Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Monster Arts Inc.Financial_Report.xls
EX-32 - EXHIBIT 32.1 - Monster Arts Inc.ex321.htm
EX-31 - EXHIBIT 31 - Monster Arts Inc.ex311.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 
 
FORM 10-K

 

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

 

For the Fiscal Year Ended December 31, 2012

 

OR

 
   
o 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:  000-53266

 

Monster Offers

(Exact name of registrant as specified in its charter)

 

Nevada   26-1548306  
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S. Employer Identification No.)  
       
       
117 Calle de Los Molinos, San Clemente, CA    92672  
(Address of principal executive offices)    (Zip Code)  
       
             

 

 

(949) 335-5350

(Registrant’s telephone number, including area code)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

oYes x No

 

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. x Yes o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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). x Yes o No o Not Applicable

  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o Yes x No

  

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to

this Form 10-K. [X]

 

1
 

 

 

 

 

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 Exchange Act). o Yes x No

 

The aggregate market value of the Company's common shares of voting stock held by non-affiliates of the Company at April 15, 2012, computed by reference to the $0.40 per-share price quoted on the OTC-BB was $434,306.

 

As of April 15, 2013, there were 241,507 shares of common stock, par value $0.001 per share, of the registrant outstanding.

 

 


2
 

 

 

 

INDEX

 

  TITLE  
     
ITEM 1. Business   5
     
ITEM 2. Properties  15
     
ITEM 3. Legal Proceedings 15
     
ITEM 4.  Submission of Matters to a Vote of Security Holders 15
     
ITEM 5. Market for Common Equity and Related Stockholder Matters 15
     
ITEM 6. Selected Financial Data 19
   
ITEM 7. Management’s Discussion and Analysis of Financial Condition 19
     
ITEM 8. Financial Statement and Supplementary Data 21
     
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 21
     
ITEM 9A. Controls and Procedures 22
     
ITEM 10. Directors, Executive Officers and Corporate Governance 23
     
ITEM 11. Executive Compensation 26
     
ITEM 12. Security Ownership of Certain Beneficial Owners Management and Related Stockholder Matters 27
     
ITEM 13. Certain Relationships and Related Transactions and Director Independence 27
     
ITEM 14. Principal Accounting Fees and Services 29
     
ITEM 15. Exhibits, Financial Statement Schedules 29

 

 

 

 

3
 

 

 

FORWARD-LOOKING STATEMENTS

 

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words "may", "could", "estimate", "intend", "continue", "believe", "expect" or "anticipate" or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 

·         inability to raise additional financing for working capital and product development;

 

·         inability to identify internet marketing approaches;

 

·         deterioration in general or regional economic, market and political conditions;

 

·         the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

 

·         adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

 

·         changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

 

·         inability to efficiently manage our operations;

 

·         inability to achieve future operating results;

 

·         our ability to recruit and hire key employees;

 

·         the inability of management to effectively implement our strategies and business plans; and

 

·         the other risks and uncertainties detailed in this report.

 

In this form 10-K references to "Monster Offers", "the Company", "we", "us", and "our" refer to Monster Offers.

 

AVAILABLE INFORMATION

 

We file annual, quarterly and special reports and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at Monster Offers, 27665 Forbes Rd. Laguna Niguel, CA 92677.

 

 

 

4
 

 

PART I

 

ITEM 1. BUSINESS

 

History and Organization

 

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 Company Tropical PC, Inc., a Nevada corporation. Tropical PC was incorporated on 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. On November 9, 2012 the Company executed a share exchange agreement with Ad Shark, Inc., a privately-held California corporation incorporated April 12, 2011. As a result of the share exchange agreement Ad Shark, Inc. became a wholly owned subsidiary of the Company.

 

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 2013.

 

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.

5
 

 

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.

 

Strategic Alliances and Licensing Agreements

 

SSL5

 

On March 14, 2011, Monster Offers 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 (post-split) of its unregistered restricted shares to SSL5. These shares were valued at the market rate of $45 (post-split) per share, for a total of $450,000.

 

At year end, management performed an impairment analysis on the license asset and determined that impairment was necessary due to the decrease in fair value of the common stock that has yet to be issued for the license. An impairment loss of $425,435 was recognized for the year. The remaining book value is $0 as of December 31, 2011.

 

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 April 16, 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 (post-split) 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 (post-split) shares will become vested and available for purchase by the Consultant. The price of these shares will be at $0.30 (post-split) 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.

 

Government Regulation

 

We are subject to federal, state and local laws and regulations affecting our business. Although the Company plans on obtaining all required federal and state permits, licenses, and bonds to operate its facilities, there can be no assurance that the Company's operation and profitability will not be subject to more restrictive regulation or increased taxation by federal, state, or local agencies. New laws and

6
 

regulations may restrict specific Internet activities, and existing laws and regulations may be applied to Internet activities, either of which could increase our costs of doing business over the Internet and adversely affect the demand for our advertising services. In the United States, federal and state laws already apply or may be applied in the future to areas, including children's privacy, copyrights, taxation, user privacy, search engines, Internet tracking technologies, direct marketing, data security, pricing, sweepstakes, promotions, intellectual property ownership and infringement, trade secrets, export of encryption technology, acceptable content and quality of goods and services.

 

 Employees

 

We currently have three employees, (i) Wayne Irving II, our Chairman, Chief Executive Officer, and Secretary; (ii) Brandon M. Graham, our Chief Financial Officer; and (iii) Thomas Mead, our Director of Technology. These officers also perform many of the Company’s supervisory and administrative roles. We utilize additional independent contractors on a part-time/as needed basis.

 

Monster Offers' Funding Requirements

We do not currently have sufficient capital to fully develop our business plan. Management anticipates Monster Offers will be required to raise $500,000 to fully fund and execute its corporate strategies.

 

Patent, Trademark, License and Franchise Restrictions and Contractual Obligations and Concessions

 

With the exception of filing a trademark application for the name “Monster Offers,” in 2012, we have no current plans for any registrations such as patents, other trademarks, copyrights, franchises, concessions, royalty agreements or labor contracts. We will assess the need for any copyright, trademark or patent applications on an ongoing basis.

 

Research and Development Activities and Costs

 

Monster Offers did not incur any research and development costs for the years ended December 31, 2012 and 2011, and does however, have plans to undertake research and development activities during the next year of operations.

 

Compliance with Environmental Laws

 

We are not aware of any environmental laws that have been enacted, nor are we aware of any such laws being contemplated for the future, that impact issues specific to our business. In our industry, environmental laws are anticipated to apply directly to the owners and operators of companies. They do not apply to companies or individuals providing consulting services, unless they have been engaged to consult on environmental matters. We are not planning to provide environmental consulting services.

 

 

7
 

  

Item 1A. Risk Factors.

 

Risk Factors Relating to Our Company

 

Risks Relating To Our Company

 

1. WE ARE A DEVELOPMENT STAGE COMPANY AND HAVE HISTORY OF LOSSES SINCE OUR INCEPTION. IF WE CANNOT REVERSE OUR LOSSES, WE WILL HAVE TO DISCONTINUE OPERATIONS.

 

From our inception on February 23, 2007 through December 31, 2012, we have generated $702,833 in total revenues and we have incurred a net loss of $4,775,817. As of December 31, 2012, we had $182,820 in cash on hand, $4,173 in accounts receivable, $452,362 in loans receivable, $8,840 in accrued interest receivable, and $46,079 in prepaid expenses, for total current assets of $694,274, total fixed assets of $45,434, total liabilities of $352,038, an accumulated deficit of $(5,211,671) and a stockholders' deficit of $(387,670). In our auditor's report for fiscal year ended December 31, 2012 and 2011, our auditors expressed substantial doubt as to our ability to continue as a going concern. We anticipate incurring losses in the foreseeable future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

 

2. THE LIMITED PUBLIC TRADING MARKET MAY CAUSE VOLATILITY IN OUR STOCK PRICE.

 

The quotation of our common stock on the OTC-BB does not assure that a meaningful, consistent and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like us. Our common stock is thus and will be subject to significant volatility. Sales of substantial amounts of our common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock.

 

3. SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK, AS THE FUTURE SALE OF A SUBSTANTIAL AMOUNT OF OUTSTANDING STOCK IN THE PUBLIC MARKETPLACE COULD REDUCE THE PRICE OF OUR COMMON STOCK.

 

We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of common stock for sale will have on the market price prevailing from time to time. Sales of shares of our common stock in the public market covered under an effective registration statement, or the perception that those sales may occur, could cause the trading price of our common stock to decrease or to be lower than it might be in the absence of those sales or perceptions.

 

4. WE DO NOT EXPECT TO GENERATE SIGNIFICANT CASH FLOW FROM OPERATIONS FOR THE FORESEEABLE FUTURE. WE WILL NEED TO RAISE CAPITAL IN THE FUTURE BY SELLING MORE COMMON STOCK AND IF WE ARE ABLE TO DO SO, YOUR OWNERSHIP OF THE COMPANY'S COMMON STOCK MAY BE DILUTED.

 

Although we have started to generate revenues from customer activities, we do not expect to generate significant cash flow from operations for the foreseeable future. Consequently, we will be required to raise additional capital by selling additional shares of common stock. There can be no assurance that we will be able to do so but if we are successful in doing so, your ownership of the Company's common stock may be diluted which might depress the market price of our common stock.

 

5. OUR HISTORY OF LOSSES IS EXPECTED TO CONTINUE AND WE WILL NEED TO OBTAIN ADDITIONAL CAPITAL FINANCING IN THE FUTURE.

 

We have a history of losses and expect to generate losses until such a time when we can become profitable in the distribution of our planned products. As of the date of this filing, we cannot provide an estimate of the amount of time it will take to become profitable.

 

We will be required to seek additional financing in the future to respond to increased expenses or shortfalls in anticipated revenues, accelerate product development, respond to competitive pressures, develop new or enhanced products, or take advantage of unanticipated acquisition opportunities. In order for us to carry out our intended business plan, management believes that we need to raise approximately $500,000 over a three year period. Management anticipates that the $500,000 will go towards regulatory compliance, product marketing, the development of new software programs and platforms and the development of our "Daily Deal" technology and programs. The Company anticipates obtaining the required funding through equity investment in the company. We cannot be certain we will be able to find such additional financing on reasonable terms, or at all. If we are unable to obtain additional financing when needed, we could be required to modify our business plan in accordance with the extent of available financing made available to our Company. If we obtain the anticipated amount of financing through the offering of our equity securities, this will result in substantial dilution to our existing shareholders, and should be considered a serious risk of investment.

 

6. WE EXPECT OUR OPERATING EXPENSES TO INCREASE AND MAY AFFECT PROFIT MARGINS AND THE MARKET VALUE OF OUR COMMON STOCK.

8
 

 

Upon obtaining additional capital, we expect to significantly increase our operating expenses to expand our marketing operations, and increase our level of capital expenditures to further develop and maintain our proprietary software systems. Such increases in operating expense levels and capital expenditures may adversely affect operating results and profit margins which may significantly affect the market value of common stock. There can be no assurance that we will, one day, achieve profitability or generate sufficient profits from operations in the future.

 

7. CURRENT ECONOMIC CONDITIONS MAY PREVENT US FROM GENERATING REVENUE.

 

Generally, consumer purchases of "Daily Deal" offers are discretionary and may be particularly affected by adverse trends in the general economy. Our ability to generate or sustain revenues is dependent on a number of factors relating to discretionary consumer spending. These include economic conditions and consumer perceptions of such conditions by consumers, employment, the rate of change in employment, the level of consumers' disposable income and income available for discretionary expenditure, business conditions, interest rates, consumer debt and asset values, availability of credit and levels of taxation for the economy as a whole and in regional and local markets where our Company operates.

 

The United States is currently recovering from an economic downturn, the extent and duration of which cannot be currently predicted, and includes record low levels of consumer confidence due, in part, to job losses. Due to these factors, consumers are not expected to purchase non-essential goods, including our products. If the current economic conditions do not improve, we may not achieve or be able to maintain profitability which may negatively affect the liquidity and market price of our common stock.

 

Also due to the economic downturn in the United States, credit and private financing is becoming difficult to obtain at reasonable rates, if at all. Until we achieve profitability at sufficient levels, if at all, we will be required to obtain loans and/or private financings to develop and sustain our operations. If we are unable to achieve such capital infusions on reasonable terms, if at all, our operations may be negatively affected.

 

8. WE MAY NOT BE ABLE TO COMPETE WITH OTHER DAILY DEAL COMPANIES, SOME OF WHOM HAVE GREATER RESOURCES AND EXPERIENCE THAN WE DO.

 

The Internet industry is dominated by large, well-financed firms. We do not have the resources to compete with larger providers of these similar services at this time. With the minimal resources we have available, we may experience great difficulties in building a customer base. Competition by existing and future competitors could result in our inability to secure any new customers. This competition from other entities with greater resources and reputations may result in our failure to maintain or expand our business as we may never be able to successfully execute our business plan. Further, Monster Offers cannot be assured that it will be able to compete successfully against present or future competitors or that the competitive pressure it may face will not force it to cease operations.

  

9. THERE CAN BE NO ASSURANCE THAT THE COMPANY WILL BE ABLE TO ENHANCE ITS PRODUCTS OR SERVICES, OR DEVELOP OTHER PRODUCTS OR SERVICES.

 

If we are unable to achieve profitability in the future, recruit sufficient personnel or raise money in the future, our ability to develop our services would be adversely affected. Our inability to develop our services or develop new services, in view of rapidly changing technology, changing customer demands and competitive pressures, would have a material adverse effect upon our business, operating results and financial condition.

 

10. RAPID TECHNOLOGICAL ADVANCES COULD RENDER OUR EXISTING PROPRIETARY TECHNOLOGIES OBSOLETE.

 

The Internet and online commerce industries are characterized by rapid technological change, changing market conditions and customer demands, and the emergence of new industry standards and practices that could render our existing web site and proprietary technology obsolete. Our future success will substantially depend on our ability to enhance our existing services, develop new services and proprietary technology and respond to technological advances in a timely and cost-effective manner. The development of other proprietary technology entails significant technical and business risk. There can be no assurance that we will be successful in developing and using new technologies or adapt our proprietary technology and systems to meet emerging industry standards and customer requirements. If we are unable, for technical, legal, financial, or other reasons, to adapt in a timely manner in response to changing market conditions or customer requirements, or if our new products and electronic commerce services do not achieve market acceptance, our business, prospects, results of operations and financial condition would be materially adversely affected.

 

 

11. INTERNET COMMERCE SECURITY THREATS COULD POSE A RISK TO OUR ONLINE SALES AND OVERALL FINANCIAL PERFORMANCE.

 

A significant barrier to online commerce is the secure transmission of confidential information over public networks. We and our partners rely on encryption and authentication technology to provide the security and authentication necessary to effect secure transmission of confidential information. There can be no assurance that advances in computer capabilities; new discoveries in the field of cryptography or other developments will not result in a compromise or breach of the algorithms used by us and our partners to protect consumer's transaction data. If any such compromise of security were to occur, it could have a materially adverse effect on our business, prospects, financial condition and results of operations. A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations. We may be required to expend significant capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches. Concerns over the security of transactions conducted on the Internet and the privacy of users may also hinder the growth of online services generally, especially as a means of conducting commercial transactions. To the extent that our activities, our partners or third-party contractors involve the storage and transmission of proprietary information, such as credit card numbers, security breaches could damage our reputation and expose us to a risk of loss or litigation and possible liability. There can be no assurance that our security measures will not prevent security breaches or that failure to prevent such security breaches will not have a materially adverse effect on our business, prospects, financial condition and results of operations.

9
 

  

12. NEW TECHNOLOGIES COULD BLOCK OR FILTER OUR "DAILY DEAL" ADS, WHICH COULD REDUCE THE EFFECTIVENESS OF OUR SERVICES AND LEAD TO A LOSS OF CUSTOMERS.

 

Technologies may be developed that can block the display of our "Daily Deal" ads. We expect to derive a portion of our revenues from fees paid to us by advertisers in connection with the display of ads on web pages. Any ad-blocking technology effective against our ad placements could severely restrict the number of advertisements that we are able to place before consumers resulting in a reduction in the attractiveness of our services to advertisers. If advertisers determine that our services are not providing substantial value, we may suffer a loss of clients. As a result, ad-blocking technology could, in the future, substantially decrease the number of ads we place resulting in a decrease in our revenues.

 

13. RISK OF CAPACITY CONSTRAINTS; RELIANCE ON INTERNALLY DEVELOPED SYSTEMS; SYSTEM DEVELOPMENT RISKS.

 

A key element of our strategy is to generate a high volume of traffic on, and use of, our services across our websites and network infrastructure and systems. Accordingly, the satisfactory performance, reliability and availability of our software systems, transaction-processing systems and network infrastructure are critical to our reputation and our ability to attract and retain customers, as well as maintain adequate customer service levels. Our revenues depend on the number of visitors to our site, number of people who sign up for our services, and the on-going usage of our products. Any systems interruptions that result in the unavailability of our software systems or network infrastructure, or reduced order placements would reduce the volume of sign ups and the attractiveness of our product and service offerings. We may experience periodic systems interruptions from time to time. Any substantial increase in the volume of traffic on our software systems or network infrastructure will require us to expand and upgrade further our technology, transaction-processing systems and network infrastructure. There can be no assurance that we will be able to accurately project the rate or timing of increases, if any, in the use of our web site or timely expand and upgrade our systems and infrastructure to accommodate such increases. We will use a combination of industry supplied software and internally developed software and systems for our search engine, distribution network, and substantially all aspects of transaction processing, including order management, cash and credit card processing, and accounting and financial systems. Any substantial disruptions or delays in any of our systems would have a materially adverse effect on our business, prospects, financial condition, results of operations and cash flows.

  

14. STORAGE OF PERSONAL INFORMATION ABOUT OUR CUSTOMERS COULD POSE A SECURITY THREAT.

 

Our policy is not to willfully disclose any individually identifiable information about any user to a third party without the user's consent. Despite this policy, however, if third persons were able to penetrate our network security or otherwise misappropriate our users' personal information or credit card information, we could be subject to liability. These could include claims for unauthorized purchases with credit card information, impersonation or other similar fraud claims. They could also include claims for other misuses of personal information, such as for unauthorized marketing purposes. These claims could result in litigation. In addition, the Federal Trade Commission and other states have been investigating certain Internet companies regarding their use of personal information. We could incur additional expenses if new regulations regarding the use of personal information are introduced or if they chose to investigate our privacy practices.

 

15. WE HAVE TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGE TO CONTINUE OFFERING OUR "DAILY DEAL" ADVERTISING PARTNERS COMPETITIVE SERVICES OR WE MAY LOSE CLIENTS AND BE UNABLE TO COMPETE.

 

Our future success will depend on our ability to continue delivering our "Daily Deal" advertising partners competitive results-based Internet marketing services. In order to do so, we will need to adapt to rapidly changing technologies, to adapt our services to evolving industry standards and to improve the performance of our services. Our failure to adapt to such changes would likely lead to a loss of clients or a substantial reduction in the fees we would be able to charge versus competitors who have more rapidly adopted improved technology. Any loss of clients or reduction of fees would adversely impact our revenue. In addition, the widespread adoption of new Internet technologies or other technological changes could require substantial expenditures by us to modify or adapt our services or infrastructure. If we are unable to pass all or part of these costs on to our clients, our margins and, therefore, profitability will be reduced.

 

16. WE MAY NOT BE ABLE TO FIND SUITABLE EMPLOYEES.

 

The Company currently relies heavily upon the services and expertise of Wayne Irving II, our chief executive officer. In order to implement the aggressive business plan of the Company, management recognizes that additional programmers, graphic artists and clerical staff will be required.

10
 

 

No assurances can be given that the Company will be able to find suitable employees that can support the above needs of the Company or that these employees can be hired on terms favorable to the Company.

  

17. THERE EXISTS UNCERTAINTY WITH REGARDS TO OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY.

 

Our prospects for success may depend, in part, on our ability to obtain commercially valuable patents, trademarks and copyrights to protect our intellectual property, specifically our software programs. The degree of future protection for our technologies or potential products is uncertain. There are numerous costs, risks and uncertainties that the Company faces with respect to obtaining and maintaining patents and other proprietary rights. The Company may not be able to obtain meaningful patent protection for its future developments. To date, the Company does not have any pending patent or trademark applications with the U.S. Patent and Trademark Office or any agency with regard to the above-referenced intellectual property assets.

 

In connection with the trademarks, there can be no assurance that such trademarks will provide the Company with significant competitive advantages, or that challenges will not be instituted against the validity or enforceability of any trademarks sublicensed to the Company or, if instituted, that such challenges will not be successful. To date, there have been no interruptions in our business as the result of any claim of infringement. However, no assurance can be given that the Company will not be adversely affected by the assertion of intellectual property rights belonging to others. The cost of litigation to uphold the validity of a trademark and prevent infringement can be very substantial and may prove to be beyond our financial means even if the Company could otherwise prevail in such litigation. Furthermore, there can be no assurance that others will not independently develop similar designs or technologies, duplicate our designs and technologies or design around aspects of our technology, or that the designs and technologies will not be found to infringe on the patents, trademarks or other rights owned by third parties. The effects of any such assertions could include requiring the Company to alter existing trademarks or products, withdraw existing products, including the products delaying or preventing the introduction of products or forcing the Company to pay damages if the products have been introduced.

 

18. INTELLECTUAL PROPERTY LITIGATION MAY BE NECESSARY AND AN UNFAVORABLE OUTCOME COULD HURT THE COMPANY.

 

We may become party to patent litigation or proceedings at the U.S. Patent and Trademark Office or at a foreign patent office to determine whether it can market its future products without infringing patent rights of others. Interference proceedings in the U.S. Patent Office or opposition proceedings in a foreign patent office may be necessary to establish which party was the first to design such intellectual property. The cost of any patent litigation or similar proceeding could be substantial and may absorb significant management time and effort. If an infringement suit against us is resolved unfavorably, we may be enjoined from manufacturing or selling certain of its products or services without a license from an adverse third party. We may not be able to obtain such a license on commercially acceptable terms, or at all.

 

19. WE MAY BE LIABLE FOR CONTENT IN THE ADVERTISEMENTS WE DELIVER FOR OUR CLIENTS RESULTING IN UNANTICIPATED LEGAL COSTS.

 

We may be liable to third parties for content in the advertising we deliver if the artwork, text or other content involved violates copyrights, trademarks or other third-party intellectual property rights or if the content is defamatory. Although substantially all of our contracts include both warranties from our advertisers that they have the right to use and license any copyrights, trademarks or other intellectual property included in an advertisement and indemnities from our advertisers in the event of a breach of such warranties, a third party may still file a claim against us. Any claims by third parties against us could be time-consuming, could result in costly litigation and adverse judgments. Such expenses would increase our costs of doing business and reduce our net income per share. In addition, we may find it necessary to limit our exposure to such risks by accepting fewer or more restricted advertisements leading to loss of revenue.

 

20. BECAUSE SOME OF OUR SERVICES GENERALLY CAN BE CANCELLED BY THE CLIENT WITH LITTLE OR NO NOTICE OR PENALTY, THE TERMINATION OF ONE OR MORE PROGRAM COULD RESULT IN AN IMMEDIATE DECLINE IN OUR REVENUES.

 

We expect to derive the majority of our revenues from "Daily Deal", marketing services. These services are provided to advertise clients services on a short-term basis. They may be canceled upon thirty (30) days or less notice. In addition, these arrangements to advertise for clients generally do not contain penalty provisions for early cancellation. The short term advertising agreements in general reflect the limited time lines, budgets and customer acquisition goals of specific advertising campaigns and are consistent with industry practice. The non-renewal, re-negotiation, cancellation or deferral of large contracts or a number of contracts that in the aggregate account for a significant amount of revenues, could cause an immediate and significant decline in our revenues and harm our business. 

 

21. IF WE ENGAGE IN ACQUISITIONS, WE MAY EXPERIENCE SIGNIFICANT COSTS AND DIFFICULTY ASSIMILATING THE OPERATIONS OR PERSONNEL OF THE ACQUIRED COMPANIES, WHICH COULD THREATEN OUR FUTURE GROWTH.

 

11
 

If we make any acquisitions, we could have difficulty assimilating the operations, technologies and products acquired or integrating or retaining personnel of acquired companies. In addition, acquisitions may involve entering markets in which we have no or limited direct prior experience. The occurrence of any one or more of these factors could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition, pursuing acquisition opportunities could divert our management's attention from our ongoing business operations and result in decreased operating performance. Moreover, our profitability may suffer because of acquisition-related costs or amortization of acquired goodwill and other intangible assets. Furthermore, we may have to incur debt or issue equity securities in future acquisitions. The issuance of equity securities would dilute our existing stockholders.

 

22. BECAUSE WE ARE NOT SUBJECT TO COMPLIANCE WITH RULES REQUIRING THE ADOPTION OF CERTAIN CORPORATE GOVERNANCE MEASURES, OUR STOCKHOLDERS HAVE LIMITED PROTECTION AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.

 

We do not currently have independent audit or compensation committees. As a result, our director(s) have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

 

We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.

 

23. COMPLIANCE WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC DISCLOSURE, AND OUR MANAGEMENT'S INEXPERIENCE WITH SUCH REGULATIONS WILL RESULT IN ADDITIONAL EXPENSES AND CREATES A RISK OF NON-COMPLIANCE.

 

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities. Management's inexperience may cause us to fall out of compliance with applicable regulatory requirements, which could lead to enforcement action against us and a negative impact on our stock price.

 

Additional Risks Relating to Our Common Stock

 

24. THE MARKET PRICE FOR OUR STOCK MAY BE VOLATILE.

 

The market price for our stock may be volatile and subject to wide fluctuations in response to factors including the following:

 

·         liquidity of the market for the shares;

 

·         actual or anticipated fluctuations in our quarterly operating results;

 

·         changes in financial estimates by securities research analysts;

 

·         conditions in the markets in which we compete;

 

·         changes in the economic performance or market valuations of other "Daily Deal" companies;

 

·         announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;

 

·         addition or departure of key personnel;

 

·         intellectual property litigation;

 

·         our dividend policy; and

 

·         general economic conditions.

 

In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our stock.

12
 

 

25. SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK, AS THE FUTURE SALE OF A SUBSTANTIAL AMOUNT OF OUTSTANDING STOCK IN THE PUBLIC MARKETPLACE COULD REDUCE THE PRICE OF OUR COMMON STOCK.

 

We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of common stock for sale will have on the market price prevailing from time to time. Sales of shares of our common stock in the public market covered under an effective registration statement, or the perception that those sales may occur, could cause the trading price of our common stock to decrease or to be lower than it might be in the absence of those sales or perceptions.

 

26. WE MAY, IN THE FUTURE, ISSUE ADDITIONAL COMMON SHARES, WHICH WOULD REDUCE INVESTORS' PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE.

 

Our Articles of Incorporation authorize the issuance of 75,000,000 shares of common stock and no preferred shares. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

 

27. OUR COMMON STOCK MAY BE CONSIDERED A "PENNY STOCK," AND THEREBY BE SUBJECT TO ADDITIONAL SALE AND TRADING REGULATIONS THAT MAY MAKE IT MORE DIFFICULT TO SELL.

 

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.

 

For any transaction involving a penny stock, unless exempt, the rules require:

 

a)      that a broker or dealer approve a person's account for transactions in penny stocks; and

 

b)      the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person; and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our Common shares and cause a decline in the market value of our stock.

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

  

28. WE DO NOT FORESEE PAYING CASH DIVIDENDS IN THE FORESEEABLE FUTURE AND, AS A RESULT, OUR INVESTORS' SOLE SOURCE OF GAIN, IF ANY, WILL DEPEND ON CAPITAL APPRECIATION, IF ANY.

 

We have never paid cash dividends on our common stock and we do not plan to declare or pay any cash dividends on our shares of common stock in the foreseeable future and currently intend to retain any future earnings for funding growth. As a result, investors should not rely on an investment in our securities if they require the investment to produce dividend income. Capital appreciation, if any, of our shares may be investors' sole source of gain for the foreseeable future. Moreover, investors may not be able to resell their shares of the Company at or above the price they paid for them.

 

29. UNLESS AN ACTIVE TRADING MARKET DEVELOPS FOR OUR SECURITIES, YOU MAY NOT BE ABLE TO SELL YOUR SHARES.

 

Although, we are a reporting company and our common shares are quoted on the OTC Bulletin Board (owned and operated by the Nasdaq Stock Market, Inc.) and on the OTC MARKETS Exchange under the symbol "MONT", the trading market for our common

13
 

stock can vary significantly from day-to-day, and a more active trading market may never develop or, if it does develop, may not be maintained. Failure to develop or maintain an active trading market will have a generally negative effect on the price of our common stock, and you may be unable to sell your common stock or any attempted sale of such common stock may have the effect of lowering the market price and therefore your investment could be a partial or complete loss.

 

30. SINCE OUR COMMON STOCK IS THINLY TRADED IT IS MORE SUSCEPTIBLE TO EXTREME RISES OR DECLINES IN PRICE, AND YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE PRICE PAID.

 

Since our common stock is thinly traded its trading price is likely to be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including:

 

·         the trading volume of our shares;

·         the number of securities analysts, market-makers and brokers following our stock;

·         changes in, or failure to achieve, financial estimates by securities analysts;

·         new products or services introduced or announced by us or our competitors;

·         actual or anticipated variations in quarterly operating results;

·         conditions or trends in our business industries;

·         announcements by us of significant contracts, acquisitions, strategic

·         partnerships, joint ventures of capital commitments;

·         additions or departures of key personnel;

·         sales of our common stock; and

·         general stock market price and volume fluctuations of publicly-traded and particularly

microcap, companies.

 

You may have difficulty reselling shares of our common stock, either at or above the price you paid, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company. In addition, securities class action litigation has often been initiated following periods of volatility in the market price of a company's securities. A securities class action suit against us could result in substantial legal fees, potential liabilities and the diversion of management's attention and resources from our business. Moreover, and as noted below, our shares are currently traded on the OTC Bulletin Board and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.

 

31. TRADING IN OUR COMMON STOCK ON THE OTC BULLETIN BOARD MAY BE LIMITED THEREBY MAKING IT MORE DIFFICULT FOR YOU TO RESELL ANY SHARES YOU MAY OWN.

 

Our common stock is quoted on the OTC Bulletin Board (owned and operated by the Nasdaq Stock Market, Inc.). The OTC Bulletin Board is not an exchange and, because trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a national exchange or on the Nasdaq National Market, you may have difficulty reselling any of the shares of our common stock that you may own.

 

  

 

14
 

 
Item 1B. Unresolved Staff Comments.

 

Not applicable.

 

Item 2. Properties.

 

Our offices are currently located at 27665 Forbes Rd. Laguna Niguel, CA 92667. Our telephone number is (949) 335-5350. Management believes that its current facilities are adequate for its needs through the next twelve months, and that, should it be needed, suitable additional space will be available to accommodate expansion of the Company's operations on commercially reasonable terms, although there can be no assurance in this regard. Our office space is provided to us at no charge by Wayne Irving II, who will not seek reimbursement.

 

Item 3. 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 4. Submission of Matters to a Vote of Security Holders.

 

On November 9, 2012, the Company, Monster Offers Acquisition Corporation, a Nevada corporation ("Merger Sub") and Ad Shark, Inc., a privately-held California corporation (“Ad Shark”), entered into an Acquisition Agreement and Plan of Merger (collectively the "Agreement") pursuant to which the Company, through its wholly-owned subsidiary, Merger Sub, acquired Ad Shark in exchange for 27,939,705 shares of the Company's unregistered restricted common stock (the “Merger Shares”), which were issued to the holders of Ad Shark based on their pro-rata ownership (the “Merger”).

 

PART II

 

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

(a) Market Information

 

Monster Offers Common Stock, $0.001 par value, is traded on the OTC-Bulletin Board under the symbol: MONTD. The stock was first cleared for quotation on the OTCBB on October 23, 2008. The following table sets forth the high and low intra-day prices per share of our common stock for the periods indicated, which information was provided by the OTC Markets. The quotations set forth below reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.

 

 

  High     Low  
Fourth Quarter Ended December 31, 2012 $ 4.35     $ 2.10  
Third Quarter Ended September 30, 2012 $ 3.25     $ 1.00  
Second Quarter Ended June 30, 2012       $ 1.25     $ 0.51  
First Quarter Ended March 31, 2012 $ 3.15     $ 2.88  
Fourth Quarter Ended December 31, 2011 $ 7.51     $ 1.50  
Third Quarter Ended September 30, 2011    $ 15.01     $ 4.50  
Second Quarter Ended June 30, 2011        $ 60.06     $ 10.81  
First Quarter Ended March 31, 2011         $ 120.12     $ 46.55  

 

Price adjusted for the 300:1 reverse stock split that took place on April 9, 2011.

 

(b) Holders of Common Stock

 

As of December 31, 2012, there were approximately 2,120 holders of record of our Common Stock and 3,389,361 shares issued and outstanding. As of April 15, 2013, we had 215,540 issued and outstanding following our 300:1 reverse stock split that took place on April 9, 2011.

 

(c) Dividends

 

In the future we intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the Common Stock will be the sole discretion of board of directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.

 

15
 

 

(d) Securities Authorized for Issuance under Equity Compensation Plans

 

There are no outstanding grants or rights nor is there any equity compensation plan in place.

 

(e) Recent Sales of Unregistered Securities

 

On January 21, 2011, the Company issued 1,333 (post-split) 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 $78 per share (post-split), 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 year ended December 31, 2011 and the remaining portion of the term of the agreement.

 

On January 21, 2011, the Company also issued 667 (post-split) 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 $78 per share (post-split), 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 year ended December 31, 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, 167 (post-split) unregistered restricted shares of common stock will be exchanged for the services provided by the consultant. As of December 31, 2011, the Company determined the shares to be fully earned and were valued at a market value of $4.50 per share (post-split), totaling $750, and an expense was recognized. As of December 31, 2011 the 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 10,000 (post-split) unregistered restricted shares as consideration for an exclusive license of SSL5 existing intellectual property. The transaction was valued at the market value of $45 per share (post-split) for a total of $450,000, and recorded as stock payable. See Note 10 for further details of the agreement.

 

During the quarter ended June 30, 2011, the Company issued a total of 6,541 (post-split) shares of common stock to Asher Enterprises for the conversion of two convertible notes payable. See Note 11 for further details of these conversions.

 

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 834 (post-split) 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 $43 per share (post-split) for a total of $35,825, and recorded as stock payable. See Note 14 for further details of the agreement.

 

On July 8, 2011, the Company sold 617 (post-split) 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 10).

 

On July 19, 2011, the Company sold 255 (post-split) 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 10).

 

On July 28, 2011, the Company sold 92 (post-split) shares of free-trading common stock for a total of $1,014 (of which $447 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 10).

 

On August 9, 2011, the Company issued 1,594 (post-split) shares of common stock to Asher Enterprises for the conversion of $11,000 in principal of outstanding convertible notes payable. See Note 11 for further details of these conversions.

 

On August 19, 2011, the Company sold 345 (post-split) 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 10).

 

On September 2, 2011, the Company issued 3,134 (post-split) shares of common stock to Asher Enterprises for the conversion of $11,000 in principal of outstanding convertible notes payable. See Note 11 for further details of these conversions

 

On December 22, 2011, the Company issued 5,027 (post-split) shares of common stock to Asher Enterprises for the conversion of $8,000 in principal and $1,200 in accrued interest of outstanding convertible notes payable. See Note 11 for further details of these conversions.

 

16
 

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 12 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 14).

 

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 12 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 12 for further details of these conversions.

 

During the second quarter, Asher Enterprises took actions that were not beneficial to the Company or its Shareholders. As a result, 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 $2,497,367 million. (see note 12).

 

On April 9, 2012, the Company issued 5,000 shares of its common stock for service rendered by a consultant. The shares were valued at the closing stock price on the date of issuance which was $1.95. This resulted in the Company recording an expense of $9,750.

 

On June 24, 2012, the Company issued 150,000 shares of its common stock for service rendered by a consultant. The shares were valued at the closing stock price on the date of issuance which was $1.25. This resulted in the Company recording an expense of $187,500.

 

On June 28, 2012 the Company issued 25,000 shares of its value common stock for service rendered by a consultant. The shares were valued at the closing stock price on the date of issuance which was $1.00. This resulted in the Company recording an expense of $25,000.

 

On July 1 and September 7, 2012, the Company issued a total of 250,000 shares for the exercise of 250,000 cashless stock options issued to

two consultants in the previous quarter.

 

On November 27, 2012 the Company issued 5,000 shares to Tangier Investors as consideration for extending the outstanding note payable.

 

On November 9, 2012 the Company acquired Ad Shark Inc., through a share exchange agreement whereby the Company will issue 27,939,705 common shares in exchange for all the outstanding equity of Ad Shark, Inc (see note 7). As of December 31, 2012, no shares have been issued pertaining to the share exchange agreement. The Company has reported the issuable shares as a stock subscription payable on the balance sheet and statement of stockholders’ equity.

 

In the fourth quarter of 2012 the Company received $278,425 in cash from investors for the future issuance of 506,228 common shares. Of the $278,425 cash for stock, $15,000 was deposited directly into Iconosys bank account and was recorded as a loan receivable to related party on the balance sheet. The shares were not issued as of December 31, 2012 therefor were recorded as stock subscription payable.

 

In January of 2013 the Company received $125,500 cash from investors for 288,181 common shares.

 

On March 4, 2013, the Company entered into a Master Purchase Agreement with Iconosys (a private company) whereas the Company would cancel the entire outstanding line of credit balance and accrued interest in exchange for 15,046,078 shares of Iconosys. The Company also acquired Iconosys’s intellectual property such as trademarks, domain names, and smart phone apps. This is all described in detail in the 8-K filed on March 6, 2013.

 

Stock Options

 

On March 14, 2011, as part of the Strategic Alliance and Licensing agreement, 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 (post-split) 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 shares (post-split) will become vested and available for purchase by the Consultant. The price of these shares will be at $0.3 (post-split) 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, 1,667 (post-split) 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 1.5 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 December 31, 2011, totaling 973

(post-split) shares, have been valued at $2,245 using the Black-Scholes option pricing model based upon the following assumptions: term of 1.2 years, risk free interest rate of 0.45%, a dividend yield of 0% and a volatility rate of 216%.

 

17
 

 

 

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%.

 

On May 12, 2012, the company entered into a consulting agreement with Thomas Cook Law Firm providing 150,000 stock options which were valued at $134,850. The options were valued using Black-Scholes option pricing model based upon the following assumptions: term of .25 years, risk free interest rate of 0.10%, a dividend yield of 0% and a volatility rate of 319%. All of the stock options were exercised in July of 2012.

 

On May 24, 2012, the company entered into a consulting agreement with Marlena Niemann providing 100,000 stock options which were valued at $124,900. The options were valued using Black-Scholes option pricing model based upon the following assumptions: term of .25 years, risk free interest rate of 0.21%, a dividend yield of 0% and a volatility rate of 318%. All of the stock options were exercised in September of 2012.

 

As of September 13, 2012, 1,667 shares fully vested in accordance with the agreement and were revalued at $1,424 using the Black-Scholes option pricing model based upon the following assumptions: term of .5 years, risk free interest rate of 0.13%, a dividend yield of 0% and a volatility rate of 299%.

 

A pro-rated portion of the unvested stock options for the service period from September 14 to December 31, 2012, totaling 972 shares, have been valued at $1,268 using the Black-Scholes option pricing model based upon the following assumptions: term of .2 years, risk free interest rate of 0.14%, a dividend yield of 0% and a volatility rate of 295% 

 

The following summarizes pricing and term information for options issued to consultants that are outstanding as of December 31, 2012 and 2011:

 

  Year ended December 31, 2012   Year ended December 31, 2011
      Weighted           Weighted    
      Average   Aggregate       Average   Aggregate
  Number of    Exercise   Intrinsic   Number of    Exercise   Intrinsic
Stock Options Options   Price   Value   Options   Price   Value
                       
Balance at beginning of year 6,667    $       0.30                 -     6,667    $       0.30                 -  
                       
Granted 250,000                  $0.001                   -                       -                 -                   -  
Exercised (250,000)                 -                   -                       -                 -                   -  
Forfeited -                 -                   -     -   -                 -  
                       
Balance at end of year 6,667    0.30                 -     6,667     0.37                 -  
                       
                       
Options exercisable at end of year 5,000    $       0.30                 -     1,667    $       0.30                 -  
                       
                       
Weighted average fair value of                      
options granted during year                   -                           -      

 

The fair value of the options was based on the Black Scholes Model using the following assumptions:

 

               
    2012   2011  
Exercise price:   $ 0.30   $ 0.30  
Market price at date of grant:   $ 1.00   $ 1.00  
Volatility:     229%-311 %   175%-216 %
Expected dividend rate:     0 %   0 %
Risk-free interest rate:     0.13%-0.21 %   0.21%-0.61 %

 

18
 

 

 

The following activity occurred under the Company’s plans:

 

               
    December 31,   December 31,  
    2012   2011  
Weighted-average grant date fair value of options granted   $ -   $ -  
Aggregate intrinsic value of options exercise     N/A     N/A  
Fair value of options recognized as expense   $ 2,645   $ 14,436  

 

(f) Issuer Purchases of Equity Securities

 

We did not repurchase any of our equity securities during the years ended December 31, 2012 or 2011.

  

Item 6. Selected Financial Data.

 

Not applicable.

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Overview of Current Operations

 

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.

 

Results of Operations for the year ended December 31, 2012

 

We generated $79,333 in total revenues for the year ended December 31, 2012 as compared to $223,275 for the same period last year. 

 

Selling, general and administrative expense. For the year ended December 31, 2012, selling, general and administrative expenses increased approximately 42.61% as compared to the year ended December 31, 2011.  For the year ended December 31, 2012 and 2011 general and administrative expenses consisted of the following:

 

       
  2012   2011
       
Auto $           2,549   $             937 
Bank Fees 3,041   3,032
Legal 184,126   34,489
Travel 1,394   4,043
Computer & Internet 4,295   47,498
Other 20,305   36,126
  $          215,710    $        126,125

 

     
  · For the year ended December 31, 2012, consulting expense increased to $325,768 as compared to $324,560, primarily as a result of a the expense related to stock being issued to consultants for services rendered to the Company.
     
  · For the year ended December 31, 2012, we had employee compensation of $55,456 compared to $144,200. Employee compensation decreased primarily due to cash restrictions in 2012.
     
  · For the year ended December 31, 2012, professional fee expense decreased to $28,605 as compared to $32,589. Professional fee expense decreased primarily due to decreased accounting fees.
     
  · For the year ended December 31, 2012, marketing and promotions expense amounted to $7,805 as compared to $24,565 for the year ended December 31, 2011.  The decrease was due to limited resources for marketing and promotions.
     
  · For the year ended December 31, 2012, depreciation and amortization expense amounted to $7,805 as compared to $24,565 for the year ended December 31, 2011
     
  · For the year ended December 31, 2012, Other income and expense which includes interest expense, interest income, financing expense, loss on extinguishment of debt and impairment expense, amounted to $2,684,956 as compared to $559,989 for the year ended December 31, 2011.
     

 

19
 

Interest expense. For the year ended December 31, 2012, interest expense increased to $61,600 as compared to $17,460 for the year ended December 31, 2011.  The increase was due to additional interest expense incurred from the notes payable to Asher.

 

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash.  The following table provides certain selected balance sheet comparisons between December 31, 2012 and December 31, 2011: 

 

                 
    December 31,   December 31,   $   %
2012 2011 Change Change
                 
Working Capital   $            342,236   $     (237,721)   $     579,957   243.40%
Cash   182,820    3,817   179,003   4689.62%
Total current assets   694,274    39,512   654,672   1656.89%
Total assets   739,708    141,933   597,775   421.17%
Accounts payable and accrued liabilities   197,113    91,562   105,551   115.28%
Notes payable and accrued interest   51,750    176,330   (124,580)    (70,65) %
Total current liabilities   352,038    277,233   74,805   26.98%
Total liabilities   352,038    277,233   74.805   26.98%

 

At December 31, 2012 our working capital increased as compared to December 31, 2011 primarily as a result of an increase in current asset of $654,672 mainly from capital raised from investors. 

 

Operating activities

 

Net cash used for continuing operating activities during fiscal 2012 was $192,797 as compared to $196,259 for fiscal 2011. Non-cash items totaling approximately $3,223,569 contributing to the net cash used in continuing operating activities for fiscal 2012 include:

 

  $100,000 in impairment expense
  $33,333 in license revenues- noncash
  $31,148 in financing fees from convertible notes payable
  $230,473 in stock issued for consulting services
  $260,905 in stock options for services
  $15,000 in stock issued for note extension
  $1,250 in bad debt
  $15,000 in discount on notes payable
  $2,497,367 from debt conversion related
  $35,825 in strategic alliance expense related to strategic alliance with SSL5
  $7,805 in depreciation and amortization
   • $62,129 in accounts payable and accrued expenses

 

Investing activities

 

Net cash used in investing activities was $0 for both fiscal 2012 and 2011.

 

Financing activities

 

Net cash provided by financing activities was $371,800 during fiscal 2012 as compared to $163,545 for fiscal 2011. During the fiscal 2012 period we generated $263,425 from the sale of our common stock, $101,125 from officer loans, $13,250 from notes payable to related parties, and paid $6,000 on convertible notes payable.

 

Future Financing

 

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuance of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any of additional sales of our equity securities or arrange for debt or other financing to fund our exploration and development activities.

 

Going Concern

 

From our inception on February 23, 2007 through December 31, 2012, we have generated $702,833 in total revenues and we have incurred a net loss of $4,775,817. As of December 31, 2012, we had $182,820 in cash on hand, $4,173 in accounts receivable, $452,362 in loans receivable, $8,840 in accrued interest receivable, and $46,079 in prepaid expenses, for total current assets of $694,274, total fixed assets of $45,434, total liabilities of $352,038, an accumulated deficit of $5,211,671 and a stockholders' deficit of $387,670. In our auditor's report for fiscal year ended December 31, 2012 & 2011, our auditors expressed substantial doubt as to our ability to continue as a going concern. We anticipate incurring losses in the foreseeable future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

 

20
 

 

 

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 product research and development under our current plan of operation.

 

Expected purchase or sale of property and significant equipment

 

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

 

Significant changes in the number of employees

 

As of December 31, 2012, we have three 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.

 

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 or operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies and 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 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.

 

Recent Pronouncements

 

ASU 2011-04. In May 2011, the FASB issued Accounting Standards Update 2011-14, “Fair Value Measurement (Topic 820)”. This Update will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with US GAAP and International Financial Reporting Standards (“IFRS”). The amendments in this Update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs and they explain how to measure fair value and they do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments in this Update apply to all reporting entities that are required or permitted to measure or disclose the fair value of an asset, a liability, or an instrument classified in a reporting entity’s shareholders’ equity in the financial statements. The amendments in this Update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption of ASU 2011-04 is not expected to have any material impact on our financial position, results of operations or cash flows.

 

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

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

 

Not applicable.

  

Item 8. Financial Statements and Supplementary Data.

 

Our financial statements are contained in pages F-1 through F-20, which appear at the end of this annual report.

 

Item 9. Changes in and Disagreements with Accountants On Accounting and Financial Disclosure.

 

There are no disagreements with our current accountants on any matters related to accounting and financial disclosure issues.  Our principal independent registered public accounting firm is Patrick Rodgers, CPA, PA. Their address is 309 East Citrus Street, Altamonte Springs, Florida 32701.

21
 

 

The report of Patrick Rodgers on our financial statements for the fiscal year ended December 31, 2012 and the report of De Joya Griffith, LLC on our financial statements for the fiscal year ended December 31, 2011 did not contain an adverse opinion or disclaimer of opinion, nor were they modified as to uncertainty, audit scope or accounting principles, other than to state that there is substantial doubt as to our ability to continue as a going concern. During our fiscal years ended December 31, 2012 and 2011, there were no disagreements between us and Patrick Rodgers or De Joya Griffith, LLC, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Patrick Rodgers or De Joya Griffith, LLC, would have caused Patrick Rodgers or De Joya Griffith, LLC to make reference thereto in their reports on our audited financial statements.

 

Item 9A(T). Controls and Procedures.

 

(a) Evaluation of disclosure controls and procedures

 

We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934.  In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met.  Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.  The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Based on his evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.  Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.  Our management has concluded that, as of December 31, 2012 our internal control over financial reporting is effective based on these criteria.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting identified in connection with our evaluation that occurred during our last fiscal quarter (our fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information.

 

None.

 

 

22
 

 

PART III

 

Item 10. Director, Executive Officer and Corporate Governance.

 

The following table sets forth certain information regarding our current director and executive officer. Our executive officers serve one-year terms. Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current director and executive officer. 

Name

 

Age

Position & Offices Held  
Wayne Irving II 41 Chief Executive Officer  
Bradon M. Graham 31 Chief Financial Officer  
Vikram M. Pattarkine, Ph. D/ 49 Director  
                     

 

All directors hold office until the next annual meeting of stockholders of the Company and until their successors have been elected and qualified. Directors currently receive no fees for services provided in that capacity. The officers of the Company are elected annually and serve at the discretion of the Board of Directors.

 

Set forth below is a brief description of the background and business experience of our sole officer/director.

 

Biography of Wayne Irving, Director, Chairman, CEO, and Secretary

 

Mr. Irving is a pioneer in mobile communications technology. He is responsible for the recent development of certain new safety and lifestyle-related mobile applications for Smartphones, tablet computers and other Smart handheld devices. He is considered an innovator with respect to mobile marketing and advertising. In addition, he maintains a high visibility with the general public and is recognized as a leading authority in the areas of mobile app design and mobile marketing through his frequent public appearances, both at industry conferences and at charitable fundraising events with non-profit organizations and other causes relating to curbing the practices of TWD (texting while driving), as well through his continued media exposure in print, Internet, and on radio and television.

 

The following provides a summary of Wayne Irving II’s recent and past work experience:

 

Iconosys, Inc. (November 2009 - Present) -- Mr. Irving is a co-founder of Iconosys and currently holds the positions of director, Chairman, CEO and CFO with the same company. Iconosys develops apps and technologies for iOS and Android OS Smartphones tablet computers and other Smart handheld devices, is a member of the National Organization for Youth Safety (NOYS) and the maker of the widely used and well publicized DriveReply™, SMSW!sh™, Trick or Tracker®, Word Bully™, Latchkey Kid™, Guards Up™, My Receipt Manager™, Tax Deduction Tracker™, and My Max Speed™ Smartphone apps, and is developing technologies and technology-driven products for its clients with a goal toward designing apps that enrich, enhance, and ultimately make safer and more convenient, our day-to-day lives. 

 

Showerpros.com, Inc. (August 2004 – January 2008) -- Mr. Irving started Showerpros.com in the summer of 2004 as a temporary departure from the Internet and financial markets. From 2004 through July 2007, Showerpros completed more than 800 bathroom and kitchen remodels in Orange County, CA and more than 2,000 total residential and commercial projects, including engaging in all facets of general contracting as a CA-licensed General Contractor. In August 2006, Showerpros was awarded and completed a 660 Kitchen Remodel projects in Las Vegas, NV, where apartments were being converted to condominiums. In the wake of the housing industry/remodeling industry's well chronicled collapsed in the middle of 2007, Mr. Irving left this business and re-entered the hi-tech and clean-tech worlds.

 

Agilon Technologies, Inc. (November 2001 – July 2002) -- In 2001, Agilon was formed as a business consulting project by Mr. Irving to explore opportunities in alternate industries such as biotechnology. This company's stated mission was to utilize lessons-learned by Mr. Irving in running Internet and hi-tech companies in guiding the business strategies of new start-up and entrepreneur-led consulting clients.

 

Solutions Media, Inc. (August 1998 – August 2000) -- Mr. Irving was Chairman and CEO of Solutions Media, a convergence technology company focused initially on developing solutions for interactive television and "smarter" devices. As the company evolved, special attention began to be paid to the media distribution methods that devices utilized in delivering content to the user. Spinrecords.com was Solutions Media's flagship product. Early investors in Solutions Media included NY-based NetGain, Goldman Sachs, and others. Solutions Media further offered technology and consulting-based solutions to a number of companies.

 

Cyber Office Technologies, Inc. (1997 – 1998) -- Mr. Irving was Information Security Manager of Cyber Office Technologies, a venture of DuPont, and in this capacity supported the development of a mid-level accounting software package, similar to Peachtree accounting.

23
 

 

Echolink Interactive (1996 – 1997) -- Mr. Irving was a Microsoft Certified Systems Administrator consulting with regard to help desk solutions for a 40-employee firm that managed approximately 100 web development clients.

 

United States Marine Corps (April 1991 – April 1996) -- Mr. Irving was a Marine Sergeant. While serving as Maintenance Management Chief, 1st Marine Regiment, 1st Marine Division, Mr. Irving managed and taught classes on the usage of several systems including Maintenance Management Systems and Publications Management Systems. In addition, in his position of authority in the S-4 office for 3rd Battalion, 1st Marines, as well as later for the Headquarters for 1st Marine Regiment, Wayne was responsible for managing policies under the Commanding Officer's signature. Mr. Irving was meritoriously promoted 3 times and decorated 5 times for outstanding leadership in his field during his 5 years as a US Marine.

 

Biography of Brandon M. Graham, CFO

 

With 10 years of experience in the areas of financial planning and analysis, corporate development, investor relations and management consulting—including over 10,000 audit hours—Brandon M. Graham has a background in corporate finance, accounting, and investing. Mr. Graham serves as a manager for corporate financial planning and analysis for The Walt Disney Company, where he supports the Sourcing and Production Departments with financial and strategic analysis and implementation.

Prior to joining Registrant, Mr. Graham was responsible for leading the Financial Planning and Analysis Department for Tutor Perini Corp. (NYSE: TPC), a $6-billion global construction services provider. While at Tutor Perini, Mr. Graham was responsible for leading investor relations activities and developing buy-side relationships.

Mr. Graham served for four years at AECOM Technology Corp. (NYSE: ACM) as a Senior Analyst in Investor Relations and Corporate Development, where he was involved with more than $2 billion worth of acquisitions. Prior to his tenure at AECOM, Mr. Graham was a Senior Associate with the accounting firm KPMG, LLP, where he worked on audit and consulting engagements for clients in California, New York, Amsterdam and London.

Biography of Vikram M. Pattarkine, Ph.D., Director

 

Dr. Vikram M. Pattarkine, CEO of PEACE USA, has a distinguished career spanning more than 25 years as a chemical-environmental engineer with extensive international experience covering research, consulting, and training. He serves on several prestigious committees such as the Scientific and Technical Advisory Committee of the Chesapeake Bay Program and the Municipal Wastewater Treatment Design Committee of the Water Environment Federation. He has authored chapters in manuals, peer-reviewed papers, and made technical presentations at conferences worldwide. Mr. Pattarkine is also a member of the board of directors of Iconosys.

 

Dr. Pattarkine was the founding CTO of OriginOil, Inc., a renewable energy technology development company. During its formative months, he added outstanding value to the company by imparting scientific rigor to its technology development. Currently, he is involved with developing OriginOil’s wastewater applications and strategic international partnerships. Prior to joining OriginOil, he was Senior Vice President at Brinjac Engineering, an engineering design and consulting firm in Pennsylvania. Before that he was Director of Process Engineering at Environmental Dynamics Inc, an aeration systems manufacturing firm in Missouri. During the 1990s, he led the Environment and Natural Resources Management consulting practice of Tata Consultancy Services, Asia’s largest consulting firm.

 

Education:

 

Mr. Irving studied mathematics and general educational subjects at Mira Costa College in Oceanside, CA (1994-1996) and later studied computer science and pre-medical subjects while attending University of San Diego (1996-1998), where he was also President of Alpha Epilon Delta (the university's pre-medical student fraternity).

 

Mr. Graham holds a Bachelors Degree in Business Economics from the University of California, Santa Barbara and a Masters of Business Administration in Entrepreneurial Studies from the Marshall School of Business at the University of Southern California.

Dr. Pattarkine holds a Ph.D. in environmental engineering from Virginia Tech and a Master of Technology degree in chemical engineering from Nagpur University, India. He is an adjunct professor of environmental engineering at the University of Missouri and has also taught graduate students at Pennsylvania State University.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our executive officer and director, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and written representations from our executive officer and director, we believe that as of the date of this report they were not current in their 16(a) reports.

24
 

 

Board of Directors

 

Our board of directors currently consists of two members, Mr. Wayne Irving II and Mr. Vikram M. Pattarkine. Our directors serve one-year terms.

 

Audit Committee

 

The Company does not presently have an Audit Committee. The Board sits as the Audit Committee. No qualified financial expert has been hired because the company is too small to afford such expense.

 

Committees and Procedures

 

1.The registrant has no standing audit, nominating and compensation committees of the Board of Directors, or committees performing similar functions. The Board acts itself in lieu of committees due to its small size.

 

2.The view of the board of directors is that it is appropriate for the registrant not to have such a committee because its directors participate in the consideration of director nominees and the board and the Company are small.

 

3.The members of the Board who acts as nominating committee is not independent, pursuant to the definition of independence of a national securities exchange registered pursuant to section 6(a) of the Act (15 U.S.C. 78f(a).

 

4.The nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders, but the committee will consider director candidates recommended by security holders.

 

5.The basis for the view of the Board that it is appropriate for the registrant not to have such a policy is that there is no need to adopt a policy for a small company.

 

6.The nominating committee will consider candidates recommended by security holders, and by security holders in submitting such recommendations.

 

7.There are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security holders except to find anyone willing to serve with a clean background.

 

8.The nominating committee's process for identifying and evaluation of nominees for director, including nominees recommended by security holders, is to find qualified persons willing to serve with a clean backgrounds. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board.

 

Code of Ethics

 

In December 2008 we adopted a Code of Business Conduct and Ethics which applies to our officers, directors, employees and consultants.  This Code outlines the broad principles of ethical business conduct we adopted, covering subject areas such as:

 

     
  compliance with applicable laws and regulations.
  handling of books and records.
  public disclosure reporting.
  insider trading.
  discrimination and harassment.
  health and safety.
  conflicts of interest.
  competition and fair dealing; and
  protection of company assets.

 

Limitation of Liability of Directors

 

Pursuant to the Nevada General Corporation Law, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director's liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments, and amounts paid in settlement in connection with any claim against a Director if he acted in good faith and in a manner he believed to be in our best interests.

 

25
 

Nevada Anti-Takeover Law and Charter and By-law Provisions

 

The anti-takeover provisions of Sections 78.411 through 78.445 of the Nevada Corporation Law apply to Monster Offers Section 78.438 of the Nevada law prohibits the Company from merging with or selling more than 5% of our assets or stock to any shareholder who owns or owned more than 10% of any stock or any entity related to a 10% shareholder for three years after the date on which the shareholder acquired the Monster Offers shares, unless the transaction is approved by Monster Offers' Board of Directors. The provisions also prohibit the Company from completing any of the transactions described in the preceding sentence with a 10% shareholder who has held the shares more than three years and its related entities unless the transaction is approved by our Board of Directors or a majority of our shares, other than shares owned by that 10% shareholder or any related entity. These provisions could delay, defer or prevent a change in control of Monster Offers.

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively.  Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.  Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during fiscal 2012.

 

Item 11. Executive Compensation

 

The following table sets forth certain compensation information for: (i) each person who served as the chief executive officer of our company at any time during the last two years, regardless of compensation level, and (ii) each of our other executive officers, other than the chief executive officer, serving as an executive officer at any time during 2012. The foregoing persons are collectively referred to herein as the "Named Executive Officers." Compensation information is shown for fiscal years 2012 and 2011.

 

Monster Offers Summary Compensation Table

 

    Year       Compen-  
  Principal Ending Salary Bonus Awards sation Total
Name Position Dec. 31, ($) ($) ($) ($) ($)
               
Wayne Irving II (1) CEO 2012 88,500 0 0 0 0
Brandon M. Graham (2) CFO 2011 0 0 0 0 0
William F. Povondra, Jr (3) Former Secretary/Director 2011 0 0 0 0 0
Vikram M. Pattarkine, PH.D. (4) Director 2012 0 0 0 0 0
Paul Gain(5) Former CEO/Director 2011 0 0 0 8,000 8,000

 

 

Note: (1) Wayne Irving II was appointed as an Officer and Director of the Company on May 15, 2012.

 

(2) Brandon M. Graham was appointed as the Company’s Chief Financial Officer on March 15, 2013.

 

(3) Vikram M Pattarkine, Ph.D. was appointed as Officers and/or Directors of the Company on November 9, 2012.

 

(4) William F. Povondra, Jr. was appointed as Officers and/or Directors of the Company on November 9, 2012. Mr. Povondra resigned as an officer of the Company effective February 13, 2013 and as a director effective February 20, 2013.

 

(5) Paul Gain resigned his position as CEO and Director of the Company on November 9, 2012.

 

We do not maintain key-man life insurance for our executive officer/director. We do not have any long-term compensation plans, stock option plans or employment agreements with our executive officer/director.

 

How Mr. Irvings compensation is determined

 

On August 1, 2011 the Company’s wholly owned subsidiary Ad Shark entered into an employment agreement with its President Wayne Irving. The term of employment shall be three (3) years, commencing on the August 1, 2011 and terminating on July 31, 2014 or at a later mutually agreeable date. Salary compensation is to be paid at the rate of $88,500 annually, payable on a monthly basis. On the anniversary of employment, this rate will increase 5% annually. At December 31, 2012 the Company had accrued wages of $127,219 which are included in accounts payable and accrued expenses balance.

 

26
 

Stock Option Grants

 

We did not grant any stock options to the executive officer or director from inception through fiscal year end December 31, 2012.

 

Outstanding Equity Awards at 2012 Fiscal Year-End

 

We did not have any outstanding equity awards as of December 31, 2012 to Company executives.

 

Option Exercises for Fiscal 2012

 

There were no options exercised by our named executive officer in fiscal year 2012.

 

Potential Payments Upon Termination or Change in Control

 

We have not entered into any compensatory plans or arrangements with respect to our named executive officer, which would in any way result in payments to such officer because of his resignation, retirement, or other termination of employment with us or our subsidiaries, or any change in control of, or a change in his responsibilities following a change in control.

 

Director Compensation

 

Our director was not paid any compensation during the fiscal year ending December 31, 2012.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this annual report on Form 10-K, which account for our recent 300:1 reverse split by (i) each Named Executive Officer, (ii) each member of our Board of Directors, (iii) each person deemed to be the beneficial owner of more than five percent (5%) of any class of our common stock, and (iv) all of our executive officers and directors as a group. Unless otherwise indicated, each person named in the following table is assumed to have sole voting power and investment power with respect to all shares of our common stock listed as owned by such person.

 

         
Name and Address of Beneficial Owner  

Number of Shares

Beneficially Owned

 

Percentage

of Outstanding

Shares of Common

Stock (1)

         
Wayne Irving II (2)   13,662,002   43.6%
Vikram M. Pattarkine, Ph.D. (3)   253,554   0.8%
Brandon S. Chabner, Esq. (4)   2,515,285   8.0%
Jeffrey Weiss (5)   4,946,756   15.7%
         
All Directors and Officers as a Group   14,023,829   44.7%

 

  (1) Percent of Class is based on 32,528,318 shares issued and outstanding as of March 25, 2013.

 

  (2) Wayne Irving II, 27665 Forbes Road, Laguna Niguel, CA 92677, is beneficial owner who has the ultimate voting control over 7,222,866 shares held in the name of Gecco Consulting, LLC, and 6,439,136 shares personally held. Not included in this ownership number are 332,313 shares owned by family members of Wayne Irving II.

 

  (3) Vikram M. Pattarkine, Ph.D., 27665 Forbes Road, Laguna Niguel, CA 92677.

 

  (4) Brandon S. Chabner, Esq., 27665 Forbes Road, Laguna Niguel, CA 92677. This number includes 37,935 shares owned by Mr. Chabner’s family trust.

 

  (5) Jeffrey Weiss, 1850 S. Avenue 9B, Yuma, AZ 85364.

 

 

 

We are not aware of any arrangements that may result in "changes in control" as that term is defined by the provisions of Item 403(c) of Regulation S-B.

 

We believe that all persons named have full voting and investment power with respect to the shares indicated, unless otherwise noted in the table. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

27
 

 

The Company's Director has contributed office space for the Company's use for all periods presented. There is no charge to Monster Offers for the space. Management believes that its current facilities are adequate for its needs through the next twelve months, and that, should it be needed, suitable additional space will be available to accommodate expansion of the Company's operations on commercially reasonable terms, although there can be no assurance in this regard. Our officer will not seek reimbursement for past office expenses. No written agreement exists that this officer/director will continue to donate office space to the operations. Therefore, there is no guarantee that he will not seek reimbursement for the donated office space in the future.

 

The Company and its wholly owned subsidiary Ad Shark both have $300,000 line of credit agreements with Iconosys. Both line of credit agreements have terms of 4%, payable on demand. Iconosys is a related party to the Company through Wayne Irving, who is an officer of both Companies. Iconosys was also at one time the parent company to Ad Shark, Inc. At December 31, 2012 and 2011 the total loan receivable balance advanced to Iconsys is $452,362 and $0. At December 31, 2012 and 2011, the accrued interest receivable was $8,840 and $0.

 

In 2012 the Company had certain debts paid directly by Iconosys, a related party through Wayne Irving. The amount paid on behalf of the Company totaled $13,250 as of December 31, 2012 and were recorded as a note payable to related party. The note payable has terms of 0% interest and is payable on demand.

 

The Company was loaned money by Wayne Irving, an officer of the Company, with 0% interest and payable on demand. At December 31, 2012 and 2011 the loan from officer balance was $101,125 and $0.

 

Ad Shark Acquisition

 

The Chairman, Chief Executive Officer and Chief Financial Officer of Monster Offers is Wayne Irving II; Mr. Irving has been an officer and director of the Company since May 15, 2012. On November 9, 2012, Monster Offers entered into an Acquisition Agreement and Plan of Merger to acquire Ad Shark. At the time of this transaction, Wayne Irving II was also the Chief Executive Officer and a director of Ad Shark. He is also the Chief Executive Officer, Director and majority shareholder of Iconosys, Inc. (“Iconosys”), which owned Ad Shark prior to Iconosys’ spinoff (the “Spinoff”) of its shareholdings in Ad Shark to its shareholders. Subsequent to the Spinoff, Ad Shark merged with Monster Offers (the “Merger”). As a result of the Merger, Mr. Irving became the director, Chairman, Chief Executive Officer and Chief Financial Officer of the Company, which was the surviving entity of the Merger, and remains the largest shareholder of the Company. As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full force and effect a three-year Employment Agreement between Ad Shark and Mr. Irving which was entered into on August 1, 2012.

 

As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full force and effect and to honor an ISO (Independent Sales Organization) Agreement between Ad Shark and Iconosys for the duration of the agreement, which terminates in June, 2013. At the time that subject agreement was entered into by the parties, Wayne Irving II was a principal executive officer and director for both Ad Shark and Iconosys. This Agreement allows Ad Shark to receive compensation from Iconosys in exchange for services rendered by Ad Shark in connection with its acting as Iconosys’ Independent Sales Organization. Under the terms of this Agreement, at the time of the Merger, Iconosys currently had an obligation to pay Ad Shark approximately $75,000.

 

As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full and effect and to honor the Engagement Agreement dated March 19, 2011 between the Law Office of Brandon S. Chabner, a Professional Corporation, and Ad Shark. Brandon S. Chabner, Esq., is a director and corporate officer of Iconosys and 5%-plus shareholder of Monster Offers. The above-referenced Engagement Agreement provides for the provision of discounted cash rate legal services in exchange for equity-based compensation. 

 

As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full and effect and to honor a Line of Credit Agreement dated June 19, 2012 (the “LOC Agreement”) between Ad Shark, as “Lender,”, and Iconosys, as “Borrower.” This is a $300,000 revolving line of credit, pursuant to which, as of the effective time of the Merger, Iconosys has an obligation to repay Ad Shark approximately $271,000 in borrowings. This represents funds borrowed by Iconosys from Ad Shark on various dates during the period June 19, 2012 through October 9, 2012. Monster Offers agreed to assume Ad Shark’s rights and obligations under the LOC Agreement as an integral part of this Merger. As of the Effective Time of the Merger, Monster Offers also owed Iconosys approximately $75,000 in repayments of monies previously borrowed by Monster Offers from Iconosys, and which obligation, as agreed to by Monster Offers and Ad Shark in the Merger Agreement, may be offset by Iconosys against Iconosys’ repayment obligations to Monster Offers under the LOC Agreement.

 

As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full effect two separate Consulting Agreements, each dated June 1, 2012, between Ad Shark and Paul Gain, a former officer and director of Monster Offers, and between Ad Shark and Paul West. Under each of these Consulting Agreements, Ad Shark paid grants of Common Stock of Five Million (5,000,000) and One Million Five Hundred Thousand (1,500,000) of restricted Ad Shark shares to Mr. Gain and Mr. West, respectively, for past consulting services rendered to Ad Shark. As part of these Consulting Agreements, each of Messrs. Gain and West entered into a Confidentially Agreement pursuant to which (i) they each agreed to keep Ad Shark proprietary information confidential, and (ii) for a period of twelve (12) months immediately following the termination of their applicable Consulting Agreement, they each agreed not to solicit Ad Shark employees or independent contractors.

 

28
 

Iconosys Acquisition

 

On March 4, 2013, we entered into a Master Purchase Agreement (the “Master Agreement”), an Asset Purchase and Domain Name, Web Site Content and Trademark Assignment Agreement (the “APA”), and a Stock Purchase Agreement (the “SPA” and together with the Master Agreement and the APA, the “Purchase Agreements”) with Iconosys.

 

The Company and Iconosys entered into the Purchase Agreements in order for the Company to purchase, and for Iconosys to sell, certain intellectual property assets, including, without limitation, domain names, trademarks, and smart phone apps, and 15,046,078 shares of Iconosys common stock, $0.001 par value, in exchange for, among other consideration, the Company’s cancellation of the outstanding debt arising under the LOC Agreement. The stock was sold through the SPA pursuant an exemption from registration under the Securities Act of 1933, in reliance on Section 4(2) thereof and Rule 506 of Regulation D thereunder.

 

Promoters

 

Among our officers and directors, Mr. Wayne Irving II can be considered a promoter of the Company in consideration of his participation and managing of the business of the Company.

 

Item 14. Principal Accountant Fees and Services.

 

Patrick Rodgers CPA, PA served as our principal independent public accountants for the fiscal year ending December 31, 2012. De Joya Griffith & Company, LLC served as our principal independent public accountants for the fiscal years ending December 31, 2011. Aggregate fees billed to us for the years ended December 31, 2012 and 2011 were as follows:

 

 

 

 

For Year Ended
December 31,

 

For the Year Ended

December 31

  2012   2011
Audit Fees (1) $10,000   $22,150
(     Audit-Related Fees  $2,000   $2,000
(3   Tax Fees       
(     All Other Fees      

 

Total fees paid or accrued to our principal auditors

 

(1) Audit Fees include fees billed and expected to be billed for services performed to comply with Generally Accepted Auditing Standards (GAAS), including the recurring audit of the Company's financial statements for such period included in this Annual Report on Form 10-K and for the reviews of the quarterly financial statements included in the Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.

  

Audit Committee Policies and Procedures

 

We do not have an audit committee; therefore our directors pre-approve all services to be provided to us by our independent auditor. This process involves obtaining (i) a written description of the proposed services, (ii) the confirmation of our Principal Accounting Officer that the services are compatible with maintaining specific principles relating to independence, and (iii) confirmation from our securities counsel that the services are not among those that our independent auditors have been prohibited from performing under SEC rules. Our sole director then makes a determination to approve or disapprove the engagement of De Joya Griffith & Company, LLC for the proposed services. In the fiscal year ending December 31, 2010, all fees paid to De Joya Griffith & Company, LLC were unanimously pre-approved in accordance with this policy.

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

 The following information required under this item is filed as part of this report:

 

29
 

 

 

(a)Exhibit Index

 

        Incorporated by reference

  Exhibit Exhibit Description Filed herewith Form Period Ending Exhibit Filing Date
  3.1 Articles of Incorporation   SB-2   3.1 01/15/08
  3.2 By-laws as currently in effect   SB-2   3.2 01/15/08
  3.2 Amended Articles of Incorporation   SB-2   3.3 01/12/12
  10.1 Asset Exchange Agreement by and between Monster Offers and Prime Mover Global, LLC, dated August 5, 2010  

 

8-K

  10.1 09/02/10
  10.2 Share Lock-Up Agreement with Scott J. Gerardi, dated August 6, 2010   8-K   10.2 09/02/10
  10.3 Share Lock-Up Agreement with Powerhouse Development, dated August 6, 2010   8-K   10.3 09/02/10
  10.4 Share Lock-Up Agreement with Paul Gain, dated August 6, 2010   8-K   10.4 09/02/10
  10.5 Share Lock-Up Agreement with Jonathan W. Marshall, dated August 6, 2010   8-K   10.5 09/02/10
  10.6 Investor and Public Relations Agreement between Monster Offers and Emerging Growth Research, LLC, date November 10, 2010   8-K   10.9 11/19/10
  10.7 Exchange and Hold Harmless Agreement with Scott J. Gerardi dated November 19, 2010 X 8-K   10.7 11/24/10
  10.8 Drawdown Equity Financing Agreement between Monster Offers and Auctus Private Equity Fund, LLC, dated December 23, 2010.   8-K   10.6 01/03/11
  10.9 Registration Rights Agreement between Monster Offers and Auctus Private Equity Fund, LLC, dated December 23, 2010.   8-K   10.7 01/03/11
  10.10 Consulting Agreement with Christina R. Hansen, dated January 21, 2011   S-8   10.1 01/27/11
  10.11 Investor and Public Relations Agreement between Monster OFFERS and Equititrend Advisors, LLC, dated January 21, 2011   8-K   10.11 02/03/11
  10.12 Strategic Alliance and Licensing Agreement between Monster OFFERS and SSL5, dated March 14, 2011   8-K   10.12 03/16/11
  23.1 Consent letter from DeJoya Griffith, LLC X        
  31.1 Certification of President and Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act X 8-K   99.1 09/30/11
  32.1 Certification of President and Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act X 8-K   99.2 09/30/11
    Consulting Agreement with Jeffrey Weiss, dated April 9, 2012   8-K     04/30/12
    Consulting Agreement with Cleverson Schmidt, dated April 23, 2012   8-K     6/28/12
    Acquisition and Plan of Merger Agreement with AdShark, dated 11/9/12 (+ Articles of Merger)   8-K     11/13/12

 

 

 

 

30
 

 

    Consulting Agreement between AdShark and Paul West, dated 6/1/12   8-K     11/13/12
    Line of Credit Agreement between AdShark and Iconosys, dated 6/19/12   8-K     11/13/12
    Engagement Agreement between AdShark and The Law Office of Brandon S. Chabner, dated 3/19/11   8-K     11/13/12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31
 

 

 

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.

 

 

 

Monster Offers

Registrant

 
     
  /s/ Wayne Irving II  
  Name: Wayne Irving II  
 

Principal Executive Officer

Principal Financial Officer

 
     
     
Date:  April 16, 2013  
     
     
         

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the dates indicated have signed this report below.

 

  /s/ Wayne Irving II  
  Name: Wayne Irving II  
 

Principal Executive Officer

Principal Financial Officer

 
     
     
Date:  April 16, 2013  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32
 

Table of Contents

  

  Page
Financial Statements of Monster Offers:  
   
Report of Independent Registered Public Accounting Firm F-2
   
Report of Independent Registered Public Accounting Firm F-3
   
Consolidated  Balance Sheets as of December 31, 2012 and 2011 F-4
   
Consolidated Statements of Operations for the Years ended December 31, 2012 and 2011, and from Inception (February 23, 2007) to December 31, 2012 F-5
   
Consolidated Statement of Stockholders' Deficit for Years ended December 31, 2012 and 2011, and from Inception (February 23, 2007) to December 31, 2012 F-6
   
Consolidated Statement of Cash Flows for the Years ended December 31, 2012 and 2011, and from Inception (February 23, 2007) to December 31, 2012 F-7
   
Notes to the Consolidated Financial Statements F-8

 

 

 

 

F-1
 

 

Patrick Rodgers, CPA, PA

309 E. Citrus Street

Altamonte Springs, FL 32701

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Stockholders and Board of Directors

Monster Offers, Inc.

 

I have audited the accompanying balance sheets of Monster Offers, Inc. as of December 31, 2012 and the statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2012. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audit.

 

I conducted my audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

 

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Monster Offers, Inc. as of December 31, 2012 and the results of its operations and its cash flows for the year period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has experienced losses from operations since inception, and it does not have a source of revenue sufficient to cover its operating costs. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Patrick Rodgers, CPA, PA

Altamonte Springs, Florida

April 15, 2013

 

 

 

  

 

 

 

F-2
 

De Joya Griffith & Company, LLC

CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

 

Report of Independent Registered Public Accounting Firm

 

To The Board of Directors and Stockholders of

Monster Offers

 

We have audited the accompanying balance sheets of Monster Offers (A Development Stage Company) (the “Company”) as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and from inception (February 23, 2007) to December 31, 2011. Monster Offers' management is responsible for these financial statements. Our responsibility is to express an opinion on the financial statements based on our audits.

 

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Monster Offers as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended and from inception (February 23, 2007) to December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

De Joya Griffith & Company, LLC

 

/s/ De Joya Griffith & Company, LLC

Henderson, NV

April 16, 2012

 

 

 

 

 

 

F-3
 

 

MONSTER OFFERS
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
       
  December 31,   December 31,
Assets: 2012   2011
Current Assets      
 Cash   $              182,820    $                 3,817
 Accounts receivable, net of allowance for doubtful      
 accounts of $1,250 and $0                       4,173                        9,423
 Loan receivable to related party                  452,362                                -
 Interest receivable                       8,840                                -
 Prepaid expenses                    46,079                     26,272
       
     Total Current Assets                  694,274                     39,512
       
Fixed Assets      
 Property and equipment, net                       1,248                                -
 Website, net                    44,186                                -
       
     Total Fixed Assets                    45,434                                -
       
Other Assets      
 Investment in Iconosys                               -                   100,000
 Unamortized financing fees                               -                        2,421
       
Total Other Assets                               -                   102,421
       
     Total Assets  $              739,708    $             141,933
       
Liabilities and Stockholders' Equity:      
Current Liabilities      
 Accounts payable & accrued expenses  $              197,113    $               58,229
 Accrued interest                       2,050                        9,341
 Unearned Revenues                               -                     33,333
 Loan from officer                  101,125                                -
 Notes payable to related party                    13,250                                -
 Convertible notes payable, net of unamortized discount      
 of $0 and $37,131, respectively                    38,500                   176,330
       
     Total Liabilities                  352,038                   277,233
       
Stockholders' Equity:      
 Common stock, $0.001 par value 75,000,000 shares      
 authorized, 3,389,361 and 220,568 shares issued and      
 outstanding, respectively                       3,389                           221
 Additional paid in capital               4,835,503                   910,385
 Stock subscription payable                  760,449                   486,575
 Deficit accumulated during the development stage             (5,211,671)              (1,532,481)
     Total stockholders' equity (deficit)                  387,670                 (135,300)
       
     Total Liabilities and Stockholders' Equity   $              739,708    $             141,933
       
The accompanying notes are an integral part of these financial statements.

 

 

 

F-4
 

 

MONSTER OFFERS
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
           
          From Inception
          (February 23, 2007) to
  For the Years Ended December 31,   December 31, 
  2012   2011   2012
Revenues          
Commission revenues  $              46,000    $            156,608    $                     203,385
Commission revenues related party                             -                               -                           326,247
License revenues                   33,333                     66,667                           100,000
Service- related party                             -                               -                             73,201
     Total revenues                   79,333                  223,275                           702,833
           
Cost of services                             -                               -                           249,828
           
     Gross Profit                   79,333                  223,275                           453,005
           
Operating expenses:          
 General and administration                215,710                  126,125                           515,713
 Consulting                325,768                  324,560                        1,060,946
 Salaries                   55,456                  144,200                           259,656
 Marketing and promotions                     4,370                     10,123                             40,271
 Depreciation and amortization                     7,805                     24,565                             32,370
 Professional fess                   28,605                     32,589                           100,802
Total operating expenses                637,714                  662,162                        2,009,758
           
  Loss from operations              (558,381)                (438,887)                      (1,556,753)
           
Other income and (expenses):          
 Interest expense                 (61,600)                   (17,460)                           (80,891)
 Interest income                     5,159                               -                               5,159
 Financing expense                 (31,148)                (117,940)                         (160,987)
 Loss on extinguishment of debt           (2,497,367)                               -                      (2,497,367)
 Debt forgiveness                             -                          846                               6,456
 Refund on expenses                             -                               -                             34,000
 Impairment expense              (100,000)                (425,435)                         (525,435)
Total other income and (expenses)           (2,684,956)                (559,989)                      (3,219,065)
           
    Net loss before taxes           (3,243,336)                (998,876)                      (4,775,817)
           
Tax provisions                             -                               -                                        -
           
    Net loss after taxes  $       (3,243,336)    $          (998,876)    $               (4,775,817)
           
Basic & diluted loss per share  $               (1.42)    $                 (6.09)    
           
Weighted average shares outstanding             2,289,099                  164,039    
           
The accompanying notes are an integral part of these financial statements.

 

F-5
 

 

MONSTER OFFERS
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
               
      Additional  Common Common    
  Common Stock Paid in Stock Stock Accumulated  
  Shares Amount Capital Receivable Payable Deficit Total
Contributed Capital, February 2007                 -  $         -  $           400  $            -  $             -  $                  -  $             400
Founder shares issued for services         56,250           56           11,194               -                -                      -            11,250
Contributed Capital                 -             -               585               -                -                      -                585
Tropical PC spin off shares           4,050             4                 (4)               -                -                      -                    -
Shares returned to Company         (3,000)           (3)                  3               -                -                      -                    -
Shares issued pursuant to offer         37,500           38           33,712               -                -                      -            33,750
Net loss                 -             -                   -               -                -              (6,595)            (6,595)
Balance December 31, 2007         94,800           95           45,890               -                -              (6,595)            39,390
               
Net loss                 -             -                   -                  -            (41,556)           (41,556)
Balance December 31, 2008         94,800           95           45,890               -                -            (48,151)            (2,166)
               
Private placement          67,500           67           13,432       (1,000)                -                      -            12,499
Net income                 -             -                   -               -                -               8,741              8,741
Balance December 31, 2009       162,300         162           59,322       (1,000)                -            (39,410)            19,074
               
Cancellation of unearned shares         (5,000)           (5)             (995)         1,000                -                      -                    -
Shares issued for cash         40,000           40            7,960       (8,000)                -                      -                    -
Shares issued for services           3,662             4         462,833          (400)                -                      -          462,437
Net loss                 -             -                   -                  -          (494,195)         (494,195)
Balance December 31, 2010       200,962         201         529,120       (8,400)                -          (533,605)           (12,684)
               
Shares issued for services           2,000             2         155,998               -            750                      -          156,750
Shares issued for license                 -             -                   -               -      450,000                      -          450,000
Issuance of stock               
options for services                 -             -           14,302               -                -                      -            14,302
Shares issued as part of strategic               
alliance                 -             -                   -               -        35,825                      -            35,825
Shares issued for conversion of                                -
notes payable         16,296           16         202,776               -                -                      -          202,792
Sale of stock at 3% discount           1,309             1           13,190               -                -              13,191
Financing fees incurred                                 -
on sale of  stock                 -             -           (5,000)               -                -                      -            (5,000)
Write off of stock receivable                 -             -                   -         8,400                -                      -              8,400
Net loss                  -             -                   -               -                -          (998,876)         (998,876)
Balance December 31, 2011       220,567         220         910,386               -      486,575        (1,532,481)         (135,300)
               
Shares issued for debt settlement     2,732,156       2,732      2,724,085               -                -                      -        2,726,817
Shares issued as part of strategic               
alliance             834             1           35,824               -       (35,825)                      -                    -
Stock options for services                 -             -         260,905               -                -                      -          260,905
Shares issued for services       430,000         430         226,710               -          3,333                      -          230,473
Stock subscription payable                 -             -                   -               -      278,426                      -          278,426
Shares issued for note extension           5,000             5           14,995               -                -                      -            15,000
Stock split adjustment             803             1                   -               -                -                      -                    1
Effect from share exchange               
agreement  with Ad Shark, Inc.                 -             -         662,598               -        27,940          (435,854)          254,684
Net loss                  -             -                   -               -                -        (3,243,336)      (3,243,336)
Balance December 31, 2012     3,389,360  $   3,389  $   4,835,503  $            -  $   760,449  $    (5,211,671)  $       387,670
               
The accompanying notes are an integral part of these financial statements.

 

 

F-6
 

 

MONSTER OFFERS
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
           
          From Inception
          (February 23, 2007)
  For the Year Ended   to
  December 31,   December 31, 
  2012   2011   2012
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Loss for the period  $   (3,243,336)    $     (998,876)    $              (4,775,817)
Adjustments to reconcile net loss to net cash          
provided by operating activities:          
     Impairment loss           100,000             425,435                         525,435
     License revenues- non cash            (33,333)             (66,667)                       (100,000)
     Non-cash compensation                        -                 8,400                              8,400
     Forgiveness of debt                        -                  (846)                               (846)
     Financing fees              31,148             117,940                         160,987
     Stock for services           230,473             171,051                         863,960
     Stock options for services           260,905                          -                         260,905
     Stock for note extension              15,000                          -                           15,000
     Bad debt                1,250                          -                              1,250
     Discount on notes payable              15,000                          -                           15,000
     Loss on extinguishment of debt        2,497,367                          -                      2,497,367
     Strategic alliance costs              35,825               10,053                           45,878
     Effect from share exchange              24,618                          -                           24,618
     Depreciation and amortization                7,805               24,565                           32,370
Changes in Operated Assets and Liabilities:          
     Decrease (increase) in prepaids            (19,807)               51,667                         (19,807)
     Increase (decrease) in accounts receivable                4,000               (3,071)                                 929
     Increase in interest receivable              (5,159)                          -                            (5,159)
     Decrease in unamortized financing fees                2,421                 2,308                            (6,919)
     Increase in loan receivable to related party         (171,812)                          -                       (171,812)
     Increase in accounts payable and accrued expenses              62,129               44,077                         117,006
     Increase (decrease) in accrued interest              (7,291)               17,705                           12,245
Net cash (used) in operating activities         (192,797)           (196,259)                       (499,010)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
     Proceeds from sale of stock           263,425               11,045                         331,970
     Proceeds from officer loan           101,125                          -                         101,125
     Proceeds from convertible notes                         -             152,500                         240,500
     Payments on  convertible notes              (6,000)                          -                            (6,000)
     Proceeds from notes payable to related party              13,250                          -                           13,250
     Contributed Capital                        -                          -                                 985
Net Cash Provided by Financing Activities           371,800             163,545                         681,830
           
Net (Decrease) Increase in Cash           179,003             (32,714)                         182,820
Cash at Beginning of Period                 3,817               36,531                                      -
Cash (Overdraft) at End of Period  $       182,820    $           3,817    $                   182,820
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:        
           
Stock issued for purchase of license  $                   -    $      450,000    $                   450,000
           
Stock issued for conversion of notes  $    2,726,817    $      202,792    $                2,929,609
           
The accompanying notes are an integral part of these financial statements.

F-7
 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

 

NOTE 1 – ORGANIZATION & BUSINESS DESCRIPTION

 

Monster Offers (a development stage company) (the "Company") was incorporated under the laws of the State of Nevada, as Tropical PC Acquisition Corporation on February 23, 2007 ("Inception"). On November 9, 2012 the Company executed a share exchange agreement with Ad Shark, Inc., a privately-held California corporation incorporated April 12, 2011. As a result of the share exchange agreement Ad Shark, Inc. became a wholly owned subsidiary of the Company. Ad Shark, Inc. organizes advertising sales efforts by constructing media and advertising delivery systems for Smartphone and Tablet application developers including the delivery of mobile banners, mobile video, mobile text messaging, and mobile email advertising.

 

The Company is a popular 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. The Company has been unable to commence its primary operations to-date due to lack of sufficient working capital, and therefore remains a Development Stage Company.

 

The Company earns fees via marketing services including the online promotion of its affiliate partners daily deals through its website, selling of industry data and analysis reports, and executing internet and social marketing campaigns for customers.

  

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 December 31, 2012 the Company recognized an accumulated deficit during development stage of approximately $4,779,622. 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.

 

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 (“US GAAP”).

 

Principles of Consolidation

 

The accompanying consolidated financial statements include all of the accounts of the Company and Ad Shark, Inc. as of December 31, 2012. Ad Shark, Inc. was acquired through a share exchange agreement on November 9, 2012. Therefore, the Company only reports the profits and losses from Ad Shark, Inc. after the date of merger. All intercompany balances and transactions have been eliminated.

 

Development Stage Company

 

The Company is currently a development stage enterprise reporting under the provisions of FASB ASC Topic 915, Development Stage Entity. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

 

 

 

 

F-8
 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Reclassification

 

On April 9, 2011, the Company executed a 300 to 1 reverse stock split, which was retrospectively applied to all financial statements, including the comparative balance sheet as of December 31, 2011.

 

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 December 31, 2012 and 2011, there are 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.

 

Advertising

 

Advertising costs are expensed when incurred. The Company incurred advertising expenses of $4,370 and $10,123 for the years ended December 31, 2012 and 2011, respectively. For the period since inception on February 23, 2007 through the year ended December 31, 2012, the Company has incurred advertising expenses of $40,271.

 

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.

 

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 December 31, 2012 and December 31, 2011, we have $5,423 and $9,423, respectively, in accounts receivable and $1,250 and $0 charged to allowance for doubtful accounts.

 

Equipment

 

Equipment is stated at cost, less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which at December 31, 2021 consist of computer equipment, which is 3 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for equipment betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or expense.

 

 

 

 

F-9
 

Monster Offers
(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Equipment (continued)

 

The Company will periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of equipment and website development costs or whether the remaining balance of equipment should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring their recoverability.

 

Website Development Costs

 

The Company recognizes the costs associated with developing a website in accordance with FASB ASC 350-50 “Website Development Costs”. Accordingly costs associated with the website consist primarily of website development costs paid to a third party. These capitalized costs are amortized based on their estimated useful life over two years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred.

 

 

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.

 

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 8).

 

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 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.

 

 

 

 

 

 

F-10
 

 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

Recent Accounting Pronouncements

 

ASU 2011-04. In May 2011, the FASB issued Accounting Standards Update 2011-14, “Fair Value Measurement (Topic 820)”. This Update will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with US GAAP and International Financial Reporting Standards (“IFRS”). The amendments in this Update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs and they explain how to measure fair value and they do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments in this Update apply to all reporting entities that are required or permitted to measure or disclose the fair value of an asset, a liability, or an instrument classified in a reporting entity’s shareholders’ equity in the financial statements. The amendments in this Update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption of ASU 2011-04 is not expected to have any material impact on our financial position, results of operations or cash flows.

 

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

 

NOTE 4 – PROPERTY & EQUIPMENT

 

Property and equipment consists of the following at December 31, 2012 and 2011:

 

                                                                                                                        2012 2011  
Property and equipment, net   $    2,364   $           -    
Less: accumulated depreciation         1,116   -    
Property and equipment, net   $    1,248   $           -    

 

The Company acquired the property and equipment through the share exchange agreement with Ad Shark, Inc. on November 9, 2012. Therefore the Company only recognized depreciation on the equipment after the share exchange date. Depreciation expense for the years ended December 31, 2012 and 2011 totaled $197 and $0.

 

NOTE 5 – WEBSITE DEVELOPMENT COSTS

 

Website development costs consist of the following at December 31, 2012 and 2011:

 

  2012 2011
Website                           $      91,298   $            -
Less: accumulated amortization                       47,112       -
Website, net   $  44,186      $            -

 

The Company acquired the website asset through the share exchange agreement with Ad Shark, Inc. on November 9, 2012. Therefore the Company only recognized amortization expense on the website after the share exchange date. Amortization expense for the years ended December 31, 2012 and 2011 totaled $7,608 and $0.

 

NOTE 6 – STOCK SPLIT

 

On April 9, 2011, the Company executed a 300 to 1 reverse stock split, which was retrospectively applied to all financial statements, including the comparative balance sheet as of December 31, 2011.

 

NOTE 7 – SHARE EXCHANGE AGREEMENT

 

On November 9, 2012 the Company acquired Ad Shark Inc., a privately-held California corporation, through a share exchange agreement whereby the Company will issue 27,939,705 common shares in exchange for all the outstanding equity of Ad Shark, Inc. As a result of the share exchange, Ad Shark, Inc. became a wholly owned subsidiary of the Company. As of December 31, 2012, no shares have been issued pertaining to the share exchange agreement. The Company has reported the issuable shares as a stock subscription payable on the balance sheet and statement of stockholders’ equity.

 

 

 

 

 

F-11
 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 8 - STOCKHOLDERS' DEFICIT

 

Common Stock

 

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

 

 On January 21, 2011, the Company issued 1,333 (post-split) 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 $78 per share (post-split), 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 year ended December 31, 2011 and the remaining portion of the term of the agreement.

 

On January 21, 2011, the Company also issued 667 (post-split) 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 $78 per share (post-split), 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 year ended December 31, 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, 167 (post-split) unregistered restricted shares of common stock will be exchanged for the services provided by the consultant. As of December 31, 2011, the Company determined the shares to be fully earned and were valued at a market value of $4.50 per share (post-split), totaling $750, and an expense was recognized. As of December 31, 2011 the 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 10,000 (post-split) unregistered restricted shares as consideration for an exclusive license of SSL5 existing intellectual property. The transaction was valued at the market value of $45 per share (post-split) for a total of $450,000, and recorded as stock payable. See Note 10 for further details of the agreement.

 

During the quarter ended June 30, 2011, the Company issued a total of 6,541 (post-split) shares of common stock to Asher Enterprises for the conversion of two convertible notes payable. See Note 10 for further details of these conversions.

 

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 834 (post-split) 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 $43 per share (post-split) for a total of $35,825, and recorded as stock payable. See Note 14 for further details of the agreement.

 

On July 8, 2011, the Company sold 617 (post-split) 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 9).

 

On July 19, 2011, the Company sold 255 (post-split) 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 9).

 

On July 28, 2011, the Company sold 92 (post-split) shares of free-trading common stock for a total of $1,014 (of which $447 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 9).

 

On August 9, 2011, the Company issued 1,594 (post-split) shares of common stock to Asher Enterprises for the conversion of $11,000 in principal of outstanding convertible notes payable. See Note 11 for further details of these conversions.

 

On August 19, 2011, the Company sold 345 (post-split) 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 9).

 

On September 2, 2011, the Company issued 3,134 (post-split) shares of common stock to Asher Enterprises for the conversion of $11,000 in principal of outstanding convertible notes payable. See Note 10 for further details of these conversions

 

F-12
 

 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 8 - STOCKHOLDERS' DEFICIT (continued)

 

On December 22, 2011, the Company issued 5,027 (post-split) shares of common stock to Asher Enterprises for the conversion of $8,000 in principal and $1,200 in accrued interest of outstanding convertible notes payable. See Note 10 for further details of these conversions.

 

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 11 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 13.

 

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 11 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 11 for further details of these conversions.

 

During the second quarter, Asher Enterprises took actions that were not beneficial to the Company or its Shareholders. As a result, 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 $2,497,367 million. See note 11.

 

On April 9, 2012, the Company issued 5,000 shares of its common stock for service rendered by a consultant. The shares were valued at the closing stock price on the date of issuance which was $1.95. This resulted in the Company recording an expense of $9,750.

 

On June 24, 2012, the Company issued 150,000 shares of its common stock for service rendered by a consultant. The shares were valued at the closing stock price on the date of issuance which was $1.25. This resulted in the Company recording an expense of $187,500.

 

On June 28, 2012 the Company issued 25,000 shares of its value common stock for service rendered by a consultant. The shares were valued at the closing stock price on the date of issuance which was $1.00. This resulted in the Company recording an expense of $25,000.

 

On July 1 and September 7, 2012, the Company issued a total of 250,000 shares for the exercise of 250,000 cashless stock options issued to two consultants in the previous quarter.

 

On November 9, 2012 the Company acquired Ad Shark Inc., through a share exchange agreement whereby the Company will issue 27,939,705 common shares in exchange for all the outstanding equity of Ad Shark, Inc (see note 7). As of December 31, 2012, no shares have been issued pertaining to the share exchange agreement. The Company has reported the issuable shares as a stock subscription payable on the balance sheet and statement of stockholders’ equity.

 

On November 27, 2012 the Company issued 5,000 shares to Tangier Investors as consideration for extending the outstanding note payable.

 

In the fourth quarter of 2012 the Company received $278,425 in cash from investors for the future issuance of 506,228 common shares. Of the $278,425 cash for stock, $15,000 was deposited directly into Iconosys bank account and was recorded as a loan receivable to related party on the balance sheet. The shares were not issued as of December 31, 2012 therefor were recorded as stock subscription payable. At December 31, 2012 the Company has 3,389,361 shares outstanding, respectively.

 

 

 

 

 

F-13
 

 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 8 - STOCKHOLDERS' DEFICIT (continued)

 

Stock Options

 

On March 14, 2011, as part of the Strategic Alliance and Licensing agreement, 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 (post-split) 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 shares (post-split) will become vested and available for purchase by the Consultant. The price of these shares will be at $0.3 (post-split) 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, 1,667 (post-split) 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 1.5 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 December 31, 2011, totaling 973 (post-split) shares, have been valued at $2,245 using the Black-Scholes option pricing model based upon the following assumptions: term of 1.2 years, risk free interest rate of 0.45%, a dividend yield of 0% and a volatility rate of 216%.

 

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%.

 

On May 12, 2012, the company entered into a consulting agreement with Thomas Cook Law Firm providing 150,000 stock options which were valued at $134,850. The options were valued using Black-Scholes option pricing model based upon the following assumptions: term of .25 years, risk free interest rate of 0.10%, a dividend yield of 0% and a volatility rate of 319%. All of the stock options were exercised in July of 2012.

 

On May 24, 2012, the company entered into a consulting agreement with Marlena Niemann providing 100,000 stock options which were valued at $124,900. The options were valued using Black-Scholes option pricing model based upon the following assumptions: term of .25 years, risk free interest rate of 0.21%, a dividend yield of 0% and a volatility rate of 318%. All of the stock options were exercised in September of 2012.

 

As of September 13, 2012, 1,667 shares fully vested in accordance with the agreement and were revalued at $1,424 using the Black-Scholes option pricing model based upon the following assumptions: term of .5 years, risk free interest rate of 0.13%, a dividend yield of 0% and a volatility rate of 299%.

 

A pro-rated portion of the unvested stock options for the service period from September 14 to December 31, 2012, totaling 972 shares, have been valued at $1,268 using the Black-Scholes option pricing model based upon the following assumptions: term of .2 years, risk free interest rate of 0.14%, a dividend yield of 0% and a volatility rate of 295% 

 

 

 

F-14
 

 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 8 - STOCKHOLDERS' DEFICIT (continued)

 

The following summarizes pricing and term information for options issued to consultants that are outstanding as of December 31, 2012 and 2011:

 

  Year ended December 31, 2012   Year ended December 31, 2011
      Weighted           Weighted    
      Average   Aggregate       Average   Aggregate
  Number of    Exercise   Intrinsic   Number of    Exercise   Intrinsic
Stock Options Options   Price   Value   Options   Price   Value
                       
Balance at beginning of year 6,667    $       0.30                 -     6,667    $       0.30                 -  
                       
Granted 250,000          $0.001                 -                       -                 -                   -  
Exercised (250,000)                 -                  -                       -                 -                   -  
Forfeited -                 -                  -     -   -                 -  
                       
Balance at end of year 6,667    0.30                 -     6,667     0.37                 -  
                       
                       
Options exercisable at end of year 5,000    $       0.30                 -     1,667    $       0.30                 -  
                       
                       
Weighted average fair value of                      
options granted during year                   -                           -      

 

The fair value of the options was based on the Black Scholes Model using the following assumptions:

 

               
    2012   2011  
Exercise price:   $ 0.30   $ 0.30  
Market price at date of grant:   $ 1.00   $ 1.00  
Volatility:     229%-311 %   175%-216 %
Expected dividend rate:     0 %   0 %
Risk-free interest rate:     0.13%-0.21 %   0.21%-0.61 %

 

The following activity occurred under the Company’s plans:

 

               
    December 31,   December 31,  
    2012   2011  
Weighted-average grant date fair value of options granted   $ -   $ -  
Aggregate intrinsic value of options exercise     N/A     N/A  
Fair value of options recognized as expense   $ 2,645   $ 14,436  

 

 

 

 

F-15
 

 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 9 - 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 $78 per share (post-split), we estimated that we would be able to receive up to $1,950,000 in gross proceeds, assuming the sale of the entire 25,000 shares (post-split) registered hereunder pursuant to the Drawdown Equity Financing Agreement. We would be required to register additional shares to obtain the balance of $10,000,000 available under the Drawdown Equity Financing Agreement at the assumed offering price of $78. 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 220,568 (post-split) shares issued and outstanding, with 75,000,000 shares of common stock authorized, the Company would not need to authorize additional shares of its Common Stock should the Company obtain the entire $10,000,000.

 

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 was taken out of the proceeds of the first Drawdown.

 

During the year ended December 31, 2011, there were four individual sales of common stock in accordance with this agreement (see note 4). The Company received a total of $11,045 (net of $2,046 financing fees) for a total of 1,309 (post-split) 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.

 

For the year ended December 31, 2012, there were no additional sales made in accordance with this agreement. Moreover the agreement has expired as of December 29, 2012.

 

NOTE 10 - CONVERTIBLE NOTES PAYABLE

 

Asher Enterprises, Inc.

 

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

 

F-16
 

 

 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 10 – CONVERTIBLE NOTES PAYABLE (continued)

 

Asher Enterprises, Inc. (continued)

 

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 12 for details on how all Asher convertible debt was disposed of during the three months ending June 30, 2012.

 

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. See Note 12 for details on how all Asher convertible debt was disposed of during the three months ending June 30, 2012.

 

Tangier Investors LLP

 

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 11 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. In November of 2012 Tangier Investors LLP agreed to extend the terms of the convertible note for 5,000 common shares paid as consideration by the Company. This allowed the maturity date to be delayed until January 25, 2013.

 

At December 31, 2012 the Company had a convertible notes payable balance of $38,500 which is entirely to Tangier Investors LLP. At December 31, 2011 the Company had a convertible notes payable balance of $176,330 which was partly to Tangier Investors LLP and partly to Asher Enterprises, Inc. The accrued interest on convertible notes payable at December 31, 2012 and 2011 was $2,050 and $9,341.

 

NOTE 11 – 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 9 for further details of these conversions. During the second quarter, Asher Enterprises took actions that were not beneficial to the Company or its Shareholders. As a result, 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 $2,497,367. 

 

NOTE 12 – RELATED PARTY TRANSACTIONS

 

Free office Space provide by Company Director

 

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.

 

 

F-17
 

  

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 12 – RELATED PARTY TRANSACTIONS (continued)

 

Loan receivable to related party

 

The Company and its wholly owned subsidiary Ad Shark both have $300,000 line of credit agreements ($600,000 total) with Iconosys. Both line of credit agreements have terms of 4%, payable on demand. Iconosys is a related party to the Company through Wayne Irving, who is an officer of both Companies. Mr. Irving was appointed CFO in May of 2012 and then appointed CEO in late 2012. Iconosys was at one time the parent company to Ad Shark, Inc. At December 31, 2012 and 2011 the total loan receivable balance advanced to Iconsys is $452,362 and $0. At December 31, 2012 and 2011, the accrued interest receivable was $8,840 and $0.

 

Notes Payable to related party

 

In 2012 the Company had certain debts paid directly by Iconosys, a related party through Wayne Irving. The amount paid on behalf of the Company totaled $13,250 as of December 31, 2012 and were recorded as a note payable to related party. The note payable has terms of 0% interest and is payable on demand.

 

Loan from Officer

 

The Company was loaned money by Wayne Irving, an officer of the Company, with 0% interest and payable on demand. At December 31, 2012 and 2011 the loan from officer balance was $101,125 and $0.

 

Accrued Compensation to Officer

 

On August 1, 2011 the Company’s wholly owned subsidiary Ad Shark entered into an employment agreement with its President Wayne Irving. The term of employment shall be three (3) years, commencing on the August 1, 2011 and terminating on July 31, 2014 or at a later mutually agreeable date. Salary compensation is to be paid at the rate of $88,500 annually, payable on a monthly basis. On the anniversary of employment, this rate will increase 5% annually. At December 31, 2012 the Company had accrued wages of $127,219 which are included in accounts payable and accrued expenses balance.

 

Ad Shark Acquisition

 

The Chairman, Chief Executive Officer and Chief Financial Officer of Monster Offers is Wayne Irving II; Mr. Irving has been an officer and director of the Company since May 15, 2012. On November 9, 2012, Monster Offers entered into an Acquisition Agreement and Plan of Merger to acquire Ad Shark. At the time of this transaction, Wayne Irving II was also the Chief Executive Officer and a director of Ad Shark. He is also the Chief Executive Officer, Director and majority shareholder of Iconosys, Inc. (“Iconosys”), which owned Ad Shark prior to Iconosys’ spinoff (the “Spinoff”) of its shareholdings in Ad Shark to its shareholders. Subsequent to the Spinoff, Ad Shark merged with Monster Offers (the “Merger”). As a result of the Merger, Mr. Irving became the director, Chairman, Chief Executive Officer and Chief Financial Officer of the Company, which was the surviving entity of the Merger, and remains the largest shareholder of the Company. As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full force and effect a three-year Employment Agreement between Ad Shark and Mr. Irving which was entered into on August 1, 2012.

 

As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full force and effect and to honor an ISO (Independent Sales Organization) Agreement between Ad Shark and Iconosys for the duration of the agreement, which terminates in June, 2013. At the time that subject agreement was entered into by the parties, Wayne Irving II was a principal executive officer and director for both Ad Shark and Iconosys. This Agreement allows Ad Shark to receive compensation from Iconosys in exchange for services rendered by Ad Shark in connection with its acting as Iconosys’ Independent Sales Organization. Under the terms of this Agreement, at the time of the Merger, Iconosys currently had an obligation to pay Ad Shark approximately $75,000.

 

As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full and effect and to honor the Engagement Agreement dated March 19, 2011 between the Law Office of Brandon S. Chabner, a Professional Corporation, and Ad Shark. Brandon S. Chabner, Esq., is a director and corporate officer of Iconosys and 5%-plus shareholder of Monster Offers. The above-referenced Engagement Agreement provides for the provision of discounted cash rate legal services in exchange for equity-based compensation.

 

 

 

 

F-18
 

 

 

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 12 - RELATED PARTY TRANSACTIONS (continued)

 

Ad Shark Acquisition (continued)

 

 

As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full and effect and to honor a Line of Credit Agreement dated June 19, 2012 (the “LOC Agreement”) between Ad Shark, as “Lender,”, and Iconosys, as “Borrower.” This is a $300,000 revolving line of credit, pursuant to which, as of the effective time of the Merger, Iconosys has an obligation to repay Ad Shark approximately $271,000 in borrowings. This represents funds borrowed by Iconosys from Ad Shark on various dates during the period June 19, 2012 through October 9, 2012. Monster Offers agreed to assume Ad Shark’s rights and obligations under the LOC Agreement as an integral part of this Merger. As of the Effective Time of the Merger, Monster Offers also owed Iconosys approximately $75,000 in repayments of monies previously borrowed by Monster Offers from Iconosys, and which obligation, as agreed to by Monster Offers and Ad Shark in the Merger Agreement, may be offset by Iconosys against Iconosys’ repayment obligations to Monster Offers under the LOC Agreement.

 

As a condition of the Merger between Monster Offers and Ad Shark, Monster Offers agreed to keep in full effect two separate Consulting Agreements, each dated June 1, 2012, between Ad Shark and Paul Gain, a former officer and director of Monster Offers, and between Ad Shark and Paul West. Under each of these Consulting Agreements, Ad Shark paid grants of Common Stock of Five Million (5,000,000) and One Million Five Hundred Thousand (1,500,000) of restricted Ad Shark shares to Mr. Gain and Mr. West, respectively, for past consulting services rendered to Ad Shark. As part of these Consulting Agreements, each of Messrs. Gain and West entered into a Confidentially Agreement pursuant to which (i) they each agreed to keep Ad Shark proprietary information confidential, and (ii) for a period of twelve (12) months immediately following the termination of their applicable Consulting Agreement, they each agreed not to solicit Ad Shark employees or independent contractors.

 

NOTE 13 - 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 is to issued 10,000 (post-split) of its unregistered restricted shares to SSL5. These shares were valued at the market rate of $45 (post-split) per share, for a total of $450,000. As of December 31, 2012, these shares have been recorded as stock payable.

 

At December 31, 2011, management performed an impairment analysis on the SSL5 license asset and determined that impairment was necessary due to the decrease in fair value of the common stock that has yet to be issued for the license. An impairment loss of $425,435 was recognized for the year. The remaining book value is $0 as of December 31, 2012 and 2011.

 

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 (post-split) 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 (post-split) shares will become vested and available for purchase by the Consultant. The price of these shares will be at $0.30 (post-split) 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.

 

Iconosys

 

In 2011, 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 (post-split) 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 (post-split) per share, for a total of $100,000. The entire value of the shares was recognized as unearned revenues and will be recognized over one year, the term of the license. For the year ended December 31, 2012 and 2011, the Company recognized $33,333 and $66,667 in license revenue.

 

F-19
 

  

Monster Offers

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2012 and 2011

 

NOTE 13 - STRATEGIC ALLIANCE & LICENSING AGREEMENTS (continued)

 

Iconosys (continued)

 

At December 31, 2012, management performed an impairment analysis on the Iconosys license asset and determined that impairment was necessary due to the fact that the 3,333 shares of Iconosys stock were not received by the Company. An impairment loss of $100,000 was recognized for the year ended December 31, 2012.

   

NOTE 14 - INCOME TAXES

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Net deferred tax assets consist of the following components as of December 31, 2012 and 2011:

 

      December 31, 2012   December 31,
2011
Deferred Tax Assets – Non-current:            
             
NOL Carryover     $ 1,419,300   $    339,265
             
Less valuation allowance       (1,419,300)   (339,265)
             
           
Deferred tax assets, net of valuation allowance     $ -   $            -                  -

 

Reconciliation between the statutory rate and the effective tax rate is as follows at December 31:

 

  2012 & 2011
Federal statutory tax rate (34%)
Permanent difference and other 34%
  0%

 

At December 31, 2012, the Company had net operating loss carryforwards of approximately $1,419,300 that may be offset against future taxable income from the year 2012 to 2032. No tax benefit has been reported in the December 31, 2012 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

 

NOTE 15 - SUBSEQUENT EVENTS

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that other than mentioned below no other material subsequent events exist.

 

  1. In January of 2013 the Company received $125,500 cash from investors for 288,181 common shares.

 

  1. On March 4, 2013, the Company entered into a Master Purchase Agreement with Iconosys (a private company) whereas the Company would cancel the entire outstanding line of credit balance and accrued interest in exchange for 15,046,078 shares of Iconosys. The Company also acquired Iconosys’s intellectual property such as trademarks, domain names, and smart phone apps. This is all described in detail in the 8-K filed on March 6, 2013.

 

 

 

F-20