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ITEM 3.02
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UNREGISTERED
SALES OF EQUITY SECURITIES
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Reference is made to the disclosure set
forth under Item 1.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.
The Company issued the shares of common
stock pursuant to the Agreement in reliance on the exemption from registration under the Securities Act set forth in Section 4(2)
thereof and Rule 506 of Regulation D.
On May 3, 2013, the Company sold an aggregate
of 100,000 shares of its common stock, $0.001 par value per share at a per share price of $8.50 in a private placement (the “First
Private Placement”) to certain accredited investors (the “First Purchasers”) for an aggregate purchase price
of approximately $850,000.
The shares were sold pursuant to subscription
agreements dated May 3, 2013 (the “First Subscription Agreements”) between the Company and the Purchasers. The First
Subscription Agreements contained customary terms regarding, among other things, representations and warranties and indemnification.
The Company has entered into registration
rights agreements with the First Purchasers, pursuant to which the Company has agreed to file a “resale” registration
statement with the Securities and Exchange Commission covering all shares of Common Stock sold in the First Private Placement within
90 days of the final closing of the First Private Placement (the “First Filing Date”). The Company has agreed
to maintain the effectiveness of the registration statement from the effective date until all securities have been sold or are
otherwise able to be sold pursuant to Rule 144. The Company has agreed to use its reasonable best efforts to have the registration
statement declared effective as soon as practicable after the First Filing Date.
The Company is obligated to pay the First
Purchasers a fee of 1.5% per month of the First Purchaser’s investment, payable in cash, for every thirty (30) day period
up to a maximum of 5%, following the First Filing Date that the registration statement has not been filed; provided, however, that
the Company shall not be obligated to pay any such damages under certain circumstances, as more fully set forth in the registration
rights agreement.
The Company issued the foregoing shares
of common stock in reliance on the exemption from registration under the Securities Act set forth in Section 4(2) thereof and Rule
506 of Regulation D.
On June 3, 2013, the Company sold an aggregate
of 150,000 shares of its common stock, $0.001 par value per share at a per share price of $10.00 in a private placement (the “Second
Private Placement”) to certain accredited investors (the “Second Purchasers”) for an aggregate purchase price
of approximately $1,500,000.
The Common Stock was sold pursuant to subscription
agreements dated June 3, 2013 2013 (the “Second Subscription Agreements”) between the Company and the Second Purchasers.
The Second Subscription Agreements contained customary terms regarding, among other things, representations and warranties and
indemnification.
The Company granted registration rights
agreements to the Second Purchasers, pursuant to that certain Registration Rights Agreement dated as of March 28, 2013, by and
among MusclePharm and the investors party thereto as if the Second Purchasers were an investor party thereto, pursuant to which
the Company has filed a “resale” registration statement with the Securities and Exchange Commission, effective as of
July 17, 2013, covering all shares of common stock sold in the Second Private Placement. The Company has agreed to maintain the
effectiveness of the registration statement from the effective date until all securities have been sold or are otherwise able to
be sold pursuant to Rule 144.
The Company is obligated to pay the Purchasers
a fee of 1.5% per month of the Purchaser’s investment, payable in cash, for every thirty (30) day period up to a maximum
of 5%, following the Second Filing Date that the registration statement has not been filed; provided, however, that the Company
shall not be obligated to pay any such damages under certain circumstances, as more fully set forth in the registration rights
agreement.
The Company issued the foregoing shares
of Common Stock in reliance on the exemption from registration under the Securities Act set forth in Section 4(2) thereof and Rule
506 of Regulation D.
Pursuant to consulting agreements entered
into by the Company with two separate third party consultants, both dated May 24, 2013, the Company issued an aggregate of 78,000
shares of the Company’s restricted common stock to such third party consultants.
Each Consultant is an “accredited
investor,” as such term is defined in the Securities Act of 1933, as amended (the “Securities Act”) and will
be issued in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities
Act of 1933 and corresponding provisions of state securities laws.