UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2015

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~___________~~__________ to ~~___________~~__________

Commission file number: 000-54798

MONARCH AMERICA, INC.

(Exact name of registrant as specified in its charter)

Nevada		99-0372219
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1150 W. Custer Place

Denver, CO 80223

(Address of Principal Executive Offices, Zip Code)

(844) 852-1537

(Registrant's Telephone Number, Including Area Code)

~~____________________________________________________________~~________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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

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 o No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “"large accelerated filer,”" “"accelerated filer”" and “"smaller reporting company”" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

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

As of ~~August~~November 1716, 2015, ~~108~~113,~~923~~927,~~623~~692 shares of common stock, par value $0.001 per share, were issued and outstanding.

TABLE OF CONTENTS

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements		3F-1
Item 2.	Management’'s Discussion and Analysis of Financial Condition and Results of Operations		203
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		2910
Item 4.	Controls and Procedures		3010
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings		3112
ItemIA.	Risk Factors		31
Item IA.	Risk Factors		12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3112
Item 3.	Defaults Upon Senior Securities		3113
Item 4.	Mine Safety Disclosures		3113
Item 5.	Other Information		3113
Item 6.	Exhibits		3213
SIGNATURES			3314
INDEX TO EXHIBITS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Monarch America Inc.

Condensed Consolidated Financial Statements (Unaudited)

(Expressed in US dollars)

For the period ended ~~June~~September 30, 2015

Condensed Consolidated Balance Sheets (unaudited)	F–2	4
Condensed Consolidated Statements of Operations (unaudited)	5F–3
Condensed Consolidated Statements of Cash Flows (unaudited)	6F–4
Notes to the Condensed Consolidated Financial Statements (unaudited)	7F–5

3F-1

Monarch America Inc.

Condensed Consolidated Balance Sheets

(Expressed in US dollars)

(unaudited)

	June 30, 2015 $			December 31, 2014 $
	September 30,2015			December 31,2014
	Successor			Predecessor
ASSETS
Cash		~~177~~151,~~146~~380			13,018
Inventory		452,717			277,610
Accounts receivable		83,367			–
Prepaid expenses and deposits		23,776			5,326
Inventory		476,217			277,610
Total Current Assets		653,639			295,954
Prepaid expenses and deposits		81,616			5,326
Note Receivable – Related party		28,243			–
Total Current Assets		792,580			295,954
Property and equipment		~~357~~5,~~990~~085			7,289
Property and equipment held for sale		364,889			–
Goodwill		5,927,587			–
Total Assets		67,~~967~~090,~~459~~141			303,243
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities		~~540~~654,~~057~~553			254,330
Due to related parties		–			68,194
Convertible debenture (less unamortized discount and debt issuance costs of $317,136 and $0, respectively)		16,198			–
Convertible debenture (less unamortized discount and debt issuance costs of $761,056 and $0, respectively)		72,278			–
Derivative liability		~~457~~921,~~829~~139			–
Current portion of promissory notes payable		1,482,801
Current portion of promissory notes payable to related parties		1,000,000			–
		3,496,885			322,524
		4,130,771			322,524
Promissory notes payable to related parties		~~750~~500,000
Total Liabilities		4,~~246~~630,~~885~~771			322,524
STOCKHOLDERS’ EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock
Authorized: 10,000,000 shares, par value of $0.001 per share
Series A Preferred Stock, 5,500,000 shares authorized 274,998 shares issued and outstanding		275			–
Series B Preferred Stock, 750,000 shares authorized 38,897 shares issued and outstanding		39			–
Series B Preferred Stock, 750,000 shares authorized 89,314 shares issued and outstanding		89			–
Common Stock
Authorized: 2,610,000,000 shares, par value of $0.001 per share
Issued and outstanding: 105,148,623 shares		105,149			5,000
Issued and outstanding: 110,281,538 shares		110,281			5,000
Additional paid-in capital		45,~~883~~919,~~054~~520			5,459
Accumulated deficit		(23,~~267~~570,~~943~~795	)		(29,740	)
Total Stockholders’ Equity (Deficit)		2,720,574			(19,281	)
Total Stockholders' Equity (Deficit)		2,459,370			(19,281	)
Total Liabilities and Stockholders’ Equity (Deficit)		6,967,459			303,243
Total Liabilities and Stockholders' Equity (Deficit)		7,090,141			303,243

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

4F-2

Monarch America Inc.

Condensed Consolidated Statements of Operations

(Expressed in US dollars)

(unaudited)

	Three months ended June 30, 2015 $			Three months ended June 30, 2014 $			Six months ended June 30, 2015 $			Six months ended June 30, 2014 $
	Three months ended September 30, 2015$			Three months ended September 30, 2014$			Nine months ended September 30, 2015$			Nine months ended September 30, 2014$
	Successor			Predecessor			Successor			Predecessor
Revenues		1,~~134~~322,~~979~~466			~~923~~799,~~284~~071			23,~~292~~614,~~367~~833			12,~~610~~310,~~179~~318
Cost of sales		(~~790~~950,~~590~~136	)		(~~680~~638,~~963~~115	)		(12,~~534~~484,~~609~~745	)		(1,~~134~~674,~~187~~969	)
Gross Margin		~~344~~372,~~389~~330			~~242~~160,~~321~~956			~~757~~1,~~758~~130,088			~~475~~635,~~992~~349
Operating Expenses
General and administrative		(617,910	)		(154,842	)		(1,476,801	)		(290,257	)
Contract acquisition costs		(594,438	)		–			(594,438	)		–
Net (Loss) Income Before Other Expenses		(273,521	)		87,479			(719,043	)		185,735
General and administrative		(605,720	)		(152,669	)		(2,082,521	)		(436,221	)
Net (Loss) Income Before Other Expenses		(827,828	)		8,287			(1,546,871	)		199,128
Other Expenses
Loss on change in fair value of derivative liability		(221,163	)		–			(221,163	)		–
Gain (loss) on change in fair value of derivative liability		5,023			–			(216,140	)		–
Interest expense		(80,238	)		(29	)		(139,963	)		(67	)
Loss on extinguishment of debt		(345,938	)		–			(345,938	)		–
Interest income		520			2,613			1,066			5,426
Interest expense		(134,109	)		(19	)		(274,072	)		(86	)
Net (Loss) Income		(574,402	)		90,063			(1,079,103	)		191,094
Interest income		–			2,426			1,066			7,852
Less: Series B preferred stock dividends		(4,655	)		–			(9,259	)		–
Net (Loss) Income		(1,302,852	)		10,694			(2,381,955	)		206,894
Net (Loss) Income Attributable to Common Shareholders		(579,057	)		90,063			(1,088,362	)		191,094
Less: Series B preferred stock dividends		(10,573	)		–			(19,832	)		–
Net (Loss) Income per Common Share – Basic and Diluted		(0.01	)					(0.01	)
Net (Loss) Income Attributable to Common Shareholders		(1,313,425	)		10,694			(2,401,787	)		206,894
Weighted Average Common Shares Outstanding – Basic and Diluted		105,148,623						103,552,230
Net (Loss) Income per Common Share – Basic and Diluted		(0.01	)					(0.02	)
Weighted Average Common Shares Outstanding – Basic and Diluted		108,876,840						105,732,320

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

5F-3

Monarch America Inc.

Condensed Consolidated Statements of Cash Flows

(Expressed in US dollars)

(unaudited)

	Six months ended June 30, 2015 $			Six months ended June 30, 2014 $
	Nine months ended September 30, 2015$			Nine months ended September 30, 2014$
	Successor			Predecessor
Operating Activities
Net (loss) income		(12,~~079~~381,~~103~~955	)		~~191~~206,~~094~~894
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Accretion of discount on convertible debenture		1686,~~198~~929			–
Depreciation		23,~~761~~902			96,~~552~~613
Common stock issued for services		~~377~~506,~~515~~550			–
Loss on change in fair value of derivative liability		221,163			–
Loss on extinguishment of debt		295,938			–
Loss on change in fair value of derivative liability		216,140			–
Changes in operating assets and liabilities:
Prepaid expenses		(15,950	)		(1,038	)
Accounts receivable		(83,367	)		–
Accrued interest on notes receivable		(1,040	)		–
Prepaid expenses		(13,441	)		(6,869	)
Inventory		(187,340	)		(138,226	)
Collection of notes receivable and accrued interest receivable		27,203			–
Accrued interest on notes payable		123,726			–
Accounts payable and accrued liabilities		~~(32~~108,~~627~~324	)		~~(16~~9,~~816~~708	)
Inventory		(167,390	)		(62,366	)
Net Cash Provided by (Used In) Operating Activities		(1,297,391	)		78,120
Net Cash Provided by (Used In) Operating Activities		(554,747	)		120,426
Investing Activities
Cash paid for the acquisition of The Big Tomato, Inc, net of cash acquired		(386,982	)		–
Cash paid for the acquisition of The Big Tomato, Inc., net of cash acquired		(386,982	)		–
Purchase of property and equipment		(~~306~~337,~~068~~523	)		–
Net Cash Used In Investing Activities		(~~693~~724,~~050~~505	)		–
Financing Activities
Payment of note payable – related party		(~~262~~512,500	)		–
Borrowing on debt		1,~~219~~612,~~467~~800			–
Distribution		–			(100,825	)
Issuance of preferred shares for cash		605,000			–
Net Cash (Used in) Provided by Financing Activities		956,967			(100,825	)
Distribution		–			(109,750	)
Increase (Decrease) in Cash		(290,830	)		19,601
Net Cash (Used in) Provided by Financing Activities		1,705,300			(109,750	)
Increase (Decrease) in Cash		(316,596	)		(31,630	)
Cash – Beginning of Period		467,976			41,522
Cash – End of Period		~~177~~151,~~146~~380			619,~~123~~892
Supplemental Disclosures:
Interest paid		–			–
Income tax paid		–			–
Non-Cash Transactions:
Notes payable related to Plan of Merger		2,000,000			–
Common stock issued pursuant to Plan of Merger		3,564,000			–
Prepaid interest deducted from Note Payable Proceeds		75,000			–
Extinguishment of related party debt at acquisition		55,694			–
Debt discount from derivative liability		~~236~~704,~~666~~999			–
Accounts payable for property and equipment		4216,~~840~~385			–

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

6F-4

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

1.	Nature of Operations and Continuance of Business

Monarch America Inc. (the “Company”) was incorporated in the state of Nevada on September 14, 2010. The Company was formerly a mineral exploration company with the purpose of acquiring and developing mineral properties. The Company’s principal business is now focusing on various opportunities in the recreational and medical marijuana industry. Effective January 1, 2015, the Company completed a Plan of Merger with Jeremy N. Stout, Inc. (d/b/a The Big Tomato), which is now The Big Tomato, Inc. (“TBT”), a Colorado corporation, whereby the Company acquired all of the outstanding shares of TBT. TBT is an established Denver area store, warehouse distribution facility, and online hydroponics and indoor garden supplier. Overview

Monarch America Inc. (the "Company") was incorporated in the state of Nevada on September 14, 2010. The Company was formerly a mineral exploration company with the purpose of acquiring and developing mineral properties. The Company's principal business is now focusing on various opportunities in the recreational and medical marijuana industry. Effective January 1, 2015, the Company completed a Plan of Merger with Jeremy N. Stout, Inc. (d/b/a The Big Tomato), which is now The Big Tomato, Inc. ("TBT"), a Colorado corporation, whereby the Company acquired all of the outstanding shares of TBT. TBT is an established Denver area store, warehouse distribution facility, and online hydroponics and indoor garden supplier.

The Company is actively involved in the business of being a vertically-integrated cannabis management company. Since current management has taken control of the Company in March 2014, (i) we are involved in the sale and distribution of hydroponic lights and equipment as a result of our acquisition of The Big Tomato, (ii) we are aiming to generate sales of specialty soil additives used in the growth of marijuana and other hydroponics and (iii) we have consummated the acquisition of certain intellectual property, including trademarks and domain names, used by the Company in branding and marketing its products and services.

Monarch America, Inc. has been established to provide turnkey solutions, management and consulting services to the legal and regulated marijuana industry. While not directly engaged in the sale of marijuana, Monarch America offers the complete spectrum of capabilities that elevate the business of cultivation from the erratically-stocked, sparsely-staffed and managed, independent-store model to that of an efficient and consistently managed organization.

Monarch America aims to oversee and manage all facets of retail operations, from property management, technology and equipment leasing to inventory control, staffing, and day-to-day operational management.

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of ~~June~~September 30, 2015, the Company has a working capital deficit of $23,~~843~~338,~~246~~191, and has an accumulated deficit of $23,~~267~~570,~~943~~795. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’'s future operations. These factors raise substantial doubt regarding the Company’'s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management is currently seeking out other opportunities to execute consulting arrangements with grow facilities. Large warehouse grow operations would require large supply orders, which would be fulfilled by ~~the~~ TBT. The Company is also seeking out other sources for financing and other partners to invest into the Company.

F-5

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

Government Regulation

Marijuana is a Schedule-I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal laws. As of the date of this filing, medical marijuana use has been legalized by 23 states and the District of Columbia, and the recreational use of marijuana has been legalized by 4 states. Despite the favorable strides made in state-level legislation, marijuana is still a federally illegal substance for both use and possession in accordance with the U.S. Controlled Substances Act. The Obama administration represents that it is inefficient for law enforcement agencies to prosecute individuals in possession or under the influence of marijuana when they would be otherwise abiding by state or locally-designated laws. There is no guarantee that the current administration will not change its stated policy regarding the low-priority enforcement of federal laws, or that any future administration would not change this policy and decide to enforce the federal laws vigorously. Any such change in the federal government's enforcement of current federal laws could cause significant financial damage to the Company.

2.	Summary of Significant Accounting Policies

Basis of Presentation

The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“"SEC”") Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the Company’'s audited consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’'s Annual Report on Form 10-K filed on March 31, 2015, with the SEC.

The consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’'s financial position at ~~June~~September 30, 2015, and the results of its operations and cash flows for the ~~six~~nine months ended ~~June~~September 30, 2015 and 2014. The results of operations for the three months and ~~six~~nine months ended ~~June~~September 30, 2015, are not necessarily indicative of the results to be expected for future quarters or the full year.

7The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, HBH Industries Inc., and The Big Tomato, Inc. (f/k/a Jeremy N. Stout, Inc. (d/b/a The Big Tomato)). Intercompany balances and transactions are eliminated upon consolidation.

On January 14, 2015, Monarch acquired TBT (See Note 3). The operations of Monarch were insignificant in comparison to those of The Big Tomato, so the consolidated financial statements are presented under predecessor reporting wherein the prior historical information consists of solely the TBT's results of operations and cash flows. The consolidated financial statements included herein are presented for the three and nine months ended September 30, 2015, and 2014, under predecessor entity reporting. The results of operations and cash flows obtained through the use of January 1, 2015, rather than January 14, 2015, are not considered to be materially different; therefore, the successor period is presented beginning January 1, 2015.

F-6

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, HBH Industries Inc., and The Big Tomato, Inc. (f/k/a Jeremy N. Stout, Inc. (d/b/a The Big Tomato)). Intercompany balances and transactions are eliminated upon consolidation.

On January 14, 2015, Monarch acquired TBT (See Note 3). The operations of Monarch were insignificant in comparison to those of The Big Tomato, so the consolidated financial statements are presented under predecessor reporting wherein the prior historical information consists of solely the Tomato’s results of operations and cash flows. The consolidated financial statements included herein are presented for the three and six months ended June 30, 2015, and 2014, under predecessor entity reporting. The results of operations and cash flows obtained through the use of January 1, 2015, rather than January 14, 2015, are not considered to be materially different; therefore, the successor period is presented beginning January 1, 2015.

Goodwill and Intangible Assets

The Company accounts for goodwill and intangible assets in accordance with ASC 350 "Intangibles-Goodwill and Other" ("ASC 350"). ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. In addition, ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units; assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or goodwill impairment at future reporting dates.

Revenue Recognition

The ~~Tomato~~Company derives the majority of its revenue from the sale of hydroponic and indoor garden supplies at its retail store, in which the products are delivered to the customer immediately. The ~~Tomato~~Company also has an online store, but there are minimal e-commerce sales. Monarch is primarily in the business of providing management and consulting services, along with retail sales of its own branded indoor gardening supplies. Monarch has not yet earned revenue in relation to its management and consulting services, and any retail sales are due upon delivery and have been paid in full. The Company recognizes revenue, net of sales tax, when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured which is typically when the customer takes possession of the merchandise at the point of sale, or if from the online store, when title transfers upon shipment from the Company’'s warehouse. The Company is not in the practice of taking cash payments in advance from customers for inventory yet to be exchanged, but in such an event, the Company would recognize the amount received as deferred revenue until the sale or service is complete.

Stock-based Compensation

The Company accounts for the grant of stock awards in accordance with ASC 718, “"Compensation-Stock Compensation.”" ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of stock based compensation. Pursuant to ASC Topic 505-50 for share-based payments to consultants and other third-parties, compensation expense is determined at the “"measurement date.”" The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date.

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, in accordance with ASC 815-15 “Derivative and Hedging” the Company valued the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or noncurrent based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at June 30, 2015, the Company had $457,829 of derivative liability.

Financial Instruments

ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Fair value is the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants. A liability is quantified at the price it would take to transfer the liability to a new obligor, not at the amount that would be paid to settle the liability with the creditor.

Fair Value Hierarchy

ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 establishes three levels of inputs that may be used to measure fair value.

~~Level 1~~ F-7

Level 1 applies to assets and liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment.

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

Level 1

Level 2

Level 2 applies to assets and liabilities for which there are other than Level 1 observable inputs such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance:

Determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and Determining whether a market is considered active requires management judgment.

Level 3

Level 3 applies to assets and liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity.

An asset’'s or liability’'s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

All financial liabilities that are measured at fair value have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, inventory, note receivable, accounts payable and accrued liabilities, amounts due to related parties and notes and loans payable. The fair value of the Company’'s convertible note payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.

The following table presents the derivative financial instruments, the Company’s only financial liabilities measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of June 30, 2015: F-8

June 30, 2015
	Amount		Level 1		Level 2		Level 3
Embedded conversion derivative liabilities	$	457,829	$	–	$	–	$	457,829
Total	$	457,829	$	–	$	–	$	457,829

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 9 for additional information.

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

The following table presents the derivative financial instruments, the Company's only financial liabilities measured and recorded at fair value on the Company's consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2015:

September 30, 2015
	Amount		Level 1		Level 2		Level 3

Embedded conversion derivative liabilities	$	921,139	$	–	$	–	$	921,139

Total	$	921,139	$	–	$	–	$	921,139

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, in accordance with ASC 815-15 "Derivative and Hedging" the Company valued the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or noncurrent based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as previously discussed. As at September 30, 2015, the Company had $921,139 of derivative liability.

Recently Adopted Accounting Policy

During the ~~six~~nine months ended ~~June~~September 30, 2015, the Company adopted guidance codified in ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs. The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense using the effective interest method pursuant to ASC 835-30-35-2 through 35-3. The Company elected to early adopt the requirements of ASU 2015-03 effective during the ~~six~~nine months ended ~~June~~September 30, 2015 and has applied this guidance retrospectively to all prior periods presented in the Company's financial statements.

The reclassification ~~does~~did not impact net income (loss) as previously reported or any prior amounts reported on the Consolidated Balance Sheets, Consolidated Statements of Operations or the Consolidated Statements of Cash Flows.

F-9

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on average cost basis. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. Periodic inventory counts are performed in order to reconcile physically present inventory at the warehouse and retail store to the inventory listing.

Depreciation

Equipment is stated at cost and is depreciated on a straight-line basis over its estimated useful life, as follows:

Furniture and equipment	5 years
Leasehold improvements	3 years
Software and website	3 years
Vehicles	7 years

Furniture and equipment		5 years
Leasehold improvements		3 years
Software and website		3 years
Vehicles		7 years

Property and equipment is presented net of accumulated depreciation.

Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of intangible assets, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’'s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

113. Acquisition

On January 14, 2015, the Company completed a Plan of Merger with Jeremy N. Stout, Inc. (d/b/a The Big Tomato), whereby the Company acquired all of the outstanding shares of The Big Tomato in consideration for cash of $400,000, promissory notes in the aggregate amount of $2,000,000 and 8,100,000 shares of restricted common stock with a fair value, based on the closing market price on the acquisition date, of $3,564,000. Each note is payable in eight equal installments of $125,000 plus interest at 8% per annum, commencing April 1, 2015. Each note is secured by all of the assets and shares of the The Big Tomato, Inc.

As a result of the acquisition, amounts owed to Monarch America by The Big Tomato were extinguished. These amounts relate to $25,539 of trade payables and $30,156 of a note payable and accrued interest. Even though the amounts continued to be carried on The Big Tomato's standalone accounting records, the amounts are eliminated upon consolidation.

F-10

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

3The results of operations and cash flows obtained through the use of January 1, 2015, rather than January 14, 2015, are not considered to be materially different; therefore, the successor period is presented beginning January 1, 2015. ~~Acquisition~~The allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are summarized in the table following:

On January 14, 2015, the Company completed a Plan of Merger with Jeremy N. Stout, Inc. (d/b/a The Big Tomato), whereby the Company agreed to acquire all of the outstanding shares of The Big Tomato in consideration for cash of $400,000, promissory notes in the aggregate amount of $2,000,000 and 8,100,000 shares of restricted common stock with a fair value, based on the closing market price on the acquisition date, of $3,564,000. Each note will be payable in eight equal installments of $125,000 plus interest at 8% per annum, commencing April 1, 2015. Each note will be secured by all of the assets and shares of the The Big Tomato, Inc.

Cash	$	13,018
Prepaid expenses and deposits		5,326
Inventory		277,610
Property and equipment		7,289
Accounts payable and accrued liabilities		(254,330	)
Loans payable to related parties		(12,500	)
Goodwill		5,927,587

Net assets acquired	$	5,964,000

AsUnaudited apro ~~result~~forma results of operations for the ~~acquisition,~~three ~~amounts~~and ~~owed~~nine tomonths ~~Monarch~~ended ~~America~~September by30, ~~The~~2015 ~~Big~~as ~~Tomato~~if ~~were~~the ~~extinguished.~~Companies ~~These~~had ~~amounts~~been ~~relate~~combined toas ~~$25~~of January 1,~~539~~ of2014, ~~trade~~follow. ~~payables~~The pro forma results include estimates and ~~$30~~assumptions which management believes are reasonable. However,~~156~~ pro forma results do not include any anticipated cost savings or other effects of athe ~~note~~planned ~~payable~~integration of these entities, and ~~accrued~~are ~~interest.~~not ~~Even~~necessarily ~~though~~indicative of the ~~amounts~~results ~~continued~~that towould behave ~~carried~~occurred onif ~~The~~the ~~Big~~business ~~Tomato’s~~combination ~~standalone~~had ~~accounting~~been ~~records,~~in effect on the ~~amounts~~dates ~~are~~indicated ~~eliminated~~or ~~upon~~which ~~consolidation~~may result in the future.

The operations of Monarch were insignificant in comparison to those of The Big Tomato, so the consolidated financial statements are presented under predecessor reporting wherein the prior historical information consists of solely the Tomato’s results of operations and cash flows. The consolidated financial statements included herein are presented for the six months ended June 30, 2015, and 2014, under predecessor entity reporting. The results of operations and cash flows obtained through the use of January 1, 2015, rather than January 14, 2015, are not considered to be materially different; therefore, the successor period is presented beginning January 1, 2015. The allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are summarized in the table below.

	Pro Forma Combined 2014 Financials
	Three months ended September 30, 2014			Nine months ended September 30, 2014

Revenues	$	799,071		$	2,310,318

Net (Loss) Income	$	(211,340	)	$	(191,363	)

Net (Loss) Income per Common Share – Basic and Diluted	$	(0.01	)	$	(0.01	)

	$
Cash		13,018
Prepaid expenses and deposits		5,326
Inventory		277,610
Property and equipment		7,289
Accounts payable and accrued liabilities		(254,330	)
Loans payable to related parties		(12,500	)
Goodwill		5,927,587
Net assets acquired		5,964,000

4.	Inventory

Inventory consists of the following:	~~June~~September 30, 2015 $		December 31, 2014 $
	Successor		Predecessor
Finished Goods	$	~~452~~476,~~717~~217	$	252,072
Inventory on Consignment		–		25,538
Raw Materials		–		–
Total	$	~~452~~476,~~717~~217	$	277,610

12F-11

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

5.	Property and Equipment

Cost $

Accumulated Depreciation $

June 30, 2015 Net Carrying Value $

December 31, 2014 Net Carrying Value $

Cost$

Accumulated Depreciation$

September 30, 2015Net Carrying Value$

December 31, 2014Net CarryingValue$

Successor

Predecessor

Furniture and equipment

59,636

5455,~~565~~444

54,~~071~~192

5,618

Leasehold Improvements

376,511

24,747

351,764

–

Leasehold improvements held for sale

389,636

24,747

364,889

–

Software and website

34,191

–

Vehicles

11,493

10,~~338~~600

~~1,155~~893

1,671

Total

~~481~~494,~~831~~956

~~123~~124,~~841~~982

~~357~~369,~~990~~974

7,289

AsAt aSeptember ~~result of the licensing complication between Green Sky, Inc., and the Custer warehouse lessor (further described in footnote 13.c), subsequent to June~~ 30, 2015, ~~Monarch entered into plans to sell~~ the ~~Leasehold Improvements, which are part of the Monarch segment of the~~ Company, tohad anclassified ~~outside party. The assets were not determined held for sale until after the balance sheet date of June 30~~$364,889 ~~2015, at which point management had then embarked on serious plans to dispose~~ of ~~the~~leasehold ~~assets~~improvements byas ~~the end of the 2015 calendar year. The subsequent determination of the assets being~~ held for sale ~~triggered the need for impairment testing in accordance with ASC 360~~. ~~Management has assessed the improvements for impairment as of June 30, 2015 and has determined that no impairment exists.~~

6.	Notes Receivable – Related Party

On August 15, 2014, the Company issued a Promissory Note to a related party, Steve Brandt, whereby the Company agreed to lend up to an aggregate of $3,000,000, which bears interest at 8% per annum, is unsecured and matures on August 15, 2017. Steve Brandt is a large shareholder of Monarch, holding more than 10% of shares outstanding. The borrower may borrow in increments of up to $750,000. On August 21, 2014, the Company advanced $60,000 under the Promissory Note. During the year ended December 31, 2014, the borrower repaid $34,000 of principal. AsOn atAugust ~~June 30~~4, 2015, ~~the~~Steve ~~Company~~Brandt ~~has~~settled ~~recognized~~his note in full with Monarch for $28,243, which consisted of accrued interest receivable of $2,243 onand the remaining outstanding principal of $26,000. OnThe ~~August~~borrowing 4,arrangement ~~2015,~~is ~~Steve~~now ~~Brandt~~closed ~~paid~~and ~~his~~the ~~note~~Note inmay ~~full~~no ~~with~~longer ~~Monarch~~be ~~for~~drawn ~~$28,243~~upon.

7.	Promissory Notes Payable

a) On December 5, 2014, the Company issued a promissory note to Glamis Capital SA (the “"Lender”"), which provides that the Company can borrow up to an aggregate of $1,500,000 from the Lender until January 30, 2015, in any amount in increments of up to $350,000. Interest accrues on the outstanding principal amount at the annual rate of 8% and is payable quarterly beginning August 15, 2015. Principal and all accrued interest thereon is due and payable on the earlier to occur of: (i) January 30, 2016; (ii) an issuance by the Company or an acquisition of voting securities of the Company of 30% or more of the then outstanding shares or the combined voting power of the Company’'s then outstanding voting securities; (iii) the individuals who are currently members of the Board of Directors of the Company cease for any reason to constitute at least two-thirds of the members of the Board; (iv) a merger, consolidation or other business combination with or into another company; or (v) the sale or other disposition of all or substantially all of the assets of the Company. As of ~~June~~September 30, 2015, the Company borrowed an aggregate of $1,482,801 from the Lender pursuant to this agreement and no further borrowings may be made. As at ~~June~~September 30, 2015, the Company has recognized accrued interest of $4979,~~969~~868. b) On January 1, 2015, the Company issued two promissory notes of $1,000,000 to each of the former shareholders of The Big Tomato pursuant to the Plan of Merger (Note 3). Each note is payable in eight equal installments of $125,000 plus interest at 8% per annum commencing April 1, 2015. AtThe ~~June~~July 301, 2015, ~~the~~payment ~~Company~~of ~~had made the initial instalment payments totaling~~ $~~250~~125,000. ~~Each~~was ~~note~~deferred isand ~~secured~~shall bybe ~~all~~due ~~of the assets of the Company~~ and ~~the~~payable ~~shares~~on ofJanuary ~~the~~2, ~~Company~~2017. As atconsideration ~~June~~for ~~30, 2015,~~ the ~~Company~~deferral ~~has~~each ~~recognized~~noteholder ~~accrued~~was ~~interest~~issued ~~of $74~~1,~~027.~~562,500 ~~Subsequent~~shares toof ~~June~~common ~~30,~~stock ~~2015,~~of the Company ~~modified~~and ~~the~~paid ~~notes~~$25, ~~refer to Note 15(a)~~000.

13F-12

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

The Company evaluated the modification pursuant to ASC 470-60 "Troubled Debt Restructuring by Debtors", and ASC 470-50 "Modification and Extinguishment" and determined that a concession was not granted and the guidance contained in ASC 470-60 does not apply. The Company determined that the modification was substantial, and the modification has been treated as a debt extinguishment in accordance with ASC 470-50. As a result, the Company recorded a loss on extinguishment of debt of $345,938.

At September 30, 2015, the Company had made installment payments totaling $500,000. Each note is secured by all of the assets and shares of The Big Tomato. As at September 30, 2015, the Company has recognized accrued interest of $103,903.

8.	Convertible Notes Payable

On April 29, 2015, the Company entered into a Securities Purchase Agreement with Redwood Management LLC, a Florida limited liability company (“"Redwood”"), for the sale of an original issue discount convertible debenture (the “"Debenture”") in the principal amount of $1,000,000. The Debenture was issued for an original issue discount of 10%, and interest on the Debenture accrues at the rate of 10% per annum, payable in six equal tranches, the first of which was paid on April 29, 2015 and the remainder is due on each of the first five monthly anniversaries of the issuance of the Debenture. Pursuant to the terms of the Secured Redwood Note described below, on each of May 29th and the next consecutive four months, Redwood will pay the Company $150,000 as long as certain conditions are met. As of ~~June~~September 30, 2015, the Company had received $~~236~~630,~~666~~000 net of the original discount of $3383,334, interest payments of $3375,~~334~~000 and issuance costs of $3045,000.

Convertible note	$	~~333~~833,334
Original issuance discount		(3383,334	)
Prepaid interest		(3375,~~334~~000	)
Debt issuance costs		(3045,000	)
Derivative liability		(~~236~~630,~~666~~000	)
Amortization of discount		1672,~~198~~278
Balance at June 30, 2015	$	16,198
Balance at September 30, 2015	$	72,278

The Debenture, which is due on April 29, 2016, is convertible into shares of the Company’'s common stock at the election of Redwood at any time at a conversion price equal to 65% of the lowest trading price of the common stock during the 20 trading day period prior to conversion. The Company has the right to prepay any portion of the Debenture upon ten days’' notice and payment of a 130% prepayment penalty.

In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value.

The fair value of the conversion feature was determined to be $~~424~~1,~~551~~055,490 using a Black-Scholes option-pricing model. Upon the issuance dates $~~236~~704,~~666~~999 was recorded as debt discount and $~~187~~350,~~885~~491 was recorded as a loss on derivative. As of ~~June~~September 30, 2015, the aggregate unamortized discount is $16761,~~198~~056.

On April 29, 2015, Redwood issued the Company a $750,000 collateralized secured promissory note (the “"Secured Redwood Note”"). The Secured Redwood Note receivable is secured by the 10% membership interests of Redwood owned by Gary Rogers and John DeNobile.As both the Debenture, and the Secured Redwood Note allow for the offset of the two notes, the Company has offset the remaining unpaid balance of the Secured Redwood Note with the Debenture.

~~9. Derivative Liability~~F-13

The Company has determined that the conversion feature associated with the convertible debenture described in Note 8 qualifies as a derivative liability and is accounted pursuant to ASC 815.

The Company records the fair value of the conversion feature in accordance with ASC 815using a Black-Scholes option-pricing model. During the six months ended June 30, 2015, the Company recorded a loss on the change in fair value of derivative liabilities of $221,163 (June 30, 2014 - $Nil). At June 30, 2015, the Company recorded a derivative liability of $457,829.

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

~~The~~ 9. ~~table~~Derivative ~~below sets forth a summary of changes the Company’s loss on the change in fair value of derivative liabilities:~~Liability

Day one loss on derivative liability	$	187,885
Change in fair value of conversion features		33,278
Three months and six months ended June 30, 2015	$	221,163

The Company has determined that the conversion feature associated with the convertible debenture described in Note 8 qualifies as a derivative liability and is accounted pursuant to ASC 815.

The ~~table~~Company ~~below~~records ~~sets~~the ~~forth~~fair avalue ~~summary~~ of ~~changes~~the conversion feature in accordance with ASC 815using a Black-Scholes option-pricing model. During the nine months ended September 30, 2015, the Company recorded a loss on the change in fair value of derivative liabilities of $216,140 (September 30, 2014 - $Nil). At September 30, 2015, the Company’s ~~Level~~recorded 3a ~~financial~~derivative ~~liabilities:~~ liability of $921,239.

Balance at December 31, 2014	$	-
Fair value of conversion features issued		424,551
Change in fair value of conversion features		33,278
Balance at June 30, 2015	$	457,829

The table below sets forth a summary of changes the Company's loss on the change in fair value of derivative liabilities:

	Three months ended September 30, 2015			Nine months ended September 30, 2015
Day one loss on derivative liability	$	(162,606	)	$	(350,491	)
Change in fair value of conversion features		167,629			134,351

Period ended September 30, 2015	$	5,023		$	(216,140	)

The table below sets forth a summary of changes in the fair value of the Company's Level 3 financial liabilities:

Balance at December 31, 2014	$	-
Fair value of conversion features issued		1,055,490
Change in fair value of conversion features		(134,351	)

Balance at September 30, 2015	$	921,139

The following are the assumptions used for derivative instruments valued using the Black Scholes option pricing model:

	At Issuance				~~June 30, 2015~~	September 30, 2015
65% of market value of stock on measurement date	$~~0.05- 0.056~~	0.038 - 0.056			$	~~0.046~~$	0.039
Risk-free interest rate	~~0.25%-0.26~~	0.18%-0.28	%	%		~~0.28~~	%0.08	%
Dividend yield		0	%	%		0	%0	%
Volatility factor		178%-189	%	%		~~183~~	%150	%
Term	~~0.92-1.00~~	0.65-1.00				~~0.83~~	0.58

10.

Related Party Transactions

a) During the ~~six~~nine months ended ~~June~~September 30, 2015, the Company incurred consulting fees of $820,250 (2014 - $nil) to directors and officers of the Company. b) During the ~~six~~nine months ended ~~June~~September 30, 2015, the Company incurred fees of $7590,~~882~~000 (2014 - $nil) to Jeremy N. Stout and Josh Field pursuant to the agreements described in Note 13(f).

F-14

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

	c)	During the nine months ended September 30, 2015, the Company granted 476,920 shares of common stock with a fair value of $52,902 to an employee for services, who was later appointed as a director of the Company in July 2015.

	d)	The Company granted 1,000,000 shares of common stock with a fair value of $70,000 to the newly instated CFO as a sign on bonus in September 2015.

	e)	The Company issued 2,500,000 shares of common stock with a fair value of $341,700 during the first quarter of 2015 to a consultant for services, who was later appointed as a director of the Company in July 2015.

	f)	On July 1, 2015, the Company's payment of $125,000 to the former owners of The Big Tomato, Messrs. Stout and Field, was deferred and shall be due and payable on January 2, 2017. As consideration for the deferral, Messrs. Stout and Field were each was issued 1,562,500 shares of common stock of the Company and paid $25,000.

	g)	On August 4, 2015, Steve Brandt settled his note in full with Monarch for $28,243, which consisted of accrued interest receivable of $2,243 and the remaining outstanding principal of $26,000. The borrowing arrangement is now closed and the Note may no longer be drawn upon. See footnote 6 for further details of the arrangement.

11.

Preferred Stock

On June 23, 2014, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (“"Series A Stock”") designating 5,500,000 shares of the Company’'s authorized preferred stock as Series A Stock, par value $0.001 per share. The Series A Preferred Stock is convertible at any time at the option of the holder into shares of common stock at a conversion ratio of 200 shares of common stock for each share of Series A Stock. A holder of Series A Stock shall be entitled to the number of votes per share equal to the number of shares of common stock into which such Series A Stock is convertible.

15On June 10, 2014, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock ("Series B Stock") designating 750,000 shares of the Company's authorized preferred stock as Series B Stock, par value $0.001 per share. The Series B Preferred Stock is convertible at any time at the option of the holder into shares of common stock at a conversion ratio of 6 shares of common stock for each share of Series B Stock. Dividends accrue on each share of Series B Stock, at the rate of 4% per annum of the price paid for each share or $12 per share. Until November 30, 2016, the Company has the right to pay the dividend in additional shares of Series B Stock. A holder of Series B Stock shall be entitled to the number of votes per share equal to the number of shares of common stock into which such Series B Stock is convertible.

On August 5, 2014, the Company filed a Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock ("Series B Stock"), whereby the Company removed the payment of dividends in additional shares of Series B Stock, reduced the conversion rate of the Series B Stock to 24 shares of common stock, and eliminated the right of holders of the Series B Stock to have a veto right on the ability of the Company to issue debt.

For both Series A and B preferred stock, the Company analyzed the embedded conversion option for derivative accounting consideration under ASC 815-15 "Derivatives and Hedging" and determined that the conversion option should be classified as equity. The Company also analyzed the conversion option for beneficial conversion features consideration under ASC 470-20 "Convertible Securities with Beneficial Conversion Features" and noted none.

	a)	On July 31, 2015, the Company issued 50,000 shares of its Series B Convertible Preferred Stock for cash proceeds of $600,000.

	b)	On August 24, 2015, the Company issued 417 shares of its Series B Convertible Preferred Stock for cash proceeds of $5,000.

F-15

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

On June 10, 2014, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (“Series B Stock”) designating 750,000 shares of the Company’s authorized preferred stock as Series B Stock, par value $0.001 per share. The Series B Preferred Stock is convertible at any time at the option of the holder into shares of common stock at a conversion ratio of 6 shares of common stock for each share of Series B Stock. Dividends accrue on each share of Series B Stock, at the rate of 4% per annum of the price paid for each share or $12 per share. Until November 30, 2016, the Company has the right to pay the dividend in additional shares of Series B Stock. A holder of Series B Stock shall be entitled to the number of votes per share equal to the number of shares of common stock into which such Series B Stock is convertible.

On August 5, 2014, the Company filed a Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (“Series B Stock”), whereby the Company removed the payment of dividends in additional shares of Series B Stock, reduced the conversion rate of the Series B Stock to 24 shares of common stock, and eliminated the right of holders of the Series B Stock to have a veto right on the ability of the Company to issue debt.

For both Series A and B preferred stock, the Company analyzed the embedded conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion option should be classified as equity. The Company also analyzed the conversion option for beneficial conversion features consideration under ASC 470-20 “Convertible Securities with Beneficial Conversion Features” and noted none.

12.

Common Stock

a) On January 1, 2015, the Company issued 8,100,000 shares of common stock with a fair value of $3,564,000 pursuant to the Plan of Merger with The Big Tomato (Note 3). Of the fair value of the shares issued, $55,694 was allocated to the extinguishment of amounts owed to Monarch America by The Big Tomato as result of the acquisition. b) During the ~~six~~nine months ended ~~June~~September 30, 2015, the Company issued 24,~~494~~326,~~005~~920 shares of common stock with a fair value of approximately $~~377~~506,~~515~~600 for consulting services. c) On July 1, 2015, the Company had agreed to make a $125,000 interest payment to each of the noteholders described in Note 7(b). In consideration for deferring the $125,000 payment due July 1, 2015, each noteholder was issued 1,562,500 shares of common stock of the Company with a total fair value of $295,938. d) On July 23, 2015, the Company issued 50,000 shares of common stock with a fair value of $3,500 for inventory. e) On August 24, 2015, the Company issued 125,000 shares of common stock with a fair value of $8,125 to a consultant for services provided that were capitalized as leasehold improvements.

13.

Commitments

a) The Company entered into a lease for office premises which originally commenced April 2, 2007. On October 27, 2010 and November 1, 2013, the Company entered into amendment agreements to extend the term of the lease. Under the terms of the November 1, 2013 amendment agreement, the term was extended to October 31, 2018, and the Company must pay base rent of $25,600 in the first 2 years of the lease, $27,200 in the next 2 years of the lease, and $28,800 in the last year of the lease. b) The Company entered into a Shopping Center Lease Agreement which commenced April 1, 2014, and terminates on March 31, 2019. The minimum base rent due under the lease agreement is $5,235 per month for the first year, $5,413 per month for the second year, and $5,568 per month for the remaining term. c) Beginning January 1, 2015, the Company entered into a management contract with Green Sky, Inc., a company wholly-owned by Steve Brandt, to build- out a warehouse located in Denver, Colorado for cultivation purposes. ~~Green~~As ~~Sky~~part ~~entered~~of ~~into~~that ~~a lease~~ agreement, ~~with~~ the ~~lessor~~Company ofassumed the ~~warehouse,~~rent ~~through~~liability ~~which, Monarch agreed to assume responsibility~~ of the ~~rent~~warehouse ~~from~~along ~~January~~with ~~2015~~other ~~through~~associated ~~August 2015, during the~~ build-out ~~phase of the agreement. However~~costs, ~~the~~estimated ~~Custer warehouse lessor had performance obligations~~ to ~~deliver~~be a$500,000. ~~cultivation~~Under ~~license~~the toagreement, ~~Green~~costs ~~Sky~~or ~~which~~expenses ~~have~~exceeding ~~not been met~~$720,000 sothrough ~~neither~~August ~~Green~~1, ~~Sky nor Monarch America have paid rent from June~~ 2015 ~~on,~~will ~~unless~~be ~~and until the issue is remediated or an alternative solution is found. Monarch and~~ Green Sky's ~~are~~responsibility. ~~working~~The ~~with~~assumed ~~other~~rent ~~parties~~liability toprovides ~~seek out other opportunities~~ for the ~~space.~~Company ~~Although~~to ~~the~~pay ~~management contract that Monarch has entered into with~~ Green Sky ~~has~~$20,000 ~~provided~~per ~~for~~month ~~Green Sky~~ to ~~make~~June ~~payments~~30, ~~to Monarch~~2015, ~~currently~~$51,200 itper ismonth ~~unlikely that Monarch will be able to collect any management fees~~ from ~~Green~~July ~~Sky.~~1, ~~Monarch~~2015 ~~has determined subsequent~~ to ~~June~~August 30, 2015, ~~that its Leasehold Improvements~~ at ~~the~~which ~~Custer~~point, ~~warehouse~~Green ~~qualify~~Sky aswill ~~held~~assume ~~for~~liability ~~sale.~~of ~~See footnote 5 for further discussion. d) Total lease commitments based on~~ the ~~minimum base~~ rent ~~due,~~payments ~~excluding~~going ~~common area maintenance charges, over the next five years are as follows:~~forward.

2015	$	45,545
2016		93,551
2017		94,283
2018		90,816
2019		16,704
Total	$	340,899

At September 30, 2015, the Company had owed past due rental payments that are expected to be paid upon the sale of the building. Refer to Note 15(a)

16 d) Total lease commitments based on the minimum base rent due, excluding common area maintenance charges, over the next five years are as follows:

2015	$	22,906
2016		93,551
2017		94,283
2018		90,816
2019		16,704

Total	$	318,260

F-16

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

e) On July 27, 2014, the Company entered into a Professional Relations and Consulting Agreement for consulting services effective on July 29, 2014 and ending on July 29, 2015. For the first 6 month period, the Company agreed to pay $12,500 per month and issue $150,000 worth of restricted common stock of the Company, determined by dividing $150,000 by the closing share price on the day preceding the execution of the agreement. For the remaining 6 month period, the Company agreed to pay $12,500 per month and issue $150,000 worth of restricted common stock of the Company, determined by dividing $150,000 by the average closing share price for the 5 trading days preceding January 15, 2015. The agreement was terminated in April 2015, resulting in the forfeiture of the unvested stock award. f) On January 14, 2015, the Company entered into a two-year employment agreement (the “"Employment Agreement”") with each of Jeremy N. Stout and Josh Field for an annual base salary of $120,000 each. Each individual will also be entitled to a bonus based upon the TBT’'s annual net income for 2015 and 2016 as follows: (i) $2,500 for every $10,000 of net income generated between $400,000 and $460,000, and (ii) $15,000 plus 7.5% of net income over $460,000. The agreement prohibits the individuals from competing with the business of the Company during the term of the agreement and for one year thereafter, except if the employee is terminated without cause or as a result of a constructive termination. g) On June 24, 2015, the Company entered into a five-year consulting agreement with FSST Pharms, LLC, a limited liability company organized under the laws of the Flandreau Santee Sioux Tribe (“"FSST”"). The term of the Consulting Agreement will automatically renew for subsequent one-year terms unless terminated by either party upon 30-days’' prior written notice to the other party. The Company will serve as FSST’'s exclusive independent contractor to provide consulting services to FSST related to medicinal and recreational marijuana and marijuana-related products. In addition, FSST may purchase nutrients, lights, equipment and other supplies from the Company at a 25% discount to the retail prices offered by the Company. Either party may terminate the Consulting Agreement for cause in accordance with the terms of the Consulting Agreement. As consideration for the consulting services provided by the Company, FSST will pay the Company a consulting fee equal to a percentage of total net revenues generated by the sale of marijuana and/or marijuana products by FSST. “"Total Net Revenues”" is defined in the Consulting Agreement as total gross revenues minus the cost of goods sold, other expenses directly related to the cultivation, processing, and sale of inventory, depreciation, and taxes. The consulting fee shall be paid monthly and no later than 30 days’' following receipt of total gross revenues by FSST. As of the date of this filing, construction of the facility was completed and cultivation processes were initiated. However, due to legal uncertainties, cultivation was halted and further growing activities until FSST and Monarch can perform a proper risk analysis and determine the best way to proceed. If FSST structures, leads to the structuring, or assists with the structuring of a consulting or other development agreement between the Company and another tribe, tribally owned company, or any other type of business entity, the Company agrees to pay FSST a percentage of all revenue generated as a result of such agreement by the Company, to be paid to FSST in cash within 10 business days of receipt by the Company; provided, however, that if FSST decides to utilize such proceeds to purchase common stock of the Company, it will be entitled to a purchase price discount of the then volume weighted average price of the common stock for the 20 days prior to receipt by the Company of such notification by FSST. ~~Until the execution of such an agreement, this arrangement does not need to be evaluated for derivative treatment.~~

14 h) On July 21, 2015, the Company entered into an arrangement with a Board Member, Kevin Malone, who will be entitled to $3,000 per month as long as he serves in that capacity.i) ~~Segment~~On ~~Reporting~~July 21, 2015, the Company added Robert Shepherd to the Board of Directors. Since January 2015, the new director was entitled to receive $5,000 in shares of common stock, based on the volume weighted average for the previous 20 days, and $1,500 in cash on a monthly basis. As a result of the execution of the consulting agreement described in Note 13(g) the director shall be entitled on a monthly basis to receive (1) $5,500 in shares of common stock and (2) $5,500 in cash. The director is expected to represent the Company at no less than five conferences during the year at a cost of $3,000 per conference to the Company.

The Company’s Chief Executive Officer (“CEO”) serves as the Company’s chief operating decision maker (“CODM”). Management evaluates the performance of the Company's operating segments based on several factors, including net sales to external customers and operating income. Net sales are recorded on a segment basis and intersegment sales are eliminated as part of the financial consolidation process. There are two reportable operating segments, being soil distribution and hydroponics retail operations. F-17

The management and consulting segment relates to Monarch America Inc., and its wholly-owned subsidiary, HBH Industries Inc. and is positioned to provide management and consulting services for building out indoor grow and cultivation facilities. This segment also has some exclusive rights for branded products (Monarch America lights, ballasts, and other indoor gardening supplies), and exclusive distribution arrangements (AgriAloe, MiraClays, Ivory Coco, REM international flavored beverage profiles). Coats AgriAloe LLC is a Texas-based developer of patented and proprietary soil amendment products. MiraClays is microscopic crystalline calcium clay, rich in over 70 other minerals and trace elements. The Ivory Coco arrangement consists of an exclusive distribution agreement with Ivory Coco International, LLC, a Colorado-based importer and supplier of Coco Coir, an all-natural soil additive utilized by indoor and outdoor gardening operations.

The retail operations segment relates to The Big Tomato and consists of supplying hydroponics and indoor gardening supplies in Denver, Colorado. The Big Tomato sells various types of products of indoor gardening products; grow boxes, grow lights, hydroponic systems, ballasts, bulbs, nutrients and additives, and other high-end hydroponic and gardening items.

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

~~The~~ 14. ~~following~~Segment ~~tables summarize selected financial data for segment disclosures for the three and six months ended June 30, 2015, and 2014.~~Reporting

2015 – (Successor)	Management/Consulting Operations $			Retail Operations $			Total $
Current assets		72,179			581,460			653,639
Total assets		452,185			6,515,274			6,967,459
Six Months Ended
Revenues		56,054			2,236,313			2,292,367
Cost of sales		(41,644	)		(1,492,965	)		(1,534,609	)
General and administrative		(1,175,021	)		(301,780	)		(1,476,801	)
Operating (loss) income		(1,160,611	)		441,568			(719,043	)
Three Months Ended
Revenues		4,200			1,130,779			1,134,979
Cost of sales		(2,644	)		(787,946	)		(790,590	)
General and administrative		(470,970	)		(146,940	)		(617,910	)
Operating (loss) income		(469,414	)		195,893			(273,521	)

The Company's Chief Executive Officer ("CEO") serves as the Company's chief operating decision maker ("CODM"). Management evaluates the performance of the Company's operating segments based on several factors, including net sales to external customers and operating income. Net sales are recorded on a segment basis and intersegment sales are eliminated as part of the financial consolidation process. There are two reportable operating segments, being soil distribution and hydroponics retail operations.

2014 – (Predecessor)	Management/Consulting Operations $		Retail Operations $			Total $
Current assets		–		272,737			272,737
Total assets		–		278,864			278,864
Six Months Ended
Revenues		–		1,610,179			1,610,179
Cost of sales		–		(1,134,187	)		(1,134,187	)
General and administrative		–		(290,257	)		(290,257	)
Operating income		–		185,735			185,735
Three Months Ended
Revenues		–		923,284			923,284
Cost of sales		–		(680,963	)		(680,963	)
General and administrative		–		(154,842	)		(154,842	)
Operating (loss) income		–		87,479			87,479

18The retail operations segment relates to The Big Tomato and consists of supplying hydroponics and indoor gardening supplies in Denver, Colorado. The Big Tomato sells various types of products of indoor gardening products; grow boxes, grow lights, hydroponic systems, ballasts, bulbs, nutrients and additives, and other high-end hydroponic and gardening items.

The following tables summarize selected financial data for segment disclosures for the three and nine months ended September 30, 2015, and 2014.

2015 – (Successor)	Management/ Consulting Operations $			Retail Operations $			Total $

Current assets		216,433			576,147			792,580

Total assets		581,322			6,508,819			7,090,141

*Nine Months Ended*
Revenues		118,700			3,496,133			3,614,833
Cost of sales		(41,644	)		(2,443,101	)		(2,484,745	)
Contract acquisition costs		(594,438	)		-			(594,438	)
General and administrative		(1,636,002	)		(446,519	)		(2,082,521	)

Operating (loss) income		(2,153,384	)		606,513			(1,546,871	)

*Three Months Ended*
Revenues		62,646			1,259,820			1,322,466
Cost of sales		-			(950,136	)		(950,136	)
Contract acquisition costs		(594,438	)		-			(594,438	)
General and administrative		(460,981	)		(144,739	)		(605,720	)

Operating (loss) income		(992,773	)		164,945			(827,828	)

F-18

Monarch America Inc.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

2014 – (Predecessor)	Management/ Consulting Operations $		Retail Operations $			Total $

Current assets		–		303,198			303,198

Total assets		–		312,264			312,264

*Nine Months Ended*
Revenues		–		2,310,318			2,310,318
Cost of sales		–		(1,674,969	)		(1,674,969	)
General and administrative		–		(436,221	)		(436,221	)

Operating income		–		199,128			199,128

*Three Months Ended*
Revenues		–		799,071			799,071
Cost of sales		–		(638,115	)		(638,115	)
General and administrative		–		(152,669	)		(152,669	)

Operating (loss) income		–		8,287			8,287

15.

Subsequent Events

a) On ~~July~~October 1, 2015, the Company had agreed to make a $125,000 interest payment to each of the noteholders described in Note 7(b). In consideration for deferring the $125,000 payment due July 1, 2015, each noteholder will be issued 1,562,500 shares of common stock of the Company and paid $25,000. The $125,000 payment shall be due and payable on January 2, ~~2017. b) On July 21,~~ 2015, the Company ~~entered~~received ~~into an arrangement with a Board Member, Kevin Malone, who will be entitled to~~ $362,~~000~~917 ~~per month as long as he serves~~ in ~~that~~net capacity. c) On July 21, 2015, the Company added Robert Shepherd to the Board of Directors. Since January 2015, the new director was entitled to receive $5,000 in shares of common stock, based on the volume weighted average for the previous 20 days, and $1,500 in cash onproceeds afrom ~~monthly basis. As~~ a ~~result~~draw ofon the ~~execution~~Secured ofRedwood ~~the consulting agreement described in~~ Note. ~~13(g)~~This ~~the~~draw ~~director~~was ~~shall~~half ~~be entitled on a monthly basis (1) $5,500 in shares~~ of ~~common stock and (2) $5,500 in cash. The director is expected to represent~~ the ~~Company~~last attranche ~~no less than five conferences during the year at a cost~~ of ~~$3,000~~funding ~~per~~available ~~conference~~ to the Company. ~~d) On~~ ~~August~~There 4,is ~~2015,~~no ~~Steve~~guarantee ~~Brandt~~that ~~paid off~~ the ~~$28,243~~remaining ~~note~~principal ~~described in Note 6 in full. e) The Company needs to formally issue 244,005 shares~~ of ~~its common stock to Robert Shepard pursuant to~~ the ~~terms~~un-borrowed offunds ~~a letter agreement with such individual. This issuance~~ will be ~~conducted~~made into ~~reliance upon an exemption from registration provided under Section 4(2) of~~ the ~~Securities Act of 1933, as amended~~Company. f b) ~~The~~ ~~Company~~On ~~needs~~October ~~to formally issue 50~~22,~~000~~ ~~shares of its Series B Convertible Preferred Stock to FSST Pharms~~2015, ~~LLC, a limited liability company organized under~~ the ~~laws of the Flandreau Santee Sioux Tribe in consideration for $600,000. The company received funds on July 9, 2015. g) The~~ Company ~~needs~~issued ~~to issue 1~~133,~~562,500~~333 shares of ~~common stock to Jeremy Stout in consideration for~~ the ~~postponement of the liability owed to Mr. Stout. h) The~~ Company's ~~needs to issue 1,562,500 shares of~~ common stock to ~~Josh~~a ~~Field~~Contractor in consideration for ~~the~~IT ~~postponement~~services ~~of the liability owed to Mr~~performed. ~~Field. i~~c) In ~~the~~On ~~time~~October ~~subsequent to June 30~~29, 2015, ~~the~~Redwood ~~Company~~Management ~~issued~~LLC ~~50,000~~exercised ~~shares~~the ofconversion ~~common~~feature ~~stock with a fair value~~ of ~~$3,500~~the ~~for~~Secured ~~products~~Redwood toNote ~~sell at the Tomato,~~ and ~~600,000~~converted ~~shares of common stock with a fair value of~~ $4220,000 ~~to employees at the Tomato as a retention bonus. j) Subsequent to June 30, 2015, Monarch put the Leasehold Improvements~~ of ~~the~~principal ~~Custer~~into ~~warehouse facility up for sale~~512,821 ~~which~~shares ~~are part~~ of the ~~Monarch segment of the~~ Company.'s ~~See~~common ~~footnotes 5 and 13~~stock.c ~~for further discussion. k~~c) ~~Subsequent~~ toOn ~~June~~November 304, ~~2015~~2014, ~~Monarch~~Redwood ~~executed~~Management ~~a management and consulting agreement with Mary JaneCo,~~ LLC, inexercised ~~which~~the ~~Monarch~~conversion ~~will~~feature ~~provide~~of ~~advisory and consulting services related to~~ the ~~cultivation,~~Secured ~~CO2~~Redwood ~~extraction~~Note and ~~cultivation~~converted ~~facility design~~$25,800 ~~and~~of ~~construction~~principal ~~management~~into ~~for Mary JaneCo’s facility in Auburn~~3,000,000 ~~Washington.~~shares ~~The terms~~ of ~~this agreement require Mary JaneCo to pay Monarch an hourly fee for services rendered by Monarch personnel and a surcharge on~~ the ~~cost~~Company's ofcommon ~~the cost of the buildout of the facility~~stock.

F-19

Item 2. Management’'s Discussion and Analysis or Plan of Operations.

As used in this Quarterly Report on Form ~~10~~10-Q (this “"Report”"), unless the context otherwise indicates, references to the “"Company,”" the “"Registrant,”" “"we,”" “"our,”" “"us,”" or “"Monarch”" refer to Monarch America, Inc. and its wholly-owned subsidiaries. Jeremy N. Stout, Inc. d/b/a The Big Tomato was acquired by and is now a wholly-owned subsidiary of Monarch America as of January 14, 2015, effective January 1, 2015. References to “"the Tomato”" refer to what is now The Big Tomato, Inc., formerly Jeremy Stout, Inc. d/b/a The Big Tomato, Inc.

Forward-Looking Statements

Certain statements contained in this Report, including statements regarding our business, financial condition, our intent, belief or current expectations, primarily with respect to the future operating performance of the Company and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “"may,”" “"will,”" “"should,”" “"expects,”" “"anticipates,”" “"contemplates,”" “"estimates,”" “"believes,”" “"plans,”" “"projected,”" “"predicts,”" “"potential,”" or “"continue”" or the negative of these similar terms. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law.

Overview

The Company is actively involved in the business of being a vertically-integrated cannabis management company. Since current management has taken control of the Company in March 2014, we are involved in the sale and distribution of hydroponic lights and equipment as a result of our acquisition of The Big Tomato, we are aiming to generate sales of specialty soil additives used in the growth of marijuana and other hydroponics and we have acquired certain intellectual property, including trademarks and domain names, used by the Company in branding and marketing its products and services.

Monarch also provides turnkey solutions, management, and consulting services to the legally regulated marijuana industry. While not directly engaged in the sale of marijuana, Monarch offers a spectrum of capabilities that we believe to elevate the business of marijuana and hydroponic cultivation from the erratically-stocked, sparsely-staffed and managed, independent-store model to that of an efficient and consistently managed organization.

Monarch aims to oversee and manage all facets of retail operations: from property management, technology and equipment leasing to inventory control, staffing, and day-to-day operational management.

~~The~~During ~~Company~~the ~~recently~~third quarter, the Company became the exclusive consultant to the Flandreau Santee Sioux Tribe for a recreational marijuana grow facility and consumption lounge in South Dakota. As of the date of this filing, construction of the facility was completed and cultivation had begun. However, certain actions recently taken by the Attorney General of South Dakota, the Flandreau Tribe voluntarily destroyed the crop, cultivation has been halted until the Flandreau tribe and Monarch can perform a risk assessment and determine how to proceed.

~~Corporate~~Our ~~History~~ Operating Segments

~~Monarch~~We ~~America,~~have ~~Inc~~two distinct operating segments:

~~The~~Monarch ~~Company~~– ~~was~~The ~~incorporated~~management ~~in the State of Nevada on September 14, 2010. On March 19, 2014, John Ngitew~~ and ~~Grace~~consulting ~~Parinas,~~segment ~~the~~is ~~former~~positioned ~~principal~~to ~~shareholders~~provide ofservices ~~the Company, formerly known as Lingas Ventures, Inc., entered into a Stock Purchase Agreement which provided~~ for ~~the~~building ~~sale~~out ofindoor ~~shares~~grow ~~of common stock of the Company representing 50% of the issued~~ and ~~outstanding~~cultivation ~~share capital of the Company on a fully-diluted basis to Eric Hagen, Jonathan Hunt and Steven Brandt~~facilities. ~~The~~This ~~consideration~~segment ~~paid~~also ~~for~~has ~~the~~branded ~~shares~~indoor ~~was~~gardening ~~$21~~products,~~750.~~ Inalong ~~connection~~ with ~~the~~exclusive ~~transaction,~~distribution ~~Mr.~~arrangements ~~Ngitew released the Company from all debts owed to him. Effective as of March 19, 2014, in connection~~ with ~~the~~outside ~~sale~~parties offor ~~the~~specialized ~~shares~~gardening tosupplies ~~Messrs.~~like ~~Hagen,~~soil ~~Hunt~~additives and ~~Brandt,~~growing ~~both John Ngitew and Grace Parinas resigned from all their respective positions as officers and directors of the Company~~mediums. The ~~Board~~Big ofTomato ~~Directors~~– ofThe ~~the~~retail ~~Company~~operations ~~elected~~segment ~~Eric~~consists ~~Hagen~~of assupplying ~~President~~hydroponics and ~~Chief~~indoor ~~Executive~~gardening ~~Officer,~~supplies ~~Jonathan~~through ~~Hunt~~a asretail ~~Vice~~storefront ~~President~~ and ~~Secretary~~supply ~~and Steven Brandt as Vice President and Treasurer, and said three individuals became the directors of the Company~~warehouse.

203

OnResults ~~May 19, 2014, the Company changed its name to "Cannabis Kinetics Corp." and effectuated a 1 for 10 reverse stock split. As a result~~ of anOperations ~~amendment~~– toMonarch ~~the~~(Successor) Company's Articles of Incorporation, the Company is authorized to issue 10,000,000 shares of blank check preferred stock. The number of authorized shares of common stock of the Companny, 2,610,000,000, par value $.001 per share, was not affected by the amendment.

OnFor ~~September 11, 2014,~~ the ~~Company~~three ~~acquired substantially all of the assets of REM International, LLC, a Colorado limited liability company (“REM”) pursuant to an asset purchase agreement, dated June 6, 2014 by~~ and ~~among~~nine ~~the~~months ~~Company,~~ended REM, and Robert E. Matuszewki, the owner of all of the issued and outstanding equity interests in REM. The consideration paid by the Company for the assets was $118,500 and the issuance 1,500,000 shares of the Company’s common stock. Pursuant to an amendment to the asset purchase agreement, dated as of September 1130, ~~2014, the Company agreed to pay REM $7,000 for the five months and commencing March~~ 2015 $12,750 for the subsequent six months. The assets purchased consist of certain intellectual property, including trademarks and domain names. The Company did not assume any liabilities in connection with the acquisition.

OnThere ~~March~~are ~~26,~~no ~~2014,~~comparable ~~the~~periods ~~Company~~for ~~borrowed $175~~2014,~~000~~ from Backenald Trading, Ltd. pursuant to the terms of a promissory note. Interest accrues on the outstanding principal amount at the rate of 8% and is payable quarterly beginning August 31, 2015. Principal and all accrued interest thereon is due ~~and payable on the earlier~~ to ~~occur of: (i) March 26, 2016; (ii) an issuance by~~ the ~~Company~~adoption ~~or an acquisition~~ of ~~voting~~predecessor securities of the Company of 30% or more of the then outstanding shares or the combined voting power of the Company’s then outstanding voting securities; (iii) the individuals who are currently members of the Board of Directors of the Company cease for any reason to constitute at least two-thirds of the members of the Board; (iv) a merger, consolidation or other business combination with or into another company; or (v) the sale or other disposition of all or substantially all of the assets of the Companyaccounting.

On March 26, 2014, the Company borrowed $175,000 from Adams Ale, Inc. pursuant to the terms of a promissory note. Interest accrues on the outstanding principal amount at the rate of 8% and is payable quarterly beginning August 31, 2015. Principal and all accrued interest thereon is due and payable on the earlier to occur of: (i) March 26, 2016; (ii) an issuance by the Company or an acquisition of voting securities of the Company of 30% or more of the then outstanding shares or the combined voting power of the Company’s then outstanding voting securities; (iii) the individuals who are currently members of the Board of Directors of the Company cease for any reason to constitute at least two-thirds of the members of the Board; (iv) a merger, consolidation or other business combination with or into another company; or (v) the sale or other disposition of all or substantially all of the assets of the Company. Revenues

OnMonarch ~~December~~generated ~~5, 2014, the Company borrowed~~ $75118,~~000~~700 ~~from~~in ~~Glamis~~net ~~Capital~~revenues SAfor ~~(Glamis Capital) pursuant to~~ the ~~terms~~nine ofmonths aended ~~promissory~~September ~~note.~~30, ~~The~~2015, ~~note~~and ~~provides that the Company can borrow up to an aggregate of~~ $162,~~500,000~~646 ~~from~~for ~~Glamis~~the ~~until~~quarter ~~January~~ended September 30, 2015. ~~Interest~~as ~~accrues~~a onresult ~~the outstanding principal amount at the rate~~ of 8%consulting ~~and~~services isrendered ~~payable~~to ~~quarterly beginning August 15, 2015~~clients. ~~Principal~~This ~~and~~was ~~all~~a ~~accrued~~significant ~~interest~~increase ~~thereon~~in isrevenues ~~due~~to ~~and~~prior ~~payable~~quarter's onretail ~~the~~sales ~~earlier to occur~~ of: ~~(i) January 30~~$4,200 ~~2016;~~as ~~(ii)~~Monarch anhas ~~issuance~~refocused byitself ~~the~~to ~~Company~~provide oronly anconsulting ~~acquisition~~and ofmanagement ~~voting~~services ~~securities~~and ofany ~~the~~Monarch-branded ~~Company~~retail ofsupplies ~~30%~~will orbe ~~more~~sold ofexclusively ~~the~~through ~~then outstanding shares or~~ the ~~combined~~Tomato. ~~voting~~The ~~power of the~~ Company’s ~~then~~has ~~outstanding~~Consulting ~~voting~~contracts ~~securities;~~in ~~(iii)~~place ~~the individuals who are currently members of the Board of Directors of the Company cease for any reason to constitute~~ at ~~least~~ two~~-thirds~~ oflocations: the ~~members~~Flandreau ofwarehouse ~~the~~in ~~Board;~~South ~~(iv)~~Dakota aand ~~merger, consolidation or other business combination with or into another company; or (v)~~ the ~~sale~~MT orDuVall ~~other~~warehouse ~~disposition~~in ofWashington ~~all or substantially all of the assets of the Company~~State. ~~As of March 30, 2015, the Company borrowed an aggregate of $1,150,000 from Glamis Capital.~~

OnTotal ~~December~~operating 18, 2014, the Company effectuated a 3-1 forward stock split and shareholders owning shares on such record date received 2 shares of the Company in addition to each share they owned as of such date. As of December 26, 2014, the Company changed its name from Lingas Ventures, Inc. to Monarch America, Inc. expenses

21Monarch's total operating expenses were $2,230,440 for the nine months ended September 30, 2015, and $1,055,419 for the quarter ended September 30, 2015. These year-to-date costs are related to contract acquisition costs of $594,438, salaries and wages of $547,864, consulting and professional fees of $711,805, occupancy costs of $89,969, and travel and other of $286,364. The quarter-to-date costs of $1,055,419 are related to contract acquisition costs of $594,438, salaries and wages of $275,212, consulting and professional fees of $107,346, and travel and other of $78,423. The 124% increase of $584,449 from last quarter's operating expense of $470,970 was almost wholly attributable to contract acquisition costs related to the build out and securing of the Flandreau facility and contract in South Dakota.

OnNet ~~April~~operating 29, 2015, the Company issued to Redwood Management LLC, a Florida limited liability company (“Redwood”), an original issue discount convertible debenture (the “Debenture”) in the principal amount of $1,000,000. The Debenture was issued for an original issue discount of 10%, and interest on the Debenture accrues at the rate of 10% per annum, payable in six equal tranches, the first of which was paid on April 29, 2015 and the remainder are due on each of the first five monthly anniversaries of the issuance of the Debenture. On each of May 29th and the next consecutive four months, Redwood will pay the Company $150,000 as long as (a) the Company shall have duly honored all conversions submitted by Redwood, if any, (b) the Company shall have paid all liquidated damages and other amounts owing to the Redwood, (c) the Common Stock is trading, (d) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares then issuable to Redwood, (e) there is no existing event of default under the Debenture, (f) there has been no public announcement of a pending or proposed fundamental transaction or change of control that has not been consummated, (g) the daily dollar trading volume for the common stock exceeds an average of $15,000 per trading day, (h) the Company’s common stock must be DTC and DWAC Eligible and not subject to a “DTC Chill” and (i) the Company has timely filed all reports required to be filed by the Company after the date hereof pursuant to the Securities Exchange Act of 1934, as amended. Notwithstanding, upon at least 2 business days the Company may prohibit Redwood from making any prepayment otherwise due under the Secured Redwood Note. The Debenture, which is due on April 29, 2016, is convertible into shares of the Company’s common stock at the election of Redwood at any time at a conversion price equal to 65% of the lowest trading price of the common stock during the 20 trading day period prior to conversion. Failure of the Company to deliver shares to Redwood within three days of conversion results the Company paying $10 per trading day for the first four days and $20 per day thereafter. loss

During the quarter ended September 30, 2015, Monarch had a net operating loss of $992,773, compared to first quarter 2015's net operating loss of $691,197 and second quarter 2015's net operating loss of $469,414, totaling a net operating loss for the nine months ended September 30, 2015 of $2,153,384. Monarch has not yet begun to receive profit sharing revenues from its consulting efforts, but has begun to recoup costs associated with these projects. The company incurred $345,938 in losses related to the restructuring of the debt repayment to the former owners of The Big Tomato, which largely accounts for the jump in third quarter's losses.

~~Founded~~Results ~~in May 2001, The Big Tomato provides thousands~~ of ~~indoor~~Operations ~~gardeners~~– ~~and commercial growers with top quality hydroponic and indoor gardening supplies at competitive costs.~~ The Big Tomato ~~sells~~(Successor ~~various~~period ~~types~~– ~~of products of indoor gardening products~~2015; ~~grow~~Predecessor ~~boxes,~~period ~~grow~~– ~~lights, hydroponic systems, ballasts, bulbs, nutrients and additives, and other high-end hydroponic and gardening items.~~ 2014)

OnFor ~~January 14, 2015,~~ the ~~Company~~three ~~completed the acquisition of Jeremy N. Stout, Inc. d/b/a The Big Tomato, a Colorado Corporation (“The Big Tomato”) pursuant to which The Big Tomato, Inc., a Colorado corporation~~ and anine ~~wholly-owned~~months ~~subsidiary~~ended ofSeptember ~~the Company was merged with and into The Big Tomato. In addition to $400~~30,~~000~~ in cash paid by the Company to Jeremy Stout and Josh Field, the shareholders of The Big Tomato, the Company issued an aggregate of 8,100,000 shares of common stock of the Company to the Shareholders. The Company also issued a secured promissory note in the principal amount of $1,000,000 (collectively, the “Notes”) to each of Messrs. Stout and Field. The Notes are payable in eight equal installments of $125,000 commencing April 1, 2015, ~~accrue interest at the rate of 8% per annum~~ and ~~are~~September ~~secured by a first priority lien on all the assets of The Big Tomato. As additional security for the Notes~~30, the Company pledged all of the shares of The Big Tomato to each of Messrs. Stout and Field. The security interest in such assets and the pledged stock is the exclusive remedy in the event of a default under the Notes. The Notes also provide that the Company shall be entitled to offset any damages incurred by it or its affiliates against the principal amount of the Notes arising from an inaccuracy or breach of any representation or warranty of Messrs. Stout and Field or failure to perform or comply with the Notes or other agreements or documents delivered in connection with the Merger. 2014

~~Messrs. Stout and Field will each be granted 1,562,500 shares of common stock and have been paid $25,000 in consideration for the postponement of the $125,000 payment which was due July 1, 2015.~~ Revenues

~~Accounting~~The ~~Survivor~~Tomato generated $1,259,820 and $3,496,133 for the three and nine months ended September 30, 2015, respectively, compared to sales of $799,071 and $2,310,318 for the three and nine months ended September 30, 2014, respectively, an increase of 51.3% year-over-year for the nine months. This continued growth in sales has been due in part to the Tomato's refocusing of its sales strategy to target and fulfill larger orders as well as fulfilling new large orders across the country. These types of arrangements have a larger profit margin, as when the Tomato places larger orders from its vendors, it obtains more favorable pricing per unit. This is demonstrated by the trend in cost in sales of $950,136 and $2,443,101 for the three and nine months ended September 30, 2015, respectively, when compared to the cost of sales of $638,115 and $1,674,969 during the three and nine months ended September 30, 2014, respectively, an increase of 45.9% year-over-year for the nine months (compared to the 51.3% growth in revenue YTD). These trends have equated to a larger gross margin, as the Tomato earned a gross margin of $309,684 and $1,053,032 for the three and nine months ended September 30, 2015, respectively, compared to the gross margins of $160,956 and $635,349 during the three and nine months ended September 30, 2014, respectively, an increase of 66% year-over-year for the nine months.

The financial results presented below are presented under predecessor entity reporting. The Monarch segment is a segment of the successor, for which there are no comparable periods since predecessor accounting was adopted as a result of Monarch’s Merger with The Big Tomato. The results of operations referred to below for the three and six months ended June 30, 2015 represent the results of operations for the successor entity (Monarch) and the standalone comparative financial results of the predecessor (The Big Tomato) for the six months ended June 30, 2014 and June 30, 2015. 4

22Total operating expenses

~~Our~~Total ~~Operating~~operating ~~Segments~~expenses for the three months ended September 30, 2015 were $144,739 consisting of $3,186 of advertising, $10,112 of insurance, $5,925 of professional fees, $29,862 of rent, $71,638 of wages, and $24,016 of other general expenses. Total operating expenses for the three months ended September 30, 2014 were $152,669 consisting of $5,108 of advertising, $14,415 of insurance, $4,500 of professional fees, $28,439 of rent, $86,649 of wages, and $13,558 of other general expenses. Year-over-year for quarter three, there was a decrease of $7,930, or 5.2%.

WeTotal ~~have~~operating ~~two~~expenses ~~distinct~~for the nine months ended September 30, 2015 were $446,519 consisting of $9,868 of advertising, $40,759 of insurance, $14,345 of professional fees, $92,495 of rent, $176,988 of wages, and $112,064 of other general expenses. Total operating ~~segments:~~ expenses for the nine months ended September 30, 2014 were $436,221 consisting of $11,855 of advertising, $34,011 of insurance, $17,378 of professional fees, $86,536 of rent, $205,112 of wages, and $81,329 of other general expenses. Year-over-year, there was an increase of $10,298, or 2.4%. When compared to net revenue, 2015 year-to-date operating expenses are 12.8% of net revenue, while 2014 year-to-date operating expenses were 18.9% of net revenue, demonstrating the Tomato's focus on controlling fixed costs and overhead despite the growth of sales.

~~Monarch~~Net –operating The management and consulting segment is positioned to provide services for building out indoor grow and cultivation facilities. This segment also has branded indoor gardening products, along with exclusive distribution arrangements with outside parties for specialized gardening supplies like soil additives and growing mediums. income

~~The~~During ~~Big~~the three and nine months ended September 30, 2015, the Tomato~~–The~~ ~~retail~~had ~~operations~~a ~~segment~~net ~~consists~~operating income of ~~supplying~~$164,945 ~~hydroponics~~and $606,513, respectively, as compared with a net operating income of $8,287 and $199,128 for the three and nine months ended September 30, 2014, respectively, an increase in bottom line results for the nine months year-over-year of $407,385 or 204.6%. With the legalization of marijuana in Colorado, the Tomato has been able to meet growing demands for indoor ~~gardening~~hydroponic and cultivation supplies. ~~through~~Larger agrow ~~retail~~facilities ~~storefront~~and operations are coming online, and the Tomato has an established reputation for being able to fill large orders at competitive costs, while giving expert advice. The Tomato has also been reaping the benefits of the synergies created by the Tomato-Monarch acquisition, as Monarch connects the Tomato to large customers across the country and fulfills large supply ~~warehouse~~orders through the Tomato—connections and customers that the Tomato did not previously have.

~~Results~~Liquidity ofand ~~Operations~~Capital ~~– Monarch (Successor)~~ Resources

~~For~~As of September 30, 2015, the ~~three~~Company ~~and~~had ~~six~~$151,380 ~~months~~of ~~ended~~cash ~~June~~and 30total liabilities of $4,630,771. ~~2015~~

~~There~~Monarch ~~are~~has noclosed ~~comparable~~its ~~periods~~line ~~for~~of ~~2014~~credit with Steve Brandt, ~~due~~and toon ~~the~~August ~~adoption~~4, of2015, ~~predecessor~~Mr. ~~accounting~~Brandt, settled his note early by repaying in full principal outstanding plus accrued interest for a total of $28,243.

~~Revenues~~The Tomato has continued its profitable trend of 2014 by showing a continued surplus into 2015. However, in order to maintain its operations and its ability to manage its supply chain and distribution channels, the Tomato must have adequate working capital so as to have the financial flexibility to fulfill inventory orders by its customers. The profitability of the Tomato may not be sufficient to support the capital burn or operations of Monarch in the future.

~~Monarch~~Management ~~generated~~estimates ~~$56,054~~that inMonarch ~~net~~will ~~revenues~~need approximately $4,180,000 for the ~~six~~next 12 months ~~ended~~of ~~June 30~~operations, ~~2015,~~which ~~and~~includes $41,~~200~~000,000 to pay the sellers for the ~~quarter~~sale ~~ended~~of ~~June~~The 30Big Tomato. Quarterly interest payments are due to Glamis Capital commencing August 15, 2015 aswith athe ~~result~~outstanding principal of ~~retail~~about ~~sales~~$1,150,000 ofand ~~its~~all ~~branded~~accrued ~~hydroponic~~interest ~~and~~due ~~cultivation~~no ~~supplies~~later than January 30, ~~such~~2016. asThe ~~lights~~Company ~~and~~also ~~ballasts.~~owes ~~This~~the ~~was~~former aowners ~~92%~~of ~~decrease~~the Tomato $500,000 in ~~retail~~cash ~~revenue~~consideration, ~~compared~~due toquarterly, ~~prior~~as ~~quarter’s~~of ~~retail~~the ~~sales~~date of ~~$51,854~~this asfiling. ~~Monarch~~The ~~has~~Company ~~refocused~~does ~~itself~~not have sufficient cash to ~~provide~~fund ~~only~~its ~~consulting~~expenses ~~and~~over ~~management~~the ~~services~~next ~~and~~twelve ~~any~~months. ~~Monarch-branded~~There ~~retail~~can ~~supplies~~be no assurance that additional capital will be ~~sold~~available ~~exclusively~~to ~~through~~the Company. If the ~~Tomato~~Company fails to raise adequate capital, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.

~~Total~~To ~~operating~~date, ~~expenses~~the Company has received cash proceeds from Redwood Management LLC funding the Debenture (described above in Corporate History- Monarch America, Inc.), resulting in $909,000 of principal outstanding, which will have to be repaid and is due in full on April 29, 2016. There is no assurance that the Company will receive any further funding from Redwood outside of the terms of the agreement.

Monarch’s total operating expenses were $1,175,021 for the six months ended June 30, 2015, and $470,970 for the quarter ended June 30, 2015. These year-to-date costs are related to salaries and wages of $272,652, consulting and professional fees of $604,459, occupancy costs of $89,969, and travel and other of $207,941. The quarter-to-date costs of $470,970 are related to salaries and wages of $164,063, consulting and professional fees of $108,301, occupancy costs of $29,969, and travel and other of $168,637. The 33% decrease of $233,081 from last quarter’s operating expense of $704,051 was largely attributable to stock granted to our SEC advisor and consultant in Q1, which was a non-recurring transaction. The 329% increase over prior quarter’s travel and other expenses were largely attributable to travel costs incurred in the negotiation of consulting and management agreements in Washington, Oregon, and South Dakota. 5

~~Net~~Monarch ~~operating~~also ~~loss~~has issued and outstanding promissory notes in the aggregate principal amount of $1,482,801 due and payable in full on January 30, 2016. Monarch's ability to continue as a going concern is dependent on management's ability to raise additional capital, or renegotiate terms of repayment, despite the profits shown by The Big Tomato.

~~During~~The ~~the~~financial ~~quarter~~statements ~~ended~~included ~~June~~in ~~30,~~this ~~2015,~~Report ~~Monarch~~do ~~had~~not ainclude ~~net~~any ~~operating~~adjustments ~~loss~~that ofmay ~~$469,414,~~be ~~compared~~necessary toif ~~first~~we ~~quarter~~are ~~2015’s~~unable ~~net~~to ~~operating~~continue ~~loss~~as ~~of $691,197, totaling~~ a ~~net~~going ~~operating loss for the six months ended June 30, 2015 of $1,160,611~~concern. ~~Monarch has not yet received consulting or management revenues to offset its costs.~~

~~Results~~Effective ofAugust ~~Operations~~1, –2015, Monarch executed a management and consulting agreement with MT DuVall,, LLC, in which Monarch will provide advisory and consulting services related to the cultivation, CO2 extraction and cultivation facility design, and construction management for MT DuVall's facility in Auburn, Washington. The ~~Big~~terms ~~Tomato~~of ~~(Successor~~this ~~period~~agreement –require ~~2015;~~MT ~~Predecessor~~DuVall ~~period~~to –pay ~~2014)~~Monarch an hourly fee for services rendered by Monarch personnel along with a surcharge on the cost of the build-out of the facility.

~~For~~On June 24, 2015, Monarch entered into a five-year consulting agreement with FSST Pharms, LLC of the ~~three~~Flandreau ~~and~~Santee ~~six~~Sioux ~~months~~Tribe ~~ended~~for ~~June~~the 30management of the build-out of a 10,000 ~~2015~~square foot warehouse in South Dakota and ~~June~~the 30oversight of the growth of marijuana for the five years. In conjunction with this agreement, ~~2014~~ Monarch will receive a percentage of net monthly proceeds resulting from the cannabis cultivation at the Flandreau facility. However, there is uncertainty as to what this amount may be. As of the date of this filing, cultivation has been halted due to legal uncertainties until FSST and Monarch can perform a risk analysis and determine how to best proceed.

~~Revenues~~The MT DuVall and FSST Pharms contracts are models for the types of relationships Monarch would like to build with other cannabis-growing entities. Once these two deals are in full operation, Monarch would have the liquidity it needs to meet the capital requirements of its short-term and operational capital needs. There is uncertainty as to the extent of the profits that these arrangements will yield along with uncertainty surrounding the timing, so Monarch is continuing to pursue other consulting and management agreements with other parties across the nation.

~~The~~Going Tomato generated $1,130,779 and $2,236,313 for the three and six months ended June 30, 2015, respectively, compared to sales of $923,284 and $1,610,179 for the three and six months ended June 30, 2014, respectively, an increase of 39% year-over-year for the six months. This continued growth in sales has been due in part to the Tomato refocusing its sales strategy to target and fulfill larger orders as well as fulfilling new large orders across the country. These types of arrangements have a larger profit margin, as when the Tomato places larger orders from its vendors, it obtains more favorable pricing per unit. This is demonstrated by the trend in cost in sales of $787,946 and $1,492,965 for the three and six months ended June 30, 2015, respectively, when compared to the cost of sales of $680,963 and $1,134,187 during the three and six months ended June 30, 2014, respectively, an increase of 32% year-over-year for the six months (compared to the 39% growth in revenue YTD). These trends have equated to a larger gross margin, as the Tomato earned a gross margin of $342,833 and $743,348 for the three and six months ended June 30, 2015, respectively, compared to the gross margins of $242,321 and $475,992 during the three and six months ended June 30, 2014, respectively, an increase of 56% year-over-year for the six months. Concern

23As of September 30, 2015, the Company has a working capital deficit of $3,338,191, and has an accumulated deficit of $3,570,795. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company's future operations. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.

~~Total~~The ~~operating~~repositioning ~~expenses~~of Lingas Resources into what is now Monarch America has required substantial capital throughout fiscal year 2014 and into 2015 in order to ramp up operations and change the Company's industry from rare earth mining and discovery to marijuana cultivation. The transition has been made further difficult by governmental red tape and bureaucracy, demonstrated by Monarch's consulting client at the Custer warehouse, Green Sky, being unable to obtain a license to grow cannabis at the facility, which has led to Monarch not being able to collect management and consulting fees from Green Sky, as no cannabis has been cultivated. As of the date of this filing, Monarch is aggressively working towards selling its tenant improvements at the Custer facility. The successful execution of these efforts will provide Monarch sufficient working capital to honor its obligations through the end of the year; however other arrangements will still need to be made in satisfying the long term debt that will come due throughout 2016. Management is in negotiations with a party interested in acquiring the tenant improvements in the Custer warehouse. The potential purchaser has deposited $50,000 into an escrow account to go towards the purchase price as a showing of intent to proceed.

~~Total~~The ~~operating~~financial ~~expenses~~statements ~~for~~included ~~the~~in ~~three~~this ~~months~~Report ~~ended~~do ~~June~~not ~~30,~~include ~~2015~~any ~~were~~adjustments ~~$146,940~~that ~~consisting~~may ofbe ~~$3,331~~necessary ofif ~~advertising,~~we ~~$1,281~~are ofunable ~~depreciation,~~to ~~$14,669~~continue ofas insurance, $3,750 of professional fees, $30,193 of rent, $40,058 of wages, and $53,658 of other general expenses. Total operating expenses for the three months ended June 30, 2014 were $154,842 consisting of $3,086 of advertising, $5,195 of depreciation, $9,313 of insurance, $5,545 of professional fees, $28,655 of rent, $65,986 of wages, and $37,062 of other general expenses. Year-over-year for quarter two, there was a ~~decrease~~going ~~of 7,902, or 5%~~concern.

Total operating expenses for the six months ended June 30, 2015 were $301,780 consisting of $6,682 of advertising, $2,761 of depreciation, $30,647 of insurance, $8,420 of professional fees, $62,633 of rent, $105,350 of wages, and $85,287 of other general expenses. Total operating expenses for the six months ended June 30, 2014 were $290,257 consisting of $6,747 of advertising, $10,350 of depreciation, $19,596 of insurance, $12,878 of professional fees, $58,097 of rent, $118,463 of wages, and $64,126 of other general expenses. YearOff-~~over-year,~~Balance ~~there~~Sheet was an increase of 11,523, or 4%. When compared to net revenue, 2015 YTD operating expenses are 13% of net revenue, while 2014 YTD operating expenses were 18% of net revenue, demonstrating the Tomato’s focus on controlling fixed costs and overhead despite the growth of sales. Arrangements

~~Net~~We ~~operating~~have ~~income~~no off-balance sheet arrangements.

During the three and six months ended June 30, 2015, the Tomato had a net operating income of $195,893 and $441,568, respectively, as compared with a net operating income of $87,479 and $185,735 for the three and six months ended June 30, 2014, respectively, an increase in bottom line results for the six months year-over-year of $255,833 or 138%. With the legalization of marijuana in Colorado, the Tomato has been able to meet growing demands for indoor hydroponic and cultivation supplies. Larger grow facilities and operations are coming online, and the Tomato has an established reputation for being able to fill large orders at competitive costs, while giving expert advice. The Tomato has also been reaping the benefits of the synergies created by the Tomato-Monarch acquisition, as Monarch connects the Tomato to large customers across the country and fulfills large supply orders through the Tomato—connections and customers that the Tomato did not previously have. 6

~~Liquidity~~Critical ~~and~~Accounting ~~Capital Resources~~Policies

AsOur financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of ~~June~~financial ~~30,~~statements ~~2015,~~in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the ~~Company~~reported ~~had~~amounts ~~$177~~of assets and liabilities,~~146~~ the disclosure of ~~cash~~contingent assets and ~~total~~ liabilities at the date of ~~$4,246,885~~the financial statements and the reported amounts of revenues and expenses during the reporting periods.

~~Monarch~~We ~~has~~regularly ~~closed~~evaluate ~~its~~the ~~line~~accounting policies and estimates that we use to prepare our financial statements. A complete summary of ~~credit~~these ~~with~~policies ~~Steve~~is ~~Brandt,~~included ain ~~related~~the ~~party~~notes to ~~Monarch~~our financial statements. In general, ~~and~~management's estimates are based on ~~August~~historical 4experience, ~~2015,~~on ~~Mr.~~information ~~Brandt~~from third party professionals, ~~settled~~and ~~his~~on ~~note~~various ~~early~~other byassumptions ~~repaying~~that inare ~~full~~believed ~~principal~~to ~~outstanding~~be ~~plus~~reasonable ~~accrued~~under ~~interest~~the ~~for~~facts aand ~~total~~circumstances. ofActual ~~$28,243~~results could differ from those estimates made by management.

~~Beginning~~Revenue January 1, 2015, the Company entered into a management contract with Green Sky, Inc., a company wholly-owned by Steve Brandt, to build-out a warehouse located in Denver, Colorado for cultivation purposes. Green Sky entered into a lease agreement with the lessor of the warehouse, through which, Monarch agreed to assume responsibility of the rent from January 2015 through August 2015, during the build-out phase of the agreement. However, the Custer warehouse lessor had performance obligations to deliver a cultivation license to Green Sky which have not been met, so neither Green Sky nor Monarch America have paid rent from June 2015 on, unless and until the issue is remediated or an alternative solution is found. Monarch and Green Sky are working with other parties to seek out other opportunities for the space. Although the management contract that Monarch has entered into with Green Sky has provided for Green Sky to make payments to Monarch, currently, it is unlikely that Monarch will be able to collect any management fees from Green Sky. Monarch has determined subsequent to June 30, 2015 that its Leasehold Improvements at the Custer warehouse qualify as held for sale. Recognition

24The Tomato derives the majority of its revenue from the sale of hydroponic and indoor garden supplies at its retail store, in which the products are delivered to the customer immediately. The Tomato also has an online store, but there are minimal e-commerce sales. Monarch is primarily in the business of providing management and consulting services, along with retail sales of its own branded indoor gardening supplies. Monarch has not yet earned revenue in relation to its management and consulting services, and any retail sales are due upon delivery and have been paid in full. The Company recognizes revenue, net of sales tax, when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured which is typically when the customer takes possession of the merchandise at the point of sale, or if from the online store, when title transfers upon shipment from the Company's warehouse. The Company is not in the practice of taking cash payments in advance from customers for inventory yet to be exchanged, but in such an event, the Company would recognize the amount received as deferred revenue until the sale or service is complete.

~~The~~Goodwill ~~Tomato has continued its profitable trend of 2014 by showing a continued surplus into 2015. However, in order to maintain its operations~~ and ~~its~~Intangible ability to manage its supply chain and distribution channels, the Tomato must have adequate working capital so as to have the financial flexibility to fulfill inventory orders by its customers. The profitability of the Tomato may not be sufficient to support the capital burn or operations of Monarch in the future. Assets

~~Management~~The ~~estimates~~Company ~~that~~accounts ~~Monarch~~for ~~will~~goodwill ~~need~~and ~~approximately~~intangible ~~$2,540,000~~assets ~~for~~in ~~the~~accordance ~~next~~with 12ASC ~~months~~350 of"Intangibles-Goodwill ~~operations,~~and ~~which~~Other" ~~includes~~("ASC ~~$1,000,000~~350"). toASC ~~pay~~350 ~~the~~requires ~~sellers~~that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the ~~sale~~fair value of ~~The~~an ~~Big~~asset ~~Tomato.~~has ~~Quarterly~~decreased ~~interest~~below ~~payments~~its ~~are~~carrying ~~due~~value. toIn ~~Glamis~~addition, ~~Capital~~ASC ~~commencing~~350 ~~August~~requires ~~15,~~that ~~2015~~goodwill ~~with~~be tested for impairment at the ~~outstanding~~reporting ~~principal~~unit oflevel ~~about~~(operating ~~$1,150,000~~segment ~~and~~or ~~all~~one ~~accrued~~level ~~interest~~below ~~due~~an nooperating ~~later~~segment) ~~than~~on ~~January~~an ~~30,~~annual ~~2016.~~basis ~~The~~and ~~Company~~between ~~also~~annual ~~owes~~tests ~~the~~when ~~former~~circumstances ~~owners~~indicate that the recoverability of the ~~Tomato~~carrying ~~$1,700,000~~amount inof ~~cash~~goodwill ~~consideration,~~may ~~due~~be ~~quarterly,~~in asdoubt. Application of the ~~date~~goodwill impairment test requires judgment, including the identification of ~~this~~reporting ~~filing.~~units; ~~The~~assigning ~~Company~~assets ~~does~~and ~~not~~liabilities ~~have~~to ~~sufficient~~reporting ~~cash~~units, assigning goodwill to ~~fund~~reporting ~~its~~units, ~~expenses~~and ~~over~~determining the ~~next~~fair ~~twelve months~~value. ~~There~~Significant ~~can~~judgments berequired noto ~~assurance~~estimate ~~that~~the ~~additional~~fair ~~capital~~value ~~will~~of bereporting ~~available~~units toinclude ~~the~~estimating ~~Company~~future cash flows, determining appropriate discount rates and other assumptions. IfChanges in these estimates and assumptions or the ~~Company~~occurrence ~~fails~~of toone ~~raise~~or ~~adequate~~more ~~capital,~~confirming ~~its~~events ~~inability~~in tofuture ~~raise~~periods ~~funds~~could ~~for~~cause the ~~above~~actual ~~purposes~~results ~~will~~or ~~have~~outcomes ato ~~severe~~materially ~~negative~~differ ~~impact~~from onsuch ~~its~~estimates ~~ability~~and tocould ~~remain~~also aaffect ~~viable~~the ~~company~~determination of fair value and/or goodwill impairment at future reporting dates.

~~To date, the Company has received cash proceeds from Redwood Management LLC funding the Debenture (described above in Corporate History~~Stock-based Monarch America, Inc.), resulting in $450,000 of principal outstanding, which will have to be repaid and is due in full on April 29, 2016. There is no assurance that the Company will receive any further funding from Redwood outside of the terms of the agreement.Compensation

~~Effective~~The ~~August~~Company 1,accounts ~~2015,~~for ~~Monarch~~the ~~executed~~grant aof ~~management~~stock ~~and~~awards ~~consulting~~in ~~agreement~~accordance with ~~Mary~~ASC ~~JaneCo~~718, ~~LLC,~~"Compensation-Stock inCompensation." ~~which~~ASC ~~Monarch~~718 ~~will~~requires ~~provide~~companies ~~advisory~~to ~~and~~recognize ~~consulting~~in ~~services~~the ~~related~~statement toof operations the ~~cultivation,~~grant-date ~~CO2~~fair ~~extraction~~value ~~and~~of ~~cultivation~~stock ~~facility~~based ~~design,~~compensation. ~~and~~Pursuant ~~construction~~to ~~management~~ASC Topic 505-50 for ~~Mary~~share-based ~~JaneCo’s~~payments ~~facility~~to inconsultants ~~Auburn~~and other third-parties, ~~Washington~~compensation expense is determined at the "measurement date." The ~~terms~~expense is recognized over the vesting period of ~~this~~the ~~agreement~~award. ~~require~~Until ~~Mary~~the ~~JaneCo~~measurement todate ~~pay~~is ~~Monarch~~reached, anthe ~~hourly~~total ~~fee~~amount ~~for~~of ~~services~~compensation ~~rendered~~expense byremains ~~Monarch~~uncertain. ~~personnel~~The ~~along~~Company ~~with~~records acompensation ~~surcharge~~expense based on the ~~cost~~fair value of the ~~build~~award at the reporting date. The awards to consultants and other third-~~out~~parties ofare then revalued, or the ~~facility~~total compensation is recalculated, based on the then current fair value, at each subsequent reporting date.

On June 24, 2015, Monarch entered into a five-year consulting agreement with FSST Pharms, LLC of the Flandreau Santee Sioux Tribe for the management of the build-out of a 10,000 square foot warehouse in South Dakota and the oversight of the growth of marijuana for the five years. In conjunction with this agreement, Monarch will receive a percentage of net monthly proceeds resulting from the cannabis cultivation at the Flandreau facility. However, there is uncertainty as to what this amount may be.7

~~The~~Derivative ~~Mary~~Financial JaneCo and FSST Pharms contracts are models for the types of relationships Monarch would like to build with other cannabis-growing entities. The closing of these two deals will help provide Monarch with liquidity it needs to meet the capital requirements of its short-term and operational capital needs. There is uncertainty as to the extent of the profits that these arrangements will yield, so Monarch is continuing to pursue other consulting and management agreements with other parties across the nation.Instruments

~~Monarch~~The ~~also~~Company ~~has~~evaluates ~~issued~~its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and ~~outstanding~~is ~~promissory~~then ~~notes~~revalued at each reporting date, with changes in the ~~aggregate~~fair ~~principal~~value ~~amount~~reported in the statements of $1operations. For stock-based derivative financial instruments,~~400,000~~ ~~due~~in accordance with ASC 815-15 "Derivative and ~~payable~~Hedging" inthe ~~full~~Company valued the derivative instruments at inception and on ~~January~~subsequent ~~30,~~valuation ~~2016~~dates. ~~Monarch’s~~The ~~ability~~classification toof ~~continue~~derivative instruments, including whether such instruments should be recorded as aliabilities ~~going~~or ~~concern~~as equity, is ~~dependent~~evaluated onat ~~management’s~~the ~~ability~~end toof ~~raise~~each ~~additional~~reporting ~~capital,~~period. Derivative instrument liabilities are classified in the balance sheet as current or ~~renegotiate~~noncurrent ~~terms~~based ofon ~~repayment,~~whether ~~despite~~or not net-cash settlement of the ~~profits~~derivative ~~shown~~instrument bycould ~~The~~be ~~Big~~required ~~Tomato~~within 12 months of the balance sheet date.

The ~~financial~~Company ~~statements~~categorizes ~~included~~its fair value estimates in ~~this~~accordance ~~Report~~with doASC ~~not~~820 ~~include~~based ~~any~~on ~~adjustments~~the ~~that~~hierarchical ~~may~~framework beassociated ~~necessary~~with ifthe wethree ~~are~~levels ~~unable~~of toprice ~~continue~~transparency utilized in measuring financial instruments at fair value as adiscussed ~~going~~above. ~~concern~~As at September 30, 2015, the Company had $921,139 of derivative liability.

~~Going~~Financial ~~Concern~~ Instruments

AsASC of825 ~~June~~defines ~~30,~~fair ~~2015,~~value as the ~~Company~~price ~~has~~that awould ~~working~~be ~~capital~~received ~~deficit~~from ofselling ~~$2,843,246,~~an ~~and~~asset ~~has~~or paid to transfer a liability in an ~~accumulated~~orderly ~~deficit~~transaction ofbetween ~~$2,267,943~~market participants at the measurement date. ~~The~~In ~~continuation~~determining offair ~~the~~value ~~Company~~for asassets aand ~~going~~liabilities ~~concern~~required isor ~~dependent~~permitted ~~upon~~to be recorded at fair value, the ~~continued~~Company ~~financial~~considers ~~support~~the ~~from~~principal ~~its~~or ~~management,~~most advantageous market in which it would transact and ~~its~~it ~~ability~~considers toassumptions ~~identify~~that ~~future~~market ~~investment~~participants ~~opportunities~~would ~~and~~use ~~obtain~~when pricing the ~~necessary~~asset ~~debt~~ or ~~equity~~liability. ~~financing,~~Fair ~~and~~value ~~generating~~is ~~profitable~~the ~~operations~~amount that would be received from the ~~Company’s~~sale ~~future~~of ~~operations.~~an ~~These~~asset ~~factors~~or ~~raise~~paid ~~substantial~~for ~~doubt~~the ~~regarding~~transfer of a liability in an orderly transaction between market participants. A liability is quantified at the ~~Company’s~~price ~~ability~~it would take to ~~continue~~transfer asthe liability to a ~~going~~new ~~concern~~obligor, not at the amount that would be paid to settle the liability with the creditor.

~~The~~Fair ~~repositioning~~Value ofHierarchy Lingas Resources into what is now Monarch America has required substantial capital throughout fiscal year 2014 and into 2015 in order to ramp up operations and change the Company’s industry from rare earth mining and discovery to marijuana cultivation. The transition has been made further difficult by governmental red tape and bureaucracy, demonstrated by Monarch’s consulting client at the Custer warehouse, Green Sky, being unable to obtain a license to grow cannabis at the facility, which has led to Monarch not being able to collect management and consulting fees from Green Sky, as no cannabis has been cultivated.

25ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 establishes three levels of inputs that may be used to measure fair value.

~~Off-Balance~~Level ~~Sheet Arrangements~~ 1

WeLevel ~~have~~1 noapplies ~~off-balance~~to ~~sheet~~assets ~~arrangements~~and liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment.

~~Critical~~Level ~~Accounting~~2 ~~Policies~~

~~Our~~Level ~~financial~~2 ~~statements~~applies ~~and~~to ~~accompanying~~assets ~~notes~~and ~~have~~liabilities ~~been~~for ~~prepared~~which inthere ~~accordance~~are ~~with~~other ~~United~~than ~~States~~Level ~~generally~~1 ~~accepted~~observable ~~accounting~~inputs ~~principles~~such ~~applied~~as onquoted aprices ~~consistent~~for ~~basis.~~similar ~~The~~assets ~~preparation~~or ofliabilities ~~financial statements~~ in ~~conformity~~active ~~with~~markets, ~~U.S.~~quoted ~~generally~~prices ~~accepted~~for ~~accounting~~identical ~~principles~~assets ~~requires~~or ~~management~~liabilities toin ~~make~~markets ~~estimates~~with ~~and~~insufficient ~~assumptions~~volume ~~that~~or ~~affect~~infrequent ~~the~~transactions ~~reported~~(less ~~amounts~~active ~~of assets and liabilities~~markets), ~~the~~or ~~disclosure~~model-derived ofvaluations ~~contingent~~in ~~assets~~which ~~and~~significant ~~liabilities~~inputs atare ~~the~~observable ~~date~~or ofcan ~~the~~be ~~financial~~derived ~~statements~~principally ~~and~~from, ~~the~~or ~~reported~~corroborated ~~amounts~~by, ofobservable ~~revenues~~market ~~and expenses during the reporting periods~~data.

WeLevel ~~regularly~~2 ~~evaluate~~instruments ~~the~~require ~~accounting~~more ~~policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general,~~ management's ~~estimates~~judgment ~~are based on historical experience, on information from third party professionals,~~ and onsubjectivity ~~various~~as ~~other~~compared ~~assumptions that are believed~~ to beLevel ~~reasonable~~1 ~~under the facts and circumstances~~instruments. ~~Actual~~For ~~results~~instance: ~~could differ from those estimates made by management.~~

~~Revenue~~Determining ~~Recognition~~ which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and Determining whether a market is considered active requires management judgment.

~~The~~Level ~~Tomato~~3 derives the majority of its revenue from the sale of hydroponic and indoor garden supplies at its retail store, in which the products are delivered to the customer immediately. The Tomato also has an online store, but there are minimal e-commerce sales. Monarch is primarily in the business of providing management and consulting services, along with retail sales of its own branded indoor gardening supplies. Monarch has not yet earned revenue in relation to its management and consulting services, and any retail sales are due upon delivery and have been paid in full. The Company recognizes revenue, net of sales tax, when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured which is typically when the customer takes possession of the merchandise at the point of sale, or if from the online store, when title transfers upon shipment from the Company’s warehouse. The Company is not in the practice of taking cash payments in advance from customers for inventory yet to be exchanged, but in such an event, the Company would recognize the amount received as deferred revenue until the sale or service is complete.

~~Goodwill~~Level 3 applies to assets and ~~Intangible~~liabilities ~~Assets~~ for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity.

26An asset's or liability's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

~~Stock~~All financial liabilities that are measured at fair value have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, inventory, note receivable, accounts payable and accrued liabilities, amounts due to related parties and notes and loans payable. The fair value of the Company's convertible note payable is estimated based ~~Compensation~~on current rates that would be available for debt of similar terms which is not significantly different from its stated value.

The ~~Company~~following ~~accounts~~table ~~for~~presents the ~~grant~~derivative offinancial ~~stock awards in accordance with ASC 718~~instruments, ~~“Compensation-Stock Compensation.” ASC 718 requires companies to recognize in~~ the ~~statement~~Company's ofonly ~~operations~~financial ~~the~~liabilities ~~grant-date~~measured ~~fair value of stock based compensation. Pursuant to ASC Topic 505-50 for share-based payments to consultants~~ and ~~other~~recorded ~~third-parties, compensation expense is determined~~ at ~~the~~fair ~~“measurement~~value ~~date.”~~on ~~The expense is recognized over~~ the ~~vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The~~ Company's ~~records~~consolidated ~~compensation~~balance ~~expense~~sheets ~~based~~ on ~~the~~a ~~fair~~recurring ~~value~~basis, ~~of the award at the reporting date. The awards to consultants~~ and ~~other~~their ~~third-parties~~level ~~are~~within ~~then revalued, or~~ the ~~total compensation is recalculated, based on the then current~~ fair value, athierarchy ~~each~~as ~~subsequent~~of ~~reporting~~September ~~date.~~ 30, 2015:

Derivative Financial Instruments

September 30, 2015
	Amount		Level 1		Level 2		Level 3

Embedded conversion derivative liabilities	$	921,139	$	–	$	–	$	921,139

Total	$	921,139	$	–	$	–	$	921,139

~~The~~Fair ~~Company~~value ~~evaluates~~estimates ~~its financial instruments to determine if such instruments~~ are ~~derivatives~~made orat ~~contain~~a ~~features~~specific ~~that~~point ~~qualify~~in ~~as embedded derivatives. For derivative financial instruments that are accounted for as liabilities~~time, ~~the~~based ~~derivative~~on ~~instrument~~relevant ismarket ~~initially~~information ~~recorded at its fair value~~ and isinformation ~~then~~about ~~revalued at each reporting date, with changes in~~ the ~~fair~~financial ~~value reported in the statements of operations~~statement. ~~For~~These ~~stock-based~~estimates ~~derivative~~are ~~financial~~subjective ~~instruments,~~ in ~~accordance~~nature ~~with ASC 815-15 “Derivative~~ and ~~Hedging”~~involve ~~the~~uncertainties ~~Company valued the derivative instruments at inception~~ and onmatters ~~subsequent valuation dates. The classification~~ of ~~derivative~~significant ~~instruments,~~judgment ~~including~~and ~~whether~~therefore ~~such~~cannot ~~instruments should~~ be ~~recorded~~determined aswith ~~liabilities or as equity, is evaluated at the end of each reporting period~~precision. ~~Derivative~~Changes ~~instrument liabilities are classified~~ in ~~the~~assumptions ~~balance~~could ~~sheet~~significantly asaffect ~~current or noncurrent based on whether or not net-cash settlement of~~ the ~~derivative~~estimates. ~~instrument~~See ~~could~~Note be9 ~~required~~for ~~within~~additional ~~12 months of the balance sheet date~~information.

~~The~~Recently ~~Company~~Adopted ~~categorizes~~Accounting its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at June 30, 2015, the Company had $457,829 of derivative liability. Policy

~~Financial~~During ~~Instruments~~ the nine months ended September 30, 2015, the Company adopted guidance codified in ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs. The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense using the effective interest method pursuant to ASC 835-30-35-2 through 35-3. The Company elected to early adopt the requirements of ASU 2015-03 effective during the nine months ended September 30, 2015 and has applied this guidance retrospectively to all prior periods presented in the Company's financial statements.

~~ASC~~The ~~825~~reclassification ~~defines~~does ~~fair~~not ~~value~~impact asnet ~~the~~income ~~price~~(loss) ~~that~~as ~~would~~previously bereported ~~received from selling an asset~~ or ~~paid~~any toprior ~~transfer~~amounts areported ~~liability~~on ~~in an orderly transaction between market participants at~~ the ~~measurement~~Consolidated ~~date.~~Balance ~~In determining fair value for assets and liabilities required or permitted to be recorded at fair value~~Sheets, ~~the~~Consolidated ~~Company~~Statements ~~considers~~of ~~the~~Operations ~~principal~~ or ~~most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing~~ the ~~asset~~Consolidated orStatements ~~liability. Fair value is the amount that would be received from the sale~~ of anCash ~~asset or paid for the transfer of a liability in an orderly transaction between market participants~~Flows. ~~A liability is quantified at the price it would take to transfer the liability to a new obligor, not at the amount that would be paid to settle the liability with the creditor.~~

~~Fair Value Hierarchy~~ Inventories

~~ASC~~Inventories ~~825~~are ~~establishes~~stated aat ~~fair~~the ~~value~~lower ~~hierarchy~~of ~~that~~cost ~~requires~~or anmarket. ~~entity~~Cost tois ~~maximize~~determined ~~the~~on ~~use~~average ofcost ~~observable~~basis. ~~inputs~~Market ~~and~~is ~~minimize~~determined ~~the~~based ~~use~~on ofnet ~~unobservable~~realizable ~~inputs when measuring fair~~ value. AAppropriate ~~financial~~consideration ~~instrument's~~is ~~categorization~~given ~~within~~to ~~the~~obsolescence, ~~fair~~excessive ~~value~~levels, ~~hierarchy~~deterioration, isand ~~based~~other ~~upon~~factors ~~the~~in ~~lowest~~evaluating ~~level~~net ofrealizable ~~input~~value. ~~that~~Periodic isinventory ~~significant~~counts toare ~~the~~performed ~~fair~~in ~~value~~order ~~measurement.~~to ~~ASC~~reconcile ~~825~~physically ~~establishes~~present ~~three~~inventory ~~levels~~at ofthe ~~inputs~~warehouse ~~that~~and ~~may~~retail bestore ~~used~~ to ~~measure~~the ~~fair~~inventory ~~value~~listing.

~~Level 1~~ Depreciation

~~Level~~Equipment 1is ~~applies~~stated toat ~~assets~~cost and ~~liabilities~~is ~~for~~depreciated ~~which there are quoted prices in active markets for identical assets or liabilities. Valuations are based~~ on ~~quoted~~a ~~prices~~straight-line ~~that~~basis ~~are~~over ~~readily~~its ~~and~~estimated ~~regularly~~useful ~~available~~life, inas ~~an active market and do not entail a significant degree of judgment.~~ follows:

~~Level~~ Furniture 2and equipment 5 years Leasehold improvements 3 years Software and website 3 years Vehicles 7 years

~~Level~~Property ~~2 instruments require more management judgment~~ and ~~subjectivity~~equipment asis ~~compared~~presented tonet ~~Level~~of 1accumulated ~~instruments~~depreciation. ~~For instance:~~

27Use of Estimates

~~Determining~~The ~~which~~preparation ~~instruments~~of ~~are~~consolidated ~~most~~financial ~~similar~~statements toin ~~the~~accordance ~~instrument~~with ~~being~~accounting ~~priced~~principles generally accepted in the United States requires management to ~~identify~~make aestimates ~~sample~~and assumptions that affect the reported amounts of ~~similar~~assets ~~securities~~and ~~based~~liabilities onat the ~~coupon~~date ~~rates~~of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of intangible assets, ~~maturity~~stock-based compensation, ~~issuer~~and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, ~~credit~~historical ~~rating~~experience and ~~instrument~~various ~~type~~other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and ~~subjectively~~liabilities ~~select~~and anthe ~~individual~~accrual ~~security~~of orcosts ~~multiple~~and ~~securities~~expenses that are ~~deemed~~not ~~most~~readily ~~similar~~apparent tofrom other sources. The actual results experienced by the ~~security~~Company ~~being~~may ~~priced;~~differ materially and ~~Determining~~adversely ~~whether~~from athe ~~market~~Company's isestimates. ~~considered~~To ~~active~~the ~~requires~~extent ~~management~~there ~~judgment~~are material differences between the estimates and the actual results, future results of operations will be affected.

~~Level~~Recently 3 Issued Accounting Pronouncements

~~Level~~The 3Company ~~applies~~has toimplemented ~~assets~~all ~~and~~new ~~liabilities~~accounting ~~for~~pronouncements ~~which~~that ~~there~~ are ~~unobservable~~in ~~inputs~~effect. toThese ~~the~~pronouncements ~~valuation~~did ~~methodology~~not ~~that~~have ~~are~~any ~~significant~~material toimpact ~~the~~on ~~measurement~~its offinancial ~~the~~statements ~~fair~~unless ~~value~~otherwise ofdisclosed, and the ~~assets~~Company ordoes ~~liabilities.~~not ~~The~~believe ~~determination~~that ofthere ~~fair~~are ~~value~~new ~~for~~accounting ~~Level~~pronouncements 3that ~~instruments~~have ~~requires~~been ~~the~~issued ~~most~~that ~~management~~may ~~judgment~~have ~~and~~a ~~subjectivity~~material impact on its financial position or results of operations.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

All financial liabilities that are measured at fair value have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, inventory, note receivable, accounts payable and accrued liabilities, amounts due to related parties and notes and loans payable. The fair value of the Company’s convertible note payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.

June 30, 2015
	Amount		Level 1		Level 2		Level 3
Embedded conversion derivative liabilities	$	457,829	$	–	$	–	$	457,829
Total	$	457,829	$	–	$	–	$	457,829

Recently Adopted Accounting Policy

During the six months ended June 30, 2015, the Company adopted guidance codified in ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs. The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense using the effective interest method pursuant to ASC 835-30-35-2 through 35-3. The Company elected to early adopt the requirements of ASU 2015-03 effective during the six months ended June 30, 2015 and has applied this guidance retrospectively to all prior periods presented in the Company's financial statements.

The reclassification does not impact net income (loss) as previously reported or any prior amounts reported on the Consolidated Balance Sheets, Consolidated Statements of Operations or the Consolidated Statements of Cash Flows.

Inventories

Depreciation

Equipment is stated at cost and is depreciated on a straight-line basis over its estimated useful life, as follows:

Furniture and equipment	5 years
Leasehold improvements	3 years
Software and website	3 years
Vehicles	7 years

Property and equipment is presented net of accumulated depreciation.

Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of intangible assets, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on its financial statements unless otherwise disclosed, and the Company does not believe that there are new accounting pronouncements that have been issued that may have a material impact on its financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “"smaller reporting company”", we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, who is also our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of ~~June~~ September 30, 2015. Based upon such evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective, as of ~~June~~September 30, 2015, to provide assurance that information that is required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified by the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive, principal operating and principal financial officers, or persons performing similar functions, and effected by the Company’s 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 accounting principles generally accepted in the United States of America. 10

~~The~~Management of the Company’s is responsible for establishing and maintaining adequate internal control over financial reporting. ~~includes~~As ~~those~~defined ~~policies~~in ~~and~~Rules ~~procedures that~~ 13a-15(1f) ~~pertain~~under to the ~~maintenance~~Securities Exchange Act of ~~records~~1934, ~~that,~~internal incontrol ~~reasonable~~over ~~detail,~~financial ~~accurately~~reporting ~~and~~is ~~fairly~~a ~~reflect~~process ~~the~~designed ~~transactions~~by, ~~and~~or ~~dispositions~~under the supervision of, the Company’'s ~~assets;~~principal ~~(2)~~executive, ~~provide~~principal ~~reasonable~~operating ~~assurance~~and ~~that~~principal ~~transactions are recorded as necessary to permit preparation of~~ financial ~~statements~~officers, inor ~~accordance~~persons ~~with~~performing ~~generally~~similar ~~accepted accounting principles~~functions, and ~~that~~effected ~~receipts~~by ~~and expenditures of~~ the Company's ~~are~~board ~~being made only in accordance with authorizations~~ of ~~the~~directors, ~~Company’s~~ management and ~~directors;~~other ~~and~~personnel, ~~(3)~~to provide reasonable assurance regarding ~~prevention~~the orreliability ~~timely detection~~ of ~~unauthorized~~financial ~~acquisition,~~reporting ~~use~~and orthe ~~disposition~~preparation of ~~the~~financial ~~Company’s~~statements ~~assets~~for ~~that~~external ~~could~~purposes ~~have~~in aaccordance ~~material~~with ~~effect~~accounting onprinciples generally accepted in the ~~financial~~United ~~statements~~States of America.

~~Our~~The Company's internal ~~controls~~control ~~were~~over ~~not~~financial ~~effective~~reporting asincludes those policies and procedures that (1) pertain to the maintenance of ~~June~~records, 30that, ~~2015~~in ~~for~~reasonable ~~the~~detail, ~~following~~accurately ~~reasons:~~and ~~Given~~fairly reflect the ~~limited~~transactions ~~number~~and dispositions of ~~personnel~~the ~~responsible~~Company's ~~for~~assets; ~~accounting~~(2) ~~for~~provide ~~and~~reasonable ~~managing~~assurance ~~transaction~~that ~~and~~transactions ~~funds~~are recorded as necessary to permit preparation of financial statements in ~~the~~accordance ~~company~~with generally accepted accounting principles, ~~there~~and isthat anreceipts ~~inherent~~and ~~limitation~~expenditures toof the Company’s ~~ability~~are tobeing ~~establish~~made ~~segregation~~only ofin ~~duties.~~accordance ~~Moreover,~~with authorizations of the Company's ~~has~~management aand ~~limited~~directors; ~~number~~and of(3) ~~qualified~~provide ~~accounting~~reasonable ~~personnel~~assurance ~~involved~~regarding inprevention ~~the~~or ~~maintenance~~timely detection of ~~accounting~~unauthorized ~~records~~acquisition, ~~and~~use or disposition of the Company's ~~has~~assets ~~been~~that ~~unable~~could tohave ~~maintain~~a ~~adequate~~material ~~control~~effect ~~activities~~on orthe ~~monitoring~~financial ~~processes~~statements.

Our internal controls were not effective as of September 30, 2015 for the following reasons: Given the limited number of personnel responsible for accounting for and managing transaction and funds in the company, there is an inherent limitation to the Company's ability to establish segregation of duties. Moreover, the Company has a limited number of qualified accounting personnel involved in the maintenance of accounting records and the Company has been unable to maintain adequate control activities or monitoring processes.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’'s property is not the subject of any pending legal proceedings.

Item 1A. Risk Factors

As a “"smaller reporting company”", we are not required to provide the information required by this item.

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

Recent sales of unregistered securities

On ~~July~~October 2722, 2015, the Company issued 50133,~~000~~333 shares of ~~common stock with a fair value of $3,500 for products to sell at~~ the ~~Big~~Company's ~~Tomato, and 600,000 shares of~~ common stock ~~with~~to a ~~fair~~Contractor ~~value~~in ofconsideration ~~$42,000~~for toIT ~~employees~~services ~~at the Tomato as a retention bonus~~performed. This issuance was conducted in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

On August 24, 2015, the Company issued 125,000 shares of the Company's common stock to a Contractor in consideration for services performed. This issuance was conducted in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

The Company needs to formally issue 476,920 shares of its common stock to Robert Shepherd pursuant to the terms of a letter agreement with such individual year to date. This issuance will be conducted in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

The Company needs to formally issue 1,000,000 shares of its common stock to Shaun Snowden pursuant to the terms of the employment agreement with such individual for his sign on as CFO of the Company. This issuance will be conducted in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

The Company needs to formally issue 50,000 shares of its series B preferred stock to FSST Pharms pursuant to the terms of the consulting and management agreement associated with the build out of the cultivation facility in South Dakota. This issuance will be conducted in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

As consideration for the deferral of the June 30, 2015 payment of the Note Payable to the former owners of The Big Tomato, Messrs. Stout and Field were each was issued 1,562,500 shares of the Company's common stock. This issuance was conducted in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

Purchases of equity securities by the issuer and affiliated purchasers.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.		Description
31		Rule 13a-14(a)/15d-14(a) Certifications*
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
32		Section 1350 Certifications*
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1		Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~__________~~ 13

*Filed herewith

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.

	MONARCH AMERICA, INC.
Date: August 17, 2015	By:	/s/ Eric Hagen
Date: November 16, 2015	By:	/s/ Eric Hagen
		Eric Hagen President and Chief Executive Officer (Principal Executive Officer)
		Eric Hagen
	By:	/s/ Jonathan Hunt
		President and Chief Executive Officer(Principal Executive Officer)
		Jonathan Hunt Vice-President, Treasurer and Secretary (Principal Financial and Account Officer)
	By:	/s/ Shaun Snowden
		Shaun Snowden
		Treasurer(Principal Financial and Accounting Officer)

3314

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