If you are a micro cap investor like me, you always enjoy a good story. Most micro cap or penny stock traders/investors remember the whole SpongeTech (now defunct) debacle of 2010. The story was pretty simple. SpongeTech was a company with 2 billion+ shares outstanding selling a product all over TV and advertising the product at every major sporting event on planet earth. This equation led to SpongeTech’s stock rising from sub penny to over 20c per share ($400m market cap at its height). The SEC charged the company in 2010 with running a Pump & Dump scheme, and the stock fell to zero along with the company.
MusclePharm (MSLP) first got introduced to me a couple weeks ago (I do not own shares) by some legit investors I know as a turnaround story with the hopes that the company will look more like a “big boy-girl” company over the next couple months. The company currently has 1.6 billion shares out if you include all the convertible securities, and I would expect the company to do a large reverse split at some point.
So with that as a backdrop, what does MusclePharm do?
MusclePharm is a healthy life-style company that develops and manufactures a full line of NSF International and Informed Choice approved nutritional supplements that are free of banned substances. Based on years of research at the MusclePharm Sports Science Center, the products are created through an advanced six-stage research protocol involving the expertise of top nutritional scientists and field tested by more than one hundred elite professional athletes from various professional sports leagues including the National Football League, Mixed Martial Arts and Major League Baseball. The Company’s products address all categories of an active lifestyle, including muscle building, weight loss and maintaining general fitness through a daily nutritional supplement regimen. MusclePharm is sold in more than 120 countries and available in over 10,000 U.S. retail outlets, including Dick’s Sporting Goods, GNC, Vitamin Shoppe, Vitamin World and Walmart. MusclePharm products also are sold through more than 100 online stores, including bodybuilding.com, Amazon.com and Vitacost.com. For more information, please visit www.musclepharm.com.
The company has pro athlete endorsements from several well known NFL players including Michael Vick, Chad Ochocinco, Patrick Willis, Joey Porter and most of the top ranked UFC (MMA) fighters: Anderson Silva, Dominick Cruz, Jose Aldo, Rampage Jackson, Rashad Evans, Clay Guida, and others.
The numbers are impressive…
The company has grown from $20m in revenues for FY 2011, and expects FY 2012 revenues of $75m. In fact MSLP expects to do $19m in revenues in Q1 2012, almost what the company did for the full year in 2011. With this growth rate and highly visible brand I expect this company to attract quite a lot of attention over the near term. With the stock currently at 0.02 (ish), it is trading at a $30-35m market cap. I do not have an opinion on the company or stock, but I think this is a story that will be fun to watch.
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