Monster Products Inc., the company behind the famous Beats headphones has applied to the U.S Securities and Exchanges Commission to launch an initial coin offering. The company’s application was filed with the SEC on May 25. The company intends to offer 300 Million Monster Money Tokens (MMNY), its native digital asset to raise $300 million. Monster intends to use the proceeds for working capital purposes and business development.
The Monster Money Network
The San Francisco-based company which is best known for its audio and video cables intends to launch a blockchain platform; the Money Monster Network. The platform will mainly focus on e-commerce with the transactions being facilitated by the platform’s digital asset, the Monster Money Tokens (MMNY). While initially, the platform will only handle basic e-commerce, the company promises to keep developing and improving it to handle other services. These will include payment processing, auditing, shipping operations, market analysis and inventory management. Monster also promises to use its global influence to lure other companies onto its platform for instant and affordable transaction processing.
The filing also included warnings to investors about possible risk factors, the prominent one being the company’s history of incurring operating losses. In the year ended December 31, 2017, Monster incurred a net loss of $26.7 million, with the company admitting that it remains uncertain about when, if ever, it will achieve profitability. Other risks the company disclosed include the seasonal nature of its market, inability to obtain intellectual rights, stiff competition, a decline in brand reputation which hurts demand as well as substantial debt which according to the company stands at just over $100 million.
Monster intends to use the proceeds from the ICO for business development. This includes sales and marketing activities, investment in the research and development of its blockchain platform, forming strategic partnerships with other industry titans and the acquisition of companies and technologies that complement its businesses.
Its blockchain platform, which will be built on Ethereum’s blockchain, will be developed in three stages. The first stage will have basic services while the second one will involve the development of a private off-chain platform for the execution of micro-transactions. The third and final stage will see the company integrate all its other functionalities into the blockchain, such as payroll processing, supply chain and inventory management, accounting and marketing.
So, what happens if no exchange lists the MMNY tokens? Monster anticipates that this is a possibility and promises to compensate the token holders with their common stock. The token holders can convert their tokens to shares of the common stock at the ratio of four tokens to one share of the common stock. However, this clause will only be activated if the tokens are not publicly listed on a crypto exchange by June 30, 2020, or if the tokens shall become deregistered from all public exchanges due to governmental enforcement actions.
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