10-Q 1 f10q0612_maxsound.htm QUARTERLY REPORT f10q0612_maxsound.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
 
FORM 10-Q
_______________
 
(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2012
 
or
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to______.
 
MAX SOUND CORPORATION
 (Exact name of registrant as specified in charter)
 
DELAWARE
 
000-51886
 
26-3534190
(State or other jurisdiction of
incorporation or organization)
 
(Commission File Number)
 
(I.R.S Employer Identification No.)

10685-B Hazelhurst Drive #6572
Houston, Texas 77043
 (Address of principal executive offices)
 _______________
 
210-401-7667
(Registrant’s telephone number, including area code)
_______________
 
Not applicable
 
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x
(Do not check if a smaller reporting company)
     
       
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock. As of August 13, 2012, there were 255,460,394 shares, par value $0.0001 per share, of common stock issued and outstanding.
 
 
 

 
 
MAX SOUND CORPORATION

FORM 10-Q
June 30, 2012
 
INDEX
 
PART I-- FINANCIAL INFORMATION
 
Item 1.
Financial Statements
1
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
43
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
50
Item 4.
Controls and Procedures
50
 
PART II-- OTHER INFORMATION
 
Item 1
Legal Proceedings
51
Item 1A
Risk Factors
51
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
51
Item 3.
Defaults Upon Senior Securities
51
Item 4.
Mine Safety Disclosures
51
Item 5.
Other Information
51
Item 6.
Exhibits
52
 
SIGNATURES

 
 

 
 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements
 
MAX SOUND CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
 
CONTENTS

PAGE
1
CONDENSED BALANCE SHEETS AS OF JUNE 30, 2012 (UNAUDITED) AND AS OF DECEMBER 31, 2011 (AUDITED).
     
PAGE
2
CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011 AND FOR THE PERIOD DECEMBER 9, 2005 (INCEPTION) TO JUNE 30, 2012 (UNAUDITED).
     
PAGE
3
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE PERIOD FROM DECEMBER 9, 2005 (INCEPTION) TO JUNE 30, 2012 (UNAUDITED).
     
PAGE
4
CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011 AND FOR THE PERIOD DECEMBER 9, 2005 (INCEPTION) TO JUNE 30, 2012 (UNAUDITED).
     
PAGES
5 - 42
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED).
 
 
 

 
 
 
Max Sound Corporation
 
(A Development Stage Company)
 
Condensed Balance Sheets
 
             
             
ASSETS
 
             
             
   
June 30, 2012
   
December 31, 2011
 
   
(UNAUDITED)
       
             
Current Assets
           
Cash
  $ 114,903     $ 516,532  
Prepaid expenses
    26,805       23,659  
Debt offering costs - net
    43,954       -  
Total  Current Assets
    185,662       540,191  
                 
Property and equipment, net
    221,046       146,000  
                 
Other Assets
               
Security deposit
    413       413  
Intangible assets
    7,800,275       7,800,275  
Total  Other Assets
    7,800,688       7,800,688  
                 
                 
Total  Assets
  $ 8,207,396     $ 8,486,879  
                 
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
                 
Current Liabilities
               
Accounts payable
  $ 38,600     $ 25,470  
Accrued expenses
    74,812       165,897  
Derivative liability
    708,783       -  
Convertible note payable, net of debt discount of $331,364
    443,970       -  
Total Current Liabilities
    1,266,165       191,367  
                 
Commitments and Contingencies
               
                 
Stockholders' Equity
               
Preferred stock,  $0.0001 par value; 10,000,000 shares authorized,
               
No shares issued and outstanding
    -       -  
Common stock,  $0.0001 par value; 400,000,000 shares authorized,
               
255,335,394 and 255,184,661 shares issued and outstanding, respectively
    25,534       25,519  
Additional paid-in capital
    22,709,948       22,629,977  
Deficit accumulated during the development stage
    (15,794,251 )     (14,359,984 )
Total Stockholders' Equity
    6,941,231       8,295,512  
                 
Total Liabilities and Stockholders' Equity
  $ 8,207,396     $ 8,486,879  
 
See accompanying notes to condensed unaudited financial statements
 
 
 
 
1

 
 
Max Sound Corporation
(A Development Stage Company)
Condensed Statement of Operations
(UNAUDITED)
 
   
For the Three Months Ended,
   
For the Six Months Ended,
   
For the Period From December 9, 2005
(Inception) to
 
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
 
                               
Revenue
  $ -     $ -     $ -     $ -     $ 23,826  
                                         
                                         
Operating Expenses
                                       
General and administrative
    144,717       32,243       338,332       69,135       961,700  
Endorsement fees
    -       411,900       -       819,273       4,942,277  
Consulting
    139,611       455,246       259,611       2,382,106       5,655,557  
Professional fees
    26,059       26,883       84,629       67,559       450,940  
Website development
    -       -       -       -       251,263  
Compensation
    162,000       54,000       324,000       108,000       2,982,343  
Total Operating Expenses
    472,387       980,272       1,006,572       3,446,073       15,244,080  
                                         
Loss from Operations
    (472,387 )     (980,272 )     (1,006,572 )     (3,446,073 )     (15,220,254 )
                                         
Other Income / (Expense)
                                       
Interest income
    57       25       129       25       640  
Gain on extinguishment of debt
    -       -       -       -       6,643  
Interest expense
    (127,730 )     (2,647 )     (127,730 )     (5,682 )     (144,731 )
Amortization of debt offering costs
    (29,178 )             (30,380 )     -       (30,380 )
Amortization of debt discount
    (185,392 )     (3,139 )     (189,925 )     (9,371 )     (213,908 )
Change in fair value of embedded derivative liability
    (9,285 )     17,040       (79,789 )     (32,085 )     (55,806 )
Total Other Income / (Expense)
    (351,528 )     11,279       (427,695 )     (47,113 )     (437,542 )
                                         
Provision for Income  Taxes
    -       -       -       -       -  
                                         
Net Loss
  $ (823,915 )   $ (968,993 )   $ (1,434,267 )   $ (3,493,186 )   $ (15,657,796 )
                                         
Net Loss Per Share  - Basic and Diluted
  $ (0.00 )   $ (0.00 )   $ (0.01 )   $ (0.02 )        
                                         
Weighted average number of shares outstanding
                                       
  during the year Basic and Diluted
    255,335,394       234,809,929       255,274,304       231,642,501          
 
See accompanying notes to condensed unaudited financial statements
 
 
2

 
 
Max Sound Corporation
 
(A Development Stage Company)
 
Condensed Statement of Changes in Stockholders' Equity
 
For the Period from December 9, 2005 (Inception) to June 30, 2012
 
(UNAUDITED)
 
   
                                                       
   
Preferred stock
   
Common stock
   
Additional
                     
Total
 
                           
paid-in
   
Accumulated
   
Subscription
   
Deferred
   
Stockholder's
 
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
Deficit
   
Receivable
   
Compensation
   
Equity
 
                                                       
                                                       
Balance, December 9, 2005 (Inception)
    -     $ -       -     $ -     $ -     $ -     $ -     $ -     $ -  
                                                                         
Stock issued on acceptance of incorporation expenses
    -       -       100,000       10       90       -       -       -       100  
                                                                         
Net loss for the period December 9, 2005 (Inception) to December 31, 2005
    -       -       -       -       -       (400 )     -       -       (400 )
                                                                         
Balance, December 31, 2005
    -       -       100,000       10       90       (400 )     -       -       (300 )
                                                                         
Net loss for the year ended December 31, 2006
    -       -       -       -       -       (1,450 )     -       -       (1,450 )
                                                                         
Balance, December 31, 2006
    -       -       100,000       10       90       (1,850 )     -       -       (1,750 )
                                                                         
Net loss for the year ended December 31, 2007
    -       -       -       -       -       (1,400 )     -               (1,400 )
                                                                         
Balance, December 31, 2007
    -       -       100,000       10       90       (3,250 )     -       -       (3,150 )
                                                                         
Common stock issued for services to founder ($0.001/sh)
    -       -       44,900,000       4,490       40,410       -       -       -       44,900  
                                                                         
Common stock issued for cash ($0.25/sh)
    -       -       473,000       47       118,203       -       (67,750 )     -       50,500  
                                                                         
Common stock issued for services ($0.25/sh)
    -       -       12,000       1       2,999       -       -       -       3,000  
                                                                         
Shares issued in connection with stock dividend
    -       -       136,455,000       13,646       122,809       (136,455 )     -       -       -  
                                                                         
In kind contribution of rent - related party
    -       -       -       -       2,913       -       -       -       2,913  
                                                                         
Accrued expenses payment made by a former shareholder
    -       -       -       -       4,400       -       -       -       4,400  
                                                                         
Net loss for the year ended December 31, 2008
    -       -       -       -       -       (117,115 )     -       -       (117,115 )
                                                                         
Balance, December 31, 2008
    -       -       181,940,000       18,194       291,824       (256,820 )     (67,750 )     -       (14,552 )
                                                                         
Common stock issued for cash ($0.25/sh)
    -       -       62,000       6       15,494       -       -       -       15,500  
                                                                         
Common stock issued for services ($0.25/sh)
    -       -       24,000       2       5,998       -       -       -       6,000  
                                                                         
Common stock issued for services ($0.35/sh)
    -       -       1,700,000       170       594,830       -       -       (499,333 )     95,667  
                                                                         
Common stock issued for services ($0.0625/sh)
    -       -       935,714       94       58,388       -       -       -       58,482  
                                                                         
Warrants issued for services
    -       -       -       -       823,077       -       -       -       823,077  
                                                                         
Common stock issued for services ($1.50/sh)
    -       -       30,000       3       44,997       -       -       (39,699 )     5,301  
                                                                         
Common stock issued for services ($1.77/sh)
    -       -       30,000       3       53,097       -       -       (53,100 )     -  
                                                                         
Common stock issued for services ($1.78/sh)
    -       -       100,000       10       177,990       -       -       (166,052 )     11,948  
                                                                         
Common stock issued for services ($1.80/sh)
    -       -       100,000       10       179,990       -       -       (168,904 )     11,096  
                                                                         
Common stock issued for services ($1.93/sh)
    -       -       2,830,000       283       5,461,617       -       -       (5,459,098 )     2,802  
                                                                         
Common stock issued for services ($1.94/sh)
    -       -       30,000       3       58,197       -       -       (58,200 )     -  
                                                                         
Common stock issued for services ($1.95/sh)
    -       -       920,000       92       1,793,908       -       -       (1,135,808 )     658,192  
                                                                         
Common stock issued for services ($2.00/sh)
    -       -       300,000       30       599,970       -       -       (506,423 )     93,577  
                                                                         
Return of common stock issued for services ($0.35/sh)
    -       -       (1,100,000 )     (110 )     (384,890 )     -       -       385,000       -  
                                                                         
Shares issued in connection with stock dividend
    -       -       258,000       26       (26 )     -       -       -       -  
                                                                         
Stock offering costs
    -       -       -       -       (850 )     -       -       -       (850 )
                                                                         
Collection of subscription receivable
    -       -       -       -       -       -       67,750       -       67,750  
                                                                         
In kind contribution of rent - related party
    -       -       -       -       12,600       -       -       -       12,600  
                                                                         
Deferred compensation realized
    -       -       -       -       -       -       -       114,333       114,333  
                                                                         
Net loss for the year ended December 31, 2009
    -       -       -       -       -       (2,298,552 )     -       -       (2,298,552 )
                                                                         
Balance, December 31, 2009
    -       -       188,159,714       18,816       9,786,211       (2,555,372 )     -       (7,587,284 )     (337,629 )
                                                                         
Common stock issued for cash ($0.25/sh)
    -       -       1,200,000       120       299,880       -       -       -       300,000  
                                                                         
Accrued salary conversion into common stock ($0.30/sh)
    -       -       945,507       95       283,557       -       -       -       283,652  
                                                                         
Common stock issued for services ($0.15/sh)
    -       -       250,000       25       37,475       -       -       -       37,500  
                                                                         
Common stock issued for services ($0.18/sh)
    -       -       100,000       10       17,990       -       -       -       18,000  
                                                                         
Common stock issued for services ($0.19/sh)
    -       -       100,000       10       18,990       -       -       -       19,000  
                                                                         
Common stock issued for services ($0.20/sh)
    -       -       210,000       21       41,979       -       -       -       42,000  
                                                                         
Common stock issued for services ($0.25/sh)
    -       -       140,000       14       34,986       -       -       -       35,000  
                                                                         
Common stock issued in exchange for technology rights ($0.25/sh)
    -       -       30,000,000       3,000       7,497,000       -       -       -       7,500,000  
                                                                         
Return of common stock issued for services ($1.05/sh)
    -       -       (150,000 )     (15 )     15       -       -       -       -  
                                                                         
Common stock issued for services ($1.24/Sh)
    -       -       1,000,000       100       1,239,900       -       -       (1,097,315 )     142,685  
                                                                         
Common stock issued for services ($1.70/sh)
    -       -       100,000       10       169,990       -       -       (152,534 )     17,466  
                                                                         
Cancellation of shares held in escrow ($1.93/sh)
    -       -       (1,000,000 )     (100 )     (1,929,900 )     -       -       487,802       (1,442,198 )
                                                                         
Warrants issued for services
    -       -       -       -       10,559       -       -       -       10,559  
                                                                         
Blue sky fees
    -       -       -       -       (400 )     -       -       -       (400 )
                                                                         
Stock and financing offering costs
    -       -       -       -       (8,000 )                             (8,000 )
                                                                         
In kind contribution of rent - related party
    -       -       -       -       9,450       -       -       -       9,450  
                                                                         
Deferred compensation realized
    -       -       -       -       -       -       -       6,546,046       6,546,046  
                                                                         
Net loss for the year ended December 31, 2010
    -       -       -       -       -       (6,312,965 )     -       -       (6,312,965 )
                                                                         
Balance, December 31, 2010
    -       -       221,055,221       22,106       17,509,682       (8,868,337 )     -       (1,803,285 )     6,860,166  
                                                                         
Common stock issued in exchange for assets ($0.10/sh)
    -       -       3,000,000       300       299,700       -       -       -       300,000  
                                                                         
Common stock issued for services ($0.07/sh)
    -       -       2,000,000       200       139,800       -       -       -       140,000  
                                                                         
Common stock issued for services ($0.08/sh)
    -       -       1,006,500       101       80,419       -       -       -       80,520  
                                                                         
Common stock issued for services ($0.10/sh)
    -       -       3,066,462       307       306,339       -       -       -       306,646  
                                                                         
Common stock issued for services ($0.11/sh)
    -       -       500,000       50       54,950       -       -       -       55,000  
                                                                         
Common stock issued for services ($0.22/sh)
    -       -       15,403       2       3,387       -       -       -       3,389  
                                                                         
Common stock issued for services ($0.23/sh)
    -       -       100,000       10       22,990       -       -       -       23,000  
                                                                         
Common stock issued for services ($0.25/sh)
    -       -       702,860       70       175,645       -       -       -       175,715  
                                                                         
Common stock issued for services ($0.33/sh)
    -       -       100,000       10       32,990       -       -       -       33,000  
                                                                         
Common stock issued for services ($0.35/sh)
    -       -       2,443       -       855       -       -       -       855  
                                                                         
Common stock issued for services ($0.39/sh)
    -       -       101,500       10       39,575       -       -       -       39,585  
                                                                         
Common stock issued for services ($0.47/sh)
    -       -       123,795       12       58,172       -       -       -       58,184  
                                                                         
Common stock issued for services ($0.50/sh)
    -       -       100,000       10       49,990       -       -       -       50,000  
                                                                         
Common stock issued for services ($0.54/sh)
    -       -       200,000       20       107,980       -       -       -       108,000  
                                                                         
Common stock issued for services ($0.70/sh)
    -       -       100,000       10       69,990       -