Monster Arts Inc. - FORM 10-Q

Attached files

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EX-32.1 - CERTIFICATION - Monster Arts Inc.	f10q0315ex32i_monsterarts.htm
EX-31.1 - CERTIFICATION - Monster Arts Inc.	f10q0315ex31i_monsterarts.htm
EX-31.2 - CERTIFICATION - Monster Arts Inc.	f10q0315ex31ii_monsterarts.htm
EX-32.2 - CERTIFICATION - Monster Arts Inc.	f10q0315ex32ii_monsterarts.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2015

☐ 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		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)

3565 South Las Vegas Blvd, #120, Las Vegas, NV		89109
(Address of principal executive offices)		(Zip Code)

(725) 222-8281

(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 ☒ 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 ☒ 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 ☒

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

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 ☒

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 October 21, 2015, the registrant’s outstanding common stock consisted of 838,736,347 shares, $0.001 par value. Authorized – 5,000,000,000 shares.

Table of Contents

Monster Arts, Inc.

Index to Form 10-Q

For the Quarterly Period Ended March 31, 2015

PART I	Financial Information	3

ITEM 1.	Financial Statements	3
	Balance Sheets	3
	Unaudited Statements of Operations	4
	Unaudited Statements of Cash Flows	5
	Notes to the Unaudited Financial Statements	6

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	24

ITEM 4T.	Controls and Procedures	25

PART II	Other Information	27

ITEM 1.	Legal Proceedings	27

ITEM 1A.	Risk Factors	27

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

ITEM 3.	Defaults Upon Senior Securities	27

ITEM 4.	Mine Safety Disclosures	27

ITEM 5.	Other Information	27

ITEM 6.	Exhibits	27

	SIGNATURES	28

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

	March 31,			December 31,
	2015			2014
Assets:
Current Assets
Cash	$	-		$	16,116
Loan receivable to related party		284,943			284,943
Interest receivable to related party		29,564			26,715
Prepaid expenses					53,240
Total Current Assets		314,507			381,014

Other Assets
Available-for-sale securities		-			1,619
Total Other Assets		-			1,619

Total Assets	$	314,507		$	382,633

Liabilities and Stockholders' Equity:
Current Liabilities
Accounts payable & accrued expenses	$	32,876		$	53,834
Accounts payable & accrued expenses to related parties		72,969			68,156
Bank overdraft		710			-
Accrued interest		88,540			67,907
Deferred revenues		21,369			34,709
Loan from officer		5,000			2,500
Notes payable to related party		15,494			15,494
Convertible notes payable, net of discounts of $294,745 and $339,934		620,497			556,116
Derivative Liability		1,174,653			1,564,098
Total Liabilities		2,032,108			2,362,814

Stockholders' Equity:
Preferred stock, $.001 par value 80,000,000 shares authorized, 20,000,000 shares issued and outstanding, respectively		20,000			20,000
Series A preferred stock, $.001 par value 10,000,000 shares authorized, 0 shares issued and outstanding, respectively		-			-
Common stock, $0.001 par value 5,000,000,000 shares authorized, 43,991,250 and 10,910,194 shares issued and outstanding, respectively		43,991			10,910
Additional paid in capital		7,307,433			7,315,474
Accumulated Comprehensive Gain / (Loss)		-			(1,966	)
Deficit accumulated during the development stage		(9,089,025	)		(9,324,599	)
Total stockholders' equity (deficit)		(1,717,601	)		(1,980,181	)

Total Liabilities and Stockholders' Equity	$	314,507		$	382,633

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

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

	For the Three Months Ended
	March 31,
	2015			2014

Commissions	$	-		$	250
Services		15,396			57,069
Services- related party		-			263
Other revenues		1,600			-
		16,996			57,582

Cost of revenues		1,206			13,587

Gross Profit		15,790			43,995

Operating expenses:
General and administration		16,898			16,026
Consulting		59,440			218,882
Wages		23,529			38,893
Marketing and promotions		90			296
Depreciation		-			197
Professional fess		1,500			16,483
Total operating expenses		101,457			290,777

Income (Loss) from operations		(85,667	)		(246,782	)

Other income and (expenses):
Interest expense		(21,864	)		(9,242	)
Interest expense- derivative		(86,689	)		-
Interest income		2,849			2,200
Gain/(Loss) on derivative adjustment		430,945			601,545
Total other income and (expenses)		325,241			594,503

Net loss before taxes	$	239,574		$	347,721

Tax provisions		-			-

Net loss after taxes	$	239,574		$	347,721

Other Comprehensive Income:
Unrealized (loss)/gain on available-for-sale securities		(4,000	)		(1,450	)

Other Comprehensive Income (Loss)	$	235,574		$	346,271

Basic & diluted loss per share	$	0.02			0.63

Weighted average shares outstanding		13,349,467			552,637

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

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

	For the Three Months Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss for the period	$	239,574		$	347,721
Adjustments to reconcile net loss to net cash provided by operating activities:
Marketable securities revenues		1,619			(3,423	)
Debt discount		45,887			-
Original issue discount		6,500			-
(Gain)/loss on change in derivative adjustment		(389,445	)		(601,545	)
Stock for services expense		53,240			215,297
Depreciation and amortization		-			197
Changes in Operated Assets and Liabilities:
(Increase) decrease in accounts receivable		-			(7,668	)
Increase in interest receivable		(2,849	)		(2,764	)
Increase (decrease) in loan receivable to related party		-			(27,199	)
Increase in deferred revenues		(13,340	)		(3,754	)
Increase (decrease) in accounts payable and accrued expenses		(20,958	)		(32,686	)
Increase (decrease) in accounts payable to related parties		4,813			13,800
Increase (decrease) in accrued interest		20,633			9,257
Net cash (used) in operating activities		(54,326	)		(92,767	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from officer loan		2,500			-
Payments on officer loan		-			(3,778	)
Proceeds from convertible notes		35,000			62,000
Net Cash Provided by Financing Activities		37,500			58,222

Net (Decrease) Increase in Cash		(16,826	)		(34,545	)
Cash at Beginning of Period		16,116			46,234
Cash (Overdraft) at End of Period	$	(710	)	$	11,689

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

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Stock issued for conversion of convertible notes payable	$	19,808		$	106,117

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

Monster Arts, Inc.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015 and December 31, 2014

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 Note 9).

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 December 31, 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 Tisha Lawton.

Reverse Stock Split

On August 28, 2014, the Board of Directors and majority shareholders of Monster Arts Inc., approved a reverse stock split of one for two hundred (1:200) of the Company's total issued and outstanding shares of common stock. The reverse stock split went effective with FINRA on January 16, 2015. The Company has adjusted its financial statements throughout this filing to reflect the reverse stock split. The reverse stock split can be further referenced in our Form 8-K filing on January 16, 2015.

Authorized Shares

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 shares have a par value of $0.001. 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.

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) the March 31, 2015, the Company incurred an accumulated deficit during development stage of approximately $9,089,025. 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”).

Unaudited Interim Financial Information

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

It is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2015.

Principles of consolidation

The accompanying consolidated financial statements include all of the accounts of the Company and Candor Homes Corporation as of March 31, 2015 and December 31, 2014.

The Company has an equity interest in the following entities;

51% of Candor Homes Corporation

The Company has accounted for the non-controlling interest using GAAP accounting standards. All intercompany balances and transactions have been eliminated.

Development Stage Company

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

Reclassification

On August 28, 2014, the Company executed a 200 to 1 reverse stock split, which was retrospectively applied to our 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 March 31, 2015 and December 31, 2014, 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.

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 (JVA) 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 issued 10,000,000 shares of ILIV upon execution of the JVA. The Company will also be issued 4,000,000 shares of ILIV in quarterly installments over a period of 2 years from the date of the agreement. The Company was issued the initial 10,000,000 shares of ILIV upon closing of the agreement which were valued at the closing price of ILIV stock on November 1, 2013, which resulted in the Company recording an available-for-sale securities asset of $10,000.

Pursuant to the consulting agreement with Mind Solutions, Inc. (referenced in Note 9 herein), in the year ended December 31, 2014, the Company received 50,000,000 shares of Mind Solutions, Inc. common stock. In the year ended December 31, 2014, the Company sold 47,855,085 shares of Mind Solutions, Inc. stock of which the Company received net proceeds of $34,895.

As of March 31, 2015, the Company holds zero marketable securities. At December 31, 2014, the Company hheld 2,144,915 shares of Mind Solutions, Inc. and 6,593,500 shares of ILIV which based on the closing share prices resulted in the Company recording an available-for-sale securities balance of $1,619 and $6,000.

NOTE 5 - FIXED ASSETS

Property and equipment consists of the following at March 31, 2015 and December 31, 2014:

	March 31, 2015		December 31, 2014
Property and equipment, net	$	2,364	$	2,364
Less: accumulated depreciation		2,364		2,364
Property and equipment, net	$	-	$	-

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. In the three months ended March 31, 2015 and 2014, the Company had $0 and $197 in depreciation expense

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. As of March 31, 2015 and December 31, 2014, the Company has a note payable balance of $2,244 pursuant to the note with Iconosys.

Deferred Revenues (TAVG Membership Sales)

In the three months ended March 31, 2015 and 2014, the Company recognized $13,340 and $15,121 in services income relating to the TAVG asset. As of March 31, 2015 and December 31, 2014 the Company recorded deferred revenues of $21,369 and $34,709 relating to TAVG membership sales. The Company recognizes revenues over each member’s respective one year subscription term.

NOTE 7 - CONVERTIBLE NOTES PAYABLE

Christopher Thompson

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. On March 15, 2015, Christopher Thompson and Atlas Long Term Growth Fund (Atlas) executed a purchase and assignment agreement whereby Christopher Thompson assigned $30,000 in total to Atlas, which included the $15,000 note dated May 1, 2014. This resulted in a zero debt balance as of March 31, 2015.

On July 1, 2014, the Company entered into a 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 July 1, 2015. The convertible note’s principle and accrued interest may 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. On March 15, 2015, Christopher Thompson and Atlas Long Term Growth Fund (Atlas) executed a purchase and assignment agreement whereby Christopher Thompson assigned $30,000 in total to Atlas, which included the $15,000 note dated July 1, 2014. This resulted in a zero debt balance as of March 31, 2015.

On August 1, 2014, the Company entered into a convertible promissory note with Christopher Thompson in the amount of $30,000. The convertible promissory note has interest at 9.9% per annum, unsecured, and due February 1, 2015. The convertible note’s principle and accrued interest may 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. In the three months ended March 31, 2015, the Company paid $2,500 cash toward this note which left a balance of 27,500.

On September 29, 2014, the Company entered into a convertible promissory note with Christopher Thompson in the amount of $30,000. The convertible promissory note has interest at 9.9% per annum, unsecured, and due March 29, 2015. The convertible note’s principle and accrued interest may 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 March 31, 2015, there has been no debt converted on this note.

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 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 March 31, 2015, there has been $15,890 of principle converted into 2,005,606 post reverse split shares of common stock, leaving a balance of $16,555. The shares were issued free of any restrictions as permitted by Section 3(a)(10) of the Securities Act.

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 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 December 31, 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 interest of 12% per annum. The convertible note’s principle and accrued interest may 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 with $7,333 of original issue discount. In June of 2014, the Company received an additional $30,000 with $7,333 of original issue discount. In September of 2014, the Company received an additional $30,000 with $7,333 of original issue discount. As of December 31, 2014, the Company has received $90,000 cash and recorded $22,000 of original issue discount pursuant to this convertible promissory note with JMJ Financial. As of March 31, 2015, JMJ Financial has converted $16,691 of principle into 7,699,000 post reverse split shares of common stock resulting in a balance of $95,309. The shares were issued free of any restrictions as permitted by Section 3(a)(10) of the Securities Act.

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 December 31, 2014, as permitted by the court order and the Settlement Agreement and Stipulation, the Company has issued 3,950,000 post reverse split shares to IBC LLC for the conversion of $138,000, leaving a balance of $70,071. The shares were issued free of any restrictions as permitted by Section 3(a)(10) of the Securities Act.

WHC Capital, LLC

On April 30, 2014, the Company entered into a convertible promissory note with WHC Capital, LLC in the amount of $22,000 , with interest of 12% per annum, unsecured, and due April 30, 2015. The convertible note’s principle and accrued interest may 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 March 31, 2015, there has been $6,301 of principle converted into 2,401,792 post reverse split shares of our common stock, leaving a balance of $15,699. The shares were issued free of any restrictions as permitted by Section 3(a)(10) of the Securities Act.

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. The convertible note’s principle and accrued interest may 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 March 31, 2015, there has been no debt converted on this note.

Jennifer Salwender

On May 15, 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 15, 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 March 31, 2015, there has been no debt converted on this note.

On June 14, 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 June 14, 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 March 31, 2015, 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 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 March 31, 2015, ADAR BAYS, LLC converted $900 of principle into 360,000 reverse stock split shares, leaving a note balance of $29,100.

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 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 March 31, 2015, KBM converted $6,440 of principle into 4,583,227 reverse stock split shares of common stock, leaving a balance of $56,560.

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 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. On June 27, 2014, Anubis Capital Partners entered into a purchase and assumption agreement with Beaufort Capital Partners, LLC whereby Anubis Capital Partners assigned a $63,950 of their note balance to Beaufort Capital Partners, LLC. As of March 31, 2015, Anubis Capital Partners has a balance on this note of $63,950.

On October 1, 2014, the Company executed a convertible promissory note with Anubis Capital Partners in the amount of $83,950 with interest of 8% per annum and a maturity date of October 1, 2015. The convertible promissory note was executed in return for three (3) months of consulting services provided to the Company. The convertible note’s principle and accrued interest may 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 March 31, 2015, there have been no conversion or payments against this note, leaving a balance of $83,950.

Beaufort Capital Partners, LLC

On June 27, 2014, the Company entered into a convertible promissory note with Beaufort Capital Partners LLC in the amount of $75,000, includes $25,000 of original issue discount, 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 March 31, 2015, Beaufort has converted $1,144 of debt on this note into 1,311,500 post reverser split shares of common stock, leaving a balance $73,856. The shares were issued free of any restrictions as permitted by Section 3(a)(10) of the Securities Act.

On June 27, 2014, Beaufort Capital Partners, LLC (“Beaufort”) entered into a purchase and assumption agreement whereby Beaufort would purchase a portion of a convertible promissory note originally issued to Anubis Capital Partners on April 1, 2014 in the amount of $127,900 with interest of 10% per annum and a maturity date of April 1, 2015. The convertible note’s principle and accrued interest may 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 March 31, 2015, there has been no debt converted on this note.

Sojourn Investments, LP

On July 14, 2014, the Company entered into a Debt Purchase Agreement with Sojourn Investments, LP whereby the Company issued a convertible promissory note in the amount of $37,500 which included $12,500 of original issue discount and due on June 14, 2015. 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. In the three months ended March 31, 2015, Sojourn converted $285 of principle into 950,000 reverse stock split shares of common stock, leaving a balance of $37,215.

On November 15, 2014, the Company entered into a convertible promissory note with Sojourn Investments, LP in the amount of $7,500 which included $1,500 of original issue discount and due on November 15, 2015. 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. As of March 31, 2015, there has been no debt converted on this note.

Ambrosial Consulting Group

On October 15, 2014, the Company executed a convertible promissory note with Ambrosial Consulting Group in the amount of $67,250 with interest of 8% per annum and a maturity date of October 15, 2015. The convertible promissory note was executed in return for six (6) months of consulting services to be provided to the Company. The convertible note’s principle and accrued interest may 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 (20) days prior to conversion. In the three months ended March 31, 2015, Ambrosial assigned $20,000 to Carebourn Capital, L.P., leaving a principle balance of $47,250.

Atlas Long Term Growth Fund

On March 15, 2015, Christopher Thompson and Atlas Long Term Growth Fund (Atlas) executed a purchase and assignment agreement whereby Christopher Thompson assigned $30,000 of convertible debt to Atlas which pertains to a convertible note payable dated July 1, 2014, entered into by Christopher Thompson. The convertible promissory note has interest at 9.9% per annum, unsecured, and is due July 1, 2015. The convertible note’s principle and accrued interest may 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. In the three months ended March 31, 2015, Atlas converted $385 of debt into 1,543,352 post reverse split shares of common stock. As of March 31, 2015, there was a balance of $29,615 on this convertible note.

Carebourn Capital, L.P.

On March 13, 2015, Carebourn Capital, L.P. entered into a purchase and assignment agreement with Brent Denlinger, holder of a $15,000 convertible promissory note with the Company, to purchase and assign the note in full which included accrued interest of $1,554. The original note bears interest of 9.9% per annum and has a maturity date of April 16, 2015. The convertible note’s principle and accrued interest may 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. In the three months ended March 31, 2015, Carebourn converted $6,298 of convertible debt into 5,994,000 post reverse split shares of common stock.

On March 13, 2015, Carebourn Capital, L.P. entered into a purchase and assignment agreement with Ambrosial Consulting Group LLC, holder of a $20,000 convertible promissory note with the Company, to purchase and assign the note in full. The original note bears interest of 9.9% per annum and has a maturity date of May 15, 2015. The convertible note’s principle and accrued interest may 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 March 31, 2015, no principle has been converted on this note.

On March 19, 2015 the Company entered into a securities purchase agreement and convertible promissory note with Carebourn Capital, L.P., a Delaware limited partnership, for the sum of $41,500. The Company received $35,000 cash with the remaining $6,500 being classified as original issue discount. The note bears interest of 12% per annum, matures on December 19, 2015 and may be converted into shares of the Company at a conversion rate of 50% multiplied by average of the lowest three (3) trading prices ten (10) trading days prior to the conversion date. As of March 31, 2015, no principle has been converted on this note.

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

	March 31, 2015			December 31, 2014

Convertible Notes Payable- Asher Enterprises, Inc.	$	300		$	300
Convertible Notes Payable - Tangier Investors, LLP		-			-
Convertible Note Payable- Premier Venture Partners LLC		-			-
Convertible Note Payable- Dennis Pieczarka		2,500			2,500
Convertible Note payable - Christopher Thompson		57,500			90,000
Convertible Note payable - James Ault		2,565			2,565
Convertible Note payable - Charles Knoop		1,000			1,000
Convertible Note payable - LG Capital Funding		58,110			58,555
Convertible Note payable - JMJ Financial		95,309			98,020
Convertible Note payable - IBC Funds, LLC		70,071			71,071
Convertible Note payable - WHC Capital, LLC		19,739			21,077
Convertible Note payable - ADAR BAYS, LLC		29,100			30,000
Convertible Note payable - Brent Delinger		-			15,000
Convertible Note payable - Jessie Redmayne		5,000			5,000
Convertible Note payable - Jennifer Salwender		40,000			40,000
Convertible Note payable - Anibus Capital Partners		147,900			147,900
Convertible Note payable - Beaufort Capital Partners, LLC		137,806			137,812
Convertible Note payable - KBM Worldwide		56,560			63,000
Convertible Note payable - Sojourn Investments, LP		44,715			45,000
Convertible Note payable - Ambrosial Consulting Group		47,250			67,250
Convertible Note payable - Carebourn Capital, L.P.		70,202			-
Convertible Note payable - Atlas Long Term Growth Fund		29,615			-
Less: Debt discount		(294,746	)		(339,934	)
Total Convertible Notes Payable, net of discounts	$	620,497		$	556,116

Debt Discount

In the three months ended March 31, 2015 and 2014, the Company recorded interest expense pertaining to debt discount on our convertible note in the amounts of $45,887 and $75,512. As of March 31, 2015 and December 31, 2014, the Company has a debt discount balance in the amounts of $294,746 and $339,934.

Accrued Interest

As of March 31, 2015 and December 31, 2014, the Company has an accrued interest balance pertaining to its outstanding liabilities in the amounts $88,540 and $67,907, respectively.

Derivative liability

The conversion feature included in our outstanding convertible promissory notes constitute a derivative and have been bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt on the accompany balance sheet. 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.

As of March 31, 2015 and December 31, 2014, the Company had $1,174,653 and $1,564,098 in derivative liability pertaining to the outstanding convertible notes.

The following is the range of variables used in revaluing the derivative liabilities at March 31, 2015 and December 31, 2014:

	March 31, 2015			December 31, 2014
Annual dividend yield		0			0
Expected life (years) of		0.01 – .90			0.01 – .95
Risk-free interest rate		13	%		13	%
Expected volatility		403.9	%		563.9	%

NOTE 8 - STOCKHOLDERS' DEFICIT

Reverse Stock Split (See Note 13 – Subsequent Events)

On August 28, 2014, the Board of Directors and majority shareholders of Monster Arts Inc., approved a reverse stock split of one for two hundred (1:200) of the Company's total issued and outstanding shares of common stock. The reverse stock split went effective with FINRA on January 16, 2015 which makes it a subsequent event in this Form 10-K filing. The Company has not made any adjustments to its financial statement regarding the reverse stock split in this filing. The reverse stock split can be further referenced in our Form 8-K filing on January 16, 2015.

Authorized Common Stock

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 December 31, 2014 all of which were issued to the Company’s chief executive officer, Wayne Irving II, for services rendered. The preferred shares were valued at par $0.001 which resulted in recording compensation expense of $20,000.

Issuance of Common Stock

In the three months ended March 31, 2015, the Company issued 33,081,056 post reverse split shares of common stock, of which 32,881,056 shares were issued for the reduction of $19,808 in convertible debt and 200,000 post reverse split shares were issued for services valued at $4,000 based on the closing stock price on the date of the executed consulting agreement.

In the year ended December 31, 2014, the Company issued 2,152,805,559 common shares of which 477,381,748 shares were issued to Asher Enterprises, Inc. for the conversion of $250,710 of principle and $5,900 of accrued interest, 58,637,933 shares were issued to Premier Venture Partners, LLC pursuant to the court ordered settlement, 590,000,000 shares were issued to IBC Funds, LLC for the conversion of $81,000 of convertible debt, 40,608,172 shares to WHC Capital, LLC for the conversion of $17,084 in convertible debt, 233,000,000 shares to JMJ Financial for the conversion of $13,980 of convertible debt, 113,700,000 shares to Beaufort Capital for the conversion of $1,137 of convertible debt, 200,667,134 shares were issued to LG Capital, LLC for the conversion of $15,445 of convertible debt, 24,998,879 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, 350,000,000 shares were issued to our chief executive officer, Wayne Irving, for the reduction of $87,500 in accrued payroll liability, and 63,811,693 shares were to consultants for services rendered to the Company. The Company valued the 413,811,693 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 $244,847.

NOTE 9 - MATERIAL 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 March 31, 2015.

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 March 31, 2015 and December 31, 2014, the Company had accrued wages of $49,581 and $46,800, respectively which are included in accounts payable and accrued expenses to related party balance.

In the year ended December 31, 2014, the Company entered into a debt settlement agreement with its chief executive officer, Wayne Irving, whereby the Company issued 350,000,000 shares of common stock for the reduction of $87,500 in accrued payroll liability.

Equity Purchase Agreement with Premier Venture

On March 12, 2015, the Company entered into the Equity Purchase Agreement with Premier Venture. Pursuant to the terms and provisions of the Equity Purchase Agreement, for a period of thirty-six (36) months commencing on the date of effectiveness of the Registration Statement. Premier Venture shall commit to purchase up to $5,000,000 of the Company's common stock, $.001 par value (the "Shares"), pursuant to Puts (as defined below) covering the Registrable Securities (as defined below). The Purchase Price for the Shares for each Put shall be the put amount multiplied by seventy percent (70%) of the lowest individual daily VWAP of the Shares during the pricing period less six hundred dollars ($600.00). The maximum number of Shares that the Company shall be entitled to Put to Premier Venture per any applicable Put Notice (the “Put Amount”) shall not exceed the lesser of (i) 200% of the average daily trading volume of Company’s common stock on the five trading days prior to the date the Put Notice is received by Premier Venture; and (ii) 120% of the highest put amount on any put notice delivered under the Equity Purchase Agreement (the amount shall never be less than 1,000,000 shares). Notwithstanding the preceding sentence, the Put Amount cannot exceed 4.99% of the outstanding shares of the Company.

On March 12, 2015, the Company entered into the Registration Rights Agreement with Premier Venture. Pursuant to the terms and provisions of the Registration Rights Agreement, the Company is obligated to file a registration statement (the "Registration Statement") with the Securities and Exchange Commission to cover the Registrable Securities within thirty (30) days from the date of execution of the Registration Rights Agreement. The Company must use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the Securities and Exchange Commission.

NOTE 12 - RELATED PARTY TRANSACTIONS

Issuance of Preferred Stock

The Company has 20,000,000 Series A preferred shares issued and outstanding as of December 31, 2014 which were issued to the Company’s chief executive officer, Wayne Irving II, for services rendered.

Debt Settlement Agreement Chief Executive Officer

On June 15, 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.

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.

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. Tisha Lawton resigned as Secretary, Treasure and Chief Financial Officer of the Company in December of 2014. Wayne Irving II assumed her title as Chief Financial Officer.

Equity interest in Candor Homes Corporation

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. See footnote 6 for additional details.

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 March 31, 2015 and December 31, 2014. 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 6, the Company issued a promissory note to Iconosys in the amount of $45,000, due August 7, 2014, with annum interest of 4% for the purchase of TAVG (see Note 6). As of March 31, 2015, the note to Iconosys has a balance of $2,244.

At March 31, 2015 and December 31, 2014, the Company had notes payable to related parties balance of $15,494.

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 March 31, 2015 and December 31, 2014, the total loan receivable balance advanced to Iconosys is $284,943, respectively. At March 31, 2015 and December 31, 2014, the accrued interest receivable to related party balance was $29,564 and $26,715, respectively.

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 March 31, 2015 and December 31, 2014, the Company had accrued wages owed to Wayne Irving II in the amounts of $49,581 and $46,800.

Employment Agreement with Chief Financial Officer, Tisha Lawton

In August of 2014, the Company appointed Tisha Lawton as the Secretary, Treasurer and Chief Financial Officer of the Company. The Company will pay Mrs. Lawton a yearly salary of $10,000. As additional compensation, Mrs Lawton will be paid 5,000,000 shares of restricted common stock per calendar quarter or the equivalent of $12,000, whichever is less. In the year ended December 31, 2014, the Company issued 5,000,000 common shares to Mrs. Lawton. In December of 2014, Mrs. Lawton resigned as the Secretary, Treasurer and Chief Financial Officer of the Company. Her employment agreement was cancelled in December of 2014.

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.

From April 1, 2015 through the date of this filing, the Company issued 794,745,097 post reverse stock split shares of common stock for the reduction of $56,184 in principle convertible debt.

On April 1, 2015, the Company issued a replacement convertible promissory note to Darling Capital, LLC in the amount of $33,000 plus accrued interest of $3,119. Darling Capital, LLC purchased a portion of a convertible promissory note dated April 1, 2014 issued to Anibus Capital Partners in the original amount of $127,900. The replacement convertible promissory note bears interest of 10% per annum and is due on July 12, 2015.

On April 1, 2015, the Company and its chief executive officer, Wayne Irving II, entered into a settlement agreement whereby Mr. Irving II agreed to settle $50,000 of accrued salary for 200,000,000 post reverse split shares of common stock.

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.

Overview of Current Operations

We are currently focused on advancing an innovative approach to managing GPS technologies along with its significant experience in developing GPS and other smart location technologies into its apps for itself and its clients. Currently Monster arts is investing funds for development, graphic design, app design, app development, .net development, and other technologies, along with administrative and management support for the creation of a nationwide tracking system that is to run on smart device controlled aerial appliances, like drones for example.

The Company is innovative software developer for mobile devices, smart TV, and set top boxes running iOS, Android, Windows and other platforms. The company is also involved in the travel industry through its online and mobile platform for consumers and paying members of Travel America Visitor Guide (TAVG), (Further described in Note 6).

We utilize proprietary technology that we have developed, acquired, and/or licensed to deploy our products and services. Our primary services include the development of Smartphone and tablet apps for clients and ourselves. We sell and arrange to sell ours and our clients apps developed thru the online and mobile marketplaces Google Play, iTunes, Amazon AppStore, and Barnes & Noble Online Marketplace. The sales of our innovative apps are subject to a commission fee charged by the online partners mentioned above. From time to time, we partner with a client at a reduced rate to earn potentially longer term residual revenues for ourselves.

Going Concern

In our auditor's report for the fiscal years ended December 31, 2014 and 2013, our auditors expressed substantial doubt as to our ability to continue as a going concern. We anticipate incurring losses in the foreseeable future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

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

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”).

Amendment to Articles of Incorporation- Approval of Reverse Stock Split

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.

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.

Results of Operations for the three months ended March 31, 2015 and 2014

Revenues

We generated $16,996 in revenues for the three months ended March 31, 2015 compared to $57,582 for the three months ended March 31, 2014, a decrease of $40,586. Monster generates revenues through a few revenue streams. One of which is through its exclusive partner to Max Apps for the purpose of developing and sharing in revenues of developed apps sold under the Max Apps brand. Project with Max Apps have materially decreased in 2015. Another revenue stream is our Travel America Visitor Guide (TAVG) network which sells one year memberships. The Company also generates revenue through app development consulting services. The Company executed an app development consulting service agreement with Mind Solutions, Inc. which is noted in the footnotes to our financial statements.

Cost of Revenues

The Company had cost of revenues of $1,206 for the three months ended March 31, 2015 compared to $13,587 for the three months ended March 31, 2014, a decrease of $12,381. Our cost of revenues include TAVG direct mailing costs such as printing, postage, graphic design, programming costs, app development costs, and administrative labor to; print, fold, stuff, deliver, pickup, process, input the data in the TAVG network. Other cost of revenues pertain to our Apps sold on markets (ie: Google Play, iTunes, Amazon, etc) which have to be maintained and updated when a new operating system and or appstore updates or interfaces require the graphic design/app development/tech support labor to do so. Monster Arts uses independent contractors both locally and internationally to process most of the workings for TAVG and the other apps that we develop and sell to the public.

Selling, general and administrative expense.

For the three months ended March 31, 2015, selling, general and administrative expenses were $16,988 compared to $16,518 for the three months ended March 31, 2014, an increase of $666. Selling, general and administrative expenses are made up of travel, office, payroll taxes, depreciation, advertising, and other expenses. For the most part, SG&A has stayed consistent from year to year.

Consulting Expense

For the three months ended March 31, 2015 , consulting expense decreased to $59,440 as compared to $2189,882 from the three months ended March 31, 2014, primarily as a result of a the less expense related to stock being issued to consultants for services rendered to the Company.

Wages

For the three months ended March 31, 2015, we had wages of $23,529 compared to $38,893 from the three months ended March 31, 2014, a decrease of $15,364. Wages decreased due to the Company having less administrative duties necessary. The Company has an employee compensation agreement with Wayne Irving, its CEO and CFO, which is described in Note 9 in our footnotes to our financial statements filed herein.

Professional Services

For the three months ended March 31, 2015, professional fees decreased to $1,500 as compared to $16,483 from the three months ended March 31, 2014. Professional fees decreased primarily due to less operations.

Other Income and Expenses

For the three months ended March 31, 2015, other expense netted to $325,241 as compared to $518,991 for the three months ended March 31, 2014.

Interest expense

For the three months ended March 31, 2015, interest expense increased to $21,864 as compared to $9,242 for the three months ended March 31, 2014, an increase of $12,622. The increase was due to additional interest expense incurred from the discount on the issuances of convertible promissory notes.

Derivative interest expense.

For the three months ended March 31, 2015, derivative interest expense was $86,689 as compared to $75,512 for the three months ended March 31, 2014, an increase of $11,117. The increase was due to the Black Scholes Method calculation used to compute the derivative liability regarding the outstanding convertible notes payable.

Interest income

For the three months ended March 31, 2015, interest income was $2,849 as compared to $2,200 for the three months ended March 31, 2014, an increase of $649. The increase is due to the accrued interest receivable on the outstanding loan receivable to relate party balance.

Gain/(Loss) on derivative adjustment

For the three months ended March 31, 2015, gain on derivative adjustment was $430,945 as compared to $601,545 for the three months ended March 31, 2014, a decrease of $170,600. The decrease was due to the Black Scholes Method calculation used to compute the derivative liability regarding the outstanding convertible notes payable.

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 March 31, 2015 and December 31, 2014:

	March 31,			December 31,			$			%
	2015			2014			Change			Change
Working Capital	$	(1,717,601	)	$	(1,981,800	)	$	264,199			(13.3	%)
Cash / (overdraft)		(710	)		16,116			(16,826	)		(104.4	%)
Total current assets		314,507			381,014			(66,507	)		(17.5	%)
Total assets	$	314,507		$	382,633		$	(68,126	)		(17.8	%)

Accounts payable & accrued expenses	$	32,876		$	53,834		$	(20,958	)		(38.9	%)
Notes payable & accrued interest		709,037			639,517			69,520			10.9	%
Total current liabilities		2,032,108			2,362,814			(330,706	)		(14.0	%)
Total liabilities	$	2,032,108		$	2,362,814		$	(330,706	)		(14.0	%)

At March 31, 2015 our working capital decreased as compared to December 31, 2014 primarily as a result of a decrease in derivative liability of $389,445 which was calculated using the Black Scholes Model based on our outstanding convertible notes payable.

Operating activities

Net cash used for continuing operating activities during the three months ended March 31, 2015 were $54,326. Non-cash items totaling approximately $239,900 contributing to the net cash used in continuing operating activities for the three months ended March 31, 2015 include:

	●	$1,619 in marketable securities revenues

	●	$45,887 in discount on convertible notes payable

	●	$389,445 in gain on derivative adjustment

	●	$53,240 in stock issued for consulting services

	●	$2,849 in increase of interest on notes receivable

	●	$13,340 in deferred revenues

	●	$20,958 decrease in accounts payable

	●	$4,813 decrease in accounts payable to related parties

	●	$20,633 increase in accrued interest

Net cash used for continuing operating activities during the three months ended March 31, 2014 was $92,767. Non-cash items totaling approximately $364,976 contributing to the net cash used in continuing operating activities for the three months ended March 31, 2014 include:

	●	$3,423 in available-for-sale securities

	●	$75,512 in discount on convertible notes payable

	●	$601,545 in gain on derivative adjustment

	●	$215,297 in stock issued for services

	●	$197 in depreciation

	●	$2,764 in accrued interest receivable

	●	$27,199 in loan receivable to related parties

	●	$3,754 in deferred revenues from members agreements with TAVG

	●	$32,686 in accounts payable and accrued expenses

	●	$13,800 in accounts payable and accrued expenses to related parties

	●	$9,257 in accrued interest from outstanding notes and loans payable

Investing activities

Net cash used in investing activities was $0 for both the three months ended March 31, 2015 and 2014.

Financing activities

Net cash provided by financing activities was $97,500 during the three months ended March 31, 2015 as compared to $58,222 for the three months ended March 31, 2014. During the three months ended March 31, 2015 we collected $35,000 in proceeds from convertible notes and $2,500 from proceeds from officer loan.

Net cash provided by financing activities was $58,222 for the three months ended March 31, 2014, which included $62,000 in proceeds from convertible notes and paid $3,778 against officer loans.

Future Financing

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

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

If the Company is successful in raising capital, it plans to spend approximately $250,000 over the next year on research and development costs associated with the completion of a nationwide tracking system that is to run on smart device controlled aerial appliances, like drones for example.

Expected purchase or sale of property and significant equipment

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

Significant changes in the number of employees

As of March 31, 2015, we have one full-time employee which is Wayne Irving, our Chief Executive Officer and Chief Financial Officer. We are dependent upon our officer for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

Recent Pronouncements

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

Item 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 September 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 September 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/A, 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 September 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, 2014 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 Number	Ref	Description of Document

31.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

101	*	The following materials from this Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2013, formatted in XBRL (eXtensible Business Reporting Language).:

		(1) Balance Sheets at September 30, 2013 (unaudited), and December 31, 2012 (audited).

		(2) Unaudited Statements of Operations for the three-month period ending September 30, 2013 and September 30, 2012, the nine-month period ended September 30, 2013 and September 30, 2012, and the period from inception to September 30, 2013.

		(3) Unaudited Statements of Cash Flows for the nine-month period ended September 30, 2013 and September 30, 2012 and from inception to September 30, 2013.

		(4) Notes to the financial statements.

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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

October 21, 2015	By:	/s/ Wayne Irving II
		Wayne Irving II Director and (principal executive officer)

	Monster Arts, Inc. Registrant

October 21, 2015	By:	/s/ Tisha Lawton
		Tisha Lawton Chief Financial Officer, Treasurer & Secretary

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