UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 000-53266
MONSTER OFFERS
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 26-1548306
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4056 Valle Del Sol, Bonsall, CA 92003
Mail Delivery - P.O. Box 1092, Bonsall, CA 92003
---------------------------------------------------
(Address of principal executive offices)(Zip Code)
Issuer's telephone number, including area code: (760) 208-4905
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act (Check one).
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller Reporting Company |X|
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
As of May 18, 2011, the registrant's outstanding common stock consisted
of 60,888,707 shares, $0.001 par value. Authorized - 75,000,000 shares.
1
Table of Contents
Monster Offers
Index to Form 10-Q
For the Quarterly Period Ended March 31, 2011
Part I. Financial Information
Page
Item 1. Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 27
Item 4T. Controls and Procedures 27
Part II Other Information
Item 1. Legal Proceedings 31
Item 1A. Risk Factors 31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31
Item 3 -- Defaults Upon Senior Securities 31
Item 4 -- Submission of Matters to a Vote of Security Holders 33
Item 5 -- Other Information 33
Item 6. Exhibits 33
Signatures 35
2
Part I. Financial Information
Item 1. Financial Statements
Monster Offers
(A Development Stage Company)
Balance Sheets
March 31, December 31,
2011 2010
(Unaudited) (Audited)
------------- -------------
ASSETS
Current assets
Cash $ 3,915 $ 36,531
Accounts receivable 8,271 6,352
Prepaid stock compensation 116,292 51,667
------------- -------------
Total current assets 128,478 94,550
Other assets
Unamortized financing fees 4,509 5,296
License 450,000 -
------------- -------------
Total other assets 454,509 5,296
------------- -------------
TOTAL ASSETS $ 582,987 $ 99,846
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 35,759 $ 10,800
Accrued interest 5,373 1,831
Convertible notes payable, net of
unamortized discount of $40,527 and
$44,363, respectively 152,915 99,899
------------- -------------
Total current liabilities 194,047 112,530
------------- -------------
Total liabilities 194,047 112,530
Stockholders' equity (deficit)
Common stock, $0.001 par value, 75,000,000
shares authorized, 60,888,707 and
60,888,707 shares issued and outstanding
as of 3/31/11 and 12/31/10, respectively 60,889 60,289
Additional paid-in capital 629,400 469,032
Treasury stock 12,000,000 and 12,000,000
shares as of 3/31/11 and 12/31/10,
respectively - -
Common stock receivable (8,400) (8,400)
Common stock payable 450,974 -
Accumulated deficit during development stage (743,923) (533,605)
------------- -------------
Total stockholders' equity (deficit) 388,940 (12,684)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 582,987 $ 99,846
============= =============
The accompanying notes are an integral part of these financial statements.
3
Monster Offers
(A Development Stage Company)
Statements of Operations
(Unaudited)
Inception
For the three months ended (February 23, 2007)
March 31, to March 31,
2011 2010 2011
---------------- ---------------- ----------------
REVENUES
Commission revenue $ 8,000 $ - $ 8,777
Commission revenue -
related party 2,000 - 328,247
Services -
related party 623 65,000 73,824
---------------- ---------------- ----------------
Total Revenues 10,623 65,000 410,848
Cost of goods
Commission paid-
related party - - 249,828
---------------- ---------------- ----------------
Total cost of goods - - 249,828
---------------- ---------------- ----------------
Gross profit 10,623 65,000 161,020
EXPENSES
Advertising 1,535 - 27,313
Audit fees 13,830 - 32,830
Expenses of spinoff 200 - 5,810
General & administrative 34,631 19,271 202,899
Professional fees 11,370 25 31,978
Officer compensation 35,500 - 95,500
Consulting services 97,317 - 507,935
---------------- ---------------- ----------------
Total operating expenses 194,383 19,296 904,265
Other expenses
Interest expense (3,542) - (5,373)
Financing fees (23,016) - (34,915)
Debt forgiveness - - 5,610
Refund of expense - - 34,000
---------------- ---------------- ----------------
Total other expenses (26,558) - 678
---------------- ---------------- ----------------
Net income (loss) $ (210,318) $ 45,704 $ (743,923)
---------------- ---------------- ----------------
Net loss per share-
basic and diluted (0.00) 0.00
Weighted average number
of common shares
outstanding - basic
and diluted 60,748,707 32,460,000
The accompanying notes are an integral part of these financial statements.
4
Monster Offers
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
Inception
For the three months ended (February 23, 2007)
March 31, to March 31,
2011 2010 2011
---------------- ---------------- ----------------
OPERATING ACTIVITIES
Net income (loss) $ (210,318) $ 45,704 $ (743,923)
Adjustments to
reconcile net income
(loss) to net cash used
by operating activities:
Financing fees 23,016 - 34,915
Common shares issued
for services 97,317 - 508,086
Changes in operating assets
and liabilities:
Decrease(increase) in
accounts receivable (1,919) (61,943) (8,271)
Decrease(increase) in
unamortized financing
fees 787 - (4,509)
Increase in
accounts payable 24,959 25 35,759
Increase in accrued
interest 3,542 - 5,373
---------------- ---------------- ----------------
Net cash used by
operating activities (62,616) (16,214) (172,570)
FINANCING ACTIVITIES
Proceeds from convertible
notes payable 30,000 - 118,000
Proceeds from issuance
of common stock - 1,000 57,500
Contributed capital - - 985
---------------- ---------------- ----------------
Net cash provided by
financing activities 30,000 1,000 176,485
---------------- ---------------- ----------------
NET CHANGE IN CASH (32,616) (15,214) 3,915
---------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 36,531 18,190 -
---------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 3,915 $ 2,976 $ 3,915
================ ================ ================
SUPPLEMENTAL DISCLOSURES:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
Non-cash investing and
financing activities:
Increase in prepaid
stock compensation $ 156,000 $ - $ 207,667
Stock issued for
purchase of license $ 450,000 $ - $ -
The accompanying notes are an integral part of these financial statements.
5
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
NOTE 1 - FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at March 31, 2011 and for all
periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It
is suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
2010 audited financial statements. The results of operations for the period
ended March 31, 2011 are not necessarily indicative of the operating results
for the full year.
NOTE 2 - GOING CONCERN
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. Since inception (February
23, 2007) through March 31, 2011, the Company recognized an accumulated
deficit during development stage of approximately $743,923 The Company's
ability to continue as a going concern is contingent upon the successful
completion of additional financing arrangements and its ability to achieve
and maintain profitable operations.
Management plans to raise equity capital to finance the operating and capital
requirements of the Company. Amounts raised will be used for further
development of the Company's services, to provide financing for marketing and
promotion, to secure additional property and equipment, and for other working
capital purposes. While the Company is devoting its best efforts to achieve
the above plans, there is no assurance that any such activity will generate
funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts, or amounts and classification of liabilities that might result
from this uncertainty.
6
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
-------------------
These financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States
of America.
Cash and Cash Equivalents
-------------------------
The Company considers all short-term investments with a maturity of three
months or less at the date of purchase to be cash equivalents. As of March
31, 2011 and December 31, 2010, 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 $1,535 and $0 for the quarters ended March 31, 2011
and March 31, 2010, respectively. For the period since inception on February
23, 2007 through the quarter ended March 31, 2011, the Company has incurred
advertising expenses of $27,313.
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.
7
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
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 March 31, 2011 and December 31, 2010, we have
$8,271 and $6,352 in accounts receivable and no amounts charged to allowance
for doubtful accounts.
Fair Value of Financial Instruments
-----------------------------------
The carrying amounts of the financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, and accrued liabilities,
approximate fair value due to the short maturities of these financial
instruments. The notes payable are also considered financial instruments
whose carrying amounts approximate fair values.
8
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
Stock-based compensation
------------------------
The Company records stock based compensation in accordance with the guidance
in ASC Topic 718 which requires the Company to recognize expenses related to
the fair value of its employee stock option awards. This eliminates
accounting for share-based compensation transactions using the intrinsic
value and requires instead that such transactions be accounted for using a
fair-value-based method. The Company recognizes the cost of all share-based
awards on a graded vesting basis over the vesting period of the award.
ASC 505, "Compensation-Stock Compensation", establishes standards for the
accounting for transactions in which an entity exchanges its equity
instruments to non-employees for goods or services. Under this transition
method, stock compensation expense includes compensation expense for all
stock-based compensation awards granted on or after January 1, 2006, based on
the grant-date fair value estimated in accordance with the provisions of
ASC 505.
Income Taxes
------------
The provision for income taxes is the total of the current taxes payable and
the net of the change in the deferred income taxes. Provision is made for
the deferred income taxes where differences exist between the period in which
transactions affect current taxable income and the period in which they enter
into the determination of net income in the financial statements.
Recent Accounting Pronouncements
--------------------------------
We have examined all recent accounting pronouncements and believe that none
of them will have a material impact on the financial statements of our
company.
9
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
NOTE 4 - STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock
The Company is authorized to issue 75,000,000 shares of its $0.001 par value
common stock.
On February 23, 2007, a shareholder contributed capital of $400 for
incorporating fees.
On December 11, 2007, the Company issued 16,875,000 shares of its common
stock to its founder for $11,250 in cash. The Founder then transferred these
shares to an outside party for the same price on December 31, 2007.
On December 15, 2007, a shareholder contributed capital of $585 for
registration fees.
The Company was a subsidiary of Tropical PC, Inc. On December 31, 2007, the
record shareholders of Tropical PC, Inc. received a spin off dividend of one
(1) common share, par value $0.001, of Monster Offers common stock for every
share of Tropical PC, Inc. common stock owned for a total 1,215,000 (post-
split) common shares issued. Of these 1,215,000 shares, 900,000 were
returned and cancelled to the Company.
On December 31, 2007, the Company issued 11,250,000 shares of its common
stock pursuant to a Regulation D 506 offering for $33,750 in cash.
On December 21, 2009, the Company authorized the sale of 20,250,000
unregistered restricted common shares in exchange for $13,500. $12,500 was
received in December 2009, with a subscription receivable of $1,000 paid in
January 2010.
In August 2010, the Company reached a mutually agreeable understanding with a
non-affiliated shareholder to cancel 1,500,000 (post-split) unregistered
common shares he owns. These unregistered restricted shares were issued in a
private offering with the understanding that the shareholder would purchase
these shares and provide technical expertise to the company. Since the
services were not delivered to the company's satisfaction, it has been agreed
that these 1,500,000 unregistered common shares will be canceled and returned
to the Company.
10
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
On August 30, 2010, the Company authorized the issuance of 12,000,000 shares
of restricted common stock, as per an Asset Exchange Agreement whereby an
officer/director of the Company is to receive these shares of restricted
common stock in exchange for cash of $8,000 and a computer software program
called the Social Network Action Platform (SNAP). This software program was
essential in order to launch the Company's website, www.monsteroffers.com.
Until such time as the company can complete a thorough evaluation of the
intangible acquired, as of September 30, 2010, the Company placed a nominal
value on the software, based at par value $0.001 of the stock to be issued
for this software. A total of $8,000 has been recorded as common stock
receivables as of March 31, 2011.
On September 1, 2010, the Company authorized the sale of 825,000 unregistered
restricted common shares to three shareholders in exchange for entering into
consulting agreements and cash of $550. The services of these consultants
was necessary for the launch of the Company's website by integrating the
recently acquired software into the site. A total fair value of $351,550 was
placed by expensing the normal hourly rate charged by these consultants for
the services rendered during the quarter. A total of $150 was received from
one consultant and has been reduced from total consulting expense. A total of
$400 has been recorded as common stock receivable as of March 31, 2011.
On November 3, 2010, the Company issued 86,207 shares of its common stock as
part of an S-8 registration with the SEC for legal and administrative
services. These shares were issued for services, and expensed at the market
stock price of $0.57 per share, for a total expense of $32,948.
On November 18, 2010, Monster Offers issued 187,500 unregistered restricted
shares in exchange for Investor and Public Relations services as part of a
service agreement dated November 10, 2010. The shares were issued at a market
value of $0.63 per share for a total consulting expense of $78,338.
On November 18, 2010, the Company's Board of Directors approved a one-half-
for-one (0.5:1) common stock dividend (the "dividend"), of the Company's
issued and outstanding common stock, par value $0.001, with a record date of
December 1, 2010 and a payment date of December 2, 2010. Each shareholder
received a dividend of one (1) common share for every two (2) shares owned on
the record date. As of the date the dividend was declared, there were
40,192,470 shares issued and outstanding. After the dividend, 60,288,707
shares were issued and outstanding. All shares contained herein are
calculated post-split.
11
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
On November 18, 2010, the Company received 12,000,000 shares of its common
stock in exchange for its "Lead Generation Business Segment" in a transaction
with the Company's former officer, Scott J. Gerardi. These shares have no
value and been returned to treasury stock as of December 31, 2010.
On January 21, 2011, the Company issued 400,000 unregistered shares in
exchange for public relations and communications consulting services in
accordance with an agreement dated January 21, 2011. The shares were valued
at a market value of $0.26 per share, totaling $104,000. The total value was
allocated between consulting expense and prepaid consulting expense based on
a prorated portion of services performed during the quarter ended March 31,
2011 and the remaining portion of the term of the agreement.
On January 21, 2011, the Company also issued 200,000 free-trading shares in
exchange for consulting services in accordance with an agreement entered into
on January 21, 2011. The shares were valued at a market value of $0.26 per
share, totaling $52,000. The total value was allocated between consulting
expense and prepaid consulting expense based on a prorated portion of
services performed during the quarter ended March 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, 50,000 unregistered restricted
shares of common stock will be exchanged for the services provided by the
consultant. The shares will be earned in proportion to the pro-rated amount
of time of the services performed over the term of the agreement and, in
accordance with ASC 505-50, will be revalued and expensed at each interim
financial statement date. The pro-rated number of shares, totaling 6,286
shares, were valued at a market value of $0.155 per share as of March 31,
2011, totaling $974, and an expense was recognized. As of March 31, 2011
the shares have not yet been issues and thus have been recorded as stock
payable.
On March 14, 2011, the Company entered into a Strategic Alliance and
Licensing agreement with SSL5. As part of the agreement, the Company agreed
to issue 3,000,000 unregistered restricted shares as consideration for an
exclusive license of SSL5 existing intellectual property. The transaction was
valued at the market value of $0.15 per share for a total of $450,000, and
recorded as stock payable. See Note 7 for further details of the agreement.
As of March 31, 2011 and December 31, 2010, the Company has 60,888,707 and
60,288,707 shares of its common stock issued and outstanding, respectively.
12
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
Stock Options
On March 14, 2011, as part of the Strategic Alliance and Licensing agreement
mentioned above, the Company entered into a consulting agreement with SSL5,
providing stock options and a seat on the Monster Offers board of directors
to develop ongoing product strategy and development services. In accordance
with the terms of the agreement, the Consulting company is entitled to
purchase a total of 2,000,000 unregistered restricted shares of the Company
over the term of the agreement of two years. Upon the completion of each
6-month period, a total of 500,000 shares will become vested and available
for purchase by the Consultant. The exercise price of these shares will be
at $0.001 per share, or par value. In the event the Company is sold or
merged with another company, all remaining unvested shares will become
fully vested immediately prior to any such transaction.
A pro-rated portion of the unvested stock options for the service period
from March 14 to March 31, 2011, totaling 41,667 shares, have been valued at
$4,968 using the Black-Scholes option pricing model based upon the following
assumptions: term of 2 years, risk free interest rate of 0.61%, a dividend
yield of 0% and a volatility rate of 143%.
13
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
NOTE 5 - DRAWDOWN EQUITY FINANCING AGREEMENT
On December 29, 2010, the Company entered into a drawdown equity financing
agreement and registration rights agreement (collectively the "Agreements")
with Auctus Private Equity Fund, LLC ("Auctus"), the selling stockholder. In
accordance with the Agreements, Auctus has committed, subject to certain
conditions, to purchase up to $10 million of the Company's common stock over
a term of up to two years. Although the Company is not mandated to sell
shares under the Agreements, the Agreements give the Company the option to
sell to Auctus shares of common stock at a per share purchase price equal to
97% of the lowest closing bid price during the five trading days following
the Company's delivery of notice to Auctus (the "Notice"). At its option, the
Company may set a floor price under which Auctus may not sell the shares
which were the subject of the Notice. The floor shall be 75% of the average
closing bid price of the stock over the preceding ten days prior to the
Notice and can be waived at the discretion of the Company. The maximum
amount of Common Stock that the Company can sell pursuant to any Notice is
the greater of: (i) an amount of shares with an aggregate maximum purchase
price of $500,000 or (ii) 200% of the average daily trading volume based on
20 days preceding the drawdown notice date.
Auctus is not required to purchase the shares, unless the shares which are
subject to the Notice have been registered for resale and are freely tradable
in accordance with the federal securities, including the Securities Act of
1933, as amended, laws and except for conditions outside of Auctus' control.
At the assumed offering price of $0.26 per share, we will be able to
receive up to $1,950,000 in gross proceeds, assuming the sale of the entire
7,500,000 shares being registered hereunder pursuant to the Drawdown Equity
Financing Agreement. We would be required to register 30,961,538 additional
shares to obtain the balance of $10,000,000 under the Drawdown Equity
Financing Agreement at the assumed offering price of $0.26. Management
believes the Company will require $500,000 over the next six months through
this Drawdown Equity Financing Agreement. There is uncertainty as to whether
we will ever receive the full $10 million available under the equity line
agreement. It is unlikely, that we will be required to register more shares,
unless management identifies a major acquisition or opportunity for the
Company. As the Company currently has 60,888,707 shares issued and
outstanding, with 75,000,000 shares of common stock authorized, the Company
would need to authorize additional shares of its Common Stock should the
Company obtain the entire $10,000,000.
14
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
The Company is obligated to file with the U.S. Securities and Exchange
Commission (the "SEC") a registration statement on Form S-1, within 30 days
from the date of the Agreements and to use all commercially reasonable
efforts to have such registration statement declared effective by the SEC
within 120 days of filing. The Company has agreed to pay Auctus an aggregate
amount of $7,500 as an origination fee with respect to the transaction.
This is a non-refundable origination fee equal to Two Thousand Five Hundred
($2,500) Dollars which was paid upon execution of the Drawdown Equity
Financing Facility term sheet and Five Thousand ($5,000) Dollars in cash
which will be taken out of the proceeds of the first Drawdown.
As of March 31, 2011, there have been no sales of common stock in accordance
with this agreement.
NOTE 6 - CONVERTIBLE NOTES PAYABLE
On November 9, 2010, the Company entered into an agreement with Asher
Enterprises, Inc., a Delaware corporation, an accredited investor, whereby
Asher Enterprises loaned the Company the aggregate principal amount of
$53,000 together with any interest at the rate of eight percent (8%) per
annum, until the maturity date of July 18, 2011. The original issue discount
note, as described in ASC 480-55, may not be prepaid in whole or in part. If
the Note is not paid in full with interest on the maturity date, the note
holder has the right to convert this Note into restricted common shares of
the Company. The conversion price shall equal the "Variable Conversion
Price" (subject to equitable adjustments for stock splits, stock dividends or
rights offerings by the Borrower). The "Variable Conversion Price" shall mean
61% multiplied by the Market Price (representing a discount rate of 39%).
"Market Price" means the average of the lowest three (3) Trading Prices for
the Common Stock during the ten (10) Trading Day period ending one Trading
Day prior to the date the Conversion Notice is sent by the Holder to the
Borrower via facsimile. The original issue discount note is for $53,000 and a
discount of $13,178 remains as of March 31, 2011. For the quarter ended March
31, 2011 and year ended December 31, 2010, $11,295 and $9,413 had been
amortized and expensed, respectively.
15
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
On December 1, 2010, an additional convertible note payable in the amount of
$35,000 was entered into with Asher Enterprises with identical terms as the
note entered into on November 9, 2010, the maturity date being August 29,
2011, with interest accruing at 8% per annum. If the Note is not paid in full
with interest on the maturity date, the note holder has the same right to
convert this Note into restricted common shares of the Company with the same
discount as the note described above. The original issue discount note is for
$35,000 and a discount of $12,432 remains as of March 31, 2011. For the
quarter ended March 31, 2011 and year ended December 31, 2010, $7,459 and
$2,486 had been amortized and expensed, respectively.
On January 27, 2011, a third convertible note payable in the amount of
$30,000 was entered into with Asher Enterprises with identical terms as the
note entered into on November 9, 2010, the maturity date being October 31,
2011, with interest accruing at 8% per annum. If the Note is not paid in full
with interest on the maturity date, the note holder has the same right to
convert this Note into restricted common shares of the Company with the same
discount as the note described above. The original issue discount note is for
$30,000 and a discount of $14,917 remains as of March 31, 2011. For the
quarter ended March 31, 2011, $4,262 had been amortized and expensed.
NOTE 7 - STRATEGIC ALLIANCE & LICENSING AGREEMENT
On March 14, 2011, Monster Offers (the "Company") entered into Strategic
Alliance and Licensing Agreement with SSL5, a Nevada corporation. SSL5 has
developed technology services pertaining to a mobile financial services
platform, which provides secure person-to-person mobile money transfer
services. Monster Offers and SSL5 formed a strategic alliance with respect
to the integration, use and commercialization of Monster Offers and SSL5
Existing Intellectual Property to create new and derivative intellectual
property to introduce to various markets. Monster Offers obtained a license
of the Existing SSL5 Intellectual Property for the exclusive use of the
strategic alliance. As consideration for this license, Monster Offers issued
3,000,000 of its unregistered restricted shares to SSL5. These shares were
valued at the market rate of $0.15 per share, for a total of $450,000.
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 March 31, 2011, the
subsidiary entity had not yet been established.
16
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
As further consideration, the Company entered into a consulting agreement
with SSL5, providing stock options and a seat on the Monster Offers board of
directors to develop ongoing product strategy and development services. In
accordance with the terms of the agreement, the Consulting company is
entitled to purchase a total of 2,000,000 unregistered restricted shares of
the Company over the term of the agreement of two years. Upon the completion
of each 6-month period, a total of 500,000 shares will become vested and
available for purchase by the Consultant. The exercise price of these shares
will be at $0.001 per share, or par value. In the event that the Company is
sold or merged with another company, all remaining unvested shares will
become fully vested immediately prior to any such transaction.
A pro-rated portion of the unvested stock options for the service period
from March 14 to March 31, 2011, totaling 41,667 shares, have been valued at
$4,968 using the Black-Scholes option pricing model based upon the following
assumptions: term of 2 years, risk free interest rate of 0.61%, a dividend
yield of 0% and a volatility rate of 142%.
NOTE 8 - RELATED PARTY TRANSACTIONS
For the three months ended March 31, 2011 and 2010, the Company received
$2,623 and $65,000, respectively, from customers in which one of the
Company's shareholders had ownership or was an affiliate, for work performed
by subcontractors who are also related parties.
The Company does not lease or rent any property. Office services are
provided without charge by a director. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business and may,
in the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such conflicts.
As discussed in Note 4, on August 5, 2010, the Company entered into an Asset
Exchange Agreement whereby an officer/director of the Company received
12,000,000 shares of restricted common stock in exchange for cash of $8,000
and a computer software program with no assigned value, called the Social
Network Action Platform (SNAP).
17
Monster Offers
(A Development Stage Company)
Notes to the Financial Statements
As discussed in Note 4, on November 18, 2010, the Company received
12,000,000 shares of its common stock in exchange for its "Lead Generation
Business Segment" in a transaction with the Company's former officer, Scott
J. Gerardi.
On November 18, 2010, an officer/director of the Company contributed a
software program to the Company that was developed for use by
DrHealthSHares.com, a Web 3.0 social commerce solution for health and
wellness that empowers like-minded collaborators to harness the collective
knowledge and experience of the social crowd to improve the depth, breadth,
and value of health information. The Company placed a nominal value on the
software.
NOTE 9 - SUBSEQUENT EVENTS
On or about April 25, 2011, the Company entered into an agreement with Asher
Enterprises, Inc., a Delaware corporation, an accredited investor, whereby
Asher Enterprises loaned the Company the aggregate principal amount of
$40,000 together with any interest at the rate of eight percent (8%) per
annum, until the maturity date of January 27, 2012. This Note 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 equals the
"Variable Conversion Price" (subject to equitable adjustments for stock
splits, stock dividends or rights offerings by the Borrower). The "Variable
Conversion Price" equals 61% multiplied by the Market Price (representing a
discount rate of 39%). "Market Price" is 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.
18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Information
The Company from time to time may make written or oral "forward-looking
statements" including statements contained in this report and in other
communications by the Company, which are made in good faith by the Company
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements include statements of the Company's plans,
objectives, expectations, estimates and intentions, which are subject to
change based on various important factors (some of which are beyond the
Company's control). The following factors, in addition to others not listed,
could cause the Company's actual results to differ materially from those
expressed in forward looking statements: the strength of the domestic and
local economies in which the Company conducts operations, the impact of
current uncertainties in global economic conditions and the ongoing financial
crisis affecting the domestic and foreign banking system and financial
markets, including the impact on the Company's suppliers and customers,
changes in client needs and consumer spending habits, the impact of
competition and technological change on the Company, the Company's ability to
manage its growth effectively, including its ability to successfully
integrate any business which it might acquire, and currency fluctuations. All
forward-looking statements in this report are based upon information
available to the Company on the date of this report. The Company undertakes
no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events, or otherwise, except
as required by law.
Critical Accounting Policies
----------------------------
There have been no material changes to our critical accounting policies and
estimates from the information provided in Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations", included in
our Annual report for the fiscal year ended December 31, 2010.
19
Results of Operations
---------------------
Overview of Current Operations
------------------------------
Monster Offers ("the Company") was incorporated in the State of Nevada on
February 23, 2007, under the name Tropical PC Acquisition Company. On
December 11, 2007, the Company amended its Articles of Incorporation changing
its name to Monster Offers. The Company was originally incorporated as a
wholly owned subsidiary of Tropical PC, Inc., a Nevada corporation.
Tropical PC was incorporated September 22, 2004. On December 11, 2007, the
Company amended its Articles of Incorporation changing its name from Tropical
PC Acquisition Corporation to Monster Offers.
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.
20
Marketing Strategy
------------------
The Monster Offers website generates page views from consumers searching
the Internet for Daily Deals and other relevant information. As users search
through the various deals that are presented via the website, they click on
specific partner deals for additional information and are directed to our
partner websites whereby they can purchase an advertised deal or offer
directly. In these instances, the information about the user and the
Monster Offers referral to a partner website is tracked and the affiliate
partner then pays Monster Offers a fee, typically a percentage of the total
transaction that occurs on the partner website. Monster Offers also earns
fees from other content providers and advertisers based on the volume of
traffic the Monster Offers site generates and the number of times content
is displayed to potential consumers.
Monster Offers has also recently entered the mobile money payment market
via a strategic alliance and exclusive license to technology developed
by SSL5. Monster Offers plans to add significant ease-of-use functionality
for the consumer to its website and to expand its affiliate partner network
further leveraging this new technology in 2011.
Email Marketing
---------------
Websites that we own or are digitally produced for clients are promoted by
the engagement of opt-in email marketing companies. In other words, opt-in
emails are sent to users who have requested to receive marketing messages
from a particular email partner/website. These partners currently market
to multiple consumer and/or business databases that they own or are managed
by them under a list management agreement.
Search Engine Marketing
-----------------------
We utilize search engine marketing companies to direct consumers to
websites. Funds are placed in an open account with each provider and are
spent on a Cost-Per-Click auction basis. Google, Yahoo, and FaceBook are
the primary providers of this service.
Affiliate Marketing
-------------------
We engage affiliate network destinations where online affiliates can
promote various client offers and promotions through Daily Deal
applications. These traffic publishers choose, manage, and execute
marketing cost per action client campaigns. They are also provided with
real-time commission tracking.
21
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.
Recent Event
------------
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 will issue
3,000,000 of its unregistered restricted shares to SSL5.
22
Monster Offers plans to establish a new company (NewCo) 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 NewCo 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 NewCo. As further
consideration, Monster Offers agreed to provide SSL5 with a consulting
agreement, stock options, and a seat on the Monster Offers board of
directors to develop ongoing product strategy and development services.
Results of Operations for the quarter ended March 31, 2011
----------------------------------------------------------
Revenues
--------
During the three month period ended March 31, 2011, the Company generated
$10,623 in revenues as compared to $65,000 for the same period last year.
Management does not expect to receive any significant related party revenues
through the end of its fiscal year. Additionally, the drop of revenues was
accounted by management's decision to shift its business focus from affiliate
marketing to building a social media commerce division. Management believes
this decision will benefit the Company in the long-term. There can be no
assurances that the Company can be profitable or that the Company will not
incur operating losses in the future.
For the three months ending March 31, 2011, the Company experienced
general and administrative expenses of $34,631 as compared to general and
administrative expenses of $19,271 for the same period last year. For the
three months ending March 31, 2011, the Company expensed advertising
fees of $1,535 as compared to no advertising fees for the same period last
year. For the three months ending March 31, 2011, the Company expensed
consulting compensation of $97,317 as compared to no consulting
compensation for the same period last year. Total expenses for the quarter
ending March 31, 2011 were $194,383 versus $19,296 for the same period
last year.
The increase in expenses for the period ending March 31, 2011 was
primarily due to the issuance of unregistered restricted common
shares to two shareholders in exchange for entering into consulting
agreements. The services of these consultants was necessary for the
Company's business. A valuation of $156,000 was placed on these shares by
expensing the normal hourly rate charged by these consultants for the
services rendered during the quarter as contributed capital.
23
For the three months ended March 31, 2011, the Company had $(210,318)
in net losses as compared to net income of $45,704 for the same period last
year.
Since the Company's inception, on February 23, 2007, the Company had a net
loss of $(743,923).
Plan of Operation
-----------------
Management does not believe that the Company will be able to generate
any significant profit during the coming year. Management believes
that general and administrative costs as well as building its infrastructure
will most likely curtail any significant profits.
Notwithstanding, the Company anticipates it will continue to generate losses
and therefore it may be unable to continue operations in the future.
Originally, management anticipated a need to raise $475,000 to fully
implement its business plan. After careful consideration and a detailed
analysis by new management, the Company now expects it will need to raise
$5,000,000 to forward its business plan, and Monster Offers would have to
issue debt or equity or enter into a strategic arrangement with a third
party. There can be no assurance that additional capital will be available
to Monster Offers, especially with the current economic environment. We
recently entered into a Drawdown agreement with Auctus Private Equity Fund,
LLC Pursuant to the Drawdown Agreement, which has a total drawdown amount of
ten million dollars ($10,000,000), Monster Offers has the right to sell to
Auctus at its sole discretion and Auctus has the obligation to purchase
through advances to the Company, the Company's common stock through
Draw-Down Notices issued by the Company. The number of shares of common
stock that Auctus shall purchase shall be determined by dividing the dollar
amount raised, which may or may not equal the entire amount of the advance
by the purchase price. As the Company currently has 60,888,707 shares issued
and outstanding, with 75,000,000 shares of common stock authorized, the
Company would need to authorize additional shares of its Common Stock should
the Company obtain the entire $10,000,000.
Based on current cash on hand of $3,915 as of March 31, 2011, current
assets of $128,478 and $194,047 in current liabilities, management is
concerned that Monster Offers may not have sufficient funds to meet its
financial obligations for the next twelve months. Management believes it has
sufficient cash reserves to keep the Company operational through the second
quarter. Management will need to obtain outside funding to keep the Company
operational beyond the second quarter. There are no assurances that management
will be able to secure outside funding. Management anticipates that the
Company will need to spend a minimum of $15,000 over the next twelve months to
pay for audit and legal fees to keep the company fully reporting. Failure to
secure additional funding can result in the company being fully reporting, but
not operational. The Company will require additional funds to build its
business infrastructure. In the event the Company requires additional funds,
the Company will have to seek loans or equity placements to cover such cash
needs. There are no assurances additional capital will be available to the
Company on acceptable terms.
24
If the Company falls short of capital to keep the Company fully reporting,
our sole officer/director has agreed to donate funds to the operations of
the Company, in order to keep it fully reporting for the next twelve (12)
months, without seeking reimbursement for funds donated. No agreement exists
that our sole officer/director will continue to donate funds to the
operations of the Company for the next twelve months; therefore, there is
no guarantee that he will continue to do so in the future.
Going Concern
-------------
Going Concern - The Company has recognized an accumulated deficit since
inception of $743,923. Although the Company has recognized total revenues of
$410,848 with gross profits of $161,020, the Company's ability to continue as
a going concern is contingent upon the successful completion of additional
financing arrangements and its ability to achieve and maintain profitable
operations. The financial statements have been prepared assuming the Company
will continue to operate as a going concern which contemplates the
realization of assets and the settlement of liabilities in the normal course
of business. No adjustment has been made to the recorded amount of assets or
the recorded amount or classification of liabilities which would be required
if the Company were unable to continue its operations. (See Financial
Footnote 2)
Summary of any product research and development that we will perform for the
term of our plan of operation.
----------------------------------------------------------------------------
We do not anticipate performing any additional significant product research
and development under our current plan of operation.
Expected purchase or sale of plant and significant equipment
------------------------------------------------------------
We do not anticipate the purchase or sale of any plant or significant
equipment; as such items are not required by us at this time.
Significant changes in the number of employees
----------------------------------------------
As of March 31, 2011, we did not have any employees. We are dependent
upon our sole officer and director for our future business development. As
our operations expand we anticipate the need to hire additional employees,
consultants and professionals; however, the exact number is not quantifiable
at this time.
25
Liquidity and Capital Resources
-------------------------------
The Company has limited financial resources available, which has had an
adverse impact on the Company's liquidity, activities and operations.
These limitations have adversely affected the Company's ability to obtain
certain projects and pursue additional business. Without realization of
additional capital, it would be unlikely for the Company to continue as a
going concern. In order for the Company to remain a Going Concern it will
need to find additional capital. Additional working capital may be sought
through additional debt or equity private placements, additional notes
payable to banks or related parties (officers, directors or stockholders),
or from other available funding sources at market rates of interest, or a
combination of these. The ability to raise necessary financing will depend
on many factors, including the nature and prospects of any business to be
acquired and the economic and market conditions prevailing at the time
financing is sought. No assurances can be given that any necessary financing
can be obtained on terms favorable to the Company, or at all.
As of March 31, 2011, our current assets were $128,478 and our current
liabilities were $194,047. As of March 31, 2011, our total assets were
$582,987 compared to total assets of $99,846 as of December 31, 2010.
Total assets as of March 31, 2011 consisted of $3,915 in cash, $8,271 in
accounts receivable, $116,292 in prepaid stock compensation, $4,509 in
unamortized financing fees and $450,000 in license ownership. As of
March 31, 2011, our current and total liabilities were $194,047 compared
to total liabilities of $112,530 as of December 31,
2010. Our liabilities consisted of $35,759 in accounts payable, $5,373 in
accrued interest and $152,915 in a convertible note payable.
Stockholders' equity increased from $(12,684) as of December 31, 2010 to
$388,940 as of March 31, 2011.
We have not generated positive cash flows from operating activities. For
the three months ended March 31, 2011, net cash flow used in operating
activities was $(62,616) compared to net cash flow used in operating
activities of $(16,214) for the three months ended March 31, 2010.
During the three month periods ended March 31, 2011 and March 31, 2010,
net cash flow provided from financing activities was $30,000 and $1,000,
respectively.
The Company has no employment agreements in place with its officers, nor does
the Company owe its officers any accrued compensation, as the Officers agreed
to work for the company at no cost, until the company can become profitable
on a consistent Quarter-to-Quarter basis.
On March 14, 2011, the Company entered into a Strategic Alliance and
Licensing agreement with SSL5. As part of the agreement, the Company agreed
to issue 3,000,000 unregistered restricted shares as consideration for an
exclusive license of SSL5 existing intellectual property. The transaction was
valued at the market value of $0.15 per share for a total of $450,000. See
Note 7 for further details of the agreement.
26
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: We recognize revenue from product sales once all of the
following criteria for revenue recognition have been met: pervasive evidence
that an agreement exists; the services have been rendered; the fee is fixed
and determinable and not subject to refund or adjustment; and collection of
the amount due is reasonably assured.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 4T. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
------------------------------------------------
Our disclosure controls and procedures, as defined in Rule 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are designed to ensure that information required to be
disclosed in reports filed or submitted under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in
rules and forms adopted by the SEC, and that such information is accumulated
and communicated to management, including the Chief Executive Officer and
the Chief Financial Officer, to allow timely decisions regarding required
disclosures.
Management, with the participation of the Chief Executive Officer and the
Chief Financial Officer, who is also the sole member of our Board of
Directors, has evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report. Based
on such evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that, our disclosure controls and procedures were not
effective. Our disclosure controls and procedures were not effective
because of the "material weaknesses" described below under "Management's
report on internal control over financial reporting," which are in the
process of being remediated as described below under "Management Plan to
Remediate Material Weaknesses."
27
Management's Report on Internal Control over Financial Reporting
----------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial
reporting, as defined in rules promulgated under the Exchange Act, is a
process designed by, or under the supervision of, our Chief Executive Officer
and Chief Financial Officer and affected by our Board of Directors,
management and other personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP. Internal control
over financial reporting includes those policies and procedures that:
o pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of our assets;
o provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP, and that
our receipts and expenditures are being made only in accordance with
authorizations of our management and our Board of Directors; and
o provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have
a material effect on our financial statements
Because of its inherent limitations, a system of internal control over
financial reporting can provide only reasonable, not absolute, assurance
that the objectives of the control system are met and may not prevent or
detect misstatements. Internal control over financial reporting is a process
that involves human diligence and compliance and is subject to lapses in
judgment and breakdowns resulting from human failures. Internal control
over financial reporting also can be circumvented by collusion or improper
override. Because of such limitations, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are
known features of the financial reporting process, and it is possible to
design into the process safeguards to reduce, though not eliminate, this
risk. Further, over time control may become inadequate because of changes in
conditions or the degree of compliance with the policies or procedures may
deteriorate.
Our management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2010. In making its assessment,
management used the criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO"). Based on its assessment, management has
concluded that we had certain control deficiencies described below that
constituted material weaknesses in our internal controls over financial
reporting. As a result, our internal control over financial reporting was
not effective as of March 31, 2011.
28
A "material weakness" is defined under SEC rules as a deficiency, or a
combination of deficiencies, in internal control over financial reporting
such that there is a reasonable possibility that a material misstatement of
a company's annual or interim financial statements will not be prevented or
detected on a timely basis by the company's internal controls. As a result
of management's review of the investigation issues and results, and other
internal reviews and evaluations that were completed after the end of
quarter related to the preparation of management's report on internal
controls over financial reporting required for this quarterly report on
Form 10-Q, management concluded that we had material weaknesses in our
control environment and financial reporting process consisting of the
following:
1) lack of a functioning audit committee due to a lack of a majority of
independent members and a lack of a majority of outside directors on our
board of directors, resulting in ineffective oversight in the establishment
and monitoring of required internal controls and procedures;
2) inadequate segregation of duties consistent with control objectives; and
3) ineffective controls over period end financial disclosure and reporting
processes.
We do not believe the material weaknesses described above caused any
meaningful or significant misreporting of our financial condition and results
of operations for the quarter ended March 31, 2011. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in
ineffective oversight in the establishment and monitoring of required
internal controls and procedures, which could result in a material
misstatement in our financial statements in future periods.
Management Plan to Remediate Material Weaknesses
------------------------------------------------
Management is pursuing the implementation of corrective measures to address
the material weaknesses described below. In an effort to remediate the
identified material weaknesses and other deficiencies and enhance our
internal controls, we have initiated, or plan to initiate, the following
series of measures:
We will create a position to segregate duties consistent with control
objectives and will increase our personnel resources and technical accounting
expertise within the accounting function when funds are available to us.
We plan to appoint one or more outside directors to our board of directors who
shall be appointed to an audit committee resulting in a fully functioning audit
committee who will undertake the oversight in the establishment and monitoring
of required internal controls and procedures such as reviewing and approving
estimates and assumptions made by management when funds are available to us.
29
We believe the remediation measures described above will remediate the
material weaknesses we have identified and strengthen our internal control
over financial reporting. We are committed to continuing to improve our
internal control processes and will continue to diligently and vigorously
review our financial reporting controls and procedures. As we continue to
evaluate and work to improve our internal control over financial reporting,
we may determine to take additional measures to address control deficiencies
or determine to modify, or in appropriate circumstances not to complete,
certain of the remediation measures described above.
Changes in Internal Control over Financial Reporting
----------------------------------------------------
There were no changes in our internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
during the most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
This quarterly report does not include an attestation report of the
Corporation's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation
by the Corporation's registered public accounting firm pursuant to temporary
rules of the SEC that permit the Corporation to provide only the management's
report in this quarterly report.
(c) Changes in internal controls over financial reporting
----------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
30
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
From time to time, we may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in
these or other matters may arise from time to time that may harm our
business.
We are not presently a party to any material litigation, nor to the knowledge
of management is any litigation threatened against us, which may materially
affect us.
Item 1A - Risk Factors
See Risk Factors set forth in Part I, Item 1A of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2010 and the discussion
in Item 1, above, under "Liquidity and Capital Resources."
Item 2 -- Unregistered Sales of Equity Securities and Use of Proceeds
On January 21, 2011, the Company issued 400,000 unregistered shares in
exchange for public relations and communications consulting services in
accordance with an agreement dated January 21, 2011. The shares will be
issued pursuant to the exemption from registration provided by Section 4(2)
of the Securities Act. We believed that Section 4(2) was available because
the offer and sale did not involve a public offering and there was not
general solicitation or general advertising involved in the offer or sale.
The consultant is a financially sophisticated individual. Before he received
these unregistered securities, he was known to us and our management, through
pre-existing business relationships, as a long standing business associate.
We did not engage in any form of general solicitation or general advertising
in connection with this transaction. The Consultant was provided access to
all material information, which he requested and all information necessary
to verify such information and was afforded access to our management in
connection with this transaction. The Consultant acquired these securities
for investment and not with a view toward distribution, acknowledging such
intent to us. He understood the ramifications of his actions. The shares
of common stock issued contained a legend restricting transferability
absent registration or applicable exemption.
On January 21, 2011, the Company issued 200,000 free-trading shares in
exchange for consulting services in accordance with an agreement entered into
on January 21, 2011. We believed that Section 4(2) was available because the
offer and sale did not involve a public offering and there was not general
solicitation or general advertising involved in the offer or sale. The
consultant is a financially sophisticated individual. Before he received
these registered securities, he was known to us and our management, through
pre-existing business relationships, as a long standing business associate.
31
We did not engage in any form of general solicitation or general advertising
in connection with this transaction. The Consultant was provided access to
all material information, which he requested and all information necessary to
verify such information and was afforded access to our management in
connection with this transaction. The Consultant acquired these securities for
investment and not with a view toward distribution, acknowledging such
intent to us. He understood the ramifications of his actions. The shares
of common stock issued contained a legend restricting transferability absent
registration or applicable exemption.
On February 7, 2011, the Company issued 50,000 unregistered restricted shares
of common stock in exchange for business strategy and planning, market
analysis, and marketing consulting services as part of an agreement dated
February 7, 2011. We believed that Section 4(2) was available because the
offer and sale did not involve a public offering and there was not general
solicitation or general advertising involved in the offer or sale. The
consultant is a financially sophisticated individual. Before he received
these unregistered securities, he was known to us and our management, through
pre-existing business relationships, as a long standing business associate.
We did not engage in any form of general solicitation or general advertising
in connection with this transactions. The Consultant was provided access to
all material information, which he requested and all information necessary to
verify such information and was afforded access to our management in
connection with this transaction. The Consultant acquired these securities for
investment and not with a view toward distribution, acknowledging such
intent to us. He understood the ramifications of his actions. The shares
of common stock issued contained a legend restricting transferability absent
registration or applicable exemption.
On March 14, 2011, the Company entered into a Strategic Alliance and
Licensing agreement with SSL5. As part of the agreement, the Company agreed
to issue 3,000,000 unregistered restricted shares as consideration for an
exclusive license of SSL5 existing intellectual property. The transaction was
valued at the market value of $0.15 per share for a total of $450,000.
Although the shares have yet to be issued, we believed that Section 4(2) was
available because the offer and sale did not involve a public offering and
there was not general solicitation or general advertising involved in the
offer or sale. SSL5 is known to us and our management, through pre-existing
business relationships, as a long standing business associate. We did not
engage in any form of general solicitation or general advertising in
connection with this transaction. SSL5 was provided access to all material
information, which they requested and all information necessary to verify
such information and was afforded access to our management in connection
with this transaction. SSL5 will acquire these securities for investment
and not with a view toward distribution, acknowledging such intent to us.
He understood the ramifications of his actions. The shares of common stock
to be issued will contain a legend restricting transferability.
Item 3 -- Defaults Upon Senior Securities
None.
32
Item 4 -- Submission of Matters to a Vote of Security Holders
None.
Item 5 -- Other Information
None.
Item 6 -- Exhibits
Incorporated by Reference
-------------------------
Filed Period Filing
Exhibit Exhibit Description herewith Form ending Exhibit date
-------------------------------------------------------------------------------
3.1 Articles of Incorporation, SB-2 3.1 01/15/2008
as currently in effect
-------------------------------------------------------------------------------
3.2 Bylaws SB-2 3.2 01/15/2008
as currently in effect
-------------------------------------------------------------------------------
3.3 Amended Articles of SB-2 3.3 01/15/2008
Incorporation as currently
in effect.
-------------------------------------------------------------------------------
10.1 Asset Exchange Agreement by 8-K 10.1 09/02/2010
and between Monster Offers and
Prime Mover Global, LLC, dated
August 5, 2010.
-------------------------------------------------------------------------------
10.2 Share Lock-Up Agreement with 8-K 10.2 09/02/2010
Scott J. Gerardi dated,
August 6, 2010.
-------------------------------------------------------------------------------
10.3 Share Lock-Up Agreement with 8-K 10.3 09/02/2010
Powerhouse Development dated,
August 6, 2010.
-------------------------------------------------------------------------------
10.4 Share Lock-Up Agreement with 8-K 10.4 09/02/2010
Paul Gain dated, August 6, 2010.
-------------------------------------------------------------------------------
10.5 Share Lock-Up Agreement with 8-K 10.5 09/02/2010
Jonathan W. Marshall, dated,
August 6, 2010.
-------------------------------------------------------------------------------
10.6 Investor and Public Relations 8-K 10.9 11/19/2010
Agreement between Monster Offers
and Emerging Growth Research, LLC,
dated November 10, 2010.
-------------------------------------------------------------------------------
33
-------------------------------------------------------------------------------
10.7 Exchange and Hold Harmless 8-K 10.10 11/24/2010
Agreement with Scott J. Gerardi
dated November 19, 2010.
-------------------------------------------------------------------------------
10.8 Drawdown Equity Financing 8-K 10.6 01/03/2011
Agreement between Monster Offers
and Auctus Private Equity Fund,
LLC dated December 23, 2010.
-------------------------------------------------------------------------------
10.9 Registration Rights Agreement 8-K 10.7 01/03/2011
between Monster Offers and
Auctus Private Equity Fund, LLC
dated December 23, 2010.
-------------------------------------------------------------------------------
10.10 Consulting Agreement with S-8 10.1 -1//27/2011
Christian R. Hansen, dated
January 21, 2011
-------------------------------------------------------------------------------
10.11 Investor and Public Relations 8-K 10.11 02/03/2011
Agreement between Monster Offers
and Equititrend Advisors, LLC,
dated January 21, 2011.
-------------------------------------------------------------------------------
10.12 Strategic Alliance and Licensing 8-K 10.12 03/16/2011
Agreement between Monster Offers
and SSL5, dated March 14, 2011.
-------------------------------------------------------------------------------
23.1 Consent Letter from De Joya X
Griffith & Company, LLC
-------------------------------------------------------------------------------
31.1 Certification of President X
and Principal Financial
Officer, pursuant to Section
302 of the Sarbanes-Oxley
Act
-------------------------------------------------------------------------------
31.2 Certification of President X
and Principal Financial
Officer, pursuant to Section
906 of the Sarbanes-Oxley
Act
-------------------------------------------------------------------------------
34
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 hereunto duly authorized.
Monster Offers
------------------------
Registrant
By: /s/ Paul Gain
--------------------------------
Name: Paul Gain
Title: Director and CEO
Principal Executive, and
Accounting Officer
Dated: May 18, 2011
------------
35