Monster Arts Inc. - FORM 10-Q

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EX-31 - EXHIBIT 31.2 - Monster Arts Inc.	ex312.htm
EX-31 - EXHIBIT 31.1 - Monster Arts Inc.	ex311.htm
EX-32 - EXHIBIT 32.2 - Monster Arts Inc.	ex322.htm
EX-32 - EXHIBIT 32.1 - Monster Arts Inc.	ex321.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2014

[ ]	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 Arts, Inc.

(Exact name of registrant as specified in its charter)

	Nevada		27-1548306
	(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

806 East Avenido Pico, Suite I-288

San Clemente, California

92673

(Address of principal executive offices)

(Zip Code)

(877) 733-6133

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes[ ] No [X]

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section S 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 18, 2014, the registrant’s outstanding common stock consisted of 968,498,328 shares, $0.001 par value. Authorized – 75,000,000 shares.

Table of Contents

Monster Arts, Inc.

Index to Form 10-Q

For the Quarterly Period Ended June 30, 2014

PART I	Financial Information	4

ITEM 1.	Financial Statements	4
	Balance Sheets	4
	Unaudited Statements of Operations	5
	Unaudited Statements of Cash Flows	6
	Notes to the Unaudited Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	31

ITEM 4T.	Controls and Procedures	31

PART II	Other Information	33

ITEM 1.	Legal Proceedings	33

ITEM 1A.	Risk Factors	34

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

ITEM 3	Defaults Upon Senior Securities	34

ITEM 4	Mine Safety Disclosures	34

ITEM 5	Other Information	34

ITEM 6	Exhibits	34

	SIGNATURES	35

MONSTER ARTS, INC.
(Formerly MONSTER OFFERS)
(A Development Stage Company) BALANCE SHEETS

		(Unaudited)			(Audited)
		June 30,			December 31,
Assets:		2014			2013
Current Assets
Cash	$	194,677		$	46,234
Accounts receivable, net of allowance for doubtful
accounts of $1,250		7,775			4,173
Loan receivable to related party		287,130			290,532
Interest receivable to related party		21,083			15,577
Prepaid expenses		—			139,996
Total Current Assets		510,665			496,512

Fixed Assets
Property and equipment, net		66			460
Total Fixed Assets		66			460

Other Assets
Available-for-sale securities		40,200			6,000
Total Other Assets		40,200			6,000

Total Assets	$	550,931		$	502,972

Liabilities and Stockholders' Equity:
Current Liabilities
Accounts payable & accrued expenses	$	19,468		$	67,586
Accounts payable & accrued expenses to related parties		164,879			169,577
Accrued interest		33,854			11,659
Deferred revenues		18,605			18,359
Loan from officer		14,004			17,021
Notes payable		10,183			10,161
Notes payable to related party		55,980			57,480
Convertible notes payable		699,295			261,945
Derivative Liability		10,047,485			21,876,947
Total Liabilities		11,063,753			22,490,735

Stockholders' Equity:
Series A preferred stock, $.001 par value 20,000,000 shares
authorized, 20,000,000 shares issued and outstanding, respectively
Common stock, $0.001 par value 730,000,000 shares		20,000			20,000
authorized, 539,310,446 and 29,201,615 shares issued and
outstanding, respectively		539,310			29,202
Additional paid in capital		19,579,655			6,121,441
Stock subscription payable		476,469			493,673
Accumulated Comprehensive Gain / (Loss)		30,200			(4,000	)
Deficit accumulated during the development stage		(31,158,456	)		(28,628,079	)
Total stockholders' equity (deficit)		(10,512,822	)		(21,987,763	)

Total Liabilities and Stockholders' Equity	$	550,931		$	502,972

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

MONSTER ARTS, INC.
(Formerly MONSTER OFFERS)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)

													From Inception
	For the Three Months Ended						For the Six Months Ended						(February 23, 2007) to
	June 30,						June 30,						June 30,
	2014			2013			2014			2013			2014

Commissions	$	—		$	2,500		$	—		$	13,750		$	207,385
Commissions- related parties		—			—			—			—			337,717
License revenues		—			—			—			—			100,000
Services		40,144			3,500			97,463			3,500			109,174
Services- related party		964			—			1,227			3,200			79,815
		41,108			6,000			98,690			20,450			834,091

Cost of services		—			—			—			—			266,860

Gross Profit		41,108			6,000			98,690			20,450			567,231

Operating expenses:
General and administration		69,081			48,898			98,694			59,650			761,577
Consulting		403,374			21,716			620,256			314,684			2,653,203
Wages		41,940			42,218			80,833			100,568			518,131
Marketing and promotions		25,059			4,883			25,355			6,086			78,353
Depreciation and amortization		197			11,609			394			23,218			69,933
Professional fess		73,533			54,830			90,016			85,035			633,115
Total operating expenses		613,184			184,154			918,548			589,241			4,714,312

Income (Loss) from operations		(572,076	)		(178,154	)		(818,858	)		(568,791	)		(4,147,081	)

Other income and (expenses):
Interest expense		(17,555	)		(1,916	)		(26,797	)		(4,587	)		(122,638	)
Interest expense- derivative		(1,689,122	)		(621,935	)		(1,689,122	)		(621,935	)		(23,566,069	)
Interest income		2,200			2,263			4,400			5,243			19,202
Financing expense		—			—			—			—			(160,987	)
Loss on debt settlement		—			—			—			—			(2,700,000	)
Debt forgiveness		—			—			—			—			10,552
Refund on expenses		—			—			—			—			34,000
Impairment expense		—			—			—			—			(525,435	)
Total other income and (expenses)		(1,704,477	)		(621,588	)		(1,711,519	)		(621,279	)		(27,011,375	)

Net loss before taxes	$	(2,276,553	)	$	(799,742	)	$	(2,530,377	)	$	(1,190,070	)	$	(31,158,456	)

Tax provisions		—			—			—			—			—

Net loss after taxes	$	(2,276,553	)	$	(799,742	)	$	(2,530,377	)	$	(1,190,070	)	$	(31,158,456	)

Other Comprehensive Income:
Gain (Loss) on Available-for-Sale Securities		(43,800	)					34,200			—			30,200

Other Comprehensive Income (Loss)	$	(2,320,353	)	$	(799,742	)	$	(2,496,177	)	$	(1,190,070	)	$	(31,128,256	)

Basic & diluted loss per share	$	(0.01	)	$	(0.16	)	$	(0.01	)		(0.26	)

Weighted average shares outstanding		415,099,852			4,968,186			376,552,316			4,628,095

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

MONSTER ARTS, INC.
(Formerly MONSTER OFFERS)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

							From Inception
							(February 23, 2007)
	For the Six Months Ended June 30,						to June 30,
	2014			2013			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss for the period	$	(2,530,377	)	$	(1,190,070	)	$	(31,158,456	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Impairment loss		—			—			525,435
License revenues- non cash		—			—			(100,000	)
Available-for-sale securities revenues		(9,423	)		—			(12,473	)
Non-cash compensation		—			—			8,400
Forgiveness of debt		—			—			(846	)
Financing fees		—			—			160,987
Derivative expense		1,689,122			621,935			23,566,069
Stock for services		157,858			193,492			2,030,967
Stock options for services		—			—			134,291
Stock for note extension		—			—			15,000
Convertible Note issued consulting services		127,900			—			127,900
Bad debt		—			—			1,250
Discount on notes payable		—			—			15,000
Loss on debt settlement		—			30,000			2,700,000
Strategic alliance costs		—			—			45,878
Effect from share exchange		—			—			24,618
Master purchase agreement		—			(298,745	)		(298,745	)
Depreciation and amortization		394			394			77,738
Changes in Operated Assets and Liabilities:
(Increase) decrease in prepaids		139,996			262			139,996
(Increase) decrease in accounts receivable		(3,602	)		(1,000	)		(9,025	)
Increase in interest receivable		(5,506	)		(2,350	)		(21,083	)
Decrease in unamortized financing fees					—			(2,875	)
Increase (decrease) in loan receivable to related party		3,402			163,562			293,934
Increase in unearned revenues		246			—			18,605
Increase (decrease) in accounts payable and accrued expenses		(13,017	)		77,068			54,569
Increase in accounts payable to related parties		(14,698	)		14,721			154,879
Increase (decrease) in accrued interest		22,195			(454	)		33,854
Net cash (used) in operating activities		(435,510	)		(391,185	)		(1,474,133	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock		—			168,875			515,845
Stock subscription payable		—			12,000			7,000
Proceeds from officer loan					14,565			119,290
Payments on officer loan		(3,107	)		(102,269	)		(105,376	)
Proceeds from convertible notes		593,721			119,800			1,121,086
Payments on convertible notes		—			—			(6,000	)
Proceeds from notes payable		—			—			10,161
Payments on notes payable		(5,161	)					(5,161	)
Payments on notes payable to related party		(1,500	)		—			10,980
Contributed Capital		—			—			985
Net Cash Provided by Financing Activities		583,953			212,971			1,668,810

Net (Decrease) Increase in Cash		148,443			(178,214	)		194,677
Cash at Beginning of Period		46,234			182,820			—
Cash (Overdraft) at End of Period	$	194,677		$	4,606		$	194,677

SUPPLEMENTAL DISCLOSURES:
Income Taxes Paid	$	—		$	—		$	—
Interest Paid	$	—		$	—		$	—

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Convertible note payable issued for consulting services	$	127,900	$	—	$	127,900
Stock issued for purchase of license	$	—	$	—	$	450,000
Stock issued for conversion of convertible notes payable	$	279,088	$	15,000	$	839,495
Stock issued for debt settlement	$	—	$	—	$	2,700,000
Increase in prepaid stock compensation	$	—	$	—	$	257,419

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

Monster Arts, Inc.

(A Development Stage Company)

Notes to Financial Statements

June 30, 2014 and December 31, 2013

(Unaudited)

NOTE 1 – ORGANIZATION & BUSINESS DESCRIPTION

On May 2, 2013, Monster Arts, Inc. (the “Company”) amended its articles of incorporation to change its name from Monster Offers to Monster Arts, Inc. The Company was incorporated under the laws of the State of Nevada, as Tropical PC Acquisition Corporation on February 23, 2007 ("Inception"). On December 11, 2007, the Company amended its Articles of Incorporation changing its name from Tropical PC Acquisition Corporation to Monster Offers. On November 9, 2012 the Company executed a share exchange agreement with Ad Shark, Inc., a privately-held California corporation incorporated April 12, 2011. As a result of the share exchange agreement, Ad Shark, Inc. became a wholly owned subsidiary of the Company. In February of 2014, Ad Shark, Inc. was dissolved as a California corporation. The Company organizes advertising sales efforts by constructing media and advertising delivery systems for Smartphone and Tablet application developers including the delivery of mobile banners, mobile video, mobile text messaging, and mobile email advertising.

On March 4, 2013, the Company entered into a Master Purchase Agreement with Iconosys, Inc., a private California corporation whom shares a common officer with the Company, whereby the Company acquired a 10% interest in Iconosys, Inc. (Referenced in the Master Purchase Agreement in Note 14).

On April 25, 2014, the Company entered into a subscription agreement to buy 53,000 shares of common stock of Candor Homes Corporation, (“CH, Inc.”) for $10,000 which represents 53% of the equity interest in CH, Inc. As of June 30, 2014, there has been no activity with CH, Inc. and the Company has recorded accounts payable to related party balance of $10,000. The only two directors of CH, Inc. are our chief executive officer, Wayne Irving II and his sister. CH, Inc. is activity analyzing potential land investments in Central Iowa where new homes could be built.

NOTE 2 - GOING CONCERN

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Since inception (February 23, 2007) through June 30, 2014, the Company incurred an accumulated deficit during development stage of approximately $31,158,456. The Company's ability to continue as a going concern is contingent upon its ability to achieve and maintain profitable operations and its ability to raise additional capital as required.

Management plans to raise equity capital to finance the operating and capital requirements of the Company, and also plans to pursue acquisition opportunities of other revenue-generating companies that provide complementary capabilities to that of the Company. Amounts raised will be used for further development of the Company's products and services, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes. While the Company is devoting its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

The accompanying unaudited quarterly financial statements have been prepared on a basis consistent with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited financial statements reflect all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The results of operations for the periods are not necessarily indicative of the results expected for the full year or any future period. These statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the SEC on April 15, 2014 (the “2013 Annual Report”).

Development Stage Company

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

Reclassification

On April 9, 2012, the Company executed a 300 to 1 reverse stock split, which was retrospectively applied to the financial statements.

Cash and Cash Equivalents

The Company considers all short-term investments with a maturity of three months or less at the date of purchase to be cash equivalents. As of June 30, 2014 and December 31, 2013, 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.

Revenue Recognition

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

Earnings per Share

Historical net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of securities or other contracts to issue common stock that were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity.

At June 30, 2014, the Company had multiple convertible debentures outstanding that if-converted would result in 190,425,090 new common shares being issued.

Accounts receivable

Accounts receivable are stated at the amount management expects to collect from balances outstanding at year end. Management provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance. As of June 30, 2014 and December 31, 2013, we have $9,025 and 5,423, respectively, in accounts receivable and $1,250 charged to allowance for doubtful accounts.

Equipment

Equipment is stated at cost, less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which consist of computer equipment, which is 3 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for equipment betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or expense. The Company will periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of equipment and website development costs or whether the remaining balance of equipment should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring their recoverability.

Website Development Costs

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

Fair Value of Financial Instruments

The carrying amounts of the financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate fair value due to the short maturities of these financial instruments. The notes payable are also considered financial instruments whose carrying amounts approximate fair values.

Intangible assets

The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles - Goodwill and Other” to determine the method of amortization of its intangible assets. The Company’s intangible assets are capitalized at historical cost and are amortized over their useful lives. The Company amortizes its license of SSL5 intellectual property using the straight-line method over an estimated useful life of 10 years.

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non-employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

Income Taxes

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

Recent Accounting Pronouncements

Company management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

NOTE 4 – AVAILABLE FOR SALE SECURITIES

On November 1, 2013, the Company executed a joint venture agreement with Intelligent Living, Inc. (“ILIV”). You can read the full agreement in the registrant’s SEC Form 8-K filing on November 5, 2013. The Company will provide ILIV comprehensive and end-to-end turnkey business function through its development of smartphone and tablet apps. The Company’s revenue sharing will be 35% of gross payments from app sales from Google Play and 50% of gross payments from app sales through Amazon, Nook, iTunes, and others. The Company will be paid in the form of stock by ILIV which is a publically traded company trading on the OTCQB under the symbol “ILIV”. The Company will be paid 36,600,000 common shares of ILIV in quarterly installments over a period of 2 years from the date of the agreement. The Company has been paid an initial 10,000,000 common shares upon closing of the agreement which were valued at the closing price of ILIV stock on November 1, 2013 which was $0.001. This resulted in the Company recording an available-for-sale securities asset of $10,000. The available-for-sale securities asset was revalued at June 30, 2014 using the ILIV closing stock price of $0.0012 per share which resulted in the Company recording an unrealized loss on available-for-sale securities of $34,200 for the three months ended June 30, 2014. In the six months ended June 30, 2014, the Company recorded $12,000 as revenues earned pursuant to the agreement. As of June 30, 2014 and December 31, 2013, the Company had an available-for-sale securities asset balance of $40,200 and $6,000.

NOTE 5 – PROPERTY & EQUIPMENT

Property and equipment consists of the following at June 30, 2014 and December 31, 2013:

	June 30, 2014		December 31, 2013
Property and equipment, net	$	2,364	$	2,364
Less: accumulated depreciation		2,298		1,904
Property and equipment, net	$	66	$	460

The Company acquired the property and equipment through the share exchange agreement with Ad Shark, Inc. on November 9, 2012. Therefore the Company only recognized depreciation on the equipment after the share exchange date. Depreciation expense for the six months ended June 30, 2014 and 2013 was $394.

NOTE 6 – ASSET PURCHASE AGREEMENT WITH ICONOSYS (TAVG)

On August 8, 2013, the Company approved the execution of an asset purchase agreement with Iconosys, Inc., a private California corporation which shares an officer with the Company for the rights to domain names, web site content and trademark assignments of Travel America Visitor Guide (“TAVG”) which is a division of Iconosys. Iconosys shall sell, convey, transfer and assign to the Company and the Company shall purchase all right, title and interest in and to the assets of Iconosys as follows: (i) the Iconosys trademarks (the "Trademarks"); (ii) the Iconosys domain name (the "Domain Name") together with all associated service marks, copyrights, trade names and other intellectual property associated with the Domain Name; (iii) the Iconsys web site content (the "Web Site"), together with all associated intellectual property rights to the Web Site.

In accordance with the terms and provisions of the Asset Purchase Agreement, the Company shall pay to Iconosys a purchase price of $250,000 as follows: (i) $50,000 of the Purchase Price shall be paid in cash with a cash payment of $5,000 and $45,000 to be satisfied with the issuance of a promissory note dated August 8, 2013, due August 7, 2014, and with annum interest of 4%. The remaining $200,000 of the purchase price shall be paid in stock through a stock purchase agreement dated August 8, 2013 whereby the Company will issue Iconosys 1,052,632 common shares with a fair market price of $.0.19 (based on the closing trading price of the Company's shares of common stock on the OTCQB as of August 8, 2013.

Being Iconosys is a related party to the Company, it was management’s decision to not record an intangible asset related to the asset purchase. As of December 31, 2013, the Company has not yet issued the 1,052,632 shares and has recorded them as a stock payable.

In the six months ended June 30, 2014, the Company recognized $26,419 in services income relating to the TAVG asset. The Company also recorded deferred revenues of $13,423 relating to TAVG membership sales which will be recognized over the one year subscription term.

NOTE 7 - CONVERTIBLE NOTES PAYABLE

Asher Enterprises, Inc.

On April 11, 2013, the Company entered into a Convertible Note Agreement with Asher Enterprises Inc. for a $42,500 convertible note payable with interest of 8% per annum, unsecured, and due January 14, 2014. The note is convertible into common shares of the Company at a conversion rate of 55% of the market price, calculated as the average of the three lowest trading prices in the previous 10 days leading up to the date of conversion. The entire principle balance of $42,500 was converted into 5,606,783 common shares of the Company.

On May 13, 2013, the Company entered into a Convertible Note Agreement with Asher Enterprises Inc. for a $63,000 convertible note payable with interest of 8% per annum, unsecured, and due February 17, 2014. The note is convertible into common shares of the Company at a conversion rate of 55% of the market price, calculated as the average of the three lowest trading prices in the previous 10 days leading up to the date of conversion. The entire principle balance of $63,000 was converted into 38,283,516 common shares of the Company.

On June 14, 2013, the Company entered into a Convertible Note Agreement with Asher Enterprises Inc. for a $37,500 convertible note payable with interest of 8% per annum, unsecured, and due March 18, 2014. The note is convertible into common shares of the Company at a conversion rate of 55% of the market price, calculated as the average of the three lowest trading prices in the previous 10 days leading up to the date of conversion. The entire principle balance of $37,500 was converted into 25,333,333 common shares of the Company.

On July 10, 2013, the Company, entered into a Securities Purchase Agreement whereby the Company sold a Convertible Promissory Note to Asher Enterprises, Inc., a Delaware corporation, in the original principal amount of $37,500, and accruing interest at eight percent (8%) per annum. The Note is convertible into the Company’s common stock at a conversion price equal to fifty-five percent (55%) of the then-prevailing market price, beginning one hundred eighty (180) days from the date of the Note’s issuance. As of June 30, 2014, the entire principle balance of $37,500 was converted into 34,210,025 shares of common stock in the Company.

On September 12, 2013, the Company, entered into a Securities Purchase Agreement whereby the Company sold a Convertible Promissory Note to Asher Enterprises, Inc., a Delaware corporation, in the original principal amount of $32,500, and accruing interest at eight percent (8%) per annum. The Note is convertible into the Company’s common stock at a conversion price equal to fifty-five percent (55%) of the then-prevailing market price, beginning one hundred eighty (180) days from the date of the Note’s issuance. As of June 30, 2014, the entire principle balance of $32,500 was converted into 43,779,046 shares of common stock in the Company.

On December 23, 2013, the Company, entered into a Securities Purchase Agreement whereby the Company sold a Convertible Promissory Note to Asher Enterprises, Inc., a Delaware corporation, in the original principal amount of $60,000, and accruing interest at eight percent (8%) per annum. The Note is convertible into the Company’s common stock at a conversion price equal to fifty-five percent (55%) of the then-prevailing market price, beginning one hundred eighty (180) days from the date of the Note’s issuance. As of June 30, 2014, Asher converted $23,440 of debt into 53,875,000 shares of common stock, 28,250,000 shares were not issued till July of 2014 and recorded as a stock payable. This left a balance remaining on this note of $36,560 as of June 30, 2014.

On February 14, 2014, the Company, entered into a Securities Purchase Agreement whereby the Company sold a Convertible Promissory Note to Asher Enterprises, Inc., a Delaware corporation, in the original principal amount of $22,500, and accruing interest at eight percent (8%) per annum. The Note is convertible into the Company’s common stock at a conversion price equal to fifty-five percent (55%) of the then-prevailing market price, beginning one hundred eighty (180) days from the date of the Note’s issuance. As of June 30, 2014, there has been no conversion of debt pertaining to this outstanding convertible promissory note.

In the six months ended June 30, 2014, Asher converted $191,950 of convertible debt and $5,900 of accrued interest into 166,111,049 common shares of the Company. In the year ended December 31, 2013, Asher Enterprises converted $44,490 of convertible notes payable into 7,265,116 common shares.

Premier Venture Partners, LLC (“Premier”)

On October 24, 2013, the Company entered into a court ordered settlement with Premier Venture Partners, LLC in the amount of $63,063. Premier Venture Partners, LLC purchased bona fide accounts payable vendor accounts of the Company in the amount of $63,063 which pursuant to the courts judgment will be settled in the form of common stock of the Company. Premier’s entitled to receive the number of common shares equal to a number, “with an aggregate value equity to (i) the sum of the claim amount plus a 10% settlement fee and plaintiff’s reasonable attorney fees and expense, (ii) divided by the lower of the following: (1) fifty percent of the closing bid price for the trading day immediately preceding the order date or (2) fifty percent of the arithmetic average of the individual daily VWAPs for any five trading days within the calculation period”.

The sum of the claim amount plus a 10% settlement fee and plaintiff’s reasonable attorney fees and expenses were calculated as follows:

Claim amount	$	63,063
10% settlement fee		6,306
Attorney fees		5,770
Total	$	75,139

Management calculates the conversion price to be $0.00114 using fifty percent of the arithmetic average of the individual daily VWAPs for any five trading days within the calculation period. Accordingly, Premier is entitled to receive 65,911,456 common shares of the Company as part of the settlement. In the six months ended June 30, 2014, the Company issued 48,637,933 common shares to Premier pursuant to the court ordered settlement. As of June 30, 2014, the Company must issue approximately 10,030,106 additional common shares to Premier to settle the court order.

In the year ended December 31, 2013, the Company has issued 7,243,417 common shares to Premier and was required to issue an additional 58,668,039 shares of common stock in the Company.

Dennis Pieczarka

Christopher Thompson

On April 1, 2013, the Company entered into a Securities Purchase Agreement with Christopher Thompson for a $10,000 convertible note payable due interest at 9% per annum, unsecured, and due April 1, 2014. The note is convertible into common shares of the Company at a conversion rate of $.10per share. On May 27, 2014, Christopher Thompson assigned his $10,000 note with accrued interest of $1,025 to WHC Capital, LLC.

On May 1, 2014, the Company entered into a Securities Purchase Agreement and convertible promissory note with Christopher Thompson in the amount of $15,000. The convertible promissory note has interest at 9.9% per annum, unsecured, and due May 1, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 60% of the lowest closing bid price in the ten days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

Michael Lace

On June 26, 2013, the Company entered into a Securities Purchase Agreement with Michael Lace for a $2,800 note payable due interest at 9% per annum, unsecured, and due June 26, 2014. The note is convertible into common shares of the Company at a conversion rate of $.05 per share. In the year ended December 31, 2013, Mr. Lace exercised his conversion rights to convert $2,800 of convertible debt and $11 of accrued interest into 56,221 common shares.

Charles Knoop

On July 9, 2013, the Company entered into a Securities Purchase Agreement with Charles Knoop for a $1,000 note payable due interest at 9% per annum, unsecured, and due July 9, 2014. The note is convertible into common shares of the Company at a conversion rate of $.095 per share.

Balamurugan Shanmugam

On August 8, 2013, the Company entered into a Securities Purchase Agreement with Balamurugan Shanmugam for a $5,000 note payable due interest at 9% per annum, unsecured, and due August 8, 2014. The note is convertible into common shares of the Company at a conversion rate of $.10per share. On September 26, 2013, Balamurugan exercised his right to convert his $5,000 of convertible debt and $60 of accrued interest into 50,604 common shares.

LG Capital Funding

On March 7, 2014, the Company entered into a convertible promissory note with LG Capital Funding, LLC for an amount of $32,000 with 8% per annum and a maturity date of March 7, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 60% of the lowest closing bid price in the fifteen days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

On June 16, 2014, the Company entered into a convertible promissory note with LG Capital Funding, LLC for an amount of $42,000 with 8% per annum and a maturity date of June 16, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 55% of the lowest closing bid price in the fifteen days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

JMJ Financial

On March 15, 2014, the Company entered into a convertible promissory note with JMJ Financial for up to $500,000 with 0% for the first three months, then 12% per annum thereafter. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 60% of the lowest closing bid price in the twenty-five days prior to conversion. In March of 2014, the Company received $30,000 pursuant to the convertible promissory note with JMJ Financial. In June of 2014, the Company received an additional $30,000 pursuant to the convertible promissory note with JMJ Financial. As of June 30, 2014, the Company has received only $60,000 pursuant to this convertible promissory note. There has been no principle converted as of June 30, 2014.

IBC Funds, LLC

On April 24, 2014, IBC Funds, LLC, a Nevada limited liability company, acquired by assignment, debts owed by Monster Arts, Inc. to fourteen (14) creditors in the amount of $208,321. Likewise, on April 24, 2014, IBC Funds and Monster Arts, Inc. executed that certain Settlement Agreement and Stipulation, whereby Monster Arts, Inc. agreed to settle the debt of $208,321, and to pay the debt by the issuance of shares pursuant to Section 3(a)(10) of the Securities Act, which provides that the issuance of shares are exempt from the registration requirement of Section 5 of the Securities Act. In relevant part, Section 3(a)(10) of the Securities Act provides an exemption from the registration requirement for securities: (i) which are issued in exchange for a bona fide claim, (ii) where the terms of the issuance and exchange are found by a court to be fair to those receiving shares, (iii) notice of the hearing is provided to those to receive shares and they are afforded the opportunity to be heard, (iv) the issuer must advise the court prior to its hearing that it intends to rely on the exemption provided in Section 3(a)(10) of the Securities Act, and (v) there cannot be any impediments to the appearance of interested parties at the hearing.

On April 25, 2014, in a court proceeding styled IBC Funds, LLC, a Nevada limited Liability Company, Plaintiff vs. Monster Arts, Inc., a Nevada corporation, Defendant, bearing Civil Action in the Circuit Court in the Twelfth Judicial Circuit in and for Sarasota County, Florida, after due notice, the court entered an order approving the Settlement Agreement and Stipulation. In satisfaction of the debt, we agreed to issue shares of our common stock in one or more tranches to IBC Funds in the manner contemplated in the Settlement Agreement and Stipulation at a conversion price of 50% discount to market as calculated as the lowest closing trading price in the 15 (15) days prior to a conversion notice. In accordance with the terms of the Settlement Agreement and Stipulation, the court was advised of our intention to rely upon the exception to registration set forth in Section 3(a)(l0) of the Securities Act to support the issuance of the shares.

As set forth in the order, the court found that the terms and conditions of the exchange were fair to Monster Arts, Inc. and IBC Funds within the meaning of Section 3(a)(10) of the Securities Act, and that the exchange of the debt for our securities was not made under Title 11 of the United States Code.

As of June 30, 2014, as permitted by the court order and the Settlement Agreement and Stipulation, the Company has issued 95,000,000 shares to IBC LLC for the conversion of $56,000. The shares were issued free of any restrictions as permitted by Section 3(a)(10) of the Securities Act.

WHC Capital, LLC

On May 27, 2014, Christopher Thompson assigned his $10,000 convertible note payable with accrued interest of $1,025 to WHC Capital, LLC. The original convertible note payable and securities purchase agreement is dated April 1, 2013,in the amount of $10,000 with interest of 9% per annum, unsecured, and due April 1, 2014. As of June 30, 2014, there has been $10,000 of principle and $1,051 in accrued interest converted on this note leaving a remaining balance of $0 on this note.

On April 30, 2014, the Company entered into a convertible promissory note with WHC Capital, LLC in the amount of $220,000 , with interest of 12% per annum, unsecured, and due April 30, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 55% of the lowest closing bid price in the fifteen days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

Beaufort Capital

On June 27, 2014, the Company entered into a convertible promissory note with Beaufort Capital Partners LLC in the amount of $50,000 with 12% interest per annum and a maturity date of December 27, 2014. The convertible note’s principle and accrued interest may be converted into common shares of the Company’s after the maturity date at a discount of 50% off the lowest traded price during the prior 20 trading days to a notice of conversion. As of June 30, 2014, there has been no debt converted on this note.

Jennifer Salwender

On May 1, 2014, the Company entered into a convertible promissory note with Jennifer Salwender in the amount of $20,000 with 9.9% interest per annum and a maturity date of May 1, 2015. The convertible note’s principle and accrued interest may be converted into common shares of the Company’s after 180 days from the issuance date at a discount of 40% off the lowest closing traded price during the prior 10 trading days to a notice of conversion. As of June 30, 2014, there has been no debt converted on this note.

ADAR BAYS, LLC

On May 2, 2014, the Company entered into a convertible promissory note with ADAR BAYS, LLC in an amount of $30,000 with 8% per annum and a maturity date of May 2, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 50% of the lowest closing bid price in the fifteen days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

Brent Denlinger

On April 16, 2014, the Company entered into a convertible promissory note with Brent Denlinger in an amount of $15,000 with 9.9% per annum and a maturity date of April 16, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 60% of the lowest closing bid price in the ten days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

KBM Worldwide, Inc.

On June 13, 2014, the Company entered into a convertible promissory note with KBM Worldwide, Inc. in an amount of $63,000 with 8% per annum and a maturity date of March 17, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 55% of the lowest closing bid price in the ten days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

Jessie Redmayne

On April 4, 2014, the Company entered into a convertible promissory note with Jessie Redmayne in an amount of $5,000 with 9.9% per annum and a maturity date of April 4, 2015. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 60% of the lowest closing bid price in the ten days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

Anubis Capital Partners

On April 1, 2014, the Company executed a convertible promissory note with Anubis Capital Partners in the amount of $127,900 with interest of 10% per annum and a maturity date of April 1, 2015. The convertible promissory note was executed in return for consulting services provided to the Company. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 50% of the lowest closing bid price in the twenty days prior to conversion. As of June 30, 2014, there has been no debt converted on this note.

The following table summarizes the total outstanding principle on convertible notes payable:

	June 30, 2014		December 31, 2013

Convertible Notes Payable- Asher Enterprises, Inc.	$	59,060	$	228,510
Convertible Notes Payable - Tangier Investors, LLP		—		—
Convertible Note Payable- Premier Venture Partners LLC		—		17,370
Convertible Note Payable- Dennis Pieczarka		2,500		2,500
Convertible Note payable - Christopher Thompson		15,000		10,000
Convertible Note payable - James Ault		2,565		2,565
Convertible Note payable - Charles Knoop		1,000		1,000
Convertible Note payable - LG Capital Funding		74,000		—
Convertible Note payable - JMJ Financial		60,000		—
Convertible Note payable - IBC Funds, LLC		152,321		—
Convertible Note payable - WHC Capital, LLC		21,949		—
Convertible Note payable - ADAR BAYS, LLC		30,000		—
Convertible Note payable - Beaufort Capital		50,000		—
Convertible Note payable - Brent Denlinger		15,000		—
Convertible Note payable - Jessie Redmayne		5,000		—
Convertible Note payable - Jennifer Salwender		20,000		—
Convertible Note payable - Anubis Capital Partners		127,900		—
Convertible Note payable - KBM Worldwide		63,000		—
Total	$	699,295	$	261,945

The accrued interest on convertible notes payable at June 30, 2014 and December 31, 2013 was $33,854 and 11,695, respectively.

Derivative liability

At June 30, 2014 and December 31, 2013, the Company had $10,047,485 and 21,876,947 in derivative liability pertaining to the outstanding convertible notes. The Company calculates the derivative liability using the Black Scholes Model which takes into consideration the stock price on the grant date, exercise price with discount to market conversion rate, stock volatility, expected life of the note, risk-free rate, annual rate of quarterly dividends, call option value and put option value.

NOTE 8 - STOCKHOLDERS' DEFICIT

Authorized Common Stock

On July 19, 2013, the Company amended its articles of incorporation to increase its authorized shares from 75,000,000 to 750,000,000 of which 730,000,000 were designated as common stock and 20,000,000 were designated as preferred stock. The stocks have a par value of $0.001. The Company then designated 10,000,000 preferred shares as Series A Preferred Stock. Each share of Series A Preferred Stock can vote equal to 100 shares of common stock and can be converted to common stock at a rate of 1 to 1.

Authorized Preferred Stock

The Company has designated 20,000,000 preferred shares as Series A Preferred Stock, par value $0.001. Each share of Series A Preferred Stock can vote equal to 100 shares of common stock and can be converted to common stock at a rate of 1 to 1.

Issuance of Preferred Stock

The Company has 20,000,000 Series A preferred shares issued and outstanding as of June 30, 2014 all of which were issued to the Company’s chief executive officer, Wayne Irving II, for services rendered.

Issuance of Common Stock

In the year ended December 31, 2013, the Company issued 26,136,087 common shares of which 861,751 shares were for $454,300 cash ($278,425 received in 2012), 7,355,667 shares were to consultants for services, 14,775,358 shares were for the reduction of $128,083 in convertible debt and $82 of accrued interest, and 3,143,311 shares were for the conversion of 13,767,684 shares of Ad Shark. The shares to consultants were valued at the closing stock price on the date of the executed agreement. This resulted in a consulting expense of $814,275 being recorded for the year ended December 31, 2013. The uncompleted portions of the consulting contracts for future services were recorded as prepaid expenses (See Note 4 for further details). At December 31, 2013, the Company recorded $139,996 in prepaid expenses pursuant to future consulting services to be performed in 2014 pursuant to contract obligations. Of the 7,355,667 shares issued to consultants, 323,833 shares were incorrectly issued and later returned and cancelled.

In the six months ended June 30, 2014, the Company issued 510,108,831 common shares of which 166,111,049 were issued to Asher Enterprises, Inc. for the conversion of $191,950 in convertible debt and $5,900 in accrued interest, 48,637,933 shares were issued to Premier Venture Partners, LLC pursuant to the court ordered settlement, 95,000,000 shares to IBC, LLC for the conversion of $56,000, 100,000,000 shares to our chief executive officer, Wayne Irving, for the reduction of $25,000 in accrued payroll liability, 22,325,475 to WHC Capital, LLC for the conversion of $11,051 in convertible dent, 19,222,681 shares were issued to Ad Shark, Inc. shareholders for the conversion of their Ad Shark, Inc. shares at a ratio of 4.38 Ad Shark shares to Monster Arts Inc. shares and 84,055,110 shares were to consultants for services by June 30, 2014. The Company valued the 84,055,110 shares to consultants at the closing share price on the date of issuance which resulted in the Company recording a non-cash consulting expense of $137,858.

NOTE 9 – CONTINGENCY AGREEMENTS

Master Purchase Agreement with Iconosys

On March 4, 2013, the Company and Iconosys, a privately held corporation, which shares an officer with the Company, entered into a Master Purchase Agreements in order for the Company to purchase, and for Iconosys to sell, certain intellectual property assets, including, without limitation, domain names, trademarks, smart phone apps. In addition, the Company received 15,046,078 shares of Iconosys common stock, $0.001 par value, as consideration for the cancellation of $295,862 in advances to Iconosys and $2,884 in accrued interest receivable. The Iconosys stock received accounts for approximately 10% of the 150,460,781 shares of Iconosys issued and outstanding as of June 30, 2014. Since this agreement was between related parties, being the two company’s share an officer, the Company did not record an asset for the excess consideration received but recorded the debit to additional paid in capital.

Management Service Agreement with Iconosys

On July 16, 2013, the Company executed a management service agreement with a subdivision of Iconosys called Text Kills. Iconosys shares an officer with the Company. The Company will provide service and management support for Text Kills events which includes but is not limited to raising awareness, public education campaigns, and managing the Text Kills tour bus. In the six months ended June 30, 2014 and in the year ended December 31, 2013 the Company recognized $250 and $5,387 in commission revenues from related parties relating to Text Kills.

Joint Venture agreement with Intelligent Living Inc.

On November 1, 2013, the Company executed a joint venture agreement with Intelligent Living, Inc. (“ILIV”). You can read the full agreement in the registrant’s SEC Form 8-K filing on November 5, 2013. The Company will provide ILIV comprehensive and end-to-end turnkey business function through its development of smartphone and tablet apps. The Company’s revenue sharing will be 35% of gross payments from app sales from Google Play and 50% of gross payments from app sales through Amazon, Nook, iTunes, and others. The Company will be paid in the form of stock by ILIV which is a publically traded company trading on the OTCQB under the symbol “ILIV”. The Company will be paid 36,600,000 common shares of ILIV in quarterly installments over a period of 2 years from the date of the agreement. The Company has been paid an initial 10,000,000 common shares upon closing of the agreement which were valued at the closing price of ILIV stock on November 1, 2013 which was $0.001. This resulted in the Company recording an available-for-sale securities asset of $10,000. The available-for-sale securities asset was revalued at June 30, 2014 using the closing price of ILIV of $0.0012 per share which resulted in the Company recording an unrealized gain on available-for-sale securities of $34,200.

Employment Agreement with Chief Executive Officer, Wayne Irving

On August 1, 2011, the Company’s wholly owned subsidiary, Ad Shark, entered into an employment agreement with its President Wayne Irving. The term of employment shall be three (3) years, commencing on the August 1, 2011 and terminating on July 31, 2014, or at a later mutually agreeable date. Salary compensation is to be paid at the rate of $88,500 annually, payable on a monthly basis. On the anniversary of employment, this rate will increase 5% annually. Monster Arts, Inc. absorbed the employment agreement when Ad Shark was dissolved in early 2014. As of June 30, 2014 and December 31, 2013, the Company had accrued wages of $151,039 and $155,706, respectively which are included in accounts payable and accrued expenses to related party balance. In the six months ended June 30, 2014, the Company entered into a debt settlement agreement with its chief executive officer, Wayne Irving, whereby the Company issued 100,000,000 shares of common stock for the reduction of $25,000 in accrued payroll liability.

Consulting Agreement with Mind Solutions, Inc.

On February 19, 2014, the Company entered into a consulting agreement with Mind Solutions, Inc., whereby Mind Solutions, Inc. will provide the Company with thought controlled software development services over a one year term. The Company will pay Mind Solutions, Inc. four quarterly payments of $50,000 in restricted common stock of the Company. In the six months ended June 30, 2014, the Company issued 39,583,333 shares of common stock.

NOTE 12 – RELATED PARTY TRANSACTIONS

Issuance of Preferred Stock

The Company has 10,000,000 Series A preferred shares issued and outstanding as of June 30, 2014 which were issued to the Company’s chief executive officer, Wayne Irving II, for services rendered.

Appointment of Chief Financial Officer

In August of 2014, the Company appointed Tisha Lawton as the Secretary, Treasurer and Chief Financial Officer of the Company. Ms. Lawton is a sibling of our Chief Executive Officer, Wayne Irving II.

Equity interest in Candor Homes Corporation

Debt Settlement Agreement with Wayne Irving, II

In the six months ended June 30, 2014, the Company entered into a debt settlement agreement with its chief executive officer, Wayne Irving, whereby the Company issued 100,000,000 shares of common stock for the reduction of $25,000 in accrued payroll liability.

Asset Purchase Agreement with Iconosys for TAVG

The Company approved the execution of certain asset purchase and domain name, web site content and trademark assignment agreement dated August 8, 2013 with Iconosys, Inc., a private California corporation which shares an officer with the Company.

Management Service Agreement with Iconosys

On July 16, 2013, the Company executed a management service agreement with a subdivision of Iconosys called Text Kills. Iconosys shares an officer with the Company. The Company will provide service and management support for Text Kills events which includes but is not limited to raising awareness, public education campaigns, and managing the Text Kills tour bus. In the six months ended June 30, 2014 and for the year ended December 31, 2013 the Company recognized $250 and $5,387 of commission revenues from related parties relating to Text Kills.

Notes Payable to Related Parties

In 2012, the Company had certain debts paid directly by Iconosys, a private California corporation which shares an officer with the Company. The amounts paid on behalf of the Company totaled $13,250 as of June 30, 2014 and December 31, 2013. They were recorded as a note payable to related party. The note payable has terms of 0% interest and is payable on demand.

Pursuant to the asset purchase agreement with Iconosys executed on August 8, 2013, further described in Note 7, the Company issued a promissory note to Iconosys in the amount of $45,000, due August 7, 2014, with annum interest of 4%.

At June 30, 2014 and December 31, 2013, the Company had notes payable to related parties balance of $55,980 and $57,480.

Loan receivable to related party

The Company’s subsidiary, Ad Shark Inc., has a $300,000 line of credit agreement with Iconosys. The line of credit agreement has terms of 4%, payable on demand. Iconosys is a private California corporation which shares an officer with the Company. Mr. Irving was appointed CFO in May of 2012 and then appointed CEO in late 2012. Iconosys was at one time the parent company to Ad Shark, Inc. At June 30, 2014 and December 31, 2013, the total loan receivable balance advanced to Iconosys is $313,333 and $290,532, respectively. At June 30, 2014 and December 31, 2013, the accrued interest receivable to related party balance was $21,083 and $15,577, respectively.

Employment Agreement with Chief Executive Officer, Wayne Irving

The accounts payable to related parties balance at June 30, 2014 and December 31, 2013 was $154,879 and $169,577.

Loan from Officer

The Company was loaned money by Wayne Irving, the chief executive officer of the Company, with 0% interest and payable on demand. At June 30, 2013 and December 31, 2013 the loan from officer balance was $14,004 and $17,021.

Master Purchase Agreement with Iconosys

Ad Shark Acquisition

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

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

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

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

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

NOTE 13 - SUBSEQUENT EVENTS

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

On July 11, 2014, the Company entered into a Securities Exchange and Settlement Agreement (SE&S) with WHC Capital, LLC (WHC, LLC), whereby WHC, LLC purchased $5,161 of note payables debt due to Jennifer Salwender pursuant to an Assignment of Debt Agreement.

On July 14, 2014, the Company entered into a Debt Purchase Agreement with Sojourn Investments, LP whereby the Company issued an aggregate principle amount of $37,500 in convertible debt for a purchase price of $25,000. The convertible note has interest of 12% per annum and is convertible into common shares of the Company at a conversion rate of 50% off the lowest trading market price for 20 days prior to conversion.

On July 30, 2014, the Board of Directors of the Company authorized and approved the execution of a settlement agreement with the Company’s chief executive officer, Wayne Irving II, whereby the Company will issue 250,000,000 restricted common shares in return for the reduction in $62,500 in accrued liabilities payable to Mr. Irving pursuant to an employment agreement.

From July 1, 2014 to the date of this filing, the Company issued 419,187,882 additional common shares of the Company of which 158,411,684 shares were for the reduction of $57,883 in convertible debt from four unrelated third parties, 10,776,198 shares for consulting services and 250,000,000 shares to our chief executive officer for the reduction of $25,000 of accrued payroll liabilities.

On August 8, 2014, our Board of Directors and majority shareholders, believing it to be in the best interests of the Company and its shareholders, approved the amendment to the Company's Articles to increase the shares of blank check preferred stock, $0.001 par value per share, from 20,000,000 to 100,000,000 shares (the "Preferred Stock”).

On August 8, 2014, our Board of Directors and majority shareholders, approved a reverse stock split upon receipt of all necessary regulatory approvals and the passage of all necessary waiting periods. The reverse split would reduce the number of outstanding shares of our common stock at a ratio of 100 to 1 but have no effect on the number of authorized shares of Common Stock or Preferred Stock.

	7.	In August of 2014, the Company amended is articles of incorporation to increase the number of authorized common shares from 730,000,000 to 5,000,000,000 with a par value of $0.001.

	8.	In August of 2014, the Company appointed Tisha Lawton as the Secretary, Treasurer and Chief Financial Officer of the Company. Ms. Lawton is a sibling of our Chief Executive Officer, Wayne Irving II.

Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

The Company from time to time may make written or oral "forward-looking statements" including statements contained in this report and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements of the Company's plans, objectives, expectations, estimates and intentions, which are subject to change based on various important factors (some of which are beyond the Company's control). The following factors, in addition to others not listed, could cause the Company's actual results to differ materially from those expressed in forward looking statements: the strength of the domestic and local economies in which the Company conducts operations, the impact of current uncertainties in global economic conditions and the ongoing financial crisis affecting the domestic and foreign banking system and financial markets, including the impact on the Company's suppliers and customers, changes in client needs and consumer spending habits, the impact of competition and technological change on the Company, the Company's ability to manage its growth effectively, including its ability to successfully integrate any business which it might acquire, and currency fluctuations. All forward-looking statements in this report are based upon information available to the Company on the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Overview of Current Operations

On May 2, 2013, the Company amended its articles of incorporation to change its name from Monster Offers to Monster Arts, Inc. Monster Arts, Inc. (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 from Tropical PC Acquisition Inc., 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 November 9, 2012, the 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 Company, through its wholly-owned subsidiary, Merger Sub, acquired Ad Shark in exchange for approximately 27,939,705 shares of the Company's unregistered restricted common stock, which were issued to the holders of Ad Shark stock based on their pro-rata ownership.

Amendment to Articles of Incorporation- Name Change

On May 16, 2013, we filed an information statement pursuant to Section 14(c) of the Securities Exchange Act of 1934, as amended (the "Information Statement"). The company's board of directors and shareholders holding a majority of its outstanding voting capital stock approved an amendment to the articles of incorporation (the "Amendment") to change the Company's name from "Monster Offers" to "Monster Arts" (the "Name Change"). On May 2, 2013, the Company obtained the approval of the Name Change and the Amendment by written consent of the stockholders that are the record owners of 21,377,597 shares of common stock, which represents an aggregate of approximately 65.72% of the voting power as of May 2, 2013.

The Company's board of directors believes that the amendment to the Articles of Incorporation to change the name from "Monster Offers" to "Monster Arts Inc." is necessary in light of the proposed future business operations of the Company. The Board of Directors believes that the current name defines and limits the Company to an area which is involving less and less the substantial business operations of the Company. Those business operations pertain to daily deal aggregation, which involves collecting daily deals from multiple sites in local communities across the U.S. and Canada. The Company focuses on providing innovation and utility for daily deal consumers and providers by collecting and publishing thousands of daily deals and allowing consumers to organize these deals by geography or product categories, or to personalize the results using keyword search. The Company will continue these operations but intends to expand its operations.

The Board of Directors, therefore, believes that the name "Monster Arts Inc." will better reflect the evolution of the Company's future business operations including, but not limited to, growing the Company outside the daily deals space utilizing the core competencies of analytics and research that the Company has garnered during the prior years, including expertise in software and smartphone app development. As of the date of this Quarterly Report, the Company has pending several agreements and/or negotiations with entertainment related firms to build out smartphone applications for their catalogs and/or catalogs for the purpose of promoting and enhancing the offerings and brands for clients.

Amendment to Articles of Incorporation- Increase Series A Preferred Stock

In March of 2014, the Company amended its articles of incorporation with the State of Nevada to increase the number of Series A Preferred Shares from 10,000,000 to 20,000,000.

Amendment to Articles of Incorporation- Increase Authorized Preferred Stock

Amendment to Articles of Incorporation- Approval of Reverse Stock Split

Amendment to Articles of Incorporation- Increase in authorized Common Shares

In August of 2014, the Company amended is articles of incorporation to increase the number of authorized common shares from 730,000,000 to 5,000,000,000 with a par value of $0.001.

Appointment of Secretary, Treasurer and Chief Financial Officer

In August of 2014, the Company appointed Tisha Lawton as the Secretary, Treasurer and Chief Financial Officer of the Company. Ms. Lawton is a sibling of our Chief Executive Officer, Wayne Irving II.

Material Agreements

Convertible Debentures

On April 1, 2013, the Company entered into a Securities Purchase Agreement with Christopher Thompson for a $10,000 note payable due interest at 9% per annum, unsecured, and due April 1, 2014. The note is convertible into common shares of the Company at a conversion rate of $.10/share. As the conversion rate is fixed and below the market price of the Company’s stock at June 30, 2013, the Company calculated a derivative expense of $27,483 at June 30, 2013 using the Black Scholes Model.

On April 11, 2013, the Company entered into a Convertible Note Agreement with Asher Enterprises Inc. for a $42,500 convertible note payable with interest of 8% per annum, unsecured, and due January 14, 2014. The note is convertible into common shares of the Company at a conversion rate of 55% of the market price, calculated as the average of the three lowest trading prices in the previous 10 days leading up to the date of conversion. As the conversion rate is floating in nature, the Company calculated a derivative expense of $112,016 at June 30, 2013 using the Black Scholes Model.

On May 13, 2013, the Company entered into a Convertible Note Agreement with Asher Enterprises Inc. for a $63,000 convertible note payable with interest of 8% per annum, unsecured, and due February 17, 2014. The note is convertible into common shares of the Company at a conversion rate of 55% of the market price, calculated as the average of the three lowest trading prices in the previous 10 days leading up to the date of conversion. As the conversion rate is floating in nature, the Company calculated a derivative expense of $212,766 at June 30, 2013 using the Black Scholes Model.

On May 22, 2013 the Company executed a convertible debenture agreement with Dennis Pieczarka for a $2,500 convertible note payable with interest of 9% per annum, unsecured and due on May 22, 2014. The holder has the right to convert the principle plus interest into common shares of the Company at a conversion rate of $0.15 per share. As the conversion rate is fixed and below the market price of the Company’s stock at June 30, 2013, the Company calculated a derivative expense of $27,483 at June 30, 2013 using the Black Scholes Model.

On June 14, 2013, the Company entered into a Convertible Note Agreement with Asher Enterprises Inc. for a $37,500 convertible note payable with interest of 8% per annum, unsecured, and due March 18, 2014. The note is convertible into common shares of the Company at a conversion rate of 55% of the market price, calculated as the average of the three lowest trading prices in the previous 10 days leading up to the date of conversion. As the conversion rate is floating in nature, the Company calculated a derivative expense of $256,584 at June 30, 2013 using the Black Scholes Model.

On June 26, 2013, the Company entered into a Securities Purchase Agreement with Michael Lace for a $2,800 note payable due interest at 9% per annum, unsecured, and due June 26, 2014. The note is convertible into common shares of the Company at a conversion rate of $.05/share. As the conversion rate is fixed and below the market price of the Company’s stock at June 30, 2013, the Company calculated a derivative expense of $10,169 at June 30, 2013 using the Black Scholes Model.

On August 8, 2013, the Company entered into a Securities Purchase Agreement with Balamurugan Shanmugam for a $5,000 note payable due interest at 9% per annum, unsecured, and due August 8, 2014. The note is convertible into common shares of the Company at a conversion rate of $.10/share. On September 26, 2013, Balamurugan exercised his right to convert his $5,000 of convertible debt and $60 of accrued interest into 50,604 common shares.

On March 15, 2014, the Company entered into a convertible promissory note with JMJ Financial for up to $500,000 with 0% for the first three months, then 12% per annum thereafter. The convertible note’s principle and accrued interest may at any time be converted into shares of the Company’s stock at a conversion rate equal to 60% of the lowest closing bid price in the twenty-five days prior to conversion. As of June 30, 2014, the Company has received only $30,000 pursuant to this convertible promissory note. There has been no principle converted as of June 30, 2014.

Asset Purchase Agreement

The Board of Directors of the Company approved the execution of certain asset purchase and domain name, web site content and trademark assignment agreement dated August 8, 2013 (the "Asset Purchase Agreement") with Iconosys, Inc., a private California corporation ("Iconosys"). In accordance with the terms and provisions of the Asset Purchase Agreement, Iconosys shall sell, convey, transfer and assign to the Company and the Company shall purchase all right, title and interest in and to the assets of Iconosys as follows: (i) the Iconosys trademarks (the "Trademarks"); (ii) the Iconosys domain name (the "Domain Name") together with all associated service marks, copyrights, trade names and other intellectual property associated with the Domain Name; (iii) the Iconsys web site content (the "Web Site"), together with all associated intellectual property rights to the Web Site.

In further accordance with the terms and provisions of the Asset Purchase Agreement, the Company shall pay to Iconsys a purchase price of $250,000 as follows: (i) $50,000 of the Purchase Price shall be paid in cash with a cash payment of $5,000 to be paid within five days of closing and the balance of the $45,000 to be paid pursuant to the terms and provisions of that certain promissory note described below; and (ii) $200,000 of the Purchase Price shall be paid in the form of the issuance to Iconosys of 1,052,632 shares of the Company's restricted common stock at a per share price of $0.19 per share (which per share price was based on the closing trading price of the Company's shares of common stock on the OTC Bulletin Board as of August 8, 2013.

Iconosys is a leading developer of innovative mobile and stationary telecommunication applications and technologies. It develops safety, security, and privacy-oriented technologies for modern-age personal devices and platforms. As a leader in the mobile communications market, Iconosys develops its technologies into retail grade Smart Device and web applications (apps) that promote an enhanced user experience. Iconosys has developed nearly 500 Smart Device retail grade apps since 2009.

Iconosys develops both client-side and server-side applications that are not only unique trendsetters, but also designed to serve the time-sensitive, constantly evolving needs of today’s and tomorrow’s consumers. Iconosys and its client-side app development team are specialists in developing solutions for Android, iPhone, BlackBerry, Palm, Windows, Chrome, Windows Phone/Windows Mobile and Symbian platforms. Iconosys cultivates compelling competitive advantages in three primary areas of its business focus: research and development; hands-on client services; and mobile marketing strategies.

In conjunction with the Asset Purchase Agreement, on August 8, 2013, the Board of Directors approved the execution of that certain promissory note dated August 8, 2013 in the principal amount of $45,000 issued to Iconosys (the "Note"). Interest accrues on the Note at a rate of 4% per annum with a maturity date of August 7, 2014.

Master Purchase Agreement with Iconosys

On March 4, 2013, the Company and Iconosys, a privately held corporation which shares an officer with the Company, entered into a Master Purchase Agreements in order for the Company to purchase, and for Iconosys to sell, certain intellectual property assets, including, without limitation, domain names, trademarks, and smart phone apps, and 15,046,078 shares of Iconosys common stock, $0.001 par value, in consideration for the Company’s cancellation of $295,862 in advances to Iconosys and $2,884 in accrued interest receivable. The Company valued the 15,046,078 shares received from Iconosys at the fair market value of $0.10 which was calculated from the average stock price paid by cash investors. This resulted in valuing the stock received at $1,504,608. The stock received accounts for approximately 10% of the 150,460,781 shares of Iconosys issued and outstanding as of June 30, 2013. Since this agreement was between related parties, the Company did not record an asset for the excess consideration received but recorded the debit to additional paid in capital.

Asset Purchase Agreement with Iconosys for TAVG

On August 8, 2013, the Company approved the execution of an asset purchase agreement with Iconosys, Inc., a private California corporation which shares an officer with the Company for the rights to domain names, web site content and trademark assignments. Iconosys shall sell, convey, transfer and assign to the Company and the Company shall purchase all right, title and interest in and to the assets of Iconosys as follows: (i) the Iconosys trademarks (the "Trademarks"); (ii) the Iconosys domain name (the "Domain Name") together with all associated service marks, copyrights, trade names and other intellectual property associated with the Domain Name; (iii) the Iconsys web site content (the "Web Site"), together with all associated intellectual property rights to the Web Site.

Being Iconosys is a related party to the Company, it was management’s decision to not record an intangible asset related to the asset purchase. As of September 30, 2013, the Company has not yet issued the 1,052,632 shares and has recorded them as a stock payable.

IBC Funds Settlement Agreement

On April 24, 2014, our Board of Directors authorized the execution of that certain settlement agreement and stipulation dated April 24, 2014 (the "Settlement Agreement") with IBC Funds LLC, a Nevada limited liability company ("IBC Funds").

We had certain payables outstanding due and owing to creditors aggregating $208,320.82 (collectively, the "Payables"). IBC Funds purchased the Payables from their respective holders and subsequently filed a claim against us in the Circuit Court of the Twelfth Judicial Circuit in and for Sarasota County, Florida for the payment of the Payables. Thus, we and IBC Funds desired to resolve and settle the Payables and entered into the Settlement Agreement.

On the dates listed below, IBC Funds delivered a conversion notice to us (the "Conversion Notice") proposing certain dollar amount conversions pertaining to the Settlement Agreement which were convertible into shares of common stock. The shares of common stock were exempt from registration under the Securities Act of 1933, as amended, in reliance upon Section 3(a)(10).

Date of Conversion		Dollar Amount	Number of Shares Issued
April 25, 2014	$	6,300.00	7,000,000
May 6, 2014		5,950.00	7,000,000
May 15, 2014		5,250.00	7,000,000
May 22, 2014		4,000.00	8,000,000
May 28, 2014		4,000.00	8,000,000
June 4, 2014		4,500.00	8,000,000
June 10, 2014		4,500.00	10,000,000
June 16, 2014		4,500.00	10,000,000
June 24, 2014		4,500.00	10,000,000
June 27, 2014		6,000.00	10,000,000
July 8, 2014		5,500.00	10,000,000
July 11, 2014		4,500.00	10,000,000
July 11, 2014		3,000.00	10,000,000
July 23, 2014		3,000.00	10,000,000
July 29, 2014		3,000.00	10,000,000

The Board of Directors determined it was in the best interests of the Company and its shareholders to enter into the Settlement Agreement and resulting 3(a)(10) issuance of shares in order to ensure our successful operational aspects within the next six months and to accelerate the possibility of generation of revenue from multiple sources.

Our Current Business

Monster Arts, Inc. 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.

Ad Shark’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 Quarterly Report.)

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.

Results of Operations for the Three Month Ended June 30, 2014 and 2013

Revenues

During the three month ended June 30, 2014 and 2013, the Company generated $41,108 in revenues as compared to $6,000 for the three months ended June 30, 2013. To date, the Company has earned minimal revenues and there can be no assurances that the Company can be profitable or that the Company will not incur operating losses in the future.

Operating Expenses

During the three month ended June 30, 2014, the Company incurred operating expenses of $613,184 as compared to operating expenses of $178,154 incurred during the three month ended June 30, 2013. Operating expenses for the three month ended June 30, 2014 increased by $435,030 compared to the prior year three months ended. The increase was due to the following:

Consulting expenses increased by $381,658 to $403,374 from $21,716 for the three months ended June 30, 2014 and 2013, respectively, primarily due to the issuance of stock for consulting services.

Salaries and wages decreased by $278 to $41,940 from $42,218 for the three months ended June 30, 2014 and 2013, respectively. The decrease was minimal as wages have stayed fairly consisitent with the presence of the same staff payroll and employment agreement with the Company’s chief executive officer, Wayne Irving II.

Professional fees increased by $73,533, to $54,830 from $18,703 for the three months ended June 30, 2014 and 2013, respectively, primarily due to increase in legal and accounting fees.

Therefore, during the three month period ended June 30, 2014, the Company incurred a loss from operations of $572,076 as compared to a loss from operations of $178,154 during the three month period ended June 30, 2013.

During the three month ended June 30, 2014, the Company further incurred: (i) interest income of $2,200 (2013: $2,263); (ii) interest expense of $17,555 (2013: $1,916); (iii) interest expense – derivative of $1,689,122 (2013: $621,935).

As a result of the above, the Company incurred a net loss of $2,276,553 and of $799,742 for the three month ended June 30, 2013, respectively.

Results of Operations for the Six Month Ended June 30, 2014 and 2013

Revenues

During the six month ended June 30, 2014 and 2013, the Company generated $98,690 in revenues as compared to $20,450 for the six months ended June 30, 2013. To date, the Company has earned minimal revenues and there can be no assurances that the Company can be profitable or that the Company will not incur operating losses in the future.

Operating Expenses

During the six month ended June 30, 2014, the Company incurred operating expenses of $917,548 as compared to operating expenses of $589,241 incurred during the six month ended June 30, 2013. Operating expenses for the six month ended June 30, 2014 increased by $328,307 compared to the prior year six months ended. The increase was due to the following:

Consulting expenses increased by $307,572 to $622,256 from $314,684 for the six months ended June 30, 2014 and 2013, respectively, primarily due to the issuance of stock for consulting services.

Salaries and wages decreased by $19,735 to $80,833 from $100,568 for the six months ended June 30, 2014 and 2013, respectively, primarily due to less wages as the Company transferred salaried work to outside consultants.

Professional fees increased by $4,981 to $90,016 from $85,035 for the six months ended June 30, 2014 and 2013, respectively, primarily due to increase in legal and accounting fees.

Therefore, during the six month period ended June 30, 2014, the Company incurred a loss from operations of $818,858 as compared to a loss from operations of $568,791 during the six month period ended June 30, 2013.

During the six month ended June 30, 2014, the Company further incurred: (i) interest income of $4,400 (2013: $5,243); (ii) interest expense of $26,797 (2013: $4,5787; (iii) interest expense – derivative of $1,689,122 (2013: 621,35).

As a result of the above, the Company incurred a net loss of $2,530,377 and of $1,190,070 for the six month ended June 30, 2013, respectively.

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 June 30, 2014 and December 31, 2013:

	June 30,	December 31,	$	%
	2014	2013	Change	Change
Working Capital (deficit)	(10,553,088)	(21,994,223)	11,441,135	52.0%
Cash	194,677	46,234	148,443	Over 100%
Total Current Assets	510,665	496,512	14,153	2.9%
Total Assets	550,931	502,972	47,959	(9.5%)
Accounts payable and accrued liabilities	218,201	248,822	(30,621)	(12.3%)
Loan from officer	14,004	17,021	(3,017)	(17.7%)
Notes payable to related party	55,980	57,480	(1,500)	(2.6)%
Convertible notes payable	699,295	261,945	437,350	Over 100%
Total current liabilities	11,063,753	22,490,735	(11,426,982)	(50.8%)
Total liabilities	11,063,753	22,490,735	(11,426,982)	(50.8%)

At June 30, 2014, our working capital deficit decreased when compared to December 31, 2013, primarily as a result of a decrease of $11,829,462 in derivative liability from the convertible notes issued.

Operating activities

Net cash used for continuing operating activities during the six months ended June 30, 2014 was $435,510. Non-cash items totaled approximately $2,094,867 which included the following:

	• • •	$157,858 of stock for services representing the value of shares issued to consultants for services rendered to the Company $127,900 of convertible notes payable issued for consulting services $1,689,122 in derivative expense
	•	$394 in depreciation and amortization
	•	$9,423 increase in revenues from available-for-sale securities revenues
	•	$3,602 increase in accounts receivable
	•	$5,506 increase in interest receivable
	• •	$246 increase in deferred revenues $3,402 increase in loans to related parties
	•	$13,017 decrease in accounts payable and accrued expenses
	•	$14,698 increase in accounts payable to related parties
	•	$22,195 increase in accrued interest

Net cash used for continuing operating activities during the six months ended June 30, 2013 was $391,185. Non-cash items totaled approximately $798,885 which included the following:

	• •	$193,492 of stock for services representing the value of shares issued to consultants for services rendered to the Company $621,935 increase in derivative expense
	•	$298,745 cancelation of loan receivable to Iconosys per Master Purchase Agreement
	•	$394 of depreciation and amortization
	•	$262 increase in prepaids from stock issued to consultants for future services
	•	$2,350 increase in interest receivable
	•	$163,562 decrease in loan receivable to related party
	•	$77,068 increase in accounts payable and accrued expenses
	•	$14,721 increase in accounts payable to related parties
	•	$454 increase in accrued interest

Financing activities

We have financed our operations primarily from debt or the issuance of equity instruments. For the six months ended June 30, 2014, net cash flows provided from financing activities was $583,953 which consisted of $3,107 in payments on officer loans and $593,721 in proceeds from convertible notes.

For the six months ended June 30, 2013, net cash flows provided from financing activities was $212,971, which consisted of $180,875 in proceeds from the sale of stock, $119,800 in proceeds from convertible notes and $87,704 in payments on officer loan.

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 the Company 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 the Company, especially with the current economic environment.

Management is concerned that the Company 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.

If the Company falls short of capital to keep the Company fully reporting, our officers/directors have agreed to donate funds to the operations of the Company, in order to keep it fully reporting for the next twelve (12) months. No agreement exists that our officers/directors will continue to donate funds to the operations of the Company for the next twelve months; therefore, there is no guarantee that they will continue to do so in the future.

Going Concern

Going Concern - The Company has recognized an accumulated deficit since inception (February 23, 2007) through June 30, 2014 of $31,158,456. 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 be performed for the term of our plan of operations.

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 April 20, 2014, we have two part-time employees and one full-time employee. We are also dependent upon our officers 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.

Employment agreements

On August 1, 2011, the Company’s wholly owned subsidiary, Ad Shark, entered into an employment agreement with its President Wayne Irving. The term of employment shall be three (3) years, commencing on the August 1, 2011 and terminating on July 31, 2014, or at a later mutually agreeable date. Salary compensation is to be paid at the rate of $88,500 annually, payable on a monthly basis. On the anniversary of employment, this rate will increase 5% annually. Monster Arts, Inc. absorbed the employment agreement when Ad Shark was dissolved in early 2014. As of June 30, 2014 and December 31, 2013, the Company had accrued wages of $178,937 and $155,706, respectively which are included in accounts payable and accrued expenses balance.

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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4. 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."

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed by, or under the supervision of, our chief executive officer and chief financial officer and affected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2013. In making its assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on its assessment, management has concluded that we had certain control deficiencies described below that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not effective as of June 30, 2014.

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

We do not believe the material weaknesses described above caused any meaningful or significant misreporting of our financial condition and results of operations for the quarter ended June 30, 2014. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

Management Plan to Remediate Material Weaknesses

Management believes that the material weaknesses set forth in item (2) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

We believe the remediation measures described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

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.

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, 2013 and the discussion in Item 1, above, under "Liquidity and Capital

Resources."

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

None not previously disclosed

Item 3 - Defaults Upon Senior Securities

None.

Item 4 - Mine Safety Disclosure

None.

Item 5 - Other Information

None.

Item 6 - Exhibits

Exhibit	Exhibit Description
31	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Definition

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Monster Arts, Inc. Registrant

August 19, 2014	By: /s/ Wayne Irving II
	Wayne Irving II Chief Executive Officer and Director (Principal Executive Officer)

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