Monster Beverage (MNST) 10-K risk factor changes: FY2014 vs FY2013

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial [removed: also] may [added: also] materially adversely affect our business, financial condition and/or operating results.

For a discussion of certain of such legislation, see “Part I, Item 1 [removed: –] [added: —] Business [removed: –] [added: —] Government Regulation.” Furthermore, additional legislation may be introduced in the United States and other countries at the federal, state, local and municipal level in respect of each of the foregoing subject areas.

To the extent any such legislation is enacted in one or more jurisdictions where a significant amount of our products are sold individually or in the aggregate, it could result in a reduction in demand for [added: or availability of] our energy drinks and adversely affect our business, financial condition and results of operations.

[removed: We] [added: In addition, additional product liability lawsuits] have [removed: also] [added: since] been [removed: named as a defendant in certain other complaints] [added: filed against us,] containing similar allegations to those presented in the Fournier lawsuit, each of which we believe is also without merit and would not have a material adverse effect on our financial position or results of operations in the event any damages were awarded.

We believe [removed: that] the [removed: softness in the] overall [added: growth of the] energy drink market in the U.S. [removed: that has been experienced] may [removed: be due in part to] [added: have been negatively impacted by] the ongoing negative publicity and comments that continue to appear in the media questioning the safety of energy drinks, and suggesting limitations on their ingredients (including caffeine) and/or the levels thereof and/or imposing minimum age restrictions for consumers.

Our products compete with a wide range of drinks produced by a relatively large number of manufacturers, [removed: many] [added: some] of which have substantially greater financial, marketing and distribution resources than we do.

Our products compete with all liquid refreshments and in [removed: many] [added: some] cases with products of much larger and substantially better financed competitors, including the products of numerous nationally and internationally known producers such as TCCC, PepsiCo, Red Bull Gmbh, the DPS Group, Kraft Foods Inc., Suntory [removed: Holding,] [added: Holdings,] Ltd., Nestle Beverage Company, Tree Top and Ocean Spray.

There can be no assurance that [removed: any of the recent] economic improvements will [added: occur, or that they would] be sustainable, or that they [removed: will] [added: would] enhance conditions in markets relevant to us.

In addition, we cannot predict the duration and severity of disruptions in any of our markets, or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any [added: developments or] crisis in European and other international markets.

If [removed: the improved] economic conditions [removed: are slower than anticipated or if conditions worsen,] [added: deteriorate,] our industry, business and results of operations could be materially and adversely affected.

Recently, concerns have emerged regarding diet sodas and in particular, aspartame, which we do not use in our [removed: products.][added: beverages.]

[added: The beverages we] currently market are in varying stages of their product lifecycles and there can be no assurance that such beverages will become or remain profitable for us.

We [removed: also] may [added: also] be unable to penetrate new markets.

Our gross sales to customers outside of the United States were approximately 23%, [removed: 22%] [added: 23%] and [removed: 20%] [added: 22%] of consolidated gross sales for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011,] [added: 2012,] respectively, and our growth strategy includes further expanding our international business.

We have not used instruments to hedge [removed: certain] [added: against all] foreign currency risks and are [added: therefore] not protected against [added: all] foreign currency fluctuations.

[added: Our DSD segment, which is comprised primarily of energy] drinks, represented [removed: 95.6%] [added: 96.1%] of net sales for the year ended December 31, [removed: 2013.][added: 2014.]

Historically, we have experienced substantial competition from new entrants in the energy drink category as well as from the [removed: more recently emerging] energy shot category.

Internationally, our energy drinks compete with Red Bull, Rockstar, Burn, V-Energy, Lucozade, Adrenaline Rush, Relentless and numerous local and private label brands that usually differ from country to country, such as [added: Play,] Power Play, Mother, Hell, Shock, Tiger, Boost, Speed, TNT, Shark, Hot 6, Shark Energy, Nalu, Battery, Bullit, Flash Up, Black, Non-Stop, Bomba, Semtex, Vive 100, Dark Dog, Speed, Guaraná, [removed: Ultra] [added: Ultra, Sting] and a host of other international brands.

In addition, there are limited alternative packing facilities in our domestic and international markets with adequate capacity and/or suitable equipment for many of our products, including our Monster Energy® brand energy drinks, our [removed: Worx Energy® energy shots, our] Peace Tea® product line, our Hansen’s® brand energy drinks, our aseptic juice products, our Hubert’s® Lemonades, our Muscle Monster® product line, our Java Monster® product line and certain of our other products.

The TCCC North American Bottlers, [removed: AB Distributors,] New [removed: CCE and] [added: CCE,] Coca-Cola Hellenic [added: and the AB Distributors] are our primary domestic and international distributors of our Monster Energy® products.

[removed: If] [added: As a result, if] we are unable to maintain good relationships with the TCCC North American Bottlers and/or [removed: the AB Distributors and/or] New CCE and/or Coca-Cola Hellenic, or if the TCCC North American Bottlers and/or [removed: AB Distributors and/or] New CCE and/or Coca-Cola Hellenic do not effectively focus on marketing, promoting, selling and distributing our products, sales of our Monster Energy® products could be adversely affected.

CCR accounted for approximately 29% [removed: and 28%] of our net sales for [added: both] the years ended December 31, [removed: 2013] [added: 2014] and [removed: 2012, respectively.][added: 2013.]

A decision by CCR, CCRC, New CCE, [removed: the AB Distributors,] Wal-Mart, Inc. (including Sam’s Club), Coca-Cola Hellenic, or any other large customer to decrease the amount purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and consolidated results of operations.

[removed: Increased frequency or duration of extreme weather conditions could] also impair production capabilities, disrupt our supply chain including, without limitation, the availability of, and/or result in higher prices for juice concentrates, natural flavors and dietary ingredients or impact demand for our products.

As a result, the effects of climate change could have a [added: long-term adverse impact on our business and results of operations.]

Our stock price is affected by a number of factors, including stockholder expectations, financial results, the introduction of new products by us and our competitors, general economic and market [removed: conditions] [added: conditions,] estimates and projections by the investment community and public comments by other parties as well as many other factors including litigation, many of which are beyond our control.

We may be unable to achieve analysts’ net revenue and/or earnings forecasts, which [removed: may be] [added: are] based on their own projected revenues, sales volumes and sales mix of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses.

During the fiscal year ended December 31, [removed: 2013,] [added: 2014,] our stock price high was [removed: $68.33] [added: $113.50] and our stock price low was [removed: $45.38.][added: $63.00.]

Furthermore, as of February [removed: 24, 2014,] [added: 17, 2015,] Mr. Sacks and Mr. Schlosberg together may be deemed to beneficially own and/or exercise voting control over approximately [removed: 13%] [added: 12%] of our outstanding common stock.

At December 31, [removed: 2013,] [added: 2014,] we had [removed: $211.3] [added: $370.3] million in cash and cash equivalents, [removed: $402.2] [added: $781.1] million in short-term investments and [removed: $9.8] [added: $42.9] million of long-term [removed: investments (comprised entirely of auction rate securities).][added: investments.]

We have historically invested these amounts in U.S. Treasury bills, certificates of deposit, commercial paper, government agencies and municipal securities (which may have an auction reset feature), [removed: corporate notes and bonds,] variable rate demand notes and money market funds meeting certain criteria.

Material legal proceedings are described more fully in “Part I, Item 3 – Legal Proceedings” and in “Part II, Item 8, Note [removed: 9”] [added: 10”] to our consolidated financial statements contained in this Form 10-K.

[removed: However,] given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to operational interruption, damage to our brand image and private data exposure.

[added: Moreover, if our data management systems, including our SAP enterprise resource planning system, do not effectively] collect, store, process and report relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies, cybersecurity attack, or human error, our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially.

_Following the TCCC Transaction, NewCo and TCCC will have extensive commercial arrangements and, as a result, NewCo’s future performance is expected to substantially depend on the success of its relationship with TCCC._

In connection with the TCCC Transaction, the amended distribution coordination agreements to be entered into with TCCC will provide for the transition of third parties’ rights to distribute the Company’s products in most territories in the U.S. to members of TCCC’s distribution network, which consists of owned or controlled bottlers/distributors and independent bottling/distribution partners.

On February 9, 2015 in accordance with its existing agreements with the applicable third-party distributors, the Company sent notices of termination to certain affected third-party distributors, including the majority of the AB Distributors in the U.S., providing for the termination of their respective distribution agreements, to be effective at various dates beginning in March 2015.

The associated distribution rights will be transferred to TCCC’s distribution network in each applicable territory as of the effective date of the termination of the applicable third party’s rights in such territory.

In addition, it is expected that TCCC will become our preferred distribution partner globally.

As a result, we will be reducing our distributor diversification and will be substantially dependent on TCCC’s international distribution platform.

Also in connection with the TCCC Transaction, TCCC will make a substantial equity investment in NewCo and has agreed, subject to certain exceptions, not to compete in the energy drink category.

While we believe that this will incentivize TCCC to take steps to assure that our products receive the appropriate attention in the TCCC distribution system, there can be no assurance of this as TCCC is a much larger company with many strategic priorities.

In addition, TCCC does not control all members of its distribution system, many of which are independent companies that make their own business decisions that may not always align with TCCC’s interests.

Moreover, it is also possible that we may fail to recognize the expected benefits of the new distribution arrangements regardless of TCCC’s priorities or the priorities of the members of TCCC’s distribution system.

In any such case, our operating results could suffer and the value of NewCo’s common shares could be adversely affected.

Under the terms of the TCCC Transaction, we have agreed, subject to certain exceptions, not to compete with TCCC in the non-energy drink category following the closing.

As a result, our sole focus will be in the energy drink category and our business will become more vulnerable to adverse changes impacting the energy drink category and business, which could adversely impact our business and the trading price of our common stock.

_The failure to transition the distribution of our products to TCCC’s distribution network in a timely manner could reduce and/or delay the expected benefits of the TCCC Transaction._

If the expected transition of the U.S. distribution rights to TCCC’s distribution network described above is not completed in a full, timely and/or efficient manner, the expected benefits of the new distribution arrangements could be reduced and/or delayed.

In this regard, we have been informed that approximately 64 AB Distributors are challenging our right to terminate their distribution agreements in accordance with the express terms of such distribution agreements.

We have filed separate arbitration demands against each of these parties seeking declarations of our rights, including our right to terminate the applicable distribution agreements in accordance with their terms.

We have also filed an action in the United States District Court, Central District of California, against these parties to enforce each of their respective obligations to arbitrate any disputes arising under such distribution agreements.

We believe the independent distributors’ allegations are without merit.

We expect to incur costs associated with transition of distribution which we currently estimate at $280.0 million.

The final amount of those costs could be different and such differences could be material.

In addition, under the TCCC Transaction Agreements, up to $625.0 million of the net $2.15 billion cash payment to be paid to us by TCCC will be held in escrow, subject to release upon achievement of milestones relating to the transition of distribution rights to TCCC’s distribution network.

A failure to meet those milestones would result in a decrease in, and/or delay of, the cash payment.

_Following the TCCC Transaction, TCCC will be a significant shareholder of NewCo and may have interests that are different from NewCo’s other shareholders (including current shareholders of the Company)._

In connection with the TCCC Transaction, each outstanding share of the Company’s common stock will be converted into one share of NewCo’s common stock.

Immediately following the consummation of the TCCC Transaction, TCCC will own NewCo common shares representing approximately 16.7% of the total number of NewCo’s outstanding common shares.

TCCC will also have the right to nominate two directors to the NewCo board of directors, subject to reduction in certain circumstances.

Following the completion of the TCCC Transaction, TCCC’s ownership could also have an effect on NewCo’s ability to engage in a change in control transaction.

TCCC will be obligated for a period of time to vote all of its NewCo common shares in excess of 20% of the outstanding NewCo common shares in the same proportion as all NewCo common shares not owned by TCCC with respect to a proposal for a NewCo change of control.

However, if TCCC were to oppose such a change in control transaction, a bidder would be required to secure the support of holders of 62.5% of NewCo’s common shares not owned by TCCC (assuming that TCCC increased its ownership from approximately 16.7% to 20% of NewCo’s common shares) to achieve a vote of a majority of NewCo’s outstanding shares for a change-in-control transaction.

In addition, assuming the completion of the TCCC Transaction, TCCC would have a bidding advantage if the NewCo board of directors were to seek to sell NewCo in the future because TCCC would not need to pay a control premium on the shares it owns at such time, including the shares it acquires in the TCCC Transaction.

TCCC and NewCo would also be permitted to terminate TCCC’s distribution coordination agreements with NewCo after a change in control of NewCo.

In such event, TCCC would receive a termination fee if TCCC terminated the distribution coordination agreements following a change in control of NewCo involving certain TCCC competitors, or if NewCo terminated following a change in control of NewCo, involving any third party.

The interests of TCCC may be different from or conflict with the interests of NewCo’s other shareholders (including current shareholders of the Company, who will receive NewCo common shares in the TCCC Transaction) and, as a result, TCCC’s influence may result in the delay or prevention of potential actions or transactions, including a potential change of management or control of NewCo, even if such action or transaction may be beneficial to NewCo’s other shareholders.

Moreover, TCCC’s ownership of a significant amount of NewCo’s outstanding common shares could result in downward pressure on the trading price of NewCo’s common shares if TCCC were to sell a large portion of its shares or as a result of the perception that such a sale might occur.

_The TCCC Transaction may not be completed or may be delayed, and even if the TCCC Transaction is successfully completed, the anticipated benefits to the Company’s stockholders may not be realized._

The completion of the TCCC Transaction is subject to certain customary conditions.

The Company or TCCC may be unable to satisfy the conditions required to complete the transaction, and there is no assurance that the TCCC Transaction will be completed on a timely basis or at all.

If the TCCC Transaction is not completed, we will nonetheless bear significant transaction costs.

In addition, the current market price of our stock may reflect an assumption that the TCCC Transaction will occur, and failure to complete the TCCC Transaction could result in a decline in our stock price.

In addition, another product liability lawsuit was filed against us in 2012, which we believe to be without merit and intend to vigorously defend.

In 2013, the global economy improved as compared to 2012, however uncertainty continues to exist as to the overall rate and stability of the recovery.

The beverages we

Our DSD segment, which is comprised primarily of energy

long-term adverse impact on our business and results of operations.

Moreover, if our data management systems, including our SAP enterprise resource planning system, do not effectively

[added: |] · [added: |] _Our Business_ – a general description of our business; the value drivers of our business; and opportunities and risks facing our Company; [added: |]

[added: |] · [added: |] _Results of Operations_ – an analysis of our consolidated results of operations for the three years presented in our financial statements; [added: |]

[added: |] · [added: |] _Sales_ – details of our sales measured on a quarterly basis in both dollars and cases; [added: |]

[added: |] · [added: |] _Inflation_ – information about the impact that inflation may or may not have on our results; [added: |]

[added: |] · [added: |] _Liquidity and Capital Resources_ – an analysis of our cash flows, sources and uses of cash and contractual obligations; [added: |]

[added: |] · [added: |] _Accounting Policies and Pronouncements_ – a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements; [added: |]

[added: |] · [added: |] _Forward-Looking Statements_ – cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company’s historical results or our current expectations or projections; and [added: |]

[added: |] · [added: |] _Market Risks_ – information about market risks and risk management. [added: (See “Forward-Looking Statements” and “Part II, Item 7A – Qualitative and Quantitative Disclosures About Market Risks”). |]

| · [added: |] Monster Energy® | [added: |] · [added: |] Hansen’s® |

| · [added: |] Monster Rehab® | [added: |] · [added: |] Hansen’s Natural Cane Soda® |

| · [added: |] Monster Energy Extra Strength Nitrous Technology® | [added: |] · [added: |] Junior Juice® |

| · [added: |] Java Monster® | [added: |] · [added: |] Blue Sky® |

| · [removed: X-Presso] [added: | Muscle] Monster® | [added: |] · [added: |] Hubert’s® |

| · [added: |] Muscle Monster® [added: Coffee] | [added: |] · [removed: Worx] [added: | Monster] Energy® [added: Unleaded] |

| · [added: |] Punch [removed: Monster™] [added: Monster®] | [added: |] · [added: |] Peace Tea® |

Our Monster Energy® drinks, which represented [removed: 92.5%, 92.3%] [added: 93.3%, 92.5%] and [removed: 91.2%] [added: 92.3%] of our net sales for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011,] [added: 2012,] respectively, [added: primarily] include the following:

| · [added: |] Monster Energy® | [added: |] · [added: |] Java Monster® Kona Blend |

| · [added: |] Lo-Carb Monster Energy® | [added: |] · [added: |] Java Monster® Loca Moca® |

| · [added: |] Monster Assault® | [added: |] · [added: |] Java Monster® Mean Bean® |

| · [removed: Monster] [added: | Juice Monster™] Khaos® | [added: |] · [added: |] Java Monster® Vanilla Light |

| · [removed: Monster M-80® (named] [added: | Juice Monster™] Ripper® [removed: in certain countries)] | [added: |] · [added: |] Java Monster® Irish Blend® |

| · [added: |] Monster Energy® Absolutely Zero | [added: |] · [added: |] Java Monster® [removed: Toffee] [added: Cappuccino] |

| · [added: · |] Monster Energy® Import [removed: Light ·] Punch [removed: Monster™] [added: Monster®] Baller’s Blend (formerly Dub Edition) | [added: |] · [added: |] Monster Energy Extra Strength Nitrous Technology® Super Dry™ |

| · [added: · |] Punch [removed: Monster™] [added: Monster®] Mad Dog (formerly Dub Edition) [removed: ·] Monster Rehab® Tea + Lemonade + Energy | [added: |] · [added: |] Monster Energy Extra Strength Nitrous Technology® Anti-Gravity® |

| · [removed: Monster Rehab® Protean + Energy ·] [added: |] Monster Rehab® Tea + Orangeade + Energy | [removed: · X-Presso Monster® Hammer] [added: |] · [removed: X-Presso Monster® Midnite] | [added: Monster Energy® Ultra Blue™ |]

| · [added: |] Monster Rehab® [added: Rojo] Tea + [removed: Pink Lemonade +] Energy | [added: |] · [added: |] Monster Cuba-Lima® |

| · [added: |] Muscle Monster® Vanilla | [added: |] · [added: |] Monster Energy® [removed: Zero] Ultra [added: Black™] |

| · [added: |] Muscle Monster® Chocolate | [added: |] · [added: |] Monster Energy® Ultra [removed: Blue] [added: Sunrise™] |

| · [removed: Muscle Monster® Coffee] | [added: Monster Rehab® Tea + Pink Lemonade + Energy | |] · [added: |] Monster Energy® Ultra [removed: Red] [added: Red™] |

| · [added: |] Muscle Monster® [removed: Strawberry] [added: Peanut Butter Cup] | [added: |] · [added: |] M3® Monster Energy® Super Concentrate |

| · [added: |] Muscle Monster® [removed: Peanut Butter Cup] [added: Strawberry] | [added: |] · [added: |] Übermonster® Energy [removed: Brew] [added: Brew™] |

We have two [added: operating and] reportable segments, namely Direct Store Delivery (“DSD”), [removed: whose] [added: the] principal products [added: of which] comprise energy drinks, and Warehouse (“Warehouse”), [removed: whose] [added: the] principal products [added: of which] comprise juice-based and soda beverages.

During the year ended December 31, [removed: 2013,] [added: 2014,] we continued to expand our existing product lines and flavors and further developed our markets.

During the year ended December 31, [removed: 2013,] [added: 2014,] we introduced the following products:

[added: |] · [added: |] Monster Energy® Ultra [removed: Blue,] [added: Sunrise™,] a carbonated energy drink which contains zero calories and zero sugar [removed: (March 2013).][added: (September 2014). |]

[added: |] · [added: |] Monster Energy® Ultra [removed: Red,] [added: Black™,] a carbonated energy drink which contains zero calories and zero [removed: sugar (September 2013).][added: sugar, launched as a summer promotion with 7-eleven (July 2014). |]

Those products or product lines discontinued in [removed: 2013,] [added: 2014,] either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.

Our gross sales of [removed: $2,586.5] [added: $2,827.1] million for the year ended December 31, [removed: 2013] [added: 2014] represented record annual sales.

Gross sales of our Monster Energy® brand energy drinks were [removed: $2,412.4] [added: $2,649.3] million for the year ended December 31, [removed: 2013,] [added: 2014,] an increase of [removed: $207.4] [added: $236.9] million, or [removed: 97.4%] [added: 98.5%] of our overall increase in gross sales for the year ended December 31, [removed: 2013.][added: 2014.]

[removed: The percentage increase in gross] [added: Such] sales [removed: was 9.0%, 21.7%] [added: were approximately 23%, 23%] and [removed: 31.0%] [added: 22% of gross sales] for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011,] [added: 2012,] respectively.

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_Acquisitions and Divestitures_

On August 14, 2014, the Company and TCCC entered into definitive agreements for the TCCC Transaction.

Pursuant to the TCCC Transaction Agreements, the Company will reorganize into a new holding company by merging Merger Sub into the Company, with the Company surviving as a wholly owned subsidiary of NewCo.

In the merger, each outstanding share of the Company’s common stock will be converted into one share of NewCo’s common stock.

Subject to the terms and conditions of the TCCC Transaction Agreements, upon the closing of the TCCC Transaction, (1) NewCo will issue to TCCC newly issued shares of common stock representing approximately 16.7% of the total number of shares of issued and outstanding NewCo common stock (after giving effect to the new issuance) and TCCC will have the right to nominate two individuals (reduced to one upon the earlier of (i) 36 months after the closing of the TCCC Transaction and (ii) TCCC’s equity interest in NewCo exceeding 20% of the outstanding shares of NewCo common stock) to NewCo’s Board of Directors, (2) TCCC will transfer its global energy drink business (including the NOS®, Full Throttle®, Burn®, Mother®, Play® and Power Play®, and Relentless® brands) to

NewCo, and the Company will transfer its non-energy drink business (including Hansen’s® Natural Sodas, Peace Tea®, Hubert’s® Lemonade and Hansen’s® Juice Products) to TCCC, (3) the Company and TCCC will amend their current distribution coordination agreements, which will contemplate expanding distribution of the Company’s products into additional territories pursuant to long-term distribution agreements with TCCC’s network of owned or controlled bottlers/distributors and independent bottling and distribution partners, and (4) TCCC will make a net cash payment of $2.15 billion to the Company (up to $625.0 million of which will be held in escrow, subject to release upon achievement of milestones relating to the transfer of distribution rights).

The waiting period under the HSR Act with respect to the TCCC Transaction expired on October 15, 2014, and all necessary approvals or consents from foreign antitrust authorities have been obtained.

The closing of the transaction is subject to customary closing conditions and is expected to close in the second quarter of 2015.

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| · | Monster Rehab® Green Tea + Energy | | · | Monster Energy® Zero Ultra |

| · | Monster Energy® Valentino Rossi | | | |

Following the consummation of the TCCC Transaction, the Company anticipates that it will have two operating and reporting segments: Concentrate, the principal products of which will likely include the various energy drink brands transferred to the Company from TCCC, and Finished Products, the principal products of which will likely include the Company’s Monster Energy® drink products that currently make up the majority of the DSD segment.

| · | Punch Monster® Baller’s Blend (formerly Dub Edition) (January 2014). |

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| · | Punch Monster® Mad Dog (formerly Dub Edition) (January 2014). |

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| · | Peace Tea Beverage Company™ Viva Mango™, a mango flavored juice drink (February 2014). |

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| · | Monster Energy® Valentino Rossi, a carbonated energy drink (May 2014). |

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| · | Hubert’s® Organic Lemonade, a line of certified organic lemonades in a variety of flavors (May 2014). |

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| · | Monster Energy® Unleaded, a carbonated energy drink which contains no caffeine (August 2014). |

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We also support our brands with prize promotions, price promotions, competitions, endorsements from selected public and sports figures,

| | | 2014 | | 2013 | | 2012 |

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In February 2015, in accordance with its existing agreements with the applicable AB Distributors, the Company sent notices of termination to the majority of the AB Distributors in the U.S. for the termination of their respective distribution agreements, to be effective at various dates beginning in March 2015.

The associated distribution rights will be transitioned to TCCC’s network of owned or controlled bottlers/distributors and independent bottling and distribution partners as of the effective date of termination of the AB Distributors’ rights in the applicable territories (see Note 8 “Distribution Agreements” in the notes to consolidated financial statements).

| · | _International Growth_ – The introduction, development and sustained profitability of our Monster Energy® brand internationally remains a key value driver for our corporate growth. The TCCC Transaction is expected to secure fully aligned access to TCCC’s leading global distribution system, which we anticipate will accelerate our international performance. In addition, we anticipate that the TCCC Transaction will provide scale and platform synergies in a range of international geographies where we currently have limited presence, which is expected to increase our energy business in a number of international markets and establish a strong presence in additional countries. |

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(See “Forward-Looking Statements” and “Part II, Item 7A – Qualitative and Quantitative Disclosures About Market Risks”).

| · Monster Energy® Import | · Java Monster® Kona Cappuccino™ |

| · Monster Rehab® Rojo Tea + Energy · Monster Rehab® Green Tea + Energy | · Monster Energy Extra Strength Nitrous Technology® Black Ice™ |

· Monster Mini’s™, 12-packs in 8-ounce size cans (January 2013).

· Muscle Monster® Energy Shakes, non-carbonated energy shakes with 25-grams of protein in five flavors: Chocolate, Vanilla, Coffee (March 2013), Strawberry (November 2013) and Peanut Butter Cup (December 2013).

· Monster Rehab® Tea + Pink Lemonade + Energy (March 2013).

· Java Monster® Kona Cappuccino™ (March 2013).

· Hansen’s® Sparkling Fruit Beverages, a line of 10-calorie beverages with all natural sweeteners (March 2013).

· Peace Tea® Georgia Peach and Sno-Berry, ready-to-drink iced teas (June 2013).

· Hubert’s® Lemonade, Strawberry Lemonade, Blackberry Lemonade and Cherry Limeade in 40-ounce glass bottles (July 2013).

We believe the decrease in the percentage growth rate for the year ended December 31, 2013 was primarily attributable to less robust growth of our Monster Energy® drink line in our United States and European energy drink markets.

In addition, the growth rate for the year ended December 31, 2012 was positively impacted by sales in Japan, which began in the second quarter of 2012 and therefore did not have a 2011 comparable.

In the first quarter of 2013, we began transitioning the labeling of such products.

Products marketed under the Worx Energy® brand, which are sold in 2-ounce bottles, will continue to be labeled as dietary supplements.

The costs of the labeling changes have not been significant and we do not expect the remaining costs, if any, to be significant.

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CCR accounted for approximately 29%, 28% and 29% of our net sales for the years ended December 31, 2013, 2012 and 2011, respectively.

· _Profitable Growth_ – We believe “functional” value added brands properly supported by marketing and innovation, targeted to a diverse consumer base, drive profitable growth.

We continue to broaden our family of brands.

In particular, we are expanding our energy drinks and specialty beverages to provide more alternatives to consumers.

We are focused on maintaining profit margins and believe that tailored branding, packaging, pricing and distribution channel strategies help achieve profitable growth.

We are implementing these strategies with a view to continuing profitable growth.

· _International Growth_ – The introduction, development and sustained profitability of our Monster Energy® brand internationally remains a key value driver for our corporate growth.

Another key area of focus is to decrease promotional allowances, selling and general and administrative costs, including sponsorships, sampling, promotional and marketing expenses, as a percentage of net sales.

The reduction of accounts receivable and inventory days on hand also remains a further key area of focus.

· _Efficient Capital Structure_ – Our capital structure is intended to optimize our working capital to finance expansion, both domestically and internationally.

We believe our strong capital position, our ability to raise funds, if necessary, at a relatively low effective cost of borrowings, provide a competitive advantage.

Looking forward, our management has identified certain challenges and risks for the beverage industry and our Company.

and be competitive in the areas of quality, method of distribution, brand image and intellectual property protection.

· increasing concern over caffeine consumption and energy drinks generally and possible related regulation of our products containing caffeine;

· growth potential of other segments of the “alternative” beverage category including sparkling beverages, carbonated soft drinks, ready-to-drink iced teas, juice drinks and protein drinks;

Pricing changes did not have a material impact on the increase in gross sales.

Pricing changes did not have a material impact on the increase in net sales.

Contribution margin for the Warehouse segment was

ended December 31, 2012.

Changes in foreign currency exchange rates had an unfavorable impact on gross sales of approximately 1% for the year ended December 31, 2012, which was primarily due to a stronger U.S. dollar compared to certain local currencies in which we conduct certain of our international business.

Changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately 1% for the year ended December 31, 2012, which was primarily due to a stronger U.S. dollar compared to certain local currencies in which we conduct certain of our international business.

The lower overall average net sales per case was primarily due to increased promotional and other allowances as a percentage of gross sales, product and geographic mix.

The decrease in gross profit as a percentage of net sales was largely attributable to changes in product and geographic mix, increased promotional and other allowances as a percentage of gross sales as well as production variances and product damages primarily in connection with Europe and Asia.

The increase in operating expenses was partially attributable to increased payroll expenses of $23.4 million (of which $9.0 million was related to an increase in stock-based compensation), increased expenditures of $18.4 million for sponsorships and endorsements, increased out-bound freight and warehouse costs of $17.9 million, increased expenditures of $11.1 million for allocated trade development, increased expenditures of $6.4 million for marketing fees and increased expenditures of $4.2 million for merchandise displays.

The principal market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) to which we are exposed are fluctuations in commodity prices affecting the costs of [removed: juice concentrates and other] [added: our] raw materials (including, but not limited to, increases in the [added: costs of juice concentrates, increases in the] price of aluminum for cans, resin for PET plastic bottles, as well as cane sugar and other sweeteners, glucose, sucrose, milk, cream and protein, all of which are used in some or many of our products), fluctuations in energy and fuel prices, and limited availability of certain raw materials.

Our gross sales to customers outside of the United States were approximately 23% [removed: and 22%] of consolidated gross sales for [added: both] the years ended December 31, [removed: 2013] [added: 2014] and [removed: 2012, respectively.][added: 2013.]

We do not consider the potential loss resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates as of December 31, [removed: 2013] [added: 2014] to be significant.

As of December 31, [removed: 2013,] [added: 2014,] we had [removed: $211.3] [added: $370.3] million in cash and cash equivalents and [removed: $412.0] [added: $824.1] million in short-term and long-term investments including U.S. treasuries, certificates of deposit and municipal securities which may have an auction reset feature.

During the year ended December 31, 2014, we entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities.

All foreign currency exchange contracts entered into by us as of December 31, 2014 have terms of one month or less.

We do not enter into forward currency exchange contracts for speculation or trading purposes.

We have not designated our foreign currency exchange contracts as hedge transactions under ASC 815.

Therefore, gains and losses on our foreign currency exchange contracts are recognized in interest and other (expense) income, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item.

These changes result in cumulative translation adjustments, which are included in accumulated other comprehensive income (loss).

For the year ended December 31, 2013, we did not use derivative financial instruments to reduce our net exposure to currency fluctuations.

We are primarily exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of our short-term and long-term investments.

Certain of our short-term and long-term investments are subject to interest rate risk because these investments generally include a fixed interest rate.

As a result, the market values of these investments are affected by changes in prevailing interest rates.

We do not consider the potential loss resulting from a hypothetical 10% adverse change in interest rates as of December 31, 2013 to be significant.

| · [removed: |] Monster Energy® | | · [removed: |] Hansen’s® |

| · [removed: |] Monster Rehab® | | · [removed: |] Hansen’s Natural Cane Soda® |

| · [removed: |] Monster Energy Extra Strength Nitrous Technology® | | · [removed: |] Junior Juice® |

| · [removed: |] Java Monster® | | · [removed: |] Blue Sky® |

| · [removed: | X-Presso] [added: Muscle] Monster® | | · [removed: |] Hubert’s® |

| · [removed: |] Muscle Monster® [removed: |] [added: Coffee] | · [removed: | Worx] [added: Monster] Energy® [added: Unleaded] |

| · [removed: |] Punch [removed: Monster™] [added: Monster®] | | · [removed: |] Peace Tea® |

Our Monster Energy® brand energy drinks, which represented [removed: 92.5%, 92.3%] [added: 93.3%, 92.5%] and [removed: 91.2%] [added: 92.3%] of our net sales for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011,] [added: 2012,] respectively, [added: primarily] include the following:

| · [removed: |] Monster Energy® | · [removed: |] Java Monster® Kona Blend |

| · [removed: |] Lo-Carb Monster Energy® | · [removed: |] Java Monster® Loca Moca® |

| · [removed: |] Monster Assault® | · [removed: |] Java Monster® Mean Bean® |

| · [removed: | Monster] [added: Juice Monster™] Khaos® | · [removed: |] Java Monster® Vanilla Light |

| · [removed: | Monster M-80® (named] [added: Juice Monster™] Ripper® [removed: in certain countries)] | · [removed: |] Java Monster® Irish Blend® |

| · [removed: |] Monster Energy® Absolutely Zero | · [removed: |] Java Monster® [removed: Toffee] [added: Cappuccino] |

| · [removed: |] [added: Monster Energy® Import ·] Punch [removed: Monster™] [added: Monster®] Baller’s Blend (formerly Dub Edition) | [removed: |] [added: · Monster Energy Extra Strength Nitrous] Technology® Super Dry™ |

| · [removed: |] Punch [removed: Monster™] [added: Monster®] Mad Dog (formerly Dub Edition) [removed: |] · [added: Monster Rehab® Tea + Lemonade + Energy] | [added: ·] Monster Energy Extra Strength Nitrous [added: Technology® Anti-Gravity®] |

| · [removed: |] Monster Rehab® Tea + [added: Pink] Lemonade + Energy | [removed: | Technology® Anti-Gravity®] [added: · Monster Energy® Ultra Red™] |

| · [removed: |] Monster Rehab® Rojo Tea + Energy | · [removed: |] Monster [removed: Energy Extra Strength Nitrous] [added: Cuba-Lima®] |

| · [removed: |] Monster Rehab® Green Tea + Energy | [removed: | Technology® Black Ice™] [added: · Monster Energy® Zero Ultra] |

| · [removed: |] Monster Rehab® Tea + Orangeade + Energy | · [removed: | X-Presso Monster® Midnite] [added: Monster Energy® Ultra Blue™] |

| · [removed: |] Muscle Monster® Vanilla | · [removed: |] Monster Energy® [removed: Zero] Ultra [added: Black™] |

| · [removed: |] Muscle Monster® Chocolate | · [removed: |] Monster Energy® Ultra [removed: Blue] [added: Sunrise™] |

| · [removed: |] Muscle Monster® [removed: Strawberry] [added: Peanut Butter Cup] | · [removed: |] M3® Monster Energy® Super Concentrate |

| · [removed: |] Muscle Monster® [removed: Peanut Butter Cup] [added: Strawberry] | · [removed: |] Übermonster® Energy [removed: Brew] [added: Brew™] |

According to Beverage Marketing Corporation, domestic U.S. wholesale sales in [removed: 2013] [added: 2014] for the “alternative” beverage category of the market are estimated at approximately [removed: $37.7] [added: $38.8] billion, representing an increase of approximately [removed: 5.0%] [added: 5.1%] over the estimated domestic U.S. wholesale sales in [removed: 2012] [added: 2013] of approximately [removed: $35.9] [added: $36.9] billion (revised from a previously reported estimate of [removed: $31.8] [added: $37.7] billion).

HFI expanded its product line from juices to include [removed: Hansen’s Natural Soda® brand sodas.]

We have two [added: operating and] reportable segments, namely Direct Store Delivery (“DSD”), [removed: whose] [added: the] principal products [added: of which] comprise energy drinks, and Warehouse (“Warehouse”), [removed: whose] [added: the] principal products [added: of which] comprise juice-based and soda beverages.

Corporate and unallocated amounts that do not relate to the DSD or Warehouse segments specifically, have been allocated to “Corporate and Unallocated.” Our DSD segment represented [removed: 95.6%, 95.4%] [added: 96.1%, 95.6%] and [removed: 94.4%] [added: 95.4%] of our consolidated net sales for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011,] [added: 2012,] respectively.

Our Warehouse segment represented [removed: 4.4%, 4.6%] [added: 3.9%, 4.4%] and [removed: 5.6%] [added: 4.6%] of our consolidated net sales for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011,] [added: 2012,] respectively.

For financial information about our reporting segments and geographic areas, refer to Note [removed: 16] [added: 17] of Notes to the Consolidated Financial Statements set forth in “Part II, Item 8 – Financial Statements and Supplementary Data” of this report, incorporated herein by reference.

[removed: 2013] [added: 2014] Product Introductions

During [removed: 2013,] [added: 2014,] we continued to expand our existing product lines and flavors and further develop our distribution markets.

During [removed: 2013,] [added: 2014,] we introduced a number of new products, including the following:

[removed: |] · [removed: |] Monster Energy® Ultra [removed: Blue,] [added: Sunrise™,] a carbonated energy drink which contains zero calories and zero sugar [removed: (March 2013). |][added: (September 2014).]

[removed: | · | Peace] [added: _Peace] Tea® [removed: Georgia Peach] [added: Iced Teas] and [removed: Sno-Berry,] [added: Juice Drinks_ - A line of] ready-to-drink iced teas [removed: (June 2013). |][added: and juice drinks.]

[removed: |] · [removed: |] Monster Energy® Ultra [removed: Red,] [added: Black™,] a carbonated energy drink which contains zero calories and zero [removed: sugar (September 2013). |][added: sugar, launched as a summer promotion with 7-eleven (July 2014).]

Those products or product lines discontinued in [removed: 2013,] [added: 2014,] either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.

We [added: primarily] offer the following products under the Monster Energy® drink product line: Monster Energy®, Lo-Carb Monster Energy®, Monster Assault®, [removed: Monster] [added: Juice Monster™] Khaos®, [removed: Monster M-80® (named Ripper® in certain countries),] [added: Juice Monster™ Ripper®,] Monster Energy® Absolutely Zero, Monster Energy® [removed: Import and Import Light,] [added: Import,] Punch [removed: Monster™] [added: Monster®] Baller’s Blend (formerly Dub Edition), Punch [removed: Monster™] [added: Monster®] Mad Dog (formerly Dub Edition), M3® Monster Energy® Super Concentrate energy drinks, Übermonster® Energy [removed: Brew,] [added: Brew™,] Monster Energy® Zero Ultra, Monster Energy® Ultra Blue, Monster Energy® Ultra [removed: Red] [added: Red, Monster Energy® Ultra Black™, Monster Energy® Ultra Sunrise™, Monster Energy® Valentino Rossi, Monster Energy® Unleaded,] and Monster Cuba-Lima®.

We offer the following products under the Java Monster® product line: Java Monster® Kona Blend, Java Monster® Loca Moca®, Java Monster® Mean Bean®, Java Monster® Vanilla Light, Java Monster® Irish [removed: Blend®, Java Monster® Toffee] [added: Blend®] and Java Monster® [removed: Kona Cappuccino™.][added: Cappuccino.]

We offer the following products under the [removed: X-Presso Monster® coffee + energy drinks] [added: Hansen’s® Energy Drink] product line: [removed: X-Presso Monster® Hammer] [added: Hansen’s® Energy] and [removed: X-Presso Monster® Midnite.][added: Hansen’s® Energy Diet Red.]

_Acquisitions and Divestitures_

On August 14, 2014, the Company and The Coca-Cola Company (“TCCC”) entered into definitive agreements for a long-term strategic relationship in the global energy drink category (the “TCCC Transaction”).

As part of the TCCC Transaction, the Company, New Laser Corporation, a wholly owned subsidiary of the Company (“NewCo”), New Laser Merger Corp., a wholly owned subsidiary of NewCo (“Merger Sub”), TCCC and European Refreshments, an indirect wholly owned subsidiary of TCCC, entered into a transaction agreement, and the Company, TCCC and NewCo entered into an asset transfer agreement (together, the “TCCC Transaction Agreements”).

Pursuant to the TCCC Transaction Agreements, the Company will reorganize into a new holding company by merging Merger Sub into the Company, with the Company surviving as a wholly owned subsidiary of NewCo.

In the merger, each outstanding share of the Company’s common stock will be converted into one share of NewCo’s common stock.

Subject to the terms and conditions of the TCCC Transaction Agreements, upon the closing of the TCCC Transaction, (1) NewCo will issue to TCCC newly issued shares of common stock representing approximately 16.7% of the total number of shares of issued and outstanding NewCo common stock (after giving effect to the new issuance) and TCCC will have the right to nominate two individuals (reduced to one upon the earlier of (i) 36 months after the closing of the TCCC Transaction and (ii) TCCC’s equity interest in NewCo exceeding 20% of the outstanding shares of NewCo common stock) to NewCo’s Board of Directors, (2) TCCC will transfer its global energy drink business (including the NOS®, Full Throttle®, Burn®, Mother®, Play® and Power Play® and Relentless® brands) to NewCo, and the Company will transfer its non-energy drink business (including Hansen’s® Natural Sodas, Peace Tea®, Hubert’s® Lemonade and Hansen’s® Juice Products) to TCCC, (3) the Company and TCCC will amend their current distribution coordination agreements, which will contemplate expanding distribution of the Company’s products into additional territories pursuant to long-term distribution agreements with TCCC’s network of owned or controlled bottlers/distributors and independent bottling and distribution partners, and (4) TCCC will make a net cash payment of $2.15 billion to the Company (up to $625.0 million of which will be held in escrow, subject to release upon achievement of milestones relating to the transfer of distribution rights).

The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) with respect to the TCCC Transaction expired on October 15, 2014, and all necessary approvals or consents from foreign antitrust authorities have been obtained.

The closing of the transaction is subject to customary closing conditions and is expected to close in the second quarter of 2015.

| --- | --- | --- |

| · Juice Monster™ | | |

| · Monster Energy® Valentino Rossi | |

Hansen’s Natural Soda® brand sodas.

Following the consummation of the TCCC Transaction, the Company anticipates that it will have two operating and reporting segments: Concentrate, the principal products of which will likely include the various energy drink brands transferred to the Company from TCCC, and Finished Products, the principal products of which will likely include the Company’s Monster Energy® drink products that currently make up the majority of the DSD segment.

· Punch Monster® Baller’s Blend (formerly Dub Edition) (January 2014).

· Punch Monster® Mad Dog (formerly Dub Edition) (January 2014).

· Peace Tea Beverage Company™ Viva Mango™, a mango flavored juice drink (February 2014).

· Monster Energy® Valentino Rossi, a carbonated energy drink (May 2014).

· Hubert’s® Organic Lemonade, a line of certified organic lemonades in a variety of flavors (May 2014).

· Monster Energy® Unleaded, a carbonated energy drink which contains no caffeine (August 2014).

Pursuant to the terms and conditions of the TCCC Transaction Agreements, upon the closing of the TCCC Transaction, the Company will transfer its non-energy drink business (including Hansen’s® Natural Sodas, Peace Tea®, Hubert’s® Lemonade and Hansen’s® Juice Products) to TCCC.

In May 2014, we added Sun Burst and 1-2-3 Punch flavors to the Hansen’s® Energy product line.

In May 2014, we added Hansen’s® Natural Organic Fruit Punch and Organic Berry Juices.

In January 2014, we added Peach and Watermelon flavors to the original Hubert’s_®_ Lemonade line.

In March 2014, we introduced Hubert’s_®_ Organic Lemonade, a line of certified organic lemonades in a variety of flavors.

In May 2014, we also added a Watermelon Habanero limited edition flavor to the original Hubert’s_®_ Lemonade line.

(a) Monster Beverages Off-Premise Distribution Coordination Agreement and the Allied Products Distribution Coordination Agreement (jointly, the “Off-Premise Agreements”) with Anheuser-

In February 2015, in accordance with its existing agreements with the applicable AB Distributors, the Company sent notices of termination to the majority of the AB Distributors in the U.S. for the termination of their respective distribution agreements, to be effective at various dates beginning in March 2015 (see Note 8 “Distribution Agreements” in the notes to the consolidated financial statements).

In February 2015, in accordance with its existing agreements with the applicable AB Distributors, the Company sent notices of termination to the majority of the AB Distributors in the U.S. for the termination of their respective distribution agreements, to be effective at various dates beginning in March 2015 (see Note 8 “Distribution Agreements” in the notes to the consolidated financial statements).

In connection with the TCCC Transaction, the parties expect to amend and restate the TCCC North American Coordination Agreement, including to change the procedure under which the TCCC North American Bottlers are appointed in specified territories.

In connection with the TCCC Transaction, the parties expect to amend and restate the TCCC International Coordination Agreement, including to change the procedure under which the TCCC distributors are appointed in specified territories.

The distribution rights relating to each territory for which the Company sent notices of termination in February 2015, including certain AB Distributors in the U.S. described above, will be transitioned to TCCC’s network of owned or controlled bottlers/distributors and independent bottling and distribution partners as of the effective date of termination of the current third party’s rights in the applicable territory, and in connection therewith, the agreements referred to in clauses (d)-(f) will be amended.

The agreements referred to in clauses (h) and (i) are also expected to be amended upon or following the closing of the TCCC Transaction.

In the TCCC Transaction, we will acquire the NOS, Burn, Full Throttle, Play, Power Play, Relentless, Mother, Nalu and Samurai brands and, as a result, our energy drink business will no longer compete with such brands.

In addition, as a result of the TCCC Transaction, we will no longer sell ready-to-drink iced tea products, traditional soda products, carbonated beverages, apple juice, juice blends or lemonades.

In February 2015, in accordance with its existing agreements with the applicable AB Distributors, the Company sent notices of termination to the majority of the AB Distributors in the U.S. for the termination of their respective distribution agreements, to be effective at various dates beginning in March 2015.

The associated distribution rights will be transitioned to TCCC’s network of owned or controlled bottlers/distributors and independent bottling and distribution partners as of the effective date of termination of the AB Distributors’ rights in the applicable territories (see Note 8 “Distribution Agreements” in the notes to consolidated financial statements).

CCR accounted for approximately 29%, 29% and 28% of our net sales for the years ended December 31, 2014, 2013 and 2012, respectively.

In January 2013, the FDA announced that it would be investigating the safety of caffeine in food products, particularly its effects on children and adolescents.

The Congressman released a follow-up report in January 2015, recommending inter alia that the energy drink industry not market to consumers under age 18 and not market their products for hydration, and that the FDA develop and release definitions and guidance for this market sector.

In January 2015, the European Food Safety Authority published a draft scientific opinion on the safety of caffeine, particularly in energy drinks.

| --- | --- | --- | --- |

| · | Monster Energy® Import | · | Java Monster® Kona Cappuccino™ |

| · | Monster Energy® Import Light | · | Monster Energy Extra Strength Nitrous |

| · | Monster Rehab® Protean + Energy | · | X-Presso Monster® Hammer |

| · | Monster Rehab® Tea + Pink Lemonade + Energy | · | Monster Cuba-Lima® |

| · | Muscle Monster® Coffee | · | Monster Energy® Ultra Red |

| · | Monster Mini’s™, 12-packs in 8-ounce size cans (January 2013). |

| · | Muscle Monster® Energy Shakes, non-carbonated energy shakes with 25-grams of protein in five flavors: Chocolate, Vanilla, Coffee (March 2013), Strawberry (November 2013) and Peanut Butter Cup (December 2013). |

| · | Monster Rehab® Tea + Pink Lemonade + Energy (March 2013). |

| · | Java Monster® Kona Cappuccino™ (March 2013). |

| · | Hansen’s® Sparkling Fruit Beverages, a line of 10-calorie beverages with all natural sweeteners (March 2013). |

| · | Hubert’s® Lemonade, Strawberry Lemonade, Blackberry Lemonade and Cherry Limeade in 40-ounce glass bottles (July 2013). |

_X-Presso Monster® Coffee + Energy Drinks_ - A line of non-carbonated dairy based coffee + energy drinks.

_Worx Energy_® _Energy Shots_ - A line of energy supplements which contains zero calories and zero sugar.

We offer the following products under the Worx Energy® energy shot product line: Original Formula and Extra Strength.

_Peace Tea® Iced Teas_ - A line of ready-to-drink iced teas.

We also offer unsweetened Hansen’s® Sparkling Waters, in a variety of flavors.

In March 2013, we added Grape and Orange flavors to the Hansen’s® Sodas and Hansen’s® Diet Sodas product lines.

In March 2013, we introduced Hansen’s® Sparkling Fruit Beverages, a line of sparkling water beverages available in a variety of fruit flavors.

Hansen’s® Sparkling Fruit Beverages contain no preservatives, artificial sweeteners, or caffeine.

We offer the following products under the Hansen’s® Energy Drink product line: Hansen’s® Natural Energy Pro and Hansen’s® Energy Diet Red.

In August 2013, we added Hansen’s® Natural Apple Cider, which also contains apple puree.

We also offer Hansen’s® Natural Lo-Cal juice cocktails, a line of low-calorie cocktails in three flavors.

The Lo-Cal juice cocktails are sweetened with Truvia® brand sweetener.

Hubert’s_®_ Lemonade contains no preservatives, artificial sweeteners, artificial flavors or caffeine.

We offer the following products under the Hubert’s_®_ Lemonade product line: Original Lemonade, Strawberry Lemonade, Limeade, Mango Lemonade, Raspberry Lemonade, Cherry Limeade and Blackberry Lemonade.

In July 2013, we introduced a Diet Lemonade sub-line of select flavors.

Hubert’s® Half & Half is sweetened with cane sugar and stevia leaf extract, and contains no preservatives or artificial sweeteners.

_Hansen’s® Natural Fruit Stix_® _and Tea Stix™ -_ Our Fruit and Tea Stix™ product line is an all-natural, low-calorie powder drink mix line, sweetened naturally with Truvia® sweetener.

markets with adequate capacity and/or suitable equipment to package our products.

In the first quarter of 2013, we began transitioning the labeling of such products.

Products marketed under the Worx Energy® brand, which are sold in 2-ounce bottles, will continue to be labeled as dietary supplements.

The costs of the labeling changes have not been significant and we do not expect the remaining costs, if any, to be significant.

same customer types listed below.

| --- | --- | --- | --- | --- | --- | --- |

New labels for such products as conventional foods were introduced beginning in the first quarter of 2013.

The decision is currently on appeal to the state’s highest court.

Plaintiff principally alleged that, during the Class Period, the defendants made false and misleading statements relating to the Company’s distribution coordination agreements with Anheuser-Busch, Inc. (“AB”) and its sales of “Allied” energy drink lines, and engaged in sales of shares in the [added: Company on the basis of material non-public information.]

A [removed: status] [added: case management] conference is scheduled for March [removed: 13, 2014.][added: 10, 2015.]

[removed: Management] [added: Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management] believes that [removed: any potential settlement, if completed, will be fully paid by insurance and] [added: such litigation in the aggregate] will [added: likely] not have a material adverse effect on the Company’s financial position or results of operations.

_State Attorney General Inquiry_ – In July 2012, the Company received a subpoena from [removed: a state attorney general] [added: the Attorney General for the State of New York] in connection with [removed: an] [added: its] investigation concerning the Company’s advertising, marketing, promotion, ingredients, usage and sale of its Monster Energy® brand of energy drinks.

[removed: As the investigation is in an early stage, it] [added: It] is unknown what, if any, action the state attorney general may take against the Company, the relief which may be sought in the event of any such proceeding or whether such proceeding could have a material adverse effect on the Company’s business, financial condition or results of operations.

[added: _San Francisco City Attorney Litigation_ –] On October 31, 2012, the Company received a written request for information from the City Attorney for the City and County of San Francisco concerning the Company’s advertising and marketing of its Monster Energy® brand of energy drinks and specifically concerning the safety of its products for consumption by adolescents.

In a letter dated March 29, 2013, the San Francisco City Attorney threatened to bring suit against the Company if it did not agree to take the following five steps immediately: (i) “Reformulate its [removed: product] [added: products] to lower the caffeine content to safe levels”; [added: -] (ii) “Provide adequate warning labels”; (iii) “Cease promoting over-consumption in marketing”; (iv) “Cease use of alcohol and drug references in marketing”; and (v) “Cease targeting minors.”

[added: (i) _The Company Action_ –] On April 29, 2013, the Company and its wholly owned subsidiary, Monster Energy Company, filed a complaint for declaratory and injunctive relief against the San Francisco City Attorney [added: (the “Company Action”)] in United States District Court for the Central District of California (the “Central District Court”), styled _Monster Beverage Corp., et al.

[removed: Dennis Herrera._] The Company [removed: seeks] [added: sought] a declaration from the Central District Court that the San Francisco City Attorney’s investigation and demands are impermissible and preempted, subject to the doctrine of primary jurisdiction, are unconstitutional in that they violate the First and Fourteenth Amendments’ prohibitions against compelled speech, content-based speech and commercial speech, are impermissibly void-for-vagueness, and/or violate the Commerce Clause.

[added: On June] 3, 2013, the City Attorney filed a motion to dismiss the [removed: Company’s complaint,] [added: Company Action,] arguing in part that the complaint should be dismissed in light of the San Francisco Action (described below) filed on May 6, 2013.

On October 17, 2013 (after the San Francisco [removed: Action] [added: Action,] described [removed: below] [added: below,] was remanded to San Francisco Superior Court), the City Attorney filed a renewed motion to dismiss [added: the Company Action] and on December 16, 2013, the Central District Court granted the City Attorney’s renewed motion, dismissing the [removed: action.][added: Company Action.]

[added: (ii) _The San Francisco Action_ —] On May 6, 2013, the San Francisco City Attorney filed a complaint for declaratory and injunctive relief, civil penalties and restitution for alleged violation of California’s Unfair Competition Law, Business & Professions Code sections 17200, [removed: et] [added: _et] seq., styled [removed: _People] [added: People] Of The State Of California ex rel.

Monster Beverage Corporation_, [added: in] San Francisco Superior Court (the “San Francisco Action”).

seq.; (2) is selling an “adulterated” product because caffeine is not generally recognized as safe (“GRAS”) due to the alleged lack of scientific consensus concerning the safety of the levels of caffeine in the Company’s products; and (3) is engaged in unfair and misleading business practices because its marketing (a) does not disclose the health risks that energy drinks pose for children and teens; (b) fails to warn against and promotes unsafe consumption; (c) implicitly promotes mixing of energy drinks with alcohol or drugs; and (d) is deceptive because it includes unsubstantiated claims about the purported special benefits of its “killer” ingredients and “energy blend.” The City Attorney [removed: seeks] [added: sought] a declaration that the Company has engaged in unfair and unlawful business acts and practices in violation of the Unfair Competition Law; an injunction from performing or proposing to perform any acts in violation of the Unfair Competition Law; restitution; and civil penalties.

On June 3, 2013, the Company removed the [removed: case] [added: San Francisco Action] to the United States District Court for the Northern District of California (the “Northern District Court”).

On July 3, 2013, the City Attorney filed a motion to remand the [removed: case] [added: San Francisco Action] back to state court.

In their prayers for relief, the plaintiffs seek, inter alia, compensatory [added: and punitive damages, restitution, attorneys’ fees, and, in some cases, injunctive relief.]

Discovery has commenced and trial has been scheduled for August 21, 2015.

Following a mediation conducted by an independent mediator, the Company entered into a Stipulation of Settlement on April 16, 2014 to resolve the litigation.

Following a fairness hearing, on January 29, 2015, the District Court granted final approval of the settlement and entered a final judgment dismissing the action with prejudice.

Under the terms of the settlement, certain of the Company’s insurance carriers paid $16.25 million into an escrow account for distribution to a settlement class, certified by the District Court for settlement purposes only and consisting of all persons who purchased or otherwise acquired the Company’s stock during the Class Period (with certain exclusions as specified in the settlement agreement).

Under the settlement, defendants and various of their related persons and entities received a full release of all claims that were or could have been brought in the action as well as all claims that arise out of, are based upon or relate to the allegations, transactions, facts, representations, omissions or other matters involved in the complaints filed in the action or any statement communicated to the public during the Class Period, and the purchase, acquisition or sale of the Company’s stock during the Class Period.

The settlement contained no admission of any liability or wrongdoing on the part of the defendants, each of whom continues to deny all of the allegations against them and believes that the claims were without merit.

Because the full amount of the settlement was paid by the Company’s insurance carriers, the settlement did not have an effect on the Company’s results of operations.

Production of documents pursuant to that subpoena was completed in approximately May 2014.

On August 6, 2014, the Attorney General for the State of New York issued a second subpoena seeking additional documents and the deposition of a Company employee.

On September 8, 2014, the Company moved to quash the second subpoena.

The motion has been fully briefed and argument has been scheduled on the motion for March 17, 2015.

Dennis Herrera_.

The Company filed its opening brief on November 28, 2014.

The City Attorney’s filed an answering brief on February 13, 2015, and the Company’s reply brief is currently due on February 27, 2015.

On March 5, 2014, the Court overruled the demurrer, granted the motion to strike as to one theory for relief pleaded by the City Attorney, and lifted the stay on discovery.

On March 20, 2014, the City Attorney filed an amended complaint, adding allegations supporting the theory for relief as to which the Court had granted the motion to strike.

On April 18, 2014, the Company filed a renewed motion to strike, challenging the theory for relief previously rejected by the Court, as well as a motion asking the Court to bifurcate and/or stay claims relating to the safety of Monster Energy® drinks, pending resolution of the ongoing FDA investigation of the safety and labeling of food products to which caffeine is added.

On May 22, 2014, the Court denied the Company’s motion to strike and motion to bifurcate and/or stay claims relating to safety.

On June 16, 2014, the Company filed a petition for writ of mandate with the Court of Appeal, asking for a writ directing the trial court to vacate its order denying the Company’s motion to bifurcate and/or stay the San Francisco Action, and instead to stay proceedings pending FDA’s investigation.

On June 19, 2014, the Court of Appeal denied the petition.

On June 25, 2014, the Company filed a petition for review with the California Supreme Court.

On July 23, 2014, the Supreme Court denied the petition.

On August 27, 2014, the Court issued an order setting the case for a two-week bench trial beginning on February 8, 2016.

On September 5, 2014, the City Attorney filed a second amended complaint, adding Monster Energy Company as a defendant.

The Company and Monster Energy Company filed answers to the second amended complaint on October 4, 2014 and November 10, 2014, respectively.

Discovery is ongoing.

The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, or in the amount of any related insurance reimbursements recorded.

As of December 31, 2014 and December 31, 2013, the Company’s consolidated balance sheets include accrued loss contingencies of approximately $3.7 million and $17.0 million, respectively, and receivables for insurance reimbursements of approximately $0.0 million and $16.25 million, respectively.

Discovery has commenced but no trial date has been set.

Company on the basis of material non-public information.

Fact discovery in the action was stayed pending resolution of the class certification motion.

Following a mediation conducted by an independent mediator, the parties are currently negotiating the terms of a possible settlement of the action.

On February 11, 2014, the District Court entered an Order staying the action to allow the parties time to complete their negotiations and to prepare and file papers seeking approval of any proposed settlement.

_San Francisco City Attorney Litigation_.

On June

The demurrer and motion to strike are currently scheduled for a hearing on March 4, 2014.

and punitive damages, restitution, attorneys’ fees, and, in some cases, injunctive relief.

Although it is not possible to predict the outcome of such litigation, based on the facts known to the Company, management believes that such litigation in the aggregate will likely not have a material adverse effect on the Company’s financial position or results of operations.

10-K 1 [removed: a14-2841_110k.htm] [added: a14-25746_110k.htm] 10-K

For the fiscal year ended December 31, [removed: 2013][added: 2014]

| [removed: |] Delaware | [added: |] 39-1679918 |

| [removed: |] (State or other jurisdiction of | [added: |] (I.R.S. Employer |

| [removed: |] incorporation or organization) | [added: |] Identification No.) |

| Large accelerated filer þ | [added: |] Accelerated filer o |

| Non-accelerated filer o | [added: |] Smaller reporting company o |

The aggregate market value of the voting and non-voting common equity held by nonaffiliates of the registrant was [removed: $9,168,059,511] [added: $10,745,367,329] computed by reference to the closing sale price for such stock on the NASDAQ Global Select Market on June [removed: 28, 2013,] [added: 30, 2014,] the last business day of the registrant’s most recently completed second fiscal quarter.

The number of shares of the registrant’s common stock, $0.005 par value per share (being the only class of common stock of the registrant), outstanding on February [removed: 24, 2014] [added: 17, 2015] was [removed: 166,877,164] [added: 170,016,322] shares.

Portions of the registrant’s Definitive Proxy Statement to be filed subsequent to the date hereof with the Commission pursuant to Regulation 14A in connection with the registrant’s [removed: 2014] [added: 2015] Annual Meeting of Stockholders are incorporated by reference into Part III of this Report.

Such Definitive Proxy Statement will be filed with the Securities and Exchange Commission no later than 120 days after the conclusion of the registrant’s fiscal year ended December 31, [removed: 2013.][added: 2014.]

| Item Number | | | [removed: |] Page Number |

| [removed: | |] [PART [removed: I](#Parti_070112] [added: I](#Parti_174728] "Click to goto ") | | | [added: |]

| [removed: [1.](#Item1__070116) |] [added: [1.](#Item1_Business_174731)] | [removed: [Business](#Item1__070116)] [added: [Business](#Item1_Business_174731)] | | 3 |

| [removed: [1A.](#Item1a_RiskFactors_015222) |] [added: [1A.](#Item1a_RiskFactors_161252)] | [Risk [removed: Factors](#Item1a_RiskFactors_015222)] [added: Factors](#Item1a_RiskFactors_161252)] | | [removed: 19] [added: 21] |

| [removed: [1B.](#Item1b_UnresolvedStaffComments_015118) |] [added: [1B.](#Item1b_UnresolvedStaffComments_181929)] | [Unresolved Staff [removed: Comments](#Item1b_UnresolvedStaffComments_015118)] [added: Comments](#Item1b_UnresolvedStaffComments_181929)] | | [removed: 29] [added: 33] |

| [removed: [2.](#Item2_Properties_015119) |] [added: [2.](#Item2_Properties_181931)] | [removed: [Properties](#Item2_Properties_015119)] [added: [Properties](#Item2_Properties_181931)] | | [removed: 29] [added: 33] |

| [removed: [3.](#Item3_LegalProceedings_015126) |] [added: [3.](#Item3_LegalProceedings_181933)] | [Legal [removed: Proceedings](#Item3_LegalProceedings_015126)] [added: Proceedings](#Item3_LegalProceedings_181933)] | | [removed: 29] [added: 33] |

| [removed: [4.](#Item4_MineSafetyDisclosures_015610) |] [added: [4.](#Item4_MineSafetyDisclosures_182123)] | [Mine Safety [removed: Disclosures](#Item4_MineSafetyDisclosures_015610)] [added: Disclosures](#Item4_MineSafetyDisclosures_182123)] | | [removed: 32] [added: 37] |

| [removed: | |] [PART [removed: II](#Partii_015623] [added: II](#Partii_182128] "Click to goto ") | | | [added: |]

| [removed: [5.](#Item5__070207) |] [added: [5.](#Item5_MarketForTheRegistrantsComm_182129)] | [Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#Item5__070207)] [added: Securities](#Item5_MarketForTheRegistrantsComm_182129)] | | [removed: 32] [added: 37] |

| [removed: [6.](#Item6_SelectedFinancialData_021350) |] [added: [6.](#Item6_SelectedFinancialData_220436)] | [Selected Financial [removed: Data](#Item6_SelectedFinancialData_021350)] [added: Data](#Item6_SelectedFinancialData_220436)] | | [removed: 35] [added: 40] |

| [removed: [7.](#Item7_ManagementsDiscussionAndAna_021354) |] [added: [7.](#Item7_ManagementsDiscussionAndAna_220615)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#Item7_ManagementsDiscussionAndAna_021354)] [added: Operations](#Item7_ManagementsDiscussionAndAna_220615)] | | [removed: 36] [added: 41] |

| [removed: [7A.](#Item7a_QuantitativeAndQualitative_030313) |] [added: [7A.](#Item7a_QuantitativeAndQualitative_215225)] | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#Item7a_QuantitativeAndQualitative_030313)] [added: Risk](#Item7a_QuantitativeAndQualitative_215225)] | | [removed: 58] [added: 64] |

| [removed: [8.](#Item8_FinancialStatementsAndSuppl_030310) |] [added: [8.](#Item8_FinancialStatementsAndSuppl_215232)] | [Financial Statements and Supplementary [removed: Data](#Item8_FinancialStatementsAndSuppl_030310)] [added: Data](#Item8_FinancialStatementsAndSuppl_215232)] | | [removed: 58] [added: 64] |

| [removed: [9.](#Disagree_030307) |] [added: [9.](#Item9_ChangesInAndDisagreementsWi_215240)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#Disagree_030307)] [added: Disclosure](#Item9_ChangesInAndDisagreementsWi_215240)] | | [removed: 58] [added: 65] |

| [removed: [9A.](#Item9a_ControlsAndProcedures_030306) |] [added: [9A.](#Item9a_ControlsAndProcedures_215241)] | [Controls and [removed: Procedures](#Item9a_ControlsAndProcedures_030306)] [added: Procedures](#Item9a_ControlsAndProcedures_215241)] | | [removed: 59] [added: 65] |

| [removed: [9B.](#Item9b_otherInformation_030919) |] [added: [9B.](#Item9b_OtherInformation_195653)] | [Other [removed: Information](#Item9b_otherInformation_030919)] [added: Information](#Item9b_OtherInformation_195653)] | | [removed: 61] [added: 67] |

| [removed: | |] [PART [removed: III](#Partiii_030923] [added: III](#Partiii_195654] "Click to goto ") | | | [added: |]

| [removed: [10.](#Item10_directorsExecutiveOfficers_030926) |] [added: [10.](#Item10_DirectorsExecutiveOfficers_195655)] | [Directors, Executive Officers and Corporate [removed: Governance](#Item10_directorsExecutiveOfficers_030926)] [added: Governance](#Item10_DirectorsExecutiveOfficers_195655)] | | [removed: 61] [added: 67] |

| [removed: [11.](#Item11_executiveCompensation_030931) |] [added: [11.](#Item11_ExecutiveCompensation_200544)] | [Executive [removed: Compensation](#Item11_executiveCompensation_030931)] [added: Compensation](#Item11_ExecutiveCompensation_200544)] | | [removed: 61] [added: 67] |

| [removed: [12.](#Item12_securityOwnershipOfCertain_030935) |] [added: [12.](#Item12_SecurityOwnershipOfCertain_195954)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#Item12_securityOwnershipOfCertain_030935)] [added: Matters](#Item12_SecurityOwnershipOfCertain_195954)] | | [removed: 61] [added: 67] |

| [removed: [13.](#Item13_certainRelationshipsAndRel_030940) |] [added: [13.](#Item13_CertainRelationshipsAndRel_200055)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#Item13_certainRelationshipsAndRel_030940)] [added: Independence](#Item13_CertainRelationshipsAndRel_200055)] | | [removed: 62] [added: 68] |

| [removed: [14.](#Item14_PrincipalAccountingFeesAnd_030944) |] [added: [14.](#Item14_PrincipalAccountingFeesAnd_200056)] | [Principal Accounting Fees and [removed: Services](#Item14_PrincipalAccountingFeesAnd_030944)] [added: Services](#Item14_PrincipalAccountingFeesAnd_200056)] | | [removed: 62] [added: 68] |

| [removed: | |] [PART [removed: IV](#Partiv_030947] [added: IV](#Partiv_200135] "Click to goto ") | | | [added: |]

| [removed: [15.](#Item15_exhibitsFinancialStatement_030950) |] [added: [15.](#Item15_ExhibitsFinancialStatement_200133)] | [Exhibits and Financial Statement [removed: Schedules](#Item15_exhibitsFinancialStatement_030950)] [added: Schedules](#Item15_ExhibitsFinancialStatement_200133)] | | [removed: 62] [added: 68] |

| | [removed: | [Signatures](#Signatures_024947] [added: [Signatures](#Signatures_201841] "Click to goto ") | | [removed: 63] [added: 69] |

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As of February [removed: 24, 2014,] [added: 17, 2015,] there were [removed: 166,877,164] [added: 170,016,322] shares of the Company’s common stock outstanding held by approximately [removed: 282] [added: 247] holders of record.

| Year Ended December 31, [removed: 2012] [added: 2014] | | High | | | Low | | |

During the year ended December 31, 2013, the Company purchased [removed: 0.257] [added: 0.95] million shares of common stock at an average purchase price of [removed: $51.99] [added: $56.98] per share for a total amount of [removed: $13.4] [added: $54.2] million (excluding broker [removed: commissions), which exhausted the availability under the November 2012 Repurchase Plan.][added: commissions).]

During the year ended December 31, [removed: 2013, 0.001] [added: 2014, 0.09] million shares were repurchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of [removed: $0.1] [added: $8.2] million.

The following table sets forth information as of December 31, [removed: 2013] [added: 2014] with respect to shares of our common stock that may be issued under our equity compensation plans.

[removed: ][added: ]

Cumulative total return assumes an initial investment of $100 on December 31, [removed: 2008.][added: 2009.]

The Company’s current self-selected peer group is comprised of [removed: The Coca-Cola Company,] [added: TCCC,] DPS Group, National Beverage Corporation, Jones Soda Company and Cott Corporation.

| First Quarter | | $ | 75.63 | | $ | 66.31 | |

| Second Quarter | | $ | 73.38 | | $ | 63.00 | |

| Third Quarter | | $ | 94.93 | | $ | 63.82 | |

| Fourth Quarter | | $ | 113.50 | | $ | 89.56 | |

During the year ended December 31, 2014, no shares of common stock were purchased under the April 2013 Repurchase Plan.

| Equity compensation plans approved by stockholders | | 13,214,554 | | $19.73 | | 11,384,395 | |

| Total | | 13,214,554 | | $19.73 | | 11,384,395 | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| First Quarter | | $ | 63.18 | | $ | 45.57 | |

| Second Quarter | | $ | 83.96 | | $ | 60.66 | |

| Third Quarter | | $ | 75.00 | | $ | 50.20 | |

| Fourth Quarter | | $ | 59.07 | | $ | 39.99 | |

On November 13, 2012, the Company’s Board of Directors authorized a share repurchase program for the repurchase of up to $250.0 million of the Company’s outstanding common stock (the “November 2012 Repurchase Plan”).

During the year ended December 31, 2013, the Company purchased 0.951 million shares of common stock at an average purchase price of $56.98 per share for a total amount of $54.2 million (excluding broker commissions).

The following tabular summary reflects our repurchase activity during the quarter ended December 31, 2013.

| 2013 | | Total Number of Shares Purchased | | Average Price per Share¹ | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (In thousands)² | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| November 1 - November 30 | | 950,690 | | $ | 56.98 | | 950,690 | | $ | 145,814 | |

| Total | | 950,690 | | $ | 56.98 | | | | | | |

| | | | | | | | | | | | |

¹Excluding broker commissions paid.

²Net of broker commissions paid.

| | | | | | | | |

| Equity compensation plans approved by stockholders | | 13,346,989 | | $15.71 | | 12,256,906 | |

| Total | | 13,346,989 | | $15.71 | | 12,256,906 | |

COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN

The consolidated statements of operations data set forth below with respect to each of the fiscal years ended December 31, [removed: 2011] [added: 2012] through [removed: 2013] [added: 2014] and the balance sheet data as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] are derived from our audited consolidated financial statements included herein, and should be read in conjunction with those financial statements and notes thereto, and with Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Part II, Item 7 of this Annual Report on Form 10-K.

The consolidated statements of operations data for the fiscal years ended December 31, [removed: 2010] [added: 2011] and [removed: 2009] [added: 2010] and the balance sheet data as of December 31, [removed: 2011, 2010] [added: 2012, 2011] and [removed: 2009] [added: 2010] are derived from the Company’s audited consolidated financial statements not included herein.

| (in thousands, exceptper shareinformation) | | [added: 2014 | | |] 2013 | | | 2012 | | | 2011 | | | 2010 | | | [removed: 2009 | | |]

| Gross sales*¹ | | $ | [removed: 2,586,531] [added: 2,827,092] | | $ | [removed: 2,373,499] [added: 2,586,531] | | $ | [removed: 1,950,490] [added: 2,373,499] | | $ | [removed: 1,488,516] [added: 1,950,490] | | $ | [removed: 1,309,335] [added: 1,488,516] | |

| Net sales¹ | | $ | [removed: 2,246,428] [added: 2,464,867] | | $ | [removed: 2,060,702] [added: 2,246,428] | | $ | [removed: 1,703,230] [added: 2,060,702] | | $ | [removed: 1,303,942] [added: 1,703,230] | | $ | [removed: 1,143,299] [added: 1,303,942] | |

| Gross profit¹ | | $ | [removed: 1,172,931] [added: 1,339,810] | | $ | [removed: 1,065,656] [added: 1,172,931] | | $ | [removed: 894,309] [added: 1,065,656] | | $ | [removed: 680,240] [added: 894,309] | | $ | [removed: 612,316] [added: 680,240] | |

| Gross profit as a percentage to net sales | | [added: 54.4% | | |] 52.2% | | | 51.7% | | | 52.5% | | | 52.2% | | | [removed: 53.6% | | |]

| Operating income² | | $ | [removed: 572,916] [added: 747,505] | | $ | [removed: 550,623] [added: 572,916] | | $ | [removed: 456,423] [added: 550,623] | | $ | [removed: 347,814] [added: 456,423] | | $ | [removed: 337,309] [added: 347,814] | |

| Net income | | $ | [removed: 338,661] [added: 483,185] | | $ | [removed: 340,020] [added: 338,661] | | $ | [removed: 286,219] [added: 340,020] | | $ | [removed: 212,029] [added: 286,219] | | $ | [removed: 208,716] [added: 212,029] | |

| Basic | | $ | [removed: 2.03] [added: 2.89] | | $ | [removed: 1.96] [added: 2.03] | | $ | [removed: 1.62] [added: 1.96] | | $ | [removed: 1.20] [added: 1.62] | | $ | [removed: 1.16] [added: 1.20] | |

| Diluted | | $ | [removed: 1.95] [added: 2.77] | | $ | [removed: 1.86] [added: 1.95] | | $ | [removed: 1.53] [added: 1.86] | | $ | [removed: 1.14] [added: 1.53] | | $ | [removed: 1.10] [added: 1.14] | |

| Cash, cash equivalents and investments | | $ | [removed: 623,388] [added: 1,194,397] | | $ | [removed: 340,949] [added: 623,388] | | $ | [removed: 793,807] [added: 340,949] | | $ | [removed: 643,680] [added: 793,807] | | $ | [removed: 427,672] [added: 643,680] | |

| Total assets | | $ | [removed: 1,420,509] [added: 1,938,875] | | $ | [removed: 1,043,325] [added: 1,420,509] | | $ | [removed: 1,362,399] [added: 1,043,325] | | $ | [removed: 1,146,950] [added: 1,362,399] | | $ | [removed: 850,189] [added: 1,146,950] | |

| Stockholders’ equity | | $ | [removed: 992,279] [added: 1,515,150] | | $ | [removed: 644,397] [added: 992,279] | | $ | [removed: 979,158] [added: 644,397] | | $ | [removed: 828,398] [added: 979,158] | | $ | [removed: 584,953] [added: 828,398] | |

¹Includes [added: $15.0 million,] $14.8 million, $13.2 million, $13.0 [removed: million, $10.0] million and [removed: $8.2] [added: $10.0] million for the years ended December 31, [added: 2014,] 2013, 2012, [removed: 2011, 2010] [added: 2011] and [removed: 2009,] [added: 2010,] respectively, related to the recognition of deferred revenue.

²Includes [added: ($0.2) million,] $10.8 million, $1.5 million, $1.1 [removed: million, $0.3] million and [removed: $1.9] [added: $0.3] million for the years ended December 31, [added: 2014,] 2013, 2012, [removed: 2011, 2010] [added: 2011] and [removed: 2009,] [added: 2010,] respectively, related to expenditures attributable to the costs associated with terminating existing distributors.

| | | | | | | | | | | | | | | | | |

The information required to be furnished in response to this ITEM 8 follows the signature page and Index to Exhibits hereto at pages 69 through [removed: 106.][added: 114.]

Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are [removed: adequate and] effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC and (2) accumulated and communicated to our management, including our principal executive and principal financial officers as appropriate to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on the framework in _Internal Control – Integrated [removed: Framework_ _(1992)_] [added: Framework (2013)_] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our management’s evaluation under the framework in _Internal Control - Integrated Framework [removed: (1992)_,] [added: (2013)_,] our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2013.][added: 2014.]

Our internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report, which is included herein.

_Changes in Internal Control Over Financial Reporting_ – There were no changes in the Company’s internal controls over financial reporting during the quarter ended December 31, [removed: 2013,] [added: 2014,] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have audited the internal control over financial reporting of Monster Beverage Corporation and subsidiaries (the “Company”) as of December 31, [removed: 2013,] [added: 2014,] based on criteria established in _Internal Control — Integrated Framework [removed: (1992)_] [added: (2013)_] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on the criteria established in _Internal Control — Integrated Framework [removed: (1992)_] [added: (2013)_] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, [removed: 2013] [added: 2014] of the Company and our report dated March [removed: 3, 2014] [added: 2, 2015] expressed an unqualified opinion on those financial statements and financial statement schedule.

March 2, 2015

March 3, 2014

The information required by this item regarding our directors is included under the caption “Proposal One – Election of Directors” in our Proxy Statement for our [removed: 2014] [added: 2015] Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, [removed: 2013] [added: 2014] (the [removed: “2014] [added: “2015] Proxy Statement”) and is incorporated herein by reference.

Information concerning compliance with Section 16(a) of the Exchange Act is included under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in our [removed: 2014] [added: 2015] Proxy Statement and is incorporated herein by reference.

Information concerning the Audit Committee and the Audit Committee Financial expert is reported under the caption “Audit Committee; Report of the Audit Committee; Duties and Responsibilities” in our [removed: 2014] [added: 2015] Proxy Statement and is incorporated herein by reference.

Information concerning the compensation of our directors and executive officers and Compensation Committee Interlocks and Insider Participation is reported under the captions “Compensation Discussion and Analysis,” and “Compensation Committee,” respectively, in our [removed: 2014] [added: 2015] Proxy Statement and is incorporated herein by reference.

Information concerning the beneficial ownership of the Company’s Common Stock of (a) those persons known to the Company to be the beneficial owners of more than 5% of the Company’s common stock; (b) each of the Company’s directors and nominees for director; and (c) the Company’s executive officers and all of the Company’s current directors and executive officers as a group is reported under the caption “Principal Stockholders and Security Ownership of Management” in our [removed: 2014] [added: 2015] Proxy Statement and is incorporated herein by reference.

Information concerning certain relationships and related transactions is reported under the caption “Certain Relationships and Related Transactions and Director Independence” in our [removed: 2014] [added: 2015] Proxy Statement and is incorporated herein by reference.

Information concerning our accountant fees and our Audit Committee’s pre-approval of audit and permissible non-audit services of independent auditors is reported under the captions “Principal Accounting Firm Fees” and “Pre-Approval of Audit and Non-Audit Services,” respectively, in our [removed: 2014] [added: 2015] Proxy Statement and is incorporated herein by reference.

| (a) | [added: |] The following documents are filed as a part of this Form 10-K: | |

| | [added: |] [Report of Independent Registered Public Accounting [removed: Firm](#ReportOfIndependentRegisteredPubl_132342] [added: Firm](#ReportOfIndependentRegisteredPubl_221457] "Click to goto ") | [removed: 69] [added: 74] |

| | [added: |] Financial Statements: | |

| | [added: |] [Consolidated Balance Sheets as of December 31, [removed: 2013] [added: 2014] and [removed: 2012](#ConsolidatedBalanceSheets_132401] [added: 2013](#ConsolidatedBalanceSheets_221602] "Click to goto ") | [removed: 70] [added: 75] |

| | [added: |] [Consolidated Statements of Income for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#ConsolidatedStatementsOfIncome_132403] [added: 2012](#ConsolidatedStatementsOfIncome_221605] "Click to goto ") | [removed: 71] [added: 76] |

| | [added: |] [Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#ConsolidatedStatementsOfComprehen_132421] [added: 2012](#ConsolidatedStatementsOfComprehen_221631] "Click to goto ") | [removed: 72] [added: 77] |

| | [added: |] [Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#ConsolidatedStatementsOfStockhold_132419] [added: 2012](#ConsolidatedStatementsOfStockhold_221651] "Click to goto ") | [removed: 73] [added: 78] |

| | [added: |] [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#ConsolidatedStatementsOfCashFlows_073551] [added: 2012](#ConsolidatedStatementsOfCashFlows_221818] "Click to goto ") | [removed: 74] [added: 79] |

| | [added: |] [Notes to Consolidated Financial [removed: Statements](#NotesToConsolidatedFinancialState_073720] [added: Statements](#NotesToConsolidatedFinancialState_222020] "Click to goto ") | [removed: 76] [added: 81] |

| | [added: |] Financial Statement Schedule: | |

| | [added: |] [Valuation and Qualifying Accounts for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#MonsterBeverageCorporationAndSubs_085334] [added: 2012](#ScheduleIiValuationAndQualifyingA_025814] "Click to goto ") | [removed: 106] [added: 114] |

| | [added: |] Exhibits: | |

| | [added: |] The Exhibits listed in the Index of Exhibits, which appears immediately following the signature page and is incorporated herein by reference, as filed as part of this Form 10-K. | |

| /s/ RODNEY C. SACKS | | Rodney C. Sacks | | Date: March [removed: 3, 2014] [added: 2, 2015] |

| /s/ RODNEY C. SACKS | | Chairman of the Board of Directors and Chief Executive Officer (principal executive officer) | | March [removed: 3, 2014] [added: 2, 2015] |

| /s/ HILTON H. SCHLOSBERG | | Vice Chairman of the Board of Directors, President, Chief Operating Officer, Chief Financial Officer and Secretary (principal financial officer, controller and principal accounting officer) | | March [removed: 3, 2014] [added: 2, 2015] |

| /s/ NORMAN C. EPSTEIN | | Director | | March [removed: 3, 2014] [added: 2, 2015] |

| /s/ BENJAMIN M. POLK | | Director | | March [removed: 3, 2014] [added: 2, 2015] |

| /s/ SYDNEY SELATI | | Director | | March [removed: 3, 2014] [added: 2, 2015] |

| /s/ HAROLD C. TABER, JR. | | Director | | March [removed: 3, 2014] [added: 2, 2015] |

| /s/ MARK S. VIDERGAUZ | | Director | | March [removed: 3, 2014] [added: 2, 2015] |

| /s/ MARK J. HALL | | Director | | March [removed: 3, 2014] [added: 2, 2015] |

| [removed: 10.1] [added: 10.9] | [removed: Amended and Restated] Monster [removed: Beverages Off-Premise] [added: Energy] Distribution Coordination [removed: Agreement] [added: Agreement, dated October 3, 2008,] between Hansen Beverage Company and [removed: Anheuser-Busch, Incorporated] [added: The Coca Cola Company] (incorporated by reference to [removed: Exhibit 10.01] [added: exhibit 10.1] to our Form [removed: 8-K] [added: 10-Q] dated [removed: August 11, 2006).] [added: November 10, 2008).] |

| [removed: 10.2] [added: 10.8] | [removed: On-Premise Distribution Coordination] [added: Business Loan] Agreement between Hansen Beverage Company and [removed: Anheuser-Busch, Incorporated] [added: Comerica Bank] (incorporated by reference to Exhibit 10.1 to our Form [removed: 8-K] [added: 10-Q] dated [removed: February 12,] [added: August 9,] 2007). |

| [removed: 10.3+] [added: 10.1+] | Form of Amendment to Stock Option Agreement (relating to the amendment of certain stock option agreements between Hansen Natural Corporation and its executive officers and directors) (incorporated by reference to Exhibit 10.1 to our Form 8-K dated January 8, 2007). |

| [removed: 10.4] [added: 10.2] | Form of Indemnification Agreement (to be provided by Hansen Natural Corporation to its directors) (incorporated by reference to Exhibit 10.1 to our Form 8-K dated November 14, 2005). |

| [removed: 10.6+] [added: 10.32+] | Employment Agreement between [removed: Hansen Natural] [added: Monster Beverage] Corporation and Rodney C. Sacks (incorporated by reference to Exhibit 10.1 to our Form 8-K dated March [removed: 11, 2009).] [added: 19, 2014).] |

| [removed: 10.7+] [added: 10.33+] | Employment Agreement between [removed: Hansen Natural] [added: Monster Beverage] Corporation and Hilton H. Schlosberg (incorporated by reference to Exhibit 10.2 to our Form 8-K dated March [removed: 11, 2009).] [added: 19, 2014).] |

| [removed: 10.13+] [added: 10.5+] | Stock Option Agreement between Hansen Natural Corporation and Rodney C. Sacks (made as of [removed: March 23,] [added: November 11,] 2005) (incorporated by reference to Exhibit [removed: 10.36] [added: 10.47] to our Form 10-K dated March 15, 2006). |

| [removed: 10.14+] [added: 10.4+] | Stock Option Agreement between Hansen Natural Corporation and Hilton H. Schlosberg (made as of [removed: March 23,] [added: November 11,] 2005) (incorporated by reference to Exhibit [removed: 10.37] [added: 10.46] to our Form 10-K dated March 15, 2006). |

| [removed: 10.16+] [added: 10.3+] | Stock Option Agreement between Hansen Natural Corporation and Harold Taber (made as of November 11, 2005) (incorporated by reference to Exhibit 10.42 to our Form 10-K dated March 15, 2006). |

| 10.17+ | Stock Option Agreement between Hansen Natural Corporation and [removed: Mark Vidergauz] [added: Hilton H. Schlosberg] (made as of [removed: November 11, 2005)] [added: June 2, 2008)] (incorporated by reference to [removed: Exhibit 10.44] [added: exhibit 10.45] to our Form 10-K dated March [removed: 15, 2006).] [added: 1, 2010).] |

| [removed: 10.19+] [added: 10.23+] | Stock Option Agreement between Hansen Natural Corporation and Hilton H. Schlosberg (made as of [removed: November 11, 2005)] [added: December 1, 2009)] (incorporated by reference to [removed: Exhibit 10.46] [added: exhibit 10.52] to our Form 10-K dated March [removed: 15, 2006).] [added: 1, 2010).] |

| [removed: 10.20+] [added: 10.15+] | Stock Option Agreement between Hansen Natural Corporation and Rodney C. Sacks (made as of [removed: November 11, 2005)] [added: June 2, 2008)] (incorporated by reference to [removed: Exhibit 10.47] [added: exhibit 10.44] to our Form 10-K dated March [removed: 15, 2006).] [added: 1, 2010).] |

| [removed: 10.26] [added: 10.6] | Single Tenant Industrial Lease, made and entered into as of October 13, 2006 by and between Watson Land Company, a California Corporation, and Hansen Beverage Company, a Delaware Corporation (incorporated by reference to exhibit 10 to our Form 10-K dated June 6, 2007). | [removed: |]

| [removed: 10.27+] [added: 10.7+] | Hansen Natural Corporation 2001 Amended and Restated Stock Option Plan (incorporated by reference to Exhibit A to our Proxy Statement dated September 25, 2007). | [removed: |]

| [removed: 10.31] [added: 10.11] | Monster Energy Distribution [removed: Coordination] Agreement, dated October 3, 2008, between Hansen Beverage Company and [removed: The Coca Cola Company] [added: Coca-Cola Enterprises, Inc.] (incorporated by reference to exhibit [removed: 10.1] [added: 10.3] to our Form 10-Q dated November 10, 2008). | [removed: |]

| [removed: 10.32] [added: 10.10] | Monster Energy International Distribution Coordination Agreement, dated October 3, 2008, between Tauranga Ltd, trading as Monster Energy, and Coca-Cola Enterprises Inc. (incorporated by reference to exhibit 10.2 to our Form 10-Q dated November 10, 2008). | [removed: |]

| [removed: 10.33] [added: 10.12] | Monster Energy [added: Canadian] Distribution Agreement, dated October 3, 2008, between Hansen Beverage Company and Coca-Cola [removed: Enterprises, Inc.] [added: Bottling Company.] (incorporated by reference to exhibit [removed: 10.3] [added: 10.4] to our Form 10-Q dated November 10, 2008). | [removed: |]

| [removed: 10.34] [added: 10.13] | Monster Energy [removed: Canadian] [added: International] Distribution Agreement, dated October 3, 2008, between [removed: Hansen Beverage Company] [added: Tauranga Ltd, trading as Monster Energy,] and Coca-Cola [removed: Bottling Company.] [added: Enterprises Inc.] (incorporated by reference to exhibit [removed: 10.4] [added: 10.5] to our Form 10-Q dated November 10, 2008). | [removed: |]

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| 2.1 | Transaction Agreement, dated as of August 14, 2014, by and among Monster Beverage Corporation, New Laser Corporation, New Laser Merger Corp, The Coca-Cola Company and European Refreshments (incorporated by reference from exhibit 2.1 to our Form 8-K dated August 18, 2014). |

| 2.2 | Asset Transfer Agreement, dated as of August 14, 2014, by and among Monster Beverage Corporation, New Laser Corporation and The Coca-Cola Company Refreshments (incorporated by reference from exhibit 2.2 to our Form 8-K dated August 18, 2014). |

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March 2, 2015

| | | 2014 | | | 2013 | | |

| Cash and cash equivalents | | $ | 370,323 | | $ | 211,349 | |

| Intangibles held-for-sale | | 18,079 | | | \- | | |

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| 10.5 | Amended and Restated Allied Products Distribution Coordination Agreement between Hansen Beverage Company and Anheuser-Busch, Incorporated (incorporated by reference to Exhibit 10.2 to our Form 8-K dated August 11, 2006). |

| 10.12 | Manufacturing Contract between Hansen Beverage Company and Pri-Pak, Inc. (incorporated by reference to Exhibit 10.32 to our Form 10-K dated March 16, 2005). |

| 10.21+ | Severance and Consulting Agreement by and among Hansen Beverage Company, Hansen Natural Corporation, and Harold C. Taber, Jr. (incorporated by reference to Exhibit 10(YY) to our Form 10-Q dated November 12, 1997). | |

| 10.24+ | Settlement Agreement dated as of September 1999 between Hansen Beverage Company and Rodney C. Sacks as sole Trustee of the Hansen’s Trust and Hansen Beverage Company, The Fresh Juice Company of California, Inc. (incorporated by reference to Exhibit 10 to our Form 10-Q dated November 15, 1999). | |

| 10.25+ | Settlement Agreement September 3, 1999 by and between The Fresh Juice Company of California, Inc., The Fresh Smoothie Company, LLC, Barry Lublin, Hansen’s Juice Creations, LLC, Harvey Laderman and Hansen Beverage Company and Rodney C. Sacks, as Trustee of The Hansen’s Trust (incorporated by reference to Exhibit 10 to our Form 10-Q dated November 15, 1999). | |

| 10.28 | Business Loan Agreement between Hansen Beverage Company and Comerica Bank (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated August 9, 2007). | |

| 10.29 | Letter Agreement between Anheuser-Busch, Inc. and Hansen Beverage Company, dated March 6, 2007, amending and clarifying certain terms of the Amended and Restated Allied Products Distribution Coordination Agreement between Hansen Beverage Company and Anheuser-Busch (incorporated by reference to exhibit 10.62 to our Form 10-K dated February 29, 2008). | |

| 10.30 | Letter Agreement between Anheuser-Busch, Inc. and Hansen Beverage Company, dated March 6, 2007, amending and clarifying certain terms of the Amended and Restated Monster Beverages Off-Premise Distribution Coordination Agreement between Hansen Beverage Company and Anheuser-Busch (incorporated by reference to exhibit 10.63 to our Form 10-K dated February 29, 2008). | |

| 10.36 | Monster Energy Belgium Distribution Agreement, dated October 3, 2008, between Tauranga Ltd, trading as Monster Energy, and Coca-Cola Enterprises Inc. (incorporated by reference to exhibit 10.6 to our Form 10-Q dated November 10, 2008). | |

| 10.47+ | Stock Option Agreement between Hansen Natural Corporation and Thomas J. Kelly (made as of December 1, 2010) (incorporated by reference to exhibit 10.53 to our Form 10-K dated March 1, 2011). |

| 10.48+ | Stock Option Agreement between Hansen Natural Corporation and Mark J. Hall (made as of December 1, 2010) (incorporated by reference to exhibit 10.54 to our Form 10-K dated March 1, 2011). |

| 10.49+ | Form of Restricted Stock Unit Agreement pursuant to the 2009 Hansen Natural Corporation Stock Incentive Plan for Non-Employee Directors (incorporated by reference to exhibit 10.55 to our Form 10-K dated March 1, 2011). |

| 10.52+* | Agreement between the Company and Mark Hall, dated October 28, 2013. |

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March 3, 2014

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| Balance, January 1, 2011 | | 197,462 | | | $ | | 988 | | | $ 186,546 | | | | $ 882,425 | | | | $ | | 281 | | | (19,502 | ) | | $ (241,842 | | ) | | $ | | 828,398 | |

| Exercise of stock options | | 1,181 | | | 6 | | | | | 20,312 | | | | \- | | | | \- | | | | | \- | | | \- | | | | 20,318 | | | |

| Issuance of restricted stock | | 86 | | | \- | | | | | \- | | | | \- | | | | \- | | | | | \- | | | \- | | | | \- | | | |

| Net income | | \- | | | \- | | | | | \- | | | | 286,219 | | | | \- | | | | | \- | | | \- | | | | 286,219 | | | |

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| Depreciation and amortization | | 22,713 | | | 20,513 | | | 17,032 | | |

| Accounts receivable | | (43,026) | | | (17,772) | | | (56,752) | | |

| CASH AND CASH EQUIVALENTS, beginning of year | | 222,514 | | | 359,331 | | | 354,842 | | |

amortized cost is recognized in other comprehensive income (loss), net of applicable taxes.

_Capitalized Software Costs_ – In accordance with ASC 350-40, the Company capitalizes certain costs incurred in connection with developing or obtaining internal use software.

Costs incurred in the preliminary project stage are expensed.

All direct external costs incurred to develop internal use software during the development stage are capitalized and amortized using the straight-line method over the remaining useful lives.

Costs such as maintenance and training are expensed as incurred.

_Recent Accounting Pronouncements –_ In July 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)”.

The amendments in this ASU provide guidance on the financial statements presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists.

An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability.

The amendments in this ASU do not require new recurring disclosures.

In February 2013, the FASB issued ASU No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”.

ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component.

In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period.