
9,014,286
9,014
424,386
-
433,400
Debt offering - additional interest expense
-
-
-
-
-
-
50,000
50
30,450
-
30,500
Extension of debt maturity date
-
-
-
-
-
-
130,000
130
95,370
-
95,500
Contract settlement in connection with lawsuit
-
-
-
-
-
-
511,509
511
99,489
-
100,000
Share based payments
-
-
-
-
-
-
-
-
630,990
-
630,990
Net loss
-
-
-
-
-
-
-
-
-
(19,569,337
)
(19,569,337
)
Balance - December 31, 2010
-
-
-
-
-
-
118,649,439
118,649
20,012,122
(21,875,438
)
(1,744,667
)
Issuance of common and preferred stock:
Conversion of convertible debt
-
-
-
-
-
-
254,061,743
254,062
4,014,795
-
4,268,857
Conversion of secured/unsecured debt
-
-
-
-
-
-
40,277,378
40,277
817,675
857,952
Cash
-
-
-
-
-
-
82,000,000
82,000
793,000
-
875,000
Cash
-
-
-
-
100
-
-
-
100,000
-
100,000
Services - third parties
-
-
-
-
-
-
46,521,157
46,522
1,153,322
-
1,199,844
Services - third parties
-
-
-
-
90
-
-
-
90,000
-
90,000
Services - third parties - future services
-
-
-
-
-
-
4,000,000
4,000
210,250
-
214,250
Extension of debt maturity date
-
-
-
-
-
-
9,375,000
9,375
151,875
-
161,250
Settlement of accounts payable
-
-
-
-
-
-
54,545,896
54,546
3,592,173
-
3,646,719
Cancellation of shares
-
-
-
-
-
-
(3,500,000
)
(3,500
)
3,500
-
-
Share based payments - related parties
-
-
51
-
-
-
-
-
-
-
-
Dividends on series C preferred stock - related
    parties
-
-
-
-
-
-
-
-
-
(293
)
(293
)
Reclassification of derivative liability to
    additional paid in capital
-
-
-
-
-
-
-
-
640,826
640,826
Net loss
-
-
-
-
-
-
-
-
-
(23,280,950
)
(23,280,950
)
Balance - December 31, 2011
-
$
-
51
$
-
190
$
-
605,930,613
$
605,931
$
31,579,538
$
(45,156,681
)
$
(12,971,212
)
See accompanying notes to consolidated
financial statements
F-
28
MusclePharm Corporation and Subsidiary
Consolidated Statements of Cash Flows
For the Year Ended December 31,
2011
2010
Cash Flows From Operating Activities:
Net loss
$
(23,280,950
)
$
(19,569,337
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
171,587
18,567
Bad debt
120,477
119,468
Warrants issued for services - third parties
1,989,982
-
Stock issued for services - third parties
1,289,844
4,554,615
Stock issued for services - related parties
-
5,300,000
Services paid with previously issued stock to related parties
-
1,039,500
Stock issued to extend maturity date of debt
161,250
95,500
Stock issued as settlement in connection with lawsuit
-
100,000
Stock issued with unsecured debt offering-additional interest expense
-
30,500
Share based payments
-
630,990
Amortization of prepaid stock compensation
1,745,705
768,637
Amortization of debt discount and debt issue costs
3,466,718
485,689
Loss on settlement of accounts payable
2,123,129
433,400
Loss on conversion of debt
1,739,329
-
Derivative expense
4,777,654
93,638
Change in fair value of derivative liabilities
(5,162,100
)
149,306
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable
(2,262,808
)
(434,753
)
Prepaid sponsorship fees
(203,333
)
-
Inventory
-
4,245
Deposits
-
32,116
Other
7,877
(66,703
)
Increase (decrease) in:
Accounts payable and accrued liabilities
7,581,564
2,358,430
Customer deposits
(67,686
)
60,715
Net Cash Used In Operating Activities
(5,801,761
)
(3,795,477
)
Cash Flows From Investing Activities:
Purchase of property and equipment
(831,511
)
(117,303
)
Net Used In Investing Activities
(831,511
)
(117,303
)
Cash Flows From Financing Activities:
Cash overdraft
-
(17,841
)
Due to related party
-
(27,929
)
Proceeds from issuance of debt
6,612,900
2,140,608
Proceeds from issuance of debt - related party
-
358,077
Repayment of debt
(75,285
)
-
Cash paid for debt issue costs
(263,283
)
-
Proceeds from issuance of preferred stock
100,000
-
Proceeds from issuance of common stock and warrants-net of recapitalization payment
875,000
1,503,569
Net Cash Provided By Financing Activities
7,249,332
3,956,484
Net increase in cash
616,060
43,704
Cash at beginning of year
43,704
-
Cash at end of year
$
659,764
$
43,704
Supplemental disclosures of cash flow information:
Cash paid for interest
$
28,806
$
15,882
Supplemental disclosure of non-cash investing and financing activities:
Stock issued for future services - third parties
$
214,250
$
2,734,548
Non cash increase in accounts payable related to future services to be paid for with common stock
$
100,000
$
-
Debt discount recorded on convertible and unsecured debt accounted for as a derivative liability
$
5,473,291
$
380,000
Conversion of convertible debt and accrued interest for common stock
$
3,387,480
$
1,033,500
Stock issued to settle debt - third parties
$
-
$
1,191,064
Stock issued to settle debt - related party
$
-
$
358,077
Stock issued to settle accounts payable and due to factor
$
1,440,779
$
433,400
Reclassification of derivative liability to additional paid in capital
$
640,826
$
-
Conversion of preferred stock to common stock
$
-
$
83
Stock issued to acquire equipment
$
82,811
$
-
Auto acquired through financing
$
26,236
$
-
Dividends on series C preferred stock - related parties
$
293
$
-
Original issue discount
$
-
$
37,500
See accompanying notes to consolidated financial
statements
F-
29
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Note 1: Nature of Operations and Summary of Significant
Accounting Policies
Nature of Operations
MusclePharm Corporation (the "Company",
"We", "Our" or "MP"), was organized as a limited liability company in the State of Colorado
on April 22, 2008. On February 18, 2010, the Company executed a reverse recapitalization with Tone in Twenty, Inc. and changed
its name to MP (See Note 3).
The Company markets branded sports nutrition
products.
Restatement
On May 14, 2012, the Company determined
that a material misstatement exists in the Company's 2011 quarterly and 2011 and 2010 annual financial statements. The Company
concluded that the following financial statements contained material misstatements: (i) the Company's audited financial statements
for the year ended December 31, 2011, filed in an annual report on Form 10-K with the U.S. Securities and Exchange Commission (the
"SEC") on April 16, 2012; (ii) the Company's audited financial statements for the year ended December 31, 2010,
filed in an annual report on Form 10-K with the SEC on April 1, 2011; (iii) the Company's unaudited financial statements
for the period ended September 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on November 14, 2011; (iv) the Company's
unaudited financial statements for the period ended June 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on August
16, 2011; and (v) the Company's unaudited financial statements for the period ended March 31, 2011, filed in a quarterly
report on Form 10-Q with the SEC on May 23, 2011.
The foregoing financial statements contained
material misstatements pertaining to the Company's calculation of net sales and presentation of general and administrative
expenses and cost of sales. The Company has determined that advertising related credits that were granted to customers fell within
the guidance of ASC No. 605-50-55 ("
Revenue Recognition" – Customer Payments and Incentives – Implementation
Guidance and Illustrations)
. The guidance indicates that, absent evidence of benefit to the vendor, appropriate treatment requires
netting these types of payments against revenues and not expensing as advertising expense. The Company also noted other credits
and discounts that, upon further review, had been previously classified as advertising expense as a component of general and administrative
expense that require a reallocation of presentation as amounts to be netted against revenues. The Company's net loss and
loss per share will not be affected by this reallocation in the statement of operations.
Promotions, credits and non-specific advertising
with its customers have been reclassified from general and administrative expenses to revenues.
Samples shipped to customers not clearly
identifiable were reclassified from general and administrative expense to cost of sales.
F-
30
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Year Ended
December 31,
2011
As Restated
Adjustments
Year Ended
December 31,
2011
As Issued
Year Ended
December 31,
2010
As Restated
Adjustments
Year Ended
December 31,
2010
As Issued
Sales - net
$
17,212,636
$
(3,625,701
)
$
20,838,337
$
3,202,687
$
(844,608
)
$
4,047,295
Cost of sales
14,845,069
374,455
14,470,614
2,804,274
-
2,804,274
Gross profit
2,367,567
(4,000,156
)
6,367,723
398,413
(844,608
)
1,243,021
General and administrative expenses
18,587,727
(4,000,156
)
22,587,883
18,650,249
(844,608
)
19,494,857
Loss from operations
(16,220,160
)
-
(16,220,160
)
(18,251,836
)
-
(18,251,836
)
Other income (expense)
Derivative expense
(4,777,654
)
-
(4,777,654
)
(93,638
)
-
(93,638
)
Change in fair value of derivative liabilities
5,162,100
-
5,162,100
(149,306
)
-
(149,306
)
Loss on settlement of accounts payable and debt
(3,862,458
)
-
(3,862,458
)
(433,400
)
-
(433,400
)
Interest expense
(3,711,278
)
-
(3,711,278
)
(480,589
)
-
(480,589
)
Other expense
(121,500
)
-
(121,500
)
(160,568
)
-
(160,568
)
Licensing income
250,000
-
250,000
-
-
-
Total other income (expense) - net
(7,060,790
)
-
(7,060,790
)
(1,317,501
)
-
(1,317,501
)
Net loss
$
(23,280,950
)
$
-
$
(23,280,950
)
$
(19,569,337
)
$
-
$
(19,569,337
)
Net loss available to common stockholders
Net loss
$
(23,280,950
)
$
-
$
(23,280,950
)
$
(19,569,337
)
$
-
$
(19,569,337
)
Series C preferred stock dividend
(293
)
-
(293
)
-
-
-
Net loss available to common stockholders
$
(23,280,657
)
$
-
$
(23,280,657
)
$
(19,569,337
)
$
-
$
(19,569,337
)
Net loss per share available to common stockholders - basic and diluted
$
(0.08
)
$
-
$
(0.08
)
$
(0.48
)
$
-
$
(0.48
)
Weighted average number of common shares outstanding during the year – basic and diluted
281,484,658
-
281,484,658
41,141,549
-
41,141,549
Risks and Uncertainties
The Company operates in an industry that
is subject to rapid change and intense competition. The Company's operations will be subject to significant risk and uncertainties
including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.
Use of Estimates
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to
exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or
set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly
from estimates.
Principles of Consolidation
All inter-company accounts and transactions have been eliminated
in consolidation.
F-
31
Cash and Cash Equivalents
The Company considers all highly liquid
instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents. At December
31, 2011 and 2010, the Company had no cash equivalents.
The Company minimizes its credit risk associated
with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally
insured limits. At December 31, 2011 there was one account that had a balance that exceeded the federally insured limit by approximately
$378,000. In 2010, there were no balances that exceeded the federally insured limit.
Accounts Receivable and Allowance for
Doubtful Accounts
Accounts receivable represent trade obligations
from customers that are subject to normal trade collection terms. The Company periodically evaluates the collectability of its
accounts receivable and considers the need to establish an allowance for doubtful accounts based upon historical collection experience
and specific customer information. Accordingly, the actual amounts could vary from the recorded allowances.
The Company does not charge interest on
past due receivables. Receivables are determined to be past due based on the payment terms of the original invoices.
Accounts receivable at December 31, 2011
and 2010 were as follows:
Accounts receivable
$
2,766,776
$
542,863
Less: allowance for doubtful accounts
(197,684
)
(116,102
)
Accounts receivable – net
$
2,569,092
$
426,761
As of December 31, 2011 and 2010, the Company
had the following concentrations of accounts receivable with customers:
Customer
2011
2010
A
36
%
24
%
B
12
%
2
%
C
10
%
-
D
7
%
40
%
E
5
%
11
%
F-
32
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Property and Equipment
Property and equipment are stated at cost and depreciated to
their estimated residual value over their estimated useful lives. When assets are retired or otherwise disposed of, the assets
and related accumulated depreciation are relieved from the accounts and the resulting gains or losses are included in operating
income in the statements of operations. Repairs and maintenance costs are expensed as incurred. Depreciation is provided using
the straight-line method for all property and equipment.
Website Development Costs
Costs incurred in the planning stage of a website are expensed,
while costs incurred in the development stage are capitalized and amortized over the estimated useful life of the asset.
Long-Lived Assets
The Company reviews long-lived assets for impairment whenever
events or changes in circumstances, such as service discontinuance or technological obsolescence, indicate that the carrying amount
of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to
the undiscounted expected future cash flows related to the asset. If the comparison indicates that impairment is present, the amount
of impairment is calculated as the difference between the excess of the carrying amount over the fair value of the asset. If a
readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to
the asset.
Fair Value of Financial Instruments
The Company measures assets and liabilities at fair value based
on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that
would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between
market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or
liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on
either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical levels of inputs to measure
fair value:
·
Level 1:
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
·
Level 2:
Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices
for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities;
or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
·
Level 3:
Unobservable inputs reflecting the Company's assumptions incorporated in valuation techniques used to
determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
F-
33
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
The following are the major categories of liabilities measured
at fair value on a recurring basis as of December 31, 2011 and 2010, using quoted prices in active markets for identical liabilities
(Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):
As of December 31,
2011
2010
Derivative liabilities
Level 2
$
7,061,238
$
622,944
The Company's financial instruments consisted primarily
of accounts receivable, prepaids, accounts payable and accrued liabilities, derivative liabilities and debt. The carrying amounts
of the Company's financial instruments generally approximated their fair values as of December 31, 2011 and 2010, respectively,
due to the short-term nature of these instruments.
Revenue Recognition
The Company records revenue when all of the following have occurred:
(1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered by the third party manufacturer, (3)
the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.
Depending on individual customer agreements, sales are recognized
either upon shipment of products to customers or upon delivery. For one of our largest customers, which represent 14% of total
revenue in 2011, revenue is recognized upon delivery.
The Company has determined that advertising related credits
that were granted to customers fell within the guidance of ASC No. 605-50-55 ("
Revenue Recognition" – Customer
Payments and Incentives – Implementation Guidance and Illustrations)
. The guidance indicates that, absent evidence of
benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not expensing as advertising
expense.
The Company records store support, giveaways, sales allowances
and discounts as a direct reduction of sales. The Company recorded reductions to gross revenues totaling approximately $4,000,000
and $1,000,000 for the years ended December 31, 2011 and 2010, respectively.
The Company grants volume incentive rebates to certain customers
based on contractually agreed percentages ranging from 2.5% - 5.5% as a percentage of sales once a certain threshold has been met.
The credits are recorded as a direct reduction to sales. Included in the reductions to revenues above are volume incentive rebates.
Total volume incentive rebates granted for the years ended December 31, 2011 and 2010 were approximately $500,000 and $0, respectively.
The Company has an informal 7-day right of return for products.
There were nominal returns in 2011 and 2010.
During the years ended December 31, 2011 and 2010, the Company
had the following concentrations of revenues with customers:
Customer
2011
2010
A
41
%
45
%
B
14
%
7
%
C
-
15
%
The Company does not manufacture or physically
hold any inventory. Inventory is held and distributed by the Company's third party manufacturer.
Licensing Income and Royalty Revenue
On May 5, 2011, the Company granted an
exclusive indefinite term license to a third party for $250,000. The licensee may market, manufacture, design and sell the Company's
existing apparel line. The licensee will pay the Company a 10% net royalty based on its net income at the end of each fiscal year.
To date, no royalty revenue has been earned.
F-
34
Cost of Sales
Cost of sales represents costs directly
related to the production and third party manufacturing of the Company's products.
In 2011, cost of sales increased due to
a reclassification from advertising expense in the amount of $374,454.
See discussion of restatement.
F-
35
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Shipping and Handling
Product sold is typically shipped directly
to the customer from the manufacturer. Any freight billed to customers is offset against shipping costs and included in cost of
sales.
Freight billed to customers for the years
ended December 31, 2011 and 2010 was $309,690 and $71,983, respectively.
Advertising
The Company expenses advertising costs
when incurred.
Advertising
for the years ended December 31, 2011 and 2010 are as follows:
Year Ended
December 31,
2011
As Restated
Adjustments
Year Ended
December 31,
2011
As Issued
Year Ended
December 31, 2010
As Restated
Adjustments
Year Ended
December 31, 2010
As Issued
Advertising
$
5,241,585
$
(4,000,156
)
$
9,241,741
$
6,240,347
$
(844,608
)
$
7,084,955
See discussion of restatement.
Income Taxes
Through February 18, 2010, the Company was taxed as a pass-through
entity (LLC) under the Internal Revenue Code and was not subject to federal and state income taxes; accordingly, no provision was
made. The financial statements reflect the LLC's transactions without adjustment, if any, required for income tax purposes
for the period ended February 18, 2010. In computing the expected tax benefit, the Company reflected a net loss of $23,280,950
in the year ended December 31, 2011 and $19,169,454 for the period from February 18, 2010 to December 31, 2010.
In 2011, and the period from February 18, 2010 through December
31, 2010, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, operating loss and tax credit carry-forwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Beginning with the adoption of FASB Interpretation No. 48,
Accounting
for Uncertainty in Income Taxes
, (included in FASB ASC Subtopic 740-10,
Income Taxes — Overall
), the Company
recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income
tax positions are measured at the largest amount that is greater than 50% likely to be realized. Changes in recognition or measurement
are reflected in the period in which the change in judgment occurs.
The Company records interest and penalties related to unrecognized
tax benefits in income tax expense. There were none for the years ended December 31, 2011 and 2010.
Beneficial Conversion Feature
For conventional convertible debt where the rate of conversion
is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount.
F-
36
When the Company records a BCF, the relative fair value of the
BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest
expense over the life of the debt.
Derivative Liabilities
Fair value accounting requires bifurcation of embedded derivative
instruments, such as ratchet provisions or conversion features in convertible debt or equity instruments, and measurement of their
fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the
convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and
further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible
debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.
Once derivative liabilities are determined, they are adjusted
to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of
operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such
as warrants, are also valued using the Black-Scholes option-pricing model.
F-
37
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Debt Issue Costs and Debt Discount
The Company may pay debt issue costs, and record debt discounts
in connection with raising funds through the issuance of convertible debt. These costs are amortized to interest expense over the
life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately
expensed.
Original Issue Discount
For certain convertible debt issued, the Company provides the
debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount
of the note and is amortized to interest expense over the life of the debt.
Share-based payments
The Company has incentive plans that reward employees with stock
options, warrants, restricted stock and stock appreciation rights. The amount of compensation cost for these share-based awards
is measured based on the fair value of the awards, as of the date that the share-based awards are issued and adjusted to the estimated
number of awards that are expected to vest.
Fair value of stock options, warrants, and stock appreciation
rights, is generally determined using a Black-Scholes option pricing model, which incorporates assumptions about expected volatility,
risk free rate, dividend yield, and expected life. Compensation cost for share-based awards is recognized on a straight-line basis
over the vesting period.
Net Earnings (Loss) per Share
Net earnings (loss) per share is computed by dividing net income
(loss) less preferred dividends for the period by weighted average number of shares of common stock outstanding during each period.
Diluted earnings (loss) per share is computed by dividing net income (loss) less preferred dividends by the weighted average number
of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
Since the Company reflected a net loss in 2011 and 2010, respectively,
the effect of considering any common stock equivalents, if exercisable, would have been anti-dilutive. A separate computation of
diluted earnings (loss) per share is not presented.
The Company has the following common stock equivalents at December
31, 2011 and 2010:
At December 31,
2011
2010
Stock options (exercise price - $0.50/share)
1,617,500
2,767,500
Warrants (exercise price $0.015- $1.50/share)
61,696,327
750,000
Convertible preferred series C shares (exercise price $0.01/share)
19,000
-
Convertible debt (exercise price $0.002- $0.02/share)
448,592,711
11,197,139
Total common stock equivalents
511,925,538
14,714,639
In the above table, some of the outstanding convertible debt
from 2011 and 2010 contains ratchet provisions that would cause variability in the exercise price at the balance sheet date. As
a result, common stock equivalents could change at each reporting period.
F-
38
Reclassification
The Company has reclassified certain prior period amounts to
conform to the current period presentation. These reclassifications had no effect on the financial position, results of operations
or cash flows for the periods presented.
F-
39
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Recent Accounting Pronouncements
In May 2011, the FASB issued ASU No. 2011-04,
which amended ASC Topic 820 to achieve common fair value measurements and disclosure requirements in U.S. GAAP and International
Financial Reporting Standards ("IFRS"). The amendments in ASU No. 2011-05 result in common fair value measurement and
disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements
in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This amendment is effective
for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not anticipate this
amendment will have a material impact on its financial statements.
Note 2: Going Concern
As reflected in the accompanying financial
statements, the Company had a net loss of $23,280,950 and net cash used in operations of $5,801,761 for the year ended December
31, 2011; and a working capital deficit and stockholders' deficit of $13,693,267 and $12,971,212, respectively, at December
31, 2011. These factors raise substantial doubt about the Company's ability to continue as a going concern.
The ability of the Company to continue
its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets
with some additional funding from other traditional financing sources, including term notes, until such time that funds provided
by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related
parties to sustain the Company's existence.
The Company will require additional funding
to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company
believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future.
There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.
In response to these problems, management
has taken the following actions:
·
seeking additional third party debt and/or equity financing,
·
continue with the implementation of the business plan,
·
generate new sales from international customers; and
·
allocate sufficient resources to continue with advertising and marketing efforts
The accompanying financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets
or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3: Reverse Recapitalization
On February 18, 2010, the Company merged
with Tone in Twenty, Inc. ("TIT"), a then public shell corporation, and MP became the surviving corporation, in a transaction
treated as a reverse recapitalization. TIT did not have any operations and majority-voting control was transferred to MP.
In the recapitalization, MP acquired 26,000,000
shares of common stock from TIT in exchange for all member units in MP. Prior to the transaction, the Company paid approximately
$25,000 to a former executive of TIT to acquire 366,662 of the 437,500 shares issued and outstanding, these shares were then immediately
cancelled and retired. The remaining 70,838 shares were held by the selling stockholders as a deemed issuance in the recapitalization.
After the transaction, there were 26,070,838 shares issued and outstanding. The transaction resulted in MP acquiring 99.7% control.
The transaction also requires a recapitalization
of MP. Since MP acquired a controlling voting interest, it was deemed the accounting acquirer, while TIT was deemed the legal acquirer.
The historical financial statements of the Company are those of MP and of the consolidated entities from the date of recapitalization
and subsequent.
F-
40
Since the transaction is considered a reverse
recapitalization, the presentation of pro-forma financial information was not required.
F-
41
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Note 4: Property and Equipment
Property and equipment consisted of the
following at December 31, 2011 and 2010:
2011
2010
Estimated
Useful Life
Furniture, fixtures and gym equipment
$
781,786
$
55,305
3 years
Leasehold improvements
244,770
67,760
*
Auto
37,068
-
5 years
Displays
32,057
32,057
5 years
Website
11,462
11,462
3 years
Total
1,107,143
166,584
Less: Accumulated depreciation and amortization
(199,621
)
(28,033
)
$
907,522
$
138,551
* The shorter of 5 years or the life of
the lease.
Note 5: Debt
At December 31, 2011 and 2010, debt consists
of the following:
2011
2010
Convertible debt - secured
$
1,749,764
$
605,000
Less: debt discount
(1,395,707
)
(331,261
)
Convertible debt - net
354,057
273,739
Auto loan - secured
26,236
-
Secured debt
-
187,500
Unsecured debt
2,380,315
78,249
Less: debt discount
(1,171,626
)
-
Unsecured debt - net
1,208,689
78,249
Total debt
1,588,982
539,488
Less: current portion
(1,281,742
)
(289,488
)
Long term debt
$
307,240
$
250,000
As of December 31, 2011 and 2010, total
debt in default as a component of short-term debt was $505,600 and $427,500, respectively.
(A) Convertible Debt – Secured
- Derivative Liabilities
During the years ended December 31, 2011
and 2010, the Company issued convertible notes totaling $4,679,253, (including non-cash convertible note and accrued interest of
$26,353 related to a reclassification from unsecured debt), and $846,000, respectively. The Convertible notes consist of the following
terms:
F-
42
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Year ended
Year ended
December 31, 2011
December 31, 2010
Amount of
Amount of
Principal Raised
Principal Raised
Interest Rate
0% - 18
%
8
%
Default interest rate
0% - 25
%
0% - 22
%
Maturity
June 30, 2011 to June 29, 2015
December 31, 2010 - December
                                            1, 2013
Conversion terms 1
Lesser of (1) a Fifty Percent (50%) discount
    to the two lowest closing bid prices of the five days trading days immediately preceding the date of conversion or (ii) Two
    and One-Half Cents ($0.025) per share
$
525,000
-
Conversion terms 2
200% - The "market price" will be
    equal to the average of (i) the average of the closing price of Company's common stock during the 10 trading days immediately
    preceding the date hereof and (ii) the average of the 10 trading days immediately subsequent to the date hereof.
$
537,600
-
Conversion terms 3
200% of Face. Average of the trading price 10
    trading days immediately preceding the closing of the transaction
$
177,000
-
Conversion terms 4
200% of Face. Fixed conversion price of $0.02
$
105,000
-
Conversion terms 5
300% of Face. Fixed conversion price of $0.02
$
15,000
-
Conversion terms 6
35% of the three lowest trading prices for previous
    10 trading days
$
250,000
-
Conversion terms 7
45% of the three lowest trading prices for previous
    10 trading days
$
327,500
-
Conversion terms 8
50% of average closing prices for 10 preceding
    trading days
$
76,353
-
Conversion terms 9
50% of lowest trade price for the last 20 trading
    days
$
45,000
-
Conversion terms 10
50% of the 3 lowest trades for previous 20 trading
    days
$
33,000
-
Conversion terms 11
50% of the lowest closing price for previous
    5 trading days
$
250,000
-
Conversion terms 12
60% Multiplied by the average of the lowest
    3 trading prices for common stock during the ten trading days prior to the conversion date
$
233,000
$
130,000
Conversion terms 13
62% of lowest trade price for the last 7 trading
    days
$
40,000
-
Conversion terms 14
65% of the lowest trade price in the 30 trading
    days previous to the conversion
$
335,000
$
250,000
Conversion terms 15
65% of the three lowest trading price for previous
    30 trading days
$
153,800
-
Conversion terms 16
70% of lowest average trading price for 30 trading
    days
$
1,366,000
-
Conversion terms 17
No fixed conversion option
$
35,000
-
Conversion terms 18
35% multiplied by the average of the lowest
    three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest
    complete Trading Day prior to the Conversion Date. "
$
75,000
-
Conversion terms 19
Fixed conversion price of $0.03
$
100,000
-
Conversion terms 20
150% of Face
$
-
$
5,000
Conversion terms 21
200% of Face
$
-
$
426,000
Conversion terms 22
300% of Face
$
-
$
35,000
$
4,679,253
$
846,000
The debt holders are entitled, at their option, to convert all
or part of the principal and accrued interest into shares of the Company's common stock at conversion prices and terms discussed
above. The Company classifies embedded conversion features in these notes as a derivative liability due to management's assessment
that the Company may not have sufficient authorized number of shares of common stock required to net-share settle or due to the
existence of a ratchet due to an anti-dilution provision. See Note 6 regarding accounting for derivative liabilities.
During the year ended December 31, 2011, the Company converted
debt and accrued interest, totaling $5,126,809 into 294,339,121 shares of common stock resulting in a loss on conversion of $1,739,329.
Convertible debt consisted of the following activity and terms:
During the year ended December 31, 2011, $585,000 of convertible
notes matured without conversion. These notes became demand loans and were reclassified as unsecured debt. Derivative liabilities
associated with these notes were eliminated given the expiration of the embedded conversion option.
Interest Rate
Maturity
Convertible Debt balance as of December 31, 2009
$
897,500
Borrowings during the year ended December 31, 2010
846,000
8%
March 3, 2010 - December 1, 2013
Conversion of debt into 9,908,906 shares of common stock with a valuation of $1,143,500 ( $0.045 - $0.667 /share)
(1,138,500
)
Balance as of December 31, 2010
605,000
Borrowings during the year ended December 31, 2011
4,652,900
0% - 18%
January 30, 2011 - June 29, 2015
Reclassifications from convertible notes to unsecured demand notes
(585,000
)
Conversion of debt to into 254,061,743 shares of common stock with a valuation of $4,268,857 ($0.0032 - $0.101/share)
(2,923,136
)
Convertible Debt balance as of December 31, 2011
$
1,749,764
F-
43
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
(B) Secured Debt
Secured debt consisted of the following activity and terms:
Interest Rate
Maturity
Secured Debt balance as of December 31, 2009
$
-
Borrowings during the year ended December 31, 2010
187,500
0
%
May 18, 2010 - May 26, 2010
Balance as of December 31, 2010
187,500
Conversion of debt to into 7,500,000 shares of common stock with a valuation of $437,500 ($0.058 - $0.059/share)
(187,500
)
Secured Debt balance as of December 31, 2011
$
-
(C) Unsecured Debt
Unsecured debt consisted of the following activity and terms:
Interest Rate
Maturity
Unsecured Debt balance as of December 31, 2009
$
30,000
Borrowings during the year ended December 31, 2010
1,177,499
0% - 10%
On Demand - September 29, 2011
Conversion of debt into 9,127,119 shares of common stock with a valuation of $1,439,141 ( $0.50/share)
(1,129,250
)
Unsecured Debt balance as of December 31, 2010
78,249
Borrowings during the year ended December 31, 2011
1,960,000
8% - 15 %
February 8, 2011 - June 21, 2014
Reclassifications from convertible notes to unsecured demand notes
585,000
Conversion of debt to into 32,777,378 shares of common stock with a valuation of $420,452 ($0.01 - $0.05/share)
(167,649
)
Repayments
(75,285
)
Unsecured Debt balance as of December 31, 2011
$
2,380,315
(D) Auto Loan
Auto loan account consisted of the following activity and terms:
Interest
Rate
Maturity
Auto loan balance as of December 31, 2010
-
Non-Cash fixed assets additions during the year ended December 31, 2011
32,568
6.99
%
36 payments of $1,008
Repayments
(6,332
)
Auto loan balance as of December 31, 2011
$
26,236
F-
44
(E) Debt Issue Costs
During the years ended 2011 and 2010, the Company paid debt
issue costs totaling $263,283 and $42,000, respectively. The following is a summary of the Company's debt issue costs:
2011
2010
Debt issue costs
$
305,283
$
42,000
Accumulated amortization of debt issue costs
(237,095
)
(7,596
)
Debt issue costs – net
$
68,188
$
34,404
During 2011 and 2010, the Company amortized
$229,499 and $7,596.
(F) Debt Discount
During the years ended 2011 and 2010, the
Company recorded debt discounts totaling $5,473,291 and $380,000, respectively.
The debt discount recorded in 2011 and
2010 pertains to convertible debt that contains embedded conversion options that are required to bifurcated and reported at fair
value (See Note 9).
The Company amortized $3,237,219 in 2011
and $48,739 in 2010 to interest expense.
2011
2010
Debt discount
$
5,804,552
$
380,000
Amortization of debt discounts
(3,237,219
)
(48,739
)
Debt discount – net
$
2,567,333
$
331,261
F-
45
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Note 6: Derivative Liabilities
The Company identified conversion features
embedded within convertible debt, warrants and series A, preferred stock issued in 2011 and 2010 (see Notes 5 and 9). The Company
has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative
liability as the Company could not determine if a sufficient number of shares would be available to settle all transactions. Additionally,
at one point during 2011, the Company had received conversion notices from investors for which sufficient authorized shares were
not available.
As a result of the application of ASC No.
815, the fair value of the conversion feature is summarized as follow:
Derivative liability - December 31, 2009
$
-
Fair value at the commitment date for convertible instruments
473,638
Fair value mark to market adjustment
149,306
Derivative liability - December 31, 2010
622,944
Fair value at the commitment date for convertible instruments
6,590,351
Fair value at the commitment date for warrants issued
5,650,576
Fair value at the commitment date for Series A, Preferred Stock issued
293
Fair value mark to market adjustment for convertible instruments
(2,293,164
)
Fair value mark to market adjustment for warrants
(2,868,818
)
Fair value mark to market adjustment for Series A, Preferred Stock issued
(118
)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability
(640,826
)
Derivative liability - December 31, 2011
$
7,061,238
The Company recorded the debt discount
to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross
proceeds of the note. The Company recorded a derivative expense of $4,777,654 and $93,638 for 2011 and 2010 respectively.
The fair value at the commitment and re-measurement dates for
the Company's derivative liabilities were based upon the following management assumptions as of December 31, 2011:
Commitment Date
Re-measurement Date
Expected dividends
0
%
0
%
Expected volatility
150% -226
%
150% -226
%
Expected term:
0.02 – 5 years
0.02 – 5 years
Risk free interest rate
0.06% - 2.76
%
0.09% - 0.31
%
The fair value at the commitment and re-measurement dates
for the Company's derivative liabilities were based upon the following management assumptions as of December 31, 2010:
Commitment Date
Re-measurement Date
Expected dividends
0
%
0
%
Expected volatility
150
%
150
%
Expected term:
0.75 – 3 years
0.37 – 2.92 years
Risk free interest rate
0.18% - 2.76
%
0.19
%
F-
46
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Note 7: Income Taxes
Income taxes are provided for the tax effects
of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes relate to differences between
the basis of assets and liabilities for financial and income tax reporting which will be either taxable or deductible when the
assets or liabilities are recovered or settled.
At December 31, 2011, the Company has a
net operating loss carry-forward of approximately $16,355,000 available to offset future taxable income expiring through 2031.
Utilization of future net operating losses may be limited due to potential ownership changes under Section 382 of the Internal
Revenue Code.
The valuation allowance at December 31,
2010 was $ 2,495,000. The net change in valuation allowance during the year ended December 31, 2011 was an increase of approximately
$6,075,000. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that
some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets
is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty
exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance
as of December 31, 2011.
The effects of temporary differences that gave rise to significant
portions of deferred tax assets at December 31, 2011 and 2010 are approximately as follows:
December 31, 2011
December 31, 2010
Net operating loss carry forward
$
6,061,000
$
1,986,000
Amortization of debt discount and debt issue costs
1,465,000
465,000
Stock options and warrants
971,000
0
Bad debt
73,000
44,000
Valuation allowance
(8,570,000
)
(2,495,000
)
Net deferred tax asset
$
-
$
-
There was no income tax expense for the
year ended December 31, 2011 and 2010 due to the Company's net losses.
The Company's tax expense differs
from the "expected" tax expense for the years ended December 31, 2011 and 2010, (computed by applying the Federal Corporate
tax rate of 34% to loss before taxes and 4.63% for Colorado State Corporate Taxes, the blended rate used was 37.1%), are approximately
as follows:
December 31,
2011
2010
Federal tax benefit at statutory rate
$
(7,916,000
)
$
(6,216,000
)
State tax benefit – net of federal tax effect
(501,000
)
(888,000
)
Derivative expense
1,625,000
35,000
Change in fair value of derivative liability
(1,755,000
)
55,000
Loss on settlement of accounts payable
1,313,000
161,000
Non-deductible stock compensation
1,091,000
4,354,000
Other non-deductible expenses
68,000
4,000
Change in valuation allowance
6,075,000
2,495,000
Income tax benefit
-
-
F-
47
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
Note 8: Commitments, Contingencies and other matters
(A) Operating Lease
In August 2010, the Company leased office
space under a non-cancelable operating lease, expiring in December 2015.
Future minimum annual rental payments for
the years ended December 31, are approximately as follows:
2012
$
86,000
2013
92,000
2014
98,000
2015
105,000
Total minimum lease payments
$
381,000
Rent expense for the years ended December 31, 2011 and 2010
was $154,155 and $138,357, respectively.
(B) Factoring Agreement
In April 2010, the Company entered into
a factoring agreement and sold its accounts receivable. During 2010, the Company was subject legal proceedings with the factor,
as a result of the Company's customers not remitting funds directly to the factor. At December 31, 2010, the Company no longer
factored its accounts receivable.
A settlement, of $96,783, was reached. During 2010, the Company
repaid $25,000, leaving a balance of $71,783 due to factor. In 2011, the Company paid $10,000.
On February 28, 2011, the remaining $65,930,
inclusive of fees and interest, was settled with the issuance of 2,187,666 shares of common stock, having a fair value of $131,206
($0.06/share), based upon the quoted closing trading price. The Company recorded a loss on settlement of accounts payable $65,330.
(C) Legal Matters
From time to time, the Company may become
involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is
party to the following legal matters as of December 31, 2011:
·
Plaintiff alleges the Company use of Creatine Nitrate in product infringed on a patent held by the Plaintiff. The Company believes the Plaintiffs case is without merit.
·
Plaintiff alleges the Company's use of the tagline "Train like an unchained beast" infringes on their mark "Beast" for dietary supplements. Plaintiff's primary goal is not damages, but rather that the Company cease using the tagline. Settlement discussions are ongoing in this case and the Company intends to defend its position.
·
Plaintiff has filed notices of intent to commence litigation on over 200 sports nutrition and dietary supplement companies in the US and Canada, including the Company. Plaintiff alleges violations of California's Proposition 65. The Company considers this case without merit and merely an attempt by a commercial plaintiff to pressure settlements. Plaintiff conveyed a settlement offer in the amount of $121,500 to which the Company has not yet responded. The Company has recorded an accrual in the amount of $121,500 as of December 31, 2011.
·
Beginning in October 2009, the Company engaged in various business dealings regarding the manufacturing, sale and distribution of products with Fit Foods Manufacturing, Ltd. and Fit Foods Distribution, Inc. Jointly, "Fit Foods"). MusclePharm and Fit Foods subsequently became involved in a business dispute regarding their respective obligations and filed claims against each other in District Court. The Parties settled their dispute on December 22, 2010. The Company issued 13,987,393 shares of common stock having a fair value of $676,980 ($0.048/share), based upon the quoted closing trading price which settled outstanding accounts payable of $333,666, resulting in a loss on settlement of $343,314 All settlement payments have been made and the case was dismissed on July 1, 2011.
F-
48
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
(D) Payroll Taxes
As of December 31, 2011 and 2010, accounts
payable and accrued expenses included approximately $168,000 and $367,860, respectively, pertaining to accrued payroll taxes. The
taxes represent employee withholdings that have yet to be remitted to the taxing agencies.
Note 9: Stockholders' Deficit
The Company has three separate series of
authorized preferred stock:
(A) Series A, Convertible Preferred
Stock
During 2010, the Company issued 16,666,600
shares of common stock in connection with the conversion of 83,333 shares of Series A Convertible Preferred Stock. There was no
gain or loss on conversion as the transaction was accounted for at par value in connection with the reverse recapitalization in
2010. (See Note 3)
This class of stock has the following provisions:
·
Non-voting;
·
No rights to dividends;
·
No liquidation value; and
·
Convertible into 200 shares of common stock.
(B) Series B, Preferred Stock (Related
Parties)
In August 2011, the Company issued an aggregate
51 shares of Series B Preferred Stock to two of its officers and directors. The Company accounted for the share issuance at par
value since there was no future economic value that could be associated with the issuance.
This class of stock has the following provisions:
·
Voting rights entitling the holders to an aggregate 51% voting control;
·
Initially no rights to dividends;
·
Stated value of $0.001 per share;
·
Liquidation rights entitle the receipt of net assets on a pro-rata basis; and
·
Non-convertible.
(C) Series C, Convertible Preferred Stock
In October 2011, the Company issued 190
shares of Series C, preferred stock, having a fair value of $190,000. Of the total shares issued, 100 shares were issued for $100,000
($1,000 /share). The remaining 90 shares were issued for services rendered having a fair value of $90,000 ($1,000 /share), based
upon the stated value per share.
This class of stock has the following provisions:
·
Stated Value - $1,000 per share;
·
Non-voting;
·
Liquidation rights entitle an amount equal to the stated value, plus any accrued and unpaid dividends;
·
As long as any Series C, convertible preferred stock is outstanding, the Company is prohibited from executing various corporate actions with the majority consent of the Series C, convertible preferred stockholders authorization; and
·
Convertible at the higher of (a) $0.01 or (b) such price that is a 50% discount to market using the average of the low 2 closing bid prices, 5 days preceding conversion.
Due to the existence of an option to convert
at a variable amount, the Company has applied ASC No. 815, and treated this series of preferred stock as a derivative liability
due to the potential for settlement in a variable quantity of shares. Additionally, the Company computed the fair value of the
derivative liability at the commitment date and remeasurement date, which was $293 and $175, respectively, using the Black-Scholes
assumptions below. This transaction is analogous to a dividend with a direct charge to retained earnings.
F-
49
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
(D) Common Stock
During the year ended December 31, 2011,
the Company issued the following common stock:
Transaction Type
Quantity
(#)
Valuation
($)
Range of Values Per
Share ($)
Conversion of convertible debt
254,061,743
4,268,857
0.003–0.10
Conversion of unsecured/secured debt
40,277,378
857,952
0.05–0.06
Settlement of accounts payable and accrued expenses
(1)
54,545,896
3,646,719
0.03–0.12
Extension of debt maturity date
9,375,000
161,250
0.017–0.02
Services – rendered
46,521,157
1,199,844
0.00–1.15
Cash and warrants
82,000,000
875,000
0.03
Services – prepaid stock compensation
(2)
4,000,000
214,250
0.05–.08
Cancelled shares
(3)
(3,500,000
-
0.03
Total
487,281,174
11,223,872
0.00–1.15
The fair value of all stock issuances above
is based upon the quoted closing trading price on the date of issuance, except for stock issued for cash and warrants, which was
based upon the cash received. Stock issued in the conversion of preferred stock was recorded at par value.
The following is a more detailed description
of some of the Company's stock issuances from the table above:
(1) Settlement of Accounts Payable and
Accrued Expenses and Loss on Settlement
The Company settled $1,523,590 in accounts
payable and recorded a loss on settlement of $2,123,129.
Loss on settlement of accounts payable and accrued expenses
$
2,123,129
Loss on settlement of debt (Note 5)
1,739,329
Total loss on settlement
$
3,862,458
(2) Prepaid Stock Compensation
The following represents the allocation
of prepaid stock compensation as of December 31, 2011 and 2010:
Prepaid stock compensation – December 31, 2009
$
-
Prepaid stock compensation additions during the year ended December 31, 2010
2,734,548
Amortization of prepaid stock compensation
(768,637
)
Prepaid stock compensation – December 31, 2010
1,965,911
Prepaid stock compensation additions during the year ended December 31, 2011
214,250
Non cash increase in accounts payable related to future services to be paid for with common stock
100,000
Amortization of prepaid stock compensation
(1,745,705
)
Prepaid stock compensation – December 31, 2011
$
534,456
The agreements commenced during the periods
February 2011 through July 2011 and terminate August 2011 through July 2012.
The following represents the allocation
of prepaid stock compensation at December 31, 2011:
Prepaid expense that will be amortized in 2012
$
534,456
(3) Cancelled Shares
The Company cancelled 3,500,000 shares during the year ended
December 31, 2011, valued at par ($0.001). The Company has disputed the issuance of these shares due to non-performance by a consultant.
These shares were originally issued in 2010 as a component of stock issued for services rendered.
F-
50
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
During the year ended December 31, 2010,
the Company issued the following common stock:
Transaction Type
Quantity
(#)
Valuation
($)
Range of Values Per
Share ($)
Reverse recapitalization
26,070,838
-
-
Conversion of preferred stock
16,666,600
16,667
0.001
Conversion of convertible debt
7,708,906
1,033,500
0.05–0.67
Settlement of accounts payable
(1)
9,014,286
433,400
0.05–0.42
Settlement of notes payable
(2)
4,165,571
1,191,064
0.05–0.55
Settlement of notes payable – officer
7,161,548
358,077
0.05
Cash and warrants – net of payment in recapitalization of ($25,107)
4,167,767
1,503,569
0.27-0.50
Services – rendered
22,457,214
4,554,615
0.05–1.16
Services – rendered – officers (bonus)
10,000,000
5,300,000
0.53
Services – prepaid stock compensation
(5)
10,545,200
2,734,548
0.06–1.16
Contract settlement
(3)
511,509
100,000
0.20
Extension of debt maturity date
(4)
130,000
95,500
0.61–1.15
Secured debt offering
50,000
30,500
0.61
Total
118,649,439
17,376,547
Range: 0.001–1.16
The fair value of all stock issuances above
is based upon the quoted closing trading price on the date of issuance, except for stock issued for cash and warrants, which was
based upon the cash received. Stock issued in the conversion of preferred stock was recorded at par value.
The following is a more detailed description of some of the Company's stock issuances from the table above:
(1)
Settlement of Accounts Payable and Loss on Settlement
Of the total shares issued to settle accounts payable, the Company issued 8,928,571 shares of common stock having a fair value of $400,000 ($0.045/share), based upon the quoted closing trading price. The Company settled $375,000 in accounts payable, paid a fee of $25,000, and recorded a loss on settlement of $112,500. The Company also paid cash to settle accounts payable of $84,715 and recorded a gain on settlement, as a result, the Company has recorded a total net loss on settlement of accounts payable of $27,785.
(2)
Settlement of Notes payable
In connection with the stock issued to settle notes payable, the Company issued 1,965,571 shares of common stock having a fair value of $1,081,064 ($0.55/share), based upon the quoted closing trading price. The Company settled $678,325 in notes payable and recorded a loss on settlement of $402,739.
(3)
Contract Settlement
In connection with litigation (See Note 8), the Company issued stock that has been accounted for as a settlement expense and a component of other expense.
(4)
Extension of Debt Maturity
The Company issued stock to extend the maturity date of certain notes and recorded additional interest expense.
(5)
Prepaid Stock Compensation
The agreements commenced during the periods March – December 2010 and terminate during the periods March 2011 through November 2012. Prepaid stock compensation is included as a component of prepaid and other current and long term assets.
F-
51
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
(E) Stock Options
On February 1, 2010, the Company's
board of directors and stockholders approved the 2010 Stock Incentive Plan ("2010 Plan"). The 2010 Plan allows the
Company to grant incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and stock
appreciation rights to key employees and directors of the Company or its subsidiaries, consultants, advisors and service providers.
Any stock option granted in the form of an incentive stock option will be intended to comply with the requirements of Section 422
of the Internal Revenue Code of 1986, as amended. Only stock options granted to employees qualify for incentive stock option treatment.
No incentive stock option shall be granted after February 1, 2020, which is 10 years from the date the 2010 Plan was initially
adopted. A stock option may be exercised in whole or in installments, which may be cumulative. Shares of common stock purchased
upon the exercise of a stock option must be paid for in full at the time of the exercise in cash or such other consideration determined
by the compensation committee. Payment may include tendering shares of common stock or surrendering of a stock award, or a combination
of methods.
The 2010 Plan will be administered by the
compensation committee. The compensation committee has full and exclusive power within the limitations set forth in the 2010 Plan
to make all decisions and determinations regarding the selection of participants and the granting of awards; establishing the terms
and conditions relating to each award; adopting rules, regulations and guidelines; and interpreting the 2010 Plan. The Compensation
Committee will determine the appropriate mix of stock options and stock awards to be granted to best achieve the objectives of
the Plan. The 2010 Plan may be amended by the Board or the compensation committee, without the approval of stockholders, but no
such amendments may increase the number of shares issuable under the 2010 Plan or adversely affect any outstanding awards without
the consent of the holders thereof. The total number of shares that may be issued shall not exceed 5,000,000, subject to adjustment
in the event of certain recapitalizations, reorganizations and similar transactions.
On April 2, 2010, the Company issued 2,767,500
stock options, having a fair value of $630,990, which was expensed immediately since all stock options vested immediately. These
options expire on April 2, 2015.
The Company applied fair value accounting
for all share based payment awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes
option-pricing model. The Black-Scholes assumptions used in the year ended December 31, 2010 is as follows:
Exercise price
$
0.50
Expected dividends
0
%
Expected volatility
74.8
%
Risk fee interest rate
1.4
%
Expected life of option
2.5 years
Expected forfeitures
0
%
F-
52
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
The following is a summary of the Company's stock option
activity for the years ended December 31, 2011, 2010 and 2009:
Number of
Shares
Weighted
Average
Exercise Price
Weighted Average
Remaining
Contractual Life
(year)
Aggregate
Intrinsic
Value
Balance – December 31, 2009
-
-
-
-
Granted
2,767,500
0.50
4.25
Exercised
-
-
-
Forfeited/Cancelled
-
-
-
Outstanding, December 31, 2010
2,767,500
0.50
4.25
-
Granted
-
Exercised
-
Forfeited/Cancelled
(1,150,000
)
0.50
Outstanding, December 31, 2011 – outstanding
1,617,500
0.50
3.25
-
Outstanding, December 31, 2011 – exercisable
1,617,500
0.50
3.25
-
Grant date fair value of options granted – 2010
630,990
Weighted average grant date fair value – 2010
0.50
Outstanding options held by related parties – 2011
2,000,000
Exercisable options held by related parties – 2010
2,000,000
Outstanding options held by related parties – 2011
1,000,000
Exercisable options held by related parties – 2011
1,000,000
(F) Stock Warrants
During 2010, the Company issued 750,000
five-year warrants, with a weighted average exercise price of $0.021/share.
All warrants issued during 2011 were accounted
for as derivative liabilities. See Note 6.
During 2011, the Company entered into convertible
and unsecured note agreements. As part of these agreements, the Company issued warrants to purchase 162,388,233 shares of common
stock. Each warrant vests six month after issuance and expire July 14, 2013 – June 28, 2016, with exercise prices ranging
from $0.015 - $0.06.
During 2011, the Company issued 120,200,000
warrants for services performed. The warrants have a vesting range of immediate to six months after issuance and expire February
28, 2014 – April 15, 2016, with exercise prices ranging from $0.002 - $0.1. The value of the warrants, $1,989,982, calculated
using the below black-scholes assumptions, was expensed as compensation with the offset being recorded to derivative liabilities,
since the Company applied the provisions of ASC No. 815, pertaining to the potential settlement in a variable amount of shares.
F-
53
MusclePharm Corporation and Subsidiary
Consolidated Notes to Financial Statements
December 31, 2011 and 2010
A summary of warrant activity for the Company for the year ended
December 31, 2010 and for the year ended December 31, 2011 is as follows:
Number of Warrants
Weighted Average Exercise Price
Balance at December 31, 2009
-
-
Granted
750,000
1.5
Exercised
-
-
Forfeited
-
-
Balance as December 31, 2010
750,000
1.50
Granted
282,588,233
.02
Exercised
-
-
Forfeited
-
-
Balance as December 31, 2011
283,338,233
.02
Warrants
    Outstanding
Warrants
    Exercisable
Range
    of
Exercise Prices
Number
Outstanding
Weighted
    Average
Remaining
Contractual Life (in
years)
Weighted
    Average
Exercise Price
Number
Exercisable
Weighted
Average
Exercise Price
Intrinsic
    Value
$0.012-$1.50
283,338,233
2.85
$
0.021
61,696,327
$
0.042
875,000
Note 10: Subsequent Events
(A) Common Stock
On March 26, 2012, the Company increase
the Company's authorized common stock from 1,000,000,000 shares to 2,500,000,000 shares.
During the 1
st
quarter of 2012,
the Company issued 20,000,000 shares of common stock to an officer, having a fair value of $280,000 ($0.014/share), based upon
the quoted closing trading price.
(B) Warrants
During the 1
st
quarter of 2012,
the Company issued 32,000,000 shares of common stock for $285,760 ($0.00893/share) in connection with the exercise of warrants.
(C) Debt, Debt Conversion and Warrants
Notes
During the 1
st
quarter of 2012,
the Company executed notes payable and received net proceeds of $3,061,000. The notes are unsecured, bear interest at 15% and mature
18 months from issuance. In connection with this debt issuance, the Company granted 241,125,000, 2.5 year warrants, with exercise
prices ranging from $0.012/share - $0.015/share, and vest 6 months from grant.
F-
54
Convertible Notes
During the first quarter of 2012, the Company
executed convertible notes for $519,950 resulting in net cash proceeds of $489,950, ($30,000 paid as debt issue costs). The notes
mature between 6 months – 1 year. The notes bear interest ranging from 8% - 10%, with default interest rates ranging from
20% - 24%.
These notes may be convertible as follows,
depending upon the terms of each issuance:
•
35% of the average, 3 lowest trading days, prior to the 10 days before conversion,
•
62% of the lowest trading price during the 7 days before conversion; and
•
65% of the lowest trading price during the 30 days before conversion
Debt Conversions
During the 1st quarter of 2012, the Company settled $2,443,214
of secured convertible debt, unsecured debt and accrued interest with the payment of $2,895,576 and the issuance of 267,308,200
shares of common stock. In addition, all related 58,971,327 warrants were cancelled. As a result of the debt conversion and cancellation
of warrants, all associated derivative liabilities underlying these instruments cease to exist.
During the 1st quarter of 2012, the Company repurchased 14,542,939
shares of common stock from an investor for $230,400 ($0.0158/share). The Company has paid $100,000; the balance will be paid in
the 2
nd
quarter of 2012. In connection with the repurchase, the Company has accounted for this transaction in accordance
with ASC 505-30, "
treasury stock"
.
F-
55
Shares
Common
Stock
PROSPECTUS
Aegis Capital Corp
, 2012
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.
Other Expenses of Issuance and Distribution
The following table sets forth all expenses to be paid by the
Registrant, other than estimated underwriting discounts and commissions, in connection with our public offering. All amounts shown
are estimates except for the SEC registration fee, the NASDAQ listing fee and the FINRA filing fee:
SEC registration fee
$
2,812
FINRA filing fee
$
3,592
NASDAQ listing fee
*
Legal fees and expenses
*
Accounting fees and expenses
*
Transfer agent and registrar fees
*
Printing and engraving expenses
*
Miscellaneous fees and expenses
*
Total
*
* To be filed by amendment.
Item 14.
Indemnification of Directors and Officers
Nevada Law
Section 78.7502 of the Nevada Revised Statutes contains provisions
authorizing indemnification by the Company of directors, officers, employees or agents against certain liabilities and expenses
that they may incur as directors, officers, employees or agents of the Company or of certain other entities. Section 78.7502(3)
provides for mandatory indemnification, including attorney's fees, if the director, officer, employee or agent has been successful
on the merits or otherwise in defense of any action, suit or proceeding or in defense of any claim, issue or matter therein.
Section 78.751 of the Nevada Revised Statutes provides that
such indemnification may include payment by the Company of expenses incurred in defending a civil or criminal action or proceeding
in advance of the final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay
such payment if he shall be ultimately found not to be entitled to indemnification under the Section. Indemnification may be provided
even though the person to be indemnified is no longer a director, officer, employee or agent of the Company or such other entities.
Section 78.752 of the Nevada Revised Statutes authorizes the
Company to obtain insurance on behalf of any such director, officer employee or agent against liabilities, whether or not the Company
would have the power to indemnify such person against such liabilities under the provisions of the Section 78.7502. The indemnification
and advancement of expenses provided pursuant to Sections 78.7502 and 78.751 are not exclusive, and subject to certain conditions,
the Company may make other or further indemnification or advancement of expenses of any of its directors, officers, employees or
agents. Because neither the articles of incorporation, as amended, or Bylaws of the Company otherwise provide, notwithstanding
the failure of the Company to provide indemnification and despite a contrary determination by the board of directors or its stockholders
in a specific case, a director, officer, employee or agent of the Company who is or was a party to a proceeding may apply to a
court of competent jurisdiction for indemnification or advancement of expenses or both, and the court may order indemnification
and advancement of expenses, including expenses incurred in seeking court- ordered indemnification or advancement of expenses if
it determines that the petitioner is entitled to mandatory indemnification pursuant to Section 78.7502(3) because he has been successful
on the merits, or because the Company has the power to indemnify on a discretionary basis pursuant to Section 78.7502 or because
the court determines that the petitioner is fairly and reasonably entitled to indemnification or advancement of expenses or both
in view of all the relevant circumstances.
II-
1
Articles of Incorporation and Bylaws
Our articles of incorporation and bylaws, as amended, empower
us to indemnify our current or former directors, officers, employees or agents or persons serving by our request in such capacities
in any other enterprise or persons who have served by our request is in such capacities in any other enterprise to the full extent
permitted by the laws of the State of Nevada. Pursuant to Nevada law and our articles of incorporation and bylaws, our officers
and directors (and former officers and directors) are entitled to indemnification from us to the full extent permitted by law.
Our articles of incorporation and bylaws generally provide for such indemnification for claims arising out of the acts or omissions
of our officers and directors in their capacity as such, undertaken in good faith and in a manner reasonably believed to be in,
or not opposed to, our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful. The conditions and extent of indemnification are set forth in the articles of incorporation and
bylaws. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to officers, directors or
persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.
Indemnification Agreements
We have also entered into individual indemnification agreements
with our directors and named executive officers. These agreements indemnify those directors and officers to the fullest extent
permitted by law against inordinate risks of claims and actions against them arising out of their service to and activities on
behalf of MusclePharm.
Item 15.
Recent Sales of Unregistered Securities
Issuance of Shares Pursuant to a
Share Exchange Agreement
On February 18, 2010, the Company issued
a total of 40,000 shares of its common stock to the 12 former owners of Muscle Pharm, LLC, in exchange for all of the Muscle Pharm,
LLC units.
Issuance of Common Stock in Exchange
for Cancellation of Warrant Agreements
Between May 17, 2012 and August 9, 2012,
the Company issued 43,123 shares of common stock to holders of warrant agreements in exchange for the cancellation of such agreements.
Conversion of Preferred Stock into
Shares of Common Stock
From February 26, 2010 to March 28, 2012,
the Company's Series A Convertible Preferred Stock was converted into 54,733 shares of our common stock.
Conversion of Convertible Notes into
Shares of Common Stock
From March 22, 2010 through December 14,
2010, holders of convertible notes converted an aggregate of $1,033,500 in principal into an aggregate of 11,860 shares of common
stock.
From January 25, 2011 through December
31 2011, holders of convertible notes converted an aggregate of $3,393,346 in principal into an aggregate of 440,645 shares of
common stock.
From January 4, 2012 through March 22,
2012, holders of convertible notes converted an aggregate of $941,785 in principal into an aggregate of 380,474 shares of common
stock.
Exercise of Warrants
On January 26, 2012, warrant holders exercised
warrants for an aggregate of 49,231 shares of common stock at an exercise price of $5.80 per share.
II-
2
Convertible Debt Issuance
Date of Sale
Amount Sold ($)
8/12/10
50,000
9/14/10
40,000
12/1/10
1,650,000
12/21/10
50,000
1/5/11
10,000
1/14/11
75,000
(1)
1/20/11
40,000
1/21/11
9,000
1/23/11
10,000
1/24/11
50,000
1/25/11
50,000
1/25/11
75,000
(2)
1/26/11
18,000
1/28/11
25,000
1/31/11
25,000
2/1/11
5,000
2/2/11
20,000
2/4/11
130,000
2/10/11
90,000
2/28/11
150,000
3/1/11
25,000
3/4/11
50,000
3/8/11
140,000
3/11/11
25,000
3/14/11
50,000
3/21/11
25,000
3/22/11
25,000
3/23/11
75,000
3/24/11
150,000
3/25/11
65,000
3/27/11
40,000
5/6/11
246,000
5/31/11
10,000
6/7/11
900,000
6/14/11
40,000
6/24/11
20,000
6/25/11
441,833
(3)
8/28/11
60,000
8/31/11
560,000
(4)
10/4/11
50,000
10/5/11
135,000
10/6/11
47,000
10/12/11
200,000
10/28/11
14,000
11/1/11
605,000
(5)
11/14/11
25,000
1/3/12
100,000
1/13/12
440,000
1/13/12
400,000
(6)
2/12/12
252,000
(7)
2/28/12
62,500
3/18/12
500,000
(8)
3/21/12
100,000
(9)
3/23/12
379,500
(10)
3/27/12
100,000
(11)
3/28/12
175,000
(12)
3/29/12
300,000
(13)
3/30/12
25
4/6/12
1,231,000
(14)
II-
3
1. The Company also issued warrants
in respect of 1,923 shares of our common stock at an exercise price of $42.25 per share.
2. The Company also issued warrants
in respect of 1,777 shares of our common stock at an exercise price of $42.25 per share.
3. The Company also issued a
warrant to purchase $800,000 of common stock pursuant to a formula based on the market price of common stock.
4. The Company also issued warrants
in respect of 28,718 shares of common stock at an exercise price of $19.50 per share.
5. The Company also issued warrants
in respect of 43,385 shares of common stock at an exercise price of $11.38 per share.
6. The Company also issued warrants
in respect of 25,641 shares of common stock at an exercise price of $9.75 per share.
7. The Company also issued warrants
in respect of 53,846 shares of common stock at an exercise price of $9.75 per share.
8. The Company also issued warrants
in respect of 6,410 shares of common stock at an exercise price of $7.80 per share.
9. The Company also issued warrants
in respect of 12,821 shares of common stock at an exercise price of $7.80 per share.
10. The Company also issued warrants
in respect of 48,654 shares of common stock at an exercise price of $7.80 per share.
11. The Company also issued warrants
in respect of 3,846 shares of common stock at an exercise price of $7.80 per share.
12. The Company also issued warrants
in respect of 22,436 shares of common stock at an exercise price of $7.80 per share.
13. The Company also issued warrants
in respect of 38,462 shares of common stock at an exercise price of $7.80 per share.
Issuance of Shares to Extend Debt Agreements
On May 5, 2010, the Company issued a noteholder 23 shares of
common stock in consideration for an extension of the noteholder's note. The issuance was recorded as interest at a fair
value of $17,250 ($747.50 per share) based upon the quoted closing price of the common stock on the date of issuance.
On May 5, 2010, the Company issued a noteholder 23 shares of
common stock in consideration for an extension of the noteholder's note. The issuance was recorded as interest at a fair
value of $17,250 ($747.50 per share) based upon the quoted closing price of the common stock on the date of issuance.
On September 21, 2010, the Company issued a noteholder 115 shares
of common stock in consideration for an extension of the noteholder's note. The issuance was recorded as interest at a fair
value of $45,750 ($396.50 per share) based upon the quoted closing price of the common stock on the date of issuance.
On September 21, 2010, the Company issued a noteholder 19 shares
of common stock in consideration for an extension of the noteholder's note. The issuance was recorded as interest at a fair
value of $7,625 ($396.50 per share) based upon the quoted closing price of the common stock on the date of issuance.
On September 21, 2010, the Company issued a noteholder 19 shares
of common stock in consideration for an extension of the noteholder's note. The issuance was recorded as interest at a fair
value of $7,625 ($396.50 per share) based upon the quoted closing price of the common stock on the date of issuance.
II-
4
On June 7, 2011, the Company issued a noteholder 619 shares
of common stock in consideration for an extension of the noteholder's note. The issuance was recorded as interest at a fair
value of $14,778 ($24.05 per share) based upon the quoted closing price of the common stock on the date of issuance.
Issuance of Shares to Settle Notes Payable
On September 29, 2010, the Company issued an aggregate of 17,426
shares of common stock to note holders in settlement of principal and accrued interest in the aggregate amount of $1,549,141.
Issuance of Shares to Settle Contract
On December 23, 2010, the Company issued
787 shares of common stock in settlement of an outstanding contract with a vendor.
Issuance of Warrants to Settle Contract
On September 15, 2011, Company issued warrants to purchase 15,385
shares of common stock with an exercise price of $5.20 per share as settlement of an outstanding contract provision with management.
Issuance of Shares to Settle Aged Debt
From December 27, 2010 through August 4, 2011, the Company issued
securities exempt from the registration requirements of the Securities Act pursuant to Section 3(a)(9) of the Securities Act, to
third party funds. Pursuant to these transactions, the Company directed its transfer agent to issue and deliver to the third parties
102,810 shares of the Company's common stock, subject to adjustment, in satisfaction of a debt in the amount of $2,099,001.
Issuance of Shares as Performance Bonus
On October 18, 2010, the Company issued an officer and director
7,692 shares of common stock as a performance bonus at a fair value of $2,650,000 ($344.50 per share), based upon the quoted closing
price of common stock on October 18, 2010.
On October 18, 2010, the Company issued an officer and director
7,692 shares of common stock as a performance bonus at a fair value of $2,650,000 ($344.50 per share), based upon the quoted closing
price of common stock on October 18, 2010.
On March 27, 2012, the Company issued officers
and a director 683,921 shares of common stock as a performance bonus at a fair value of $4,667,764 ($6.83 per share), based upon
the quoted closing price of common stock on December 31, 2011.
Issuance of Shares to Debt Holders
On September 21, 2010, the Company issued one investor 51 shares
of common stock as further consideration for the investor to enter into a debt agreement with the Company.
On September 21, 2010, the Company issued one investor 26 shares
of common stock as further consideration for the investor to enter into a debt agreement with the Company.
On February 15, 2012, the Company issued one investor 30,769
shares of common stock as further consideration related to the prepayment of a debt agreement with the Company.
On March 28, 2012, the Company issued one investor 15,385 shares
of common stock as further consideration related to the prepayment of a debt agreement with the Company.
On March 30, 2012, the Company issued one investor 38,462 shares
of common stock as further consideration related to the prepayment of a debt agreement with the Company.
II-
5
Issuance of Shares for Services
On the dates set forth below, the Company issued the number
of shares of common stock at the aggregate offering prices as set forth below to consultants for services rendered to the Company.
Date of Sale
Number of Shares Sold
Aggregate Offering Price ($)
2010
4/1
231
174,000
5/1
185
138,000
5/5-5/8
594
397,940
6/28
462
309,000
6/30-7/10
2,855
1,924,278
7/22
38
25,000
7/22
18
10,000
7/29
8
3,700
8/10
177
56,350
8/20
4
1,275
8/20
154
51,000
8/25
37
11,760
8/25
131
41,650
9/29
77
20,900
9/29
55
12,500
9/29
55
12,500
10/5
30
9,408
10/11
769
300,000
10/14
54
19,250
10/22
658
357,600
10/26
288
150,710
10/28
154
177,000
11/2
54
18,200
11/18
5,385
840,000
12/3
31
11,000
12/10
3,385
220,000
12/13
1,538
60,000
12/14
6,154
200,000
12/14
1,538
50,000
11/17
6,154
960,000
12/15
1,538
80,000
12/15
2,308
120,000
12/15
385
20,000
12/16
7,692
350,000
12/22
7,692
300,000
2011
1/7
38
1,723
1/7
231
10,335
1/7
38
1,723
2/17
231
10,335
2/28
398
15,000
3/31
38
1,650
3/31
726
25,000
3/31
350
15,000
4/15
154
8,100
4/30
491
15,000
5/1
5,728
175,000
5/31
513
15,000
6/30
769
15,000
7/12
154
3,050
8/22
577
11,250
8/22
115
2,250
8/30
154
2,500
8/30
6,053
90,000
9/6
3,979
75,000
9/30
154
8,100
12/7
14,945
170,000
2012
5/1
5,806
50,000
5/9
6,689
50,000
6/1
3,846
50,000
7/10
30,769
311,000
8/1
11,538
75,000
8/20
3,846
25,000
9/3
15,385
115,000
9/11
5,574
50,000
9/13
46,238
285,519
10/9
3,902
16,000
10/16
9,231
40,200
10/18
7,692
30,000
II-
6
Issuances for Prepaid Services
On February 11, 2011, the Company issued
1,538 shares of common stock to a consultant for services to be rendered at a fair value of $78,000 ($50.70 per share), based upon
the quoted closing price of the Company's common stock on the date of issuance.
On March 9, 2011, the Company issued consultants
3,846 shares of common stock for services to be rendered at a fair value of $150,000 ($42.90 per share) based upon the quoted closing
price trading price on the date of issuance.
On May 1, 2011, the Company issued 769
shares of common stock to a consultant for services to be rendered at a fair value of $23,500 ($30.55 per share), based upon the
quoted closing price trading price on the date of issuance.
On April 1, 2012, the Company issued 3,077
shares of common stock to a consultant for services to be rendered at a fair value of $50,000 ($16.25 per share), based upon the
quoted closing price trading price on the date of issuance.
On August 1, 2012, the Company issued
1,538 shares of common stock to a consultant for services to be rendered at a fair value of $10,000 ($6.50 per share), based upon
contract value.
II-
7
On September 18, 2012, the Company issued
7,692 shares of common stock to a consultant for services to be rendered at a fair value of $50,000 ($6.50 per share), based upon
contract value.
Issuance of Shares for Cash
From May 1, 2010 to June 23, 2010, the
Company entered into stock purchase agreements with investors for an aggregate of 969 shares of common stock at $227.50 per share
for an aggregate purchase price of $315,000.
On May 25, 2010, the Company entered into
a stock purchase agreement with an investor for 162 shares of common stock, for an aggregate purchase price of $30,000.
On July 14, 2010, the Company entered into
stock purchase agreements with an investor for 50,000 shares of common stock, for an aggregate purchase price of $13,250.
From June 17, 2010 to November 2, 2010,
the Company entered into stock purchase agreements with investors for an aggregate of 5,152 shares of common stock at $227.50 per
share for an aggregate purchase price of $1,172,156.
From July 16, 2012 to August 29, 2012,
the Company entered into stock purchase agreements with investors for an aggregate of 211,538 shares of common stock at $6.50 per
share for an aggregate purchase price of $1,375,000.
Issuance of Common Stock to Settle Disputes Regarding
Warrants
On August 21, 2012, the Company issued 23,669 shares of common
stock to Ellis International, LP in exchange for the cancellation of a warrant to purchase common stock and entering into a settlement
agreement between Ellis International and the Company.
On August 27, 2012, the Company issued 24,616 shares of common
stock to JMJ Financial in exchange for the cancellation of a warrant to purchase common stock and entering into a settlement agreement
between JMJ Financial and the Company.
On September 14, 2012, the Company issued 153,847 shares of
common stock to Southridge Partners II, LP in exchange for the cancellation of a warrant to purchase common stock and entering
into a settlement agreement between Southridge Partners and the Company.
On October 12, 2012, the Company issued 220,000 shares of common
stock to Inter-Mountain Capital Corp. in exchange for the cancellation of a warrant to purchase common stock and entering into
a settlement agreement between Inter-Mountain and the Company.
Issuance of Common Stock as a Result of the Warrant Conversions
From September 28, 2012 to September 30, 2012, the Company issued
670,364 shares of common stock in exchange for cancellation of warrants exercisable for 946,438 shares of common stock.
Unless otherwise stated, the sales of the above securities were
deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act (or Regulation
D or Regulation S promulgated thereunder), or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions
by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities
for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were
placed upon the stock certificates issued in these transactions.
II-
8
Item 16.
Exhibits and Financial Statement Schedules
Incorporated by Reference
Exhibit
No.
Description
Form
SEC File No.
Exhibit
Filing Date
Filed
Herewith
Furnished
Herewith
1.1*
Form of Underwriting Agreement.
2.1
Agreement Concerning the Exchange of Securities by and Among Tone in Twenty and Muscle Pharm, LLC and the Security Holders of Muscle Pharm, LLC, dated February 1, 2010.
8-K
000-53166
2.1
February 2, 2010
3.1
Articles of Incorporation of MusclePharm Corporation (successor to Tone In Twenty).
SB-2
333-147111
3.1
November 2, 2007
3.2
Bylaws of MusclePharm Corporation (successor to Tone In Twenty). (Amended on March 1, 2010 to change fiscal year end to December 31 – set forth on Form 8-K filed on 03-03-2010.)
SB-2
333-147111
3.2
November 2, 2007
3.3
Amendment to the Articles of Incorporation.
SB-2
333-147111
3.3
November 2, 2007
3.4
Amendment to the Articles of Incorporation
8-K
000-53166
3.3
February 24, 2010
3.5
Certificate of Designation relating to the Series A Convertible Preferred Stock.
8-K
000-53166
3.4
February 24, 2010
3.6
Amendment to the Articles of Incorporation.
10-Q
000-53166
3.1
May 23, 2011
3.7
Certificate of Designation of Series B Convertible Preferred Stock.
10-Q
000-53166
3.1
August 16, 2011
3.8
Certificate of Designation of Series C Convertible Preferred Stock.
8-K
000-53166
3.1
November 4, 2011
3.9
Amendment to the Articles of Incorporation.
8-K
000-53166
3.1
November 23, 2011
3.10
Amendment to the Articles of Incorporation.
8-K
000-53166
3.1
January 27, 2012
3.11
Amendment to the Articles of Incorporation.
8-K
000-53166
3.1
March 30, 2012
4.1*
Specimen of certificate for MusclePharm Corporation Common Stock
4.2
Form of Promissory Note, dated July 13, 2012, issued by MusclePharm Corporation in favor of TCA Global Credit Master Fund LP.
8-K
000-53166
4.1
July 20, 2012
5.1*
Opinion of Jones & Keller, P.C.
10.1
Purchasing Agreement with General Nutrition Corporation dated December 16, 2009.
8-K
000-53166
10.2
February 24, 2010
10.2
Order Approving Stipulation for Settlement of Claim, dated December 8, 2010, between MusclePharm Corporation and Socius CG II, Ltd.
8-K
000-53166
10.1
December 9, 2010
10.3
Endorsement Agreement, dated July 20, 2011, between MusclePharm Corporation and Michael Vick, individually.
8-K
000-53166
10.1
July 22, 2011
10.4
Convertible Promissory Note between MusclePharm Corporation and Brad J. Pyatt, dated November 18, 2010.
S-1/A
333-176771
4.2
September 27, 2011
II-
9
10.5
Convertible Promissory Note between MusclePharm Corporation and Brad J. Pyatt, dated November 23, 2010.
S-1/A
333-176771
4.3
September 27, 2011
10.6+
Amended and Restated Employment Agreement, dated November 14, 2011, between MusclePharm Corporation and Brad J. Pyatt.
10-Q
000-53166
10.6
November 14, 2011
10.7+
Amended and Restated Employment Agreement, dated November 14, 2011, between MusclePharm Corporation and Cory J. Gregory.
10-Q
000-53166
10.7
November 14, 2011
10.8+
Employment Agreement, dated September 15, 2011, by and between MusclePharm Corporation and John H. Bluher.
10-Q
000-53166
10.4
November 14, 2011
10.9+
Employment Agreement, dated November 14, 2011, by and between MusclePharm Corporation and Jeremy R. DeLuca.
10-Q
000-53166
10.5
November 14, 2011
10.10
Securities Purchase Agreement, dated July 10, 2012, between MusclePharm Corporation and Subscribers set forth therein.
8-K
000-53166
10.1
July 19, 2012
10.11
Consulting Agreement, dated July 12, 2012, between MusclePharm Corporation and Melechdavid, Inc.
8-K
000-53166
10.2
July 19, 2012
10.12
Consulting Agreement, dated July 12, 2012, between MusclePharm Corporation and GRQ Consultants, Inc.
8-K
000-53166
10.3
July 19, 2012
10.13
Form of Committed Equity Facility Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.
8-K
000-53166
10.1
July 20, 2012
10.14
Form of Registration Rights Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.
8-K
000-53166
10.1
July 20, 2012
10.15
Form of Security Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.
8-K
000-53166
10.1
July 20, 2012
10.16+
Form of Indemnification Agreement.
8-K
000-53166
10.1
August 27, 2012
10.17+
Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Brad J. Pyatt.
8-K
000-53166
10.1
October 23, 2012
10.18+
Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and L. Gary Davis.
8-K
000-53166
10.2
October 23, 2012
10.19+
Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and John H. Bluher.
8-K
000-53166
10.3
October 23, 2012
10.20+
Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Jeremy R. DeLuca.
8-K
000-53166
10.4
October 23, 2012
II-
10
10.21+
Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Cory J. Gregory.
8-K
000-53166
10.5
October 23, 2012
21
Subsidiary of the Registrant.
X
23.1
Consent of Berman & Company, P.A.
X
23.2*
Consent of Jones & Keller, P.C. (included in Exhibit 5.1).
24.1
Power of Attorney (included on signature page hereof).
*
To be filed by amendment.
+
Indicates management contract or compensatory plan.
II-
11
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities, other than the payment by the registrant of expenses incurred and paid
by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding, is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) for purposes of determining any liability under the
Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1), or (4) or 497(h) under
the Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) for purposes of determining any liability under the
Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
II-
12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized
in the City of Denver, State of Colorado, on October 26, 2012.
MUSCLEPHARM CORPORATION
By:
/s/ Brad J. Pyatt
Name:
Brad J. Pyatt
Title:
Chief Executive Officer and President
(Principal Executive Officer)
POWER OF ATTORNEY
We, the undersigned officers and directors of MusclePharm Corporation
hereby severally constitute and appoint Brad J. Pyatt and John H. Bluher, our true and lawful attorney-in-fact and agents, with
full power of substitution and resubstitution for him and in his name, place and stead, and in any and all capacities, to sign
for us and in our names in the capacities indicated below any and all amendments (including post-effective amendments) to this
registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act of 1933, as amended), and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent,
full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises,
as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact
and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Brad J. Pyatt
Co-Chairman, Chief Executive Officer, President and Principal Executive Officer
October 26, 2012
Brad J. Pyatt
/s/ L. Gary Davis
Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer
October 26, 2012
L. Gary Davis
/s/ John H. Bluher
Co-Chairman, Executive Vice President and Chief
October 26, 2012
John H. Bluher
Operating Officer
/s/ Donald W. Prosser
October 26, 2012
Donald W. Prosser
Director
/s/ Gordon G. Burr
October 26, 2012
Gordon G. Burr
Director
/s/ James J. Greenwell
October 26, 2012
James J. Greenwell
Director
EXHIBIT INDEX
Incorporated by Reference
Exhibit
No.
Description
Form
SEC File No.
Exhibit
Filing Date
Filed
Herewith
Furnished
Herewith
1.1*
Form of Underwriting Agreement.
2.1
Agreement Concerning the Exchange of Securities by and Among Tone in Twenty and Muscle Pharm, LLC and the Security Holders of Muscle Pharm, LLC, dated February 1, 2010.
8-K
000-53166
2.1
February 2, 2010
3.1
Articles of Incorporation of MusclePharm Corporation (successor to Tone In Twenty).
SB-2
333-147111
3.1
November 2, 2007
3.2
Bylaws of MusclePharm Corporation (successor to Tone In Twenty). (Amended on March 1, 2010 to change fiscal year end to December 31 – set forth on Form 8-K filed on 03-03-2010.)
SB-2
333-147111
3.2
November 2, 2007
3.3
Amendment to the Articles of Incorporation.
SB-2
333-147111
3.3
November 2, 2007
3.4
Amendment to the Articles of Incorporation
8-K
000-53166
3.3
February 24, 2010
3.5
Certificate of Designation relating to the Series A Convertible Preferred Stock.
8-K
000-53166
3.4
February 24, 2010
3.6
Amendment to the Articles of Incorporation.
10-Q
000-53166
3.1
May 23, 2011
3.7
Certificate of Designation of Series B Convertible Preferred Stock.
10-Q
000-53166
3.1
August 16, 2011
3.8
Certificate of Designation of Series C Convertible Preferred Stock.
8-K
000-53166
3.1
November 4, 2011
3.9
Amendment to the Articles of Incorporation.
8-K
000-53166
3.1
November 23, 2011
3.10
Amendment to the Articles of Incorporation.
8-K
000-53166
3.1
January 27, 2012
3.11
Amendment to the Articles of Incorporation.
8-K
000-53166
3.1
March 30, 2012
4.1*
Specimen of certificate for MusclePharm Corporation Common Stock
4.2
Form of Promissory Note, dated July 13, 2012, issued by MusclePharm Corporation in favor of TCA Global Credit Master Fund LP.
8-K
000-53166
4.1
July 20, 2012
5.1*
Opinion of Jones & Keller, P.C.
10.1
Purchasing Agreement with General Nutrition Corporation dated December 16, 2009.
8-K
000-53166
10.2
February 24, 2010
10.2
Order Approving Stipulation for Settlement of Claim, dated December 8, 2010, between MusclePharm Corporation and Socius CG II, Ltd.
8-K
000-53166
10.1
December 9, 2010
10.3
Endorsement Agreement, dated July 20, 2011, between MusclePharm Corporation and Michael Vick, individually.
8-K
000-53166
10.1
July 22, 2011
10.4
Convertible Promissory Note between MusclePharm Corporation and Brad J. Pyatt, dated November 18, 2010.
S-1/A
333-176771
4.2
September 27, 2011
10.5
Convertible Promissory Note between MusclePharm Corporation and Brad J. Pyatt, dated November 23, 2010.
S-1/A
333-176771
4.3
September 27, 2011
10.6+
Amended and Restated Employment Agreement, dated November 14, 2011, between MusclePharm Corporation and Brad J. Pyatt.
10-Q
000-53166
10.6
November 14, 2011
10.7+
Amended and Restated Employment Agreement, dated November 14, 2011, between MusclePharm Corporation and Cory J. Gregory.
10-Q
000-53166
10.7
November 14, 2011
10.8+
Employment Agreement, dated September 15, 2011, by and between MusclePharm Corporation and John H. Bluher.
10-Q
000-53166
10.4
November 14, 2011
10.9+
Employment Agreement, dated November 14, 2011, by and between MusclePharm Corporation and Jeremy R. DeLuca.
10-Q
000-53166
10.5
November 14, 2011
10.10
Securities Purchase Agreement, dated July 10, 2012, between MusclePharm Corporation and Subscribers set forth therein.
8-K
000-53166
10.1
July 19, 2012
10.11
Consulting Agreement, dated July 12, 2012, between MusclePharm Corporation and Melechdavid, Inc.
8-K
000-53166
10.2
July 19, 2012
10.12
Consulting Agreement, dated July 12, 2012, between MusclePharm Corporation and GRQ Consultants, Inc.
8-K
000-53166
10.3
July 19, 2012
10.13
Form of Committed Equity Facility Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.
8-K
000-53166
10.1
July 20, 2012
10.14
Form of Registration Rights Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.
8-K
000-53166
10.1
July 20, 2012
10.15
Form of Security Agreement, dated July 13, 2012, between MusclePharm Corporation and TCA Global Credit Master Fund LP.
8-K
000-53166
10.1
July 20, 2012
10.16+
Form of Indemnification Agreement.
8-K
000-53166
10.1
August 27, 2012
10.17+
Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Brad J. Pyatt.
8-K
000-53166
10.1
October 23, 2012
10.18+
Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and L. Gary Davis.
8-K
000-53166
10.2
October 23, 2012
10.19+
Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and John H. Bluher.
8-K
000-53166
10.3
October 23, 2012
10.20+
Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Jeremy R. DeLuca.
8-K
000-53166
10.4
October 23, 2012
10.21+
Amended and Restated Employment Agreement, dated October 18, 2012, between MusclePharm Corporation and Cory J. Gregory.
8-K
000-53166
10.5
October 23, 2012
21
Subsidiary of the Registrant.
X
23.1
Consent of Berman & Company, P.A.
X
23.2*
Consent of Jones & Keller, P.C. (included in Exhibit 5.1).
24.1
Power of Attorney (included on signature page hereof).
*
To be filed by amendment.
+
Indicates management contract or compensatory plan.