Music cable manufacturer Monster Inc. is going to launch an initial coin offering and a new e-commerce website in an attempt to reverse its habit of losing money.
Background
Monster Inc. is a manufacturer of audio devices and accessories, most well-known for its line of audio and video cables.
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It was founded in 1979 under the name Monster Cable Products by engineer Noel Lee, who became convinced by experimenting with a recording of Tchaikovsky’s 1812 Overture that sound quality could be improved by cables that conduct electricity more efficiently. The company was renamed to Monster Inc. in 2012.
It owns around 70 trademarks related to the word ‘monster’. According to the Wall Street Journal, it has sued Walt Disney over its 2001 film “Monsters Inc”, a family-run mini golf franchise called ‘Monster Mini Golf’, and a woman that sells children’s t-shirts with the words ‘Junk Food Monster’ on them.
In 2004 it paid $6 million to an American football team (the 49ers) to rename the stadium from Candlestick Park to Monster Park.
Turning to cryptocurrency
According to its SEC application, Monster Inc. has been losing money. In 2017 it made a net loss of $26.7 million, and it was down $19.6 million in the first quarter of 2018 alone.
In an attempt to turn things around, the company will be selling tokens. It explains to the SEC: “We plan to integrate the Ethereum blockchain technology to our E-commerce website to create the new ecosystem, namely Monster Money Network where consumers may use either MMNY Tokens or fiat currencies to purchase Monster products and services. As we develop Monster Money Network and our backend systems, we intend to utilize the blockchain technology to our marketing, accounting and audit, internal control and shipping management functions. We believe the blockchain innovation will bring disruptive advancement to our E-commerce and business operation systems.”
It says that it intends to compete with Amazon, Ebay and Alibaba.
The company will be selling up to 300 million Monster Money Tokens (MMNY) and 75 million shares of common stock. The maximum amount it can raise from selling the tokens is $300 million.
The company states that if it fails to raise this amount: “…we will be required to seek additional funding to develop our blockchain technology as contemplated, which may not be available on reasonable terms. If we do not raise sufficient funds in this Offering, or if we are not able to obtain additional funding, we may be required to modify or suspend our business plan, which could result in investors losing all or most of their investments.”
The stocks of Monster Inc. are not listed on any stock market in the US, but it intends to apply to do so. It also intends to apply to have the tokens listed on a cryptocurrency exchange, “however, we cannot assure you that MMNY Tokens will be traded on such exchange in a timely manner or at all.”
The filing also says that stock can be acquired by holders of tokens at a rate of four tokens to one share.
What are its chances?
According to ICO tracker TokenData, more than half of the ICOs launched last year either failed or are going to fail shortly.
A report in Hackernoon states that when ICOs fail it is because of one or a combination of the following reasons: 1) they are selling a product with little value 2) they fail to create a brand identity 3) they have unrealistic objectives/budgets, and 4) they do not understand how to constantly monitor and report their own progress.
Do these failings apply to Monster? In terms of brand identity, probably not. In terms of auditing/reporting requirements, the company has 40-odd years of experience so it will likely be alright. However it’s debatable if its product is worthwhile (consumer comparison websites are generally unimpressed with Monster’s hugely expensive cables), and in terms of unrealistic objectives, competing with the biggest commerce websites in the US and China is a big ask.