Stockholders' Equity

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 6          STOCKHOLDERS' EQUITY

On November 10, 2014, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 50,000,000 shares of common stock, and changing the par value to $.00001 per share.

On March 4, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors created and authorized the issuance of Series A Convertible Preferred stock, with a par value of $0.00001 per share. The face amount of state value of each Preferred Share of stock is $0.96.

(A) Common Stock 

During the three months ended March 31, 2015, the Company issued the following common stock:

Transaction Type	Quantity			Valuation			Range of Value per share
Conversion of convertible debt and accrued interest		29,796,782		$	791,444			$0.02715 - $0.14175
Services - rendered		950,000			32,730			$0.028 - $0.063
Return of shares		(120,000,000	)		(1,200	)	$	0.00001
Preferred stock issued in exchange of common stock		5,000,000			50		$	0.00001
Total shares issued		(89,253,218	)	$	1,401,650

 The following is a detailed description of transactions noted above:

1. Conversion of convertible debt and accrued interest

During the three months ended March 31, 2015, the Company converted debt and accrued interest, totaling $791,444 into 29,796,782 shares of common stock

2. Services Rendered

On February 28, 2015, the Company entered into a services agreement. In connection with this agreement, the consultant will receive 700,000 shares of fully vested common stock.

During the year ended December 31, 2014, the Company issued 250,000 shares of common stock valued at $12,850 in connection with employment agreements entered into (See Note 9 (A).

2. Return of Shares and Issuance of Preferred shares

On March 4, 2015 the Company filed a form 8K with the SEC associated with the Company entering into a Securities Exchange Agreement and the Company filing with the Secretary of State Delaware a Certificate of Designations, Preferences and Rights whereby, among other things, the Company for good and valuable consideration, agreed that in consideration of a large shareholder exchanging 120,000,000 shares of common stock back to the Company, the shareholder would receive 5,000,000 shares of Series A Convertible Preferred Stock of the Company at a Stated Value of $0.96 per share and a Conversion Price of $.0.04 per share. The Series A Convertible Preferred Stock carries certain voting preferences and will accrue dividends at a rate of 8% per annum Stated Value, payable in cash or in kind at the election of the Board of Directors. For the three months ended March 31, 2015, the Company recorded $30,000 as a dividend payable.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

During the year ended December 31, 2014, the Company issued the following common stock:

Transaction Type	Quantity			Valuation		Range of Value per share
Conversion of convertible debt and accrued interest	48,998,342		$	3,421,019		$0.02715 - $0.14175
Services - rendered	3,150,000			678,030		$0.093 - $0.365
Acquisition of intangibles	15,000,000			1,514,000		$0.0985 - $0.12
Return of shares	(4,250,000	)		—		$0.00 - $0.00
Settlement of accounts payable	1,000,000			90,000	$	0.09
Total shares issued	63,898,342		$	5,703,049

The following is a detailed description of transactions noted above:

1. Conversion of convertible debt and accrued interest

During the year ended December 31, 2014, the Company converted debt and accrued interest, totaling $3,421,019 into 48,998,342 shares of common stock.    Conversions of debt to equity occurring after the maturity date and penalties incurred resulted in a loss on settlement of $183,911.

2. Services Rendered

During the year ended December 31, 2014, the Company issued 1,250,000 shares of common stock valued at $386,250 in connection with employment agreements entered into (See Note 9 (A).

On January 15, 2013, the Company entered into an agreement for legal services, pursuant to which the Company will pay $2,000 and issue 50,000 shares of fully vested common stock for the preparation, filing costs and fees of each provisional and regular patent application.  Through September 30, 2014, a total of 44 applications have been filed.  In connection with this agreement:

During the year ended December 31, 2014, the Company issued 800,000 shares of fully vested common stock for services having a fair value of $131,500 ($0.11 - $0.168/share).

On March 17, 2014, the Company entered into an advisory board agreement for a period of three years. In consideration for these services, during the nine months ended September 30, 2014, the Consultant was granted 100,000 shares of fully vested common stock valued at $9,300 ($0.09/share). (See note 7(B)).

On April 4, 2014, the Company entered into consulting services agreement. In consideration for these services, during the nine months ended September 30, 2014, the Consultant was granted 200,000 shares of fully vested common stock valued at $21,980 ($0.11/share). (See note 7(B)).

During the year ended December 31, 2014, the Company entered into a consulting services agreement related to marketing and the creation of Company awareness. In connection with this agreement, the consultant shall be paid $20,000 and was issued 200,000 fully vested shares of common stock valued at $31,000 ($0.16/share). (See note 7(B)).

On August 6, 2014, the Company entered into an advisory board agreement for a period of three years. In consideration for these services, during the nine months ended September 30, 2014, the Consultant was granted 100,000 fully vested shares of common stock valued at $16,500 ($0.17/share). (See note 7(B)).

On September 23, 2014, the Company entered into service agreement for a period of two years with the Company’s transfer agent. In consideration for these services, during the nine months ended September 30, 2014, 300,000 shares of fully vested common stock valued at $49,500 ($0.17/share) were granted and expensed.

On September 10, 2014, the Company entered into an advisory board agreement. In consideration for these services, during the nine months ended September 30, 2014, the Consultant was granted 100,000 shares of fully vested common stock valued at $16,000 ($0.16/share). (See note 7(B)).

On July 29, 2014, the Company entered into an investor relations agreement. In connection with this agreement, the Company is to issue 100,000 shares of common stock monthly and $5,500 in monthly fees. As of September 30, 2014, the agreement was terminated. In total, the consultant was issued 100,000 shares of fully vested common stock valued at $16,000 ($0.16/share) and was paid $5,500. (See note 7(B)).

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

3. Acquisition of intangibles

During the nine months ended September 30, 2014, the Company issued 15,000,000 common shares in connection with license agreements entered into and intangibles acquired. See Note 1(I)

4. Return of Shares

On August 3, 2012, the Company entered into an endorsement agreement with an unrelated third party for a period from August 3, 2012 through August 3, 2015.    In exchange for the services provided, the Company issued 3,000,000 shares of common stock having a fair value of $960,000 ($0.30/share) based upon fair value on the date of grant. As of January 2014, the August 3, 2012 agreement has been terminated and 3,000,000 shares have been returned to the Company (See note 7(B)).

In July of 2013, the Company entered into a financial advisor agreement for a period of six months with the advisor providing various assistance including introductions to potential investors. The Agreement calls for a fee of $25,000 with an additional $7,500 due and payable on the 1st day of the subsequent five months. On July 8, 2013, the Company issued 1,500,000 common shares as consideration for these services valued at $315,000. On April 15, 2014, the parties entered into a mutual termination agreement, as a result, 1,250,000 shares were returned to the Company.

5. Settlement of accounts payable

During the year ended December 31, 2014, the Company settled accounts payable totaling $154,320 through the issuance of $1,000,000 common shares with a valuation of $90,000. The Company recognize a gain on settlement of $64,320.

 (B) Stock Warrants

On November 25, 2014, the Company issued 200,000 warrants for services rendered. The Company recognized compensation expense of $11,972 on the date of issuance with the offset being recorded to derivative liabilities since the Company applied the provisions of ASC No. 815, pertaining to the potential settlement in a variable amount of shares given the company’s shares are tainted.    The Company recorded the fair value of the warrants    based on the fair value of each warrant grant estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions, dividend yield of zero, expected volatility of 128%; risk-free interest rates of 0.91%, expected life of three years. The warrants vested immediately.  The warrants expire in three years from the date of issuance and have an exercise price of $0.10 per share (See Note 9(B)).

During the year ended December 31, 2014, the Company issued 750,000 warrants in connection with the entry into certain convertible debenture agreements. Each warrant vests immediately and expire February 26, 2017 – August 12, 2017 with an exercise price of $0.40.

The following tables summarize all warrant grants as of March 31, 2015, and the related changes during these periods are presented below:

Balance, December 31, 2014	3,750,000	$	0.38	1.7
Granted	—	$	—
Exercised	—	$	—
Cancelled/Forfeited	—	$	—
Balance, March 31, 2015	3,750,000	$	0.38	1.4

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

A summary of all outstanding and exercisable warrants as of March 31, 2015 is as follows:

				Weighted Average
	Exercise	Warrants	Warrants	Remaining		Aggregate
	Price	Outstanding	Exercisable	Contractual Life		Intrinsic Value
$	0.10	200,000	200,000	2.66	$	—
$	0.25	200,000	200,000	0.20	$	—
$	0.40	2,850,000	2,850,000	1.49	$	—
$	0.45	500,000	500,000	0.76	$	—
		3,750,000	3,750,000	1.4 years	$	—

 A summary of all outstanding and exercisable warrants as of December 31, 2014 is as follows:

				Weighted Average
	Exercise	Warrants	Warrants	Remaining		Aggregate
	Price	Outstanding	Exercisable	Contractual Life		Intrinsic Value
$	0.10	200,000	200,000	2.90	$	—
$	0.25	200,000	200,000	0.44	$	—
$	0.40	2,850,000	2,850,000	1.73	$	—
$	0.45	500,000	500,000	1.00	$	—
		3,750,000	3,750,000	1.7 years	$	—

(C) Stock Options

The following tables summarize all option grants as of March 31, 2015, and the related changes during these periods are presented below:

Outstanding - December 31, 2014	15,566,652	0.13	1.32
Granted	—	—	—
Exercised	—	—	—
Forfeited or Canceled	—	—	—
Outstanding - March 31, 2015	15,566,652	—	1.07
Exercisable - March 31, 2015	15,566,652

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

(D) Share Exchange

On May 11, 2010, the Company acquired the rights to an audio technology known as Max Audio Technology (Max) through a share exchange, whereby the Company issued 30,000,000 shares of common stock to two individuals in exchange for their rights in Max having a value of $7,500,000 based upon recent market value ($0.25/share) (See Note 8(B)).

On January 17, 2011, the Company acquired the rights to software technology known as Blog Software, Social Media Vault, Social Media Bar and Trending Topix (BSST) through a share exchange, whereby the Company issued 3,000,000 shares of common stock to two individuals in exchange for their rights to BSST having a value of $300,000 based upon recent market value ($0.10/share).

On November 15, 2012, the Company acquired the rights to an audio technology known as Liquid Spins, Inc. through a share exchange, whereby the Company issued 24,752,475 shares of common stock for their rights in Liquid Spins technology and other assets having a value of $10,000,000 based upon recent market value ($0.404/share).    The following assets were acquired in the transaction:

	Three Months Ended			Year Ended
	March 31, 2015			December 31, 2014
Intangible at fair value, Opening Balance	$	9,303,679		$	9,303,679
Consideration transferred  at fair value:
Common stock - 24,752,475 Shares		—			—
Net assets acquired:
Current assets		—			—
Cash		—			—
Total net assets acquired		—			8,011
Amortization		(1,206,949	)		(965,559	)
Intangible at fair value, Ending Balance	$	8,096,731		$	8,338,121

During the year ended December 31, 2013, the Company received an additional $8,011 related to the acquisition which reduced the carrying value of the intangible asset as of December 31, 2013.  For the year ended December 31, 201, the Company recorded $965,559_ of amortization expense.

For the year ended December 31, 2014 and 2013, the Company recorded $965,559 and $343,898, respectively, of amortization expense.

For the three months ended March 31, 2015 and 2014, the Company recorded $241,390 and $241,389, respectively, of amortization expense.

(D) Share Exchange

For the three months ended March 31, 2015 and 2014, the Company recorded $241,390 and $241,389, respectively, of amortization expense.