10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended: March 31, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ______________to ______________

Commission File Number: 000-53166

MUSCLEPHARM CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	77-0664193
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4721 Ironton Street, Building A Denver, CO 90839

(Address of principal executive offices and zip code)

(303) 396-6100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of May 22, 2012, there were 1,399,366,239 shares outstanding of the registrant’s common stock.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 (the “Amendment”) to MusclePharm Corporation’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2012, originally filed with the U.S. Securities and Exchange Commission on May 24, 2012 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T.

No other changes have been made in this Amendment to the Form 10-Q. This Amendment speaks as of the original date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to rule 406T of Regulation S–T, the interactive data files on Exhibit 101 attached hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.

ITEM 6.  EXHIBITS.

Exhibit No.	Description
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MUSCLEPHARM CORPORATION
Date: May 29, 2012	By:	/s/ Brad J. Pyatt
		Name: Brad J. Pyatt
		Title: Chief Executive Officer          (Principal Executive Officer)
Date: May 29, 2012	By:	/s/ Lawrence S. Meer
		Name: Lawrence S. Meer
		Title: Chief Financial Officer          (Principal Financial Officer)

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Property and Equipment

3 Months Ended

Mar. 31, 2012

Property and Equipment

Note 4 Property and Equipment

Property and equipment consisted of the following at March 31, 2012 and December 31, 2011:

	2012			2011			Estimated Useful Life
Furniture, fixtures and gym equipment	$	908,018		$	781,786		3 years
Leasehold improvements		388,879			244,770		*
Auto		72,507			37,068		5 years
Displays		32,057			32,057		5 years
Website		11,462			11,462		3 years
Total		1,412,923			1,107,143
Less: Accumulated depreciation and amortization		(289,276	)		(199,621	)
	$	1,123,647		$	907,522

* The shorter of 5 years or the life of the lease.

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Going Concern

3 Months Ended

Mar. 31, 2012

Going Concern

Note 3 Going Concern

As reflected in the accompanying unaudited interim consolidated financial statements, the Company had a net loss of $16,035,293 and net cash provided by operations of $1,423,375 for the three months ended March 31, 2012 and a working capital deficit and stockholders’ deficit of $18,140,341 and $17,209,090 respectively, at March 31, 2012. These factors raise substantial doubt about the Company's ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements.  The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives.  The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future.  There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

In response to these problems, management has taken the following actions:

· seeking additional third party debt and/or equity financing,

· continue with the implementation of the business plan,

· allocate sufficient resources to continue with advertising and marketing efforts

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

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Consolidated Balance Sheets (USD $)	Mar. 31, 2012	Dec. 31, 2011
Current Assets
Cash	$ 1,299,235	$ 659,764
Accounts receivable - net	4,541,865	2,569,092
Prepaid stock compensation	336,800	534,456
Prepaid sponsorship fees	103,333	203,333
Other	91,927	50,188
Total Current Assets	6,373,160	4,016,833
Property and equipment - net	1,123,647	907,522
Debt issue costs - net	575	68,188
Other assets	55,925	53,585
Total Assets	7,553,307	5,046,128
Current Liabilities:
Accounts payable and accrued liabilities	7,804,895	9,359,073
Customer deposits	428,603	8,047
Debt - net	1,181,400	1,281,742
Derivative liabilities	15,098,603	7,061,238
Total Current Liabilities	24,513,501	17,710,100
Long Term Liabilities:
Debt - net	248,896	307,240
Total Liabilities	24,762,397	18,017,340
Stockholders' Deficit
Common Stock, $0.001 par value; 2,500,000,000 shares authorized,1,403,787,767 and 605,930,613 issued and 1,389,244,828 and 605,930,613 outstanding	1,403,787	605,931
Treasury Stock, at cost; 14,542,939 and zero shares repurchased	(230,400)
Additional paid-in capital	42,809,498	31,579,538
Accumulated deficit	(61,191,975)	(45,156,681)
Total Stockholders' Deficit	(17,209,090)	(12,971,212)
Total Liabilities and Stockholders' Deficit	7,553,307	5,046,128
Series A, Convertible Preferred Stock
Stockholders' Deficit
Preferred Stock
Series B, Preferred Stock
Stockholders' Deficit
Preferred Stock
Series C, Convertible Preferred Stock
Stockholders' Deficit
Preferred Stock

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Nature of Operations and Basis of Presentation

3 Months Ended

Mar. 31, 2012

Nature of Operations and Basis of Presentation

Note 1 Nature of Operations and Basis of Presentation

Nature of Operations

MusclePharm Corporation (the “Company”, “We”, “Our” or “MP”), was organized as a limited liability company in the State of Colorado on April 22, 2008.  On February 18, 2010, the Company executed a reverse recapitalization with Tone in Twenty, Inc. and changed its name to MP.

During the second quarter of 2012, the Company opened operations in Canada under the subsidiary name MusclePharm Canada, Inc. The business will have distribution and sales activity on site in its warehouse in Hamilton, Ontario. The business currently employs five people.

The Company markets branded sports nutrition products.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Act of 1934, as amended for interim financial information.

The financial information as of December 31, 2011 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the years ended December 31, 2011 and 2010. The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the years ended December 31, 2011 and 2010.

Certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the three months ended March 31, 2012 are not necessarily indicative of results for the full fiscal year.

Restatement

On May 14, 2012, the Company determined that a material misstatement exists in the Company’s 2011 quarterly and annual financial statements. The Company concluded that the following financial statements contained material misstatements: (i) the Company’s audited financial statements for the year ended December 31, 2011, filed in an annual report on Form 10-K with the U.S. Securities and Exchange Commission (the “SEC”) on April 16, 2012; (ii) the Company’s unaudited financial statements for the period ended September 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on November 14, 2011; (iii) the Company’s unaudited financial statements for the period ended June 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on August 16, 2011; and (iv) the Company’s unaudited financial statements for the period ended March 31, 2011, filed in a quarterly report on Form 10-Q with the SEC on May 23, 2011.

The foregoing financial statements contained material misstatements pertaining to the Company’s calculation of net sales and presentation of general and administrative expenses and cost of sales. The Company has determined that advertising related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 (“Revenue Recognition” – Customer Payments and Incentives – Implementation Guidance and Illustrations). The guidance indicates that, absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not expensing as advertising expense. The Company also noted other credits and discounts that, upon further review, had been previously classified as advertising expense as a component of general and administrative expense that require a reallocation of presentation as amounts to be netted against revenues. The Company’s net loss will not be affected by this reallocation in the statement of operations.

Promotions, credits and non-specific advertising with its customers have been reclassified from general and administrative expenses to revenues.

Samples shipped to customers not clearly identifiable were reclassified from general and administrative expense to cost of sales.

	For The Three Months Ended March 31,						March 31,
	2011 Restated			Adjustments			2011 As Issued
Sales - net	$	3,033,936		$	(483,838	)	$	3,517,774
Cost of sales		2,401,534			77,326			2,324,208
Gross profit (loss)		632,402			(561,164	)		1,193,566
General and administrative expenses		1,719,627			(561,164	)		2,280,791
Gain (loss) from operations		(1,087,225	)		-			(1,087,225	)
Other income (expense)
Derivative expense		(1,359,369	)		-			(1,359,369	)
Change in fair value of derivative liabilities		(131,717	)		-			(131,717	)
Loss on settlement of accounts payable and debt		(1,914,689	)		-			(1,914,689	)
Interest expense		(518,922	)		-			(518,922	)
Other income (expense)		-			-			-
Total other income (expense) - net		(3,924,697	)		-			(3,924,697	)
Net loss	$	(5,011,922	)	$	-		$	(5,011,922	)
Net loss per share available to common stockholders - basic and diluted	$	(0.03	)	$	-		$	(0.03	)
Weighted average number of common shares outstanding during the period – basic and diluted		146,560,444			-			146,560,444

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with United States of America generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates.

Risks and Uncertainties

The Company operates in an industry that is subject to rapid change and intense competition. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents.  At March 31, 2012 and December 31, 2011, the Company had no cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable represents trade obligations from customers that are subject to normal trade collection terms. The Company periodically evaluates the collectability of its accounts receivable and considers the need to establish an allowance for doubtful accounts based upon historical collection experience and specific customer information. Accordingly, the actual amounts could vary from the recorded allowances.

The Company does not charge interest on past due receivables. Receivables are determined to be past due based on the payment terms of the original invoices. Accounts receivable at March 31, 2012 and December 31, 2011:

Accounts receivable	$	4,721,674		$	2,766,776
Less: allowance for doubtful accounts		(179,809	)		(197,684	)
Accounts receivable – net	$	4,541,865		$	2,569,092

Prepaid Sponsorship Fees

Prepaid sponsorship fees represents fees paid in connection with future advertising to be received.

At March 31, 2012 and December 31, 2011, the Company had the following concentrations of accounts receivable with customers:

Customer	2012			2011
A		36	%		7	%
B		12	%		3	%
C		3	%		12	%
D		3	%		10	%
E		9	%		3	%
F		4	%		36	%

Property and Equipment

Property and equipment are stated at cost and depreciated to their estimated residual value over their estimated useful lives. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are relieved from the accounts and the resulting gains or losses are included in operating income in the statements of operations. Repairs and maintenance costs are expensed as incurred. Depreciation is provided using the straight-line method for all property and equipment.

Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances, such as service discontinuance or technological obsolescence, indicate that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If the comparison indicates that impairment is present, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the asset. During the three months ended March 31, 2012 and 2011, the Company recorded no impairment expense.

Website Development Costs

Costs incurred in the planning stage of a website are expensed, while costs incurred in the development stage are capitalized and amortized over the estimated useful life of the asset.

Fair Value of Financial Instruments

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

The following are the hierarchical levels of inputs to measure fair value:

· Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

· Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The following are the major categories of liabilities measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

	March 31, 2012		December 31,  2011
Derivative liabilities (Level 2)	$	15,098,603	$	7,061,238

The Company's financial instruments consisted primarily of accounts receivable, prepaids, accounts payable and accrued liabilities, derivative liabilities and debt. The carrying amounts of the Company's financial instruments generally approximated their fair values as of March 31, 2012 and December 31, 2011, respectively, due to the short-term nature of these instruments.

Revenue Recognition

The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) product has been shipped or delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.

Depending on individual customer agreements, sales are recognized either upon shipment of products to customers or upon delivery. The Company records sales allowances and discounts as a direct reduction of sales. The Company has determined that advertising related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 (“Revenue Recognition” – Customer Payments and Incentives – Implementation Guidance and Illustrations). The guidance indicates that, absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not expensing as advertising expense. Sales for the three months ended March 31, 2012 and 2011 are as follows:

	Three Months Ended March 31,						March 31,
	2012		2011				2011
			Restated		Adjustments		As Issued
Sales	$	19,302,769	$	3,671,215	$	-	$	3,671,215
Discounts		2,742,089		637,279		483,838		153,441
Sales - Net	$	16,560,680	$	3,033,936	$	483,838	$	3,517,774

The Company has an informal 7-day right of return for products. There were nominal returns for the three months ended March 31, 2012 and 2011.

For the three months ended March 31, 2012 and 2011, the Company had the following concentrations of revenues with customers:

Customer	2012			2011
A		38	%		39	%
B		18	%		9	%
C		11	%		3	%

The Company does not manufacture or physically hold any inventory. Inventory is held and distributed by the Company’s third party manufacturer.

Licensing Income and Royalty Revenue

On May 5, 2011, the Company granted an exclusive indefinite term license to a third party for $250,000. The licensee may market, manufacture, design and sell the Company’s existing apparel line. The licensee will pay the Company a 10% net royalty based on its net income at the end of each fiscal year. To date, no royalty revenue has been earned.

Cost of Sales

Cost of sales represents costs directly related to the production and manufacturing of the Company’s products. Cost of sales for the three months ended March 31, 2012 and 2011 are as follows:

	For The Three Months Ended March 31,						March 31,
	2012		2011				2011
			As Issued		Adjustments		Restated
Cost of Sales	$	12,895,162	$	2,324,208	$	77,326	$	2,401,534

See discussion of restatement

Shipping and Handling

Product sold is shipped directly to the customer from the manufacturer. Costs associated to the shipments are recorded as shipping expenses. During the three months ended March 31, 2012 and March 31, 2011 shipping expense is $569,240 and $125,534 respectively.

Advertising

The Company expenses advertising costs when incurred.

Advertising expense for the three months ended March 31, 2012 and 2011 are as follows:

	For The Three Months Ended March 31,						March 31,
	2012		2011				2011
			Restated		Adjustments		As Issued
Advertising	$	1,976,319	$	582,194	$	561,164	$	1,143,358

See discussion of restatement

Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount.

When the Company records a BCF, the relative fair value of the BCF would be recorded as a debt discount against the face amount of the respective debt instrument. The discount would be amortized to interest expense over the life of the debt.

Derivative Liabilities

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once derivative liabilities are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. Once a derivative liability ceases to exist any remaining fair value will be reclassified to additional paid in capital.

Debt Issue Costs and Debt Discount

The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Original Issue Discount

For certain convertible debt issued, the Company provides the debt holder with an original issue discount.  The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.

Share-Based Payments

The Company has incentive plans that reward employees with stock options, warrants, restricted stock and stock appreciation rights. The amount of compensation cost for these share-based awards is measured based on the fair value of the awards, as of the date that the share-based awards are issued and adjusted to the estimated number of awards that are expected to vest.

Fair value of stock options, warrants, and stock appreciation rights, is generally determined using a Black-Scholes option pricing model, which incorporates assumptions about expected volatility, risk free rate, dividend yield, and expected life. Compensation cost for share-based awards is recognized on a straight-line basis over the vesting period.

Earnings (loss) Per Share

Net earnings (loss) per share is computed by dividing net income (loss) less preferred dividends for the period by weighted average number of shares of common stock outstanding during each period.  Diluted earnings (loss) per share is computed by dividing net income (loss) less preferred dividends by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. 

Since the Company reflected a net loss for the three months ended March 31, 2012 and 2011, respectively, the effect of considering any common stock equivalents, if exercisable, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

The Company has the following common stock equivalents at March 31, 2012 and 2011 respectively:

	2012		2011
Stock options (exercise price - $0.50/share)		1,617,500		2,767,500
Warrants (exercise price $0.002- $1.50/share)		72,096,327		16,310,000
Convertible debt (exercise price $0.002- $0.02/share)		2,100,000		46,504,410
Total common stock equivalents		75,813,827		65,581,910

In the above table, some of the outstanding instruments from 2012 and 2011 contains ratchet provisions that would cause variability in the exercise price at the balance sheet date.  As a result, common stock equivalents could change at each reporting period.

Reclassification

The Company has reclassified certain prior period amounts to conform to the current period presentation including the restatement previously mentioned. These reclassifications had no effect on the financial position, results of operations or cash flows for the periods presented.

Recent Accounting Pronouncements

In May 2011 the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (“GAAP”) and International Financial Reporting Standards (“IFRS”). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS.  ASU 2011-04 requires reporting entities to disclose additional information for fair value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU 2011-04 requires reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	2,500,000,000	2,500,000,000
Common Stock, issued	1,403,787,767	605,930,613
Common Stock, outstanding	1,389,244,828	605,930,613
Treasury Stock, shares	14,542,939	0
Series A, Convertible Preferred Stock
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	5,000,000	5,000,000
Series B, Preferred Stock
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	51	51
Preferred Stock, issued	51	51
Preferred Stock, outstanding	51	51
Series C, Convertible Preferred Stock
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	500	500
Preferred Stock, issued		190
Preferred Stock, outstanding		190

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Document and Entity Information	3 Months Ended
	Mar. 31, 2012	May 22, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Trading Symbol	MSLP
Entity Registrant Name	MUSCLEPHARM CORP
Entity Central Index Key	0001415684
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,399,366,239

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Consolidated Statements of Operations (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Sales - net	$ 16,560,680	$ 3,033,936
Cost of sales	12,895,162	2,401,534
Gross profit	3,665,518	632,402
General and administrative expenses	4,392,811	1,719,627
Loss from operations	(727,293)	(1,087,225)
Other income (expense)
Derivative expense	(1,456,910)	(1,359,369)
Change in fair value of derivative liabilities	(8,357,171)	(131,717)
Loss on settlement of accounts payable and debt	(2,941,826)	(1,914,689)
Interest expense	(2,570,516)	(518,922)
Other income	18,423
Total other expense - net	(15,308,000)	(3,924,697)
Net loss	$ (16,035,293)	$ (5,011,922)
Net loss per share - basic and diluted	$ (0.01)	$ (0.03)
Weighted average number of common shares outstanding during the period - basic and diluted	1,213,820,101	146,560,444

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Stockholders' Deficit

3 Months Ended

Mar. 31, 2012

Stockholders' Deficit

Note 7 Stockholders’ Deficit

The Company has three separate series of authorized preferred stock:

(A) Series A, Convertible Preferred Stock

This class of stock has the following provisions:

· Non-voting,

· No rights to dividends,

· No liquidation value,

· Convertible into 200 shares of common stock

(B) Series B, Preferred Stock (Related Parties)

In August 2011, the Company issued an aggregate 51 shares of Series B, preferred stock to 2 of its officers and directors. The Company accounted for the share issuance at par value since there was no future economic value that could be associated with the issuance.

This class of stock has the following provisions:

· Voting rights entitling the holders to an aggregate 51% voting control,

· Initially no rights to dividends,

· Stated value of $0.001 per share,

· Liquidation rights entitle the receipt of net assets on a pro-rata basis; and

· Non-convertible

(C) Series C, Convertible Preferred Stock

In October 2011, the Company issued 190 shares of Series C, preferred stock, having a fair value of $190,000. Of the total shares issued, 100 shares were issued for $100,000 ($1,000 /share). The remaining 90 shares were issued for services rendered having a fair value of $90,000 ($1,000 /share), based upon the stated value per share. In March 2012, all 190 shares were converted into 19,000,000 common shares at a conversion price of $0.00001 per share.

This class of stock has the following provisions:

· Stated Value - $1,000 per share,

· Non-voting,

· Liquidation rights entitle an amount equal to the stated value, plus any accrued and unpaid dividends

· As long as any Series C, convertible preferred stock is outstanding, the Company is prohibited from executing various corporate actions with the majority consent of the Series C, convertible preferred stockholders authorization; and

· Convertible at the higher of (a) $0.01 or (b) such price that is a 50% discount to market using the average of the low 2 closing bid prices, 5 days preceding conversion

Due to the existence of an option to convert at a variable amount, the Company has applied ASC No. 815, and treated this series of preferred stock as a derivative liability due to the potential for settlement in a variable quantity of shares. Additionally, the Company computed the fair value of the derivative liability at the commitment date and remeasurement date, which was $293 and $175, respectively, using the black-scholes assumptions below. This transaction is analogous to a dividend with a direct charge to retained earnings.

 (D) Common Stock

In the three months ended March 31, 2012, the Company issued the following common stock:

Transaction Type	Quantity		Valuation		Loss on  Settlement		Range of Value  per Share
Conversion of convertible debt		209,732,083	$	950,739	$	61,124	$	0.0038–0.0173
Conversion of unsecured/secured debt		37,576,155	$	469,683	$	289,897	$	0.0095–0.016
Forbearance of agreement terms		55,000,000	$	914,500	$	-	$	0.0084-0.0324
Cash and warrants		32,000,000	$	285,760	$	-	$	0.0089
Executive compensation (1)		444,548,916	$	4,667,764	$	-	$	0.0105
Conversion of Series C, preferred stock to common stock		19,000,000	$	614,984	$	614,984	$	0.0324
Total		797,857,154	$	7,903,431	$	966,005	$	0.0038–.0324

The fair value of all stock issuances above is based upon the quoted closing trading price on the date of issuance, except for stock and warrants issued for cash, which is based on the cash received.

(1) Represents stock issued for prior year 2011 accrued compensation.

The forebearance of agreement terms valuation of $914,500 is reduced by $135,000 accrual, for items expensed in the year ended December 31, 2011, but are treated in the current period as a non-cash settlement, which nets to $779,500 as shown in the statement of cash flows as loss on debt.

(E) Stock Options

The Company applied fair value accounting for all shares based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes assumptions used in the year ended December 31, 2010 is as follows:

Exercise price	$	0.50
Expected dividends		0	%
Expected volatility		74.8	%
Risk fee interest rate		1.4	%
Expected life of option		2.5 years
Expected forfeiture		0	%

The following is a summary of the Company’s stock option activity:

					Weighted
					Average
					Remaining		Aggregate
			Weighted Average		Contractual		Intrinsic
	Options		Exercise Price		Life		Value
Balance – December 31, 2011		1,617,500	$	0.50		3.25 years		-
Granted		-	$
Exercised		-	$
Forfeited/Cancelled		-	$	0.50
Balance – March 31, 2012 – outstanding		1,617,500	$	0.50		3 years	$	-
Balance – March 31, 2012 – exercisable		1,617,500	$	0.50		3 years	$	-
Outstanding options held by related parties – 2012		1,000,000
Exercisable options held by related parties – 2012		1,000,000

(F) Stock Warrants

All warrants issued during the three months ended March 31, 2012 were accounted for as derivative liabilities. See Note 6.

During the three months ended March 31, 2012, the Company entered into convertible and unsecured note agreements. As part of these agreements, the Company issued warrants to purchase 181,625,000 shares of common stock. Each warrant vests six month after issuance and expire July 13, 2014 – September 30, 2014, with exercise prices ranging from $0.012 - $0.015. All warrants contain anti-dilution rights, and are treated as derivative liabilities.

A summary of warrant activity for the Company for the three months ended March 31, 2012 and for the year ended December 31, 2011 is as follows:

	Number of
	Warrants			Weighted Average Exercise Price
Outstanding – December 31, 2011		283,338,233		$	.02
Granted		181,625,000		$	.013
Exercised		(32,000,000	)	$	0.0089
Balance as March  31, 2012		432,963,233		$	.017

Warrants Outstanding							Warrants Exercisable
Range of	Number		Weighted Average Remaining Contractual Life (in		Weighted Average		Numbers		Weighted Average
exercise price	Outstanding		years)		Exercise Price		Exercisable		Exercise Price		Intrinsic Value
$0.012 - $1.50		432,963,233		2.58	$	0.017		72,096,327	$	0.038	$	9,593,413

(G) Treasury Stock

On March 26, 2012, the Company repurchased 14,542,939 shares of its common stock for the sum of $230,400 or $0.0158. The Company records the value of its common stock held in treasury at cost. The Company has not cancelled or retired these shares, and they remain available for reissuance.

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Derivative Liabilities

3 Months Ended

Mar. 31, 2012

Derivative Liabilities

Note 6 Derivative Liabilities

The Company identified conversion features embedded within convertible debt, warrants and series A, preferred stock issued in 2011 and 2010 (see Notes 5 and 9). The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability as the Company could not determine if a sufficient number of shares would be available to settle all transactions.

As a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follow:

Derivative liability - December 31, 2011	$	7,061,238
Fair value at the commitment date for debt instruments		1,096,808
Fair value at the commitment date for warrants issued		2,707,774
Fair value mark to market adjustment for debt instruments		(1,517,609	)
Fair value mark to market adjustment for warrants		9,874,838
Fair value mark to market adjustment for Series A, Preferred Stock issued		(59	)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability		(4,124,387	)
Derivative liability - March 31, 2012	$	15,098,603

The Company recorded the debt discount to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross proceeds of the note.  The Company recorded a derivative expense of $1,456,910 and $1,359,369 for the three months ended March 31, 2012 and 2011, respectively.

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2012:

	Commitment Date			Re-measurement Date
Expected dividends		0	%		0	%
Expected volatility		228% -249  %			226% -249  %
Expected term:		6 months – 2.5 years			6 months – 2.5 years
Risk free interest rate		0.12% - 0.69 %			0.2% - 0.33 %

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Subsequent Events

3 Months Ended

Mar. 31, 2012

Subsequent Events

Note 10 Subsequent Events

Debt Issuance

In April 2012, the Company raised gross proceeds of $1,291,000 through the sale of (18 month) promissory notes bearing interest at an annual rate of 15%.  In consideration of the promissory notes, the Company issued 107,583,333 stock purchase warrants equal to 100% of the face amount of the notes, with an exercise price of $0.012 per share and debt issue costs of $76,950. All warrants contain anti-dilution rights and are treated as derivative liabilities.

During the 2^nd quarter there have been principal and interest payments related to the unsecured notes of approximately $558,000.

Share Issuances

On April 1, 2012 the Company issued 2,000,000 shares of the Company’s common stock valued at $50,000 to a consultant for services rendered based on $0.025 price/share. The share price was calculated based on a 20 day average closing price prior to issuance.

On May 1, 2012 the Company issued 3,773,585 shares of the Company’s common stock valued at $100,000 for services rendered. The share price was calculated based on a 20 day average closing price prior to issuance.

On May 9, 2012 the Company issued 4,347,826 shares of the Company’s common stock valued at $50,000 for future services. The share price was calculated based on a 20 day average closing price prior to issuance.

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Committments, Contingencies and Other Matters

3 Months Ended

Mar. 31, 2012

Committments, Contingencies and Other Matters

Note 8 Committments, Contingencies and Other Matters

(A) Operating Lease

In August 2010, the Company leased office space under a non-cancelable operating lease, expiring in December 2015.

Future minimum annual rental payments are approximately as follows:

Years Ended December 31,

2012 (9 months)	$	64,771
2013		92,421
2014		98,481
2015		104,542
Total minimum lease payments	$	360,215

Rent expense for the three months ended March 31, 2012 and 2011 was $43,573 and $44,076, respectively.

(B) Legal Matters

From time to time, the Company may become involved in various lawsuits  and legal proceedings, which  arise in the ordinary  course  of business. Litigation is subject to inherent uncertainties as to outcomes. Although there can be no assurances, based on information currently available, management believes that it is probable that the ultimate outcome of matters that are pending or threatened will not have a material effect on the company’s consolidated financial condition.

Other legal matters to which the Company is party do exist. At this time the outcome of these matters is not probable nor reasonably estimable. The Company intends to defend these matters vigorously.  The company is party to the following legal matters as of March 31, 2012:  

· Plaintiff alleges the Company’s use of the tagline "Train like an unchained beast" infringes on their mark "Beast" for dietary supplements. Plaintiff's primary goal is not damages, but rather that the Company cease using the tagline. The Company believes the case is without merit.

· Plaintiff has filed notices of intent to commence litigation on over 200 sports nutrition and dietary supplement companies in the US and Canada, including the Company. Plaintiff alleges violations of California's Proposition 65. The Company considers this case without merit and merely an attempt by a commercial plaintiff to pressure settlements.

· On April 20, 2012, Musclepharm received notice of a pending lawsuit in U.S. Federal District Court in Utah alleging misevaluation of stock used to settle a debt obligation.  The Company believes the Plaintiffs case is without merit. 

(C) Payroll Taxes

As of March 31, 2012 accounts payable and accrued expenses included approximately $163,000 pertaining to accrued payroll taxes. The taxes represent employee withholdings that have yet to be remitted to the taxing agencies.

Included in the $163,000 is an amount due prior to the Company becoming a publicly traded company in February 2010, when the Company existed as an LLC, which at that time had accrued payroll taxes/penalties and interest of approximately $53,000.

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Defined Contribution Plan

3 Months Ended

Mar. 31, 2012

Defined Contribution Plan

Note 9 Defined Contribution Plan

The Company has a defined contribution plan, in which all eligible employees participate. The 401(k) plan is a contributory plan. Matching contributions are based upon the amount of the employees’ contributions. Beginning January 1, 2012, the Company may make an additional discretionary 401(k) plan matching contribution to eligible employees. During the first quarter ended March 31, 2012 and March 31, 2011 the Company’s matching contribution was $2,630 and $0.00, respectively.

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Consolidated Statements of Cash Flows (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash Flows From Operating Activities:
Net loss	$ (16,035,293)	$ (5,011,922)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	89,655	10,345
Bad debt		(13,801)
Amortization of prepaid stock compensation	159,354	533,203
Amortization of debt discount	2,357,490	432,081
Amortization of debt issue costs	97,612	53,156
Loss on settlement of accounts payable		1,914,689
Loss on conversion of debt	351,021
Loss on conversion of Series C preferred shares	614,984
Derivative expense	1,456,910	1,359,369
Change in fair value of derivative liabilities	8,357,171	131,717
(Increase) decrease in:
Accounts receivable	(1,972,773)	(1,580,423)
Prepaid and other	94,223	30,098
Inventory		(31,011)
Increase (decrease) in:
Accounts payable and accrued liabilities	3,456,644	1,314,846
Customer Deposits	420,556	(75,733)
Due to factor		(5,853)
Net Cash Provided by (Used In) Operating Activities	1,423,375	(868,808)
Cash Flows From Investing Activities:
Purchase of property and equipment	(305,781)	(253,853)
Net Cash Used In Investing Activities	(305,781)	(253,853)
Cash Flows From Financing Activities:
Proceeds from issuance of debt	2,842,950	1,482,000
Debt issue costs	(30,000)	(69,700)
Repayment of debt	(3,346,433)
Repurchase of common stock (treasury stock)	(230,400)
Proceeds from issuance of common stock and warrants	285,760
Net Cash (Used In) Provided By Financing Activities	(478,123)	1,412,300
Net increase in cash	639,471	289,669
Cash at beginning of period	659,764	43,704
Cash at end of period	1,299,235	333,373
Supplemental disclosures of cash flow information:
Cash paid for interest	101,706	54,215
Cash paid for taxes
Supplemental disclosure of non-cash investing and financing activities:
Stock issued for future services - third parties		228,000
Debt discount recorded on convertible and unsecured debt accounted for as a derivative liability	2,347,672	224,531
Recognition of stock purchase warrants as discount to debt		863,440
Conversion of convertible debt and accrued interest for common stock	1,069,402	437,500
Conversion of notes to common stock payable		522,000
Reclassification of derivative liability to additional paid in capital	4,124,387	189,132
Services
Adjustments to reconcile net loss to net cash used in operating activities:
Stock issued		70,431
Transaction 01
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on debt repayment	779,500
Transaction 02
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on debt repayment	1,196,321
Settlement of debt | Third Parties
Supplemental disclosure of non-cash investing and financing activities:
Stock issued		903,850
Accrued Compensation
Supplemental disclosure of non-cash investing and financing activities:
Stock issued	4,667,764
Accrued Liabilities
Supplemental disclosure of non-cash investing and financing activities:
Stock issued	$ 135,000

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Debt

3 Months Ended

Mar. 31, 2012

Debt

Note 5 Debt

At March 31, 2012 and December 31, 2011, debt consists of the following:

	2012			2011
Convertible debt - secured	$	14,000		$	1,749,764
Less: debt discount		(8,671	)		(1,395,707	)
Convertible debt - net		5,329			354,057
Auto loan - secured		23,522			26,236
Unsecured debt		3,950,290			2,380,315
Less: debt discount		(2,548,845	)		(1,171,626	)
Unsecured debt - net		1,401,445			1,208,689
Total debt		1,430,296			1,588,982
Less: current portion		(1,181,400	)		(1,281,742	)
Long term debt	$	248,896		$	307,240

Debt in default of $50,600 and $505,600, at March 31, 2012 and December 31, 2011 respectively, is included as a component of short-term debt.

Convertible Debt – Secured - Derivative Liabilities

During the three months ended March 31, 2012 and the year ended December 31, 2011 the Company issued convertible notes totaling $500,000 and 4,679,253 respectively. The Convertible notes consist of the following terms:

		Three Months Ended		Year Ended
		March 31, 2012		December 31, 2011
		Amount of		Amount of
		Principal Raised		Principal Raised
Interest Rate			8% - 10%		0% - 18%
Default interest rate			0% - 20%		0% - 25%
Maturity			January 3, 2013 to January 3, 2013		June 30, 2011 to June 29, 2015
Conversion terms 1	62% of the lowest  closing prices in the 7 days preceding conversion days		100,000
Conversion terms 2	35% multiplied by the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "	$	400,000		-
Conversion terms 3	Lesser of (1) a Fifty Percent (50%) discount to the two lowest closing bid prices of the five days  trading days immediately preceding the date of conversion or (ii) Two and One-Half Cents ($0.025) per share	$		$	525,000
Conversion terms 4	200% - The "market price" will be equal to the average of (i) the average of the closing price of Company's common stock during the 10 trading days immediately preceding the date hereof and (ii) the average of the 10 trading days immediately subsequent to the date hereof.	$		$	537,600
Conversion terms 5	200% of Face.  Average of the trading price 10 trading days immediately preceding the closing of the transaction	$		$	177,000
Conversion terms 6	200% of Face.  Fixed conversion price of $0.02	$		$	105,000
Conversion terms 7	300% of Face.  Fixed conversion price of $0.02	$		$	15,000
Conversion terms 8	35% of the three lowest trading prices for previous 10 trading days	$		$	250,000
Conversion terms 9	45% of the three lowest trading prices for previous 10 trading days	$		$	327,500
Conversion terms 10	50% of average closing prices for 10 preceding trading days	$		$	76,353
Conversion terms 11	50% of lowest trade price for the last 20 trading days	$		$	45,000
Conversion terms 12	50% of the 3 lowest trades for previous 20 trading days	$		$	33,000
Conversion terms 13	50% of the lowest closing price for previous 5 trading days	$		$	250,000
Conversion terms 14	60% Multiplied by the average of the lowest 3 trading prices for common stock during the ten trading days prior to the conversion date	$		$	233,000
Conversion terms 15
Conversion terms 16	62% of lowest trade price for the last 7 trading days	$		$	40,000
Conversion terms 17	65% of the lowest trade price in the 30 trading days previous to the conversion	$	19,950	$	335,000
Conversion terms 18	65% of the three lowest trading price for previous 30 trading days	$		$	153,800
Conversion terms 19	70% of lowest average trading price for 30 trading days	$		$	1,366,000
Conversion terms 20	No fixed conversion option	$		$	35,000
Conversion terms 21	35% multiplied by the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "	$		$	75,000
Conversion terms 22	Fixed conversion price of $0.03	$		$	100,000
		$	519,950	$	4,679,253

The debt holders are entitled, at their option, to convert all or part of the principal and accrued interest into shares of the Company’s common stock at conversion prices and terms discussed above.  The Company classifies embedded conversion features in these notes as a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of shares of common stock required to net-share settle or due to the existence of a ratchet due to an anti-dilution provision. See Note 6 regarding accounting for derivative liabilities.

During the three months ended March 31, 2012 the Company converted debt and accrued interest, totaling $1,420,423 into 247,308,238 shares of common stock. The resulting loss on conversion of $351,021, is included in the $2,941,826 loss on settlement of accounts payable and debt as shown in the consolidated statement of operations.

Convertible debt consisted of the following activity and terms:

				Interest Rate	Maturity
Balance as of December 31, 2011		1,749,764
Borrowings during the three months ended March 31, 2012		519,950		8% - 10%	January 3, 2013 to January 3, 2013
Conversion  of debt to into 209,732,045 shares of common stock with a valuation of $950,739 ($0.0035 - $0.0095/share)		(759,095	)
Repayment of convertible debt		(2,518,343	)
Interest and accrued interest		15,632
Loss on repayment		1,006,092
Convertible debt balance as of December 31, 2012	$	14,000

(B) Unsecured Debt

Unsecured debt consisted of the following activity and terms:

				Interest Rate		Maturity
Unsecured Debt balance as of December 31, 2011		2,380,432
Borrowings during the three months ended March 31, 2012		2,323,000			15%	July 13, 2013 – September 30, 2013
Conversion of debt to into 37,576,155 shares of common stock with a valuation of $469,683 ($0.0095 - $0.016/share)		(150,000	)
Repayments		(825,376	)
Interest and accrued interest		32,005
Loss on repayment		190,229
Unsecured Debt balance as of March 31, 2012	$	3,950,290

(C) Auto Loan

Auto loan account consisted of the following activity and terms:

				Interest Rate		Maturity
Auto loan balance as of December 31, 2011	$	26,236
Repayments		(2,714	)		6.99%	26 payments of $1,008
Auto loan balance as of March 31, 2012		23,522

(D) Debt Issue Costs

During the three months ended March 31, 2012 and 2011, the Company paid debt issue costs totaling $30,000 and $69,700, respectively.

The following is a summary of the Company’s debt issue costs for the three months ended March 31, 2012 and year ended December 31, 2011 as follows:

	March 31, 2012			2011
Debt issue costs	$	219,713			305,283
Accumulated amortization of debt issue costs		(219,138	)		(237,095	)
Debt issue costs – net	$	575			68,188

During the three months ended March 31, 2012, the Company amortized $97,612 in debt issue costs.

(E)  Debt Discount

During the three months ended March 31, 2012 and 2011, the Company recorded debt discounts totaling $2,347,672 and $1,087,971, respectively.

The debt discounts recorded in 2012 and 2011 pertain to convertible debt and warrants that contain embedded conversion options that are required to bifurcated and reported at fair value.

The Company amortized $2,357,490 and $3,237,219 to interest expense in the three months ended March 31, 2012 and year ended December 31, 2011 as follows:

	2012			2011
Debt discount	$	4,915,006			5,804,552
Amortization of debt discounts		(2,357,490	)		(3,237,219	)
Debt discount – net	$	2,557,516			2,567,333