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EX-21 - EXHIBIT 21 - BOLDFACE GROUP, INC.v245400_ex21.htm
EX-4.3 - EXHIBIT 4.3 - BOLDFACE GROUP, INC.v245400_ex4-3.htm
EX-4.6 - EXHIBIT 4.6 - BOLDFACE GROUP, INC.v245400_ex4-6.htm
EX-4.4 - EXHIBIT 4.4 - BOLDFACE GROUP, INC.v245400_ex4-4.htm
EX-4.7 - EXHIBIT 4.7 - BOLDFACE GROUP, INC.v245400_ex4-7.htm
EX-4.2 - EXHIBIT 4.2 - BOLDFACE GROUP, INC.v245400_ex4-2.htm
EX-31.1 - EXHIBIT 31.1 - BOLDFACE GROUP, INC.v245400_ex31-1.htm
EX-10.2 - EXHIBIT 10.2 - BOLDFACE GROUP, INC.v245400_ex10-2.htm
EX-32.1 - EXHIBIT 32.1 - BOLDFACE GROUP, INC.v245400_ex32-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-K
(Mark One)
 
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended: September 30, 2011

 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______ to _______
 
 Commission File Number: 333-148722

MAX CASH MEDIA, INC.
(Exact name of registrant as specified in its charter)

Nevada
02-0811868
(State or other jurisdiction of incorporation)
(I.R.S. Employer Identification No.)

50 Brompton Road, Apt. 1X
Great Neck, NY 11021
(Address of principal executive offices)

(646) 303-6840
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None
 
Securities registered pursuant to Section 12(g) of the Exchange Act: None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨   No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes x   No ¨
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ¨
 
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 ¨
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definitions of the “large accelerated filer,” “accelerate 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 x   No ¨
 
As of January 12, 2012 there were 6,370,000 shares of the registrant’s common stock, par value $0.001, issued and outstanding. Of these, 1,370,000 shares were held by non-affiliates of the registrant. The aggregate market value of the voting and non-voting common equity held by non-affiliates was $0 as the registrant’s stock did not then and does not presently trade.
 
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable.

 
 

 
 
TABLE OF CONTENTS
Item Number and Caption
 
Page
     
Forward-Looking Statements
 
3
       
PART I
 
4
       
1.
Business
 
5
1A.
Risk Factors
 
5
1B.
Unresolved Staff Comments
 
5
2.
Properties
 
5
3.
Legal Proceedings
 
6
4.
[Removed and Reserved]
   
       
PART II
 
6
       
5.
Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities
  6
6.
Selected Financial Data
 
7
7
Management's Discussion and Analysis of Financial Condition and Results of OPerations
 
7
7A.
Quantitative and Qualitative Disclosures About Market Risk
 
12
8.
Financial Statements and Supplemental Data
 
12
9.
Changes In And Disagreements With Accountants On Accounting, And Financial Disclosure
 
12
9A.
Controls And Procedures
 
13
9B.
Other Information
 
14
       
PART III
 
14
       
10.
Directors, Executive Officers, and Corporate Governance
 
14
11.
Executive Compensation
 
17
12.
Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters
  18
13.
Certain Relationships And Related Transactions and Director Independence
 
19
14.
Principal Accountant Fees And Services
 
19
       
PART IV
 
20
       
15.
Exhibits and Financial Statement Schedules
 
20

 
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FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains forward-looking statements within the meaning of federal securities laws. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should carefully review the risks described in this Annual Report and in other documents we file from time to time with the Securities and Exchange Commission (the “SEC”). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
 
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
 
All references in this Form 10-K to the “Company,” “MXCS,” “we,” “us” or “our” are to Max Cash Media, Inc.
 
 
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PART I

ITEM 1.      BUSINESS

General

We were incorporated in the State of Nevada on July 9, 2007, with the intention of acquiring and marketing intellectual properties within the entertainment industry. We conducted minimal operations in this line of business and decided to discontinue operations in this area. We are presently inactive, but we are looking at ventures of merit for corporate participation as means of enhancing shareholder value. This may involve sales of our equity or debt securities in merger or acquisition transactions.

Transactions with Prism Corporation

In August 2011, we entered negotiations relating to a proposed reverse triangular merger (the “Merger”) with Prism Corporation, an Oklahoma corporation (“Prism”), a privately held company active in the oil, gas and energy business in several states of the southern and western United States. In connection with those Merger discussions with Prism, it was contemplated that we might conduct a private placement offering (the “PPO”) for up to 2,500,000 shares of our common stock, par value $0.0001 (the “Common Stock”), to close simultaneously with the closing of the Merger.

On August 9, 2011, we had a first closing of a private placement (the “Bridge Offering”) of $1,000,000 principal amount of our 8% Secured Convertible Promissory Notes (the “Notes”).  On August 18, 2011, we had a second closing of the Bridge Offering of $500,000 principal amount of Notes, on August 31, 2011, we had a third closing of the Bridge Offering of $250,000 principal amount of Notes, and on September 29, 2011, we had a fourth closing of the Bridge Offering of $250,000 principal amount of Notes. In the aggregate, we sold $2,000,000 in principal amount of the Notes. Each of the Notes matured three months from the date of issuance.  Accrued interest was to be payable at maturity or upon earlier conversion as described below.

All of the outstanding principal amount of, and accrued but unpaid interest on, the Notes was to be converted automatically into shares of our Common Stock simultaneously with the closing of the Merger at a price of $1.00 per share (subject to adjustment in certain circumstances).

 The net proceeds of the sale of the Notes in the Bridge Offering were utilized by us to make loans (the “Bridge Loans”) to Prism under four 8% Secured Bridge Loan Promissory Notes (aggregating to $2,000,000 in principal amount), under which all accrued interest was to be payable at maturity, and which were to mature on the earlier to occur of (a) three months from the date of issuance or (b) the closing of any subsequent financing by Prism that resulted in gross proceeds to Prism of an amount equal to or greater than the aggregate amount loaned to Prism under the Bridge Loans; provided that upon the consummation of the Merger prior to such maturity, all indebtedness of Prism to us (including accrued interest) represented by the Bridge Loans was to be deemed canceled and paid in full.

 
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The Notes are secured by: (i) a first priority security interest in all of our assets relating to the Bridge Loans, now owned or hereafter acquired by the Company; (ii) a first priority security interest in all of the tangible and intangible assets of Prism now owned or hereafter acquired by Prism; and (iii) a pledge by certain shareholders of Prism of 100% of the outstanding capital stock of Prism.

Discussions with Prism relating to the proposed Merger and related PPO terminated with neither Prism nor us being bound to proceed with the Merger or PPO. All of the Bridge Loans and the Notes have passed their maturity dates and all are currently in default. Discussions are underway with Prism relating to the repayment to us of the $2,000,000 aggregate principal amount of the Bridge Loans along with accrued and unpaid interest on the Bridge Loans. We have also begun legal actions against Prism (see Part I, Item 3. Legal Actions, below, for a discussion of the legal proceedings relating to this matter) and we intend to aggressively pursue all legal remedies available to us in connection with the collection of these debts.

Patents, Trademarks and Licenses

We do not presently own any patents, trademarks, copyrights or other forms of intellectual property.

Research and Development

We have not performed any research and development since our inception.
 
Employees
 
As of September 30, 2011, we had two employees, who devote minimal time to Company matters.

ITEM 1A.    RISK FACTORS

Not Applicable.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 2.       PROPERTIES

Our principal executive office is located at 50 Brompton Road, Apt. 1X, Great Neck, NY 11021. The office is provided to us on a rent free basis by our Chief Executive Officer, Noah Levinson.
 
 
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ITEM 3.       LEGAL PROCEEDINGS

On January 9, 2012, we commenced litigation in the Federal Court for the Southern District of New York (the “Court”) against Prism Corporation and its President Joe Loftis (the “Defendants”). The Complaint states causes of action against the Defendants for breach of contract, seizure of collateral and injunctive relief, and seeks to obtain a Judgment in the amount of $2,000,000 plus interest and all costs due under the four promissory notes at issue. In an effort to ensure that our first priority security interest in Prism's assets (the “Collateral” under the relevant security and pledge agreements) remains intact throughout the pendency of the litigation, we also successfully petitioned the Court to issue an Order to Show Cause with Temporary Restraining Order, thereby enjoining Defendants from, among other things, selling, assigning, transferring, conveying or otherwise disposing of any of the Collateral. The parties are due back in Court on January 19, 2012, at which time our attorneys will continue to aggressively pursue all available remedies.

PART II

ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has been approved to be quoted on the OTC Bulletin Board under the symbol “MXCS.OB”. However, to date there has been no trading market for our common stock.

The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.

As of September 30, 2011, we had 11 shareholders of record of our common stock.
 
Dividends

Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.
 
Payment of dividends in the future will depend upon our earnings, capital requirements, financial condition and other factors, which our Board of Directors may deem relevant.

Recent Sales of Unregistered Equity Securities
 
During the fiscal year ended September 30, 2011, we issued no equity securities.

 
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 6.       SELECTED FINANCIAL DATA

Not applicable.

ITEM 7.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Much of the discussion in this Item is “forward looking.” Actual operations and results may materially differ from present plans and projections due to changes in economic conditions, new business opportunities, changed business conditions, and other developments. Other factors that could cause results to differ materially are described in our filings with the SEC.

The following are factors that could cause actual results or events to differ materially from those anticipated, and include, but are not limited to, general economic, financial and business conditions, changes in and compliance with governmental laws and regulations, including various state and federal environmental regulations, our ability to obtain additional financing from outside investors and/or bank and mezzanine lenders; and our ability to generate sufficient revenues to cover operating losses and position us to achieve positive cash flow.

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-K to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of our public disclosure practices.

Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes contained in Item 8 of Part II of this Form 10-K.

Plan of Operation

We were formed to engage in the acquisition and marketing of intellectual properties within the entertainment business. We conducted minimal operations in this line of business and has since decided to discontinue operations in this area. We are presently inactive, but we are looking at ventures of merit for corporate participation as means of enhancing shareholder value. This may involve sales of our equity or debt securities in merger or acquisition transactions.
 
Results of Operations
  
We have conducted no material operations during the year ended September 30, 2011 and do not have any present operations.

 
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Revenues

We have had no revenues since our inception.

Expenses

We incurred operating expenses of $78,353 for the fiscal year ended September 30, 2011, compared to operating expenses of $83,800 for the fiscal year ended September 30, 2010. The decrease in operating expenses for the fiscal year ended September 30, 2011 was mainly due to decreased professional fees related to the preparation and filing of our periodic reports with the Securities and Exchange Commission.
 
The operating expenses for the period from July 9, 2007 (date of inception) through September 30, 2011 amounted to $347,452 primarily due to the factors discussed above. We have not generated any operating revenues since inception. We anticipate that we will not generate any operating revenues until we are able to raise additional capital for funding our operations.

The main components of our operating expenses during the fiscal year ended September 30, 2011 and 2010, and for the period from July 9, 2007 (date of inception) through September 30, 2011 were as follows:

   
Fiscal Year Ended
September 30,
2011
   
Fiscal Year Ended
September 30,
2010
   
For the Period
from 
July 9, 2007
(inception)
through
September 30,
2011
 
Professional fees
  $ 59,860     $ 70,093     $ 285,787  
General and administrative expenses
  $ 18,493     $ 13,707     $ 61,665  

Net Loss

We incurred net loss in the amount of $2,109,308 for the fiscal year ended September 30, 2011, as compared to net loss of $90,826 for the fiscal year ended September 30, 2010. Net loss for the period from July 9, 2007 (date of inception) through September 30, 2011 was $2,385,345.

We believe that we will need additional funding to satisfy our cash requirements for the next twelve months. Completion of our plan of operation is subject to attaining adequate revenue. We cannot assure investors that additional financing will be available. In the absence of additional financing, we may be unable to proceed with our plan of operations.
 
 
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Interest income was $5 for the fiscal year ended September 30, 2011, as compared to interest income of $21 for the fiscal year ended September 30, 2010. The decrease in interest income for the fiscal year ended September 30, 2011 was mainly due to lower average cash balances held in bank deposits. Interest expense was $30,960 during the fiscal year ended September 30, 2011, as compared to $7,047 during the fiscal year ended September 30, 2010. Interest expense during the fiscal year ended September 30, 2011 consisted mainly of interest on a convertible note in the principal amount of $50,000 issued by the Company in July 2009, promissory note in the amount of $65,000 issued by the Company in May 2010, a series of convertible notes in the principal amount of $66,125 issued by the Company in July 2011 and a series of convertible notes in the principal amount of $2,000,000 issued by the Company in August 2011. Net interest expense for the period from July 9, 2007 (date of inception) through September 30, 2011 amounted to $38,784.

Liquidity and Capital Resources

The report of our auditors on our audited financial statements for the fiscal year ended September 30, 2011 contains a going concern qualification as we have suffered losses since our inception. We have minimal assets and have achieved no operative revenues since our inception. As of September 30, 2011 and 2010, we had cash of $25,205 and $11,410 and current liabilities of $2,123,668 and $67,054, respectively. Unless and until we commence material operations and achieve material revenues, we will remain dependent on financings to continue our operations.

Since our inception, our ongoing operating costs have been financed primarily by loans and sales of our common stock. From July 9, 2007 (inception) through September 30, 2011, we raised $137,000 from sales of shares of common stock. In July 2009, we issued a convertible promissory note in the principal amount of $50,000, in May 2010, we issued a promissory note in the amount of $65,000 and from August to September 2011, we issued $2,066,125 in principal amount of convertible promissory notes (the “2011 Convertible Notes”). The total net funds raised from financing activities of $2,312,536 since inception through September 30, 2011 have been used principally as follows: (a) $285,787 in professional fees in connection with the filing of a registration statement and our financial reporting requirements and (b) $61,665 in general and administrative expenses. At September 30, 2011, we had available cash balances of $25,205 which are held in the interest bearing bank accounts.

As discussed in Part I, “Business,” above, between August and September of 2011 we sold $2,000,000 in principal amount of the Notes in the Bridge Offering, which we, in turn, in contemplation of the proposed Merger with Prism, lent to Prism under the Bridge Loans. The Merger did not go forward and the Notes and Bridge Loans have reached maturity and are all currently in default.

According to their original terms, the 2011 Convertible Notes were supposed to automatically convert at the initial closing of the next private placement following the issuance of the 2011 Convertible Notes in which we sold at least $1,000,000 of our securities into the securities sold in such private placement. As such, the 2011 Convertible Notes were supposed to have converted into Notes as sold in the Bridge Offering. We have amended the 2011 Convertible Notes such that this conversion feature did not apply with respect to the Bridge Offering.

As reflected in the accompanying financial statements, we are in the development stage with no operations, used cash in operations of $287,331 from inception, and have a net loss since inception of $2,385,345. In addition, we have a stockholders’ deficiency of $2,227,352 and a working capital deficiency of $2,098,463. This raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
 
 
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We anticipate that our operational and general and administrative expenses for the next 12 months will total approximately $50,000, not including the $2,000,000 in aggregate principal amount of the Notes plus accrued interest that we are obligated to repay to the investors who participated in the Bridge Offering. We do not currently engage in any product research and development and have no plans to do so in the foreseeable future. We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. The exact allocation, purposes and timing of any monies raised in subsequent private financings may vary significantly depending upon the exact amount of funds raised and our progress with the execution of our business plan. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
 
We presently do not have any available credit, bank financing or other external sources of liquidity. Due to our brief history and historical operating losses, our operations have not been a source of liquidity. We believe that, at our current level of operation, we do not have sufficient cash to meet our expenses for the next twelve months. We expect that we will need to obtain additional capital in order to meet our operational needs, repay the Notes, execute our business plan, build our operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or debt securities, or borrow funds from private lenders or banking institutions. We have not made any decisions with respect to any such financing. There can be no assurance that we will be successful in obtaining additional funding in amounts or on terms acceptable to us, if at all. If we are unable to raise additional funding as necessary, we may have to suspend our operations temporarily or cease operations entirely.
 
Critical Accounting Policies
 
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
 
 
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Our significant accounting policies are summarized in Note 1 of our financial statements. While all these significant accounting policies impact its financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

Recent Accounting Pronouncements

ASU No. 2011-03; Reconsideration of Effective Control for Repurchase Agreements. In April, 2011, the FASB issued ASU No. 2011-03. The amendments in this ASU remove from the assessment of effective control the criterion relating to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee. The amendments in this ASU also eliminate the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets.

The guidance in this ASU is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.
 
ASU No. 2011-04; Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. In May, 2011, the FASB issued ASU No. 2011-04. The amendments in this ASU generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This ASU results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.
 
We will adopt the methodologies prescribed by this ASU by the date required, and do not anticipate that the ASU will have a material effect on our financial position or results of operations.
 
ASU No. 2011-05; Amendments to Topic 220, Comprehensive Income. In June, 2011, the FASB issued ASU No. 2011-05. Under the amendments in this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.

 
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The amendments in this ASU should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted. The amendments do not require any transition disclosures. Due to the recency of this pronouncement, the Company is evaluating its timing of adoption of ASU 2011-05, but will adopt the ASU retrospectively by the due date.
 
On September 15, 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other, which simplifies how an entity is required to test goodwill for impairment. This ASU would allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under the ASU, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The ASU includes a number of factors to consider in conducting the qualitative assessment.  The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.

Off Balance Sheet Transactions

None.

Contractual Obligations

Not applicable.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not applicable.

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Our audited financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list of the financial statements included herein.

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

 
12

 
 
ITEM 9A     CONTROLS AND PROCEDURES

Our Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. This information is accumulated and communicated to our management, including our principal executive financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Management’s Annual Report on Internal Control Over Financial Reporting
 
Under the supervision and with the participation of our senior management, including our chief executive financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as of the end of the period covered by this annual report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer, Noah Levinson concluded as of the Evaluation Date that our disclosure controls and procedures were not effective because of the identification of what might be deemed a material weakness in our internal control over financial reporting which is identified below.
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. With the participation of our chief executive and financial officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2011 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based on this evaluation, our sole officer concluded that, during the period covered by this annual report, our internal controls over financial reporting were not operating effectively. Management did not identify any material weaknesses in our internal control over financial reporting as of September 30, 2011; however, it has identified the following deficiencies that, when aggregated, may possibly be viewed as a material weakness in our internal control over financial reporting as of that date:
 
 
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1.
We do not have an audit committee. While we are not currently obligated to have an audit committee, including a member who is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management’s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures.
 
 
2.
We did not maintain proper segregation of duties for the preparation of our financial statements. We currently only have one officer overseeing all transactions. This has resulted in several deficiencies including the lack of control over preparation of financial statements, and proper application of accounting policies:
 
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report.
 
Officers’ Certifications

Appearing as exhibits to this Annual Report are “Certifications” of our principal executive officer and principal financial officer. The Certifications are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Annual Report contains information concerning the Controls Evaluation referred to in the Section 302 Certification. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the year ended September 30, 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

Not Applicable.
  
PART III
 
ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Executive Officers, Directors and Key Employees
 
Directors serve until the next annual meeting of the stockholders; until their successors are elected or appointed and qualified, or until their prior resignation or removal. Officers serve for such terms as determined by our Board of Directors. Each officer holds office until such officer’s successor is elected or appointed and qualified or until such officer’s earlier resignation or removal. No family relationships exist between any of our present directors and officers.
 
 
14

 
 
The following table sets forth certain information, as of January 12, 2012, with respect to our officers and directors:

Name
 
Positions Held
 
Age
 
Date of Election
or Appointment
as Director
             
Noah Levinson
 
Chief Executive and Financial Officer, President, Treasurer and Director
 
39
 
July 9, 2007
             
Irv Pyun
 
Secretary and Director
 
55
 
July 9, 2007

Noah Levinson

Noah Levinson has been Senior Loan Consultant/Production Coordinator at Kazmi National Finance Company since December 2008. He was Vice President and Operations Manager for Refinance.com, a privately held mortgage bank in New York, from January 2003 to November 2008.  Previous to the mortgage business, Mr. Levinson worked extensively in the entertainment industry.  His first job out of college was at EMI Records doing dance music promotion.  Mr. Levinson then served as a personal assistant to actor Danny DeVito in Los Angeles, and cultivated many relationships in the field.  After two years in California and following several consulting positions, Mr. Levinson created his own boutique public relations firm, Citiwide Media Inc., and handled events for such clients as New Line Cinema, Sundance Channel, and the Raul Julia Ending Hunger fund.

Irv Pyun

Irv Pyun has been owner and CEO of Benefit Solutions Group, Inc., an employee benefits brokerage/consulting firm in Raleigh, NC, since 1995. Mr. Pyun attended Brown University and has over 27 years of experience evaluating group insurance plans. He was an officer and manager of the Group Underwriting Department with The Prudential Insurance Company of America and was responsible for underwriting group accounts ranging from 100 to 20,000 employees. He is familiar with various funding mechanisms for all types of benefit plans whether they are fully insured, partially self-insured, or self-insured. As an independent brokerage consultant, he has been advising employers on their employee benefit programs for more than 22 years, and served as Chairman of the Select Committee on Health Care for the City of Raleigh.

Employment Agreements
 
We do not have any employment agreement or arrangement with any of our employees.

 
15

 
 
Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the board.

Audit Committee
 
We do not have a standing audit committee, an audit committee financial expert, or any committee or person performing a similar function. We currently have limited working capital and no revenues. Management does not believe that it would be in our best interests at this time to retain independent directors to sit on an audit committee. If we are able to raise sufficient financing in the future, then we will likely seek out and retain independent directors and form an audit committee, a compensation committee and other applicable committees.
 
Board of Directors
 
Neither of our directors is an independent director. There are no agreements with respect to the election of directors. We have not compensated our directors for service on our Board of Directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of our Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees but has not done so to date. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date this has not been a problem as no security holders have made any such recommendations. Our directors perform all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations we intend to expand the size of our board and allocate responsibilities accordingly.

Corporate Governance

We are a shell corporation which has yet to achieve operating revenues. Noah Levinson serves as our Chief Executive and Financial Officer, President, Treasurer and Director, and Irv Pyun serves as our Secretary and Director. We believe that our present management structure is appropriate for a company of our size and state of development.
 
Our Board of Directors is actively involved in our risk oversight function and collectively undertakes our risk oversight function. This review of our risk tolerances includes, but is not limited to, financial, legal and operational risks and other risks concerning our reputation and ethical standards.
 
Given our size, we do not have a nominating committee or a diversity policy. Our entire Board of Directors monitors and assesses the need for and qualifications of additional directors. We may adopt a diversity policy in the future in connection with our anticipated growth.

 
16

 
 
Compliance with Section 16(a) of the Exchange Act
 
Our common stock is not registered pursuant to Section 12 of the Exchange Act. Accordingly, our officers, directors and principal shareholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.
 
Code of Ethics
 
The company has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief Financial Officer. This Code of Ethics is filed herewith as an exhibit.

A copy of our Code of Ethics will be provided to any person requesting same without charge. To request a copy of our Code of Ethics, please make written request to our President c/o Max Cash Media, Inc. at 50 Brompton Road, Apt. 1X, Great Neck, NY 11021.

ITEM 11.    EXECUTIVE COMPENSATION

The following table sets forth information concerning the total compensation paid or accrued by us during the two fiscal years ended September 30, 2011 and 2010 to (i) all individuals that served as our principal executive officer or acted in a similar capacity for us at any time during the fiscal year ended September 30, 2011; (ii) all individuals that served as our principal financial officer or acted in a similar capacity for us at any time during the fiscal year ended September 30, 2011; and (iii) all individuals that served as executive officers of ours at any time during the fiscal year ended September 30, 2011 that received annual compensation during the fiscal year ended September 30, 2011 in excess of $100,000.
 
Summary Compensation Table
 
Name and Principal
Position
 
Year
 
Salary 
($)
   
Bonus
($)
   
Stock
Awards
($)
   
Option
Awards
($)
   
Non-
Equity
Incentive
Plan
Compen-
sation ($)
   
Change in
Pension
Value
and
Non-
qualified
Deferred
Compen-
sation
Earnings
($)
   
All
Other
Compen-
sation ($)
   
Total
($)
 
(a)
 
(b)
 
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
   
(i)
   
(j)
 
                                                     
Noah Levinson,
 
2011
    0       0       0       0       0       0       0       0  
Chief Executive Officer & Director
 
2010
    0       0       0       0       0       0       0       0  
                                                                     
Irv Pyun,
 
2011
    0       0       0       0       0       0       0       0  
Secretary & Director
 
2010
    0       0       0       0       0       0       0       0  
 
 
17

 

We have not issued any stock options or maintained any stock option or other incentive plans since our inception. We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans. Similarly, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers or any other persons following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of us or a change in a named executive officer’s responsibilities following a change in control.
 
Compensation of Directors

None of our directors receive any compensation for serving as such, for serving on committees of the board of directors or for special assignments. During the fiscal year ended September 30, 2011, there were no other arrangements between us and our directors that resulted in our making payments to any of our directors for any services provided to us by them as directors.

ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The following table sets forth information with respect to the beneficial ownership of our common stock known by us as of January 12, 2012 by:

 
·
each person or entity known by us to be the beneficial owner of more than 5% of our common stock;

 
·
each of our directors;

 
·
each of our executive officers; and
 
 
·
all of our directors and executive officers as a group.
 
The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on such date and all shares of our common stock issuable to such holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by such person at said date which are exercisable within 60 days of January 12, 2012. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent such power may be shared with a spouse.
 
Name and Address of
Beneficial Owner
 
Title of Class
 
Amount and
Nature
of Beneficial 
Ownership(1)
 
Percentage
of 
Class(2)
 
               
Noah Levinson (3)
 
Common Stock, par value $0.001 per share
 
5,000,000 shares (Direct)
    78.5 %
 
 
18

 
  
(1)
As used herein, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Exchange Act as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, including a right to acquire such power(s) during the next 60 days. Unless otherwise noted, beneficial ownership consists of sole ownership, voting and investment rights.

(2)
There were 6,370,000 shares of common stock issued and outstanding on January 12, 2012.

(3)
The address for Mr. Levinson is 50 Brompton Road, Apt. 1X, Great Neck, NY 11021.

Securities Authorized for Issuance under Equity Compensation Plans

We have not adopted any equity compensation plans since our inception.

ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
We currently use an office space provided by Noah Levinson, our Chief Executive Officer, at no cost to us. Management has agreed to continue this arrangement until we complete an acquisition or merger.

Neither Noah Levinson nor Irv Pyun, our directors, is an independent director as each also serves as an officer.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees.

The aggregate fees billed to us by our principal accountant for services rendered during the fiscal years ended September 30, 2011 and 2010 are set forth in the table below:

Fee Category
 
Fiscal year ended
September 30, 2011
   
Fiscal year ended
September 30, 2010
 
             
Audit fees (1)
  $ 13,441     $ 13,088  
Audit-related fees (2)
    0       0  
Tax fees (3)
    0       0  
All other fees (4)
    0       0  
Total fees
  $ 13,441     $ 13,088  
 
 
19

 
  
(1) Audit fees consist of fees billed for professional services rendered by our principal accountant for the audit of our annual financial statements, review of our interim financial statements included in our quarterly reports on Form 10-Q and services that are normally provided in connection with statutory and regulatory filings or engagements.
 
(2) Audit-related fees consist of fees billed for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”
  
(3) Tax fees consist of fees billed for professional services rendered by our principal accountant relating to tax compliance, tax advice and tax planning.

(4) All other fees consist of fees billed for all other products and services rendered by our principal accountant.

Audit Committee’s Pre-Approval Practice.
 
We do not have an audit committee. Our Board of Directors performs the function of an audit committee. Section 10A(i) of the Exchange Act prohibits our auditors from performing audit services for us as well as any services not considered to be audit services unless such services are pre-approved by our audit committee or, in cases where no such committee exists, by our Board of Directors (in lieu of an audit committee) or unless the services meet certain de minimis standards.
  
PART IV
 
ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  
Financial Statements
 
Page
     
Report of Independent Registered Public Accounting Firm
 
F-2
     
Balance Sheets as of September 30, 2011 and 2010
 
F-3
     
Statements of Operations for the years ended September 30, 2011 and 2010, and for the period from July 9, 2007 (Inception) to September 30, 2011
 
F-4
     
Statements of Changes in Stockholders’ Equity/(Deficiency) for the period from July 9, 2007 (Inception) to September 30, 2011
    F-5
     
Statements of Cash Flows for the years ended September 30, 2011 and 2010, and for the period from July 9, 2007 (Inception) to September 30, 2011
  F-6
     
Notes to Financial Statements
 
F-7 – F-15

 
20

 
 
Financial Statement Schedules
 
All financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

Exhibits

In reviewing the agreements included as exhibits to this Form 10-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

 
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

 
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

 
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

 
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

The following exhibits are included as part of this report:

Exhibit
No.
 
SEC Report
Reference No.
 
Description
         
3.1
 
3.1
 
Articles of Incorporation of Registrant (1)
         
3.2
 
3.2
 
By-Laws of Registrant (2)
         
4.1
 
4.1
 
9% Convertible Promissory Note dated July 29, 2009 (4)
         
4.2
 
*
 
Form of 10% Promissory Note dated May 10, 2010
         
4.3
 
*
 
Form of Amendment to 9% Convertible Promissory Note dated July 29, 2009

 
21

 
 
4.4
 
*
 
Form of 2011 10% Convertible Promissory Note
         
4.5
 
10.3
 
Form of 8% Secured Convertible Promissory Note (5)
         
4.6
 
*
 
Form of Amendment to 10% Promissory Note dated May 10, 2010
4.7
 
*
 
Form of Amendment to 2011 10% Convertible Promissory Notes
         
10.1
 
10.1
 
Securities Purchase Agreement, dated July 28, 2009, between Registrant and Paramount Strategy Corporation (4)
         
10.2
 
*
 
Form of 2011 10% Convertible Promissory Note Subscription Agreement
         
10.3
 
10.1
 
Securities Purchase Agreement dated as of August 4, 2011 by and between the Registrant and the Buyer(s) set forth therein (5)
         
10.4
 
10.2
 
Registration Rights Agreement dated as of August 4, 2011 by and between the Registrant and the Buyer(s) set forth therein (5)
         
10.5
 
10.4
 
Prism Security Agreement dated as of August 4, 2011 by and between the Registrant and Prism Corporation (5)
         
10.6
 
10.5
 
Pledge Agreement dated as of August 4, 2011 by and between the Registrant and the Pledgor(s) set forth therein (5)
         
10.7
 
10.6
 
Bridge Loan Agreement dated as of August 4, 2011 by and between the Registrant and Prism Corporation (5)
         
10.8
 
10.7
 
Company Security Agreement dated as of August 4, 2011 by and between the Registrant and Prism Corporation (5)
         
14
 
14
 
Code of Ethics (3)
         
21
 
*
 
List of Subsidiaries
         
31.1
 
*
 
Certification of Principal Executive Officer and Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
         
32.1
 
*
 
Certification of Chief Executive Officer and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
22

 
 

* Filed herewith.

 
(1)
Filed with the Securities and Exchange Commission on January 17, 2008 as an exhibit, numbered as indicated above, to the Registrant’s Registration Statement on Form SB-2 (file no. 333-148722) (the “Form SB-2”), which exhibit is incorporated herein by reference.

 
(2)
Filed with the Securities and Exchange Commission on January 17, 2008 as an exhibit, numbered as indicated above, to the Form SB-2, which exhibit is incorporated herein by reference.

 
(3)
Filed with the Securities and Exchange Commission on December 31, 2008 as an exhibit, numbered as indicated above, to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2008, which exhibit is incorporated herein by reference.

 
(4)
Filed with the Securities and Exchange Commission on December 29, 2009 as an exhibit, numbered as indicated above, to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2009, which exhibit is incorporated herein by reference.

 
(5)
Filed with the Securities and Exchange Commission on August 15, 2011 as an exhibit, numbered as indicated above, to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2011, which exhibit is incorporated herein by reference.
 
 
23

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
MAX CASH MEDIA, INC.
   
   
/s/Noah Levinson
Dated:  January 13, 2012
By:
 
   
Noah Levinson
   
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities indicated on January 13, 2012.

 
/s/Noah Levinson
   
 
Noah Levinson
 
Principal Executive Officer, Principal Financial Officer and Director
   
 
/s/Irv Pyun
   
 
Irv Pyun
 
Director

 
24

 

PART IV – FINANCIAL INFORMATION
 
ITEM 15.         FINANCIAL STATEMENTS

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)

Report of Independent Registered Public Accounting Firm
 
F-2
     
Balance Sheets as of September 30, 2011 and 2010
 
F-3
     
Statements of Operations for the years ended September 30, 2011 and 2010, and for the period from July 9, 2007 (Inception) to September 30, 2011
 
F-4
     
Statements of Changes in Stockholders’ Equity/(Deficiency) for the period from July 9, 2007 (Inception) to September 30, 2011
 
F-5
     
Statements of Cash Flows for the years ended September 30, 2011 and 2010, and for the period from July 9, 2007 (Inception) to September 30, 2011
 
F-6
     
Notes to Financial Statements
 
F-7 - 15

 
F-1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
Max Cash Media, Inc.
(A Development Stage Company)

We have audited the accompanying balance sheets of Max Cash Media, Inc. (the “Company”) (A Development Stage Company) as of September 30, 2011 and 2010 and the related statements of operations, changes in stockholders’ equity/(deficiency) and cash flows for the two years then ended and for the period from July 9, 2007 (Inception) to September 30, 2011.  These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Max Cash Media, Inc. (A Development Stage Company) as of September 30, 2011 and 2010 and the results of its operations and its cash flows for the two years then ended and for the period from July 9, 2007 (Inception) to September 30, 2011 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 10 to the financial statements, the Company is in the development stage with a net loss of $2,109,308 and used cash in operations of $287,331 since inception. In addition, the Company has a stockholders' deficiency of $2,227,352 and a working capital deficiency of $2,098,463 as of September 30, 2011 and $2,000,000 of convertible notes payable are currently in default.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans concerning these matters are also described in Note 10.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Webb & Company, P.A.
WEBB & COMPANY, P.A.
Certified Public Accountants

Boynton Beach, Florida
January 12, 2012

 
F-2

 

Max Cash Media, Inc.
(A Development Stage Company)
Balance Sheets

   
September 30,
   
September 30,
 
   
2011
   
2010
 
             
ASSETS
             
             
Current Assets
           
Cash
  $  25,205     $  11,410  
Total Current Assets
    25,205       11,410  
                 
Other Assets
               
Debt Issue Costs, net
    2,236       -  
Total Other Assets
    2,236       -  
                 
Total Assets
  $  27,441     $  11,410  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
               
                 
Current Liabilities
               
Accounts Payable and Accrued Expenes
  $  34,893     $  9,230  
Accrued Interest Payable
    38,775       7,824  
Convertible Notes Payable
    2,050,000       50,000  
Current  Liabilities
    2,123,668       67,054  
                 
Long Term Liabilities
               
Convertible Notes Payable
    66,125       -  
Note Payable
    65,000       65,000  
Total Liabilities
    2,254,793       132,054  
                 
                 
Commitments and Contingencies
    -       -  
                 
Stockholders' Deficiency
               
Preferred stock, $0.001 par value; 10,000,000 shares authorized,none issued  and outstanding
    -       -  
Common stock, $0.001 par value; 100,000,000 shares authorized, 6,370,000 shares issued and outstanding, respectively
    6,370       6,370  
Additional paid-in capital
    151,623       149,023  
Deficit accumulated during the development stage
    (2,385,345 )     (276,037 )
Total Stockholder's Deficiency
    (2,227,352 )     (120,644 )
                 
Total Liabilities and Stockholders' Deficiency
  $  27,441     $  11,410  

See accompanying notes to the financial statements.

 
F-3

 

Max Cash Media, Inc.
(A Development Stage Company)
Statements of Operations

   
For the Years Ended
   
For the period from July 9,
2007
 
   
September 30, 2011
   
September 30, 2010
   
(Inception) to September 30,
2011
 
Operating Expenses
                 
Professional Fees
  $ 59,860     $ 70,093     $ 285,787  
General and Administrative
    18,493       13,707       61,665  
Total Operating Expenses
    78,353       83,800       347,452  
                         
Loss from Operations
    (78,353 )     (83,800 )     (347,452 )
                         
Other Income / (Expense)
                       
Interest Income
    5       21       891  
Interest Expense
    (30,960 )     (7,047 )     (38,784 )
Impairment of Note Receivable
    (2,000,000 )     -       (2,000,000 )
                         
Total Other Expense - net
    (2,030,955 )     (7,026 )     (2,037,893 )
                         
LOSS FROM OPERATIONS BEFORE INCOME TAXES
    (2,109,308 )     (90,826 )     (2,385,345 )
                         
Provision for Income Taxes
    -       -       -  
                         
NET LOSS
  $ (2,109,308 )   $ (90,826 )   $ (2,385,345 )
                         
Net Loss Per Share  - Basic and Diluted
  $ (0.33 )   $ (0.01 )        
                         
Weighted average number of shares outstanding during the year/period - Basic and Diluted
    6,370,000       6,370,000          

See accompanying notes to the financial statements.

 
F-4

 

Max Cash Media, Inc.
(A Development Stage Company)
Statements of Changes in Stockholders’ Equity/(Deficiency)
For the period from July 9, 2007 (Inception) to September 30, 2011

                                 
Deficit
             
   
Preferred Stock
   
Common stock
   
Additional
   
accumulated during the
         
Total
 
                           
paid-in
   
development
   
Subscription
   
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
stage
   
Receivable
   
Equity/(Deficiency)
 
                                                 
Balance July 9, 2007
    -     $ -       -     $ -     $ -     $ -     $ -     $ -  
                                                                 
 Common stock issued for services to founder ($0.001)
    -       -       5,000,000       5,000       -       -       -       5,000  
                                                                 
 Common stock issued for cash ($0.10/ per share)
    -       -       255,000       255       25,245       -       (25,500 )     -  
                                                                 
 In kind contribution of services
    -       -       -       -       593       -       -       593  
                                                                 
 Net loss for the period July 9, 2007 (Inception) to September 30, 2007
    -       -       -       -       -       (16,593 )     -       (16,593 )
                                                                 
 Balance, September 30, 2007
    -       -       5,255,000       5,255       25,838       (16,593 )     (25,500 )     (11,000 )
                                                                 
 Common stock issued for cash ($0.10/ per share)
    -       -       1,115,000       1,115       110,385       -       -       111,500  
                                                                 
Cash received for subscription receivable
    -       -       -       -       -       -       25,500       25,500  
                                                                 
 In kind contribution of services
    -       -       -       -       2,600       -       -       2,600  
                                                                 
Net loss for the year ended September 30, 2008
    -       -       -       -       -       (127,900 )     -       (127,900 )
                                                                 
 Balance, September 30, 2008
    -       -       6,370,000       6,370       138,823       (144,493 )     -       700  
                                                                 
 In kind contribution of services
    -       -       -       -       2,600       -       -       2,600  
                                                                 
 Forgiveness of a third party account payable
    -       -       -       -       5,000       -       -       5,000  
                                                                 
Net loss for the year ended September 30, 2009
    -       -       -       -       -       (40,718 )     -       (40,718 )
                                                                 
Balance, September 30, 2009
    -       -       6,370,000       6,370       146,423       (185,211 )     -       (32,418 )
                                                                 
 In kind contribution of services
    -       -       -       -       2,600       -       -       2,600  
                                                                 
Net loss for the year ended September 30, 2010
    -       -       -       -       -       (90,826 )     -       (90,826 )
Balance, September 30, 2010
    -       -       6,370,000       6,370       149,023       (276,037 )     -       (120,644 )
                                                                 
 In kind contribution of services
    -       -       -       -       2,600       -       -       2,600  
                                                                 
Net loss for the year ended September 30, 2011
    -       -       -       -       -       (2,109,308 )     -       (2,109,308 )
Balance, September 30, 2011
    -     $ -       6,370,000     $ 6,370     $ 151,623     $ (2,385,345 )   $ -     $ (2,227,352 )
See accompanying notes to the financial statements.
 
 
F-5

 

Max Cash Media, Inc.
(A Development Stage Company)
Statements of Cash Flows

   
For the year ended
   
For the Period from July
9, 2007
 
   
September 30, 2011
   
September 30, 2010
   
(Inception) to 
September 30, 2011
 
Cash Flows Used in Operating Activities:
                 
Net Loss
  $ (2,109,308 )   $ (90,826 )   $ (2,385,345 )
Adjustments to reconcile net loss to net cash used in operations
                       
In-kind contribution of services
    2,600       2,600       10,993  
Shares issued to founder for services
    -       -       5,000  
Impairment of note receivable
    2,000,000       -       2,000,000  
Amortization of Debt Issue Costs
    3,353       -       3,353  
Changes in operating assets and liabilities:
                       
Increase in accounts payable and accrued expenses
    25,663       5,044       39,893  
Increase in accrued interest payable
    30,951       7,047       38,775  
Net Cash Used In Operating Activities
    (46,741 )     (76,135 )     (287,331 )
                         
Cash Flows From Investing Activities:
                       
Proceeds from issuance of note receivable
    (2,000,000 )     -       (2,000,000 )
Net Cash Used In Investing Activities
    (2,000,000 )     -       (2,000,000 )
                         
Cash Flows From Financing Activities:
                       
Proceeds from note payable
    -       65,000       69,585  
Repayment of loan payable
    -       -       (4,585 )
Proceeds from loan payable- Related party
    -       -       1,100  
Repayment of loan payable - Related party
    -       -       (1,100 )
Proceeds from convertible note payable
    2,066,125       -       2,116,125  
Proceeds from issuance of common stock
    -       -       137,000  
Debt Issue Costs
    (5,589 )     -       (5,589 )
Net Cash Provided by Financing Activities
    2,060,536       65,000       2,312,536  
                         
Net Increase/(Decrease) in Cash
    13,795       (11,135 )     25,205  
                         
Cash at Beginning of Period
    11,410       22,545       -  
                         
Cash at End of Period
  $ 25,205     $ 11,410     $ 25,205  
                         
Supplemental disclosure of cash flow information:
                       
                         
Cash paid for interest
  $ -     $ -     $ -  
Cash paid for taxes
  $ -     $ -     $ 120  
                         
Supplemental disclosure of non-cash investing and financing activities:
                       
                         
Forgiveness of Related Accounts Payable
  $ -     $ -     $ 5,000  

See accompanying notes to the financial statements.

 
F-6

 

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Organization

Max Cash Media, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Nevada on July 9, 2007.  Activities during the development stage include developing the business plan and raising capital.

(B) Use of Estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period.  Significant estimates include the allowance for doubtful accounts, the amortization of debt issuance costs and valuation of deffered tax assets.  Actual results could differ from those estimates.

(C) Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.  At September 30, 2011 and September 30, 2010, the Company had no cash equivalents.

(D) Loss Per Share

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, “Earnings Per Share.”  As of September 30, 2011 and 2010 there were no common share equivalents outstanding.

(E) Income Taxes

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”).  Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under ASC 740-10-25, the effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date.

 
F-7

 
 
MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

   
2011
   
2010
 
             
Expected income tax expense at the statutory rate of 38.55%
  $ (813,223 )   $ (35,017 )
Tax effect of expenses that are not deductible for income tax purposes (net of other amounts deductible for tax purposes)
    1,006       1,006  
Tax effect of differences in the timing of deductibility of items for income tax purposes
    771,080       -  
Change in valuation allowance
    41,137       34,011  
                 
Provision for income taxes
  $ -     $ -  
                 
The components of deferred income taxes are as follows:
               
      2011       2010  
                 
Deferred income tax asset:
               
Impairment of note receivable
  $ 771,080     $ -  
Net operating loss carryforwards
    141,891       100,755  
Valuation allowance
    (912,971 )     (100,755 )
Deferred income taxes
  $ -     $ -  

As of September 30, 2011, the Company has a net operating loss carryforward of approximately $369,352 available to offset future taxable income through 2031. The valuation allowance at September 30, 2011 was $912,971. The valuation allowance at September 30, 2010 was $100,755. The net change in the valuation allowance for the period ended September 30, 2010 was an increase of $812,216.

The Company’s federal income tax returns for the years September 30, 2007 through September 30, 2011 remain subject to examination by the Internal Revenue Service as of September 30, 2011.

(F) Business Segments

The Company operates in one segment and therefore segment information is not presented.

(G) Revenue Recognition

The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

 
F-8

 

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

(H) Reclassification

Certain amounts from prior period have been reclassified to conform to the current period presentation.

(I) Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for accounts payable and accrued expenses, accrued interest payable, convertible note payable and note payable approximate fair value based on the short-term maturity of these instruments.

(J) Recent Accounting Pronouncements

ASU No. 2011-03; Reconsideration of Effective Control for Repurchase Agreements.  In April, 2011, the FASB issued ASU No. 2011-03. The amendments in this ASU remove from the assessment of effective control the criterion relating to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee. The amendments in this ASU also eliminate the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets.

The guidance in this ASU is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

ASU No. 2011-04; Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.   In May, 2011, the FASB issued ASU No. 2011-04. The amendments in this ASU generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed.  This ASU results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs.  The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.

The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

 
F-9

 

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

ASU No. 2011-05; Amendments to Topic 220, Comprehensive Income.  In June, 2011, the FASB issued ASU No. 2011-05. Under the amendments in this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.

The amendments in this ASU should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted. The amendments do not require any transition disclosures. Due to the recency of this pronouncement, the Company is evaluating its timing of adoption of ASU 2011-05, but will adopt the ASU retrospectively by the due date.

On September 15, 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other, which simplifies how an entity is required to test goodwill for impairment. This ASU would allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under the ASU, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The ASU includes a number of factors to consider in conducting the qualitative assessment.  The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.

(K) Debt Issue Costs and Debt Discount

The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt.  These costs are amortized over the life of the debt to debt issue costs. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

(L) Notes Receivable

The Company loaned funds to an unrelated party in the form of a note receivable.  The note is recorded at cost and net of the allowances for losses when a note is deemed to be impaired.  The Company does not record interest income on the note receivable when the contractual payment of interest and/or principal is not received.  For the year ended September 30, 2011 no interest income was recorded on the note receivable.

 
F-10

 

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

(M) Impairment of Notes Receivable

The Company reviews notes receivables for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts recorded as assets on the balance sheet. The Company applies normal loan review procedures (as may be implemented or modified from time to time) in making that judgment.
 
When a loan is impaired, the Company measures impairment based on the present value of expected cash flows discounted at the loan’s effective interest rate against the value of the asset recorded on the balance sheet. The Company may also measure impairment based on a loan’s observable market price or the fair value of collateral if the loan is collateral dependent. If a loan is deemed to be impaired, the Company records a valuation allowance through a charge to earnings for any shortfall. The Company’s assessment of impairment is based on considerable judgment and estimates. For the year ended September 30, 2011 the note receivable is considered impaired and the $2,000,000 was recorded as an impairment expense.

NOTE 2
NOTE RECEIVABLE

On August 4, 2011, the Company received a promissory note in exchange for $2,000,000 bearing interest at 8%  with Prism Corporation (the Borrower).  The loan was disbursed in four installments:

 
·
August 9, 2011 - $1,000,000, due by November 9, 2011
 
·
August 18, 2011 - $500,000, due by November 18, 2011
 
·
August 31, 2011 - $250,000, due by November 30, 2011
 
·
September 9, 2011 - $250,000, due by December 9, 2011

The loan is due and payable on the earliest of:

 
·
On the dates mentioned above, or
 
·
Closing of additional financing by the borrower of an amount equal to or greater of the amount loaned, or
 
·
The date of closing of the merger between the borrower and the lender.

As part of the note receivable the borrower entered into a security and a pledge agreements with the Company. The security agreement is dated August 5, 2011 and Pledge Agreement is dated August 4, 2011.   The Security Agreement granted the Company first priority security interest in all tangible and intangible assets of the borrower.   The Pledge Agreement pledged 1,000 issued and outstanding shares of common stock of the borrower as security

 
F-11

 

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

As of September 30, 2011, none of the above events took place.   No repayment of the note occurred through today and the note receivable is in default. The Company is not recognizing the interest income on the note receivable since the note is in default.  Currently, the value of pledged capital stock cannot be determined and the entire $2,000,000 is deemed to be uncollectible. On January 9, 2012 the Company commenced litigation against the borrower to secure the Company’s interest in the pledged assets (See Note 11).

NOTE 3
DEBT ISSUE COSTS

During the year ended 2011 and 2010, the Company paid debt issue costs totaling $5,589 and $0, respectively.

The following is a summary of the Company’s debt issue costs:

       
Debt issue costs paid – 2011
  $ 5,589  
Amortization of debt issue costs – 2011
    (3,353 )
Debt issue costs – net – 2011
  $ 2,236  

During 2011, the Company amortized $3,353 of debt issue costs.

NOTE 4
STOCKHOLDERS’ EQUITY

(A) Common Stock Issued for Cash

During October 2007, the Company issued 1,115,000 shares of common stock for $111,500 ($0.10/share).

During October 2007, the Company collected $25,500 ($0.10/share) for the sale of 255,000 shares of common stock made during the period from July 9, 2007 (inception) through September 30, 2007.

(B) In-Kind Contribution

For the year ended September 30, 2011, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 9).

During the year ended September 30, 2009, a related party forgave accounts payable in the amount of $5,000 for services provided.  The payable was reclassified to additional paid in capital as an in kind contribution of services (See Notes 5, 8 and 9).

For the year ended September 30, 2010, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 9).

 
F-12

 

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

For the year ended September 30, 2009, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 9).

For the year ended September 30, 2008, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 9).
 
For the year ended September 30, 2007 a shareholder of the Company contributed services having a fair value of $593. (See Note 9).

(C) Stock Issued for Services

On July 9, 2007, the Company issued 5,000,000 shares of common stock to its founder having a fair value of $5,000 ($0.001/share) in exchange for services provided (See Note 9).

NOTE 5 
FORGIVENESS OF A PAYABLE

During the year ended September 30, 2009, a related party forgave accounts payable in the amount of $5,000 for services provided.  The payable was reclassified to additional paid in capital as an in kind contribution of services (See Notes 4(B), 8 and 9).

NOTE 6 
LOAN PAYABLE

On May 10, 2010, the Company issued a promissory note in the amount of $65,000due November 9, 2011 and bearing interest at a rate of 10% per annum.  On November 9, 2011, the due date of the loan was extended to May 9, 2013 (See Note 11).

During 2009, the Company owed $4,585 to an unrelated third party for expenses paid on behalf of the Company.  The loan was repaid in full during August 2009.

For the year ended September 30, 2007, the Company received $1,100 from a principal stockholder. Pursuant to the terms of the loan, the loan is non interest bearing, unsecured and due on demand.  The loan was repaid on October 23, 2007 (See Note 9).

NOTE 7 
CONVERTIBLE NOTE PAYABLE

During August and September, 2011, the Company had a closing of a private placement (the “Bridge Offering”) of $2,000,000 principal amount of 8% Secured Convertible Promissory Notes (the “Notes”).    The Notes mature three months from the date of issuance.  Accrued interest is payable at maturity or upon conversion.    All of the outstanding principal amount of, and accrued but unpaid interest on, the Notes will automatically be converted into shares of the Company’s Common Stock simultaneously with the closing of the Merger (if it occurs) at a price of $1.00 per share (subject to adjustment in certain circumstances).   For the year ended September 30, 2011, the closing of the merger did not take place and convertible note payable is outstanding.  The company accrued $18,959 of interest on the note as of September 30, 2011.

 
F-13

 

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

During August 2011, the Company issued $66,125 of 10% convertible notes payable due the earlier of January 31, 2013 or upon the completion by the Company of a securities offering or other financing in which the Company raises a minimum of one million dollars.  The notes and accrued interest will be converted into the same instruments issued in the offering at the same price and terms in the offering.  Each holder is limited in their conversion to 9.99% of the total outstanding common shares.  If the notes are not converted, the notes require the Company to pay interest in shares of common stock on the due date based on the 10 day weighted average price of the Company’s common stock or if not such price exists, at a rate determined by the Board of Directors.  The notes are unsecured. The company accrued $992 of interest on the note as of September 30, 2011.

On July 29, 2009, the Company issued a convertible promissory note in the amount of $50,000 due January 28, 2011 and bearing interest at a rate of 9% per annum. On January 28, 2011 the Company extended the due date of the note to July 27, 2012.   All debt can be converted into shares at a conversion price to be mutually determined by the Company and the holder of the note.

NOTE 8 
COMMITMENTS

On October 15, 2007, the Company entered into a consulting agreement with a related party to receive administrative and other miscellaneous services.  The Company is required to pay $7,500 a month.  The agreement was to remain in effect unless either party desired to cancel the agreement.   This agreement has been terminated as of July 31, 2008.  In addition, the payment due for the month of July has been reduced to $5,000 by mutual agreement of both parties.  Effective December 31, 2008, the amount of $5,000 was forgiven (See Notes 4(B), 5 and 9).

NOTE 9 
RELATED PARTY TRANSACTIONS

For the year ended September 30, 2011, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 4(B)).

For the year ended September 30, 2010, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 4(B)).

For the year ended September 30, 2009, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 4(B)).

For the year ended September 30, 2008 a shareholder of the Company contributed services having a fair value of $2,600 (See Note 4(B)).

 
F-14

 

MAX CASH MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011 AND 2010

During the year ended September 30, 2009, a related party forgave accounts payable in the amount of $5,000 for services provided.  The payable was reclassified to additional paid in capital as an in kind contribution of services (See Notes 5 and 8).

For the year ended September 30, 2007, the Company received $1,100 from a principal stockholder. Pursuant to the terms of the loan, the loan is non interest bearing, unsecured and due on demand.  The loan was repaid on October 23, 2007 (See Note 6).

For the year ended September 30, 2007, a shareholder of the Company contributed services having a fair value of $593 (See Note 4(B)).

On July 9, 2007, the Company issued 5,000,000 shares of common stock to its founder having a fair value of $5,000 ($0.001/share) in exchange for services provided (See Note 4B)).

NOTE 10 
GOING CONCERN

As reflected in the accompanying financial statements, the Company is in the development stage and has accumulated losses of $2,385,345 and a negative cash flow from operations of $287,331 since inception.  In addition, the Company has a stockholders’ deficiency of $2,227,352 and working capital deficiency of $2,098,463 as of September 30, 2011.  In addition, $2,000,000 of notes payable are currently in default. This raises substantial doubt about its ability to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
The Company intends to make every commercially reasonable effort to pursue collection of the notes receivable, including all legal options.  Additionally, the Company expects to raise additional capital to meet its working capital needs, although there can be no assurance it will be successful in those efforts. The Company believes that these actions provide the opportunity for the Company to continue as a going concern.

NOTE 11 
SUBSEQUENT EVENTS

On December 30, 2011 the Company issued an amendment to the 10% convertible notes to exclude the August and September $2,000,000 8% convertible notes (“Bridge Offering”) as financing for the purposes of determining the conversion of the notes.

On November 9, 2011, the Company extended the due date of the $65,000 promissory note to May 9, 2013 (See Note 6).
 
On January 9, 2012, the Company commenced litigation in the Federal Court for the Southern District of New York (the “Court”) against Prism Corporation and its President Joe Loftis (the “Defendants”).  The Complaint states causes of action against the Defendants for breach of contract, seizure of collateral and injunctive relief, and seeks to obtain a Judgment in the amount of $2,000,000 plus interest and all costs due under the four promissory notes at issue.  In an effort to ensure that the Company’s first priority security interest in Prism's assets (the “Collateral” under the relevant security and pledge agreements) remains intact throughout the pendency of the litigation, the Company also successfully petitioned the Court to issue an Order to Show Cause with Temporary Restraining Order, thereby enjoining Defendants from, among other things, selling, assigning, transferring, conveying or otherwise disposing of any of the Collateral.  The parties are due back in Court on January 19, 2012, at which time the Company’s attorneys will continue to aggressively pursue all available remedies. (See Note 2)

 
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