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EX-32.1 - SECTION 906 CERTIFICATION - Monster Arts Inc.ex321sec906.htm
EX-31.1 - SECTION 302 CERTIFICATION - Monster Arts Inc.ex311sec302.htm

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM 10-Q

_________________

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period 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 _____________

 

MONSTER OFFERS

(Exact name of registrant as specified in its charter)

 

Nevada 000-53266 26-1548306
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation or Organization) File Number) Identification No.)

4056 Valle Del Sol, Bonsall, CA 92003
Mail Delivery – P.O. Box 1092, Bonsall, CA 92003
(Address of Principal Executive Offices) (Zip Code)

(760) 208-4905
(Registrant’s telephone number, including area code)

N/A
(Former name or former address and former fiscal year, if changed since last report)

_________________

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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), 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 [X]     No  [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer  o Accelerated filer  o Non-accelerated filer  o Smaller reporting company  [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  o     No  [X]

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section S 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes  o     No  [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 21, 2011, the registrant’s outstanding common stock consisted of 64,662,084 shares, $0.001 par value. Authorized – 75,000,000 shares.

 
 

 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements   3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   18
Item 3. Quantitative and Qualitative Disclosures About Market Risk   24
Item 4. Controls and Procedures   25

PART II — OTHER INFORMATION

Item 1. Legal Proceedings   28
Item 1A. Risk Factors   28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   28
Item 3. Defaults Upon Senior Securities   28
Item 4. Submission of Matters to a Vote of Security Holders   28
Item 5. Other Information   28
Item 6. Exhibits   28

 

 

 

2

 

 
 

Monster Offers

(A Development Stage Company)

Balance Sheets

 

  September 30, December 31,
  2011 2010
  (Unaudited) (Audited)
ASSETS    
     
Current assets    
Cash  $                           7,133  $         36,531
Accounts receivable                             38,226               6,352
Unamortized financing fees – current portion 5,739 -
Prepaid stock compensation – current portion 14,330             51,667
Total current assets 65,428             94,550
     
Other assets    
Unamortized financing fees -               5,296
Prepaid stock compensation 15,525 -
Investment in Iconosys                           100,000                     -  
License, net of $24,565 accumulated amortization                           425,435                     -  
Total other assets 540,960               5,296
     
TOTAL ASSETS  $                       606,388  $         99,846
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)    
     
Current Liabilities    
Accounts payable  $                         66,550  $         10,800
Accrued interest                               7,968               1,831
Unearned revenue                             58,333                     -  
Convertible notes payable, net of unamortized discount    
of $37,131 and $44,363, respectively                           167,315             99,899
Total current liabilities                           300,166           112,530
     
Total liabilities                           300,166           112,530
     
Stockholders' equity (deficit)    
Common stock - $0.001 par value,     
75,000,000 shares authorized, 64,662,084    
and 60,288,707 shares issued and outstanding    
as of 9/30/2011 and 12/31/2010, respectively                             64,662             60,289
Additional paid-in capital                           828,868           469,032
Treasury stock 12,000,000 and 12,000,000 shares as of 9/30/11 and    
12/31/10, respectively                                    -                       -  
Common stock receivable                            (8,400)             (8,400)
Common stock payable                           486,311                     -  
Accumulated deficit during development stage                   (1,065,219)         (533,605)
Total stockholders' equity (deficit)                           306,222           (12,684)
     
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY (DEFICIT)  $                       606,388  $         99,846

 

The accompanying notes are an integral part of these financial statements.

 

3

 
 

Monster Offers

(A Development Stage Company)

Statements of Operations

(Unaudited)

 

          Inception
  For the three months ended For the nine months ended (February 23, 2007)
  September 30, September 30, to September 30,
  2011 2010 2011 2010 2011
           
REVENUES          
Commission revenue $        79,373 $               -    $    105,123 $           250 $               105,900
Commission revenue - related party -            500             2,572       3,102              328,819
License revenue         25,000                 -           41,667                -                    41,667
Services - related party              (233)           19,014                390           93,264                     73,591
Total revenues        104,140         19,514       149,752         96,616                  549,977
           
Cost of goods          
Commission paid - related party                  -                 -                    -                    -                   249,828
Total cost of goods                     -                    -                    -                    -                   249,828
           
Gross profit         104,140          19,514        149,752          96,616                   300,149
           
EXPENSES          
Advertising         4,930               200            9,079               200                    34,857
Amortization           11,250                  -            24,565                  -                       24,565
Audit fees            4,275                  -            21,605           1,750                     40,605
Expenses of spin-off                  -                    -                200                 -                       5,810
General and administrative          46,240          2,216     105,508        25,529                  273,776
Professional fees              (100)                 -            18,908           7,700               39,516
Officer compensation      33,400                 -      103,100                -                    163,100
Strategic alliance costs             3,582                  -          6,470                 -                    6,470
Consulting services           70,522        182,768       280,244        182,768                   690,862
Total operating expenses         174,100       185,184       569,679       217,947              1,279,561
           
Other income (expense)          
Interest expense          (6,258) -       (15,619) -                 (17,450)
Financing fees          (30,348) -    (96,655) -           (108,554)
Debt forgiveness                  -   -              587 -              6,197
Refund of expense                 -   -                -   -                    34,000
Total other income (expenses)         (36,606) -     (111,687) -           (85,807)
           
Net loss  $    (106,565)  $  (165,670)  $  (531,614)  $  (121,331)  $        (1,065,219)
           

Net loss per common share - basic

and diluted

  $         (0.00)  $        (0.01) $        (0.01) $        (0.00)  
           
Weighted average number of common           
shares outstanding - basic    63,586,795  31,932,527   61,959,936   32,283,529  

 

The accompanying notes are an integral part of these financial statements.

 

4

 

 

 

 

 

(A Development Stage Company)

Statements of Cash Flows

(Unaudited)

 

      Inception
  For the nine months ended (February 23, 2007)
  September 30, September 30,
  2011 2010 2011
       
OPERATING ACTIVITIES      
Net loss         (531,614)         (121,331)                 (1,065,219)
Adjustments to reconcile net loss       
to net cash used by operating activities:      
License revenue – non - cash           (41,667)                    -                        (41,667)
Forgiveness of debt                (587)                    -                             (587)
Financing fees            95,811                    -                       107,710
Common shares issued for services          169,280          182,768 631,716
Strategic alliance costs              6,470                    -                           6,470
Amortization            24,565                    -                         24,565
Changes in operating assets and liabilities:                                   -  
Decrease in prepaid stock compensation            51,667                    -                        -  
Increase in accounts receivable           (31,874)           (63,559)                      (38,226)
Increase in unamortized financing fees             (1,010)                    -                          (6,306)
Increase (decrease) in accounts payable             52,397              1,775                       63,197
Increase in accrued interest            13,619                    -                         15,450
       
Net cash used by operating activities         (192,943)                (347)                    (302,897)
       
FINANCING ACTIVITIES      
Proceeds from convertible notes payable          152,500                    -                       240,500
Proceeds from issuance of common stock            11,045                 150                       68,545
Contributed capital                    -                      -                              985
       
Net cash provided by financing activities        163,545                 150 310,030
       
NET CHANGE IN CASH           (29,398)                (197)                         7,133
       
CASH AND CASH EQUIVALENTS -       
BEGINNING OF PERIOD            36,531            18,190                               -  
       
CASH AND CASH EQUIVALENTS -       
END OF PERIOD  $          7,133  $        17,993  $                     7,133
       
SUPPLEMENTAL DISCLOSURES:      
Interest paid  $                -    $                -    $                           -  
Income taxes paid  $                -    $                -    $                           -  
Non-cash investing and financing activities:      
Non – cash intangible asset  $                 - $           8,000 $                            -
Stock issued for purchase of license  $      450,000  $                  -  $                 450,000
Stock issued for conversion of notes payable  $      187,223  $                -    $                 187,223
Investment in Iconosys $      100,000 - $                 100,000
Increase in prepaid stock compensation  $      156,000  $                -    $                 243,492

 

 

The accompanying notes are an integral part of these financial statements.

5

 

 

 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

NOTE 1 - FINANCIAL STATEMENTS

 

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2011 and for all periods presented have been made.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2010 audited financial statements. The results of operations for the nine months ended September 30, 2011 are not necessarily indicative of the operating results expected for the full year.

 

NOTE 2 - GOING CONCERN

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Since inception (February 23, 2007) through September 30, 2011, the Company recognized an accumulated deficit during development stage of approximately ($1,065,219). The Company's ability to continue as a going concern is contingent upon its ability to achieve and maintain profitable operations, and the Company’s ability to raise additional capital as required.

 

Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used for further development of the Company's products and services, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes. While the Company is devoting its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

 

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting

These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

 

Cash and Cash Equivalents

The Company considers all short-term investments with a maturity of three months or less at the date of purchase to be cash equivalents. As of September 30, 2011 and December 31, 2010, there are no cash equivalents.

 

6

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Advertising

Advertising costs are expensed when incurred. The Company incurred advertising expenses of $4,930 and $200 for the three months ended September 30, 2011 and September 30, 2010, respectively. The Company incurred advertising expenses of $9,079 and $200 for the nine months ended September 30, 2011 and September 30, 2010, respectively. For the period since inception on February 23, 2007 through September 30, 2011, the Company has incurred advertising expenses of $34,857.

 

Revenue Recognition

In accordance with ASC 605 and SEC Staff Accounting Bulletin 104, fee revenue is recognized in the period that the Company's advertiser customer generates a sale or other agreed-upon action on the Company's affiliate marketing networks or as a result of the Company's services, provided that no significant Company obligations remain, collection of the resulting receivable is reasonably assured, and the fees are fixed or determinable. All transactional services revenues are recognized on a gross basis in accordance with the provisions of ASC Subtopic 605-45, due to the fact that the Company is the primary obligor, and bears all credit risk to its customer, and publisher expenses that are directly related to a revenue-generating event are recorded as a component of commission paid-related party.

 

Earnings per Share

Historical net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of securities or other contracts to issue common stock that were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity.

 

Accounts receivable

Accounts receivable are stated at the amount management expects to collect from balances outstanding at year end. Management provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance. As of September 30, 2011 and December 31, 2010, we have $38,226 and $6,352 in accounts receivable and no amounts charged to allowance for doubtful accounts.

 

Fair Value of Financial Instruments

The carrying amounts of the financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate fair value due to the short maturities of these financial instruments. The notes payable are also considered financial instruments whose carrying amounts approximate fair value.

 

7

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

Intangible assets

The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles – Goodwill and Other” to determine the method of amortization of its intangible assets. The Company’s intangible assets are capitalized at historical cost and are amortized over their useful lives. The Company amortizes its license of SSL5 intellectual property using the straight-line method over an estimated useful life of 10 years (see Note 7).

 

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

 

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non-employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

 

Income Taxes

The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements.

 

Recent Accounting Pronouncements

We have examined all recent accounting pronouncements and believe that none of them will have a material impact on the Company’s financial position, results of operations or cashflows.

 

NOTE 4 - STOCKHOLDERS' EQUITY (DEFICIT)

 

Common Stock

 

The Company is authorized to issue 75,000,000 shares of its $0.001 par value common stock.

 

 

 

8

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

On January 21, 2011, the Company issued 400,000 unregistered shares in exchange for public relations and communications consulting services in accordance with an agreement dated January 21, 2011. The shares were valued at a market value of $0.26 per share, totaling $104,000. The total value was allocated between consulting expense and prepaid consulting expense based on a prorated portion of services performed during the nine months ended September 30, 2011 and the remaining portion of the term of the agreement.

 

On January 21, 2011, the Company also issued 200,000 free-trading shares in exchange for consulting services in accordance with an agreement entered into on January 21, 2011. The shares were valued at a market value of $0.26 per share, totaling $52,000. The total value was allocated between consulting expense and prepaid consulting expense based on a prorated portion of services performed during the nine months ended September 30, 2011 and the remaining portion of the term of the agreement.

 

On February 7, 2011, the Company entered into an agreement for business strategy and planning, market analysis, and marketing consulting services. In accordance with the terms of the agreement, 50,000 unregistered restricted shares of common stock will be exchanged for the services provided by the consultant. The shares will be earned in proportion to the pro-rated amount of time of the services performed over the term of the agreement and, in accordance with ASC 505-50, will be revalued and expensed at each interim financial statement date. The pro-rated number of shares, totaling 19,286 shares, were valued at a market value of $0.04 per share as of September 30, 2011, totaling $486, and an expense was recognized. As of September 30, 2011the shares have not yet been issued and thus have been recorded as stock payable.

 

On March 14, 2011, the Company entered into a Strategic Alliance and Licensing agreement with SSL5. As part of the agreement, the Company agreed to issue 3,000,000 unregistered restricted shares as consideration for an exclusive license of SSL5 existing intellectual property. The transaction was valued at the market value of $0.15 per share for a total of $450,000, and recorded as stock payable. See Note 7 for further details of the agreement.

 

During the quarter ended June 30, 2011, the Company issued a total of 1,962,173 shares of common stock to Asher Enterprises for the conversion of two convertible notes payable. See Note 6 for further details of these conversions.

 

10

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

On May 6, 2011, the Company entered into a Strategic Alliance and License agreement with Iconosys, Inc. In accordance with the terms of the agreement, the Company agreed to issue 250,000 shares of common stock to Iconosys as part of consideration for services to be performed in conjunction with the alliance and license agreement. These shares were valued at the market value of $0.1433 per share for a total of $35,825, and recorded as stock payable. See Note 7 for further details of the agreement.

 

On July 8, 2011, the Company sold 185,198 shares of free-trading common stock for a total of $6,988 (of which $700 was recorded to reduce APIC for the $5,000 origination fee payable) to Auctus Private Equity Fund, LLC in accordance with the terms of the Drawdown Equity Financing Agreement entered into on December 29, 2010 (see Note 5).

 

On July 19, 2011, the Company sold 76,529 shares of free-trading common stock for a total of $2,680 (of which $500 was recorded to reduce APIC for the $5,000 origination fee payable) to Auctus Private Equity Fund, LLC in accordance with the terms of the Drawdown Equity Financing Agreement entered into on December 29, 2010 (see Note 5).

 

On July 28, 2011, the Company sold 27,500 shares of free-trading common stock for a total of $1,014 (of which $447 was recorded to reduce the $5,000 origination fee payable) to Auctus Private Equity Fund, LLC in accordance with the terms of the Drawdown Equity Financing Agreement entered into on December 29, 2010 (see Note 5).

 

On August 9, 2011, the Company issued 478,261 shares of common stock to Asher Enterprises for the conversion of $11,000 in principal of outstanding convertible notes payable. See Note 6 for further details of this conversion.

 

On August 19, 2011, the Company sold 103,545 shares of free-trading common stock for a total of $2,511 (of which $500 was recorded to reduce APIC for the $5,000 origination fee payable) to Auctus Private Equity Fund, LLC in accordance with the terms of the Drawdown Equity Financing Agreement entered into on December 29, 2010 (see Note 5).

 

On September 2, 2011, the Company issued 940,171 shares of common stock to Asher Enterprises for the conversion of $11,000 in principal of outstanding convertible notes payable. See Note 6 for further details of this conversion.

 

As of September 30, 2011 and December 31, 2010, the Company has 64,662,084 and 60,288,707 shares of its common stock issued and outstanding, respectively.

 

Stock Options

 

On March 14, 2011, as part of the Strategic Alliance and Licensing agreement mentioned above, the Company entered into a consulting agreement with SSL5, providing stock options and a seat on the Monster Offers board of directors to develop ongoing product strategy and development services. In accordance with the terms of the agreement, the consulting company is entitled to purchase a total of 2,000,000 unregistered restricted shares of the Company over the term of the agreement of two years. Upon the completion of each 6-month period, a total of 500,000 shares will become vested and available for purchase by the Consultant. The price of these shares will be at $0.001 per share, or par value. In the event that the Company is sold or merged with another company, all remaining unvested shares will become fully vested immediately prior to any such transaction.

 

11

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

As of September 13, 2011, 500,000 shares have fully vested in accordance with the agreement and were revalued at $12,192 using the Black-Scholes option pricing model based upon the following assumptions: term of 2 years, risk free interest rate of 0.21%, a dividend yield of 0% and a volatility rate of 183%.

 

A pro-rated portion of the unvested stock options for the service period from September 14 to September 30, 2011, totaling 41,667 shares, have been valued at $602 using the Black-Scholes option pricing model based upon the following assumptions: term of 2 years, risk free interest rate of 0.25%, a dividend yield of 0% and a volatility rate of 183%.

 

NOTE 5 - DRAWDOWN EQUITY FINANCING AGREEMENT

 

On December 29, 2010, the Company entered into a drawdown equity financing agreement and registration rights agreement (collectively the "Agreements") with Auctus Private Equity Fund, LLC ("Auctus"), the selling stockholder. In accordance with the Agreements, Auctus has committed, subject to certain conditions, to purchase up to $10 million of the Company's common stock over a term of up to two years. Although the Company is not mandated to sell shares under the Agreements, the Agreements give the Company the option to sell to Auctus shares of common stock at a per share purchase price equal to 97% of the lowest closing bid price during the five trading days following the Company's delivery of notice to Auctus (the "Notice"). At its option, the Company may set a floor price under which Auctus may not sell the shares which were the subject of the Notice. The floor shall be 75% of the average closing bid price of the stock over the preceding ten days prior to the Notice and can be waived at the discretion of the Company. The maximum amount of Common Stock that the Company can sell pursuant to any Notice is the greater of: (i) an amount of shares with an aggregate maximum purchase price of $500,000 or (ii) 200% of the average daily trading volume based on 20 days preceding the drawdown notice date.

 

Auctus is not required to purchase the shares, unless the shares which are subject to the Notice have been registered for resale and are freely tradable in accordance with the federal securities, including the Securities Act of 1933, as amended, laws and except for conditions outside of Auctus' control.

 

At the assumed offering price of $0.26 per share, we estimated that we would be able to receive up to $1,950,000 in gross proceeds, assuming the sale of the entire 7,500,000 shares registered hereunder pursuant to the Drawdown Equity Financing Agreement. We would be required to register 30,961,538 additional shares to obtain the balance of $10,000,000 under the Drawdown Equity Financing Agreement at the assumed offering price of $0.26. Management believes the Company will require $500,000 over the next six months through this Drawdown Equity Financing Agreement. There is uncertainty as to whether we will ever receive the full $10 million available under the equity line agreement. It is unlikely that we will be required to register more shares, unless management identifies a major acquisition or opportunity for the Company. As the Company currently has 64,662,084 shares issued and outstanding, with 75,000,000 shares of common stock authorized, the Company would need to authorize additional shares of its Common Stock should the Company obtain the entire $10,000,000.

 

 

12

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

The Company is obligated to file with the U.S. Securities and Exchange Commission (the "SEC") a registration statement on Form S-1, within 30 days from the date of the Agreements and to use all commercially reasonable efforts to have such registration statement declared effective by the SEC within 120 days of filing. The Company has agreed to pay Auctus an aggregate amount of $7,500 as an origination fee with respect to the transaction. This is a non-refundable origination fee equal to Two

Thousand Five Hundred ($2,500) Dollars which was paid upon execution of the Drawdown Equity Financing Facility term sheet and Five Thousand ($5,000) Dollars in cash which a portion will be taken out of each Drawdown.

 

During the three months ended September 30, 2011, there have been four individual sales of common stock in accordance with this agreement (see Note 4). The Company received a total of $11,045 for a total of 392,772 shares of free-trading common stock. In accordance with the agreement, these shares were issued at a discount equal to three percent of the lowest closing bid price during the five trading days following the Company's delivery of notice.

 

NOTE 6 - CONVERTIBLE NOTES PAYABLE

 

On November 9, 2010, the Company entered into an agreement with Asher Enterprises, Inc., a Delaware corporation, an accredited investor, whereby Asher Enterprises loaned the Company the aggregate principal amount of $53,000 together with any interest at the rate of eight percent (8%) per annum, until the maturity date of July 18, 2011. The original issue discount note, as described in ASC 480-55, may not be prepaid in whole or in part. If the Note is not paid in full with interest on the maturity date, the note holder has the right to convert this Note into restricted common shares of the Company. The conversion price shall equal the "Variable Conversion Price" (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower). The "Variable Conversion Price" shall mean 61% multiplied by the Market Price (representing a discount rate of 39%). "Market Price" means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending one Trading Day prior to the date the Conversion Notice is sent by the Holder to the Borrower via facsimile. On May 2, 2011, $15,000 of the principal balance was converted into 161,812 shares. On May 4, 2011, $12,000 of the principal balance was converted into 128,068 shares. On May 6, 2011 $12,000 of the principal balance was converted into 129,450 shares. On May 23, 2011, the remaining principal balance of $14,000 and $2,120 in interest was converted into 326,316 shares. As of September 30, 2011 this note was paid in full.

 

On December 1, 2010, an additional convertible note payable in the amount of $35,000 was entered into with Asher Enterprises with identical terms as the note entered into on November 9, 2010, the maturity date being August 29, 2011, with interest accruing at 8% per annum. If the Note is not paid in full with interest on the maturity date, the note holder has the same right to convert this Note into restricted common shares of the Company with the same discount as the note described above. The original issue discount note is for $35,000 and a discount of $12,432 remains as of March 31, 2011. For the quarter ended March 31, 2011 and year ended December 31, 2010, $7,459 and $2,486 had been amortized and expensed, respectively. On June 7, 2011, $15,000 of the principal balance was converted into 392,670 shares. On June 13, 2011, $10,000 of the principal balance was converted into 362,319 shares. On June 17, 2011, the remaining principal balance of $10,000 and $1,400 in interest was converted into 461,538 shares. As of September 30, 2011 this note was paid in full.

 

13

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

On January 27, 2011, a third convertible note payable in the amount of $30,000 was entered into with Asher Enterprises with identical terms as the note entered into on November 9, 2010, the maturity date being October 31, 2011, with interest accruing at 8% per annum. If the Note is not paid in full with interest on the maturity date, the note holder has the same right to convert this Note into restricted common shares of the Company with the same discount as the note described above. On August 9, 2011, $11,000 of the principal balance was converted into 478,261 shares. On September 2, 2011, an additional $11,000 of the principal balance was converted into 940,171 shares. The remaining principal of $8,000 and a discount of $575 remain as of September 30, 2011. For the nine months ended September 30, 2011, $18,605 has been amortized and expensed.

 

On April 25, 2011, a fourth convertible note payable in the amount of $40,000 was entered into with Asher Enterprises with identical terms as the note entered into on November 9, 2010, the maturity date being January 27, 2012, with interest accruing at 8% per annum. If the Note is not paid in full with interest on the maturity date, the note holder has the same right to convert this Note into restricted common shares of the Company with the same discount as the note described above. The original issue discount note is for $40,000 and a discount of $11,366 remains as of September 30, 2011. For the nine months ended September 30, 2011, $14,208 has been amortized and expensed.

 

On May 16, 2011, the Company entered into an agreement with Tangiers Investors, LP, a Delaware limited partnership, an accredited investor, whereby Tangiers Investors loaned the Company the aggregate principal amount of $50,000, less $500 for costs of the loan transaction and $4,000 fee to be paid to a third party, together with any interest at the rate of seven percent (7%) per annum, until the maturity date of May 7, 2012. The original issue discount note, as described in ASC 480-55, may not be prepaid in whole or in part. If the Note is not paid in full with interest on the maturity date, the note holder has the right to convert this Note into restricted common shares of the Company. The conversion price shall equal the "Variable Conversion Price" (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower). The "Variable Conversion Price" shall mean 75% multiplied by the Market Price (representing a discount rate of 25%). "Market Price" means the lowest trading price for the Common Stock during the seven (7) Trading Day period ending one Trading Day prior to the date the Conversion Notice is sent by the Holder to the Borrower via facsimile. The original issue discount note is for $50,000 and a discount of $10,417 remains as of September 30, 2011. For the nine months ended September 30, 2011, $6,250 has been amortized and expensed.

 

On June 1, 2011, a fifth convertible note payable in the amount of $32,500 was entered into with Asher Enterprises. The original issue discount note, as described in ASC 480-55, may not be prepaid in whole or in part. If the Note is not paid in full with interest on the maturity date, the note holder has the right to convert this Note into restricted common shares of the Company. The conversion price shall equal the "Variable Conversion Price" (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower). The "Variable Conversion Price" shall mean 55% multiplied by the Market Price (representing a discount rate of 45%). "Market Price" means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending one Trading Day prior to the date the Conversion Notice is sent by the Holder to the Borrower via facsimile. The original issue discount note is for $32,500 and a discount of $14,773 remains as of September 30, 2011. For the nine months ended September 30, 2011, $11,818 has been amortized and expensed

 

 

14

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

NOTE 7 – STRATEGIC ALLIANCE & LICENSING AGREEMENTS

 

SSL5

 

On March 14, 2011, Monster Offers (the "Company") entered into Strategic Alliance and Licensing Agreement with SSL5, a Nevada corporation. SSL5 has developed technology services pertaining to a mobile financial services platform, which provides secure person-to-person mobile money transfer services. Monster Offers and SSL5 formed a strategic alliance with respect to the integration, use and commercialization of Monster Offers and SSL5 Existing Intellectual Property to create new and derivative intellectual property to introduce to various markets. Monster Offers obtained a license of the Existing SSL5 Intellectual Property for the exclusive use of the strategic alliance. As consideration for this license, Monster Offers issued 3,000,000 of its unregistered restricted shares to SSL5. These shares were valued at the market rate of $0.15 per share, for a total of $450,000.The license is amortized using the straight-line method over an estimate economic life to the Company of 10 years. As of September 30, 2011, the license totaled $425,435, net of $24,565 of accumulated amortization. Amortization expense for the three and nine months ended September 30, 2011 and 2010 were $11,250 and $24,565, respectively.

 

Monster Offers and SSL5 plan to establish a new company as a 100% owned subsidiary of Monster Offers, in the State of Nevada, and to contribute the license of the Existing SSL5 Intellectual Property into the new subsidiary for its use and future development of new and derivative intellectual property. Any new and derivative intellectual property developed in conjunction with this Strategic Alliance and Licensing Agreement shall be owned exclusively by the new subsidiary. As of September 30, 2011, the subsidiary entity had not yet been established.

 

As further consideration, the Company entered into a consulting agreement with SSL5, providing stock options and a seat on the Monster Offers board of directors to develop ongoing product strategy and development services. In accordance with the terms of the agreement, the Consulting Company is entitled to purchase a total of 2,000,000 unregistered restricted shares of the Company over the term of the agreement of two years. Upon the completion of each 6-month period, a total of 500,000 shares will become vested and available for purchase by the Consultant. The price of these shares will be at $0.001 per share, or par value. In the event that the Company is sold or merged with another company, all remaining unvested shares will become fully vested immediately prior to any such transaction.

 

As of September 13, 2011, 500,000 shares have fully vested in accordance with the agreement and were revalued at $12,192 using the Black-Scholes option pricing model based upon the following assumptions: term of 2 years, risk free interest rate of 0.21%, a dividend yield of 0% and a volatility rate of 183%.

 

A pro-rated portion of the unvested stock options for the service period from September 14 to September 30, 2011, totaling 41,667 shares, have been valued at $602 using the Black-Scholes option pricing model based upon the following assumptions: term of 2 years, risk free interest rate of 0.25%, a dividend yield of 0% and a volatility rate of 183%.

 

15

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

Iconosys

 

On May 16, 2011, the Company entered into a Strategic Alliance and License Agreement with Iconosys, Inc., a California corporation. Iconosys has developed proprietary mobile applications and technology and is engaged in the business of mobile communication application design related services. Monster Offers and Iconosys formed a strategic alliance with respect to the integration, use and commercialization of Monster Offers and Iconosys Existing Intellectual Property to create new and derivative intellectual property to introduce to various markets.

 

Iconosys obtained a license of the Existing Monster Offers Tier 1 Zala Merchant license with the ability to promote and sign up Zala account holders and participate in a revenue sharing model with Monster Offers. As consideration for this license, Iconosys issued 1,000,000 of its unregistered restricted shares to Monster Offers. Since Iconosys is not a publicly-traded corporation, these shares were valued at a fair value based upon a fair value of similar shares sold under a private placement memorandum by Iconosys at rate of $0.10 per share, for a total of $100,000. The entire value of the shares was recognized as unearned license revenue and will be recognized over one year, the term of the license. For the three and nine months ended September 30, 2011 and 2010, the Company has recognized $25,000, $41,667, $0, and $0 in license revenue, respectively.

 

In accordance with the terms of the agreement, Iconosys will provide services to Monster Offers relating to its Deal Buzzer mobile application and to integrate the Monster Offers existing intellectual property into mobile applications it currently designs and produces. As consideration for the services performed by Iconosys, Monster Offers issued 250,000 shares of unregistered, restricted common stock, an initial cash payment of $500, and future payments as part of a revenue share participation portion of the agreement. The 250,000 shares issued to Iconosys were valued at the market value $0.1433 per share for a total of $35,825 in prepaid expenses that will be recognized over the term of the agreement, or approximately 30 months. For the three and nine months ended September 30, 2011, the Company recognized $3,582 and $6,470 in expenses, respectively.

 

The term of the strategic alliance and this agreement commenced on May 6, 2011 and will end on November 5, 2013, unless terminated earlier in accordance with the agreement.

 

 

NOTE 8 – CONSULTING AGREEMENT

 

On April 21, 2011, the Company entered into a consulting agreement for services related to raising funds for the Company. The terms of the agreement call for a percentage of monies received by contacts provided by the consultant in the following scale:

 

Up to $1 million raised 8.00%
$1,000,001 to $2 million 6.50%
$2,000,001 to $4 million 5.50%
$4,000,001 and above 4.50%

 

16

 
 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

As of September 30, 2011, the Company has received $50,000 in convertible notes payable from contacts gained from this agreement and has paid 8 percent of those monies received, in accordance with this agreement, to the consultant for a total of $4,000.

 

NOTE 9 – SIGNIFICANT SOURCE OF REVENUE

 

On June 14, 2011, the Company executed a Services Agreement with Gannett, Inc., a Delaware corporation. In accordance with the Agreement, Monster Offers will track the performance of mutually agreed upon third-party "deal of the day" sites ("DOTD") that serve users in the applicable Gannett Markets, and will create reports describing the performance of deals distributed on such DOTD sites

 

This Agreement commenced on July 1, 2011 with the first deliverable due on July 12, 2011 and, unless earlier terminated as set forth herein, will remain in effect until June 30, 2012. Following the Initial Term, this Agreement may be renewed upon mutual written agreement of the parties.

 

NOTE 10 - RELATED PARTY TRANSACTIONS

 

For the nine months ended September 30, 2011 and 2010, the Company received $2,962 and $96,366, respectively, from customers in which one of the Company's shareholders had ownership or was an affiliate, for work performed by subcontractors who are also related parties.

 

The Company does not lease or rent any property. Office services are provided without charge by a director. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.

 

On August 5, 2010, the Company entered into an Asset Exchange Agreement whereby an officer/director of the Company received 12,000,000 shares of restricted common stock in exchange for cash of $8,000 and a computer software program with no assigned value, called the Social Network Action Platform (SNAP).

 

On November 18, 2010, the Company received 12,000,000 shares of its common stock in exchange for its "Lead Generation Business Segment" in a transaction with the Company's former officer, Scott J. Gerardi. These shares have not been cancelled and are included in the total issued and outstanding shares.

 

On November 18, 2010, an officer/director of the Company contributed a software program to the Company that was developed for use by DrHealthSHares.com, a Web 3.0 social commerce solution for health and wellness that empowers like-minded collaborators to harness the collective knowledge and experience of the social crowd to improve the depth, breadth, and value of health information. The Company placed a nominal value on the software.

 

 

17

 
 

Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Information

 

The Company from time to time may make written or oral "forward-looking statements" including statements contained in this report and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation

Reform Act of 1995.

 

These forward-looking statements include statements of the Company's plans, objectives, expectations, estimates and intentions, which are subject to change based on various important factors (some of which are beyond the Company's control). The following factors, in addition to others not listed, could cause the Company's actual results to differ materially from those expressed in forward looking statements: the strength of the domestic and local economies in which the Company conducts operations, the impact of current uncertainties in global economic conditions and the ongoing financial crisis affecting the domestic and foreign banking system and financial markets, including the impact on the Company's suppliers and customers, changes in client needs and consumer spending habits, the impact of competition and technological change on the Company, the Company's ability to manage its growth effectively, including its ability to successfully integrate any business which it might acquire, and currency fluctuations. All forward-looking statements in this report are based upon information available to the Company on the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except

as required by law.

 

Critical Accounting Policies

 

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our Annual report on Form 10-K for the fiscal year ended December 31, 2010.

 

Results of Operations

 

Overview of Current Operations

 

Monster Offers ("the Company") was incorporated in the State of Nevada on February 23, 2007, under the name Tropical PC Acquisition Company. On December 11, 2007, the Company amended its Articles of Incorporation changing its name to Monster Offers. The Company was originally incorporated as a wholly owned subsidiary of Tropical PC, Inc., a Nevada corporation. Tropical PC was incorporated September 22, 2004. On December 11, 2007, the Company amended its Articles of Incorporation changing its name from Tropical PC Acquisition Corporation to Monster Offers.

 

 

 

18

 
 

Our Business

 

Monster Offers is a daily deal aggregator, collecting daily deals from multiple sites in local communities across the U.S. and Canada. Focused on providing innovation and utility for Daily Deal consumers and providers, the company collects and publishes thousands of daily deals and allows consumers to organize these deals by geography or product categories, or to personalize the results using keyword search.

 

We utilize proprietary technology that we have developed, acquired, and/or licensed to deploy our products and services.

 

Our primary services include the aggregation and promotion of Daily Deals to consumers via our primary website; www.monsteroffers.com which provides search capabilities for users to quickly find Daily Deals based on filtering algorithms, zip code, predictive text search by city, and by user preferences.

 

The Company earns fees from data reporting services, traffic generation, and from our affiliate partners via marketing services including the online promotion of its affiliate partners daily deals through its website www.monsteroffers.com, selling of industry data and analysis reports, and executing internet and social marketing campaigns for customers. Our affiliate program partners are also offered search result placement and other benefits including the ability to participate in early release or beta programs for new innovations that the Company offers.

 

Current and potential customers include media and content publishers, advertisers, direct marketers, and advertising agencies seeking to increase brand impressions, sales, and customer contact through online marketing initiatives. Our customers also utilize our products and services to analyze the competitive landscape within their target markets. All transactional services revenues are recognized on a gross basis.

 

 

Marketing Strategy

 

The Monster Offers website generates page views from consumers searching the Internet for Daily Deals and other relevant information. As users search through the various deals that are presented via the website, they click on specific partner deals for additional information and are directed to our partner websites whereby they can purchase an advertised deal or offer directly. In these instances, the information about the user and the Monster Offers referral to a partner website is tracked and the affiliate partner then pays Monster Offers a fee, typically a percentage of the total transaction that occurs on the partner website. Monster Offers also earns fees from other content providers and advertisers based on the volume of traffic the Monster Offers site generates and the number of times content is displayed to potential consumers.

 

Monster Offers has also recently entered the mobile money payment market via a strategic alliance and exclusive license to technology developed by SSL5. Monster Offers plans to add significant ease-of-use functionality for the consumer to its website and to expand its affiliate partner network further leveraging this new technology in 2011.

 

19

 
 

Email Marketing

 

Websites that we own or are digitally produced for clients are promoted by the engagement of opt-in email marketing companies. In other words, opt-in emails are sent to users who have requested to receive marketing messages from a particular email partner/website. These partners currently market to multiple consumer and/or business databases that they own or are managed by them under a list management agreement.

 

 

Search Engine Marketing

 

We utilize search engine marketing companies to direct consumers to websites. Funds are placed in an open account with each provider and are spent on a Cost-Per-Click auction basis. Google, Yahoo, and FaceBook are the primary providers of this service.

 

 

Affiliate Marketing

 

We engage affiliate network destinations where online affiliates can promote various client offers and promotions through Daily Deal applications. These traffic publishers choose, manage, and execute marketing cost per action client campaigns. They are also provided with real-time commission tracking.

 

 

Software Development

 

We utilize the services of outsourced contractors for the development of our software technology. We also utilize the services of technology consultants to assist in the development of our strategic product development roadmap, and the ongoing management of all software development outsourced contractors. As the Company continues to grow, we may hire direct employees to fill various technology management, development, testing and quality control roles as needed.

 

 

Competition

 

The Daily Deal advertising and marketing industry is highly competitive. Management believes that the ability to provide innovative consumer and business solutions that fulfill unmet industry needs is a competitive advantage.

 

 

 

20

 
 

A number of companies are active in specific aspects of our business. As a Daily Deal provider, Monster Offers would face competition from a growing list of other Daily Deal providers including Groupon, Living Social, Travelzoo, and literally hundreds of smaller start-up companies who continue to emerge in the Daily Deal market. These companies all aim to offer online "Daily Deals" directly to the consumer. Rather than compete with all of these companies, the Monster Offers business model is to "aggregate" the Daily Deals that are offered by these companies into a single website making it easier and more convenient for the consumer to search and purchase the deals that they seek.

 

As a Daily Deal aggregator, Monster Offers does face a growing number of other companies with a similar aggregation model including Yipit, thedealmap, 8coupons, and others. Monster Offers plans to leverage its latest innovations in mobile banking and money sharing technology with prospective competitors to turn competitors into partners, therefore reducing any substantial direct competition in the Daily Deal industry.

 

 

Results of Operations for the quarters ended September 30, 2011 and 2010

 

Revenues

 

During the three month period ended September 30, 2011, the Company generated $104,140 in revenues as compared to $19,514 for the same period last year. During the nine months ended September 30, 2011, the Company generated $149,752 in revenues as compared to $96,616 for the same period last year. Management does not expect to receive any significant related party revenues through the end of its fiscal year. There can be no assurances that the Company can be profitable or that the Company will not incur operating losses in the future.

 

For the three months ending September 30, 2011, the Company experienced general and administrative expenses of $46,240 as compared to general and administrative expenses of $2,216 for the same period last year. For the three months ending September 30, 2011, the Company expensed advertising fees of $4,930 as compared to $200 in advertising fees for the same period last year. For the three months ending September 30, 2011, the Company expensed consulting compensation of $70,522 as compared to $182,768 in consulting compensation for the same period last year. Total operating expenses for the quarter ending September 30, 2011 were $174,100 versus $185,184 for the same period last year. Total operating expenses for the nine months ended September 30, 2011 were $569,679 as compared to $217,947 for the nine months ended September 30, 2010.

 

For the three months ended September 30, 2011, the Company had $(106,565) in net losses as compared to a net loss of $(165,670) for the same period last year. For the nine months ended September 30, 2011, the Company had $(531,614) in net losses as compared to a net loss of $(121,331) for the nine months ended September 30, 2010.

 

Since the Company's inception, on February 23, 2007, the Company had a net loss of $(1,065,219).

 

 

21

 
 

Plan of Operation

 

Management does not believe that the Company will be able to generate any significant profit during the coming year. Management believes that general and administrative costs as well as building its infrastructure will most likely curtail any significant profits.

 

Notwithstanding, the Company anticipates it will continue to generate losses and therefore it may be unable to continue operations in the future. Originally, management anticipated a need to raise $475,000 to fully implement its business plan. After careful consideration and a detailed analysis by new management, the Company now expects it will need to raise $5,000,000 to forward its business plan, and Monster Offers would have to issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to Monster Offers, especially with the current economic environment. We recently entered into a Drawdown agreement with Auctus Private Equity Fund, LLC Pursuant to the Drawdown Agreement, which has a total drawdown amount of ten million dollars ($10,000,000). Monster Offers has the right to sell to Auctus at its sole discretion and Auctus has the obligation to purchase through advances to the Company, the Company's common stock through Draw-Down Notices issued by the Company. The number of shares of common stock that Auctus shall purchase shall be determined by dividing the dollar amount raised which may or may not equal the entire amount of the advance by the purchase price. As the Company currently has 64,662,084 shares issued and outstanding, with 75,000,000 shares of common stock authorized, the Company would need to authorize additional shares of its Common Stock should the Company obtain the entire $10,000,000.

 

Based on current cash on hand of $7,133 as of September 30, 2011, current assets of $65,428 and $300,166 in current liabilities, management is concerned that Monster Offers may not have sufficient funds to meet its financial obligations for the next twelve months. Management believes it has sufficient cash reserves to keep the Company operational through the fourth quarter. Management will need to obtain outside funding to keep the Company operational beyond the third quarter. There are no assurances that management will be able to secure outside funding. Management anticipates that the Company will need to spend a minimum of $15,000 over the next twelve months to pay for audit and legal fees to keep the company fully reporting. Failure to secure additional funding can result in the company being fully reporting, but not operational. The Company will require additional funds to build its business infrastructure. In the event the Company requires additional funds, the Company will have to seek loans or equity placements to cover such cash needs. There are no assurances additional capital will be available to the Company on acceptable terms.

 

If the Company falls short of capital to keep the Company fully reporting, our sole officer/director has agreed to donate funds to the operations of the Company, in order to keep it fully reporting for the next twelve (12) months, without seeking reimbursement for funds donated. No agreement exists that our sole officer/director will continue to donate funds to the operations of the Company for the next twelve months; therefore, there is no guarantee that he will continue to do so in the future.

 

 

 

22

 
 

Going Concern

 

Going Concern - The Company has recognized an accumulated deficit since inception (February 23, 2007) through September 30, 2011 of $(1,065,219). Although the Company has recognized total revenues of $549,977 with gross profits of $300,149, since inception (February 23, 2007) through September 30, 2011, the Company's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. The financial statements have been prepared assuming the Company will continue to operate as a going concern which contemplates the realization of assets and the settlement of liabilities in the normal course of business. No adjustment has been made to the recorded amount of assets or the recorded amount or classification of liabilities which would be required if the Company were unable to continue its operations. (See Financial Footnote 2)

 

Summary of any product research and development that we will perform for the term of our plan of operation.

 

We do not anticipate performing any additional significant product research and development under our current plan of operation.

 

 

Expected purchase or sale of plant and significant equipment

 

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

 

 

Significant changes in the number of employees

 

As of September 30, 2011, we did not have any employees. We are dependent upon our sole officer and director for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable

at this time.

 

 

Liquidity and Capital Resources

 

The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. These limitations have adversely affected the Company's ability to obtain certain projects and pursue additional business. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. In order for the Company to remain a Going Concern it will need to find additional capital. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all.

 

 

23

 
 

As of September 30, 2011, our current assets were $65,428 and our current liabilities were $300,166. As of September 30, 2011, our total assets were $606,388 compared to total assets of $99,846 as of December 31, 2010. Total assets as of September 30, 2011 consisted of $7,133 in cash, $38,226 in accounts receivable, prepaid expense of $14,330, $5,739 in unamortized financing fees and $425,435 in license ownership and $100,000 in an investment. As of September 30, 2011, our current and total liabilities were $300,166 compared to total liabilities of $112,530 as of December 31, 2010. Our liabilities consisted of $66,550 in accounts payable, $7,968 in accrued interest, $58,333 in unearned revenue and $167,315 in convertible notes payable.

 

Stockholders' equity (deficit) increased from $(12,684) as of December 31, 2010 to $306,222 as of September 30, 2011.

 

We have not generated positive cash flows from operating activities. For the nine months ended September 30, 2011, net cash flow used in operating activities was $(192,943) compared to net cash flow used in operating activities of $(347) for the nine months ended September 30, 2010.

 

During the nine month periods ended September 30, 2011 and September 30, 2010, net cash flow provided from financing activities was $163,545 and $150, respectively.

 

The Company has no employment agreements in place with its officers, nor does the Company owe its officers any accrued compensation, as the Officers agreed to work for the company at no cost, until the company can become profitable on a consistent Quarter-to-Quarter basis.

 

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

 

Critical Accounting Policies and Estimates

 

Revenue Recognition: We recognize revenue from product sales and service agreements once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonably assured.

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not applicable.

 

 

 

24

 
 

Item 4T. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

 

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, who is also the sole member of our Board of Directors, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective because of the "material weaknesses" described below under "Management's report on internal control over financial reporting," which are in the process of being remediated as described below under "Management Plan to Remediate Material Weaknesses."

 

 

Management's Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that:

 

  • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 

  • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and

 

  • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements

 

 

 

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Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2011. In making its assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on its assessment, management has concluded that we had certain control deficiencies described below that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not effective as of September 30, 2011.

 

A "material weakness" is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis by the company's internal controls. As a result of management's review of the investigation issues and results, and other internal reviews and evaluations that were completed after the end of quarter related to the preparation of management's report on internal controls over financial reporting required for this quarterly report on Form 10-Q, management concluded that we had material weaknesses in our control environment and financial reporting process consisting of the following:

 

1)      lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

 

2)      inadequate segregation of duties consistent with control objectives; and

 

3)      ineffective controls over period end financial disclosure and reporting processes.

 

We do not believe the material weaknesses described above caused any meaningful or significant misreporting of our financial condition and results of operations for the quarter ended September 30, 2011. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

 

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Management Plan to Remediate Material Weaknesses

 

Management is pursuing the implementation of corrective measures to address the material weaknesses described below. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

 

We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

 

We believe the remediation measures described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

 

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

This quarterly report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only the management's report in this quarterly report.

 

 

 

 

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PART II. OTHER INFORMATION

 

Item 1 - Legal Proceedings

 

From time to time, we 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 our business.

 

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

 

Item 1A - Risk Factors

 

See Risk Factors set forth in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and the discussion in Item 1, above, under "Liquidity and Capital Resources."

 

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3 - Defaults Upon Senior Securities

 

None.

 

Item 4 - Submission of Matters to a Vote of Security Holders

 

None.

 

Item 5 - Other Information

 

None.

 

Item 6 - Exhibits

 

(a) Pursuant to Rule 601 of Regulation S-B, the following exhibits are included herein or incorporated by reference.

 

Exhibit Number Description
31.1 Section 302 Certification - Chief Executive Officer
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:  November 21, 2011

  Monster Offers
  By:  /s/ Paul Gain
  Paul Gain
Director and CEO (principal executive, financial and accounting officer)

 

 

 

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