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MONSTER OFFERS - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations
(Edgar Glimpses Via Acquire Media NewsEdge) Forward-Looking Information
The Company from time to time may make written or oral "forward-looking
statements" including statements contained in this report and in other
communications by the Company, which are made in good faith by the Company
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements include statements of the Company's plans,
objectives, expectations, estimates and intentions, which are subject to change
based on various important factors (some of which are beyond the Company's
control). The following factors, in addition to others not listed, could cause
the Company's actual results to differ materially from those expressed in
forward looking statements: the strength of the domestic and local economies in
which the Company conducts operations, the impact of current uncertainties in
global economic conditions and the ongoing financial crisis affecting the
domestic and foreign banking system and financial markets, including the impact
on the Company's suppliers and customers, changes in client needs and consumer
spending habits, the impact of competition and technological change on the
Company, the Company's ability to manage its growth effectively, including its
ability to successfully integrate any business which it might acquire, and
currency fluctuations. All forward-looking statements in this report are based
upon information available to the Company on the date of this report. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events, or otherwise, except
as required by law.
Critical Accounting Policies
There have been no material changes to our critical accounting policies and
estimates from the information provided in Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", included in our
Annual report on Form 10-K for the fiscal year ended December 31, 2011.
Results of Operations
Overview of Current Operations
Monster Offers ("Registrant" or 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.
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On November 9, 2012, Monster Offers, Monster Offers Acquisition Corporation, a
Nevada corporation and Ad Shark, Inc., a privately-held California corporation
("Ad Shark"), entered into a Acquisition Agreement and Plan of Merger pursuant
to which the Registrant, through its wholly-owned subsidiary, Merger Sub,
acquired Ad Shark in exchange for 27,939,705 shares of the Registrant's
unregistered restricted common stock, which were issued to the holders of Ad
Shark stock based on their pro-rata ownership.
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.
AdShark's Business
Ad Shark organizes advertising sales efforts by constructing media and
advertising delivery systems for Smartphone and Tablet app developers. Ad
Shark's corporate mission is to capitalize on the growth of the mobile marketing
industry, which some analysts have estimated to be increasing at an annual rate
of about 100% per year.
Ad Shark's approach to integrating traditional internet advertising with
optimized media and cutting edge ad delivery methods, all tailored specifically
for the applicable Smart Device, OS or screen resolution platform, puts the
company in an ideal position to compete for engagements involving advertising
campaigns for mobile marketing services and products. At present, Ad Shark has
more than 2,000 clients. For more on Ad Shark, Inc., see Ad Shark's website:
http://www.adshark.mobi. (The information on Ad Shark's website is for reference
purposes only, and is not meant or intended to be included as description of Ad
Shark in this Current Report.)
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Ad Shark, acts as the servicing vehicle for mobile communication advertising
services sold to commercial clients. Ad Shark is developing a series of
advertising accessories to establish a platform position in mobile marketing for
the company with specific families of mobile devices.
In addition, Ad Shark serves as the marketing and sales support arm for Travel
America Visitor Guide ("TAVG") directories, which is currently operated as a
division of Iconosys and is gaining visibility and traction as a preferred mode
of business advertising for smaller-to-mid-sized businesses throughout the U.S.
With the Ad Shark opportunity, the Company sees itself as being in an excellent
position to take advantage of the mobile marketing industry, which is projected
to grow over the next 3 years. Management believes this growth will come
primarily from Internet-enabled Smartphones.
COMPETITION
The advertising and marketing industry is highly competitive, subject to rapid
change and has relatively low barriers to entry, as compared with other
industries or industry segments. Management believes that its ability to compete
depends in part on a number of factors, which includes but are not limited to:
• the ability to hire, retain and motivate qualified personnel;
• the price at which the Company offers comparable services and products; and
• the extent of our responsiveness to customer needs.
Competition in the Mobile Marketing industry may increase in the future, partly
due to low barriers to entry, the emergence of larger, more dominant and perhaps
better funded competitors, as well as from the emergence of new mobile
communications technologies and/or social or economic trends now in existence or
developed or emerging in the future. Increased competition could result in price
reductions, reduced margins or loss of market share and greater competition for
qualified personnel. The prospect of increased competition is particularly
likely in the mobile advertising industry, where such larger players as Google,
Apple, and ValueClick have already entered the arena through their respective
purchases of AdMob, Quattro Wireless, and Greystripe. There can be no assurance
that we will be able to compete successfully against current and future
competitors. If we are unable to compete effectively, or if competition results
in a deterioration of market conditions, our business and results of operations
could be adversely affected.
Iconosys
On May 16, 2011, the Company entered into a Strategic Alliance and License
Agreement with Iconosys, Inc., a California corporation. Iconosys has developed
proprietary mobile applications and technology and engaged in the business of
mobile communication application design related services. Monster Offers and
Iconosys formed a strategic alliance with respect to the integration, use and
commercialization of Monster Offers and Iconosys existing Intellectual Property
to create new and derivative intellectual property to introduce to various
markets.
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Iconosys obtained a license of the Existing Monster Offers Tier 1 Zala Merchant
license with the ability to promote and sign up Zala account holders and
participate in a revenue sharing model with Monster Offers. As consideration for
this license, Iconosys issued 3,333 of its unregistered restricted shares to
Monster Offers. Since Iconosys is not a publicly-traded corporation, these
shares were valued at a fair value based upon a fair value of similar shares
sold under a private placement memorandum by Iconosys at rate of $30 per share,
for a total of $100,000. The shares of Iconosys common stock received were
recorded as an investment in Iconosys on the balance sheet for $100,000. The
investment is evaluated for indicators of impairment on an annual basis, in
accordance with ASC 350-10 "Intangibles - Goodwill and Other".
The Company recognized a value in the intellectual property exchange with
Iconosys. The fair value of the shares $100,000 was recognized as unearned
license revenue and is being recognized over one year, the term of the license
agreement. As of September 30, 2012, the Company had recognized $100,000 in
license revenue.
In accordance with the terms of the agreement, Iconosys will provide services to
Monster Offers relating to its Deal Buzzer mobile application and to integrate
the Monster Offers existing intellectual property into mobile applications it
currently designs and produces. As consideration for the services performed by
Iconosys, Monster Offers issued 834 shares of unregistered, restricted common
stock, an initial cash payment of $500, and future payments as part of a revenue
share participation portion of the agreement. The term of the strategic alliance
and this agreement commenced on May 6, 2011 and will end on November 5, 2013,
unless terminated earlier in accordance with the agreement.
Results of Operations for the three and nine months ended September 30, 2012 and
2011
Revenues
During the three month period ended September 30, 2012, the Company generated
$5,750 in revenues as compared to $104,140 for the same period last year. During
the nine month period ended September 30, 2012, the Company generated $78,168 in
revenues as compared to $149,752 for the same period last year. Management does
not expect to receive any significant related party revenues through the end of
its fiscal year. There can be no assurances that the Company can be profitable
or that the Company will not incur operating losses in the future.
For the three months ending September 30, 2012, the Company experienced general
and administrative expenses of $26,686 as compared to general and administrative
expenses of $46,240 for the same period last year. For the three months ending
September 30, 2012, the Company expensed advertising fees of $0 as compared to
$4,930 in advertising fees for the same period last year. For the three months
ending September 30, 2012, the Company expensed officer compensation of $1,150
as compared to $33,400 in officer compensation for the same period last year.
For the three months ending September 30, 2012, the Company expensed audit fees
of $6,700 as compared to $4,275 in audit fees for the same period last year. For
the three months ending September 30, 2012, the Company expensed strategic
alliance costs of $3,583 as compared to $3,582 in strategic alliance costs for
the same period last year. For the three months ending September 30, 2012, the
Company expensed consulting costs of $147,718 as compared to $70,522 in
consulting costs for the same period last year. Total operating expenses for the
quarter ending September 30, 2012 were $185,837 versus $174,100 for the same
period last year.
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For the nine months ending September 30, 2012, the Company experienced general
and administrative expenses of $188,958 as compared to general and
administrative expenses of $105,508 for the same period last year. For the nine
months ending September 30, 2012, the Company expensed officer compensation of
$20,806 as compared to $103,100 in officer compensation for the same period last
year. For the nine months ending September 30, 2012, the Company expensed audit
fees of $22,150 as compared to $21,605 in audit fees for the same period last
year. For the nine months ending September 30, 2012, the Company expensed
strategic alliance costs of $10,748 as compared to $6,470 in strategic alliance
costs for the same period last year. For the nine months ending September 30,
2012, the Company expensed consulting costs of $261,588 as compared to $280,244
in consulting costs for the same period last year. Total operating expenses for
the nine months ending September 30, 2012 were $506,355 versus $569,679 for the
same period last year. Operating expenses decreased due to reductions in general
and administrative fees and reduced outside consulting fees.
For the three months ended September 30, 2012, the Company had $(181,132) in net
losses or $(0.06) per share as compared to a net loss of $(106,565) or $(0.50)
for the same period last year. For the nine months ended September 30, 2012, the
Company had $(3,022,835) in net losses or $(1.61) per share as compared to a net
loss of $(531,614) or $(2.57) for the same period last year.
Since the Company's inception, on February 23, 2007, the Company had a net loss
of $(4,555,316).
Plan of Operation
Management does not believe that the Company will be able to generate any
significant profit during the coming year. Management believes that general and
administrative costs as well as building its infrastructure will most likely
curtail any significant profits.
Notwithstanding, the Company anticipates it will continue to generate losses and
therefore it may be unable to continue operations in the future. Originally,
management anticipated a need to raise $475,000 to fully implement its business
plan. After careful consideration and a detailed analysis by new management, the
Company now expects it will need to raise $5,000,000 to forward its business
plan, and Monster Offers would have to issue debt or equity or enter into a
strategic arrangement with a third party. There can be no assurance that
additional capital will be available to Monster Offers, especially with the
current economic environment.
Based on current cash on hand of $189 as of September 30, 2012, current assets
of $92,089 and $135,681 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 the Company can generate
sufficient cash reserves to keep the Company operational through the fourth
quarter. Management will need to obtain outside funding to keep the Company
operational beyond the third quarter. There are no assurances that management
will be able to secure outside funding. Management anticipates that the Company
will need to spend a minimum of $30,000 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.
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If the Company falls short of capital to keep the Company fully reporting, our
officers/directors have agreed to donate funds to the operations of the Company,
in order to keep it fully reporting for the next twelve (12) months. No
agreement exists that our officers/directors will continue to donate funds to
the operations of the Company for the next twelve months; therefore, there is no
guarantee that they will continue to do so in the future.
Going Concern
Going Concern - The Company has recognized an accumulated deficit since
inception (February 23, 2007) through September 30, 2012 of $(4,555,316).
Although the Company has recognized total revenues of $701,668 with gross
profits of $451,840, since inception (February 23, 2007) through September 30,
2012, the Company's ability to continue as a going concern is contingent upon
the successful completion of additional financing arrangements and its ability
to achieve and maintain profitable operations. The financial statements have
been prepared assuming the Company will continue to operate as a going concern
which contemplates the realization of assets and the settlement of liabilities
in the normal course of business. No adjustment has been made to the recorded
amount of assets or the recorded amount or classification of liabilities which
would be required if the Company were unable to continue its operations. (See
Financial Footnote 2).
Summary of any product research and development that we will perform for the
term of our plan of operation.
We do not anticipate performing any additional significant product research and
development under our current plan of operation.
Expected purchase or sale of plant and significant equipment
We do not anticipate the purchase or sale of any plant or significant equipment;
as such items are not required by us at this time.
Significant changes in the number of employees
As of September 30, 2012, we did not have any employees. We are dependent upon
our officers and directors for our future business development. As our
operations expand we anticipate the need to hire additional employees,
consultants and professionals; however, the exact number is not quantifiable at
this time.
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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 September 30, 2012, our current assets were $92,089 and our current
liabilities were $135,681. As of September 30, 2012, our total assets were
$192,089 compared to total assets of $141,933 as of December 31, 2011. Total
assets as of September 30, 2012 consisted of $189 in cash, $2,423 in accounts
receivable, and prepaid expense of $89,477. As of September 30, 2012, our
liabilities consisted of $48,979 in accounts payable, $6,085 in accrued
interest, $13,250 in notes payable, $6,700 in due to related party and $60,667
in convertible notes payable.
We have not generated positive cash flows from operating activities. For the
nine months ended September 30, 2012, net cash flow used in operating activities
was $(15,878) compared to net cash flow used in operating activities of
$(157,507) for the nine months ended September 30, 2011.
During the nine month periods ended September 30, 2012 and September 30, 2011,
net cash flow provided from financing activities was $12,250 and $152,500,
respectively.
The Company has no employment agreements in place with its officers, nor does
the Company owe its officers any accrued compensation.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and Estimates
Revenue Recognition: We recognize revenue from product sales and service
agreements once all of the following criteria for revenue recognition have been
met: persuasive 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.
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