MusclePharm Corp - FORM 8-K - EX-99.2

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file	filename
8-K - MusclePharm Corp	tit_8k.htm
EX-2.1 - MusclePharm Corp	tit_ex2-1.htm
EX-99.1 - MusclePharm Corp	tit_ex99-1.htm

EXHIBIT 99.2

Tone in Twenty

Introduction to Pro Forma Combined Financial Statements

(Unaudited)

The following unaudited pro forma financial statements are presented to illustrate the estimated effects of the Securities Exchange Agreement ("Exchange Transaction") between Tone in Twenty and Muscle Pharm, LLC ("Muscle Pharm"), dated February 1, 2010 on our historical financial position and results of operations. We have derived our historical financial data from our audited financial statements as of and for the year ended August 31, 2009, and from our unaudited financial statements as of and for the period ended November 30, 2009. We have derived Muscle Pharm's financial data from its audited financial statements as of and for the period from inception (April 22, 2008) to December 31, 2008, and its unaudited financial statements as of and for the period ended September 30, 2009.

The unaudited pro forma combined balance sheet as of November 30, 2009 assumes the Exchange Transaction was consummated on November 30, 2009. The information presented in the unaudited pro forma combined financial statements does not purport to represent what the financial position or results of operations would have been had the Exchange Transaction occurred as of November 30, 2009, nor is it indicative of future financial position or results of operations. You should not rely on this information as being indicative of the historical results that would have been achieved dad the companies always been combined, or the future result that the combined company will experience after the Exchange Transaction is consummated.

The pro forma adjustments are based upon available information and certain assumptions that the Company believes is reasonable under the circumstances. The unaudited pro forma financial statements should be read in conjunction with the accompanying notes and assumptions and the historical financial statements of Tone in Twenty and Muscle Pharm, LLC.

Tone in Twenty

Pro Forma Combined Balance Sheets

(Unaudited)

							Pro Forma Adjustments (1)
	Tone in Twenty			Muscle Pharm LLC				(2	)	(3	)	(4	)	Pro Forma Combined
	November 30, 2009			September 30, 2009

Assets:
Current assets:
Cash	$	1,562			451									$	2,013
Accounts receivable					10,358										10,358
Inventory					1,677										1,677
Deposits on product					-										-
Prepaid expenses and other current assets					2,387										2,387
Total current assets		1,562			14,873										16,435
Fixed assets, net					15,932										15,932
Patent					-										-
Website, net					7,960										7,960
Seurity deposits					1,207										1,207
Total assets	$	1,562			39,972									$	41,534

Liabilities and Stockholder's Equity (Deficit):
Current liabilities:
Accounts payable		1,670			355,149										356,819
Accrued interest					4,499										4,499
Overdrawn bank accounts					17,645										17,645
Customer deposits					112,731										112,731
Other short term borrowings										25,000					25,000
Due to related parties					73,528										73,528
Notes payable					30,000										30,000
Convertible notes payable					297,500										297,500
Total current liabilities		1,670			891,052										917,722
Equity:
Convertible preferred stock, $0.001 par value,
5,000,000 shares authorized, 83,333 shares issued and outstanding		83													83
Common stock, $0.001 par value,
195,000,000 shares authorized, 437,500 shares issued and outstanding (26,070,834 shares issued and outstanding combined)		438						26,000		(367	)				26,071
Additional paid-in capital		1,027,349						536,000		(24,633	)	(1,027,978	)		510,738
Deficit accumulated during the development stage		(1,027,978	)									1,027,978			-
Accumulated deficit												(1,413,080	)		(1,413,080	)
Member's deficit					(851,080	)		(562,000	)			1,413,080			-
Total equity		(108	)		(851,080	)									(876,188	)
Total Liabilities and Stockholders' Equity (Deficit)	$	1,562			39,972									$	41,534

See notes to pro forma combined financial statements

Tone in Twenty

Pro Forma Combined Statement of Operations

(Unaudited)

	Year ended August 31, 2009			From Inception (April 22, 2008) to December 31, 2008			Pro Forma Adjustments (1)
	Tone in Twenty			Muscle Pharm LLC				(2	)	(3	)	(4	)	Pro Forma Combined
Revenues:
Net sales	$	-			80,690									$	80,690
Cost of sales					(129,815	)									(129,815	)
Gross margin					(49,125	)									(49,125	)
Operating expenses:
Advertising & promotion		-			248,999										248,999
Bad debt					812										812
Bank charges					1,547										1,547
Salaries & labor					19,215										19,215
Depreciation and amortization					1,521										1,521
Insurance					2,649										2,649
Information technology					12,979										12,979
Travel, meetings and entertainment					23,845										23,845
Occupancy, telephone and utilities					8,175										8,175
Office and warehouse supplies					11,962										11,962
Professional fees		7,000			9,674										16,674
Repairs and maintenance					-										-
Other general and administrative		4,233			840										5,073
Total operating expenses		11,233			342,218										353,451
Operating loss		(11,233	)		(391,343	)									(402,576	)
Extraordinary gain		2,357													2,357
Interest income		-			14										14
Interest expense		-			(1,300	)									(1,300	)
Net loss	$	(8,876	)		(392,629	)								$	(401,505	)

See notes to pro forma combined financial statements

Tone in Twenty

Pro Forma Combined Statement of Operations

(Unaudited)

	Three months ended November 30, 2009			Three months ended September 30, 2009			Pro Forma Adjustments (1)
	Tone in Twenty			Muscle Pharm LLC				(2	)	(3	)	(4	)	Pro Forma Combined
Revenues:
Net sales	$	-			198,637									$	198,637
Cost of sales					(346,713	)									(346,713	)
Gross margin					(148,076	)									(148,076	)
Operating expenses:
Advertising & promotion		-			359,980										359,980
Bad debt					(1,669	)									(1,669	)
Bank charges					12,272										12,272
Salaries & labor					83,250										83,250
Depreciation and amortization					1,656										1,656
Insurance					3,512										3,512
Information technology					5,287										5,287
Travel, meetings and entertainment					29,363										29,363
Occupancy, telephone and utilities					7,199										7,199
Office and warehouse supplies					5,993										5,993
Professional fees		5,020			66,454										71,474
Repairs and maintenance					799										799
Other general and administrative		265			478										743
Total operating expenses		5,285			574,574										579,859
Operating loss		(5,285	)		(722,650	)									(727,935	)
Interest income		-			-										-
Interest expense		-			(6,348	)									(6,348	)
Net loss	$	(5,285	)		(728,998	)								$	(734,283	)

See notes to pro forma combined financial statements

Tone in Twenty

Notes to Pro Forma Combined Financial Statements (Unaudited)

(1) The Exchange Transaction is deemed to be a reverse acquisition. In accordance with the Accounting and Financial Reporting Interpretations and Guidance provided by the staff of the U.S. Securities and Exchange Commission, Tone in Twenty (the legal acquirer) is considered the accounting acquiree and Muscle Pharm (the legal acquiree) is considered the accounting acquirer. The consolidated financial statements of the combined entity will in substance be those of Muscle Pharm, with the assets and liabilities, and revenues and expenses, of Tone in Twenty being included effective from the date of consummation of the Exchange Transaction. Tone in Twenty is deemed to be a continuation of the business of Muscle Pharm. The outstanding stock of Tone in Twenty prior to the Exchange Transaction will be accounted for at its net book value and no goodwill will be recognized.

(2) To reflect the issuance of 26,000,000 shares of common stock for all the issued and outstanding equity and voting interests of Muscle Pharm members.

(3) To reflect the purchase and cancellation of 366,666 of common stock owned by the Company's President for $25,000 to be paid by Muscle Pharm.

(4) To reflect the elimination of Tone in Twenty's deficit accumulated during the development stage, and to reflect the operating entity's (Muscle Pharm) accumulated operating deficits as the combined entity's accumulated deficit.

Attached files

MusclePharm Corp Reports

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