Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 20, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | MusclePharm Corp | |
Entity Central Index Key | 0001415684 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 33,479,886 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 592 | $ 2,003 |
Accounts receivable, net | 6,221 | 7,488 |
Inventory | 1,353 | 1,032 |
Prepaid expenses and other current assets | 814 | 1,341 |
Total current assets | 8,980 | 11,864 |
Property and equipment, net | 13 | 13 |
Intangible assets, net | 275 | 356 |
Operating lease right-of-use assets | 406 | 474 |
Other assets | 275 | 295 |
TOTAL ASSETS | 9,949 | 13,002 |
Current liabilities: | ||
Obligation under secured borrowing arrangement | 4,740 | 7,098 |
Line of credit | 1,705 | 743 |
Operating lease liability, current | 402 | 381 |
Convertible note with a related party, net of discount | 2,872 | 2,872 |
Accounts payable | 13,759 | 14,719 |
Accrued and other liabilities | 6,028 | 6,194 |
Total current liabilities | 29,506 | 32,007 |
Operating lease liability, long-term | 233 | 343 |
Other long-term liabilities | 4,535 | 5,071 |
Total liabilities | 34,274 | 37,421 |
Commitments and contingencies (Note 7) | ||
Stockholders' deficit: | ||
Common stock, par value of $0.001 per share; 100,000,000 shares authorized, 34,261,821 and 33,980,905 shares issued as of March 31, 2021 and December 31, 2020, respectively; 33,386,200 and 33,105,284 shares outstanding as of March 31, 2021 and December 31, 2020, respectively | 32 | 32 |
Additional paid-in capital | 178,261 | 178,261 |
Treasury stock, at cost; 875,621 shares | (10,039) | (10,039) |
Accumulated deficit | (192,579) | (192,673) |
TOTAL STOCKHOLDERS' DEFICIT | (24,325) | (24,419) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 9,949 | $ 13,002 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 34,261,821 | 33,980,905 |
Common stock, shares outstanding | 33,386,200 | 33,105,284 |
Treasury stock, shares | 875,621 | 875,621 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Revenue, net | $ 13,121 | $ 16,231 |
Cost of revenue | 9,432 | 11,422 |
Gross profit | 3,689 | 4,809 |
Operating expenses: | ||
Advertising and promotion | 345 | 125 |
Salaries and benefits | 1,048 | 1,681 |
Selling, general and administrative | 1,397 | 1,911 |
Professional fees | 627 | 541 |
Total operating expenses | 3,417 | 4,258 |
Income from operations | 272 | 551 |
Other expense: | ||
Interest and other expense, net | (178) | (589) |
Income (loss) before provision for income taxes | 94 | (38) |
Provision for income taxes | 22 | |
Net income (loss) | $ 94 | $ (60) |
Net income (loss) per share, basic and diluted | $ 0 | $ 0 |
Weighted average shares used to compute net income (loss) per share, basic | 33,119,549 | 32,459,675 |
Weighted average shares used to compute net income (loss) per share, diluted | 45,492,621 | 32,459,675 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2019 | $ 31 | $ 177,914 | $ (10,039) | $ (195,858) | $ (27,952) |
Balance, shares at Dec. 31, 2019 | 33,000,412 | ||||
Stock-based compensation for issuance and amortization of restricted stock awards to employees, executives, and directors | 100 | 100 | |||
Stock-based compensation for issuance and amortization of restricted stock awards to employees, executives, and directors, shares | |||||
Issuance of shares of common stock related to the payment of advertising services | 47 | 47 | |||
Issuance of shares of common stock related to the payment of advertising services, shares | 101,454 | ||||
Net loss | (60) | (60) | |||
Balance at Mar. 31, 2020 | $ 31 | 178,061 | (10,039) | (195,918) | (27,865) |
Balance, shares at Mar. 31, 2020 | 33,101,866 | ||||
Balance at Dec. 31, 2020 | $ 32 | 178,261 | (10,039) | (192,673) | (24,419) |
Balance, shares at Dec. 31, 2020 | 33,105,284 | ||||
Stock-based compensation for issuance and amortization of restricted stock awards to employees, executives, and directors | |||||
Stock-based compensation for issuance and amortization of restricted stock awards to employees, executives, and directors, shares | 280,916 | ||||
Net loss | 94 | 94 | |||
Balance at Mar. 31, 2021 | $ 32 | $ 178,261 | $ (10,039) | $ (192,579) | $ (24,325) |
Balance, shares at Mar. 31, 2021 | 33,386,200 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 94 | $ (60) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment | 4 | 63 |
Amortization of intangible assets | 80 | 80 |
Bad debt expense (recovery) | (11) | 11 |
Gain on disposal of property and equipment | (11) | |
Inventory provision | 86 | 12 |
Stock-based compensation | 100 | |
Issuance of common stock to non-employees | 47 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,278 | (781) |
Inventory | (406) | (268) |
Prepaid expenses and other current assets | 527 | (459) |
Other assets | 87 | 174 |
Accounts payable and accrued liabilities | (1,641) | 1,253 |
Net cash provided by operating activities | 98 | 161 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (4) | |
Proceeds from disposal of property and equipment | 11 | |
Net cash (used in) provided by investing activities | (4) | 11 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from line of credit | 1,061 | |
Payments on line of credit | (100) | (393) |
Proceeds from secured borrowing arrangement, net of reserves | 11,423 | 9,377 |
Payments on secured borrowing arrangement, net of fees | (13,781) | (9,993) |
Repayment of finance lease obligations | (29) | |
Repayment of notes payable | (108) | (48) |
Net cash used in financing activities | (1,505) | (1,086) |
NET CHANGE IN CASH | (1,411) | (914) |
CASH - BEGINNING OF PERIOD | 2,003 | 1,532 |
CASH - END OF PERIOD | 592 | 618 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | $ 101 | $ 168 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Note 1. Description of Business Description of Business MusclePharm Corporation was incorporated in Nevada in 2006. Except as otherwise indicated herein or the context requires otherwise, the terms “MusclePharm,” the “Company,” “we,” “our” and “us” refer to MusclePharm Corporation and its subsidiaries. The Company is a scientifically-driven, performance lifestyle company that develops, markets and distributes branded sports nutrition products and nutritional supplements that are manufactured by the Company’s co-manufacturers. Our portfolio of recognized brands, including MusclePharm and FitMiss, is marketed and sold globally. Although the Company has historically incurred significant losses and experienced negative cash flows since inception, we generated net income of $0.1 million for the period ended March 31, 2021 and had cash of $0.6 million, a decline of $1.4 million from the December 31, 2020 balance of $2.0 million. As of March 31, 2021, the Company had a working capital deficit of $20.5 million, a stockholders’ deficit of $24.3 million and an accumulated deficit of $192.6 million resulting from recurring losses from operations. As a result of our history of losses and financial condition, there is substantial doubt about our ability to continue as a going concern. For financial information concerning more recent periods, see our reports for such periods filed with the SEC. The ability to continue as a going concern is dependent upon us generating profits in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management is evaluating different strategies to obtain financing to fund our expenses and achieve a level of revenue adequate to support our current cost structure. Financing strategies may include, but are not limited to, private placements of capital stock, debt borrowings, partnerships and/or collaborations. During the fourth quarter of 2019, the Company focused on cost containment and improving gross margins by focusing on customers with higher margins, reducing product discounts and promotional activity, along with reducing the number of SKU’s and negotiate cost for raw materials. These steps improved gross margins in the fourth quarter of 2019 and this trend has continued through March 31, 2021. During 2020, the Company experienced a slowdown in sales from retail customers, including our largest customer, which was partially offset by an increase in sales from our largest online customer. In addition, the Company negotiated lower cost of sold with its co-manufactures. In 2021, the Company announced its entrance into the functional energy space with its partnership with a former Rockstar Energy executive. The Company plans to launch 3 new energy products in the summer of 2021. The Company believes reductions in operating costs with continued focus on gross profit and top line sales growth will allow it to ultimately achieve sustained profitability, however, the Company can give no assurances that this will occur. In particular, the cost of protein may have a material impact on the Company’s profitability, and the ability of our third-party manufacturers to meet our customer’s demands. In addition, the Company believes entering the functional energy space will help to increase sales and gross margin, however, the Company can give no assurances that this will occur. To manage cash flow, the Company has entered into multiple financing arrangements. See additional information in “Note 6. Debt.” The Company’s results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. There continues to be significant volatility and economic uncertainty in many markets and the ongoing COVID-19 pandemic has increased that level of volatility and uncertainty and has created economic disruption. The Company is actively managing its business to respond to the impact. There were no adjustments recorded in the financial statements that might result from the outcome of these uncertainties. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all the information and notes required by U.S. GAAP for complete financial statements. The consolidated financial statements include the accounts of MusclePharm Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company’s management believes the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position as of March 31, 2021, results of operations for the three months ended March 31, 2021 and 2020, and cash flows for the three months ended March 31, 2021 and 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ended December 31, 2021. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 29, 2021. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Such estimates include, but are not limited to, allowance for doubtful accounts, revenue discounts and allowances, the valuation of inventory and deferred tax assets, the assessment of useful lives, recoverability and valuation of long-lived assets, likelihood and range of possible losses on contingencies, present value of lease liabilities, among others. Actual results could differ from those estimates. Shipping and handling The Company accounts for shipping and handling costs as fulfillment activities, which are therefore recognized upon shipment of the goods. For the three months ended March 31, 2021 and 2020, the Company incurred $0.5 million and $0.4 million, respectively, of inbound shipping and handling costs. Shipping and handling costs related to inbound purchases of raw material and finished goods are included in cost of revenue in our consolidated statements of operations. For the three months ended March 31, 2021 and 2020, the Company incurred $0.7 million and $0.6 million, respectively, of shipping and handling costs related to shipments to our customers. Shipping and handling costs related to shipments to our customers is included in “Selling, general and administrative” expense in our consolidated statements of operations. Sales discounts and returns The Company excludes from its revenue any amounts collected from customers for sales (and similar) taxes. During the three months ended March 31, 2021 and 2020, the Company recorded discounts, and to a lesser degree, sales returns, totaling $2.4 million and $4.0 million, respectively, which accounted for 15% and 20% of gross revenue in each period, respectively. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The cash balance, at times, may exceed federally insured limits. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date. Significant customers are those that represent more than 10% of the Company’s revenue, net or accounts receivable for each period presented. During the period ended March 31, 2021, the Company had three customers who individually accounted for 28%, 17% and 14% of our net revenue, and two customers that accounted for 32% and 21% of our accounts receivable, net as of March 31, 2021. During the period ended March 31, 2020, the Company had three customers who individually accounted for approximately 36%, 21% and 10% of our net revenue and three customers that accounted for 30%, 23% and 14% of our accounts receivable, net as of March 31, 2020. The Company uses a limited number of non-affiliated suppliers for contract manufacturing of its products. During the period ended March 31, 2021, the Company had three suppliers who individually accounted for approximately 32%, 21% and 21% of our purchases with contract manufactures and raw material providers. During the period ended March 31, 2020, the Company had four suppliers who individually accounted for approximately 34%, 30%, 13% and 11% of our purchases with contract manufactures and raw material providers. Recent Accounting Pronouncements In July 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): |
Accrued and Other Liabilities
Accrued and Other Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued and Other Liabilities | Note 3. Accrued and Other Liabilities As of March 31, 2021 and December 31, 2020, the Company’s accrued and other liabilities consisted of the following (in thousands): As of March 31, 2021 As of December 31, 2020 Accrued professional fees $ 123 $ 242 Accrued interest 693 644 Accrued payroll and bonus 368 738 Settlements – short term (Nutrablend and 4Excelsior) 2,181 2,005 Accrued expenses - ThermoLife 1,364 1,364 Accrued and other short-term liabilities 1,299 1,201 Accrued and other liabilities $ 6,028 $ 6,194 |
Interest and Other Expense, Net
Interest and Other Expense, Net | 3 Months Ended |
Mar. 31, 2021 | |
Other Income and Expenses [Abstract] | |
Interest and Other Expense, Net | Note 4. Interest and other expense, net For the three months ended March 31, 2021 and 2020, “Interest and other expense, net” consisted of the following (in thousands): For the Three Months Ended March 31, 2021 2020 Interest expense, related party $ (120 ) $ (76 ) Interest expense, other (227 ) (157 ) Interest expense, secured borrowing arrangement (163 ) (365 ) Foreign currency transaction loss (1 ) (34 ) Loss on settlement obligation — (50 ) Gain on legal settlement 200 — Other 133 93 Total interest and other expense, net $ (178 ) $ (589 ) “Other” includes sublease income. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Leases | Note 5. Leases A summary of the Company’s lease portfolio as of March 31, 2021 and December 31, 2020 is presented in the table below (in thousands): Balance Sheet Classification March 31, 2021 December 31, 2020 Assets Operating ROU assets, net $ 406 $ 474 Liabilities Current liabilities: Operating Operating lease liability - current $ 402 $ 381 Non-current liabilities: Operating Operating lease liability - long term 233 343 Total lease liabilities $ 635 $ 724 Fixed lease costs represent the explicitly quantified lease payments prescribed by the lease agreement and are included in the measurement of the ROU asset and corresponding lease liability. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the initial ROU asset or lease liability. The Company’s lease agreements do not contain any material restrictive covenants. The components of lease cost for operating and finance leases for the three months ended March 31, 2021 and 2020 were as follows (in thousands): Income Statement Classification Three months ended Three months ended Operating lease cost Selling, general and administrative $ 115 $ 243 Finance lease cost: Amortization of ROU asset Selling, general and administrative — 27 Total finance lease cost — 27 Variable lease payments Selling, general and administrative 32 103 Sublease income Other income (134 ) (36 ) Total lease (income) cost $ 13 $ 337 The Company had no short-term leases as of both March 31, 2021 and 2020. The Company’s leases do not provide an implicit rate; therefore, the Company uses its incremental borrowing rate based on the information available at the effective date in determining the present value of future payments for those leases. Supplemental cash flow information related to leases was as follows: Three months ended March 31, 2021 Three months ended March 31, 2020 Cash paid for amounts included in the measurement of lease liabilities (in thousands): Operating cash flows from operating leases $ 88 $ 197 Financing cash flows from finance leases — 29 The weighted average remaining lease term was as follows: Operating leases (in years) 1.4 2.1 Finance leases (in years) — 0.3 The weighted average discount rate was as follows: Operating leases 18 % 18 % Finance leases — 5 % |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Note 6. Debt As of March 31, 2021, and December 31, 2020, the Company’s debt consisted of the following (in thousands): As of March 31, 2021 As of December 31, 2020 Refinanced convertible note, related party $ 2,872 $ 2,872 Revolving line of credit, related party 1,705 743 Obligations under secured borrowing arrangement 4,740 7,098 Notes payable 59 167 Paycheck Protection Program loan 965 965 Total debt 10,341 11,845 Less: current portion (9,537 ) (10,880 ) Long term debt $ 804 $ 965 Related-Party Refinanced Convertible Note On November 29, 2020, the Company entered into a refinancing agreement with Mr. Ryan Drexler, the Company’s Chairman of the Board of Directors and Chief Executive Officer (the “November 2020 Refinancing”), in which the Company issued to Mr. Drexler a convertible secured promissory note (the November 2020 “Convertible Note”) in the original principal amount of $2,871,967, which amended and restated a convertible secured promissory note dated as of August 21, 2020. The $2.9 million November 2020 Convertible Note bears interest at the rate of 12% per annum. Unless earlier converted or repaid, all outstanding principal and any accrued but unpaid interest under the November 2020 Convertible Note shall be due and payable on July 1, 2021. Any interest not paid when due shall be capitalized and added to the principal amount of the November 2020 Convertible Note and bear interest on the applicable interest payment date along with all other unpaid principal, capitalized interest, and other capitalized obligations. Mr. Drexler may, at any time, and from time to time, upon written notice to the Company, convert the outstanding principal and accrued interest into shares of Common Stock, at a conversion price of $0.23 per share. At the election of the Company, one-sixth of the interest may be paid in kind (“PIK Interest”) by adding such amount to the principal amount of the note, or through the issuance of shares of the Company’s common stock to Mr. Drexler. The PIK Interest is convertible to common stock at the closing price per share on the last business day of each calendar quarter. In no event will the conversion price of such PIK Interest be less than $0.10. The Company may prepay the Note by giving Mr. Drexler between 15- and 60-days’ notice depending upon the specific circumstances, subject to Mr. Drexler’s conversion right. The Company intends to pay all interest due on the Convertible Note to Mr. Drexler at the end of each calendar quarter. The November 2020 Convertible Note contains customary restrictions on the ability of the Company to, among other things, grant liens or incur indebtedness other than certain obligations incurred in the ordinary course of business. The restrictions are also subject to certain additional qualifications and carveouts, as set forth in the November 2020 Convertible Note. The November 2020 Convertible Note is subordinated to certain other indebtedness of the Company held by Prestige Capital Corporation (“Prestige”) and Crossroads Financial Group, LLC (“Crossroads”). For the three months ended March 31, 2021 and 2020, interest expense related to the related party convertible secured promissory notes was $85,000 and $76,000, respectively. During the three months ended March 31, 2021, $85,000 in interest was paid in cash to Mr. Drexler; for the three months ended March 31, 2020, no interest was paid in cash to Mr. Drexler. Related Party Secured Revolving Promissory Note On October 15, 2020, the Company entered into a secured revolving promissory note (the “Revolving Note”) with Ryan Drexler. Under the terms of the Revolving Note, the Company can borrow up to $3.0 million. The Revolving Note bears interest at the rate of 12% per annum. The use of funds will be used for the purchase of whey protein and other general corporate purposes. Both the outstanding principal, if any, and all accrued interest under the Revolving Note were due on March 31, 2021, however, the Company and Mr. Drexler agreed to a 60 day extension. The Company may prepay the Revolving Note by giving Mr. Drexler one days’ advance written notice. The Revolving Note contains customary events of default, including, among others, the failure by the Company to make a payment of principal or interest when due. Following an event of default, Mr. Drexler is entitled to accelerate the entire indebtedness under the Revolving Note. The Revolving Note also contains customary restrictions on the ability of the Company to, among other things, grant liens or incur indebtedness other than certain obligations incurred in the ordinary course of business. The restrictions are also subject to certain additional qualifications and carveouts, as set forth in the Revolving Note. The Revolving Note is subordinated to certain other indebtedness of the Company held by Prestige and Crossroads. In connection with the Revolving Note, the Company and Mr. Drexler entered into a fifth amended and restated security agreement dated October 15, 2020 (the “Security Agreement”) pursuant to which the Revolving Note is secured by all of the assets and properties of the Company and its subsidiaries whether tangible or intangible. As of March 31, 2021, the outstanding balance on the revolving note was $1.7 million. During the period ended March 31, 2021, interest paid in cash to Mr. Drexler was $16,000. Secured Borrowing Arrangement In January 2016, the Company entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Prestige, pursuant to which the Company agreed to sell and assign and Prestige agreed to buy and accept, certain accounts receivable owed to the Company (“Accounts”). Under the terms of the Purchase and Sale Agreement, upon the receipt and acceptance of each assignment of Accounts, Prestige will pay the Company 80% of the net face amount of the assigned Accounts, up to a maximum total borrowing of $12.5 million subject to sufficient amounts of accounts receivable to secure the loan. The remaining 20% will be paid to the Company upon collection of the assigned Accounts, less any chargebacks (including chargebacks for any customer amounts that remain outstanding for over 90 days), disputes, or other amounts due to Prestige. Prestige’s purchase of the assigned Accounts from the Company will be at a discount fee which varies from 0.7% to 4%, based on the number of days outstanding from the assignment of Accounts to collection of the assigned Accounts. In addition, the Company granted Prestige a continuing security interest in and first priority lien upon all accounts receivable, inventory, fixed assets, general intangibles, and other assets. Prestige will have no recourse against the Company if payments are not made due to the insolvency of an account debtor within 90 days of invoice date, with the exception of international and certain domestic customers As of March 31, 2021, and December 31, 2020, the Company had outstanding borrowings of approximately $4.7 million and $7.1 million, respectively. During the three months ended March 31, 2021 and 2020, the Company assigned to Prestige, accounts with an aggregate face amount of approximately $11.1 million and $11.7 million, respectively, for which Prestige paid to the Company approximately $8.8 million and $9.4 million, respectively, in cash. During the three months ended March 31, 2021 and 2020, $11.2 million and $10.0 million, respectively, was repaid to Prestige, including fees and interest. Paycheck Protection Program Loan Due to economic uncertainty as a result of the ongoing pandemic (COVID-19), on May 14, 2020, the Company received an aggregate principal amount of $964,910 pursuant to the borrowing arrangement (“Note”) with Harvest Small Business Finance, LLC (“HSBF”) and agreed to pay the principal amount plus interest at a 1% fixed interest rate per year, on the unpaid principal balance. The Note includes forgiveness provisions in accordance with the requirements of the Paycheck Protection Program, Section 1106 of the CARES Act. The Note is expected to mature on May 16, 2023. Payments were due by November 16, 2020 (the “Deferment Period”) and interest was accrued during the Deferment Period. However, the Flexibility Act, which was signed into law on June 5, 2020, extended the Deferment Period to the date that the forgiven amount is remitted by the United States Small Business Administration (“SBA”) to HSBF. The Company is in the process of filling out the forgiveness application form. As of March 31, 2021, the Company owed approximately $1.0 million (principal plus accrued interest). Of this amount, the short-term portion of $0.2 million is recorded in “Accrued and other liabilities” and the remaining liability of $0.8 million is recorded in “Other long-term liabilities” in the consolidated balance sheets. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7. Commitments and Contingencies Settlements Manchester City Football Group The Company was engaged in a dispute with City Football Group Limited (“CFG”), the owner of Manchester City Football Group, concerning amounts allegedly owed by the Company under a sponsorship agreement with CFG (the “Sponsorship Agreement”). In August 2016, CFG commenced arbitration in the United Kingdom against the Company, seeking approximately $8.3 million for the Company’s purported breach of the Sponsorship Agreement. On July 28, 2017, the Company approved a Settlement Agreement (the “CFG Settlement Agreement”) with CFG effective July 7, 2017. The CFG Settlement Agreement represents a full and final settlement of all litigation between the parties. Under the terms of the agreement, the Company agreed to pay CFG a sum of $3 million, which was recorded as accrued expenses in 2017. The settlement consists of a $1 million payment that was advanced by a related party on July 7, 2017, a $1 million installment paid on July 7, 2018 and a subsequent $1 million installment payment to be paid by July 7, 2019. Of this amount, the Company has remitted $0.3 million. During the three months ended March 31, 2021 and 2020, the Company recorded a charge of $18,000 and $19,000, respectively. This charge, representing imputed interest, is included in “Interest and other expense, net” in the Company’s consolidated statements of operations. Nutrablend Matter On February 27, 2020, Nutrablend, a manufacturer of MusclePharm products, filed an action against MusclePharm in the United States District Court for the Eastern District of California, claiming approximately $3.1 million in allegedly unpaid invoices. These invoices relate to the third and fourth quarter of 2019, and a liability has been recorded in the books for the related periods. On September 25, 2020, the parties successfully mediated the case to a settlement and the Company agreed to (i) pay approximately $3.1 million (“Owed Amount”) in monthly payments (“Monthly Payments”) from September 1, 2020 through June 30, 2023 and (ii) issue monthly purchase orders (“Purchase Orders”) at minimum amounts accepted by Nutrablend. MusclePharm agreed to issue Purchase Orders in a combined total amount of at least (i) $1,500,000 from September 1, 2020 through November 30, 2020; (ii) $1,800,000 from December 1, 2020 through February 28, 2021; (iii) $2,100,000 from March 31, 2021 through May 31, 2021; (iv) $2,100,000 from June 1, 2021 through August 31, 2021; and (v) $1,400,000 from September 1, 2021 through October 30, 2021. Beginning on November 1, 2021, MusclePharm will be required to issue monthly Purchase Orders to Nutrablend in a minimum amount of $700,000 until the Owed Amount is paid in full to Nutrablend. In the event that MusclePharm pays the Owed Amount in full before September 1, 2021, MusclePharm is entitled to a rebate on all completed Purchase Orders. Further, once the monthly payments, and any additional payments that MusclePharm has made on the Owed Amount, reduce the outstanding balance of the Owed Amount to below $2.0 million, MusclePharm is eligible for an extension of a line of credit from Nutrablend in an amount of up to $3.0 million. The Company determined that approximately $1.0 million dollars of the Owed Amount was due within a year, and this amount was recorded in “Accrued and other liabilities” in the consolidated balance sheets. The present value of the remaining Owed Amount that was due after a year was $1.2 million, and the amount was recorded in “Other long-term liabilities” in the consolidated balance sheets. The Company made payments of $0.5 million as of March 31, 2021. During the period ended March 31, 2021, the Company recorded interest expense of $64,000, in the consolidated statements of operations. 4Excelsior Matter On March 18, 2019, Excelsior Nutrition, Inc. (“4Excelsior”), a manufacturer of MusclePharm products, filed an action against MusclePharm in the Superior Court of the State of California for the County of Los Angeles, claiming approximately $6.2 million in damages relating to allegedly unpaid invoices, as well as approximately $7.8 million in consequential damages. On January 27, 2020, MusclePharm filed a counterclaim against 4Excelsior seeking unidentified damages relating to, among other things, 4Excelsior’s failure to fulfill a purchase order. MusclePharm also moved to strike 4Excelsior’s consequential damages on the grounds that they are unrecoverable under the Uniform Commercial Code. The court denied that motion, and the action proceeded to discovery. On November 16, 2020, the Company and 4Excelsior entered into a stipulation of settlement that provided that the Company would pay to 4Excelsior a total of $4.75 million in four monthly payments of $70,000, beginning January 5, 2021, and thereafter in monthly payments of $0.1 million. On December 16, 2020, MusclePharm and 4Excelsior entered into a Settlement Agreement and Mutual Release (“the Agreement”), pursuant to which the parties resolved and settled the civil action pending in the Superior Court of the State of California for the County of Los Angeles (the “Litigation”). The parties agreed to a mutual general release of claims and to jointly file within 10 business days of the effective date of the Agreement a stipulation and proposed order of dismissal, dismissing with prejudice all claims and counterclaims asserted in the Litigation. MusclePharm agreed to pay $4.75 million (the “Settlement Amount”) in four monthly payments of $70,000, beginning January 5, 2021, and thereafter in monthly payments of $0.1 million until the Settlement Amount is fully paid. MusclePharm may prepay all or any portion of the Settlement Amount at any time without penalty or premium. The Agreement provides that, in the event of a Default (as defined in the Agreement) by MusclePharm, the entire outstanding balance of the Settlement Amount will become immediately due and payable, plus accrued interest at a rate of 18% per annum, commencing from the date of default. The Company determined that approximately $1.1 million dollars of the Settlement Amount was due within a year, and this amount was recorded in “Accrued and other liabilities” in the consolidated balance sheets. The present value of the remaining Settlement Amount that was due after a year was $2.4 million, and the amount was recorded in “Other long-term liabilities” in the consolidated balance sheets. The Company made payments of $0.2 million as of March 31, 2021. During the period ended March 31, 2021, the Company recorded interest expense of $0.1 million, in the consolidated statements of operations. Contingencies In the normal course of business or otherwise, the Company may become involved in legal proceedings. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. The Company provides disclosures for material contingencies when there is a reasonable possibility that a loss or an additional loss may be incurred. In assessing whether a loss is a reasonable possibility, the Company may consider the following factors, among others: the nature of the litigation, claim or assessment, available information, opinions or views of legal counsel and other advisors, and the experience gained from similar cases. As of March 31, 2021, the Company was involved in the following material legal proceedings described below. ThermoLife International In January 2016, ThermoLife International LLC (“ThermoLife”), a supplier of nitrates to MusclePharm, filed a complaint against us in Arizona state court. ThermoLife alleged that we failed to meet minimum purchase requirements contained in the parties’ supply agreement. In March 2016, we filed counterclaims alleging that ThermoLife’s products were defective. Through orders issued in September and November 2019, the court dismissed MusclePharm’s counterclaims and found that the Company was liable to ThermoLife for failing to meet its minimum purchase requirements. The court held a bench trial on the issue of damages in October 2019, and on December 4, 2019, the court entered judgment in favor of ThermoLife and against the Company in the amount of $1.6 million, comprised of $0.9 million in damages, interest in the amount of $0.3 million and attorneys’ fees and costs in the amount of $0.4 million. The Company recorded $1.6 million in accrued expenses in 2018. As of December 31, 2020, the total amount accrued, including interest, was $1.8 million. In the interim, the Company filed an appeal and posted bonds in the total amount of $0.6 million in order to stay execution on the judgment pending appeal. Of the $0.6 million, $0.25 million (including fees) was paid by Mr. Drexler on behalf of the Company. See “Note 8. Debt” for additional information. The balance of $0.35 million was secured by a personal guaranty from Mr. Drexler, while the associated fees of $12,500 were paid by the Company. On April 27, 2021, the appellate court issued a decision largely affirming the trial court judgement, except vacating the judgement’s $0.3 million prejudgment interest award and remanding for a recalculation of prejudgment interest. On May 18, 2021, ThermoLife filed a motion asking the trial court to increase MusclePharm’s appeal bond to the full amount of the judgment, or $1.8 million, which MusclePharm intends to vigorously oppose. For both the three months ended March 31, 2021 and 2020, interest expense recognized by the Company on the awarded damages was $22,000. The Company intends to vigorously continue pursuing its defenses, including an appeal to the Arizona Supreme Court, which it has until June 25, 2021 to file a petition for review. White Winston Select Asset Fund Series MP-18, LLC et al., v. MusclePharm Corp., et al., (Nev. Dist. Ct.; Cal. Superior Court; Colorado Dist. Ct.; Mass. Super. Ct.) On August 21, 2018, White Winston Select Asset Fund Series MP-18, LLC and White Winston Select Asset Fund, LLC (together “White Winston”) initiated a derivative action against MusclePharm and its directors (the “director defendants”). White Winston alleges that the director defendants breached their fiduciary duties by improperly approving the refinancing of three promissory notes issued by MusclePharm to Mr. Drexler (the “Amended Note”) in exchange for $18.0 million in loans. White Winston alleges that this refinancing improperly diluted their economic and voting power and constituted an improper distribution in violation of Nevada law. In its complaint, White Winston sought the appointment of a receiver over MusclePharm, a permanent injunction against the exercise of Mr. Drexler’s conversion right under the Amended Note, and other unspecified monetary damages. On September 13, 2018, White Winston filed an amended complaint, which added a former MusclePharm executive, as a plaintiff (together with White Winston, the “White Winston Plaintiffs”). On December 9, 2019, the White Winston Plaintiffs filed a Second Amended Complaint, in which they added allegations relating to the resignation of MusclePharm’s auditor, Plante & Moran PLLC (“Plante Moran”). MusclePharm has moved to dismiss the Second Amended Complaint. That motion has not yet been fully briefed. Along with its complaint, White Winston also filed a motion for a temporary restraining order (“TRO”) and preliminary injunction enjoining the exercise of Mr. Drexler’s conversion right under the Amended Note. On August 23, 2018, the Nevada district court issued an ex parte TRO. On September 14, 2018, the court let the TRO expire and denied White Winston’s request for a preliminary injunction, finding, among other things, that White Winston did not show a likelihood of success on the merits of the underlying action and failed to establish irreparable harm. Following the court’s decision, MusclePharm filed a motion seeking to recoup the legal fees and costs it incurred in responding to the preliminary injunction motion. On October 31, 2019, the court awarded MusclePharm $56,000 in fees and costs. Due to the uncertainty associated with determining our liability, if any, and due to our inability to ascertain with any reasonable degree of likelihood, as of the date of this report, the outcome of the trial, the Company has not recorded an estimate for its potential liability. On June 17, 2019, White Winston moved for the appointment of a temporary receiver over MusclePharm, citing Plante Moran’s resignation. The court granted White Winston’s request to hold an evidentiary hearing on the motion, but subsequently stayed the action pending the parties’ attempts to resolve their dispute. Although the parties have been unable to reach a resolution, the litigation has not yet resumed. On July 30, 2019, White Winston filed an action in the Superior Court of the State of California in and for the County of Los Angeles, seeking access to MusclePharm’s books and records and requesting the appointment of an independent auditor for the company. On February 25, 2021, the court ordered MusclePharm to produce certain documents, denied White Winston’s request for an auditor, and ordered MusclePharm to pay a $1,500 penalty. White Winston also seeks its attorneys’ fees and cost relating to the books-and-records action. MusclePharm intends to challenge White Winston’s request for fees and costs. IRS Audit On April 6, 2016, the Internal Revenue Service (“IRS”) selected our 2014 Federal Income Tax Return for audit. As a result of the audit, the IRS proposed certain adjustments with respect to the tax reporting of our former executives’ 2014 restricted stock grants. Due to the Company’s current and historical loss position, the proposed adjustments would have no material impact on the Company’s Federal income tax. On October 5, 2016, the IRS commenced an audit of our employment and withholding tax liability for 2014. The IRS contends that the Company inaccurately reported the value of the restricted stock grants and improperly failed to provide for employment taxes and Federal tax withholding on these grants. In addition, the IRS is proposing certain penalties associated with the Company’s filings. On April 4, 2017, the Company received a “30-day letter” from the IRS asserting back taxes and penalties of approximately $5.3 million, of which $4.4 million related to withholding taxes, specifically, income withholding and Social Security taxes, and $0.9 million related to penalties. Additionally, the IRS asserts that the Company owes information reporting penalties of approximately $2.0 million. The Company’s counsel has submitted a formal protest to the IRS disputing on several grounds all of the proposed adjustments and penalties on the Company’s behalf, and the Company has been pursuing this matter vigorously through the IRS appeal process. An Appeals Conference was held with the IRS in Denver, Colorado on July 31, 2019. At the conference, the Company made substantial arguments challenging the IRS’s claims for employment taxes and penalties. On December 16, 2019, a further Appeals Conference was held with the IRS by telephone. At the telephone conference, the Appeals Officer confirmed that he agreed with the Company’s argument that the failure to deposit penalties should be conceded by the IRS. The failure to deposit penalties total about $2 million. Thus, with this concession, the IRS’s claims have been reduced from approximately $7.3 million to about $5.3 million. The remaining issue in dispute in this matter involves the fair market value of restricted stock units in the Company granted to certain former officers (the “Former Officers”) of the Company under Internal Revenue Code § 83. The Company and the IRS disagree as to the value of the restricted stock on the date of the grants, i.e., October 1, 2014. The Company and the IRS have exchanged expert valuation reports on the fair market value of the stock and have had extensive negotiations on this issue. The parties, however, have not been able to reach an agreement with respect to the value of the stock. The IRS has also made parallel claims regarding the restricted stock units against the Former Officers of the Company. The IRS has asserted that the Former Officers received ordinary income from the stock grants, and that they owe additional personal income taxes based on the fair market value of the stock. The Former Officers’ cases, unlike the Company’s case, are pending before the United States Tax Court. In the Tax Court litigation, the Former Officers are challenging the IRS’s determinations regarding the fair market value of the restricted stock grants on October 1, 2014. The Former Officers have separate counsel from the Company. The same IRS Appeals Officer and Revenue Agents assigned to the Company’s case are also involved in the cases for the Former Officers. Throughout the proceedings, the Company has argued to the IRS that it is the Former Officers who are directly and principally liable for the amount of any tax due, and not the Company. The Former Officers cases were scheduled for trial in Tax Court on March 9, 2020. The trial of the cases was continued by the Court on February 4, 2020. The basis for the continuance was that the IRS and the Former Officers had made progress toward a settlement of the valuation issue involving the grants of the restricted stock. The outcome of these settlement negotiations will be relevant to the Company’s case. The Company is closely monitoring the settlement discussions between the IRS and the Former Officers. The Tax Court ordered the Former Officers to file status reports regarding progress of their settlement negotiations with the IRS on or before February 28, 2021. The IRS and the Former Officers filed status reports with the Tax Court on February 26, 2021. After receiving the status reports, the Tax Court issued an order directing the parties to file further status reports on or before July 9, 2021. The Tax Court has not set a trial dates in the cases of the Former Officers. Due to the uncertainty associated with determining our liability for the asserted taxes and penalties, if any, and to our inability to ascertain with any reasonable degree of likelihood, as of the date of this report, the outcome of the IRS appeals process, the Company has not recorded an estimate for its potential liability, if any, associated with these taxes. During the time period of the IRS audit and Appeals Office consideration of the Company’s case, the Company and the IRS signed a series of consents to extend the statutes of limitations for assessment for both the employment tax and corporation income tax of the Corporation for 2014. The Company’s records show that the last consents that the Company signed extended the statutes of limitations for employment tax and corporation income tax for 2014 through and including December 15, 2020. The Company has no record of any consents being signed by the Company and the IRS extending the statutes of limitations beyond December 15, 2020. Based on these facts, the Company believes that the statutes of limitations for assessment of additional employment tax and corporation income tax against the Corporation for 2014 expired on December 15, 2020. The Company does not know whether the IRS agrees with the Corporation’s statements regarding the current status of the statutes of limitations described herein. On August 22, 2018, Richard Estalella filed an action against us and two other defendants in the Colorado District Court for the County of Denver, seeking damages arising out of the IRS’s assertion of tax liability and penalties relating to the 2014 restricted stock grants. We have answered Estalella’s complaint, asserted counterclaims against Estalella for his failure to ensure that all withholding taxes were paid in connection with the 2014 restricted stock grants, and filed cross-claims against two valuation firms named in the action (as well as their principals) for failing to properly value the 2014 restricted stock grants for tax purposes. Trial in the matter has been scheduled for February 7, 2022. There are no amounts accrued related to this matter. The Company will continue to vigorously litigate the matter. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Note 8. Stock-Based Compensation Restricted Stock There were no restricted stock awards granted during the three months ended March 31, 2021 or 2020, respectively. As of March 31, 2021 there was no unrecognized expense for unvested restricted stock awards. For the three months ended March 31, 2021 and 2020, the Company recorded $0.0 and $0.1 million of stock-based compensation expense related to restricted stock. Stock Options For the three months ended March 31, 2021 and 2020, the Company recorded no stock compensation expense related to options. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Net Income (loss) Per Share | Note 9. Net Income (Loss) per Share Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock outstanding during each period. The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share for the periods presented (in thousands, except share and per share data): For the Three Months Ended March 31, 2021 2020 Net income (loss) $ 94 $ (60 ) Weighted average common shares used in computing net income (loss) per share, basic 33,119,549 32,459,675 Potentially diluted securities 12,373,071 — Weighted average common shares used in computing net income (loss) per share, diluted 45,492,621 32,459,675 Net income (loss) per share, basic and diluted $ 0.00 $ (0.00 ) Diluted net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The Company uses the treasury stock method to determine whether there is a dilutive effect of outstanding potentially dilutive securities, and the if-converted method to assess the dilutive effect of the convertible notes. The Company reported net income for the three months ended March 31, 2021. The weighted average shares of 12,373,071, which represented potentially dilutive securities related to Mr. Drexler’s convertible notes outstanding in 2020, were included in the computations for the diluted net income per share for the three months ended March 31, 2021. The following securities were excluded from the computations of the diluted net income (loss) per share, as the effect of the securities would be antidilutive: As of March 31, 2021 2020 Stock options 171,703 171,703 Warrants — 1,289,378 Unvested restricted stock — 541,322 Convertible notes 12,373,071 931,974 Total common stock equivalents 12,554,774 2,934,377 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10. Income Taxes The Company recorded a tax provision of $0 and $22,000 for the three months ended March 31, 2021 and 2020, respectively. Income taxes are provided for the tax effects of transactions reported in the consolidated 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. 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 March 31, 2021. |
Segments, Geographical Informat
Segments, Geographical Information | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Segments, Geographical Information | Note 11. Segments, Geographical Information The Company’s chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company currently has a single reporting segment and operating unit structure. In addition, substantially all long-lived assets are attributable to operations in the U.S. for both periods presented. Revenue, net by geography is based on the company addresses of the customers. The following table sets forth revenue, net by geographic area (in thousands): For the Three Months Ended 2021 2020 Revenue, net: United States $ 9,274 $ 11,847 International 3,847 4,384 Total revenue, net $ 13,121 $ 16,231 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12. Subsequent Events On May 12, 2021, the Company entered into an Agreement (the “Agreement”) with Joseph Cannata (“Cannata”), pursuant to which the Company has engaged Cannata on a non-exclusive basis to assist with the growth of the Company’s energy beverage product line. In connection with entry into the Agreement, the Company issued to Cannata an option to purchase 1,673,994 shares of the Company’s common stock at a price per share of $1.12. The option has an exercise term of 10 years (subject to potential acceleration upon a sale of the Company) and will vest in two equal tranches upon the achievement of certain net revenue milestones related to the Company’s energy beverage products. In addition, the Company agreed to make quarterly payments to Cannata during the term of the Agreement in amounts equal to 17.5% of the gross profit attributable to the applicable products, excluding products sold through certain excluded sales channels. The Agreement continues in effect unless terminated by the mutual agreement of the parties, upon the sale of the Company and upon other specified termination events. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all the information and notes required by U.S. GAAP for complete financial statements. The consolidated financial statements include the accounts of MusclePharm Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company’s management believes the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position as of March 31, 2021, results of operations for the three months ended March 31, 2021 and 2020, and cash flows for the three months ended March 31, 2021 and 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ended December 31, 2021. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 29, 2021. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Such estimates include, but are not limited to, allowance for doubtful accounts, revenue discounts and allowances, the valuation of inventory and deferred tax assets, the assessment of useful lives, recoverability and valuation of long-lived assets, likelihood and range of possible losses on contingencies, present value of lease liabilities, among others. Actual results could differ from those estimates. |
Shipping and Handling | Shipping and handling The Company accounts for shipping and handling costs as fulfillment activities, which are therefore recognized upon shipment of the goods. For the three months ended March 31, 2021 and 2020, the Company incurred $0.5 million and $0.4 million, respectively, of inbound shipping and handling costs. Shipping and handling costs related to inbound purchases of raw material and finished goods are included in cost of revenue in our consolidated statements of operations. For the three months ended March 31, 2021 and 2020, the Company incurred $0.7 million and $0.6 million, respectively, of shipping and handling costs related to shipments to our customers. Shipping and handling costs related to shipments to our customers is included in “Selling, general and administrative” expense in our consolidated statements of operations. |
Sales Discounts and Returns | Sales discounts and returns The Company excludes from its revenue any amounts collected from customers for sales (and similar) taxes. During the three months ended March 31, 2021 and 2020, the Company recorded discounts, and to a lesser degree, sales returns, totaling $2.4 million and $4.0 million, respectively, which accounted for 15% and 20% of gross revenue in each period, respectively. |
Concentrations | Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The cash balance, at times, may exceed federally insured limits. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date. Significant customers are those that represent more than 10% of the Company’s revenue, net or accounts receivable for each period presented. During the period ended March 31, 2021, the Company had three customers who individually accounted for 28%, 17% and 14% of our net revenue, and two customers that accounted for 32% and 21% of our accounts receivable, net as of March 31, 2021. During the period ended March 31, 2020, the Company had three customers who individually accounted for approximately 36%, 21% and 10% of our net revenue and three customers that accounted for 30%, 23% and 14% of our accounts receivable, net as of March 31, 2020. The Company uses a limited number of non-affiliated suppliers for contract manufacturing of its products. During the period ended March 31, 2021, the Company had three suppliers who individually accounted for approximately 32%, 21% and 21% of our purchases with contract manufactures and raw material providers. During the period ended March 31, 2020, the Company had four suppliers who individually accounted for approximately 34%, 30%, 13% and 11% of our purchases with contract manufactures and raw material providers. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In July 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): |
Accrued and Other Liabilities (
Accrued and Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued and Other Liabilities | As of March 31, 2021 and December 31, 2020, the Company’s accrued and other liabilities consisted of the following (in thousands): As of March 31, 2021 As of December 31, 2020 Accrued professional fees $ 123 $ 242 Accrued interest 693 644 Accrued payroll and bonus 368 738 Settlements – short term (Nutrablend and 4Excelsior) 2,181 2,005 Accrued expenses - ThermoLife 1,364 1,364 Accrued and other short-term liabilities 1,299 1,201 Accrued and other liabilities $ 6,028 $ 6,194 |
Interest and Other Expense, N_2
Interest and Other Expense, Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Other Income and Expenses [Abstract] | |
Schedule of Interest and Other Expense, Net | For the three months ended March 31, 2021 and 2020, “Interest and other expense, net” consisted of the following (in thousands): For the Three Months Ended March 31, 2021 2020 Interest expense, related party $ (120 ) $ (76 ) Interest expense, other (227 ) (157 ) Interest expense, secured borrowing arrangement (163 ) (365 ) Foreign currency transaction loss (1 ) (34 ) Loss on settlement obligation — (50 ) Gain on legal settlement 200 — Other 133 93 Total interest and other expense, net $ (178 ) $ (589 ) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | A summary of the Company’s lease portfolio as of March 31, 2021 and December 31, 2020 is presented in the table below (in thousands): Balance Sheet Classification March 31, 2021 December 31, 2020 Assets Operating ROU assets, net $ 406 $ 474 Liabilities Current liabilities: Operating Operating lease liability - current $ 402 $ 381 Non-current liabilities: Operating Operating lease liability - long term 233 343 Total lease liabilities $ 635 $ 724 |
Schedule of Components of Lease Cost for Operating and Finance Leases | The components of lease cost for operating and finance leases for the three months ended March 31, 2021 and 2020 were as follows (in thousands): Income Statement Classification Three months ended Three months ended Operating lease cost Selling, general and administrative $ 115 $ 243 Finance lease cost: Amortization of ROU asset Selling, general and administrative — 27 Total finance lease cost — 27 Variable lease payments Selling, general and administrative 32 103 Sublease income Other income (134 ) (36 ) Total lease (income) cost $ 13 $ 337 |
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information related to leases was as follows: Three months ended March 31, 2021 Three months ended March 31, 2020 Cash paid for amounts included in the measurement of lease liabilities (in thousands): Operating cash flows from operating leases $ 88 $ 197 Financing cash flows from finance leases — 29 The weighted average remaining lease term was as follows: Operating leases (in years) 1.4 2.1 Finance leases (in years) — 0.3 The weighted average discount rate was as follows: Operating leases 18 % 18 % Finance leases — 5 % |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Note 6. Debt As of March 31, 2021, and December 31, 2020, the Company’s debt consisted of the following (in thousands): As of March 31, 2021 As of December 31, 2020 Refinanced convertible note, related party $ 2,872 $ 2,872 Revolving line of credit, related party 1,705 743 Obligations under secured borrowing arrangement 4,740 7,098 Notes payable 59 167 Paycheck Protection Program loan 965 965 Total debt 10,341 11,845 Less: current portion (9,537 ) (10,880 ) Long term debt $ 804 $ 965 Related-Party Refinanced Convertible Note On November 29, 2020, the Company entered into a refinancing agreement with Mr. Ryan Drexler, the Company’s Chairman of the Board of Directors and Chief Executive Officer (the “November 2020 Refinancing”), in which the Company issued to Mr. Drexler a convertible secured promissory note (the November 2020 “Convertible Note”) in the original principal amount of $2,871,967, which amended and restated a convertible secured promissory note dated as of August 21, 2020. The $2.9 million November 2020 Convertible Note bears interest at the rate of 12% per annum. Unless earlier converted or repaid, all outstanding principal and any accrued but unpaid interest under the November 2020 Convertible Note shall be due and payable on July 1, 2021. Any interest not paid when due shall be capitalized and added to the principal amount of the November 2020 Convertible Note and bear interest on the applicable interest payment date along with all other unpaid principal, capitalized interest, and other capitalized obligations. Mr. Drexler may, at any time, and from time to time, upon written notice to the Company, convert the outstanding principal and accrued interest into shares of Common Stock, at a conversion price of $0.23 per share. At the election of the Company, one-sixth of the interest may be paid in kind (“PIK Interest”) by adding such amount to the principal amount of the note, or through the issuance of shares of the Company’s common stock to Mr. Drexler. The PIK Interest is convertible to common stock at the closing price per share on the last business day of each calendar quarter. In no event will the conversion price of such PIK Interest be less than $0.10. The Company may prepay the Note by giving Mr. Drexler between 15- and 60-days’ notice depending upon the specific circumstances, subject to Mr. Drexler’s conversion right. The Company intends to pay all interest due on the Convertible Note to Mr. Drexler at the end of each calendar quarter. The November 2020 Convertible Note contains customary restrictions on the ability of the Company to, among other things, grant liens or incur indebtedness other than certain obligations incurred in the ordinary course of business. The restrictions are also subject to certain additional qualifications and carveouts, as set forth in the November 2020 Convertible Note. The November 2020 Convertible Note is subordinated to certain other indebtedness of the Company held by Prestige Capital Corporation (“Prestige”) and Crossroads Financial Group, LLC (“Crossroads”). For the three months ended March 31, 2021 and 2020, interest expense related to the related party convertible secured promissory notes was $85,000 and $76,000, respectively. During the three months ended March 31, 2021, $85,000 in interest was paid in cash to Mr. Drexler; for the three months ended March 31, 2020, no interest was paid in cash to Mr. Drexler. Related Party Secured Revolving Promissory Note On October 15, 2020, the Company entered into a secured revolving promissory note (the “Revolving Note”) with Ryan Drexler. Under the terms of the Revolving Note, the Company can borrow up to $3.0 million. The Revolving Note bears interest at the rate of 12% per annum. The use of funds will be used for the purchase of whey protein and other general corporate purposes. Both the outstanding principal, if any, and all accrued interest under the Revolving Note were due on March 31, 2021, however, the Company and Mr. Drexler agreed to an extension until June 30, 2021. The Company may prepay the Revolving Note by giving Mr. Drexler one days’ advance written notice. The Revolving Note contains customary events of default, including, among others, the failure by the Company to make a payment of principal or interest when due. Following an event of default, Mr. Drexler is entitled to accelerate the entire indebtedness under the Revolving Note. The Revolving Note also contains customary restrictions on the ability of the Company to, among other things, grant liens or incur indebtedness other than certain obligations incurred in the ordinary course of business. The restrictions are also subject to certain additional qualifications and carveouts, as set forth in the Revolving Note. The Revolving Note is subordinated to certain other indebtedness of the Company held by Prestige and Crossroads. In connection with the Revolving Note, the Company and Mr. Drexler entered into a fifth amended and restated security agreement dated October 15, 2020 (the “Security Agreement”) pursuant to which the Revolving Note is secured by all of the assets and properties of the Company and its subsidiaries whether tangible or intangible. As of March 31, 2021, the outstanding balance on the revolving note was $1.7 million. During the period ended March 31, 2021, interest paid in cash to Mr. Drexler was $16,000. Secured Borrowing Arrangement In January 2016, the Company entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Prestige, pursuant to which the Company agreed to sell and assign and Prestige agreed to buy and accept, certain accounts receivable owed to the Company (“Accounts”). Under the terms of the Purchase and Sale Agreement, upon the receipt and acceptance of each assignment of Accounts, Prestige will pay the Company 80% of the net face amount of the assigned Accounts, up to a maximum total borrowing of $12.5 million subject to sufficient amounts of accounts receivable to secure the loan. The remaining 20% will be paid to the Company upon collection of the assigned Accounts, less any chargebacks (including chargebacks for any customer amounts that remain outstanding for over 90 days), disputes, or other amounts due to Prestige. Prestige’s purchase of the assigned Accounts from the Company will be at a discount fee which varies from 0.7% to 4%, based on the number of days outstanding from the assignment of Accounts to collection of the assigned Accounts. In addition, the Company granted Prestige a continuing security interest in and first priority lien upon all accounts receivable, inventory, fixed assets, general intangibles, and other assets. Prestige will have no recourse against the Company if payments are not made due to the insolvency of an account debtor within 90 days of invoice date, with the exception of international and certain domestic customers As of March 31, 2021, and December 31, 2020, the Company had outstanding borrowings of approximately $4.7 million and $7.1 million, respectively. During the three months ended March 31, 2021 and 2020, the Company assigned to Prestige, accounts with an aggregate face amount of approximately $11.1 million and $11.7 million, respectively, for which Prestige paid to the Company approximately $8.8 million and $9.4 million, respectively, in cash. During the three months ended March 31, 2021 and 2020, $11.2 million and $10.0 million, respectively, was repaid to Prestige, including fees and interest. Paycheck Protection Program Loan Due to economic uncertainty as a result of the ongoing pandemic (COVID-19), on May 14, 2020, the Company received an aggregate principal amount of $964,910 pursuant to the borrowing arrangement (“Note”) with Harvest Small Business Finance, LLC (“HSBF”) and agreed to pay the principal amount plus interest at a 1% fixed interest rate per year, on the unpaid principal balance. The Note includes forgiveness provisions in accordance with the requirements of the Paycheck Protection Program, Section 1106 of the CARES Act. The Note is expected to mature on May 16, 2023. Payments were due by November 16, 2020 (the “Deferment Period”) and interest was accrued during the Deferment Period. However, the Flexibility Act, which was signed into law on June 5, 2020, extended the Deferment Period to the date that the forgiven amount is remitted by the United States Small Business Administration (“SBA”) to HSBF. The Company is in the process of filling out the forgiveness application form. As of March 31, 2021, the Company owed approximately $1.0 million (principal plus accrued interest). Of this amount, the short-term portion of $0.2 million is recorded in “Accrued and other liabilities” and the remaining liability of $0.8 million is recorded in “Other long-term liabilities” in the consolidated balance sheets. |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Income (Loss) Per Share | The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share for the periods presented (in thousands, except share and per share data): For the Three Months Ended March 31, 2021 2020 Net income (loss) $ 94 $ (60 ) Weighted average common shares used in computing net income (loss) per share, basic 33,119,549 32,459,675 Potentially diluted securities 12,373,071 — Weighted average common shares used in computing net income (loss) per share, diluted 45,492,621 32,459,675 Net income (loss) per share, basic and diluted $ 0.00 $ (0.00 ) |
Schedule of Outstanding Potentially Dilutive Securities | The following securities were excluded from the computations of the diluted net income (loss) per share, as the effect of the securities would be antidilutive: As of March 31, 2021 2020 Stock options 171,703 171,703 Warrants — 1,289,378 Unvested restricted stock — 541,322 Convertible notes 12,373,071 931,974 Total common stock equivalents 12,554,774 2,934,377 |
Segments, Geographical Inform_2
Segments, Geographical Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Revenue, Net by Geographic Area | The following table sets forth revenue, net by geographic area (in thousands): For the Three Months Ended 2021 2020 Revenue, net: United States $ 9,274 $ 11,847 International 3,847 4,384 Total revenue, net $ 13,121 $ 16,231 |
Description of Business (Detail
Description of Business (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net income | $ 94 | $ (60) | ||
Cash | 592 | $ 2,003 | ||
Working capital deficit | 20,500 | |||
Stockholders' deficit | (24,325) | $ (27,865) | (24,419) | $ (27,952) |
Accumulated deficit | $ (192,579) | $ (192,673) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Sales returns and discounts | $ 2,400 | $ 4,000 |
Sales returns and discounts as a percentage of sales | 15.00% | 20.00% |
Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||
Concentration risk, percentage | 28.00% | 36.00% |
Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||
Concentration risk, percentage | 17.00% | 21.00% |
Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||
Concentration risk, percentage | 14.00% | 10.00% |
Revenue, Net [Member] | Vendor [Member] | Supplier One [Member] | ||
Concentration risk, percentage | 32.00% | 34.00% |
Revenue, Net [Member] | Vendor [Member] | Supplier Two [Member] | ||
Concentration risk, percentage | 21.00% | 30.00% |
Revenue, Net [Member] | Vendor [Member] | Supplier Three [Member] | ||
Concentration risk, percentage | 21.00% | 13.00% |
Revenue, Net [Member] | Vendor [Member] | Supplier Four [Member] | ||
Concentration risk, percentage | 11.00% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||
Concentration risk, percentage | 32.00% | 30.00% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||
Concentration risk, percentage | 21.00% | 23.00% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||
Concentration risk, percentage | 14.00% | |
Cost of Revenue [Member] | ||
Shipping and handling costs | $ 500 | $ 400 |
Selling, General and Administrative Expense [Member] | ||
Shipping and handling costs | $ 700 | $ 600 |
Accrued and Other Liabilities -
Accrued and Other Liabilities - Schedule of Accrued And Other Liabilities (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued professional fees | $ 123 | $ 242 |
Accrued interest | 693 | 644 |
Accrued payroll and bonus | 368 | 738 |
Settlements - short term (Nutrablend and 4Excelsior) | 2,181 | 2,005 |
Accrued expenses - ThermoLife | 1,364 | 1,364 |
Accrued and other short-term liabilities | 1,299 | 1,201 |
Accrued and other liabilities | $ 6,028 | $ 6,194 |
Interest and Other Expense, N_3
Interest and Other Expense, Net- Schedule of Interest and Other Expense, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Other Income and Expenses [Abstract] | ||
Interest expense, related party | $ (120) | $ (76) |
Interest expense, other | (227) | (157) |
Interest expense, secured borrowing arrangement | (163) | (365) |
Foreign currency transaction loss | (1) | (34) |
Loss on settlement obligation | (50) | |
Gain on legal settlement | 200 | |
Other | 133 | 93 |
Total interest and other expense, net | $ (178) | $ (589) |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Assets: Operating, ROU assets, net | $ 406 | $ 474 |
Current liabilities: Operating lease liability - current | 402 | 381 |
Non-current liabilities: Operating lease liability - long term | 233 | 343 |
Total lease liabilities | $ 635 | $ 724 |
Leases - Schedule of Components
Leases - Schedule of Components of Lease Cost for Operating and Finance Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total lease (income) cost | $ 13 | $ 337 |
Selling, General and Administrative Expense [Member] | ||
Operating lease cost | 115 | 243 |
Amortization of ROU asset | 27 | |
Total finance lease cost | 27 | |
Variable lease payments | 32 | 103 |
Other Income [Member] | ||
Sublease income | $ (134) | $ (36) |
Leases - Schedule of Suppleme_2
Leases - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 88 | $ 197 |
Financing cash flows from finance leases | $ 29 | |
The weighted average remaining lease term : Operating leases (in years) | 1 year 4 months 24 days | 2 years 1 month 6 days |
The weighted average remaining lease term : Finance leases (in years) | 0 years | 3 months 19 days |
The weighted average discount rate: Operating leases | 18.00% | 18.00% |
The weighted average discount rate: Finance leases | 5.00% |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Nov. 29, 2020 | Sep. 25, 2020 | May 14, 2020 | Apr. 10, 2019 | Jan. 31, 2016 | Mar. 31, 2021 | Mar. 31, 2020 | Oct. 15, 2020 | Aug. 21, 2020 |
Interest expense related to related party | $ 120,000 | $ 76,000 | |||||||
Debt description | The Company agreed to (i) pay approximately $3.1 million ("Owed Amount") in monthly payments ("Monthly Payments") from September 1, 2020 through June 30, 2023 and (ii) issue monthly purchase orders ("Purchase Orders") at minimum amounts accepted by Nutrablend. | ||||||||
Accrued Liabilities [Member] | |||||||||
Original principal amount | 200,000 | ||||||||
Other Long Term Liabilities [Member] | |||||||||
Original principal amount | 800,000 | ||||||||
Purchase and Sale Agreement [Member] | |||||||||
Original principal amount | $ 12,500,000 | 4,700,000 | 7,100,000 | ||||||
Debt description | Under the terms of the Purchase and Sale Agreement, upon the receipt and acceptance of each assignment of Accounts, Prestige will pay the Company 80% of the net face amount of the assigned Accounts, up to a maximum total borrowing of $12.5 million subject to sufficient amounts of accounts receivable to secure the loan. The remaining 20% will be paid to the Company upon collection of the assigned Accounts, less any chargebacks (including chargebacks for any customer amounts that remain outstanding for over 90 days), disputes, or other amounts due to Prestige. Prestige's purchase of the assigned Accounts from the Company will be at a discount fee which varies from 0.7% to 4%, based on the number of days outstanding from the assignment of Accounts to collection of the assigned Accounts. | ||||||||
Paycheck Protection Program [Member] | |||||||||
Original principal amount | 1,000,000 | ||||||||
Maximum [Member] | |||||||||
Original principal amount | 2,000,000 | ||||||||
Maximum [Member] | Purchase and Sale Agreement [Member] | |||||||||
Disount fee interest rate | 4.00% | ||||||||
Minimum [Member] | Purchase and Sale Agreement [Member] | |||||||||
Disount fee interest rate | 0.70% | ||||||||
Convertible Note [Member] | |||||||||
Interest expense related to related party | 85,000 | 76,000 | |||||||
Interest paid in cash | 85,000 | ||||||||
Paycheck Protection Program [Member] | Harvest Small Business Finance, LLC [Member] | |||||||||
Maturity date | May 16, 2023 | ||||||||
Debt description | The Note is expected to mature on May 16, 2023. Payments were due by November 16, 2020 (the "Deferment Period") and interest was accrued during the Deferment Period. However, the Flexibility Act, which was signed into law on June 5, 2020, extended the Deferment Period to the date that the forgiven amount is remitted by the United States Small Business Administration ("SBA") to HSBF. The Company is in the process of filling out the forgiveness application form. | ||||||||
Proceeds from debt | $ 964,910 | ||||||||
Mr. Ryan Drexler [Member] | The 2020 Refinanced Convertible Note [Member] | |||||||||
Original principal amount | $ 2,871,967 | ||||||||
Mr. Ryan Drexler [Member] | Convertible Secured Promissory Note [Member] | |||||||||
Original principal amount | $ 2,900,000 | ||||||||
Interest rate | 12.00% | ||||||||
Maturity date | Jul. 1, 2021 | ||||||||
Conversion price | $ 0.23 | ||||||||
Mr. Ryan Drexler [Member] | Convertible Secured Promissory Note [Member] | Payment in Kind (PIK) Note [Member] | |||||||||
Conversion price | $ 0.10 | ||||||||
Mr. Ryan Drexler [Member] | Related Party Secured Revolving Promissory Note [Member] | |||||||||
Original principal amount | 1,700,000 | ||||||||
Interest rate | 12.00% | ||||||||
Interest paid in cash | 16,000 | ||||||||
Mr. Ryan Drexler [Member] | Related Party Secured Revolving Promissory Note [Member] | Maximum [Member] | |||||||||
Original principal amount | $ 3,000,000 | ||||||||
Prestige [Member] | |||||||||
Original principal amount | 11,100,000 | 11,700,000 | |||||||
Proceeds from related party debt | 8,800,000 | 9,400,000 | |||||||
Repayments of debt | $ 11,200,000 | $ 10,000,000 | |||||||
Prestige [Member] | Purchase and Sale Agreement [Member] | |||||||||
Maturity date | Apr. 1, 2020 | ||||||||
Debt description | On April 10, 2019, the Company and Prestige amended the terms of the agreement. The agreement was extended until April 1, 2020 and automatically renews for one (1) year periods unless either party receives written notice of cancellation from the other, at minimum, thirty (30) days prior to the expiration date thereafter. |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Refinanced convertible note, related party | $ 2,872 | $ 2,872 |
Revolving line of credit, related party | 1,705 | 743 |
Obligations under secured borrowing arrangement | 4,740 | 7,098 |
Notes payable | 59 | 167 |
Paycheck Protection Program loan | 965 | 965 |
Total debt | 10,341 | 11,845 |
Less: current portion | (9,537) | (10,880) |
Long term debt | $ 804 | $ 965 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 01, 2021 | May 18, 2021 | Apr. 27, 2021 | Feb. 25, 2021 | Sep. 25, 2020 | Feb. 27, 2020 | Dec. 04, 2019 | Oct. 31, 2019 | Jul. 07, 2019 | Mar. 18, 2019 | Aug. 21, 2018 | Jul. 07, 2018 | Jul. 28, 2017 | Jul. 07, 2017 | Apr. 04, 2017 | Oct. 30, 2021 | May 31, 2021 | Aug. 31, 2021 | Mar. 31, 2021 | Feb. 28, 2021 | Nov. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2018 | Dec. 31, 2020 | Nov. 16, 2020 | Dec. 16, 2019 |
Accrued expenses | $ 1,800,000 | $ 1,600,000 | ||||||||||||||||||||||||
Paid in installment | $ 3,100,000 | |||||||||||||||||||||||||
Remiitted amount | $ 1,800,000 | $ 1,500,000 | ||||||||||||||||||||||||
Interest and other expense | 1,028,000 | |||||||||||||||||||||||||
Debt instrument, description | The Company agreed to (i) pay approximately $3.1 million ("Owed Amount") in monthly payments ("Monthly Payments") from September 1, 2020 through June 30, 2023 and (ii) issue monthly purchase orders ("Purchase Orders") at minimum amounts accepted by Nutrablend. | |||||||||||||||||||||||||
Other long-term liabilities | 4,535,000 | $ 5,071,000 | ||||||||||||||||||||||||
Accrued and other liabilities | 6,028,000 | $ 6,194,000 | ||||||||||||||||||||||||
Litigation Settlement, Expense | 1,200,000 | |||||||||||||||||||||||||
Attorneys' fees and costs | $ 56,000 | |||||||||||||||||||||||||
Taxes and penalties | $ 5,300,000 | |||||||||||||||||||||||||
Tax withholdings | 4,400,000 | |||||||||||||||||||||||||
Penalties expense | 900,000 | |||||||||||||||||||||||||
Accrued penalties | 2,000,000 | |||||||||||||||||||||||||
Failure to deposit penalties | $ 2,000,000 | |||||||||||||||||||||||||
Claims amount | $ 7,300,000 | $ 5,300,000 | ||||||||||||||||||||||||
Three Promissory Notes [Member] | ||||||||||||||||||||||||||
Loan exchange value | $ 18,000,000 | |||||||||||||||||||||||||
ThermoLife [Member] | ||||||||||||||||||||||||||
Loss contingency, damages sought, value | $ 1,600,000 | |||||||||||||||||||||||||
Damage value | 900,000 | |||||||||||||||||||||||||
Interest expenses | 300,000 | |||||||||||||||||||||||||
Attorneys' fees and costs | $ 400,000 | |||||||||||||||||||||||||
Bond posted value | 600,000 | |||||||||||||||||||||||||
Repayment of debt | 250,000 | |||||||||||||||||||||||||
Accrued and other liabilities [Member] | ||||||||||||||||||||||||||
Litigation Settlement, Expense | 1,100,000 | |||||||||||||||||||||||||
Other long-term liabilities [Member] | ||||||||||||||||||||||||||
Paid in installment | 200,000 | |||||||||||||||||||||||||
Interest expenses | 100,000 | |||||||||||||||||||||||||
Litigation Settlement, Expense | 2,400,000 | |||||||||||||||||||||||||
Maximum [Member] | ||||||||||||||||||||||||||
Debt instrument, face amount | 2,000,000 | |||||||||||||||||||||||||
Line of credit | 3,000,000 | |||||||||||||||||||||||||
Forecast [Member] | ||||||||||||||||||||||||||
Remiitted amount | $ 1,400,000 | $ 2,100,000 | ||||||||||||||||||||||||
Forecast [Member] | Minimum [Member] | ||||||||||||||||||||||||||
Remiitted amount | $ 700,000 | |||||||||||||||||||||||||
Subsequent Event [Member] | ||||||||||||||||||||||||||
Remiitted amount | $ 2,100,000 | |||||||||||||||||||||||||
California [Member] | ||||||||||||||||||||||||||
Allegedly unpaid invoices | $ 3,100,000 | |||||||||||||||||||||||||
Settlement Agreement [Member] | ||||||||||||||||||||||||||
Accrued expenses | $ 3,000,000 | |||||||||||||||||||||||||
Payments from advance related party | $ 1,000,000 | |||||||||||||||||||||||||
Paid in installment | $ 1,000,000 | $ 1,000,000 | ||||||||||||||||||||||||
Remiitted amount | $ 300,000 | |||||||||||||||||||||||||
Interest and other expense | 18,000 | $ 19,000 | ||||||||||||||||||||||||
Nutrablend Matter [Member] | ||||||||||||||||||||||||||
Paid in installment | 500,000 | |||||||||||||||||||||||||
Interest and other expense | 64,000 | |||||||||||||||||||||||||
Other long-term liabilities | 1,200,000 | |||||||||||||||||||||||||
Accrued and other liabilities | $ 1,000,000 | |||||||||||||||||||||||||
City Football Group Limited [Member] | Sponsorship Agreement [Member] | ||||||||||||||||||||||||||
Loss contingency dispute resolution description | In August 2016, CFG commenced arbitration in the United Kingdom against the Company, seeking approximately $8.3 million for the Company's purported breach of the Sponsorship Agreement. | |||||||||||||||||||||||||
Loss contingency dispute resolution amount | $ 8,300,000 | |||||||||||||||||||||||||
4Excelsior [Member] | ||||||||||||||||||||||||||
Loss contingency, damages sought, value | $ 7,800,000 | |||||||||||||||||||||||||
Damage value | $ 6,200,000 | |||||||||||||||||||||||||
Settlement payable | $ 4,750,000 | |||||||||||||||||||||||||
Settlement periodic payments beginning January 5, 2021 | 70,000 | |||||||||||||||||||||||||
Settlement periodic payments thereafter | $ 100,000 | |||||||||||||||||||||||||
Interest Rate, Stated Percentage | 18.00% | |||||||||||||||||||||||||
Mr. Drexler [Member] | ||||||||||||||||||||||||||
Interest expenses | 22,000 | |||||||||||||||||||||||||
Personal guaranty | 350,000 | |||||||||||||||||||||||||
Legal fees | $ 12,500 | |||||||||||||||||||||||||
Penalty expense | $ 1,500 | |||||||||||||||||||||||||
ThermoLife International LLC [Member] | Subsequent Event [Member] | ||||||||||||||||||||||||||
Loss contingency, damages sought, value | $ 1,800,000 | |||||||||||||||||||||||||
Interest expenses | $ 300,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
Restricted stock awards granted | ||
Unrecognized expense of restricted stock awards | ||
Stock-based compensation expense | $ 0 | $ 100 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Potentially diluted securities | 12,373,071 |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Schedule of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ 94 | $ (60) |
Weighted average common shares used in computing net income (loss) per share, basic | 33,119,549 | 32,459,675 |
Potentially diluted securities | 12,373,071 | |
Weighted average common shares used in computing net income (loss) per share, diluted | 45,492,621 | 32,459,675 |
Net income (loss) per share, basic and diluted | $ 0 | $ 0 |
Net Income (Loss) Per Share -_2
Net Income (Loss) Per Share - Schedule of Outstanding Potentially Dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total common stock equivalents | 12,554,774 | 2,934,377 |
Stock Options [Member] | ||
Total common stock equivalents | 171,703 | 171,703 |
Warrants [Member] | ||
Total common stock equivalents | 1,289,378 | |
Unvested Restricted Stock [Member] | ||
Total common stock equivalents | 541,322 | |
Convertible Notes [Member] | ||
Total common stock equivalents | 12,373,071 | 931,974 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Tax provision | $ 22 |
Segments, Geographical Inform_3
Segments, Geographical Information - Schedule of Revenue, Net by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total revenue, net | $ 13,121 | $ 16,231 |
United States [Member] | ||
Total revenue, net | 9,274 | 11,847 |
International [Member] | ||
Total revenue, net | $ 3,847 | $ 4,384 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - Joseph Cannata [Member] | May 12, 2021$ / sharesshares |
Number of shares issued | shares | 1,673,994 |
Price per share | $ / shares | $ 1.12 |
Option exercise term | 10 years |
Percentage of gross profit | 17.50% |