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EX-31.1 - SECTION 302 CERTIFICATION - Monster Arts Inc.ex311sec302.htm
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EX-10.16 - ADDENDUM TO ADMINISTRATIVE CONSULTANT AGREEMENT - Monster Arts Inc.ex1016addendum.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Amendment No. 3 to

FORM 10-Q/A

(Mark one)
   
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2012

OR

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________to

 
Commission File Number: 0-53266
 

MONSTER OFFERS

(Exact name of registrant as specified in its charter)

Nevada   27-1548306
(State or Other Jurisdiction   (I.R.S. Employer
of Incorporation or Organization)   Identification No.)

 

P.O. Box 1092, Bonsall, CA 92003   92003
(Address of principal executive offices)   (Zip Code)

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

 

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 6, 2012, the registrant’s outstanding common stock consisted of 3,233,558 shares, $0.001 par value. Authorized – 75,000,000 shares.

 
 

 

Explanatory Note

 

This Amendment No. 3 on Form 10-Q/A amends the Monster Offers (“the Company” or “Registrant”) Quarterly Report on Amendment No. 2 to Form 10-Q/A for the quarter ended June 30, 2012, filed with the U. S. Securities and Exchange Commission (“Commission”) on November 8, 2012 (the “Amended Filing”). We are filing this Amendment for the sole purpose to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the condensed financial statements and related notes from the Form 10-Q/A formatted in XBRL (eXtensible Business Reporting Language). When the Amended Filing was made, along with subsequent amendments, we erroneously neglected to include this data in the EDGAR filing.

 

There have been no changes from the Amended Filing other than as herein. This Amendment No. 3 does not modify or update in any way the other disclosures made in the Amended Filing.

 

Table of Contents

Monster Offers

Index to Form 10-Q/A

For the Quarterly Period Ended June 30, 2012

PART I Financial Information 3
     
ITEM 1. Financial Statements (Unaudited) 3
  Balance Sheets 3
  Statements of Operations 4
  Statements of Cash Flows 5
  Notes to the Financial Statements 6
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16
     
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 22
     
ITEM 4T. Controls and Procedures 22
     
PART II Other Information 26
     
ITEM 1. Legal Proceedings 26
     
ITEM 1A. Risk Factors 26
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
     
ITEM 3 Defaults Upon Senior Securities 27
     
ITEM 4 Submission of Matters to a Vote of Security Holders 27
     
ITEM 5 Other Information 27
     
ITEM 6 Exhibits 28
     
  SIGNATURES 29
     

 

 

 

2

 

 
 

 

Monster Offers

(A Development Stage Company)

Balance Sheets

(Unaudited)

 

      June 30,   December 31,
      2012   2011
ASSETS          
           
Current assets          
Cash    $                               260  $                            3,817
Accounts receivable                               5,673                             9,423
Prepaid expense                           257,419                           26,272
Total current assets                           263,352                           39,512
           
Other assets          
Unamortized financing fees                                    -                               2,421
Investment in Iconosys                           100,000                         100,000
Total other assets                           100,000                         102,421
           
TOTAL ASSETS    $                        363,352  $                        141,933
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
           
Current liabilities          
Accounts payable    $                          45,978  $                          58,229
Accrued interest                               5,041                             9,341
Bank overdraft                                  497                                  -  
Unearned revenue                                    -                             33,333
Notes payable                              13,250                                  -  
Convertible notes payable, net of unamortized discount of $0 and $15,001, respectively                             61,667                         176,330
Total current liabilities                           126,433                         277,233
           
Total liabilities                           126,433                         277,233
           
Stockholders' equity (deficit)          
Common stock - $0.001 par value,           
75,000,000 shares authorized, 3,133,556          
and 220,568 shares issued and outstanding          
as of 6/30/2012 and 12/31/2011, respectively                               3,134                                221
Additional paid-in capital                        4,152,219                         910,385
Common stock payable                           455,750                         486,575
Accumulated deficit during development stage                      (4,374,184)                    (1,532,481)
Total stockholders' equity (deficit)                           236,919                       (135,300)
           
TOTAL LIABILITESLIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)    $                        363,352  $                        141,933
           

 

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 six months ended   (February 23, 2007)
  June 30, June 30,   June 30,
  2012 2011 2012 2011   2012
                     
REVENUES                    
Commission revenue  $             14,000  $          17,750  $          30,500  $          25,750  $                      187,885
Commission revenue - related party                     -                  572                   -               2,572                       326,247
License revenue                8,333           16,667           33,333           16,667                       100,000
Services                3,585                   -               8,585                   -                             8,585
Services - related party                     -                     -                     -                  623                         73,201
Total revenues              25,918           34,989           72,418           45,612                       695,918
                                                  -  
Cost of goods                                                 -  
Commission paid - related party                     -                     -                     -                     -                         249,828
Total cost of goods                     -                     -                     -                     -                         249,828
                                                  -  
Gross profit              25,918           34,989           72,418           45,612                       446,090
                                                  -  
EXPENSES                                                 -  
Advertising                     -               2,614                   -               4,149                         35,901
Bad debt expense                     -                     -               1,250                   -                             1,250
Amortization                     -             13,315                   -             13,315                         24,565
Audit fees              10,950             3,500           15,450           17,330                         62,924
Expenses of spinoff                     -                     -                     -                  200                           5,810
General and administrative            154,882           24,637         162,272           59,268                       444,084
Professional fees                   855             7,638                855           19,008                         25,578
Officer compensation                9,106           34,200           19,656           69,700                       223,856
Strategic alliance costs                3,582             2,888             7,165             2,888                         17,218
Impairment loss                     -                     -                     -                     -                         425,435
Consulting services            104,687         112,405         113,870         209,722                       849,048
Total operating expenses            284,062         201,197         320,518         395,580                    2,115,669
                                                  -  
Other Income (expenses)                                                 -  
Interest expense            (57,209)            (5,819)         (62,590)            (9,361)                        (81,881)
Financing fees              (2,084)          (43,291)         (16,148)          (66,307)                      (148,315)
Gain/(Loss) on Debt forgiveness       (2,514,865)                587    (2,514,865)                587                   (2,508,409)
Refund of expense                     -                     -                     -                     -                           34,000
Total other expenses       (2,574,158)          (48,523)    (2,593,603)          (75,081)                   (2,704,605)
                                                  -  
Net loss  $      (2,832,302)  $       (214,731)  $   (2,841,703)  $       (425,049)  $                  (4,374,184)
                     
Net loss per share - basic   $               (1.28)  $             (0.00)  $            (2.34)  $             (0.01)    
                     
Weighted average number of common                     
shares outstanding - basic         2,210,006    61,528,233      1,213,805    61,137,090    

 

 

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

 

4

 

 
 

 

Monster Offers

(A Development Stage Company)

Statements of Cash Flows

(Unaudited)

 

              Inception
    For the six months ended   (February 23, 2007)
    June 30,    June 30,
    2012 2011   2012
               
OPERATING ACTIVITIES              
Net loss    $   (2,841,703)  $   (425,049)  $                  (4,374,184)
Adjustments to reconcile net income (loss)                                            -  
to net cash used by operating activities:                                           -  
Impairment loss                     -                  -                         425,435
Non-cash compensation         (231,147)                -                        (222,747)
License revenue - non cash                     -        (16,667)                        (66,667)
(Gain) loss on settlement of debt        2,514,865           (587)                    2,514,019
Financing fees             15,000        66,307                       144,839
Bad Debt               1,250                -                             1,250
Common shares issued for services           481,381      168,226                    1,114,868
Strategic alliance costs                     -            2,888                         10,053
Unearned revenue           (33,333)                -                          (33,333)
Amortization               2,421        13,315                         26,986
Changes in operating assets and liabilities:              
Decrease in prepaid stock compensation                     -          25,667                                 -  
Increase in prepaid                     -          (5,000)                                 -  
Decrease (increase) in accounts receivable               2,500        (4,044)                             (571)
(Increase) decrease in unamortized financing fees                     -          (5,204)                          (9,340)
Increase (decrease) in accounts payable               8,872        13,279                         63,749
Increase in accrued interest             62,590          9,362                         82,126
Net cash used by operating activities           (17,304)    (157,507)                      (323,517)
               
FINANCING ACTIVITIES              
   Bank overdraft                  497                -                                497
   Advances from related party             13,250                -                           13,250
Proceeds from convertible notes payable                     -        152,500                       240,500
Proceeds from issuance of common  stock               5,000                -                           73,545
Payment on convertible notes             (5,000)                -                           (5,000)
Contributed capital                     -                  -                                985
Net cash provided by financing activities             13,747      152,500                       323,777
                                            -  
NET CHANGE IN CASH             (3,557)        (5,007)                              260
                                            -  
CASH AND CASH EQUIVALENTS -                                            -  
BEGINNING OF PERIOD               3,817        36,531                                 -  
                                            -  
CASH AND CASH EQUIVALENTS -                                            -  
END OF PERIOD    $               260  $       31,524  $                             260
               
SUPPLEMENTAL DISCLOSURES:              
Interest paid   $                 -   $              -   $  
Income taxes paid   $                 -   $              -   $  
Non-cash investing and financing activities:              
Stock issued for purchase of license   $                 -   $    450,000 $  450,000
Stock issued for conversion of notes payable   $         32,541 $    151,157 $  260,499
Shares issued to settle notes payable   $ 185,135 $ - $ 185,135
Investment in Iconosys   $                 -   $    100,000 $  100,000
Stock issued to settle stock payable to Iconosys   $ 35,825 $ - $ 35,825
Increase in prepaid stock compensation   $       257,419   $  156,000 $  257,419

 

 

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 June 30, 2012 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, 2011 audited financial statements. The results of operations for the six months ended June 30, 2012 are not necessarily indicative of the operating results 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 June 30, 2012, the Company recognized an accumulated deficit during development stage of $4,374,184. 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, and also plans to pursue acquisition opportunities of other revenue-generating companies that provide complementary capabilities to that 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.

 

 

 

6

 
 

 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

 

Year-end

The Company’s fiscal year-end is December 31.

 

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 June 30, 2012 and December 31, 2011, there were no cash equivalents.

 

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.

 

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 other 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.

 

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.

 

 

7

 
 

 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

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 June 30, 2012 and December 31, 2011, we have $5,673 and $9,423, respectively.

 

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 values.

 

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.

 

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 11).

 

 

Income Taxes

The Company accounts for its income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

Recent Accounting Pronouncements

We have examined all recent accounting pronouncements and believe that none of them will have a material impact on the financial statements of our company.

 

8

 
 

 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

NOTE 4 - STOCKHOLDERS' (DEFICIT)

 

Common Stock

 

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

 

On February 14, 2012, the Company issued 10,753 shares of common stock to Asher Enterprises for the conversion of $10,000 in principal of outstanding convertible notes payable. See Note 6 for further details of these conversions.

 

On February 23, 2012, the Company issued 834 shares of common stock to Iconosys to satisfy $35,825 of stock payable as part of the license agreement entered into on May 16, 2011. See Note 7.

 

On March 13, 2012, the Company issued 10,186 shares of common stock to Asher Enterprises for the conversion of $5,500 in principal of outstanding convertible notes payable. See Note 6 for further details of these conversions.

 

On April 17, 2012, the Company issued 11,217 shares of common stock to Asher Enterprises for the conversion of $1,300 in principal of outstanding convertible notes payable and $831 in accreted discount. See Note 6 for further details of these conversions.

 

During the second quarter, Asher Enterprises took actions that were not beneficial to the Company or its Shareholders. On April 26, 2012, the Company issued a total of 2,700,000 shares of common stock to two related-party investors in exchange for them paying off $73,500 in our convertible notes to Asher Enterprises and forgiving $21,121 in other advances the shareholders had made to the Company, a total liability of $94,621. Though these shares are unregistered and restricted, the SEC requires that they be valued as though they were not. Accordingly, these shares were valued at the fair value of $1 per share and we recognized a non-cash loss on settlement of debt associated with this stock issuance of $2,700,000 million. See note 7.

 

During the second quarter, the Company issued a total of 180,000 shares related to services rendered.

 

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 6,667 unregistered restricted shares of the Company over the term of the agreement of two years. Upon the completion of each six month period, a total of 1,667 shares will become vested and available for purchase by the Consultant. The price of these shares will be at $0.30 per share. 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.

 

 

9

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

As of September 13, 2011, 1,667 shares 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 1.5 years, risk free interest rate of 0.21%, a dividend yield of 0% and a volatility rate of 183%.

 

As of March 13, 2012, 1,667 shares fully vested in accordance with the agreement and were revalued at $2,241 using the Black-Scholes option pricing model based upon the following assumptions: term of 1 year, risk free interest rate of 0.20%, a dividend yield of 0% and a volatility rate of 220%.

 

A pro-rated portion of the unvested stock options for the service period from April 1, 2012 to June 30, 2012 have been valued at $800 using the Black-Scholes option pricing model based upon the following assumptions: term of .45 years, risk free interest rate of 0.19%, a dividend yield of 0% and a volatility rate of 429%.

 

During the quarter ending June 30, 2012, we also issued the following shares to consultants, in exchange for their services:

 

Shares                  Value/Share      Value attributed to Consulting Services

5,000                     $1.95                     $9,750

25,000                   $1.00                     $25,000

 

All shares are valued at the quoted value of our stock on the day of issue, based on our determination that the fair value of our stock is more reliably measurable than the value of the services we received.

 

In addition, we issued 11,217 shares in accordance with an existing conversion feature in certain notes payable.

 

Finally, we issued 150,000 shares to a consultant in the form of options that were immediately exercised (cashless), recording a $135,090 charge to expense.

 

At June 30, 2012, we had 3,133,556 common shares outstanding.

 

 

NOTE 5 - DRAWDOWN EQUITY FINANCING AGREEMENT

 

During the three months ended June 30, 2012 no additional sales have been made in accordance with this agreement.

 

 

 

10

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

NOTE 6 - CONVERTIBLE NOTES PAYABLE

 

On April 25, 2011, a fourth convertible note payable in the amount of $40,000 was entered into with Asher Enterprises, the maturity date being January 27, 2012, with interest accruing at 8% per annum. 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. 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 prior notes. On February 14, 2012, $10,000 of the principal balance was converted into 10,753 shares. On March 13, 2012, an additional $5,500 of the principal balance was converted into 10,186 shares. On April 17, 2012, $1,300 of the principal balance was converted into 11,217 shares. The remaining principal after this conversion was $23,200 and the discount had been fully amortized. See Note 7 for details on how all Asher convertible debt was disposed of during the three months ending June 30, 2012.

 

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. During the three months ended June 30, 2012, $5,000 in principal was paid to Tangiers Investors, reducing the principle balance to $45,000 at June 30, 2012, and we amortized the remaining discount of $2,083, leaving no unamortized discount at June 30, 2012.

 

 

11

 
 

 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

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 the discount has been fully amortized as of March 31, 2012. For the three months ended March 31, 2012, $5,909 of discount had been amortized and expensed. See Note 7 for details on how all Asher convertible debt was disposed of during the three months ending June 30, 2012.

 

 

NOTE 7 - ASHER ENTERPRISES CONVERTIBLE NOTE RETIREMENT

 

On March 13, 2012, the Company issued 10,186 shares of common stock to Asher Enterprises for the conversion of $5,500 in principal of outstanding convertible notes payable.

 

On April 17, 2012, the Company issued 11,217 shares of common stock to Asher Enterprises for the conversion of $1,300 in principal of outstanding convertible notes payable and $831 in accreted discount. See Note 6 for further details of these conversions.

 

During the second quarter, Asher Enterprises took actions that were not beneficial to the Company or its Shareholders. On April 26, 2012, the Company issued a total of 2,700,000 shares of common stock to two related-party investors in exchange for them paying off $73,500 in our convertible notes to Asher Enterprises and forgiving $21,121 in other advances the shareholders had made to the Company, a total liability of $94,621. Though these shares are unregistered and restricted, the SEC requires that they be valued as though they were not. Accordingly, these shares were valued at $1 per share and we recognized a non-cash loss on settlement of debt associated with this stock issuance of $2,700,000.

 

 

 

12

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

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%

 

As of June 30, 2012, 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 and ended on Oct 6, 2011. This agreement accounted for approximately 60% of the Company’s revenues at the time.

 

 

NOTE 10 - RELATED PARTY TRANSACTIONS

 

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.

 

 

13

 
 

 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

 

NOTE 11 – 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 10,000 of its unregistered restricted shares to SSL5. These shares were valued at the market rate of $45 per share, for a total of $450,000 and recorded as stock payable.

 

At year end, management performed an impairment analysis on the license asset and determined that impairment was due to the fact that as of December 31, 2011 the Company had not had significant forward-moving activity or use of the licensed intellectual property and could not reasonably predict the use of the license at year end. The Company does however still plan to pursue further development and marketing activities associated with this License. An impairment loss of $425,435 was recognized during the year ended December 31, 2011. The remaining book value of is $0 as of December 31, 2011. Amortization expense for the years ended December 31, 2011 and 2010 was $24,565 and $0, 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 June 30, 2012, 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 6,667 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 1,667 options will become vested and available for purchase by the Consultant. In the event that the Company is sold or merged with another company, all remaining unvested options will become fully vested immediately prior to any such transaction.

 

As of September 13, 2011, 1,667 options 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 1.5 years, risk free interest rate of 0.21%, a dividend yield of 0% and a volatility rate of 183%.

 

As of March 13, 2012, 1,667 options fully vested in accordance with the agreement and were revalued at $2,241 using the Black-Scholes option pricing model based upon the following assumptions: term of 1 year, risk free interest rate of 0.20%, a dividend yield of 0% and a volatility rate of 220%.

 

14

 
 

 

Monster Offers

(A Development Stage Company)

Notes to the Financial Statements

 

A pro-rated portion of the unvested stock options for the service period from March 14 to March 31, 2012, totaling 139 shares, have been valued at $119 using the Black-Scholes option pricing model based upon the following assumptions: term of .95 years, risk free interest rate of 0.19%, a dividend yield of 0% and a volatility rate of 229%.

 

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 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 3,333 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 $30 per share, for a total of $100,000. The shares of Iconosys common stock received were recorded as an investment in Iconosys on the balance sheet for $100,000. The investment is evaluated for indicators of impairment on an annual basis, in accordance with ASC 350-10 "Intangibles - Goodwill and Other".

 

The Company recognized a value in the intellectual property exchange with Iconosys. The fair value of the shares $100,000 was recognized as unearned license revenue and is being recognized over one year, the term of the license agreement. As of June 30, 2012, the Company had recognized $100,000 in license revenue.

 

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 834 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 834 shares issued to Iconosys were valued at the market value $43 per share for a total of $35,825 in prepaid expenses that will be recognized over the term of the agreement. For the three months ended March 31, 2012, the Company recognized $3,583 in strategic alliance expenses. On February 23, 2012, the Company issued the 834 shares from stock payable for a total of $35,825.

 

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 12 – SUBSEQUENT EVENTS

 

On September 7, 2012, the Company issued 100,000 shares to a consultant in the form of options that were immediately exercised (cashless). These shares were previously registered in an S-8 Registration Statement filed on May 30, 2012.

 

 

15

 
 

 

 

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, 2011.

 

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.

 

 

 

 

 

 

16

 
 

 

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 2012.

 

 

 

17

 
 

 

 

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.

 

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.

 

18

 
 

 

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 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.

 

Results of Operations for the quarters ended June 30, 2012 and 2011

 

Revenues

 

During the three month period ended June 30, 2012, the Company generated $25,918 in revenues as compared to $34,989 for the same period last year. During the six month period ended June 30, 2012, the Company generated $72,418 in revenues as compared to $45,612 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.

 

Our overall revenues were up over the previous year due to increased customer acct activities. However, the decrease in the second quarter was due to the added customer contracts only being short-term contracts. Another way of saying this is:

 

Short-term customer contracts accounted for an overall increase in revenue to date.

 

For the three months ending June 30, 2012, the Company experienced general and administrative expenses of $154,882 as compared to general and administrative expenses of $24,637 for the same period last year. For the three months ending June 30, 2012, the Company expensed advertising fees of $0 as compared to $2,614 in advertising fees for the same period last year. For the three months ending June 30, 2012, the Company expensed consulting compensation of $104,687 as compared to $112,405 in consulting compensation for the same period last year. For the three months ending June 30, 2012, the Company expensed audit fees of $10,950 as compared to $3,500 in audit fees for the same period last year. For the three months ending June 30, 2012, the Company expensed officer compensation of $9,106 as compared to $34,200 in officer compensation for the same period last year. Total operating expenses for the quarter ending June 30, 2012 were $284,062 versus $201,197 for the same period last year.

 

For the six months ending June 30, 2012, the Company experienced general and administrative expenses of $162,272 as compared to general and administrative expenses of $59,268 for the same period last year. For the six months ending June 30, 2012, the Company expensed consulting compensation of $113,870 as compared to $209,722 in consulting compensation for the same period last year. For the six months ending June 30, 2012, the Company expensed audit fees of $15,450 as compared to $17,330 in audit fees for the same period last year. For the six months ending June 30, 2012, the Company expensed officer compensation of $19,656 as compared to $69,700 in officer compensation for the same period last year. Total operating expenses for the six months ending June 30, 2012 were $320,518 versus $395,580 for the same period last year. Operating expenses decrease due to reductions in general and administrative fees and reduced outside consulting fees.

 

For the three months ended June 30, 2012, the Company had $(2,832,302) in net losses or $(1.28) per share as compared to a net loss of $(214,731) or $(0.00) for the same period last year. For the six months ended June 30, 2012, the Company had $(2,841,703) in net losses or $(2.34) per share as compared to a net loss of $(425,049) or $(0.01) for the same period last year.

 

Since the Company's inception, on February 23, 2007, the Company had a net loss of $(4,374,184).

 

19

 
 

 

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.

 

Based on current cash on hand of $260 as of June 30, 2012, current assets of $263,352 and $126,433 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 officers/directors have agreed to donate funds to the operations of the Company, in order to keep it fully reporting for the next twelve (12) months. No agreement exists that our officers/directors will continue to donate funds to the operations of the Company for the next twelve months; therefore, there is no guarantee that they will continue to do so in the future.

 

Going Concern

 

Going Concern - The Company has recognized an accumulated deficit since inception (February 23, 2007) through June 30, 2012 of $4,374,184. Although the Company has recognized total revenues of $695,918 with gross profits of $446,090, since inception (February 23, 2007) through June 30, 2012, 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.

 

20

 
 

 

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 June 30, 2012, we did not have any employees. We are dependent upon our officers and directors 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.

 

As of June 30, 2012, our current assets were $263,352 and our current liabilities were $126,433. As of June 30, 2012, our total assets were $363,352 compared to total assets of $141,933 as of December 31, 2011. Total assets as of June 30, 2012 consisted of $260 in cash, $5,673 in accounts receivable, prepaid expense of $257,419, and $100,000 in Iconosys as an investment. As of June 30, 2012, our liabilities consisted of $45,978 in accounts payable, $5,041 in accrued interest, $13,250 in notes payable, $497 in bank overdrafts and $61,667 in convertible notes payable.

 

Stockholders' equity (deficit) decreased from $(135,300) as of December 31, 2011 to $236,919 as of June 30, 2012.

 

We have not generated positive cash flows from operating activities. For the six months ended June 30, 2012, net cash flow used in operating activities was $(17,304) compared to net cash flow used in operating activities of $(157,507) for the six months ended June 30, 2011. The difference came from a net loss of $(2,841,703) as of June 30, 2012 as compared to a net loss of $(425,049) as of June 30, 2011.

 

During the six month periods ended June 30, 2012 and June 30, 2011, net cash flow provided from financing activities was $13,747 and $152,500, respectively.

 

 

21

 
 

 

The Company has no employment agreements in place with its officers, nor does the Company owe its officers any accrued compensation.

 

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.

 

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."

 

 

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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

 

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 June 30, 2012. 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 June 30, 2012.

 

 

 

 

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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/A, 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)          insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements;

 

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 June 30, 2012. 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.

 

Management Plan to Remediate Material Weaknesses

 

Management believes that the material weaknesses set forth in item (2) above did not have an effect on our financial results. 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. 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 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.

 

 

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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, 2011 and the discussion in Item 1, above, under "Liquidity and Capital

Resources."

 

 

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

 

On February 14, 2012, the Company issued 10,753 shares of common stock to Asher Enterprises for the conversion of $10,000 in principal of outstanding convertible notes payable.

 

On February 23, 2012, the Company issued 834 shares of common stock to Iconosys to satisfy $35,825 of stock payable as part of the license agreement entered into on May 16, 2011.

 

On March 13, 2012, the Company issued 10,186 shares of common stock to Asher Enterprises for the conversion of $5,500 in principal of outstanding convertible notes payable.

 

On April 17, 2012, the Company issued 11,217 shares of common stock to Asher Enterprises for the conversion of $1,300 in principal of outstanding convertible notes payable and $831 in accreted discount.

 

During the second quarter, Asher Enterprises took actions that were not beneficial to the Company or its Shareholders. On April 26, 2012, the Company issued a total of 2,700,000 shares of common stock to two related-party investors in exchange for them paying off $73,500 in our convertible notes to Asher Enterprises and forgiving $21,121 in other advances the shareholders had made to the Company, a total liability of $94,621. Though these shares are unregistered and restricted, the SEC requires that they be valued as though they were not. Accordingly, these shares were valued at $1 per share and we recognized a non-cash loss on settlement of debt associated with this stock issuance of $2.6million. See note 7.

 

On September 7, 2012, the Company issued 100,000 shares to a consultant in the form of options that were immediately exercised (cashless). These shares were previously registered in an S-8 Registration Statement filed on May 30, 2012.

 

 

 

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During the quarter ending June 30, 2012, we also issued the following shares to consultants, in exchange for their services:

 

Shares                  Value/Share      Value attributed to Consulting Services

5,000                     $1.95                     $9,750

25,000                   $1.00                     $25,000

 

All shares are valued at the quoted value of our stock on the day of issue, based on our determination that the fair value of our stock is more reliably measurable than the value of the services we received.

 

In addition, we issued 11,217 shares in accordance with an existing conversion feature in certain notes payable.

 

 

Item 3 - Defaults Upon Senior Securities

 

None.

 

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

 

None.

 

Item 5 - Other Information

 

None.

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Item 6 - Exhibits

 

 

Exhibit Number   Ref   Description of Document
10.16       Addendum to Administrative Consulting Agreement
         
31.1       Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
         
32.1       Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

         
101   *   The following materials from this Quarterly Report on Form 10-Q/A for the quarter ended August 31, 2012, formatted in XBRL (eXtensible Business Reporting Language).:
         
        (1) Interim Condensed Balance Sheets at August 31, 2012 (unaudited), and May 31, 2012 (audited).
         
        (2) Unaudited Interim Condensed Statements of Operations for the three-month period ended August 31, 2012, August 31, 2011, and the period from inception to August 31, 2012.
         
        (3) Unaudited Interim Condensed Statements of Cash Flows for the three-month period ended August 31, 2012, August 31, 2011, and the period from inception to August 31, 2012.
         
        (4) Notes to the Unaudited Condensed Interim financial statements.

 

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

 

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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 8, 2012

  Monster Offers
  By: /s/ Paul Gain
  Paul Gain
Director and CEO (principal executive,

 

 

 

  Monster Offers
  By: /s/ Wayne Irving
  Wayne Irving
Director and (principal executive, financial and accounting officer)

 

 

 

 

 

 

 

 

 

 

 

 

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