Max Sound Corp - FORM 10-Q

Attached files

file	filename
EX-5 - CONVERTABLE NOTE - Max Sound Corp	exhibit5.htm
EX-1 - CONVERTABLE NOTE - Max Sound Corp	exhibit1.htm
EX-1.01 - CONVERTABLE NOTE #6 - Max Sound Corp	exhibit6.htm
EX-9 - CONSULTING AGREEMENT - Max Sound Corp	exhibit9.htm
EX-2 - CONVERTABLE NOTE - Max Sound Corp	exhibit2.htm
EX-7 - CONSULTING AGREEMENT - Max Sound Corp	exhibit7.htm
EX-4 - CONVERTABLE NOTE - Max Sound Corp	exhibit4.htm
EX-3 - CONVERTABLE NOTE - Max Sound Corp	exhibit3.htm
EX-10 - EMPLOYMENT EXTENSION - Max Sound Corp	exhibit10.htm
EX-11 - CERTIFICATION - Max Sound Corp	exhibit11.htm
EX-12 - CERTIFICATION - Max Sound Corp	exhibit12.htm
EX-13 - CERTIFICATION - Max Sound Corp	exhibit13.htm
EXCEL - IDEA: XBRL DOCUMENT - Max Sound Corp	Financial_Report.xls
EX-8 - CONSULTING AGREEMENT - Max Sound Corp	exhibit8.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to______.

MAX SOUND CORPORATION

(Exact name of registrant as specified in charter)

DELAWARE

000-51886

26-3534190

(State or other jurisdiction of

incorporation or organization)

(Commission File Number)

(I.R.S Employer

Identification No.)

2902A Colorado Avenue

Santa Monica, CA 90404

(Address of principal executive offices)

_______________

(800) 327-6293

(Registrant’s telephone number, including area code)

_______________

N/A

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ 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 ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(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 ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock.

As of May 17, 2015, the registrant had 299,343,719 shares, par value $0.00001 per share, of common stock issued and outstanding.

MAX SOUND CORPORATION

FORM 10-Q

for the period ended March 31, 2015

INDEX

PART I-- FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

PART II-- OTHER INFORMATION

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43

SIGNATURES		43

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be

achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

CERTAIN TERMS USED IN THIS REPORT

When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Max Sound Corporation, and “SEC” refers to the Securities and Exchange Commission.

PART I Ð FINANCIAL INFORMATION

Item 1.

Financial Statements

MAX SOUND CORPORATION

CONTENTS

PAGE	1	CONDENSED BALANCE SHEETS AS OF MARCH 31, 2015 (UNAUDITED) AND AS OF DECEMBER 31, 2014 (AUDITED).

PAGE	2	CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTH ENDED MARCH 31, 2015 AND 2014 (UNAUDITED).

PAGE	4	CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (UNAUDITED).

PAGES	5 - 27	NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED).

Max Sound Corporation

Condensed Balance Sheets

ASSETS

	March 31, 2015			December 31, 2014
	(UNAUDITED)

Current Assets
Cash	$	21,897		$	35,747
Inventory		8,796			38,071
Prepaid expenses		28,962			30,207
Debt offering costs - net		34,733			27,456
Total Current Assets		94,388			131,481

Property and equipment, net		172,445			188,896

Other Assets
Security deposit		413			413
Intangible assets		17,587,006			17,850,595
Total Other Assets		17,587,419			17,851,008


Total Assets	$	17,854,252		$	18,171,385



LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable	$	896,839		$	656,308
Accrued expenses		161,741			116,903
Line of credit - related party		220,478			268,227
Derivative liabilities		3,171,244			3,234,792
Convertible note payable, net of debt discount of $1,578,944 and $1,691,065 respectively		1,417,871			1,337,353
Total Current Liabilities		5,868,173			5,613,583

Commitments and Contingencies

Stockholders' Equity
Preferred stock, $0.0001 par value; 10,000,000 shares authorized,
No shares issued and outstanding		—			—
Series, A Convertible Preferred stock, $0.00001 par value; 10,000,000 shares authorized,
5,000,000 and 0 shares issued and outstanding, respectively		50			—
Common stock, $0.00001 par value; 450,000,000 shares authorized,
284,188,822 and 373,442,040 shares issued and outstanding, respectively		2,841			3,733
Additional paid-in capital		51,613,168			50,209,989

Treasury stock		(519,575	)		(519,575	)
Accumulated deficit		(39,110,405	)		(37,136,345	)
Total Stockholders' Equity		11,986,079			12,557,802

Total Liabilities and Stockholders' Equity	$	17,854,252		$	18,171,385

See accompanying notes to condensed unaudited financial statements.

Max Sound Corporation

Condensed Statements of Operations

(UNAUDITED)

	For the Three Months Ended,
	March 31, 2015			March 31, 2014


Revenue	$	—		$	1,236


Operating Expenses
General and administrative		787,303			740,785
Consulting		69,837			133,812
Professional fees		117,624			277,474
Website development		5,000			22,881
Compensation		241,300			256,400
Total Operating Expenses		1,221,064			1,431,352

Loss from Operations		(1,221,064	)		(1,430,116	)

Other Income / (Expense)
Loss on inventory write off		(29,275	)		—
Gain (Loss) on extinguishment of debt		—			(116,582	)
Interest expense		(56,443	)		(18,596	)
Derivative Expense		(167,523	)		—
Amortization of debt offering costs		(53,093	)		(78,983	)
Loss on conversions		—			(42,085	)
Amortization of debt discount		(919,760	)		(786,155	)
Change in fair value of embedded derivative liability		473,735			(1,717,264	)
Total Other Income / (Expense)		(752,359	)		(2,759,665	)

Provision for Income Taxes		—			—

Net Loss	$	(1,973,423	)	$	(4,189,781	)

Net Loss Per Share - Basic and Diluted	$	(0.01	)	$	(0.01	)

Weighted average number of shares outstanding
during the year Basic and Diluted		341,970,037			313,207,471

See accompanying notes to condensed unaudited financial statements.

Max Sound Corporation

Condensed Statements of Cash Flows

(UNAUDITED)

	For the Three Months Ended,
	March 31, 2015			March 31, 2014
Cash Flows From Operating Activities:
Net Loss	$	(1,973,423	)	$	(4,189,781	)
Adjustments to reconcile net loss to net cash used in operations
Depreciation/amortization		19,208			26,464
Common Stock and stock options issued for services		32,731			198,425
Loss on debt conversion		—			42,085
Amortization of intangible assets		263,590-			241,389
Amortization of stock based compensation		—			18,750

Amortization of debt issuance costs		17,361			96,402
Amortization of debt discount		953,494			728,736
Change in fair value of derivative liability		(460,555	)		1,717,264

Loss on debt extinguishment					18,596
Initial derivative expense		167,523			—
Changes in operating assets and liabilities:
Inventory		29,275			—
Prepaid expenses		1,245			50,799


Accounts payable		240,528			193,191
Cash overdraft					90,362
Accrued expenses		69,453			115,519
Net Cash Used In Operating Activities		(639,570	)		(651,799	)

Cash Flows From Investing Activities:
Cash paid in connection with acquisition of assets and intellectual property		—			—
Purchase of property equipment		(2,757	)		(14,979	)
Net Cash Used In Investing Activities		(2,757	)		(14,979	)

Cash Flows From Financing Activities:
Proceeds from stockholder loans / lines of credit		25,000			50,000
Repayment from stockholder loans / lines of credit		(75,000	)		(-)
Proceeds from issuance of convertible note, less offering costs and OID costs paid		733,477			450,000
Cash paid on convertible notes		(55,000	)

Net Cash Provided by Financing Activities		628,477			500,000

Net Increase (Decrease) in Cash		(13,850	)		(166,778	)

Cash at Beginning of Period		35,747			166,778

Cash at End of Period	$	21,897		$	—

Supplemental disclosure of cash flow information:

Cash paid for interest	$	—		$	—
Cash paid for taxes	$	—		$	—

Supplemental disclosure of non-cash investing and financing activities:
Shares issued in conversion of convertible debt and accrued interest	$	1,368,990		$	937,978
Conversion of common to preferred stock	$	1,200		$	—

See accompanying notes to condensed unaudited financial statements.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Organization and Basis of Presentation

Max Sound Corporation (the "Company") was incorporated in Delaware on December 9, 2005, under the name 43010, Inc. The Company business operations are focused primarily on developing and launching audio technology software.

Effective March 1, 2011, the Company filed with the State of Delaware a Certificate of Amendment of Certificate of Incorporation changing our name from So Act Network, Inc. to Max Sound Corporation.

(B) Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, 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. Actual results could differ from those estimates.

(C) Cash and Cash Equivalents

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of March 31, 2015 and 2014, the Company had no cash equivalents.

(D) Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided using the straight-line method over the estimated useful life of three to five years.

(E) Research and Development

The Company has adopted the provisions of FASB Accounting Standards Codification No. 350, Intangibles - Goodwill & Other (“ASC Topic 350”). Costs incurred in the planning stage of a website are expensed as research and development while costs incurred in the development stage are capitalized and amortized over the life of the asset, estimated to be three years. Expenses subsequent to the launch have been expensed as website development expenses.

(F) Concentration of Credit Risk

The Company at times has cash in banks in excess of FDIC insurance limits. The Company had $0 in excess of FDIC insurance limits as of March 31, 2015 and 2014.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

(G) Revenue Recognition

The Company recognized revenue on arrangements in accordance with FASB Codification Topic 605, “Revenue Recognition” (“ASC Topic 605”). Under ASC Topic 605, 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. We had revenues of $0 and $1,236 for the years ended March 31, 2015 and 2014, respectively.

(H) Advertising Costs

Advertising costs are expensed as incurred and include the costs of public relations activities. These costs are included in consulting and general and administrative expenses and totaled $0 and $4,805 for the years ended March 31, 2015 and 2014, respectively.

(I) Identifiable Intangible Assets

As of March 31, 2015 and December 312, 2014, $7,500,275 of costs related to registering a trademark and acquiring technology rights (audio technology known as Max Audio Technology (MAXD) have been capitalized. It has been determined that the trademark and technology rights have an indefinite useful life and are not subject to amortization. However, the trademark and technology rights will be reviewed for impairment annually or more frequently if impairment indicators arise.

On November 15, 2012, the Company acquired the rights to assets and audio technology known as Liquid Spins, Inc. through a share exchange, whereby the Company issued 24,752,475 shares of common stock for their rights in Liquid Spins technology (See Note 8 (H)). As of March 31, 2015 and December 31, 2014, $8,096,731 and $8,338,121, respectively, of costs related to this intangible remain capitalized. The technology was placed in service on August 23, 2013 with a useful life of 10 years. However, the technology will be reviewed for impairment annually or more frequently if impairment indicators arise.

On May 19, 2014, the Company entered into an agreement with VSL Communications to acquire the rights to intellectual property titled “Optimized Data Transmission System and Method” (“ODT”) through a cash payment of $500,000 in addition to a share issuance, whereby the Company issued 10,000,000 shares of common stock, valued at $1,000,000 ($0.10/share). In exchange, the Company received a perpetual, exclusive, worldwide license to the ODT technology for all fields of use. In addition, the Company issued 1,000,000 shares of common stock, valued at $120,000 ($0.12/share), as compensation for the introduction and identification of a seller based on the agreement dated April 10, 2014.

As of March 31, 2015 and December 31, 2014, $1,620,000 of costs related to the “ODT” intangible asset remains capitalized. The technology will be reviewed for impairment annually or more frequently if impairment indicators arise. In connection with this agreement, the Company is obligated to make an additional five (5) payments totaling $1,000,000 to be made every 30 days, with the thirty (30) day periods to be waived if fund raising occurs on an anticipated faster time line. The payments of additional cash are contingent on the following funding criteria:

	●	The Company shall pay set increments of cash based on a percentage of gross funds received through funds raised.
	●	The Company shall pay 20% of such monies as soon as they are received.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

In connection with funds raised through March 31, 2015, the Company recorded a liability and expensed $484,056 as royalty cost, related to the 20% fee, as of March 31, 2015, $30,000 has been paid . The remaining liability as of March 31, 2015, is $454,556 and is included in accounts payable.

The Company shall act as the exclusive agent to facilitate and negotiate any opportunities on behalf of ODT to Companies, Organizations and other qualified entities. Upon any closing, ODT shall receive 50% of gross dollars and the Company shall receive the other 50% at the time of a completion of any transaction opportunity, including legal settlements after subtracting applicable contingent legal fees. The term of the agreement is for the life of the acquired intellectual property.

On August 11, 2014, the Company and VSL simultaneously filed trade secret and patent infringement actions against Google, Inc. and its subsidiaries, YouTube, LLC and On2 Technologies, Inc., relating to proprietary and patented technology owned by Vedanti Systems Limited, a subsidiary of VSL. The patent infringement complaint was brought in U.S. District Court for the District of Delaware and the trade secret suit was filed in Superior Court of California, County of Santa Clara. The lawsuits contend that, in 2010, while Google was in discussions with Vedanti about the possibility of acquiring Vedanti's patented digital video streaming techniques and other proprietary methods, Google gained access to and received technical guidance regarding Vedanti’s proprietary codec, a computer program capable of encoding and decoding a digital data stream or signal. The complaints allege that soon after the two companies initiated negotiations, Google began implementing Vedanti's technology into its own WebM/VP8 video codec without informing Vedanti, and without compensating Vedanti for its use. Plaintiffs are seeking a permanent injunction against Google, compensatory damages, as well as treble damages. As exclusive agent to VSL to enforce all rights with respect to the subject technology, the Company has hired Grant & Eisenhofer, PA to represent the Company and VSL in the suits. These cases will be vigorously prosecuted and the Company believes it has a good likelihood of success.

On May 22, 2014, the Company entered into a five (5) year agreement to acquire the rights to intellectual property titled “Engineered Architecture” (“EA Technology”) through a cash payment of $50,000 in addition to a share issuance, whereby the Company issued 4,000,000 shares of common stock, valued at $394,000 ($0.0985/share). In exchange, the Company received for the term of the agreement, the exclusive worldwide right to use the EA Technology. As of March 31, 2015, $392,200 of costs related to this intangible remains capitalized. The technology will be reviewed for impairment annually or more frequently if impairment indicators arise. In connection with this agreement, the Company is obligated to make an additional five (5) payments totaling $500,000 to be made every 30 days, with the thirty (30) day periods to be waived if fund raising occurs on an anticipated faster time line. The payments of additional cash are contingent on the following funding criteria:

	●	The Company shall pay set increments of cash based on a percentage of gross funds received through funds raised.
	●	The Company shall pay 10% of such monies as soon as they are received.

In connection with funds raised through March 31, 2015, the Company recorded a liability and expensed $242,028 as royalty cost, related to the 10% fee, as of March 31, 2015, $40,000 has been paid . The remaining liability as of March 31, 2015, is $202,028 and is included in accounts payable.

The Company shall act as the exclusive agent to facilitate and negotiate any opportunities on behalf of EA Technology to Companies, Organizations and other qualified entities. Upon any closing, EA shall receive 50% of gross dollars and the Company shall receive the other 50% at the time of a completion of any transaction opportunity, including legal settlements after subtracting applicable contingent legal fees. In the event the Company sublicenses EA to other entities, profits shall be split evenly 50%/50%.

(J) Impairment of Long-Lived Assets

The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets, such as technology rights, be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. No impairments were recorded for the three months ended March 31, 2015 and 2014, respectively.

(K) Loss Per Share

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. Because of the Company’s net losses, the effects of stock warrants and stock options would be anti-dilutive and accordingly, is excluded from the computation of earnings per share.

The computation of basic and diluted loss per share for the three months ended March 31, 2015 and 2014, excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

	March 31, 2015		March 31, 2014

Stock Warrants (Exercise price - $0.25 - $.52/share)		6,500,000		3,385,000
Stock Options (Exercise price - $0.10 - $.50/share)		15,566,652		12,700,000
Convertible Debt (Exercise price - $0.07 - $.0817/share)		177,891,339		29,778,963
Series A Convertible Preferred Shares ($0.04/share)		5,000,000		—

Total		204,957,991		45,863,963

(L) Income Taxes

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. 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 of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2011, and the related state income tax returns are no longer subject to examination by state authorities for the years prior to 2010.

(M) Business Segments

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

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

(N) Recent Accounting Pronouncements

On June 10, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ("ASUE 2014-10"). The guidance is intended to reduce the overall cost and complexity associated with financial reporting for development stage entities without reducing the availability of relevant information. The FASB also believes the changes will simplify the consolidation accounting guidance by removing the differential accounting requirements for development stage entities. As a result of these changes, there no longer will be any accounting or reporting differences in GAAP between development stage entities and other operating entities. For organizations defined as public business entities, the presentation and disclosure requirements in Topic 915 will no longer be required, starting with the first annual period beginning after December 15, 2014, including interim periods therein. Early application is permitted for any annual reporting period or interim period for which the entity's financial statements have not yet been issued (public business entities) or made available for issuance (other entities). The Company has elected early application of this ASU and implemented the changes in their financial statement for the year ended December 31, 2014.

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-12, “Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

(O) Fair Value of Financial Instruments

The carrying amounts on the Company’s financial instruments including prepaid expenses, accounts payable, accrued expenses, derivative liability, convertible note payable, and loan payable-related party, approximate fair value due to the relatively short period to maturity for these instruments.

(P) Stock-Based Compensation

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation - Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies this statement prospectively.

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

(Q) Reclassification

Certain amounts from prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on the Company's net loss or cash flows.

(R) Derivative Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

(S) Original Issue Discount

For certain convertible debt issued, the Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.

(T) 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 to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

(U) Licensing & Distribution

On May 28, 2014, the Company entered into a license agreement with Akyumen Technologies Corp. (“Akyumen”), an original equipment manufacturer of mobile devices, for the non-exclusive, non-transferable, indivisible worldwide license rights to the use of Company’s API technology in Akyumen’s mobile devices. The license is for five years and is renewable, with the Company’s approval, at Akyumen’s request.

As consideration for the above-referenced license rights, Akyumen agreed to pay the Company royalties of $2.50 per Akyumen device that utilizes the API technology, to be payable on a monthly basis within 15 days after the close of the calendar month. Akyumen also agreed to pay, within three months of first sale, 50% of non-recurring engineering costs to port the Technology onto the operating systems of the Akyumen devices, inclusive of any local fees, taxes, or other charges.

On June 16, 2014, MAXD entered into a license and revenue share agreement with LOOKHU, an online subscription service that delivers movies, music, television shows, apps and games. The agreement grants LOOKHU non-exclusive, non-transferable, indivisible worldwide license rights to the distribution and use of the Company’s Application Programming Interface (“API”) audio processor technology. The license is for five years and is renewable, with the Company’s approval, at LOOKHU’s request.

As consideration for the above-referenced license rights, LOOKHU agreed to pay the Company royalties of $0.25 per month per paid subscription to the technology, to be payable on a monthly basis. Additionally, LOOKHU agreed to pay the Company 4% of the net advertising revenue derived from advertising that utilizes the technology, to be payable on a quarterly basis.

Additionally, for the term of the agreement, the parties agreed to split, on a 50/50 basis, net revenue derived from sales of digital music or songs played from a LOOKHU software player, to be payable on a monthly basis.

(V) Inventory

Inventory consists primarily of gift cards and is valued at the lower of cost or market. Cost is determined using the weighted average method and average cost and is recomputed after each inventory purchase or sale. Inventory is periodically reviewed for obsolescence or impairment. During the three months ended March 31, 2015 the Company wrote-off impaired inventory totaling $29,275.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 2 GOING CONCERN

As reflected in the accompanying audited financial statements, the Company had a net loss of $1,973,423 for the three months ended March 31, 2015, has an accumulated deficit of $39,110,405 as of March 31, 2015, and has negative cash flow from operations of $639,570 as of and for the three months ended March 31, 2015.

As the Company continues to incur losses, transition to profitability is dependent upon the successful commercialization of its products and achieving a level of revenues adequate to support the Company’s cost structure.

The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings. Based on the Company’s operating plan, existing working capital at December 31, 2014 was not sufficient to meet the cash requirements to fund planned operations through January 31, 2015 without additional sources of cash. This raises substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 3 DEBT

Debt consists of the following:

	As of			As of
	March 31, 2015			December 31, 2014

Line of credit - related party	$	220,478		$	268,227

Convertible debt		2,996,815			3,028,418
Less: debt discount		(1,578,944	)		(1,691,065	)
Convertible debt - net		1,417,871			1,337,353

Total current debt	$	1,638,349		$	1,605,580

(A)

Line of credit – related party

Line of credit with the principal stockholder consisted of the following activity and terms:

		Principal		Interest Rate		Maturity
Balance - December 31, 2014	$	268,227

Borrowings during the three months ended March 31, 2015		25,000		4	%	September 26, 2015
Interest accrual		2,250
Repayments		(75,000	)
Balance - March 31, 2015	$	220,478		4	%	September 26, 2015

(B) Convertible Debt

During the three months ended March 31, 2015 and year ended December 31, 2014, the Company issued convertible notes totaling $792,500 and $3,475,334, respectively. The Convertible notes issued for three months ended March 31, 2015 and year ended December 31, 2014, consist of the following terms:

			Three Months Ended		Year ended
			March 31, 2015		December 31, 2014
			Amount of		Amount of
			Principal Raised		Principal Raised
Interest Rate			2.5% - 10%		2.5% - 10%
Default interest rate			14% - 22%		14% - 22%
Maturity			February 26, 2015 - June 18, 2016		February 26, 2015 - June 18, 2016

Conversion terms 1	65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.		689,500		689,500
Conversion terms 2	65% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.		592,500		747,500
Conversion terms 3	70% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.		150,000		—
Conversion terms 4	70% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.		—		250,000
Conversion terms 5	70% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the twenty (20) trading day period prior to the conversion.		50,000		125,000
Conversion terms 6	70% of the lower of the average of the three (3) lowest trading prices for the fifteen (15) day trading period 1 day prior to conversion.		—		50,000
Conversion terms 7	75% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.		—		848,334
Conversion terms 8	Convertible into $0.07/share. After six month from the date of this note, conversion price shall equal the lower of $0.07/share or the variable conversion price - 75% of the average three (3) lowest closing prices during the ten (10) trading day period.		—		765,000

		$	792,500	$	3,475,334

The debt holders are entitled, at their option, to convert all or part of the principal and accrued interest into shares of the Company’s common stock at conversion prices and terms discussed above. The Company classifies embedded conversion features in these notes as a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of shares of common stock required to net-share settle or due to the existence of a ratchet due to an anti-dilution provision. See Note 4 regarding accounting for derivative liabilities.

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

During the year ended December 31, 2014, the Company converted debt and accrued interest, totaling $3,421,019 into 48,998,342 shares of common stock. Conversions of debt to equity occurring after the maturity date and penalties incurred resulted in a loss on settlement of $183,907.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

Convertible debt consisted of the following activity and terms:

Convertible Debt Balance as of December 31, 2014	3,028,418		4% - 10%	February 26, 2015 - June 18, 2016


Borrowings during the three months ended March 31, 2015	792,500		8% - 10%

Non-Cash Reclassification of accrued interest converted	22,361

Repayments	(55,000	)

Conversion of debt to into 29,796,782 shares of common stock with a valuation of $791,4448 ($0.02 - $0.039/share) including the accrued interest of $22,361	(791,444	)

Convertible Debt Balance as of March 31, 2015	2,996,815		4% - 10%	February 26, 2015 - June 18, 2016

(C)

Debt Issue Costs

During the three months ended March 31, 2015, the Company paid debt issue costs totaling $26,938.

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

	Three Months Ended			Three Months Ended
	March 31, 2015			March 31, 2014

Debt issue costs	$	221,693		$	146,055
Accumulated amortization of debt issue costs		(184,960	)		(118,529	)

Debt issue costs - net	$	34,733		$	27,526

During the three months ended March 31, 2015 and 2014 the Company amortized $17,361 and $38,983 of debt issue costs, respectively.

(D)

Debt Discount & Original Issue Discount

During the three months ended March 31, 2015 and December 31, 2014, the Company recorded debt discounts and original issue discounts totaling $841,373 and $3,199,391, respectively.

The debt discount recorded in 2015 and 2014 pertains to convertible debt that contains embedded conversion options that are required to bifurcated and reported at fair value and original issue discounts.

The Company amortized $953,494 and $728,736 during the three months ended March 31, 2015 and 2014, respectively, to amortization of debt discount expense.

		Three Months Ended			Three Months Ended
		March 31, 2015			March 31, 2014

Debt discount	$	2,532,438		$	2,923,369
Accumulated amortization of debt discount		(953,494	)		(1,712,320	)

Debt discount - Net	$	1,578,944		$	1,211,049

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 4 DERIVATIVE LIABILITIES

The Company identified conversion features embedded within convertible debt issued in 2015 and 2014 and warrants issued in 2015 and 2014. The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability.

As a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follow:

Derivative Liability - December 31, 2014	$	3,234,792

Fair value at the commitment date for convertible instruments		974,533

Change in fair value of embedded derivative liability for convertible instruments		(460,555	)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability		(577,526	)
Derivative Liability - March 31, 2015	$	3,171,244

The Company recorded the debt discount to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross proceeds of the note. The Company also recorded the value of the warrants issued for services as derivative expense for the three months ended March 31, 2015. The Company recorded a derivative expense for the three months ended March 31, 2015 and 2014 of $167,523 and $0, respectively.

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2015:

	Commitment Date		Re-measurement Date

Expected dividends:	0	%	0	%
Expected volatility:	133.33% - 149.37%		128.45% - 238.77%
Expected term:	0.97 - 2 Years		0.07 - 1.95 Years
Risk free interest rate:	0.01% - 1.16%		0.12% - 1.10%

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of December 31, 2014:

	Commitment Date		Re-measurement Date

Expected dividends:	0	%	0	%
Expected volatility:	109% - 304%		120% - 140%
Expected term:	0.44 - 3 Years		0.16 - 2.9 Years
Risk free interest rate:	0.06% - 0.94%		0.12% - 1.10%

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 5 PROPERTY AND EQUIPMENT

At December 31, 2014, and December 31, 2013, respectively, property and equipment is as follows:

		March 31, 2015			December 31, 2014

Website Development	$	294,795		$	294,795
Furniture and Equipment		99,881			99,881
Leasehold Improvements		6,573			6,573
Software		53,897			53,897
Music Equipment		2,247			2,247
Office Equipment		74,412			71,652
Domain Name		1,500			1,500
Sign		628			628
Total		533,933			531,173
Less: accumulated depreciation and amortization		(361,488	)		(342,277	)
Property and Equipment, Net	$	172,445		$	188,896

Depreciation/amortization expense for the three months ended March 31, 2015 totaled $19,208.

Depreciation/amortization expense for the three months ended March 31, 2014 totaled $26,464.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 6 STOCKHOLDERS' EQUITY

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

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

(A) Common Stock

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

Transaction Type	Quantity			Valuation			Range of Value per share

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

The following is a detailed description of transactions noted above:

1. Conversion of convertible debt and accrued interest

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

2. Services Rendered

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

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

2. Return of Shares and Issuance of Preferred shares

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

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

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

Transaction Type	Quantity			Valuation		Range of Value per share

Conversion of convertible debt and accrued interest	48,998,342		$	3,421,019		$0.02715 - $0.14175
Services - rendered	3,150,000			678,030		$0.093 - $0.365
Acquisition of intangibles	15,000,000			1,514,000		$0.0985 - $0.12
Return of shares	(4,250,000	)		—		$0.00 - $0.00
Settlement of accounts payable	1,000,000			90,000	$	0.09

Total shares issued	63,898,342		$	5,703,049

The following is a detailed description of transactions noted above:

1. Conversion of convertible debt and accrued interest

2. Services Rendered

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

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

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

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

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

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

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

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

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

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

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

3. Acquisition of intangibles

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

4. Return of Shares

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

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

5. Settlement of accounts payable

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

(B) Stock Warrants

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

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

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

Balance, December 31, 2014	3,750,000	$	0.38	1.7

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

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

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

				Weighted Average
	Exercise	Warrants	Warrants	Remaining		Aggregate
	Price	Outstanding	Exercisable	Contractual Life		Intrinsic Value

$	0.10	200,000	200,000	2.66	$	—
$	0.25	200,000	200,000	0.20	$	—
$	0.40	2,850,000	2,850,000	1.49	$	—
$	0.45	500,000	500,000	0.76	$	—

		3,750,000	3,750,000	1.4 years	$	—

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

				Weighted Average
	Exercise	Warrants	Warrants	Remaining		Aggregate
	Price	Outstanding	Exercisable	Contractual Life		Intrinsic Value

$	0.10	200,000	200,000	2.90	$	—
$	0.25	200,000	200,000	0.44	$	—
$	0.40	2,850,000	2,850,000	1.73	$	—
$	0.45	500,000	500,000	1.00	$	—

		3,750,000	3,750,000	1.7 years	$	—

(C) Stock Options

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

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

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

(D) Share Exchange

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

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

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

	Three Months Ended			Year Ended
	March 31, 2015			December 31, 2014

Intangible at fair value, Opening Balance	$	9,303,679		$	9,303,679

Consideration transferred at fair value:
Common stock - 24,752,475 Shares		—			—

Net assets acquired:
Current assets		—			—
Cash		—			—
Total net assets acquired		—			8,011

Amortization		(1,206,949	)		(965,559	)

Intangible at fair value, Ending Balance	$	8,096,731		$	8,338,121

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

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

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

(D) Share Exchange

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

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 7 COMMITMENTS

(A) Employment Agreement

On January 9, 2013, the Company executed an employment agreement with its Director of New Business Development. The term of the agreement is for three years. As compensation for services, the Director will receive a monthly compensation of $10,000. Upon the first million dollars in gross sales the salary will increase to $12,000 per month. In addition, the Director will receive up to 1,000,000 shares of common stock payable in lots of 125,000 per quarter beginning on January 1, 2013. Also, employee for the first eight quarters of employment has a right to earn 125,000 additional 3 year stock options with a strike price of $0.50 per share as follows:

For each million of new gross sales - 125,000 additional 3-year stock options with a strike price of $.50 per share.

For the year ended December 31, 2014 and year ended December 31, 2013, the employee received 375,000 and 500,000 shares with a fair value of $95,625 and $127,500, respectively. For the three months ended March 31, 2015, the employee received 125,000 with a fair value of $7,875

On November 26, 2012, the Company executed an employment agreement with its VP of Music Entertainment. The term of the agreement is for two years. As compensation for services, the VP will receive a monthly compensation of $8,000. In addition, the employee will receive up to 1,000,000 shares of common stock payable in lots of 125,000 per quarter beginning on December 1, 2012. In addition, the employee is entitled to a monthly commission equal to 5% of all profits from any sales of music from Liquid Spins that employee is directly responsible for bringing to the Company. For the three months ended March 31, 2014 and year ended December 31, 2013, the employee received 125,000 and 500,000 shares with a fair value of $45,625 and $133,750, respectively. As of February 3, 2014, the employee was terminated with no additional compensation owed.

On November 26, 2012, the Company executed an employment agreement with its VP of Music Distribution. The term of the agreement is for two years. As compensation for services, the VP will receive a monthly compensation of $7,000. In addition, the employee will receive up to 1,000,000 shares of common stock payable in lots of 125,000 per quarter beginning on December 1, 2012. In addition, the employee is entitled to a monthly commission equal to 5% of all profits from any sales of music from Liquid Spins that employee is directly responsible for bringing to the Company. For the nine months ended September 30, 2014 and year ended December 31, 2013, the employee received 500,000 and 500,000 shares with a fair value of $182,500 and $133,750, respectively. For the three months ended March 31, 2015, the employee received 125,000 with a fair value of $4,975.

On June 11, 2012, the Company executed an employment agreement with its Senior Audio Engineer. The term of the agreement is for five years. As compensation for services, the Engineer will receive a monthly compensation of $6,000 beginning July 1, 2012. In addition to the base salary, the employee is entitled to receive health benefits, and the employee will receive 1,000,000 shares of common stock payable in 125,000 increments per quarter beginning on July 1, 2012. For year ended December 31, 2014 and year ended December 31, 2013, the employee received 250,000 and 500,000 shares with a fair value of $62,500 and $125,000, respectively.

(B) Consulting Agreement

On January 21, 2015, the Company entered into a consulting services agreement. In connection with this agreement, the consultant shall be paid $4,000 per month and receive up to 150,000 shares of common stock payable in lots of 50,000 per month and will be issued 90 days after the date of the signing of the agreement. For three months March 31, 2015, the Company recorded $9,000 in stock based compensation payable.

On March 17, 2015, the Company entered into a services agreement. In connection with this agreement, the consultant will receive 300,000 shares of fully vested common stock, payable in lots of 100,000 shares of common stock per month and 5,000 per month. The agreement will continue until June 17, 2015. For three months March 31, 2015, the Company recorded $8,400 in stock based compensation payable.

On February 18, 2015, the Company entered into service agreement for a period of two years with the Company’s transfer agent for a period from September 23, 2014 to September 23, 2016. . In consideration for these services, during the three months ended March 31, 2015, 700,000 shares of fully vested common stock valued at $22,400 ($0.03/share) were granted.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

On April 24, 2014, the Company entered into consulting services agreement. In consideration for these services, during the nine months ended September 30, 2014, the Consultant was granted 200,000 shares of fully vested common stock valued at $21,980 ($0.11/share).

During the nine months ended September 30, 2014, the Company entered into a consulting services agreement related to marketing and the creation of Company awareness. In connection with this agreement, the consultant shall be paid $20,000 and was issued 200,000 shares of fully vested common stock valued at $31,000 ($0.16/share).

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

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

(C) Operating Lease Agreements

On September 20, 2012, the Company took over a month to month operating lease upon completing the asset purchase agreement with Liquid Spins. The lease began on October 1, 2012 at a monthly rate of $1,585. The Company gave notice to end this month to month lease, with a final end date of February 28, 2014.

On September 1, 2010, the Company executed a three-year non-cancelable operating lease for its new corporate office space. The lease began on October 1, 2010 and expires on September 30, 2013. Total base rent due during the term of the lease is $134,880. At the current time the Company is continuing on with the existing office space on a month to month basis based on the previous terms and conditions of the recently expired lease.

(C) Research Agreement

On July 1, 2014, the Company entered into a research agreement with University of Florida for the service period to begin July 15, 2014 and ending no later than October 31, 2014. Subsequently on December 3, 2014, the Company modified the terms of the service period of the agreement to start on September 30,214 and ending no later than January 15,2015. The fee for research services is fixed at $49,910 and will be paid in four monthly installments of $12,678. For the year ended December 31, 2014 the Company recorded a liability and expensed $12,678 as research and development cost, as of December 31, 2014, $0 has been paid. The remaining liability as of December 31, 2014, is $12,678 and is included in accounts payable. For the three months ended March 31, 2015, the Company paid $12,678 and $0 is included in accounts payable.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 8 LITIGATION

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.

On February 21, 2012, the Company filed a suit for breach of contract, intentional misrepresentation, negligent misrepresentation, fraud, false advertising, and unfair competition with a former consultant. It seeks damages due to their alleged failure to meet the contractual requirements regarding promotions. The defendant has been served. In September of 2014, the Company received a Default Judgment against the Defendant. The Company is vigorously pursuing collection on this judgment.

On August 14, 2012, the Company, along with two shareholders of the Company, were named as a defendant in an action filed in the Superior Court for the State of California and the County of San Diego. The plaintiff alleges he was terminated by his former employer “Acoustics Control Sciences, LLC” (which is a company that is not affiliated with Max Sound Corporation) in August 2008 without receiving wages and other compensation allegedly due him. The plaintiff further claims that two of the members or “shareholders” of Acoustics Control Sciences, LLC, wrongfully transferred a patent owned by his former employer and this transfer prevented his former employer from paying the wages alleged due. According to the plaintiff, when the assets of his former employer were sold to the Company, Max Sound Corporation became a successor-in-interest to the plaintiff’s former employer. Plaintiff thus seeks unpaid wages and other compensation from each alleged successor-in-interest named in his complaint. This case will be vigorously prosecuted and has a good likelihood of success.

On August 11, 2014, the Company and VSL simultaneously filed trade secret and patent infringement actions against Google, Inc., and its subsidiaries YouTube, LLC, and On2 Technologies, Inc., relating to proprietary and patented technology owned by Vedanti Systems Limited (“Vedanti”), a subsidiary of VSL. The patent infringement complaint was originally filed in the U.S. District Court for the District of Delaware; the trade secret suit was filed in Superior Court of California, County of Santa Clara. On September 30, 2014, the Company filed notices of voluntary dismissal without prejudice as to both lawsuits. On October 1, 2014, the Company amended the patent complaint and filed it in the U.S. District Court for the Northern District of California. In this patent lawsuit, which remains pending, the Company contends that, in 2010, while Google was in discussions with Vedanti about the possibility of acquiring Vedanti's patented digital video streaming techniques and other proprietary methods, Google gained access to and received technical guidance regarding Vedanti’s proprietary codec, a computer program capable of encoding and decoding a digital data stream or signal. The lawsuit further alleges that soon after Google and Vedanti initiated negotiations, Google willfully infringed Vedanti's patent by incorporating Vedanti's patented technology into Google's own VP8, VP9, WebM, YouTube, Google Adsense, Google Play, Google TV, Chromebook, Google Drive, Google Chromecast, Google Play-per-view, Google Glasses, Google+, Google’s Simplify, Google Maps, and Google Earth, without compensating Vedanti for such use. Plaintiffs are seeking a permanent injunction against Google, compensatory damages, as well as treble damages. As exclusive agent to VSL to enforce all rights with respect to the subject technology, the Company has hired Grant & Eisenhofer PA and Buether Joe & Carpenter LLC to represent the Company in the suit on a contingency fee basis. The case will be vigorously prosecuted, and the Company believes it has a good likelihood of success.

Additionally, on December 5, 2014, the Company, along with renowned architect Eli Attia, filed a lawsuit in the Superior Court of California, County of Santa Clara, against Google, its co-founders Sergey Brin and Larry Page, Google’s spinoff company Flux Factory, and senior executives of Flux. Plaintiffs’ allege misappropriation of trade secrets, breach of contract and other contract-related claims, breach of confidence, slander of title, violation of California’s Unfair Competition Law (California Business and Professionals Code §§ 17200 et seq.), and fraud, and also bring a claim for declaratory relief. The lawsuit contends that Google and the other Defendants stole Mr. Attia’s trade secrets, proprietary information, and know-how regarding a revolutionary architecture design and building process that he alone had invented, known as Engineered Architecture. Defendants are alleged to have engaged Mr. Attia in 2010 and 2011 to translate his architectural technology into software for a proof of concept, with the goal of determining at that point whether to continue with full-scale development with Mr. Attia. Instead, the lawsuit claims that once Mr. Attia had disclosed the trade secrets and proprietary information Defendants needed to bring the technology to market, they severed ties with Mr. Attia, and continued to use his technology without a license and without compensation, in order to bring the technology to market themselves. Plaintiffs seek a permanent injunction against Google, damages (including punitive damages), and restitution. As exclusive agent to Eli Attia to enforce all rights with respect to the subject technology, the Company has retained Buether Joe & Carpenter LLC to represent the Company in the suit, on a contingency fee basis. The case will be vigorously prosecuted, and the Company believes it has a good likelihood of success.

On September 8 and 9, 2014, respectively, the Company and VSL were granted preliminary injunctions by the District Court of Berlin, Germany, against the Chinese company Shenzhen KTC Technology Co. Ltd. and the French company Pact Informatique S.A. Both companies have been offering products at the International Consumer Electronics Trade Show 2014 in Berlin, which, according to the company’s claim and the Preliminary Injunctions issued by the Court, infringed the rights to a patent. This patent is the German is the German part of the patent on optimized data transmission, owned by Vedanti, which is already asserted the United States infringement proceedings. The products in question are tablet computers and smart phones with Android OS and with the ability to encode videos in the format H.264. The injunctions were issued ex-parte and can be appealed by the Defendants. However, currently there are no indications that any prospective appeals will be interposed. The Company can still enforce claims for cost reimbursement with regard to these legal proceedings.

On December 2, 2014, the Company filed a patent infringement action against Google, Inc., Germany GmBH, Google Commerce Ltd. and YouTube LLC with the District Court of Mannheim, Germany. The asserted patent infringement concerns the same patent infringement asserted in the in the prior Germany Preliminary Injunctions described herein. The Complaint alleges that Google Inc. and it above-named subsidiaries are offering and selling products which can also decode and show videos, which have been encoded in a patent protected and proprietary way. The complaint also avers that YouTube LLC offers to German customers, which are encoded and transmitted in a manner claimed and protected by the patent. The Company mainly seeks a permanent injunction against the Defendants, damages and information regarding past infringements.

On January 26, 2015, the Company was named as a defendant in an action filed in the Superior Court for the State of California and the County of Los Angeles captioned Bibicoff Family Trust v. Max Sound Corporation (Case No. SC123679). In the complaint the plaintiff alleges a cause of action for breach of contract associated with the non-payment by the Company for certain services plaintiff agreed to provide to the Company. The Company interposed a cross-complaint against plaintiffs averring causes of action for breach of contract, fraud, and negligent misrepresentation by defendants with respect to defendants’ undisclosed inability to perform the services that are the subject of this dispute. This lawsuit will be vigorously defended and prosecuted. While this lawsuit is in its infancy, the Company believes there is a strong likelihood of success on the merits with respect to the defending and prosecuting this action.

The Company intends to vigorously prosecute these various patent infringement litigations. The Company believes it has a good likelihood of success associated with these patent infringement lawsuits. However, no assurance can be given by the Company as to the ultimate outcome of these actions or its effect on the Company. The law firm is prosecuting these action on a pure contingency fee basis.

No assurance can be given as to the ultimate outcome of these actions or its effect on the Company.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 9 INTANGIBLE ASSETS

As of December 31, 2014 and December 31, 2013, the Company owns certain trademarks and technology rights. See Note 1 (I).

Intangible assets were comprised of the following at March 31, 2015 and December 31, 2014:

	Useful Life		March 31, 2015			December 31, 2014

Distribution rights	10 Years	$	9,647,577		$	9,647,577
Trademarks	Indefinite		7,500,000			7,500,000
Licensing Rights	Indefinite		2,064,000			2,064,000
Software	3 Years		—			—
Other	Indefinite		275			275
Accumulated amortization			(1,624,847	)		(1,361,257	)

Net carrying value		$	17,587,005		$	17,850,595

For the three months ended March 31, 2015 and 2014, amortization expense related to the intangibles with finite lives totaled $263,590 and $241,390, respectively, and was included in general and administrative expenses in the statement of operations.

MAX SOUND CORPORATION

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2015

(UNAUDITED)

NOTE 10 SUBSEQUENT EVENTS

Through the filing of these financial statements, the Company converted a total of approximately $223,000 in convertible debt comprised of principal and accrued interest into approximately 9,704,897 common shares.

On April 1, 2015, the principal stockholder converted $150,000 of the line of credit owed into 5,000,000 shares of common stock at $0.03 per share.

On April 1, 2015, the Company issued 150,000 shares of common stock having a fair value of $4,470 ($0.0284/sh) in exchange for consulting services.

On April 1, 2015, the Company issued 300,000 shares of common stock having a f air value of $8,520 ($0.0284/sh) in exchange for consulting services.

On April 1, 2015, the Company extended the November 26, 2012 employment agreement with its VP of Music Development for another two year period, ending on November 27, 2016. The employee will receive 125,000 shares of common stock per quarter starting on April 1, 2015, and a salary of $10,000 per month. The employee's month base salary will increase to $14,000 per month in the event the Corporation received $1,000,000 from funding or revenues in the 2015 calendar year.

On April 21, 2015, the Company entered into an agreement whereby the Company will issue up to $54,600 in a convertible note. The note matures on April 21, 2016 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the lowest two trading prices for the common stock during the fifteen (15) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $52,000 of proceeds less and $2,600 in legal costs on April 21, 2015.

On April 21, 2015, the Company entered into an agreement whereby the Company will issue up to $204,000 in a convertible note. The note matures on January 23, 2016 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the lowest three trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $200,000 of proceeds less and $4,000 in legal costs on April 27 , 2015.

On April 24, 2015, the Company entered into an agreement whereby the Company will issue up to $103,000 in a convertible note. The note matures on December 10, 2016 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is lower of the either (i) the closing sale price of the common stock on the trading day immediate receding the closdite or and (ii) 65% of the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $100,000 of proceeds less and $3,000 in legal costs on April 27, 2015.

On April 21, 2015, the Company entered into an agreement whereby the Company will issue up to $105,000 in a promissory note. The note matures on December 21, 2015 and bears an interest charge of 8%. On April 21, 2015, the Company entered into an agreement whereby the Company will issue up to $105,000 in a promissory note. The note matures on December 21, 2015 and bears an interest charge of 8%.

On April 21, 2015, the Company entered into an agreement whereby the Company will issue up to $105,000 in a convertible note. The note matures on April 21, 2016 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the lowest two trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $95,000 of proceeds less $5,000 in debt issue costs and $5,000 in legal costs on April 21, 2015.

On May 1, 2015, the Company entered into an agreement whereby the Company will issue up to $150,000 in a convertible note. The note matures on November 1, 2015 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is 60% of the lowest two trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $147,000 of proceeds less and $3,000 in legal costs on May 1, 2015.

Subsequent to March 31, 2015, the Company received $106,000 from the principal stockholder under the terms of the line of credit and repaid $5,000 to the principal stockholder under the terms of the line of credit.

Subsequent to March 31, 2015, the Company repaid $455,729 on convertible notes.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Overview

We were incorporated in the State of Delaware as of December 9, 2005 as 43010, Inc. to engage in any lawful corporate undertaking, including, but not limited to, locating and negotiating with a business entity for combination in the form of a merger, stock-for-stock exchange or stock-for-assets exchange. On October 7, 2008, pursuant to the terms of a stock purchase agreement, Mr. Greg Halpern purchased a total of 100,000 shares of our common stock from Michael Raleigh for an aggregate of $30,000 in cash. The total of 100,000 shares represents 100% of our issued and outstanding common stock at the time of the transfer. As a result, Mr. Halpern became our sole shareholder. As part of the acquisition, and pursuant to the Stock Purchase Agreement, Michael Raleigh, our then President, CEO, CFO, and Chairman resigned from all the positions he held in the company, and Mr. Halpern was appointed as our President, CEO CFO and Chairman. The current business model was developed by Mr. Halpern in September of 2008 and began when he joined the company on October 7, 2008. In October 2008, we became a development stage company focused on creating an Internet search engine and networking web site.

In May of 2010, we acquired the world-wide rights to all fields of use for Max Sound HD Audio Technology. In November of 2010, we opened our post-production facility for Max Sound HD Audio in Santa Monica California. In February of 2012, after several successful demonstrations to multi-media industry company executives, we decided to shift the focus of the Company to the marketing of the Max Sound HD Audio Technology and commenced the name change from So Act Network, Inc. to Max Sound Corporation and the symbol from SOAN to MAXD.

On December 3, 2012, the Company completed the purchase of the assets of Liquid Spins, Inc., a Colorado corporation (“Liquid Spins”). Pursuant to the Asset Purchase Agreement, the assets of Liquid Spins were exchanged for 24,752,475 shares of common stock of the Company (the “Shares”), equal to $10,000,000 and a purchase price of $.404 per share. The assets of Liquid Spins purchased included: record label distribution agreements; Liquid Spins technology inventory; independent arts programs; retail contracts for music distribution; physical inventory and office equipment; design and retail ready concepts; brand value; records; publishing catalog; and web assets.

The Company is in negotiations with several multi-media companies that will utilize our HD Audio solution in the future.

Videos and news relating to the Company is available on the company website at http://www.maxsound.com. The MAX-D Technology Highlights Video summarizes the HD Audio™ process and shows the need for high definition (HD) Audio in several key vertical markets. The video explains MAX-D as what we believe to be the only dynamic HD Audio™ that is being offered to various markets.

Plan of Operation

We began our operations on October 8, 2008, when we purchased the Form 10 Company from the previous owners. Since that date and through 2014, we have conducted financings to raise initial start-up money for the building of our internet search engine and social networking website and to start our operations. In 2011, the Company shifted the focus of its business operations from their social networking website to the marketing of the Max Sound HD Audio Technology.

The Company believes that Max Sound HD Audio Technology is a game changer for several vertical markets whose demand will create revenue opportunities in 2014.

We expect our financial requirements to increase with the additional expenses needed to market and promote the MAX-D Audio technology. We plan to fund these additional expenses through financings and through loans from our stockholders and/or officers based on existing lines of credit and we are also considering various private funding opportunities until such time that our revenue stream is adequate enough to provide the necessary funds.

Results of Operations

The following tables set forth key components of our results of operations for the periods indicated, in dollars, and key components of our revenue for the period indicated, in dollars.

	For the Three Months Ended,
	March 31, 2015			March 31, 2014


Revenue	$	—		$	1,236


Operating Expenses
General and administrative		787,303			740,785
Endorsement fees		—			—
Consulting		69,837			133,812
Professional fees		117,624			277,474
Website development		5,000			22,881
Compensation		241,300			256,400
Total Operating Expenses		1,221,064			1,431,352

Loss from Operations		(1,221,064	)		(1,430,116	)

Other Income / (Expense)
Other income		—			—
Gain on sale of intellectual property					—
Loss on inventory write off		(29,275	)
Gain (Loss) on extinguishment of debt		—			(116,582	)
Interest expense		(56,443	)		(18,596	)
Derivative Expense		(167,523	)		—
Amortization of debt offering costs		(53,093	)		(78,983	)
Loss on conversions		—			(42,085	)
Amortization of debt discount		(919,760	)		(786,155	)
Change in fair value of embedded derivative liability		473,735			(1,717,264	)
Total Other Income / (Expense)		(752,359	)		(2,759,665	)

Provision for Income Taxes		—			—

Net Loss	$	(1,973,423	)	$	(4,189,781	)

Net Loss Per Share - Basic and Diluted	$	(0.01	)	$	(0.01	)

Weighted average number of shares outstanding
during the year Basic and Diluted		341,970,037			313,207,471

For the three months ended March 31, 2015 and for the three months ended March 31, 2014.

General and Administrative Expenses: Our general and administrative expenses were $787,303 for the three months ended March 31, 2015 and $740,785 for the three months ended March 31, 2014, representing an increase of $46,516, or approximately 6%, as a result of increase in the general operation of the Company included added personnel, product development and marketing of our Max Sound Technology.

Consulting Fees: Our consulting fees were $69,837 for the three months ended March 31, 2015 and $133,812 for the three months ended March 31, 2014, representing a decrease of $63,975, or approximately 48%. The Company has decreased the use of consultants to assist the Company.

Professional Fees: Our professional fees were $117,627 for the three months ended March 31, 2015 and $277,474 for the three months ended March 31, 2014, representing a decrease of $159,850, or approximately 58%, as a result of reduced legal fees.

Compensation: Our compensation expenses were $241,300 for the three months ended March 31, 2015 and $256,400 for the three months ended March 31, 2014, representing a decrease of $15,100, or approximately 6%, as a result of our expensing of monthly compensation to our CFO, CEO, CIO and to our CTO pursuant to their employment agreements.

Net Loss: Our net loss for the three months ended March 31, 2015 and 2014, was $1,973,423, compared to $4,189,781 for the three months ended March 31, 2014. While the operational expenses in marketing our Max Sound technology decreased from the same period of last year, the overall amount of our net loss substantially increased as a result of an increase in the change in the fair value of embedded derivative liability associated with the convertible debt.

Liquidity and Capital Resources

Revenues for the three months ended March 31, 2015 and 2014, were $0 and $1,236, respectively. We have an accumulated deficit of $39,110,405 for the period from December 9, 2005 (inception) to March 31, 2015, and have negative cash flow from operations of $639,570 for the three months ended March 31, 2015.

Our financial statements have been presented on the basis that it is a going concern, which contemplates the realization of revenues from our subscriber base and the satisfaction of liabilities in the normal course of business. We have incurred losses from inception. These factors raise substantial doubt about our ability to continue as a going concern.

From our inception through March 31, 2015, our primary source of funds has been the proceeds of private offerings of our common stock, private financing, and loans from stockholders. Our need to obtain capital from outside investors is expected to continue until we are able to achieve profitable operations, if ever. There is no assurance that management will be successful in fulfilling all or any elements of its plans.

Below is a summary of our capital-raising activities for the three months ended March 31, 2015:

Private Financings

On December 24, 2014, the Company entered into an agreement with Blue Citi, LLC whereby the Company will issue up to $225,000 in a convertible note. The note matures on December 24, 2015 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the lowest three trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $225,000 of proceeds less $10,750 in debt issue costs on and $4,250 in legal costs on January 5, 2015.

On January 21, 2015, the Company entered into an agreement with Vista Capital Investments, LLC, whereby the Company will issue up to $50,000 in a convertible note. The note matures on January 21, 2016 and bears an interest charge of 10. The conversion price equals the “Variable Conversion Price”, which is 70% of the lowest three trading prices for the common stock during the twenty (20) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $50,000 on January 21, 2015.

On February 27, 2015, the Company entered into an agreement with Toledo Advisors, LLC whereby the Company will issue up to $115,500 in a convertible note. The note matures on February 27, 2016 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the lowest three trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $100,000 of proceeds, after $5,775 in debt issue costs on and $9,725 in legal costs on March 3, 2015.

On February 5, 2015, the Company entered into an agreement with Rock Capital, LLC whereby the Company will issue up to $36,750 in a convertible note. The note matures on February 25, 2016 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $31,500 of proceeds, after $3,413 in debt issue costs on and $1,838 in OID costs on March 2, 2015.

On March 11, 2015, the Company entered into an agreement with JMJ Financial, whereby the Company will issue up to $150,000 in a convertible note. The note matures on March 11, 2016 and bears a onetime interest charge of 5% after 90 days. The conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the fifteen (15) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding an unpaid principal amount into shares of common stock after six months. The Company received $150,000 proceeds on march 11, 2015.

Also on May 12, 2014, the Company entered into an agreement with ADAR Bays, LLC to issue up to $210,000 in two convertible notes. Each note matures on May 12, 2015 and bears an interest rate of 8%. The Company received $105,000 proceeds, less the $5,000 original issue discount pursuant to the terms of the first note, on May 16, 2014 and finder’s fees of $5,000 and the Company received $105,000 proceeds, less the $5,250 original issue discount pursuant to the terms of the first note, on May 16, 2014 and finder’s fees of $4,750 on January 12, 2015. The Company received a secured note in the amount of $105,000 from the investor as consideration for the second note, payable by December 30, 2014, and secured by the pledge of the second note. Both convertible notes are convertible at a “Variable Conversion Price”, which is 65% of the “Market Price”, which is the lowest closing bid price for the common stock during the ten (10) trading day period prior to the conversion. The holder of each note has a right to convert all or any part of the outstanding an unpaid principal amount into shares of common stock at any time on or before the maturity date; provided, however, that the second note is not convertible until it has been fully paid for in cash. The Company has a right to redeem each note as follows: (i) during the first 90 days after issuance, by paying an amount equal to 130% of the unpaid principal plus accrued unpaid interest; (ii) from the 90th to 180th day after issuance, by paying an amount equal to 140% of the unpaid principal plus accrued unpaid interest; and (iii) at any time upon a transfer of all or substantially all of the Company’s assets, a reclassification of the Company’s stock, a consolidation, merger or other reorganizational event, by paying an amount equal to 150% of the unpaid principal plus accrued unpaid interest.

Also on March 17, 2015, the Company entered into an agreement with ADAR Bays, LLC to issue up to $210,000 in two convertible notes. Each note matures on March 17, 2016, and bears an interest rate of 8%. The Company received $105,000 proceeds, less the $10,750 original issue discount pursuant to the terms of the first note, on May 16, 2014 and finder’s fees of $4,500. Both convertible notes are convertible at a “Variable Conversion Price”, which is 65% of the “Market Price”, which is the lowest closing bid price for the common stock during the ten (10) trading day period prior to the conversion. The holder of each note has a right to convert all or any part of the outstanding an unpaid principal amount into shares of common stock at any time on or before the maturity date; provided, however, that the second note is not convertible until it has been fully paid for in cash. The Company has a right to redeem each note as follows: (i) during the first 90 days after issuance, by paying an amount equal to 130% of the unpaid principal plus accrued unpaid interest; (ii) from the 90th to 180th day after issuance, by paying an amount equal to 140% of the unpaid principal plus accrued unpaid interest; and (iii) at any time upon a transfer of all or substantially all of the Company’s assets, a reclassification of the Company’s stock, a consolidation, merger or other reorganizational event, by paying an amount equal to 150% of the unpaid principal plus accrued unpaid interest.

During the three months ended March 31, 2015 and December 31, 2014, the Company issued convertible notes totaling $792,500 and $3,475,334, respectively. The Convertible notes issued for three months ended March 31, 2015 and year ended December 31, 2014, consist of the following terms:

	For the Three Months Ended,
	March 31, 2015			March 31, 2014


Revenue	$	—		$	1,236


Operating Expenses
General and administrative		854,705			740,785
Endorsement fees		—			—
Consulting		69,837			133,812
Professional fees		117,624			277,474
Website development		5,000			22,881
Compensation		241,300			256,400
Total Operating Expenses		1,288,466			1,431,352

Loss from Operations		(1,288,466	)		(1,430,116	)

Other Income / (Expense)
Other income		—			—
Gain on sale of intellectual property					—
Loss on inventory write off		(29,275	)
Gain (Loss) on extinguishment of debt		—			(116,582	)
Interest expense		(56,740	)		(18,596	)
Derivative Expense		(485,412	)		—
Amortization of debt offering costs		(51,141	)		(78,983	)
Loss on conversions		(200,000	)		(42,085	)
Amortization of debt discount		(776,998	)		(786,155	)
Change in fair value of embedded derivative liability		1,281,915			(1,717,264	)
Total Other Income / (Expense)		(317,651	)		(2,759,665	)

Provision for Income Taxes		—			—

Net Loss	$	(1,606,117	)	$	(4,189,781	)

Net Loss Per Share - Basic and Diluted	$	(0.00	)	$	(0.01	)

Weighted average number of shares outstanding
during the year Basic and Diluted		341,970,037			313,207,471

Loans and Advances

We have entered into three Credit Line Agreements with Greg Halpern. The first two were for $100,000 each and matured and expired in 2011. The third Credit Line Agreement issued by Mr. Halpern in March 2010 is for an additional $500,000 and matured and expired in 2012. All three agreements accrue interest at the prime rate as of the date of issuance. The prime rate of interest is the rate of interest that major banks charge their most creditworthy customers. For the purposes of these agreements, we shall determine the prime rate by using the prime rate reported by the Wall Street Journal on the date funds are extended to the Company. Based on the prime rate as of the date of issuance, the prime rate shall be 3.25%. On September 26, 2013, we entered into a Credit Line Agreement with Mr. Halpern for $1,000,000 that will mature and expire on or before the second anniversary of September 26, 2013. Interest will accrue on each advance at an annual rate of 4%. As of December 31, 2013, the Company owed $0 in principal and $0 in accrued interest related to these loans and lines of credit. We believe that the $1,000,000 line of credit issued will not be sufficient to cover the additional expense arising from maintenance of our regulatory filings with the SEC, and the marketing of our technology over the next twelve months, thus the Company will continue to pursue additional financing and/or additional funding in 2014 to continue marketing the Max Sound HD Audio Technology aggressively to Multi-Media Industry Users of Audio and Audio with Video products.

In 2014, the Company has received from Mr. Halpern additional net advances on the established lines of credit in the amount of $153,000 of which it has repaid $35,000. As of December 31, 2014, the balance including accrued interest on the line of credit is $268,227. This further demonstrates our Chairman’s ongoing commitment to continue financing the Company’s needs. While the Company expects to have ongoing needs for additional financing, the amount of those needs are not clearly established as the Company moves forward.

During the three months ended March 31, 2015, the principal stockholder loaned an additional $25,000 and was repaid $75,000. As of March 31, 2015, the line of credit balance including accrued interest totaled $220,478.

In the event that we are unable to obtain additional financing and/or funding or Mr. Halpern either fails to extend us more financing, declines to loan additional cash, declines to fund the line of credit, or declines to defer his salary payments, we will no longer be able to continue to operate and will have to cease operations unless we begin to generate sufficient revenue to cover our costs.

Recent Accounting Pronouncements

On June 10, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ("ASUE 2014-10"). The guidance is intended to reduce the overall cost and complexity associated with financial reporting for development stage entities without reducing the availability of relevant information. The Board also believes the changes will simplify the consolidation accounting guidance by removing the differential accounting requirements for development stage entities. As a result of these changes, there no longer will be any accounting or reporting differences in GAAP between development stage entities and other operating entities. For organizations defined as public business entities the presentation and disclosure requirements in Topic 915 will no longer be required starting with the first annual period beginning after December 15, 2014, including interim periods therein. Early application is permitted for any annual reporting period or interim period for which the entity's financial statements have not yet been issued (public business entities) or made available for issuance (other entities).

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-12, “Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

Critical Accounting Policies and Estimates

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.

Use of Estimates:

Revenue Recognition:

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is assured. We had $2,498 and $5 in revenue for the years ended December 31, 2013 and 2012, respectively.

Stock-Based Compensation:

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies this statement prospectively.

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

Derivative Financial Instruments

Impairment of Long-Lived Assets

The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets." ASC Topic 360-10-05 requires that long-lived assets, such as technology rights, be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including the eventual disposition. If the future net cash flows are less than the carrying value of an asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value or disposable value. For the year ended December 31, 2013, the Company completed an impairment analysis on its' long-lived assets, their technology rights, and determined that no impairment was necessary.

The Company believes that the accounting estimate related to asset impairment is a "critical accounting estimate" because the impairment methodology is highly susceptible to change from period to period, because it requires management to make assumptions about future cash flows, and because the impact of recognizing impairment could have a significant effect on operations. Management's assumptions about future cash flows require significant judgment because actual business operations of marketing the technology rights is in its infancy stages and managements expects that their future operating levels to fluctuate. The analysis included assumptions that are based on annual business plans and other forecasted results which are used to reflect market-based estimates of the risks associated with the projected cash flows, based on the best information available as of the date of the impairment test. There can be no assurance that the estimates and assumptions used in the impairment tests will prove to be accurate predictions of the future. If the future adversely differs from management's best estimate of key economic assumptions, and if associated future cash flows materially decrease, the Company may be required to record impairment charges related to its indefinite life intangible asset.

Prior to February 2011, the Company's business operations were related to the development and launching of a social networking website. However, since February 2011, our business focus has been on the marketing of our Max Sound HD Audio Technology. Since 2011, was our initial year of marketing our technology, management considers past operational levels to be inconsistent with future operations mainly due to the shift in business focus. In our impairment testing, the Company made assumptions towards the income and expenses expected in the future including, but not limited to, determining the actual expenses incurred in the current year that were attributable to the new business focus in order to develop an annual cost benchmark, trends in the marketplace, feedback from current and past marketing activities, and assessments upon the useful life of the technology rights.

The Company's primary focus over the next three to five years will be centered on the marketing and implementation of their technology in order to take advantage of the current trends in the marketplace for users of their technology. In particular, the Company expects that expenses will increase significantly from year to year over the next five years, at which time in year six and beyond the year-to-year change will be a minimal increase. In addition, the Company expects minimal revenue over the next two years, while in year three to six the Company expects to realize significant year to year increases in revenue, at which time in year seven and beyond the year to year change will be a minimal increase.

As part of the impairment test, the Company reviewed its' initial useful life analysis, in reference to their technology, and updated this analysis with factors that existed at the time of the impairment testing and determined that nothing had occurred in the marketplace that would change their initial determination of the useful life of their technology. The analysis included researching known technological advances in the marketplace and determining if those advances which are similar to the Company's products would limit the useful life of the asset. The Company believes that the technological advances in the marketplace are geared to developing different playback devices and the implementation of technology that is similar to the Company's technology. Thus, the Company concluded that their technology rights continue to have an indefinite useful life. However, it is understood that technological advancements could happen in the future that would limit the useful life of their technology. If a technology was created in the future that would limit the useful life of the technology, the Company would be required to update their impairment testing to include a useful life determination of the technology and may be required to record impairment charges at some time in the future.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities”.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to certain market risks, including changes in interest rates and currency exchange rates. We have not undertaken any specific actions to limit those exposures.

Item 4. Controls and Procedures

Disclosure controls and procedures. Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Additionally, on December 5, 2014, the Company, along with renowned architect Eli Attia, filed a lawsuit in the Superior Court of California, County of Santa Clara, against Google, its co-founders Sergey Brin and Larry Page, Google’s spinoff company Flux Factory, and senior executives of Flux. Plaintiffs’ allege misappropriation of trade secrets, breach of contract and other contract-related claims, breach of confidence, slander of title, violation of California’s Unfair Competition Law (California Business and Professionals Code §§ 17200 et seq.), and fraud, and also bring a claim for declaratory relief. The lawsuit contends that Google and the other Defendants stole Mr. Attia’s trade secrets, proprietary information, and know-how regarding a revolutionary architecture design and building process that he alone had invented, known as Engineered Architecture. Defendants are alleged to have engaged Mr. Attia in 2010 and 2011 to translate his architectural technology into software for a proof of concept, with the goal of determining at that point whether to continue with full-scale development with Mr. Attia. Instead, the lawsuit claims that once Mr. Attia had disclosed the trade secrets and proprietary information Defendants needed to bring the technology to market, they severed ties with Mr. Attia, and continued to use his technology without a license and without compensation, in order to bring the technology to market themselves. Plaintiffs seek a permanent injunction against Google, damages (including punitive damages), and restitution. As exclusive agent to Eli Attia to enforce all rights with respect to the subject technology, the Company has retained Buether Joe & Carpenter LLC to represent the Company in the suit, on a contingency fee basis. The case will be vigorously prosecuted, and the Company believes it has a good likelihood of success.

On January 21, 2015, the Company filed a patent infringement action against Netflix Inc., Netflix Luxembourg S.a.r.l. and Netflix International B.V. with the District Court of Mannheim, Germany. The asserted patent is the same patent as in the German proceedings against Google Inc. and its subsidiaries. The Complaint alleges that Netflix Inc. and its subsidiaries are offering and transmitting video streams to German customers as part of their video-on-demand business model; the videos being encoded and transmitted in a manner claimed and protected by the patent. The Company primarily seeks a permanent injunction against the Defendants, plus damages and information regarding past infringements.

On January 26, 2015, the Company was named as a defendant in an action filed in the Superior Court for the State of California and the County of Los Angeles captioned Bibicoff Family Trust v. Max Sound Corporation (Case No. SC123679). In the complaint the plaintiff alleges a cause of action for breach of contract associated with the non-payment by the Company for certain services plaintiff agreed to provide to the Company. The Company interposed a cross-complaint against plaintiffs averring causes of action for breach of contract, fraud, and negligent misrepresentation by defendants with respect to defendants’ fraudulent and intentional undisclosed inability to perform the services that plaintiffs’ agreed to perform that are the subject of this dispute. This lawsuit will be vigorously defended and prosecuted. While this lawsuit is in its nacency, the Company believes there is a strong likelihood of success on the merits with respect to the defending and prosecuting this action.

No assurance can be given as to the ultimate outcome of these actions or its effect on the Company.

Item 1A.

Risk Factors.

Not required for smaller reporting companies.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Private Financings

Below is a summary of our capital-raising activities for the three months ended March 31, 2015 and underlying terms:

On March 31, 2015, the Company issued 125,000 shares of common stock for services having a fair value of $7,875 ($0.063/share).

On March 31, 2015, the Company issued 125,000 shares of common stock for services having a fair value of $4,975 ($0. 04/share).

On March 31, 2014, the Company issued 700,000 shares of common stock for services having a fair value of $19,880 ($0.028/share).

On March 31, 2015, the majority shareholder exchanged 120,000,000 shares of common stock of the Company for 5,000,000 shares of Series A Convertible Preferred Stock of the Company at a Stated Value of $0.96 per share and a Conversion Price of $0.04 per share.

On January 5, 2015, the Company entered into a conversion agreement with LG Capital Funding, LLC relating to a convertible promissory note dated May 1, 2014, with the original principal amount of $105,000 for 1,068,315 shares based on a conversion price of $0.0331 per share (See Note 6).

On March 2, 2015, the Company entered into a conversion agreement with LG Capital Funding, LLC relating to a convertible promissory note dated May 1, 2014, with the original principal amount of $105,000 for 735,207 shares based on a conversion price of $0.0222 per share (See Note 6).

On March 12, 2015, the Company entered into a conversion agreement with LG Capital Funding, LLC relating to a convertible promissory note dated May 1, 2014, with the original principal amount of $105,000 for 991,991 shares based on a conversion price of $0.0196 per share (See Note 6).

On March 7, 2015, the Company entered into a conversion agreement with Vista Capital Investments, LLC relating to a convertible promissory note dated March 19, 2014, with the original principal amount of $25,000 for 305,434 shares based on a conversion price of $0.0341 per share (See Note 6).

On January 7, 2015, the Company entered into a conversion agreement with Vista Capital Investments, LLC relating to a convertible promissory note dated March 19, 2014, with the original principal amount of $25,000 for 305,434 shares based on a conversion price of $0.0341 per share (See Note 6).

On January 15, 2015, the Company entered into a conversion agreement with Vista Capital Investments, LLC relating to a convertible promissory note dated May 23, 2014, with the original principal amount of $25,000 for 300,000 shares based on a conversion price of $0.0346 per share (See Note 6).

On January 28, 2015, the Company entered into a conversion agreement with Vista Capital Investments, LLC relating to a convertible promissory note dated May 23, 2014, with the original principal amount of $25,000 for 300,000 shares based on a conversion price of $0.0356 per share (See Note 6).

On February 10, 2015, the Company entered into a conversion agreement with Vista Capital Investments, LLC relating to a convertible promissory note dated May 23, 2014, with the original principal amount of $25,000 for 286,028 shares based on a conversion price of $0.0331 per share (See Note 6).

On February 25, 2015, the Company entered into a conversion agreement with Vista Capital Investments, LLC relating to a convertible promissory note dated July 28, 2014, with the original principal amount of $50,000 for 500,000 shares based on a conversion price of $0.0244 per share (See Note 6).

On March 12, 2015, the Company entered into a conversion agreement with Vista Capital Investments, LLC relating to a convertible promissory note dated July 28, 2014, with the original principal amount of $50,000 for 1,250,000 shares based on a conversion price of $0.0212 per share (See Note 6).

On January 2, 2015, the Company entered into a conversion agreement with Iliad Research and Trading, LP relating to a convertible promissory note dated February 27, 2014, with the original principal amount of $282,778 for 1,333,956 shares based on a conversion price of $0.03 per share (See Note 6).

On January 12, 2015, the Company entered into a conversion agreement with Iliad Research and Trading, LP relating to a convertible promissory note dated February 27, 2014, with the original principal amount of $282,778 for 1,051,359 shares based on a conversion price of $0.0380 per share (See Note 6).

On January 26, 2015, the Company entered into a conversion agreement with Iliad Research and Trading, LP relating to a convertible promissory note dated February 27, 2014, with the original principal amount of $282,778 for 881,342 shares based on a conversion price of $0.0340 per share (See Note 6).

On February 3, 2015, the Company entered into a conversion agreement with Iliad Research and Trading, LP relating to a convertible promissory note dated February 27, 2014, with the original principal amount of $282,778 for 925,526 shares based on a conversion price of $0.0324 per share (See Note 6).

On February 11, 2015, the Company entered into a conversion agreement with Iliad Research and Trading, LP relating to a convertible promissory note dated February 27, 2014, with the original principal amount of $282,778 for 1,031,779 shares based on a conversion price of $0.0291 per share (See Note 6).

On February 27, 2015, the Company entered into a conversion agreement with Iliad Research and Trading, LP relating to a convertible promissory note dated February 27, 2014, with the original principal amount of $282,778 for 1,362,769 shares based on a conversion price of $0.0220 per share (See Note 6).

On January 13, 2015, the Company entered into a conversion agreement with Adar Bays, LLC relating to a convertible promissory note dated January 12, 2015, with the original principal amount of $105,000 for 128,849 shares based on a conversion price of $0.0388 per share (See Note 6).

On January 20, 2015, the Company entered into a conversion agreement with Adar Bays, LLC relating to a convertible promissory note dated January 12, 2015, with the original principal amount of $105,000 for 521,512 shares based on a conversion price of $0.0345 per share (See Note 6).

On January 22, 2015, the Company entered into a conversion agreement with Adar Bays, LLC relating to a convertible promissory note dated January 12, 2015, with the original principal amount of $105,000 for 753,296 shares based on a conversion price of $0.0345 per share (See Note 6).

On January 28, 2015, the Company entered into a conversion agreement with Adar Bays, LLC relating to a convertible promissory note dated January 12, 2015, with the original principal amount of $105,000 for 559,441 shares based on a conversion price of $0.0322 per share (See Note 6).

On February 2, 2015, the Company entered into a conversion agreement with Adar Bays, LLC relating to a convertible promissory note dated January 12, 2015, with the original principal amount of $105,000 for 621,601 shares based on a conversion price of $0.0322 per share (See Note 6).

On February 10, 2015, the Company entered into a conversion agreement with Adar Bays, LLC relating to a convertible promissory note dated January 12, 2015, with the original principal amount of $105,000 for 340,368 shares based on a conversion price of $0.0294 per share (See Note 6).

On February 5, 2015, the Company entered into a conversion agreement with KBM Worldwide, Inc. relating to a convertible promissory note dated August 1, 2014, with the original principal amount of $253,500 for 1,577,287 shares based on a conversion price of $0.0317 per share (See Note 6).

On February 11, 2015, the Company entered into a conversion agreement with KBM Worldwide, Inc. relating to a convertible promissory note dated August 1, 2014, with the original principal amount of $253,500 for 1,798,561 shares based on a conversion price of $0.0278 per share (See Note 6).

On February 19, 2015, the Company entered into a conversion agreement with KBM Worldwide, Inc. relating to a convertible promissory note dated August 1, 2014, with the original principal amount of $253,500 for 2,136,752 shares based on a conversion price of $0.0234 per share (See Note 6).

On March 2, 2015, the Company entered into a conversion agreement with KBM Worldwide, Inc. relating to a convertible promissory note dated August 1, 2014, with the original principal amount of $253,500 for 5,165,455 shares based on a conversion price of $0.0220 per share (See Note 6).

On March 10, 2015, the Company entered into a conversion agreement with Horberg Ventures, relating to a convertible promissory note dated August 21, 2014, with the original principal amount of $250,000 for 1,987,084shares based on a conversion price of $0.0201 per share (See Note 6).

On February 21, 2015, the Company entered into a conversion agreement with Horberg Ventures, relating to a convertible promissory note dated August 21, 2014, with the original principal amount of $250,000 for 1,882,0870 shares based on a conversion price of $0.0212 per share (See Note 6).

On March 10, 2015, the Company entered into a conversion agreement with Horberg Ventures, relating to a convertible promissory note dated August 21, 2014, with the original principal amount of $250,000 for 1,987,084 shares based on a conversion price of $0.0201 per share (See Note 6).

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not applicable.

Item 5.

Other Information.

None.

Item 6.

Exhibits

All 10 Form exhibits previously exhibited associated with all Company 10 Form filings are incorporated herein.

Exhibit Number		Description
10.1		8% Convertible Redeemable Note, dated Dec. 24, 2014 issued in 2015 to Blue Citi
10.2		8% Convertible Redeemable Note, dated March 17, 2015 issued to Adar Bays, LLC
10.3		8% Convertible Redeemable Note, dated Feb. 6, 2013 issued to Vista Capital Investments, LLC
10.4		8% Convertible Redeemable Note, dated Feb. 27, 2015 issued to Toledo Advisors, LLC
10.5		8% Convertible Redeemable Note, dated Mar. 11, 2015 issued to JMJ Financial
10.6		8% Convertible Redeemable Note, dated Feb. 25, 2015 issued to Rock Capital
10.7		Consulting Agreement with William Collins, dated Jan. 21, 2015
10.8		Consulting Agreement with J.B. Holding Group, dated Jan. 21, 2015
10.9		Consulting Agreement with Gabe Gunlock, LLC, dated Mar. 17, 2015
10.10		Extension of Employment Agreement, dated April 2, 2015
10.11		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer
10.12		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer
10.13		Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MAX SOUND CORPORATION
	(Registrant)

Date: May 18, 2015	By:	/s/ John Blaisure
		John Blaisure
		Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Greg Halpern
		Greg Halpern
		Chief Financial Officer (Principal Financial and Accounting Officer)

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