10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 2)

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

For the quarter ended: September 30, 2011

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	(I.R.S. Employer
incorporation or organization)	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  ¨  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 July 6, 2012, there were 1,399,074,207 shares outstanding of the registrant’s common stock.

EXPLANATORY NOTE

The purpose of this Amendment No.2 (the “Amendment”) to MusclePharm Corporation’s (the “Company”) quarterly report on Form 10-Q for the period ended September 30, 2011, originally filed with the U.S. Securities and Exchange Commission on July 2, 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: July 6, 2012	By:	/s/ Brad J. Pyatt
		Name:	Brad J. Pyatt
		Title:	Chief Executive Officer (Principal Executive Officer)
Date: July 6, 2012	By:	/s/ Lewis Gary Davis
		Name:	Lewis Gary Davis
		Title:	Chief Financial Officer (Principal Financial Officer) (Principal Accounting Officer)

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Property and Equipment

9 Months Ended

Sep. 30, 2011

Property and Equipment

Note 4 Property and Equipment

Property and equipment consisted of the following at September 30, 2011 and December 31, 2010:

	September 30,			December 31,			Estimated
	2011			2010			Useful Life
Leasehold improvements	$	218,256		$	67,760			*
Furniture and fixtures		759,272			55,305			3 years
Displays		32,056			32,057			5 years
Website		11,462			11,462			3 years
		1,021,046			166,584
Less: Accumulated depreciation and amortization		(117,421	)		(28,033	)
	$	903,625		$	138,551

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

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Going Concern and Liquidity

9 Months Ended

Sep. 30, 2011

Going Concern and Liquidity

Note 3 Going Concern and Liquidity

As reflected in the accompanying unaudited interim consolidated financial statements, the Company had a net loss of $12,332,236 and net cash used in operations of $4,075,448 for the nine months ended September 30, 2011 and a working capital deficit and stockholders’ deficit of $5,392,491 and $5,141,634 respectively, at September 30, 2011. These factors raise substantial doubt about the Company's ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, sale of aged debt to third parties in exchange for free trading stock, 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; and

● allocate sufficient resources to continue with advertising and marketing efforts.

The accompanying unaudited interim consolidated 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 $)	Sep. 30, 2011	Dec. 31, 2010
Current Assets
Cash		$ 43,704
Accounts receivable	3,605,076	426,761
Prepaid stock compensation	823,261	893,240
Other current assets	245,234	42,605
Total Current Assets	4,673,570	1,406,310
Property and equipment	903,625	138,551
Prepaid stock compensation	41,728	1,088,131
Other assets	98,445	87,989
Total Assets	5,717,368	2,720,981
Current Liabilities:
Accounts payable and accrued liabilites	4,695,399	3,155,701
Cash overdraft	27,008
Debt	1,023,441	289,488
Derivative liabilities	4,265,953	622,944
Deferred revenue	54,260	75,733
Due to factor		71,783
Total Current Liabilities	10,066,061	4,215,649
Long Term Liabilities:
Debt	792,941	250,000
Total Liabilities	10,859,002	4,465,649
Stockholders' Deficit
Series A, Convertible Preferred Stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding
Common Stock, $0.001 par value; 500,000,000 shares authorized, 354,374,865 and 118,649,439 issued and outstanding	354,374	118,649
Additional paid-in capital	28,711,667	20,012,122
Accumulated deficit	(34,207,675)	(21,875,438)
Total Stockholders' Deficit	(5,141,634)	(1,744,667)
Total Liabilities and Stockholders' Deficit	$ 5,717,368	$ 2,720,981

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Nature of Operations and Basis of Presentation (Restated)

9 Months Ended

Sep. 30, 2011

Nature of Operations and Basis of Presentation (Restated)

Note 1 Nature of Operations and Basis of Presentation (Restated)

Nature of Operations

MusclePharm Corporation (the “Company” 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., a then inactive public shell company, and changed its name to MusclePharm Corporation.

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 Commission for interim financial information.

The financial information as of December 31, 2010 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the years ended December 31, 2010 and 2009. 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, 2010 and 2009.

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 nine months ended September 30, 2011 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 2011 and 2010 annual financial statements. The Company concluded that the following financial statements contained material misstatements: (i) the Company’s audited financial statements for the year ended December 31, 2011, filed in an annual report on Form 10-K with the U.S. Securities and Exchange Commission (the “SEC”) on April 16, 2012; (ii) the Company’s audited financial statements for the year ended December 31, 2010, filed in an annual report on Form 10-K with the U.S. Securities and Exchange Commission (the “SEC”) on April 1, 2011; (iii) the Company’s unaudited financial statements for the period ended September 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on November 14, 2011; (iv) the Company’s unaudited financial statements for the period ended June 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on August 16, 2011; and (v) the Company’s unaudited financial statements for the period ended March 31, 2011, filed in a quarterly report on Form 10-Q with the SEC on May 23, 2011.

The foregoing financial statements contained material misstatements pertaining to the Company’s calculation of net sales and presentation of general and administrative expenses and cost of sales. The Company has determined that advertising related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 (“ Revenue Recognition” – Customer Payments and Incentives – Implementation Guidance and Illustrations) . The guidance indicates that, absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not expensing as advertising expense. The Company also noted other credits and discounts that, upon further review, had been previously classified as advertising expense as a component of general and administrative expense that require a reallocation of presentation as amounts to be netted against revenues. The Company’s net loss and loss per share will not be affected by this reallocation in the statement of operations. Additionally, for the quarter ended September 30, 2011, the Company reclassified certain items classified as samples originally included as an advertising expense to cost of sales. There were no such reclassifications for 2010.

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.

	The Three						The Three			The Nine						The Nine
	Months Ended						Months Ended			Months Ended						Months Ended
	September 30,						September 30,			September 30,						September 30,
	2011						2011			2011						2011
	As Restated			Adjustments			As Issued			As Restated			Adjustments			As Issued
Sales - net	$	4,443,571		$	(1,312,855	)	$	5,756,426		$	10,875,249		$	(2,201,757	)	$	13,077,006
Cost of sales		3,928,628			90,593			3,838,035			8,842,990			199,090			8,643,900
Gross profit		514,943			(1,403,448	)		1,918,391			2,032,259			(2,400,847	)		4,433,106
General and administrative expenses		2,927,287			(1,403,448	)		4,330,735			7,425,596			(2,400,847	)		9,826,443
Loss from operations		(2,412,344	)		-			(2,412,344	)		(5,393,337	)		-			(5,393,337	)
Other income (expense )
Derivative expense		481,667			-			481,667			(3,576,192	)		-			(3,576,192	)
Change in fair value of derivative liabilities		1,547,185			-			1,547,185			2,181,955			-			2,181,955
Loss on settlement of accounts payable and debt		-			-			-			(2,542,073	)		-			(2,542,073	)
Interest expense		499,800			-			499,800			(3,002,589	)		-			(3,002,589	)
Total other income (expense) - net		2,528,653			-			2,528,653			(6,938,899	)		-			(6,938,899	)
Net Income (loss)	$	116,309		$	-		$	116,309		$	(12,332,236	)	$	-		$	(12,332,236	)
Net loss per share available to common stockholders - basic and diluted	$	0		$	-		$	0		$	(0.05	)	$	-		$	(0.05	)
Weighted average number of common shares outstanding during the year – basic and diluted		326,088,629			-			326,088,629			225,410,157			-			225,410,157

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2011

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 consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

Such estimates and assumptions impact, among others, the following: the fair value of share-based payments, fair value of derivative liabilities, estimates of the probability and potential magnitude of contingent liabilities and the valuation allowance for deferred tax assets due to continuing operating losses.

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 consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our 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. Also, see Note 3 regarding going concern and liquidity matters.

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. There were no cash equivalents at September 30, 2011 and at December 31, 2010.

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 September 30, 2011 and December 31, 2010:

Accounts receivable	$	3,766,300		$	542,863
Less: allowance for doubtful accounts		(161,224	)		(116,102	)
Accounts receivable – net	$	3,605,076		$	426,761

At September 30, 2011 and December 31, 2010, the Company had the following concentrations of accounts receivable with customers:

Customer	2011			2010
A		29	%		40	%
B		21	%		24	%
C		20	%		-	%
D		4	%		11	%

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.

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 September 30, 2011 and December 31, 2010, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

	September 30,		December 31,
	2011		2011
Derivative liabilities Level 2	$	4,265,953	$	622,944

The Company's financial instruments consisted primarily of cash, accounts receivable, prepaid stock compensation, other assets, accounts payable and accrued liabilities, demand loans and short term debt. The carrying amounts of the Company's financial instruments generally approximated their fair values as of September 30, 2011 and December 31, 2010, respectively, due to the short-term nature of these instruments.

Revenue Recognition (Restated)

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

Depending on individual customer agreements, sales are recognized either upon shipment of products to customers or upon delivery. For one of our largest customers, which represents 13% of our total revenue for the nine months ended September 30, 2011, revenue is recognized upon delivery.

The Company has determined that advertising related credits that were granted to customers fell within the guidance of ASC No. 605-50-55 (“ Revenue Recognition” – Customer Payments and Incentives – Implementation Guidance and Illustrations) . The guidance indicates that, absent evidence of benefit to the vendor, appropriate treatment requires netting these types of payments against revenues and not expensing as advertising expense.

The Company records store support, giveaways, sales allowances and discounts as a direct reduction of sales. The Company recorded reductions to gross revenues totaling approximately $2,446,025 and $128,247 for the nine months ended September 30, 2011 and 2010, respectively.

Sales for the three and nine months ended September 30, 2011 and 2010 are as follows:

	The Three						The Three			The Three			The Nine						The Nine			The Nine
	Months Ended						Months Ended			Months Ended			Months Ended						Months Ended			Months Ended
	September 30,						September 30,			September 30,			September 30,						September 30,			September 30,
	2011						2011			2010			2011						2011			2010
	As Issued			Adjustments			As Restated						As Issued			Adjustments			As Restated
Sales	$	5,811,685		$	-		$	5,811,685		$	1,452,354		$	13,321,274		$	-		$	13,321,274		$	3,263,959
Discounts		(55,259	)		(1,312,855	)		(1,368,114	)		(43,338	)		(244,268	)		(2,201,757	)		(2,446,025	)		(128,247
Sales - Net	$	5,756,426		$	(1,312,855	)	$	4,443,571		$	1,409,016		$	13,077,006		$	(2,201,757	)	$	10,875,249		$	3,135,712

The Company has an informal 7-day right of return for products. There were nominal returns for the three and nine months ended September 30, 2011 and 2010.

For the nine months ended September 30, 2011 and 2010, the Company had the following concentrations of revenues with customers:

Customer	2011 (As Restated)			2010
A		39	%		37	%
B		13	%		9	%
C		-	%		15	%
D		6	%		11	%

Cost of Sales (Restated)

Cost of sales represents costs directly related to the production and manufacturing of the Company’s products.

Cost of sales increased by $199,090 for the nine months ended September 30, 2011 due to a reclassification from advertising expense to cost of sales due to our restatement.

See restatement discussion

Shipping and Handling

Product sold is shipped directly to the customer from the manufacturer. Any freight billed to customers is offset against shipping costs and included in cost of sales.

Advertising (Restated)

The Company expenses advertising costs when incurred.

Advertising for the three and nine months ended September 30, 2011 and 2010 are as follows:

	The Three					The Three		The Three		The Nine					The Nine		The Nine
	Months Ended					Months Ended		Months Ended		Months Ended					Months Ended		Months Ended
	September 30,					September 30,		September 30,		September 30,					September 30,		September 30,
	2011					2011		2010		2011					2011		2010
	As Issued		Adjustments			As Restated				As Issued		Adjustments			As Restated
Advertising	$	2,676,417	$	(1,403,448	)	$	1,272,969	$	1,143,663	$	5,869,049	$	(2,400,847	)	$	3,468,202	$	4,199,773

See restatement discussion

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 for accounting purposes. 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 determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

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 and additional paid in capital at an amount not to exceed gross proceeds raised, reducing the face amount of the note and is being amortized to interest expense over the life of the debt.

Share-Based Payments

Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non- employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable.

Earnings Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) 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) 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 nine months ended September 30, 2011 and 2010, respectively, the effect of considering any common stock equivalents, if exercisable, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

Common stock equivalents consist of exercisable instruments at the balance sheet date. The Company has the following common stock equivalents at September 30, 2011 and 2010:

	2011		2010
Stock options (exercise price  $0.50/share)		2,767,500		-
Warrants (exercise price - $0.10 - $1.50/share)		56,696,327		-
Convertible debt		210,751,119		2,202,000
Total common stock equivalents		270,214,946		2,202,000

In the above table, some of the convertible debt from 2011 and 2010 contains discount to market 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

Certain items in the 2010 financial statement presentation have been reclassified to conform to the 2011 presentation. Such reclassifications have no effect on previously reported financial condition, operations or cash flows.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have an effect on the Company’s consolidated financial statements.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2011	Dec. 31, 2010
Series A, Convertible Preferred Stock, par value	$ 0.001	$ 0.001
Series A, Convertible Preferred Stock, shares authorized	10,000,000	833,000
Series A, Convertible Preferred Stock, issued	0	0
Series A, Convertible Preferred Stock, outstanding	0	0
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	500,000,000	195,000,000
Common Stock, issued	354,374,865	118,649,439
Common Stock, outstanding	354,374,865	118,649,439

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Document and Entity Information	9 Months Ended
	Sep. 30, 2011	Jun. 29, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	true
AmendmentDescription	On May 14, 2012, MusclePharm Corporation's (the "Company") independent registered public accounting firm and the Company's board of directors (the "Board") determined, after consultation with Company management that the Company's unaudited financial statements for the period ended September 30, 2011, filed in a quarterly report on Form 10-Q with the Securities and Exchange Commission (the "Commission") on November 14, 2011, contained certain material misstatements. Our financial statements contained in this amended quarterly report on Form 10-Q/A restate a previous error in accounting for the Company's calculation of net sales and presentation of general and administrative expenses. 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 foregoing guidance indicates that, absent evidence of benefit to the vendor, appropriate U.S. GAAP treatment requires netting these types of payments against gross revenues and not 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 gross revenues. Additionally, for the quarter ended September 30, 2011, the Company reclassified certain items classified as samples originally included as an advertising expense to cost of sales. There were no such reclassifications for 2010. The Company previously deducted certain credits and promotions as general and administrative expenses. After a thorough analysis and review as noted above, the Company has determined to net any credits and promotions directly against gross sales instead of classifying the same amounts as an advertising expense. Because this accounting change is a reclassification of expenses in the Company's Consolidated Statements of Operations, the Company's net loss will not be affected by the restatement, nor does the restatement affect the net loss amounts reported in this unaudited quarterly financial statements. The financial statements contained herein have been restated solely for 2011.
Document Period End Date	Sep. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
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		1,399,074,207

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Consolidated Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Sales - net	$ 4,443,571	$ 1,409,016	$ 10,875,249	$ 3,135,712
Cost of sales	3,928,628	927,506	8,842,990	2,120,113
Gross profit	514,943	481,510	2,032,259	1,015,599
General and administrative expenses	2,927,287	2,759,153	7,425,596	8,420,275
Loss from operations	(2,412,344)	(2,277,643)	(5,393,337)	(7,404,676)
Other income (expense)
Derivative expense	481,667		(3,576,192)
Change in fair value of derivative liabilities	1,547,185		2,181,955
Loss on settlement of accounts payable and debt		(364,472)	(2,542,073)	(369,668)
Interest expense	499,800	(231,739)	(3,002,589)	(900,886)
Total other income (expense) - net	2,528,653	(596,211)	(6,938,899)	(1,270,554)
Net Income (loss)	$ 116,309	$ (2,873,854)	$ (12,332,236)	$ (8,675,230)
Net loss per share available to common stockholders - basic and diluted		$ (0.08)	$ (0.05)	$ (0.28)
Weighted average number of common shares outstanding during the year - basic and diluted	326,088,629	35,923,947	225,410,157	30,473,190

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Stockholders' Deficit

9 Months Ended

Sep. 30, 2011

Stockholders' Deficit

Note 7 Stockholders’ Deficit

(A) Common Stock

On April 18, 2011, the Company increased its authorized shares of common stock to 500,000,000.

During the nine months ended September 30, 2011, the Company issued the following common stock:

Transaction Type	Quantity			Valuation			Loss on Settlement		Range of Value per Share
Conversion of debt (1)		132,321,172		$	2,379,913		$	1,056,369	$	0.01–0.08
Settlement of accounts payable and accrued expenses (2)		65,097,382		$	3,642,108		$	1,485,704	$	0.02-0.12
Services – rendered (3)		15,220,665		$	527,231				$	0.03–1.15
Services – prepaid stock compensation (4)		6,586,207		$	326,500				$	0.05-0.09
Common shares issued for cash (5)		20,000,000		$	500,000				$	0.025
Share cancellation (6)		(3,500,000	)	$	(350	)			$	0.0001
Totals		235,725,426		$	7,375,402		$	2,542,073	$	0.0001-1.15

The fair value of all stock issuances above is based upon the quoted closing trading price on the date of issuance, except for stock issued for cash and warrants, which was based upon the cash received. Stock issued in the conversion of preferred stock was recorded at par value.

The following is a more detailed description of some of the Company’s stock issuances from the table above:

(1) Conversion of Debt

The Company issued 132,321,172 shares of common stock to settle notes payable having a fair value of $2,379,913 In connection therewith the Company has recorded a loss on settlement of $1,056,369.

(2) Settlement of Accounts Payable and Accrued Expense and Loss on Settlement

Of the total shares issued to settle accounts payable, accrued expenses and contract settlements the Company issued 65,097,382 shares of common stock having a fair value of $3,642,108. The Company has recorded losses in connection with these settlements of $1,485,704.

(3) Stock Issued for Services

During nine months ended September 30, 2011, the Company issued 15,220,665 shares of common stock for services, having a fair value of $527,231 based upon the quoted closing trading price.

(4) Prepaid Stock Compensation

During the nine months ended September 30, 2011, the Company issued 6,586,207 shares of common stock for future services, having a fair value of $326,500. The agreements commenced during the periods July 2010 – September 2011 and terminate during the periods July 2011 - November 2012.

The following represents the allocation of prepaid stock compensation:

Prepaid stock compensation – December 31, 2010	$	1,981,371
Stock issued for future services		320,249
Amortization of prepaid stock compensation		(1,436,631	)
Prepaid stock compensation – September 30, 2011		864,989
Less: current portion		(823,261	)
Long term portion	$	41,728

(5) Common Stock Issued for Cash

The Company issued 20,000,000 shares of it’s common stock for proceeds of $500,000

(6) Share Cancellation

The Company cancelled 3,500,000 shares during the nine months ended September 30, 2011, valued at par ($0.001). The Company is disputing the issuance of these shares due to non-performance by a consultant.

(B) Stock Options

On February 1, 2010, the Company's board of directors and shareholders approved the 2010 Stock Incentive Plan ("2010 Plan"). The 2010 Plan allows the Company to grant incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and stock appreciation rights to key employees and directors of the Company or its subsidiaries, consultants, advisors and service providers. Any stock option granted in the form of an incentive stock option will be intended to comply with the requirements of Section 422 of the Internal Revenue Code of 1986, as amended. Only stock options granted to employees qualify for incentive stock option treatment. No incentive stock option shall be granted after February 1, 2020, which is 10 years from the date the 2010 Plan was initially adopted. A stock option may be exercised in whole or in installments, which may be cumulative. Shares of common stock purchased upon the exercise of a stock option must be paid for in full at the time of the exercise in cash or such other consideration determined by the compensation committee. Payment may include tendering shares of common stock or surrendering of a stock award, or a combination of methods.

The 2010 Plan will be administered by the compensation committee. The compensation committee has full and exclusive power within the limitations set forth in the 2010 Plan to make all decisions and determinations regarding the selection of participants and the granting of awards; establishing the terms and conditions relating to each award; adopting rules, regulations and guidelines; and interpreting the 2010 Plan. The Compensation Committee will determine the appropriate mix of stock options and stock awards to be granted to best achieve the objectives of the Plan. The 2010 Plan may be amended by the Board or the compensation committee, without the approval of stockholders, but no such amendments may increase the number of shares issuable under the 2010 Plan or adversely affect any outstanding awards without the consent of the holders thereof. The total number of shares that may be issued shall not exceed 5,000,000, subject to adjustment in the event of certain recapitalizations, reorganizations and similar transactions.

On April 2, 2010, the Company's board of directors authorized the issuance of 2,767,500 stock options, having a fair value of $630,990, which was expensed immediately since all stock options vested immediately. These options expire on April 2, 2015.

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

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

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

			Weighted Average		Weighted Average		Aggregate
	Options		Exercise Price		Remaining Contractual Life		Intrinsic Value
Balance – December 31, 2010 – outstanding		2,767,500	$	0.50			$	-
Balance – December 31, 2010 – exercisable		2,767,500	$	0.50			$	-
Granted		-	$	-
Exercised		-	$	-
Forfeited		-	$	-
Balance – September 30, 2011 – outstanding		2,767,500	$	..32		1.25 years	$	-
Balance – September 30, 2011 – excercisable		2,767,500	$	0.50		1.25 years	$	-
Grant date fair value of options granted – 2011			$	-
Weighted average grant date fair value – 2011			$	-
Outstanding options held by related parties – 2011		2,000,000
Exercisable options held by related parties – 2011		2,000,000
Fair value of stock options granted to related parties – 2011	$	-

(C) Stock Warrants

During the nine months ended September 30, 2011, the Company issued 61,376,327 stock warrants attached to certain convertible debt (Note 5A). These warrants contain variable exercise features, resulting in the treatment of these warrants as derivative liabilities.

In addition, the Company issued 200,000, 5 year stock purchase warrants, with exercise prices ranging from $0.08 - $0.10 per share for services rendered. The company recorded an expense of $16,200 as a result of the issuance.

The Company applied fair value accounting for stock warrant issuance. The fair value of each stock warrant granted is estimated on the date of issuance using the Black-Scholes option-pricing model. The Black-Scholes assumptions used at issuance are as follows:

Exercise price	$	0.10 - 1.50
Expected dividends		0	%
Expected volatility		180	%
Risk fee interest rate		1.16	%
Expected life of warrants		2.5 to 5 years
Expected forfeitures		0	%

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

	Warrants		Weighted Average Exercise Price
Outstanding – December 31, 2010		750,000	$	1.50
Exercisable – December 31, 2010		750,000	$	1.50
Granted		61,576,327	$	0.10
Exercised		-	$	-
Forfeited/Cancelled		-	$	-
Outstanding – September 30, 2011		62,326,327	$	0.10
Exercisable – September 30, 2011		56,696,327	$	0.10

Warrants Outstanding								Warrants Exercisable
						Weighted				Weighted
Range of		Number		Weighted Average Remaining Contractual Life (in			Average		Number		Average
exercise price		Outstanding			years)		Exercise Price		Exercisable		Exercise Price
$	0.10- $1.50		62,326,327		4.14 years	$	0.10		56,696,327	$	0.10

At September 30, 2011 and December 31, 2010, the total intrinsic value of warrants outstanding and exercisable was $0 and $0, respectively.

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Derivative Liabilities

9 Months Ended

Sep. 30, 2011

Derivative Liabilities

Note 6 Derivative Liabilities

The Company identified conversion features embedded within convertible debt - secured (see Note 5(A)). 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 a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follow:

Derivative liability balance at December 31, 2010	$	622,944
Fair value at the commitment date for convertible notes issued during nine months ended September 30, 2011		6,849,374
Reclassification of derivative liability to additional paid in capital		(1,024,409	)
Fair value mark to market adjustment		(2,181,956	)
Derivative liability balance at September 30, 2011	$	4,265,953

The Company recorded the derivative liability to 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 for $3,576,192 during the nine months ended September 30, 2011.

The fair value at the commitment and remeasurement dates for embedded conversion features and warrants were based upon the following management assumptions:

	Commitment Date			Remeasurement Date
Expected dividends		0	%		0	%
Expected volatility		150%-204	%		212	%
Expected term: conversion feature		0.02 – 3 years			0.04 – 2.67 years
Expected term: warrants		2.5 – 5 years			2.5 – 5 years
Risk free interest rate		0.11% - 1.16	%		0.11	%

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Commitments, Contingencies and Other Matters

9 Months Ended

Sep. 30, 2011

Commitments, Contingencies and Other Matters

Note 8 Commitments, Contingencies and Other Matters

(A) Other Matters

In April 2010, the Company entered into a factoring agreement (the "agreement") and sold its accounts receivable. During 2010, the Company entered into legal proceedings with the factor, as a result of the Company’s customers not remitting funds directly to the factor.

A settlement, of $96,783, was reached on November 10, 2010. During 2010, the Company repaid $25,000, leaving a remaining balance of $71,783 due to factor. In January 2011, the Company paid $10,000.

On December 22, 2010, the Company became involved in a business dispute with a manufacturer, seller and distributor of their product line (the “manufacturer”) regarding their respective obligations. The parties settled their dispute in private mediation. As a result of the settlement, the Company agreed to pay a maximum of $425,000. The Company issued 511,509 shares in 2010 of common stock having a fair value of $100,000. The Company settled the balance due in 2011, by issuing 4,932,500 shares of common stock, having a fair value of $187,435. The Company recorded a loss on debt settlement of $88,785.

On February 28, 2011, the remaining $65,930, inclusive of fees and interest, was settled with the issuance of 2,187,666 shares of common stock, having a fair value of $126,885. The Company recorded a loss on this debt settlement of $60,955. This has been included as component of stock issued to settle accounts payable and accrued expenses (Note 7).

At September 30, 2011, the Company no longer factors its accounts receivable.

(B) Litigations, Claims and Assessments

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.

Other legal matters to which the Company is party do exist. The outcome of these matters is not probable nor reasonably estimable. The Company intends to defend these matters vigorously.

(C) Taxes

As of September 30, 2011, accounts payable and accrued expenses included a balance of approximately $196,000 pertaining to accrued payroll taxes. The taxes represent employee withholdings that have yet to be remitted to the taxing agencies. The balance consists of the following;

Prior to the Company becoming a publicly traded company in February 2010, the Company existed as an LLC, which had accrued payroll taxes/penalties/interest of approximately $53,000.

As of the filing of this report, the Company repaid approximately $55,000. The remaining $141,000 is expected to be repaid in the fourth quarter of 2011

Accrued payroll taxes – MusclePharm, Inc.	$	101,000
Accrued payroll taxes/penalties/interest – MusclePharm, LLC	$	53,000
Accrued penalties and interest - MusclePharm, Inc	$	42,000
	$	196,000
Payment in October 2011	$	(55,000	)
Balance due	$	141,000

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Subsequent Events

9 Months Ended

Sep. 30, 2011

Subsequent Events

Note 9 Subsequent Events

Debt Issuance

On October 1, 2011 the Company borrowed $100,000 cash related to a debt financing the terms have not yet been finalized.

On October 6, 2011 the Company borrowed $50,000 in the form of a convertible promissory note bearing interest at 8%. The note matures on July 12, 2012 and is convertible into shares of the Company’s common stock at a variable conversion price. Due to the variable conversion feature, the Company will need to determine the fair value of the derivative liability associated with this debt instrument.

On October 6, 2011 the Company borrowed $150,000 in the form of a convertible promissory note bearing interest at 8%. The note matures on April 3, 2012 and is convertible into shares of the Company’s common stock at a variable conversion price. Due to the variable conversion feature, the Company will need to determine the fair value of the derivative liability associated with this debt instrument

Conversion of Debt and Demand Loans and Accrued Interest

During the period October 1, 2011 through November 7, 2011, the Company issued 22,803,731 shares of common stock to convert notes payable and accrued interest totaling $194,871.

One note payable totaling $41,600 in principal and accrued interest was converted over the period October 28, 2011 through November 3, 2011, into 4,181,643 shares of the Company’s common stock at a conversion price of approximately $0.01.

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Consolidated Statements of Cash Flows (USD $)	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash Flows From Operating Activities:
Net loss	$ (12,332,236)	$ (8,675,230)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	89,390	10,830
Bad debt	84,018	6,771
Stock based compensation	558,209	4,213,585
Amortization of prepaid stock based compensation	1,436,631
Amortization of debt discount and debt issue costs	2,659,918	714,430
Loss on extinguishment of debt		402,739
Derivative expense	3,576,192
Change in fair value of derivative liabilities	(2,181,955)
Loss on sale of accounts receivable		51,644
Loss (Gain) on settlement of accounts payable	2,542,073	(84,715)
(Increase) decrease in:
Accounts receivable	(3,262,333)	(730,131)
Prepaid and other	(213,152)	49,417
Inventory		(181,782)
Deposits		(4,485)
Other current Assets		(52,268)
Accounts payable and accrued liabilities	2,995,123	1,870,492
Deferred revenue	(21,473)	40,456
Due to factor	(5,853)
Net Cash Used In Operating Activities	(4,075,448)	(2,368,247)
Cash Flows From Investing Activities:
Purchases of property and equipment	(771,652)	(30,395)
Net Used In Investing Activities	(771,652)	(30,395)
Cash Flows From Financing Activities:
Proceeds from sale of accounts receivable		226,847
Repayment of debt - related party		(39,291)
Proceeds from issuance of debt	4,495,756	1,259,000
Debt issue costs	(219,368)
Payment for recapitalization from merger		(25,108)
Proceeds from issuance of common stock	500,000	1,005,692
Cash overdraft	27,008	(17,841)
Net Cash Provided By Financing Activities	4,803,396	2,409,299
Net increase (decrease) in cash	(43,704)	10,657
Cash at beginning of period	43,704
Cash at end of period		10,657
Supplemental disclosures of cash flow information:
Cash paid for interest
Supplemental disclosure of non-cash investing and financing activities:
Stock issued for future services - third parties	326,500
Debt discount recorded on convertible debt accounted for as a derivative liability	3,273,181
Stock issued to settle debt - third parties	1,521,355	678,325
Conversion of notes to common stock	2,379,913	564,037
Conversion of notes to common stock payable
Reclassification of derivative liability to additional paid in capital	1,024,409
Beneficial conversion feature - convertible debt		426,000
Conversion of preferred stock to common stock		73
Stock issued to acquire equipment	82,811
Share cancellation	$ 350

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Debt

9 Months Ended

Sep. 30, 2011

Debt

Note 5 Debt

At September 30, 2011 and December 31, 2010, debt consists of the following:

	September 30,			December 31,
	2011			2010
Convertible debt – secured – derivative liabilities	$	1,847,097		$	380,000
Conventional convertible debt – secured		-			225,000
Convertible debt - unsecured		-			78,249
Less: debt discount		(1,159,352	)		(331,261	)
Convertible debt – net		687,745			351,988
Secured debt		-			187,500
Unsecured debt		1,128,637			-
Total debt		1,816,382			539,488
Less: current portion		(1,023,441	)		(289,488	)
Long term debt	$	792,941		$	250,000

Debt in default of $30,000 is included as a component of short-term debt.

(A) Convertible Debt – Secured – Derivative Liabilities

During the nine months ended September 30, 2011, the Company issued $3,798,733 in convertible debt – secured – derivative liabilities. The Company issued these debt instruments with 13 different sets of conversion terms. The Material terms of the Company’s convertible debt – secured – derivative liabilities are as follows:

			Amount of Principal Raised
Interest Rate	6% - 12	%
Default interest rate	15% - 22	%
Maturity	April 5, 2011 to June 2, 2014
Conversion terms 1	Average 10 day trade pricing divided by 200% of outstanding principal balance		$	827,600
Conversion terms 2	Lesser of: Average of the lowest 2 closing prices of the 5 days preceding conversion date or $0.025/share		$	775,000
Conversion terms 3	60% of the average of the lowest 3 closing prices in the 10 days preceding conversion date		$	170,000
Conversion terms 4	$0.03		$	100,000
Conversion terms 5	65% of the average of the lowest 3 closing prices in the 30 days preceding conversion		$	303,800
Conversion terms 6	62% of the lowest closing prices in the 7 days preceding conversion date		$	40,000
Conversion terms 7	70% of the average of the lowest 3 closing prices in the 30 days preceding conversion		$	600,000
Conversion terms 8	50% of the average closing prices in the 10 days preceding conversion		$	85,000
Conversion terms 9	45% of the lowest 3 closing prices in the 10 days preceding conversion		$	277,500
Conversion terms 10	35% of the lowest 3 closing prices in the 10 days preceding conversion		$	100,000
Conversion terms 11	Lesser of: 50% of average of the lowest 3 closing prices of the 20 days preceding conversion date or $0.05/share		$	33,000
Conversion terms 12	50% of lowest trade price in preceding 20 days		$	45,000
Conversion terms 13	80% of lowest trade price in preceding 30 days		$	441,833
			$	3,798,733

During the nine months ended September 30, 2011, the Company converted $2,379,913 in notes into 132,321,172 shares of the Company’s common stock at prices ranging from $0.01 to $0.08 per share, based upon the terms of the debt conversion.

The following is a summary of the Company’s convertible debt – secured:

Convertible debt – secured – derivative liabilities – December 31, 2010	$	380,000
Issuance of convertible debt – secured – derivative liabilities		3,798,733
Conversions of convertible debt to common stock		(2,331,636	)
Convertible debt - secured – September 30, 2011	$	1,847,097

(B) Conventional Convertible Debt – Secured

Terms of the Company’s conventional convertible debt are as follows:

● Interest rate 8%,

● All notes were due by December 31, 2010, and were converted in 2011,

● Conversion of principal and accrued interest at rates ranging from 150% - 300%,

● Secured by all assets of the Company, and

● All conversion rates associated with these instruments were at or above market. There is no BCF.

During the nine months ended September 30, 2011, the Company issued 7,226,649 shares of common stock, having a fair value of $426,970 ($0.06 - $0.10/share) to settle convertible notes payable, originating prior to December 31, 2010, having a face value of $225,000. As a result, the Company recorded a loss on debt conversion of $137,017.

The following is a summary of the Company’s conventional convertible debt –secured:

Conventional convertible debt - secured – December 31, 2010	$	225,000
Settlement of debt through issuance of common stock		(225,000	)
Conventional convertible debt - secured – September 30, 2011	$	-

(C) Convertible Debt – Unsecured

During the nine months ended September 30, 2011, $102,649 was converted into 11,501,829, shares of common stock, having a fair value of $76,647 ($0.101/share), based upon the quoted closing trading price. The Company recorded a loss on debt settlement of $24,107.

During the nine months ended September 30, 2011, the Company issued an additional $90,000 of conventional convertible notes, convertible at 200% of the face value of the note, bearing 8% interest annually.

The following is a summary of the Company’s unsecured debt:

Unsecured debt – December 31, 2010	$	78,249
Issuance of convertible secured notes		90,000
Settlement of debt through issuance of common stock		(102,649	)
Unsecured debt – September 30, 2011	$	65,600

Table above this has been combined with convertible secured debt

(D) Secured Debt

During the nine months ended September 30 2011, $187,500 was converted into 7,500,000 shares of common stock, having a fair value of $437,500 ($0.058/share - $0.059/share), based upon the quoted closing trading price. The Company recorded a loss on debt settlement of $250,000.

The following is a summary of the Company’s secured debt:

Secured debt – December 31, 2010	$	187,500
Settlement of debt through issuance of common stock		(187,500	)
Secured debt – September 30, 2011	$	-

(E) Debt Issue Costs

The following is a summary of the Company’s debt issue costs:

Debt issue costs – net – December 31, 2010	$	34,404
Issue costs paid during nine months ended September 30, 2011		219,368
Amortization of debt issue costs – September 30, 2011		(225,686	)
Debt issue costs – net – September 30, 2011	$	28,086

(F) Debt Discount

During the nine months ended September 30, 2011, the Company issued convertible debt with embedded derivatives and warrants. The Company recorded the derivatives and warrants at fair value and are amortizing the debt discount over the life of the debt. Debt discount is as follows:

Debt discount balance at December 31, 2010	$	331,261
Discount recorded for convertible notes issued during nine months ended September 30, 2011		3,262,323
Accretion of debt discount to interest expense during the nine months ended September 30, 2011		(2,434,232	)
Debt discount balance at September 30, 2011	$	1,159,352