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MONT > SEC Filings for MONT > Form 10-K on 16-Apr-2013All Recent SEC Filings

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Form 10-K for MONSTER OFFERS


16-Apr-2013

Annual Report


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

Overview of Current Operations

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

Results of Operations for the year ended December 31, 2012

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

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

                         2012            2011

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

For the year ended December 31, 2012, consulting expense increased to $325,768 as compared to $324,560, primarily as a result of a the expense related to stock being issued to consultants for services rendered to the Company.

For the year ended December 31, 2012, we had employee compensation of $55,456 compared to $144,200. Employee compensation decreased primarily due to cash restrictions in 2012.

For the year ended December 31, 2012, professional fee expense decreased to $28,605 as compared to $32,589. Professional fee expense decreased primarily due to decreased accounting fees.

For the year ended December 31, 2012, marketing and promotions expense amounted to $7,805 as compared to $24,565 for the year ended December 31, 2011. The decrease was due to limited resources for marketing and promotions.

For the year ended December 31, 2012, depreciation and amortization expense amounted to $7,805 as compared to $24,565 for the year ended December 31, 2011

For the year ended December 31, 2012, Other income and expense which includes interest expense, interest income, financing expense, loss on extinguishment of debt and impairment expense, amounted to $2,684,956 as compared to $559,989 for the year ended December 31, 2011.

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

Liquidity and Capital Resources

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

                                     December 31,    December 31,         $            %
                                         2012            2011          Change       Change

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

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

Operating activities

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

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

Investing activities

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

Financing activities

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

Future Financing

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

Going Concern

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

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

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

Expected purchase or sale of property and significant equipment

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

Significant changes in the number of employees

As of December 31, 2012, we have three employees. We are dependent upon our officers and directors for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

Recent Pronouncements

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

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

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