In the last days of its existence, a report has surfaced indicating that Musclepharm, the WEC’s official supplement company, owed the WEC $375,000 in sponsorship fees.
The WEC issued two invoices to MusclePharm for a total of $500,000, and while MusclePharm was only able to pay for half of the first one, they came up with none of the money for the second invoice. The WEC sold the debt to a third party (Socius), and MusclePharm was forced to give them 7,800,000 shares of Common Stock, as they were unable to produce the necessaey (sic) capital to pay off the debt.
H/T: Anthony Roberts
An email to Musclepharm requesting comment was not returned.
Payout Perspective:
Since the debt was sold to a third party, the outstanding debt would not have carried over to the UFC after the merger. The report includes the first page of a pleading indicating an “Order Approving Stipulation for Settlement of Claim”. The lawsuit looks to be filed in Los Angeles and Socius is the plaintiff suing defendant MusclePharm. A hearing on the stipulation for the settlement appears to have taken place on December 8th. The Complaint was filed December 6th. I attempted to look up the lawsuit in Pacer but it was not yet in the system. We will continue to follow this story and try to track down the Complaint.
It would be interesting to find out the periods those bills cover. Two shows, two months, two quarters, two years?
Here is the full text of the settlement.
http://www.faqs.org/sec-filings/101209/Tone-in-Twenty_8-K/ex101.txt
The debt dates back to a Sponsorship Agreement from November 2009.
Thanks Jason:
So at most it covers a one year period and was priced at half a million.
Why would the debt not carry over to Zuffa? Zuffa owned the WEC when they entered into the agreement with Muscle Pharm.
Muscle Pharm has been paying fighters with stock but not registered stock. The fighters have to wait to cash out.
Public companies can pledge stock to cover debt.
Thanks Jason: So at most it covers a one year period and was priced at half a million.