Max Sound Corp - Quarter Report: 2013 June (Form 10-Q)

f10q0613_maxsound.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

(Mark One)

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

For the quarterly period ended June 30, 2013

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

For the transition period from ______to______.

MAX SOUND CORPORATION

(Exact name of registrant as specified in charter)

DELAWARE		000-51886		26-3534190
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S Employer Identification No.)

2902A Colorado Avenue

Santa Monica, CA 90404 (Address of principal executive offices)

_______________

310-264-0230 (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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock. As of August 12, 2013, there were 305,335,938 shares, par value $0.0001 per share, of common stock issued and outstanding.

MAX SOUND CORPORATION

FORM 10-Q

June 30, 2013

INDEX

PART I-- FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	60
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	66
Item 4.	Controls and Procedures	66

PART II-- OTHER INFORMATION

Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	70

SIGNATURES

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 “SEC” refers to the Securities and Exchange Commission.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

MAX SOUND CORPORATION

(A DEVELOPMENT STAGE COMPANY)

CONTENTS

PAGE	2	CONDENSED BALANCE SHEETS AS OF JUNE 30, 2013 (UNAUDITED) AND AS OF DECEMBER 31, 2012 (AUDITED).

PAGE	3	STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2013 AND 2012 AND FOR THE PERIOD DECEMBER 9, 2005 (INCEPTION) TO JUNE 30, 2013 (UNAUDITED).

PAGE	4	STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE PERIOD FROM DECEMBER 9, 2005 (INCEPTION) TO JUNE 30, 2013(UNAUDITED).

PAGE	5	STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012 AND FOR THE PERIOD DECEMBER 9, 2005 (INCEPTION) TO JUNE 30, 2013(UNAUDITED).

PAGES	6 - 59	NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED).

Max Sound Corporation

(A Development Stage Company)

Condensed Balance Sheets

ASSETS

	June 30, 2013			December 31, 2012
	(UNAUDITED)

Current Assets
Cash	$	283,901		$	135,298
Inventory		39,041			8,796
Prepaid expenses		50,228			51,554
Debt offering costs - net		135,493			87,879
Total Current Assets		508,663			283,527

Property and equipment, net		293,436			327,525

Other Assets
Security deposit		413			413
Intangible assets		17,447,852			17,455,863
Total Other Assets		17,448,265			17,456,276

Total Assets	$	18,250,364		$	18,067,328

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable	$	43,912		$	32,786
Accrued expenses		81,253			66,440
Derivative liability		2,069,654			1,166,286
Convertible note payable, net of debt discount of $1,600,913 and $643,814, respectively		807,657			603,240
Total Current Liabilities		3,002,476			1,868,752

Commitments and Contingencies

Stockholders' Equity
Preferred stock, $0.0001 par value; 10,000,000 shares authorized,
No shares issued and outstanding		-			-
Common stock, $0.0001 par value; 400,000,000 shares authorized,
298,111,324 and 287,366,648 shares issued and outstanding, respectively		29,811			28,737
Additional paid-in capital		38,419,898			35,243,005
Deferred compensation		(87,500	)		(605,000	)
Deficit accumulated during the development stage		(23,114,321	)		(18,468,166	)
Total Stockholders' Equity		15,247,888			16,198,576

Total Liabilities and Stockholders' Equity	$	18,250,364		$	18,067,328

See accompanying notes to condensed unaudited financial statements.

Max Sound Corporation

(A Development Stage Company)

Condensed Statements of Operations

(UNAUDITED)

	For the Three Months Ended,						For the Six Months Ended						For the Period From December 9, 2005 (Inception)
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012			to June 30, 2013

Revenue	$	732		$	-		$	1,720		$	-		$	25,551


Operating Expenses
General and administrative		492,879			144,717			1,440,696			338,332			3,449,604
Endorsement fees		-			-			480,000			-			5,422,277
Consulting		143,211			139,611			270,287			259,611			6,280,531
Professional fees		110,630			26,059			603,388			84,629			1,133,758
Website development		-			-			-			-			251,263
Compensation		411,340			162,000			681,699			324,000			4,044,265
Total Operating Expenses		1,158,060			472,387			3,476,070			1,006,572			20,581,698

Loss from Operations		(1,157,328	)		(472,387	)		(3,474,350	)		(1,006,572	)		(20,556,147	)

Other Income / (Expense)
Interest income		-			57			-			129			688
Gain on extinguishment of debt		-			-			-			-			6,643
Interest expense		(32,453	)		(127,730	)		(62,109	)		(127,730	)		(120,481	)
Derivative Expense		(71,752	)		-			(95,877	)		-			(297,272	)
Amortization of debt offering costs		(72,418	)		(29,178	)		(121,655	)		(30,380	)		(248,509	)
Loss on conversions		-			-			(46,093	)		-			(46,093	)
Amortization of debt discount		(660,334	)		(185,392	)		(1,082,097	)		(189,925	)		(1,931,899	)
Change in fair value of embedded derivative liability		47,534			(9,285	)		236,026			(79,789	)		215,204
Total Other Income / (Expense)		(789,423	)		(351,528	)		(1,171,805	)		(427,695	)		(2,421,719	)

Provision for Income Taxes		-			-			-			-			-

Net Loss	$	(1,946,751	)	$	(823,915	)	$	(4,646,155	)	$	(1,434,267	)	$	(22,977,866	)

Net Loss Per Share - Basic and Diluted	$	(0.01	)	$	(0.00	)	$	(0.02	)	$	(0.01	)

Weighted average number of shares outstanding
during the year Basic and Diluted		295,880,176			255,335,394			293,158,844			255,274,304

See accompanying notes to condensed unaudited financial statements.

Max Sound Corporation

(A Development Stage Company)

Condensed Statement of Changes in Stockholders' Equity

For the Period from December 9, 2005 (Inception) to June 30, 2013

(UNAUDITED)

											Additional												Total
	Preferred stock				Common stock						paid-in			Accumulated			Subscription			Deferred			Stockholder's
	Shares		Amount		Shares			Amount			capital			Deficit			Receivable			Compensation			Equity


Balance, December 9, 2005 (Inception)		-	$	-		-		$	-		$	-		$	-		$	-		$	-		$	-

Stock issued on acceptance of incorporation expenses		-		-		100,000			10			90			-			-			-			100

Net loss for the period December 9, 2005 (Inception) to December 31, 2005		-		-		-			-			-			(400	)		-			-			(400	)

Balance, December 31, 2005		-		-		100,000			10			90			(400	)		-			-			(300	)

Net loss for the year ended December 31, 2006		-		-		-			-			-			(1,450	)		-			-			(1,450	)

Balance, December 31, 2006		-		-		100,000			10			90			(1,850	)		-			-			(1,750	)

Net loss for the year ended December 31, 2007		-		-		-			-			-			(1,400	)		-						(1,400	)

Balance, December 31, 2007		-		-		100,000			10			90			(3,250	)		-			-			(3,150	)

Common stock issued for services to founder ($0.001/sh)		-		-		44,900,000			4,490			40,410			-			-			-			44,900

Common stock issued for cash ($0.25/sh)		-		-		473,000			47			118,203			-			(67,750	)		-			50,500

Common stock issued for services ($0.25/sh)		-		-		12,000			1			2,999			-			-			-			3,000

Shares issued in connection with stock dividend		-		-		136,455,000			13,646			122,809			(136,455	)		-			-			-

In kind contribution of rent - related party		-		-		-			-			2,913			-			-			-			2,913

Accrued expenses payment made by a former shareholder		-		-		-			-			4,400			-			-			-			4,400

Net loss for the year ended December 31, 2008		-		-		-			-			-			(117,115	)		-			-			(117,115	)

Balance, December 31, 2008		-		-		181,940,000			18,194			291,824			(256,820	)		(67,750	)		-			(14,552	)

Common stock issued for cash ($0.25/sh)		-		-		62,000			6			15,494			-			-			-			15,500

Common stock issued for services ($0.25/sh)		-		-		24,000			2			5,998			-			-			-			6,000

Common stock issued for services ($0.35/sh)		-		-		1,700,000			170			594,830			-			-			(499,333	)		95,667

Common stock issued for services ($0.0625/sh)		-		-		935,714			94			58,388			-			-			-			58,482

Warrants issued for services		-		-		-			-			823,077			-			-			-			823,077

Common stock issued for services ($1.50/sh)		-		-		30,000			3			44,997			-			-			(39,699	)		5,301

Common stock issued for services ($1.77/sh)		-		-		30,000			3			53,097			-			-			(53,100	)		-

Common stock issued for services ($1.78/sh)		-		-		100,000			10			177,990			-			-			(166,052	)		11,948

Common stock issued for services ($1.80/sh)		-		-		100,000			10			179,990			-			-			(168,904	)		11,096

Common stock issued for services ($1.93/sh)		-		-		2,830,000			283			5,461,617			-			-			(5,459,098	)		2,802

Common stock issued for services ($1.94/sh)		-		-		30,000			3			58,197			-			-			(58,200	)		-

Common stock issued for services ($1.95/sh)		-		-		920,000			92			1,793,908			-			-			(1,135,808	)		658,192

Common stock issued for services ($2.00/sh)		-		-		300,000			30			599,970			-			-			(506,423	)		93,577

Return of common stock issued for services ($0.35/sh)		-		-		(1,100,000	)		(110	)		(384,890	)		-			-			385,000			-

Shares issued in connection with stock dividend		-		-		258,000			26			(26	)		-			-			-			-

Stock offering costs		-		-		-			-			(850	)		-			-			-			(850	)

Collection of subscription receivable		-		-		-			-			-			-			67,750			-			67,750

In kind contribution of rent - related party		-		-		-			-			12,600			-			-			-			12,600

Deferred compensation realized		-		-		-			-			-			-			-			114,333			114,333

Net loss for the year ended December 31, 2009		-		-		-			-			-			(2,298,552	)		-			-			(2,298,552	)

Balance, December 31, 2009		-		-		188,159,714			18,816			9,786,211			(2,555,372	)		-			(7,587,284	)		(337,629	)

Common stock issued for cash ($0.25/sh)		-		-		1,200,000			120			299,880			-			-			-			300,000

Accrued salary conversion into common stock ($0.30/sh)		-		-		945,507			95			283,557			-			-			-			283,652

Common stock issued for services ($0.15/sh)		-		-		250,000			25			37,475			-			-			-			37,500

Common stock issued for services ($0.18/sh)		-		-		100,000			10			17,990			-			-			-			18,000

Common stock issued for services ($0.19/sh)		-		-		100,000			10			18,990			-			-			-			19,000

Common stock issued for services ($0.20/sh)		-		-		210,000			21			41,979			-			-			-			42,000

Common stock issued for services ($0.25/sh)		-		-		140,000			14			34,986			-			-			-			35,000

Common stock issued in exchange for technology rights ($0.25/sh)		-		-		30,000,000			3,000			7,497,000			-			-			-			7,500,000

Return of common stock issued for services ($1.05/sh)		-		-		(150,000	)		(15	)		15			-			-			-			-

Common stock issued for services ($1.24/Sh)		-		-		1,000,000			100			1,239,900			-			-			(1,097,315	)		142,685

Common stock issued for services ($1.70/sh)		-		-		100,000			10			169,990			-			-			(152,534	)		17,466

Cancellation of shares held in escrow ($1.93/sh)		-		-		(1,000,000	)		(100	)		(1,929,900	)		-			-			487,802			(1,442,198	)

Warrants issued for services		-		-		-			-			10,559			-			-			-			10,559

Blue sky fees		-		-		-			-			(400	)		-			-			-			(400	)

Stock and financing offering costs		-		-		-			-			(8,000	)											(8,000	)

In kind contribution of rent - related party		-		-		-			-			9,450			-			-			-			9,450

Deferred compensation realized		-		-		-			-			-			-			-			6,546,046			6,546,046

Net loss for the year ended December 31, 2010		-		-		-			-			-			(6,312,965	)		-			-			(6,312,965	)

Balance, December 31, 2010		-		-		221,055,221			22,106			17,509,682			(8,868,337	)		-			(1,803,285	)		6,860,166

Common stock issued in exchange for assets ($0.10/sh)		-		-		3,000,000			300			299,700			-			-			-			300,000

Common stock issued for services ($0.07/sh)		-		-		2,000,000			200			139,800			-			-			-			140,000

Common stock issued for services ($0.08/sh)		-		-		1,006,500			100			80,420			-			-			-			80,520

Common stock issued for services ($0.10/sh)		-		-		3,066,462			307			306,339			-			-			-			306,646

Common stock issued for services ($0.11/sh)		-		-		500,000			50			54,950			-			-			-			55,000

Common stock issued for services ($0.22/sh)		-		-		15,403			2			3,386			-			-			-			3,388

Common stock issued for services ($0.23/sh)		-		-		100,000			10			22,990			-			-			-			23,000

Common stock issued for services ($0.25/sh)		-		-		702,860			70			175,645			-			-			-			175,715

Common stock issued for services ($0.33/sh)		-		-		100,000			10			32,990			-			-			-			33,000

Common stock issued for services ($0.35/sh)		-		-		2,443			-			855			-			-			-			855

Common stock issued for services ($0.39/sh)		-		-		101,500			10			39,575			-			-			-			39,585

Common stock issued for services ($0.47/sh)		-		-		123,795			12			58,172			-			-			-			58,184

Common stock issued for services ($0.50/sh)		-		-		100,000			10			49,990			-			-			-			50,000

Common stock issued for services ($0.54/sh)		-		-		200,000			20			107,980			-			-			-			108,000

Common stock issued for services ($0.70/sh)		-		-		100,000			10			69,990			-			-			-			70,000

Common stock issued for services ($0.88/sh)		-		-		100,000			10			87,990			-			-			-			88,000

Convertible debt conversion into common stock ($0.0295/sh)		-		-		271,186			27			7,973			-			-			-			8,000

Convertible debt conversion into common stock ($0.0315/sh)		-		-		587,382			59			18,444			-			-			-			18,503

Convertible debt conversion into common stock ($0.032/sh)		-		-		109,375			11			3,489			-			-			-			3,500

Convertible debt conversion into common stock ($0.0336/sh)		-		-		357,143			36			11,964			-			-			-			12,000

Convertible debt conversion into common stock ($0.0454/sh)		-		-		220,264			22			9,978			-			-			-			10,000

Convertible debt conversion into common stock ($0.1339/sh)		-		-		116,505			12			15,588			-			-			-			15,600

Convertible debt conversion into common stock ($0.1455/sh)		-		-		96,220			9			13,991			-			-			-			14,000

Convertible debt conversion into common stock ($0.1554/sh)		-		-		77,220			8			11,992			-			-			-			12,000

Accrued salary conversion into common stock ($0.11/sh)		-		-		1,309,091			131			143,869			-			-			-			144,000

Line of credit conversion into common stock ($0.11/sh)		-		-		909,091			91			99,909			-			-			-			100,000

Common stock issued for cash ($0.10/sh)		-		-		18,857,000			1,886			1,883,814			-			-			-			1,885,700

Warrants issued for services		-		-		-			-			248,498			-			-			-			248,498

Stock offering costs		-		-		-			-			(79,780	)		-			-			-			(79,780	)

Amortization of stock options		-		-		-			-			1,199,794			-			-			-			1,199,794

Deferred compensation realized		-		-		-			-			-			-			-			1,803,285			1,803,285

Net loss for the year ended December 31, 2011		-		-		-			-			-			(5,491,647	)		-			-			(5,491,647	)

Balance, December 31, 2011		-		-		255,184,661			25,519			22,629,977			(14,359,984	)		-			-			8,295,512

Common stock issued in exchange for assets ($0.404/sh)		-		-		24,752,475			2,475			9,997,525												10,000,000

Common stock issued for services ($0.62/sh)		-		-		733			-			454			-			-			-			454

Common stock issued for services ($0.21/sh)		-		-		150,000			15			31,485			-			-			-			31,500

Common stock issued for services ($0.25/sh)		-		-		250,000			25			62,475			-			-			-			62,500

Common stock issued for services ($0.30/sh)		-		-		850,000			85			254,915			-			-			(125,000	)		130,000

Common stock issued for services ($0.32/sh)		-		-		3,000,000			300			959,700			-			-			(480,000	)		480,000

Convertible debt conversion into common stock ($0.17032/sh)		-		-		146,780			15			24,985			-			-			-			25,000

Convertible debt conversion into common stock ($0.1764/sh)		-		-		150,000			15			26,445			-			-			-			26,460

Convertible debt conversion into common stock ($0.18013/sh)		-		-		277,572			28			49,972			-			-			-			50,000

Convertible debt conversion into common stock ($0.18128/sh)		-		-		113,805			11			20,489			-			-			-			20,500

Convertible debt conversion into common stock ($0.18619/sh)		-		-		917,031			92			170,649			-			-			-			170,741

Convertible debt conversion into common stock ($0.19159/sh)		-		-		180,000			18			34,468			-			-			-			34,486

Convertible debt conversion into common stock ($0.19670/sh)		-		-		101,678			10			19,990			-			-			-			20,000

Convertible debt conversion into common stock ($0.1995/sh)		-		-		200,501			20			39,980			-			-			-			40,000

Convertible debt conversion into common stock ($0.2394/sh)		-		-		48,454			5			11,595			-			-			-			11,600

Convertible debt conversion into common stock ($0.2513/sh)		-		-		198,965			20			49,980			-			-			-			50,000

Convertible debt conversion into common stock ($0.27067/sh)		-		-		92,365			9			24,991			-			-			-			25,000

Convertible debt conversion into common stock ($0.2741/sh)		-		-		91,208			9			24,991			-			-			-			25,000

Convertible debt conversion into common stock ($0.2763/sh)		-		-		72,385			7			19,993			-			-			-			20,000

Convertible debt conversion into common stock ($0.322/sh)		-		-		528,035			53			169,974			-			-			-			170,027

Common stock issued for financing costs ($0.34/sh)		-		-		60,000			6			20,394			-			-			-			20,400

Reclassification of derivative liability associated with convertible debt		-		-		-			-			549,547			-			-			-			549,547

Warrants issued for services		-		-		-			-			48,031			-			-			-			48,031

Net loss for the year ended December 31, 2012		-		-		-			-			-			(4,108,182	)		-			-			(4,108,182	)

Balance, December 31, 2012		-		-		287,366,648			28,737			35,243,005			(18,468,166	)		-			(605,000	)		16,198,576

Common stock issued for services ($0.30/sh)		-		-		300,000			30			89,970												90,000

Common stock issued for services ($0.24/sh)		-		-		250,000			25			59,975									(36,000	)		24,000

Common stock issued for services ($0.24/sh)		-		-		700,000			70			173,530												173,600

Common stock issued for services ($0.36/sh)		-		-		500,000			50			182,450												182,500

Common stock issued for services ($0.25/sh)		-		-		250,000			25			62,475												62,500

Common stock issued for services ($0.26/sh)		-		-		700,000			70			181,930												182,000

Common stock issued for services ($0.27/sh)		-		-		120,000			12			32,388			-			-			-			32,400

Common stock issued for interest expense ($0.25/sh)		-		-		8,000			-			2,000												2,000

Common stock issued for services ($0.25/sh)		-		-		60,000			6			14,994												15,000

Common stock issued for services ($0.26/sh)		-		-		250,000			25			63,725												63,750

Common stock issued for services ($0.26/sh)		-		-		57,692			6			14,994												15,000

Common stock issued for services ($0.23/sh)		-		-		26,087			3			5,997												6,000

Common stock issued for services ($0.23/sh)		-		-		250,000			25			57,475												57,500

Common stock issued for services ($0.24/sh)		-		-		250,000			25			59,975												60,000

Return of shares		-		-		(750,000	)		(75	)		75												-

Reclassification of derivative liability associated with convertible debt		-		-		-			-			823,950			-			-			-			823,950

Exercise of stock warrants		-		-		430,800			43			43,037			-			-			-			43,080

Warrants issued for services		-		-		-			-			84,028			-			-			-			84,028

Stock options issued for services		-		-		-			-			115,288												115,288

Deferred compensation realized		-		-		-			-			-			-			-			553,500			553,500

Convertible debt conversion into common stock		-		-		7,247,133			725			1,088,092			-			-			-			1,088,817

Shares issued as a finder's fee		-		-		94,964			9			20,545			-			-			-			20,554

Net loss for the six months ended June 30, 2013		-		-		-			-			-			(4,646,155	)		-			-			(4,646,155	)

Balance June 30, 2013		-	$	-		298,111,324		$	29,811		$	38,419,898		$	(23,114,321	)	$	-		$	(87,500	)	$	15,247,888

See accompanying notes to condensed unaudited financial statements.

Max Sound Corporation

(A Development Stage Company)

Condensed Statements of Cash Flows

(UNAUDITED)

	For the Six Months Ended						For the Period From December 9, 2005 (Inception) to
	June 30, 2013			June 30, 2012			June 30, 2013

Cash Flows From Operating Activities:
Net Loss	$	(4,646,155	)	$	(1,434,267	)	$	(22,977,866	)
Adjustments to reconcile net loss to net cash used in operations
Depreciation/Amortization		40,756			22,354			160,336
Depreciation for abandonment of website		-			-			57,063
In kind contribution of rent - related party		-			-			24,963
Shares issued for intellectual property		-			-			-
Stock and stock options issued for services		1,115,538			31,955			3,849,603
Stock issued for debt financing costs		-			-			20,400
Warrants issued for services		84,028			48,031			1,214,193
Loss on debt conversion		46,093			-			46,093
Trademark Impairment		275			-			275
Amortization of stock options		-			-			1,199,794
Blue-sky Fees		-			-			(1,750	)
Amortization of stock based compensation		517,500			-			8,043,966
Amortization of original issue discount		28,382			-			28,382
Security deposit		-			-			(413	)
Amortization of debt offering costs		93,273			30,380			220,127
Amortization of debt discount		1,038,097			189,925			1,888,848
Change in fair value of derivative liability		(236,026	)		187,494			(216,153	)
Derivative Expense		95,877			-			297,272
Changes in operating assets and liabilities:
(Increase)/Decrease in prepaid expenses		1,326			(3,146	)		105,123
Increase/(Decrease) in inventory		(30,245	)		-			(30,245	)
Increase/(Decrease) accounts payable		11,126			13,130			43,910
Increase/(Decrease) cash overdraft		-			-			-
Increase/(Decrease) in accrued expenses		62,109			(91,085	)		571,339
Net Cash Used In Operating Activities		(1,778,046	)		(1,005,229	)		(5,454,740	)

Cash Flows From Investing Activities:
Register of trademark		-			-			(275	)
Cash received in connection with shares issued for assets and intellectual property		7,736			-			70,620
Purchase of property equipment		(6,667	)		(97,400	)		(393,454	)
Net Cash Provided by (Used In) Investing Activities		1,069			(97,400	)		(323,109	)

Cash Flows From Financing Activities:
Proceeds from stockholder loans		-			-			620,583
Repayment of stockholder loans		-			-			(520,583	)
Accrued expenses payment made by a former shareholder		-			-			4,400
Proceeds from issuance of convertible note, net of offering costs		1,882,500			701,000			3,676,600
Proceeds from warrants exercised		43,080			-			43,080
Proceeds from issuance of stock, net of subscriptions receivable and net of offering costs		-			-			1,772,920
Proceeds from collection of stock subscription receivable		-			-			464,750
Net Cash Provided by Financing Activities		1,925,580			701,000			6,061,750

Net Increase / (Decrease) in Cash		148,603			(401,629	)		283,901

Cash at Beginning of Period		135,298			516,532			-

Cash at End of Period	$	283,901		$	114,903		$	283,901

Supplemental disclosure of cash flow information:

Cash paid for interest	$	-		$	-		$	231
Cash paid for taxes	$	-		$	-		$	-

Supplemental disclosure of non-cash investing and financing activities:
Shares issued in connection with assets and intellectual property	$	-		$	-		$	17,800,000
Shares issued in conversion of related party accrued compensation	$	-		$	-		$	427,652
Shares issued in conversion of related party line of credit	$	-		$	-		$	100,000
Shares issued in conversion of convertible debt and accrued interest	$	1,090,817		$	-		$	1,873,234
Shares issued in connection with stock dividend	$	-		$	-		$	136,713
Reclassification of derivative liability to additional paid in capital	$	823,950		$	-		$	1,373,497
Stock sold for subscription	$	-		$	-		$	464,750
Shares issued for direct offering costs	$	20,554		$	-		$	20,554
Debt discount recorded on convertible and unsecured debt accounted for as a derivative liability	$	1,867,467		$	521,289		$	3,362,032

During the year ended December 31, 2012 the Company issued 24,752,475 shares of common stock to Liquid Spins, Inc in exchange for assets and intellectual property with a value of $10,000,000.

See accompanying notes to condensed unaudited financial statements.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(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. The Company is currently in the development stage, and on or around February 2011, the Company changed its business operations to focus primarily on developing and launching audio technology software.

Prior to February 2011, the Company's business operations were focused on creating search technologies within an online networking platform.

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

It is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

Activities during the development stage include developing the online networking platform, launching our audio technology, and raising capital.

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.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

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 June 30, 2013 and December 31, 2012, 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. 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 June 30, 2013 and December 31, 2012.

(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 $732, and $1,720 for the three and six months ended June 30, 2013 and revenues of $0 and $0 for the three and six months ended June 30, 2012, 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 $16,943 and $20,796 for the three and six months ended June 30, 2013 and advertising costs of $2,919 and $51,069 for the three and six months ended June 30, 2012.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

(I) Identifiable Intangible Assets

As of June 30, 2013 and December 31, 2012, $17,447,852 and $17,455,863, respectively of costs related to registering a trademark and acquiring technology rights 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.

(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 and six months ended June 30, 2013 and 2012.

(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.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

The computation of basic and diluted loss per share at June 30, 2013 and 2012 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

	June 30, 2013		December 31, 2012

Stock Warrants (Exercise price - $0.10 - $.50/share)		3,335,000		2,415,800
Stock Options (Exercise price - $0.12 - $.50/share)		12,700,000		12,000,000
Convertible Debt (Exercise price - $0.11 - $.20/share)		17,074,937		6,201,734

Total		33,109,937		20,617,534

(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 2009, and the related state income tax returns are no longer subject to examination by state authorities for the years prior to 2009.

(M) Business Segments

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

(N) Recent Accounting Pronouncements

The Company's management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted would have a material impact on the accompanying financial statements.

(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.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

(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.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

(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.

NOTE 2 GOING CONCERN

As reflected in the accompanying financial statements, the Company is in the development stage with minimal operations, has an accumulated deficit of $23,114,321 for the period from December 9, 2005 (inception) to June 30, 2013, and has negative cash flow from operations of $5,454,740 from inception. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

NOTE 3 NOTE PAYABLE – PRINCIPAL STOCKHOLDER

During the year ended December 31, 2008, the Company received $18,803 from the principal stockholder. Pursuant to the terms of the loan, the loan is bearing an annual interest rate of 3.25% and due on demand. In 2008, the Company repaid $15,000 in principal to the principal stockholder. In 2009, the Company repaid $3,803 in principal to the principal stockholder. As of December 31, 2010, the principal portion of this principal stockholder loan balance has been repaid (See Note 10).

On May 11, 2009, the Company received $9,500 from the principal stockholder. During the year ended December 31, 2009, the Company repaid $1,500 in principal to the principal stockholder. Pursuant to the terms of the loan, the loan is bearing an annual interest rate of 3.25% and is due on demand (See Note 10).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On May 22, 2009, the Company received $15,000 from the principal stockholder. During the year ended December 31, 2010, the Company repaid $6,000 in principal to the principal stockholder under the terms of the loan. Pursuant to the terms of the loan, the loan is bearing an annual interest rate of 3.25% and is due on demand (See Note 10).

On May 26, 2009, the Company received $16,700 from the principal stockholder. During the year ended December 31, 2010, the Company repaid $15,700 in principal to the principal stockholder under the term of this loan. Pursuant to the terms of the loan, the loan is bearing an annual interest rate of 3.25% and is due on demand (See Note 10).

During the year ended December 31, 2011, the Company repaid $18,000 in principal and $2,116 of accrued interest to the principal stockholder related to these principal stockholder loans (See Note 10).

NOTE 4 LINE OF CREDIT – PRINCIPAL STOCKHOLDER

On May 28, 2009, the Company entered into a two year line of credit agreement with the principal stockholder in the amount of $100,000. The line of credit carries an interest rate of 3.25%. As of December 31, 2011, the principal stockholder has advanced the Company $100,000 under the terms of this line of credit agreement (See Note 10).

On November 10, 2009, the Company entered into a two year line of credit agreement with the principal stockholder in the amount of $100,000. The line of credit carries an interest rate of 3.25%. As of December 31, 2011, the principal stockholder has advanced $100,000 to the Company under the terms of this line of credit agreement (See Note 10).

On March 25, 2010, the Company entered into a two year line of credit agreement with the principal stockholder in the amount of $500,000. The line of credit carries an interest rate of 3.25%. On February 17, 2011, the principal stockholder converted $100,000 of the line of credit owed into 909,091 shares of common stock at $0.11 per share. As of December 31, 2011, the principal stockholder has advanced $360,580 to the Company under the terms of this line of credit agreement. (See Note 8(G) and Note 10).

As of December 31, 2011, the Company repaid $460,580 in principal and $11,283 of accrued interest to the principal stockholder related to these lines of credit (See Note 10).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

NOTE 5 PROPERTY AND EQUIPMENT

At June 30, 2013, and December 31, 2012, respectively, property and equipment is as follows:

	June 30, 2013			December 31, 2012

Website Development	$	294,795		$	294,795
Furniture and Equipment		98,613			98,613
Leasehold Improvements		6,573			6,573
Software		53,897			53,897
Office Equipment		54,829			48,162
Domain Name		1,500			1,500
Sign		628			628
Total		510,835			504,168
Less: accumulated depreciation and amortization		(217,399	)		(176,643	)
Property & Equipment, Net	$	293,436		$	327,525

Depreciation/amortization expense for the three and six months ended June 30, 2013 was $20,543 and $40,756, respectively.

NOTE 6 CONVERTIBLE DEBT – DERIVATIVE LIABILITIES

On July 6, 2010, the Company entered into an agreement whereby the Company will issue up to $50,000 in a convertible note. The note matured on March 30, 2011, and bears an interest rate of 8%. Any unpaid amount as of the maturity date bears an interest rate of 22%. 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. The conversion prices equals the "Variable Conversion Price", which is 59% of the "Market Price", which is the average of the lowest six trading prices for the Common Stock during the ten (10) trading day period prior to the conversion. In July of 2010, the Company received $50,000 proceeds less the $3,000 finder’s fee pursuant to the terms of this convertible note. As of December 31, 2012 the convertible note balance and accrued interest is $0.

On February 17, 2011, the Company entered into an agreement whereby the Company will issue up to $40,000 in a convertible note. The note matures on November 17, 2011, and bears an interest rate of 8%. 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. The conversion prices equals the "Variable Conversion Price", which is 59% of the "Market Price", which is the average of the lowest six (6) trading prices for the Common Stock during the ten trading day period prior to the conversion. In February of 2011, the Company received $40,000 proceeds less the $2,500 finder’s fee pursuant to the terms of this convertible note. As of December 31, 2012 the convertible note balance and accrued interest is $0.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On March 8, 2012, the Company entered into an agreement whereby the Company will issue up to $166,667 in a convertible note. The note matures on March 9, 2013 and bears an interest rate of 4%. 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 conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is the average of the lowest ten (10) trading prices for the common stock during the ten trading day period prior to the conversion. The Company received $150,000 proceeds, less the $16,667 finder’s fee pursuant to the terms of this convertible note, on March 14, 2012. As of December 31, 2012 the convertible note balance and accrued interest is $0.

On March 14, 2012, the Company entered into an agreement whereby the Company will issue up to $102,500 in a convertible note. The note matures on December 19, 2012 and bears an interest rate of 8%. 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 conversion price equals the “Variable Conversion Price”, which is 65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten trading day period prior to the conversion. The Company received $102,500 proceeds, less the $2,500 finder’s fee pursuant to the terms of this convertible note, on March 20, 2012. As of December 31, 2012 the convertible note balance and accrued interest is $0.

On April 4, 2012, the Company entered into an agreement whereby the Company will issue up to $166,000 in a convertible note. The note matures on December 28, 2012 and bears an interest rate of 8%. 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 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 ten trading day period prior to the conversion. The Company received $138,000 proceeds, less the $28,000 finder’s fee pursuant to the terms of this convertible note, on April 4, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $10,500, respectively.

On April 25, 2012, the Company entered into an agreement whereby the Company will issue up to $166,667 in a convertible note. The note matures on April 25, 2013 and bears an interest rate of 4%. 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 conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is the average trading prices for the common stock during the ten trading day period prior to the conversion. The Company received $150,000 proceeds, less the $16,667 finder’s fee pursuant to the terms of this convertible note, on April 25, 2012. As of December 31, 2012 the convertible note balance and accrued interest is $0.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On May 8, 2012, the Company entered into an agreement whereby the Company will issue up to $333,000 in a convertible note subject to a $33,000 original issue discount (OID). On October 31, 2012 the Company entered into a new agreement whereby up to $833,000 in convertible note will be issued. The note matures on May 8, 2013, and bears an interest rate of 0% if note is repaid on or before 90 days from the effective date. If the note is not repaid within 90 days, a one-time interest charge of 5% will be applied to the principal. 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 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 Company received $92,000 proceeds, less the $8,000 finder’s fee and $11,000 OID pursuant to the terms of this convertible note, on May 9, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $53,402, respectively.

On June 22, 2012, the Company entered into an agreement whereby the Company will issue up to $62,500 in a convertible note. The note matures on March 27, 2013 and bears an interest rate of 8%. 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 conversion price equals the “Variable Conversion Price”, which is 65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten trading day period prior to the conversion. The Company received $60,000 proceeds, less the $2,500 finder’s fee pursuant to the terms of this convertible note, on April 25, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $40,156, respectively.

On July 16, 2012, the Company entered into an agreement whereby the Company will issue up to $58,333 in a convertible note. The note matures on January 15, 2013 and bears an interest rate of 10%. The conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is the low traded price of 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 an unpaid principal amount into shares of common stock after six months. The Company received $50,000 proceeds, less the $8,333 finder’s fee pursuant to the terms of this convertible note, on July 16, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $61,054, respectively.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On July 30, 2012, the Company entered into an agreement whereby the Company will issue up to $111,000 in a convertible note. The note matures on April 30, 2013 and bears an interest rate of 8%. 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 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 an unpaid principal amount into shares of common stock after six months. The Company received $100,000 proceeds, less the $11,000 finder’s fee pursuant to the terms of this convertible note, on July 30, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $114,775, respectively.

On August 3, 2012, the Company entered into an agreement whereby the Company will issue up to $82,500 in a convertible note. The note matures on August 3, 2013 and bears an interest rate of 4%. The conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is lower of the average closing bid price for the common stock during the ten trading day period. 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 $75,000 proceeds, less the $7,500 finder’s fee pursuant to the terms of this convertible note, on August 3, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $84,695, respectively.

On August 15, 2012, the Company will issue up to $50,000 in a convertible note subject to a $4,000 original issue discount (OID) related to the agreement entered into on May 8, 2012 and updated on October 31, 2012. The note matures on August 15, 2013, and bears an interest rate of 0% if note is repaid on or before 180 days from the effective date. If the note is not repaid within 90 days a one-time interest charge of 5% will be applied to the principal. 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 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 Company received $50,000 proceeds, less the $4,000 finder’s fee pursuant to the terms of this convertible note, on August 15, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $55,943, respectively.

On September 10, 2012, the Company entered into an agreement whereby the Company will issue up to $83,333 in a convertible note. The note matures on September 10, 2013 and bears an interest rate of 4%. The conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is lower of the average closing bid price for the common stock during the ten trading day period. 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 $75,000 proceeds, less the $8,333 finder’s fee pursuant to the terms of this convertible note, on September 10, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $84,354, respectively.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)\

On September 26, 2012, the Company entered into an agreement whereby the Company will issue up to $166,000 in a convertible note. The note matures on June 26, 2013 and bears an interest rate of 8%. 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 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 an unpaid principal amount into shares of common stock after six months. The Company received $150,000 proceeds, less the $16,000 finder’s fee pursuant to the terms of this convertible note, on September 10, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $169,491, respectively.

On October 9, 2012, the Company entered into an agreement whereby the Company will issue up to $62,500 in a convertible note. The note matures on July 11, 2013 and bears an interest rate of 8%. 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 conversion price equals the “Variable Conversion Price”, which is 65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten trading day period prior to the conversion. The Company received $60,000 proceeds, less the $2,500 finder’s fee pursuant to the terms of this convertible note, on October 9, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $63,642, respectively.

On November 1, 2012, the Company will issue up to $165,000 in a convertible note subject to a $15,000 original issue discount (OID) related to the agreement entered into on May 8, 2012 and updated on October 31, 2012. The note matures on November 1, 2013 and bears an interest rate of 0% if note is repaid on or before 180 days from the effective date. If the note is not repaid within 90 days a one-time interest charge of 5% will be applied to the principal. 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 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 Company received $50,000 proceeds, less the $4,000 finder’s fee pursuant to the terms of this convertible note, on August 15, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $16,291 and $165,000, respectively.

On November 30, 2012, the Company entered into an agreement whereby the Company will issue up to $78,500 in a convertible note. The note matures on September 4, 2013 and bears an interest rate of 8%. 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 conversion price equals the “Variable Conversion Price”, which is 65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten trading day period prior to the conversion. The Company received $60,000 proceeds, less the $2,500 finder’s fee pursuant to the terms of this convertible note, on October 9, 2012. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $0 and $79,023, respectively.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On November 29, 2012, the Company entered into an agreement whereby the Company will issue up to $166,000 in a convertible note. The note matures on August 29, 2013 and bears an interest rate of 8%. 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 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 an unpaid principal amount into shares of common stock after six months. During 2012, the Company received $166,000 proceeds, less the $16,000 finder’s fee pursuant to the terms of this convertible note. As of June 30, 2013 and December 31, 2012 the convertible note balance and accrued interest is $123,812 and $167,143, respectively.

On January 25, 2013, the Company entered into an agreement whereby the Company will issue up to $100,000 in a convertible note. The note matures on January 25, 2014 and bears an interest rate of 4%. The conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is the average the closing bid 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 an unpaid principal amount into shares of common stock after six months. The Company received $100,000 proceeds, less the $10,000 finder’s fee pursuant to the terms of this convertible note, on January 25, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $101,745.

On January 24, 2013, the Company entered into an agreement whereby the Company will issue up to $166,000 in a convertible note. The note matures on October 24, 2013 and bears an interest rate of 8%. 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 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 an unpaid principal amount into shares of common stock after six months. The Company received $166,000 proceeds, less the $1,000 finder’s fee and an original issue discount of $15,000 pursuant to the terms of this convertible note, on January 24, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $171,871.

On February 1, 2013, the Company entered into an agreement whereby the Company will issue up to $83,333 in a convertible note. The note matures on February 1, 2014 and bears an interest rate of 4%. The conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is the average the closing bid 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 an unpaid principal amount into shares of common stock after six months. The Company received $83,333 proceeds, less the $8,333 finder’s fee pursuant to the terms of this convertible note, on February 1, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $84,700.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On February 6, 2013, the Company entered into an agreement whereby the Company will issue up to $25,000 in a convertible note. The note matures on February 6, 2014 and bears an interest rate of 10%. The conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is the average the closing bid prices for the lowest three (3) trading prices of 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 an unpaid principal amount into shares of common stock after six months. The Company received $25,000 proceeds, on February 19, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $26,000.

On February 25, 2013, the Company entered into an agreement whereby the Company will issue up to $62,500 in a convertible note. The note matures on November 27, 2013 and bears an interest rate of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the “Market Price”, which is the average the closing bid prices for the lowest three (3) trading prices of 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 an unpaid principal amount into shares of common stock after six months. The Company received $62,500 proceeds less the 2,500 finder’s fee pursuant to the terms of this convertible note, on March 1, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $64,226.

On February 27, 2013, the Company entered into an agreement whereby the Company will issue up to $100,000 in a convertible note. The note matures on February 27, 2014 and bears an interest rate of 4%. 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 $100,000 proceeds, less the $8,000 finder’s fee pursuant to the terms of this convertible note, on February 27, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $105,000.

On March 13, 2013, the Company entered into an agreement whereby the Company will issue up to $111,000 in a convertible note. The note matures on December 13, 2013 and bears an interest rate of 8%. 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 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 an unpaid principal amount into shares of common stock after six months. The Company received $111,000 proceeds, less the $9,000 finder’s fee and an original issue discount of $10,000 pursuant to the terms of this convertible note, on March 13, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $113,682.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On March 14, 2013, the Company entered into an agreement whereby the Company will issue up to $55,500 in a convertible note. The note matures on December 14, 2013 and bears an interest rate of 8%. 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 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 an unpaid principal amount into shares of common stock after six months. The Company received $55,500 proceeds, less the $500 finder’s fee and an original issue discount of $5,000 pursuant to the terms of this convertible note, on March 18, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $56,828.

On April 4, 2013, the Company entered into an agreement whereby the Company will issue up to $61,750 in a convertible note. The note matures on January 8, 2014, and bears an interest rate of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the “Market Price”, which is the average the closing bid prices for the lowest three (3) trading prices of 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 an unpaid principal amount into shares of common stock after six months. The Company received $61,750 proceeds less the 1,750 finder’s fee pursuant to the terms of this convertible note, on April 8, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $62,933.

On April 17, 2013, the Company entered into an agreement whereby the Company will issue up to $41,750 in a convertible note. The note matures on January 22, 2014, and bears an interest rate of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the “Market Price”, which is the average the closing bid prices for the lowest three (3) trading prices of 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 an unpaid principal amount into shares of common stock after six months. The Company received $41,750 proceeds less the 1,750 finder’s fee pursuant to the terms of this convertible note, on April 23, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $42,429.

On April 26, 2013, the Company entered into an agreement whereby the Company will issue up to $194,444 in a convertible note. The note matures on April 26, 2014 and bears an interest rate of 4%. The conversion price equals the “Variable Conversion Price”, which is 75% of the “Market Price”, which is the average the three lowest closing bid 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 an unpaid principal amount into shares of common stock after six months. The Company received $194,444 proceeds, less the $19,444 original issue discount pursuant to the terms of this convertible note, on April 26, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $195,828. In connection with this raise, the Company also issued 175,000 three year warrants exercisable at $0.40/share.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On May 2, 2013, the Company entered into an agreement whereby the Company will issue up to $166,000 in a convertible note. The note matures on February 2, 2014 and bears an interest rate of 8%. 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 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 an unpaid principal amount into shares of common stock after six months. The Company received $166,000 proceeds, less the $13,000 finder’s fee and an original issue discount of $15,000 pursuant to the terms of this convertible note, on May 2, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $168,169.

On May 3, 2013, the Company entered into an agreement whereby the Company will issue up to $83,333 in a convertible note. The note matures on May 3, 2014 and bears an interest rate of 4%. The conversion price equals the “Variable Conversion Price”, which is 75% of the “Market Price”, which is the average the three lowest closing bid 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 an unpaid principal amount into shares of common stock after six months. The Company received $83,333 proceeds, less the $8,333 original issue discount pursuant to the terms of this convertible note, on May 3, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $83,867. In connection with this raise, the Company also issued 75,000 three year warrants exercisable at $0.40/share.

On May 3, 2013, the Company entered into an agreement whereby the Company will issue up to $25,000 in a convertible note. The note matures on May 2, 2014 and bears an interest rate of 10%. The conversion price equals the “Variable Conversion Price”, which is 70% of the “Market Price”, which is the average the closing bid prices for the lowest three (3) trading prices of 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 an unpaid principal amount into shares of common stock after six months. The Company received $25,000 proceeds, on May 3, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $25,402.

On May 23, 2013, the Company entered into a Securities Purchase Agreement (Aggregate SPA) by and between the Company and three (3) institutional investors. The Purchase Agreement provides for the sale by the Company to the Investors of an aggregate principal amount of $2,222,222.16 of 4% Convertible Debentures, with 10% Original Issue Discount that is due twelve months from their date of issuance (the “Debentures”). The Subscription Amount shall be funded in the amount of $277,777.77 (net amount of $250,000 less debt offering costs to the Company after the original issue discount) on the initial closing date of May 23, 2013 and seven (7) additional installments in the amount of $277,777.77(net amount of $250,000 less debt offering costs to the Company after the original issue discount) shall each be funded on or about the first day of each calendar month commencing on June 1, 2013.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

In addition, the Company issues debt offering costs (placement agent fees) equal to 7% of the aggregate purchase price paid by each purchase and equity equaling 2% of the gross proceeds received by the Company valued at the Investors conversion price.

The Debentures have an interest rate of four percent (4%) and shall have an original issue discount of ten percent (10%) from the stated Principal Amount. The Debentures may be prepaid in whole or in part on not less than thirty (30) days prior written notice to the Investors for an amount equal to 115% multiplied by the sum of the then outstanding principal amount of the Debentures plus any accrued and unpaid interest.

The Debentures shall be convertible into common stock, at the Investors’ option, at a twenty-five percent (25%) discount to the average price of the lowest three (3) closing bid prices for the common stock during the ten (10) trading days prior to the conversion date. In the event of default, the Debentures shall be convertible into common stock at a thirty-five percent (35%) discount to the Market Price. In the event that the Company fails in any material respect to comply with the reporting requirements of the Securities and Exchange Act of 1934, as amended, with regards to the filing of Form 10-Q's and 10-K's or ceases to be subject to the Exchange Act, the Debentures shall be convertible into common stock at a fifty percent (50%) discount to the Market Price, unless the Company has registration statement declared effective by the SEC, which covers for resale the shares issued in connection with the May Investor’s conversion.

Warrants

In connection with the Aggregate SPA, the Investors were each issued warrants to purchase from the Company at any time after the Closing Date until 5:00 p.m., E.S.T on the third anniversary of the Closing Date (the “Expiration Date”), up to 250,000 fully-paid and non-assessable shares of Common Stock at a per share purchase price of $0.40 (the “Warrants”). The Company issued 750,000 three year warrants on the terms discussed above.

As of June 30, 2013, the Company (from the Aggregate SPA) received proceeds totaling $833,333 less $83,333 original issue discount and debt offering costs totaling $85,054 which includes 94,964 common shares of the Company’s common stock valued at $20,554 issued to the finder.

As of June 30, 2013, the Aggregate SPA convertible note balance and accrued interest is $835,720.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On June 27, 2013, the Company entered into an agreement whereby the Company will issue up to $50,000 in a convertible note. The note matures on June 26, 2014 and bears an interest rate of 4%. 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 $50,000 proceeds on June 27, 2013. As of June 30, 2013, the convertible note balance and accrued interest is $50,000.

During the six months ended June 30, 2013 and the year ended December 31, 2012, the Company issued convertible notes totaling $2,158,944 and $1,924,333 respectively. The Convertible notes consist of the following terms:

		6 Months Ended			Year ended
		June 30, 2013			December 31, 2012
		Amount of			Amount of
		Principal Raised			Principal Raised
Interest Rate			4% - 10	%		0% - 10	%
Default interest rate			14% - 22	%		0% - 22	%
Maturity		October 24, 2013 - June 26, 2014			December 19, 2012 - November 19, 2013

Conversion terms 1	70% of the “Market Price”, which is the average of the lowest ten (10) trading prices for the common stock during the ten trading day period prior to the conversion.	$	-		$	166,667
Conversion terms 2	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		-			102,500
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 ten (10) trading day period prior to the conversion		-			166,000
Conversion terms 4	70% of the “Market Price”, which is the average trading prices for the common stock during the ten (10) trading day period prior to the conversion.		-			166,667
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 fifteen (15) trading day period prior to the conversion.		-			111,000
Conversion terms 6	65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten trading day period prior to the conversion.		-			62,500
Conversion terms 7	70% of the “Market Price”, which is the low traded price of the common stock during the twenty (20) trading day period prior to the conversion		-			58,333
Conversion terms 8	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.		-			111,000
Conversion terms 9	70% of the “Market Price”, which is lower of the average closing bid price for the common stock during the ten (10) trading day period		-			83,333
Conversion terms 10	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.		-			55,000
Conversion terms 11	70% of the “Market Price”, which is lower of the average closing bid price for the common stock during the ten trading day period.		-			83,333
Conversion terms 12	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		-			166,000
Conversion terms 13	65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten trading day period prior to the conversion		-			62,500
Conversion terms 14	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.		-			165,000
Conversion terms 15	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		-			166,000
Conversion terms 16	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		-			-
Conversion terms 17	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.		-			78,500
Conversion terms 18	Conversion price of $0.50 per share		-			120,000
Conversion terms 19	70% of the “Market Price”, which is lower of the average closing bid price for the common stock during the ten (10) trading day period		100,000			-
Conversion terms 20	70% of the “Market Price”, which is lower of the average closing bid price for the common stock during the ten (10) trading day period		83,333			-
Conversion terms 21	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.		166,000			-
Conversion terms 22	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.		25,000			-
Conversion terms 23	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.		111,000			-
Conversion terms 24	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.		55,500			-
Conversion terms 25	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.		62,500			-
Conversion terms 26	65% 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.		100,000			-
Conversion terms 27	75% of the three (3) lowest closing prices of the common stock during the ten (10) day trading period prior to the conversion date.		277,777			-
Conversion terms 28	70% of the lower of the average of the three (3) lowest trading prices for the ten (10) day trading period prior to conversion.		166,000			-
Conversion terms 29	65% of the lower of the average of the three (3) lowest trading prices for the ten (10) day trading period prior to conversion.		103,500			-
Conversion terms 30	75% of the three (3) lowest closing prices of the common stock during the ten day trading period prior to the conversion date.		833,334			-
Conversion terms 31	70% of the lower of the average of the three (3) lowest trading prices for the twenty (20) day trading period 1 day prior to conversion.		25,000			-
Conversion terms 32	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			-

		$	2,158,944		$	1,924,333

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 6 regarding accounting for derivative liabilities.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

During the six months ended June 30, 2013, the Company converted debt and accrued interest, totaling $1,088,817 into 7,247,133 shares of common stock.

During the year ended December 31, 2012, the Company converted debt and accrued interest, totaling $688,814 into 3,118,779 shares of common stock.

During the year ended December 31, 2011, the Company converted debt and accrued interest, totaling $93,603 into 1,835,295 shares of common stock.

Convertible debt consisted of the following activity and terms:

				Interest Rate	Maturity
Balance as of December 31, 2011	$	-

Borrowings during the year ended December 31, 2012		1,924,334		0% - 10%	December 19, 2012 - November 19, 2013

Conversion of debt to into 3,118,779 shares of common stock with a valuation of $688,814 ($0.17032 - $0.322/share) including the accrued interest of $11,534		(677,280	)
Convertible Debt Balance as of December 31, 2012		1,247,054		0% - 10%

Borrowings during the six months ended June 30, 2013		2,158,944		4% - 10%	October 24, 2013 - June 26, 2014

Non-Cash Reclassification of accrued interest converted		45,296

Conversion of debt and accrued interest into 7,247,133 shares of common stock with a valuation of $1,088,817 ($0.1128 - $0.1783/share) reduced by the loss on conversion of $46,093		(1,042,724	)

Convertible Debt Balance as of June 30, 2013	$	2,408,570		4% - 10%

Debt Offering Costs

During the three and six months ended June 30, 2013, the Company paid debt issue costs totaling $101,554 and $140,887, respectively.

During the year ended December 31, 2012, the Company paid debt issue costs totaling $214,733.

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

	6 Months Ended			Year ended
	June 30, 2013			December 31, 2012

Debt issue costs	$	272,787		$	214,733
Accumulated amortization of debt issue costs		(137,294	)		(126,854	)

Debt issue costs - net	$	135,493		$	87,879

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

During the three and six months ended June 30, 2013, the Company amortized $48,626 and $93,273 of debt issue costs, respectively.

During the three and six months ended June 30, 2012, the Company amortized $29,178 and $30,380 of debt issue costs, respectively.

Debt Discount & Original Issue Discount

During the six months ended June 30, 2013 and year ended December 31, 2012, the Company recorded debt discounts totaling $1,913,831 and $1,469,633, respectively.

The debt discount recorded in 2013 and 2012 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 $660,334 and $1,038,097 during the three and six months ended June 30, 2013 to interest expense.

The Company amortized $825,819 during the year ended December 31, 2012 to interest expense.

	6 Months Ended			Year ended
	June 30, 2013			December 31, 2012

Debt discount	$	3,065,421		$	1,469,633
Accumulated amortization of debt discount		(1,464,508	)		(825,819	)

Debt discount - Net	$	1,600,913		$	643,814

Derivative Liabilities

The Company identified conversion features embedded within convertible debt issued in 2013 and 2012 and warrants issued in 2013. The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

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, 2011		-
Fair value at the commitment date for convertible instruments		1,671,028
Change in fair value of embedded derivative liability		44,805
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability		(549,547	)
Derivative Liability - December 31, 2012		1,166,286

Fair value at the commitment date for convertible instruments		1,963,344
Change in fair value of embedded derivative liability		(236,026	)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability		(823,950	)
Derivative Liability - June 30, 2013	$	2,069,654

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 recorded a derivative expense for the three and six months ended June 30, 2013 of $71,752 and $95,877, respectively. There Company recorded a derivative expense for the three and six months ended June 30, 2012 of $0 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 June 30, 2013:

	Commitment Date			Re-measurement Date
Expected dividends		0	%		0	%
Expected volatility		119% -304	%		133% -300	%
Expected term:	0.75– 3 years			0.16 – 2.97 years
Risk free interest rate		0.08% -.5	%		0.12% - 0.66%

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, 2012:

	Commitment Date			Re-measurement Date
Expected dividends		0	%		0	%
Expected volatility		228.76% -251.93	%		156	%
Expected term:	0.5– 1 years			0.5 – 1 years
Risk free interest rate		0.18% -.21	%		0.16%

NOTE 7 CONVERTIBLE DEBT

On December 11, 2012, the Company entered into an agreement whereby the Company will issue up 120,000 in a convertible note. The note matures on December 11, 2013 and bears an interest rate of 8%. As of June 30, 2013 and December 31, 2012, the Company balance of the convertible note and accrued interest is $125,428 and 120,526, respectively. 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 conversion price equals to $0.50 per share. On March 21, 2013, the Company issued 8,000 shares of common stock for accrued interest having a fair value of $2,000 ($0.25/share).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

NOTE 8 STOCKHOLDERS’ EQUITY

(A) Common Stock Issued for Cash

On December 31, 2005, the Company issued 100,000 shares of common stock for cash of $100 in exchange for acceptance of the incorporation expenses for the Company ($0.001/share). As a result of the forward split, the 100,000 shares were increased to 400,000 shares ($0.00025/share) (See Note 7(D)).

For the year ended December 31, 2008, the Company issued 473,000 shares of common stock for cash of $118,250 ($0.25/share), of which $67,750 was a subscription receivable. During the month of January 2009, $67,750 of stock subscription receivable was collected. As a result of the forward split, the 473,000 shares were increased to 1,892,000 shares ($0.0625/share). (See Note 8(D)).

On January 2, 2009, the Company entered into stock purchase agreements to issue 20,000 shares of common stock for cash of $5,000 ($0.25/share). As a result of the forward split, the 20,000 shares were increased to 80,000 shares ($0.0625/share) (See Note 8(D)).

On January 3, 2009, the Company entered into stock purchase agreements to issue 2,000 shares of common stock for cash of $500 ($0.25/share). As a result of the forward split, the 2,000 shares were increased to 8,000 shares ($0.0625/share) (See Note 8(D)).

On January 11, 2009, the Company entered into stock purchase agreements to issue 32,000 shares of common stock for cash of $8,000 ($0.25/share). As a result of the forward split, the 32,000 shares were increased to 128,000 shares ($0.0625/share) (See Note 8(D)).

On January 12, 2009, the Company entered into stock purchase agreements to issue 2,000 shares of common stock for cash of $500 ($0.25/share). As a result of the forward split, the 2,000 shares were increased to 8,000 shares ($0.0625/share) (See Note 8(D)).

On January 15, 2009, the Company entered into stock purchase agreements to issue 4,000 shares of common stock for cash of $1,000 ($0.25/share). As a result of the forward split, the 4,000 shares were increased to 16,000 shares ($0.0625/share) (See Note 8(D)).

In February of 2009, the Company paid direct offering costs of $850 related to the securities sold.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On May 27, 2010, the Company issued one unit; each unit consisted of 100,000 shares of common stock and 100,000 warrants to purchase common stock, for cash of $22,500 net of the $2,500 finder’s fee ($0.25/share). Each warrant is exercisable for a three year period and has an exercise price of $0.50 per share (See Note 8(C)).

On July 23, 2010, the Company issued one unit; each unit consisted of 100,000 shares of common stock and 100,000 warrants to purchase common stock, for cash of $25,000 ($0.25/share). Each warrant is exercisable for a three year period and has an exercise price of $0.50 per share (See Note 8(C).

On August 5, 2010, the Company issued 10 units; each unit consisted of 100,000 shares of common stock and 100,000 warrants to purchase common stock, for cash of $250,000 ($0.25/share). Each warrant is exercisable for a three year period and has an exercise price of $0.50 per share (See Note 8(C).

During the year ended December 31, 2010, the Company paid direct offering costs of $2,900 related to the securities sold.

On January 24, 2011, the Company issued 10,000 shares of common stock for cash of $1,000 ($0.10/share).

On February 23, 2011, the Company issued 300,000 shares of common stock for cash of $30,000 ($0.10/share).

On March 21, 2011, the Company issued 150,000 shares of common stock for cash of $15,000 ($0.10/share).

On May 2, 2011, the Company issued 2,000,000 shares of common stock for cash of $200,000 ($0.10/share).

During the month of June 2011, the Company issued 5,460,000 shares of common stock for cash of $546,000 ($0.10/share) of which $397,000 was a subscription receivable. The Company received the entire $397,000 of subscription receivable in July 2011.

During the months of July, August and September of 2011, the Company issued 10,937,000 shares of common stock for cash of $1,093,700 ($0.10/share).

During the year-ended December 31, 2011, the Company paid $76,780 in finder’s fees and issued 955,800 warrants (See Note 8(C)).

(B) Stock Issued for Services

On October 14, 2008, the Company issued 44,900,000 shares of common stock to its founder having a fair value of $44,900 ($0.001/share) in exchange for services provided. As a result of the forward split, the 44,900,000 shares were increased to 179,600,000 shares and its purchase price was similarly adjusted to $0.00025((See Note 8(D) and Note10).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On November 24, 2008, the Company issued 4,000 shares of common stock having a fair value of $1,000 ($0.25/share) in exchange for consulting services. As a result of the forward split, the 4,000 shares were increased to 16,000 shares and its purchase price was similarly adjusted to $0.0625/share (See Note 8(D)).

On December 5, 2008, the Company issued 4,000 shares of common stock having a fair value of $1,000 ($0.25/share) in exchange for consulting services. As a result of the forward split, the 4,000 shares were increased to 16,000 shares and its purchase price was similarly adjusted to $0.0625/share (See Note 8(D)).

On December 20, 2008, the Company issued 4,000 shares of common stock having a fair value of $1,000 ($0.25/share) in exchange for consulting services. As a result of the forward split, the 4,000 shares were increased to 16,000 shares and its purchase price was similarly adjusted to $0.0625/share (See Note 8(D)).

On January 12, 2009, the Company issued 4,000 shares of common stock having a fair value of $1,000 ($0.25/share) in exchange for consulting services. As a result of the forward split, the 4,000 shares were increased to 16,000 shares and its purchase price was similarly adjusted to $0.0625/share (See Note 8(D)).

On January 14, 2009, the Company issued 20,000 shares of common stock having a fair value of $5,000 ($0.25/share) in exchange for services related to a development services agreement entered on January 19, 2009. As a result of the forward split, the 20,000 shares were increased to 80,000 shares and its purchase price was similarly adjusted to $0.0625/share (See Note 8(D) and Note 9(B)).

On August 25, 2009, the Company issued 50,000 shares of common stock having a fair value of $3,125 ($0.0625/share), based upon the fair value on the date of grant, in exchange for professional services.

On August 31, 2009, the Company issued 885,714 shares of common stock in exchange for services valued at $62,000 related to the development services agreement entered into on January 19, 2009. Based on the most recent fair market value at that time, the shares were valued at $55,357 ($0.0625/share), resulting in the recognition of a gain on the extinguishment of debt of $6,643 (See Note 9(B)).

On September 18, 2009, the Company issued 500,000 shares of common stock as compensation pursuant to the terms of a consulting agreement, having a fair value of $175,000 ($0.35/share) based upon fair value on the date of grant. On November 11, 2009, the Company cancelled the agreement and 300,000 shares of common stock were returned to the Company. As of December 31, 2009, $70,000 is recorded as consulting expense and $105,000 of deferred compensation was reclassified to $0 (See Note 9(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On September 18, 2009, the Company issued 600,000 shares of common stock as compensation pursuant to the terms of a consulting agreement, having a fair value of $210,000 ($0.35/share) based upon fair value on the date of grant. On November 18, 2009, the Company cancelled the agreement and 400,000 shares of common stock were returned to the Company. As of December 31, 2009, $70,000 is recorded as consulting expense and $140,000 of deferred compensation was reclassified to $0 (See Note 9(B)).

On September 21, 2009, the Company issued 600,000 shares of common stock as compensation pursuant to the terms of a consulting agreement, having a fair value of $210,000 ($0.35/share) based upon fair value on the date of grant. On December 18, 2009, the Company terminated the consulting agreement and 400,000 shares were returned to the Company. As of December 31, 2009, $70,000 is recorded as consulting expense and $140,000 of deferred compensation was reclassified to $0 (See Note 9(B)).

On November 12, 2009, the Company issued 100,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $178,000 ($1.78/share) based upon fair value on the date of grant. During 2009 and 2010, $11,948 and $89,000 was recorded as consulting expense, respectively. For the year ended December 31, 2011, $77,052 is recorded as consulting expense and $0 is recorded as deferred compensation (See Note 9(B)).

On November 12, 2009, the Company issued 200,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $400,000 ($2.00/share) based upon fair value on the date of grant. During 2009 and 2010, $22,466 and $200,000 was recorded as consulting expense, respectively. For the year ended December 31, 2011, $177,534 is recorded as consulting expense and $0 is recorded as deferred compensation (See Note 9(B)).

On November 16, 2009, the Company issued 100,000 shares of common stock as compensation pursuant to the terms of the consulting agreements, having a fair value of $180,000 ($1.80/share) based upon fair value on the date of grant. During 2009 and 2010, $11,096 and $90,000 was recorded as consulting expense, respectively. For the year ended December 31, 2011, $78,904 is recorded as consulting expense and $0 is recorded as deferred compensation (See Note 9(B)).

On November 18, 2009, the Company issued 30,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $45,000 ($1.50/share) based upon fair value on the date of grant. During 2009, $5,301 was recorded as consulting expense. For the year ended December 31, 2010, $39,699 was recorded as consulting expense. (See Note 9(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On November 21, 2009, the Company issued 30,000 shares of common stock as compensation pursuant to the terms of the marketing agreement, having a fair value of $53,100 ($1.77/share) based upon fair value on the date of grant. For the year ended December 31, 2010, $53,100 was recorded as consulting expense (See Note 9(B)).

On December 3, 2009, the Company issued 240,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $468,000 ($1.95/share) based upon fair value on the date of grant. As of December 31, 2009, $468,000 was recorded as consulting expense (See Note 9(B)).

On December 3, 2009, the Company issued 35,000 shares of common stock as compensation pursuant to the terms of the commission agreement, having a fair value of $68,250 ($1.95/share) based upon fair value on the date of grant. As of December 31, 2009, $68,250 was recorded as consulting expense (See Note 9(B)).

On December 3, 2009, the Company issued 35,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $68,250 ($1.95/share) based upon fair value on the date of grant. As of December 31, 2009, $68,250 was recorded as consulting expense (Note 9(B)).

On December 3, 2009, the Company issued 10,000 shares of common stock as compensation pursuant to the terms of the commission agreement, having a fair value of $19,500 ($1.95/share) based upon fair value on the date of grant. As of December 31, 2009, $19,500 is recorded as consulting expense (See Note 9(B)).

On December 15, 2009, the Company issued 100,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $200,000 ($2.00/share) based upon fair value on the date of grant. During 2009, $71,111 was recorded as consulting expense. For the year ended December 31, 2010, $128,889 was recorded as consulting expense (See Note 9(B)).

On December 27, 2009, the Company issued 10,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $19,400 ($1.94/share) based upon fair value on the date of grant. For the year ended December 31, 2010, $19,400 was recorded as consulting expense (See Note 9(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On December 30, 2009, the Company issued 1,500,000 shares of common stock as compensation pursuant to the terms of the advertising agreement, having a fair value of $2,895,000 ($1.93/share) based upon fair value on the date of grant. In 2010, the Company cancelled a portion of the agreement and as a result, 1,000,000 shares of common stock were returned to the Company. For the year ended December 31, 2010, $965,000 was recorded as consulting expense (See Note 9(B)).

On December 31, 2009, the Company issued 75,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $144,750 ($1.93/share) based upon fair value on the date of grant. For the year ended December 31, 2010, $116,374 was recorded as consulting expense. For the year ended December 31, 2011, $28,376 is recorded as consulting expense (See Note 9(B)).

On December 31, 2009, the Company issued 500,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $965,000 ($1.93/share) based upon fair value on the date of grant. For the year ended December 31, 2010, $965,000 was recorded as consulting expense (See Note 9(B)).

During December of 2009, the Company issued 680,000 shares of common stock as compensation pursuant to the terms of the consulting agreements, having a fair value of $1,312,400 ($1.93/share) based upon fair value on the date of grant. During 2009 and 2010, $2,802 and $709,116 was recorded as consulting expense, respectively. For the year ended December 31, 2011, $600,482 is recorded as consulting expense and $0 is recorded as deferred compensation (See Note 9(B)).

During December of 2009, the Company issued 600,000 shares of common stock as compensation pursuant to the terms of the consulting agreements, having a fair value of $1,170,000 ($1.95/share) based upon fair value on the date of grant. During 2009 and 2010, $34,192 and $585,000 was recorded as consulting expense, respectively. For the year ended December 31, 2011, $550,808 is recorded as consulting expense and $0 is recorded as deferred compensation (See Note 9(B)).

On January 15, 2010, the Company issued 100,000 shares of common stock as compensation pursuant to the terms of the consulting agreement, having a fair value of $170,000 ($1.70/share) based upon fair value on the date of grant. For the year ended December 31, 2010, $81,507 was recorded as consulting expense. For the year ended December 31, 2011, $88,493 is recorded as consulting expense and $0 is recorded as deferred compensation (See Note 9(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On February 17, 2010, the Company entered into a twelve month consulting agreement with an unrelated third party effective February 17, 2010. In exchange for the services provided, the Company issued 1,000,000 shares of common stock having a fair value of $1,240,000 ($1.24/share) based upon fair value on the date of grant. For the year ended December 31, 2010, $1,066,740 was recorded as consulting expense. For the year ended December 31, 2011, $173,260 is recorded as consulting expense (See Note 9(B)).

On June 1, 2010, the Company entered into a twelve month consulting agreement for consulting and business services. As part of the agreement, the Company issued 40,000 shares as a nonrefundable retainer fee having a value of $10,000 ($0.25/share) based upon fair value on the date of the agreement. (See Note 9(B)).

On July 23, 2010, the Company issued 10,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $2,000 ($0.20/share) based upon fair value on the grant date (See Note 9(B)).

On August 1, 2010, the Company issued 200,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $40,000 ($0.20/share) based upon fair value on the grant date (See Note 9(B)).

On September 1, 2010, the Company issued 100,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $19,000 ($0.19/share) based upon fair value on the grant date (See Note 9(B)).

On October 1, 2010, the Company issued 100,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $18,000 ($0.18/share) based upon fair value on the grant date (See Note 9(B)).

On November 1, 2010, the Company issued 100,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $25,000 ($0.25/share) based upon fair value on the grant date (See Note 9(B)).

On December 14, 2010, the Company issued 250,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $37,500 ($0.15/share) based upon fair value on the grant date (See Note 9(B)).

On January 17, 2011, the Company issued 3,000,000 shares of common stock to its' new CEO pursuant to an employment agreement having a fair value of $300,000 ($0.10/share) based upon fair value on the grant date. (See Note 8(A)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On February 17, 2011, the Company issued 500,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $55,000 ($0.11/share) based upon fair value on the grant date (See Note 9(B)).

On March 3, 2011, the Company issued 1,000,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $80,000 ($0.08/share) based upon fair value on the grant date (See Note 9(B)).

On May 17, 2011, the Company issued 2,000,000 shares of common stock pursuant to an employment agreement having a fair value of $140,000 ($0.07/share) based upon fair value on the grant date. (See Note 9(A)).

During June 2011, the Company issued 300,000 shares of common stock pursuant to consulting agreements for consulting services having a fair value of $75,000 ($0.25/share) based upon fair value on the grant date (See Note 9(B)).

On June 15, 2011, the Company issued 15,980 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $1,598 ($0.10/share) based upon the terms of the consulting agreement (See Note 9(B)).

On July 1, 2011, the Company issued 6,500 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $520 ($0.08/share) based upon the terms of the consulting agreement (See Note 9(B)).

On August 14, 2011, the Company issued 2,443 shares of common stock pursuant to two consulting agreements for consulting services having a fair value of $855 ($0.35/share) based upon the terms of the consulting agreements (See Note 9(B)).

On September 12, 2011, the Company issued 2,860 shares of common stock pursuant to two consulting agreements for consulting services having a fair value of $715 ($0.25/share) based upon the terms of the consulting agreements (See Note 9(B)).

On September 18, 2011, the Company issued 15,403 shares of common stock pursuant to two consulting agreements for consulting services having a fair value of $3,388 ($0.22/share) based upon the terms of the consulting agreements (See Note 9(B)).

On September 25, 2011, the Company issued 1,500 shares of common stock pursuant to two consulting agreements for consulting services having a fair value of $585 ($0.39/share) based upon the terms of the consulting agreements (See Note 9(B)).

During the three months ended September 30, 2011, the Company issued 50,482 shares of common stock pursuant to two consulting agreements for consulting services having a fair value of $5,048 ($0.10/share) based upon the terms of the consulting agreements (See Note 8(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On September 19, 2011, the Company issued 100,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $23,000 ($0.23/share) based upon the terms of the consulting agreement (See Note 9(B)).

On September 21, 2011, the Company issued 400,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $100,000 ($0.25/share) based upon the terms of the consulting agreement (See Note 9(B)).

On September 24, 2011, the Company issued 100,000 shares of common stock pursuant to a consulting agreement for consulting services having a fair value of $33,000 ($0.33/share) based upon the terms of the consulting agreement (See Note 9(B)).

On September 27, 2011, the Company issued 100,000 shares of common stock pursuant to two consulting agreements for consulting services having a fair value of $39,000 ($0.22/share) based upon the terms of the consulting agreements (See Note 9(B)).

During October 2011, the Company issued 123,795 shares of common stock for services having a fair value of $58,184 ($0.47/share).

On October 28, 2011, the Company issued 100,000 shares of common stock for consulting services having a fair value of $88,000 ($0.88/share).

On November 18, 2011, the Company issued 100,000 shares of common stock for consulting services having a fair value of $70,000 ($0.70/share).

During December 2011, the Company issued 200,000 shares of common stock for services having a fair value of $108,000 ($0.54/share).

On December 18, 2011, the Company issued 100,000 shares of common stock for consulting services having a fair value of $50,000 ($0.50/share).

On January 25, 2012 the Company issued 733 shares of common stock pursuant to two consulting agreements for consulting services having a fair value of $455 ($0.62/share) based upon the terms of the consulting agreements (See Note 9(B)).

On March 14, 2012, the Company entered into a settlement agreement with a former employee with relation to the restriction on shares owned by the former employee. The settlement agreement will lift the restriction on his 6 million shares, and thus agreed to allow the former employee to sell 250,000 of the Company stock per quarter for two years. In addition, the Company settled a dispute over the termination of the employment agreement by agreeing to give the former employee an additional 150,000 shares to eliminate any dispute over anything owed under his old employment agreement. He is not an affiliate, not an insider and not a 5% or greater shareholder. For the year ended December 31, 2012, the Company issued 300,000 shares of common stock for consulting services having a fair value of $63,000 ($0.21/share), in relation to this settlement agreement.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On April 22, 2012, the Company issued 200,000 shares of common stock for services having a fair value of $60,000 ($0.30/share).

For the year ended December 31, 2012 , the Company issued 250,000 shares of stock to an employee per an employment agreement dated June 11, 2012 having a fair value of $62,500 ($0.25/share) based upon the terms of the employment agreement (See Note 8(A)).

On August 3, 2012, the Company issued 3,000,000 shares of common stock at an offering price of $.30 per share in exchange for consulting services rendered having a fair value at the grant date of $960,000. The Company will recognize the value of the shares over the life of the agreement. As of December 31, 2012, the Company recognized $480,000 in expense and recorded deferred compensation of $480,000 (See Note 8(B)).

On August 17, 2012, the Company issued 150,000 shares of common stock for consulting services having a fair value of $45,000 ($0.30/share).

On August 22, 2012, the Company issued 500,000 shares of common stock at an offering price of $.30 per share in exchange for consulting services rendered having a fair value at the grant date of $150,000. The Company will recognize the value of the shares over the life of the agreement. As of June 30, 2013, the Company recognized $62,500 in expenses and recorded deferred compensation of $87,500 (See Note 9(B)).

On October 31, 2012, the Company issued 60,000 shares of common stock for financing costs having a fair value of $20,400 ($0.34/share).

On January 1, 2013, the Company issued 300,000 shares of common stock for services having a fair value of $90,000 ($0.30/share).

As of June 30, 2013, the Company issued 250,000 shares of common stock for services having a fair value of $62,500 ($0.25/share).

As of June 30, 2013, the Company issued 250,000 shares of common stock for services having a fair value of $63,750 ($0.26/share).

On January 21, 2013, the Company issued 120,000 shares of common stock for services having a fair value of $32,400 ($0.27/share).

On January 30, 2013, the Company issued 250,000 shares of common stock for services to be performed over a period of six months having a fair value of $60,000 ($0.24/share), of which, $0 was included in deferred compensation as of June 30, 2013.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On February 15, 2013, the Company issued 700,000 shares of common stock for legal services having a fair value of $182,000 ($0.26/share).

On March 1, 2013, the Company issued 500,000 shares of common stock for services having a fair value of $182,500 ($0.36/share).

On March 15, 2013, the Company issued 700,000 shares of common stock for legal services having a fair value of $173,600 ($0.24/share).

On March 20, 2013, the Company issued 60,000 shares of common stock for services having a fair value of $15,000 ($0.25/share).

On March 21, 2013, the Company issued 8,000 shares of common stock for accrued interest having a fair value of $2,000 ($0.25/share).

On April 15, 2013, the Company issued 57,692 shares of common stock for services having a fair value of $15,000 ($0.26/share).

On May 20, 2013, the Company issued 26,087 shares of common stock for services having a fair value of $6,000 ($0.23/share).

On April 5, 2013, the Company issued 250,000 to shares of common stock for services having a fair value of $60,000 ($0.24/share).

On April 5, 2013, the Company issued 250,000 to shares of common stock for services having a fair value of $57,500 ($0.23/share).

On December 30, 2009, the Company issued 500,000 warrants under a consulting agreement. The Company recognized an expense of $823,077 for the year ended December 31, 2009. 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 weighted average assumptions used for grants in 2009, dividend yield of zero, expected volatility of 112.80%; risk-free interest rates of 1.65%, 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 $0.52 per share.

On May 27, 2010, the Company issued 10,000 warrants under a consulting agreement. The Company recognized an expense of $1,782 for the year ended December 31, 2010. 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 weighted average assumptions used for grants in 2010, dividend yield of zero, expected volatility of 152.80%; risk-free interest rates of 1.35%, 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 $0.50 per share (See Note 9(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On June 1, 2010, the Company issued 40,000 warrants under a consulting agreement. The Company recognized an expense of $7,184 for the year ended December 31, 2010. 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 weighted average assumptions used for grants in 2010, dividend yield of zero, expected volatility of 145.70%; risk-free interest rates of 1.26%, 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 $0.50 per share (See Note 9(B)).

On July 23, 2010, the Company issued 10,000 warrants under a consulting agreement. The Company recognized an expense of $1,593 for the year ended December 31, 2010. 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 weighted average assumptions used for grants in 2010, dividend yield of zero, expected volatility of 172.90%; risk-free interest rates of 0.94%, 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 $0.50 per share (See Note 9(B)).

During the year ended December 31, 2010, the Company issued 1,200,000 warrants in conjunction with the sale of the Company stock (See Note 8(A)).

On September 2, 2011, the Company issued 955,800 warrants under consulting agreements. The Company recognized an expense of $248,498 for the year ended December 31, 2011. 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 weighted average assumptions used for grants in 2011, dividend yield of zero, expected volatility of 461.11%; risk-free interest rates of 0.33%, 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)).

On June 11, 2012, the Company issued 200,000 warrants under consulting agreements. The Company recognized an expense of $48,031 for the year ended December 31, 2012. 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 weighted average assumptions used for grants in 2012, dividend yield of zero, expected volatility of 237.76%; risk-free interest rates of 0.19%, 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 $0.25 per share (See Note 9(B)).

On January 1, 2013, the Company issued 500,000 warrants under consulting agreements. The Company recognized an expense of $84,028 for the six months ended June 30, 2013. 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 weighted average assumptions used for grants in 2013, dividend yield of zero, expected volatility of 140.30%; risk-free interest rates of 0.37%, 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 $0.45 per share (See Note 9(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On January 31, 2013 an individual exercised 430,800 of stock warrants at an exercise price of $0.10 per share for proceeds of $43,080.

During the 3 months ended June 30, 2013, the Company issued 1,000,000 warrants in connection with convertible debenture agreements entered into. (See note 6).

The following tables summarize all warrant grants as of June 30, 2013, and the related changes during these periods are presented below:

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Balance, December 31, 2011		2,715,800		$	0.36
Granted		200,000			0
Exercised
Cancelled/Forfeited		(500,000	)		0.52
Balance, December 31, 2012		2,415,800			0.28		0.8
Granted		1,500,000		$	0.42
Exercised		(430,800	)	$	0.10
Cancelled/Forfeited		(150,000	)	$	0.50
Balance, June 30, 2013		3,335,000		$	0.38		1.6

A summary of all outstanding and exercisable warrants as of June 30, 2013 is as follows:

Exercise Price		Warrants Outstanding		Warrants Exercisable		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
$	0.10		525,000		525,000	.2 years	$	47,250
$	0.25		200,000		200,000	0.1 years	$	-
$	0.40		1,000,000		1,000,000	0.9 years	$	-
$	0.45		500,000		500,000	0.4 years	$	-
$	0.50		1,110,000		1,110,000	0.03 years	$	-
			3,335,000		3,335,000	1.6 years	$	47,250

(D) Stock Split Effected in the Form of a Stock Dividend

On January 16, 2009, the Company's Board of Directors declared a four-for-one stock split to be effected in the form of a stock dividend. The stock split was distributed on January 16, 2009 to shareholders of record. A total of 136,713,000 shares of common stock were issued. All basic and diluted loss per share and average shares outstanding information has been adjusted to reflect the aforementioned stock dividend.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

(E) Amendment to Articles of Incorporation

On January 27, 2009, the Company amended its Articles of Incorporation to provide for an increase in its authorized share capital. The authorized capital stock increased to 250,000,000 common shares at a par value of $0.001 per share, and 10,000,000 preferred shares at a par value of $0.001 with class and series designations, voting rights, and relative rights and preferences to be determined by the Board of Directors of the Company from time to time.

On June 2, 2010, the Company amended its Articles of Incorporation to provide for an increase in its authorized share capital. The authorized capital stock increased to 295,000,000 common shares at a par value of $0.001 per share.

On September 20, 2010, the Company amended its Articles of Incorporation to provide for an increase in its authorized share capital and a change in the par value per share. The authorized capital stock increased to 400,000,000 common shares at a par value of $0.0001 per share.

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.

(F) In Kind Contribution

During the fourth quarter of 2008, a former stockholder of the Company paid $4,400 of operating expenses on behalf of the Company.

During the fourth quarter of 2008, the principal stockholder contributed office space with a fair market value of $2,913 (See Note 10).

For the year ended December 31, 2009, the principal stockholder contributed office space with a fair market value of $12,600 (See Note 10).

For the year ended December 31, 2010, the principal stockholder contributed office space with a fair value of $9,450 (See Note 10).

(G) Share Conversion

On June 2, 2010, a principal stockholder converted $283,652 of accrued compensation into 945,507 shares of common stock at $0.30 per share (See Note 10).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On February 17, 2011, a principal stockholder converted $144,000 of accrued compensation into 1,309,091 shares of common stock at $0.11 per share (See Note 10).

On February 17, 2011, a principal stockholder converted $100,000 of a line of credit owed into 909,091 shares of common stock at $.011 per share (See Note 4 and Note 10).

On January 18, 2011, the Company entered into a conversion agreement executed by a note holder for 109,375 shares based on a conversion price of $0.032 per share (See Note 6).

On February 9, 2011, the Company entered into a conversion agreement executed by a note holder for 271,186 shares based on a conversion price of $0.0295 per share (See Note 6).

On February 15, 2011, the Company entered into a conversion agreement executed by a note holder for 357,143 shares based on a conversion price of $0.0336 per share (See Note 6).

On February 23, 2011, the Company entered into a conversion agreement executed by a note holder for 220,264 shares based on a conversion price of $0.0454 per share (See Note 6).

On April 11, 2011, the Company entered into a conversion agreement executed by a note holder for 587,382 shares based on a conversion price of $0.0315 per share (See Note 6).

On August 25, 2011, the Company entered into a conversion agreement executed by a note holder for 77,220 shares based on a conversion price of $0.1554 per share (See Note 6).

On August 30, 2011, the Company entered into a conversion agreement executed by a note holder for 96,220 shares based on a conversion price of $0.1455 per share (See Note 6).

On September 12, 2011, the Company entered into a conversion agreement executed by a note holder for 116,505 shares based on a conversion price of $0.1339 per share (See Note 6).

On September 14, 2012, the Company entered into a conversion agreement executed by a note holder for 528,035 shares based on a conversion price of $0.322 per share (See Note 6).

On September 21, 2012, the Company entered into a conversion agreement executed by a note holder for 72,385 shares based on a conversion price of $0.2763 per share (See Note 6).

On September 27, 2012, the Company entered into a conversion agreement executed by a note holder for 91,208 shares based on a conversion price of $0.2741 per share (See Note 6).\

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On October 2, 2012, the Company entered into a conversion agreement executed by a note holder for 79,586 shares based on a conversion price of $0.2513 per share (See Note 6).

On October 3, 2012, the Company entered into a conversion agreement executed by a note holder for 119,379 shares based on a conversion price of $0.2513 per share (See Note 6).

On October 5, 2012, the Company entered into a conversion agreement executed by a note holder for 92,365 shares based on a conversion price of $0.27067 per share (See Note 6).

On October 9, 2012, the Company entered into a conversion agreement executed by a note holder for 48,454 shares based on a conversion price of $0.2394 per share (See Note 6).

On October 19, 2012, the Company entered into a conversion agreement executed by a note holder for 200,501 shares based on a conversion price of $0.1995 per share (See Note 6).

On November 1, 2012, the Company entered into a conversion agreement executed by a note holder for 101,678 shares based on a conversion price of $0.19670 per share (See Note 6).

On November 5, 2012, the Company entered into a conversion agreement executed by a note holder for 917,037 shares based on a conversion price of $0.18619 per share (See Note 6).

On November 14, 2012, the Company entered into a conversion agreement executed by a note holder for 111,029 shares based on a conversion price of $0.18013 per share (See Note 6).

On November 19, 2012, the Company entered into a conversion agreement executed by a note holder for 113,805 shares based on a conversion price of $0.18128 per share (See Note 6).

On November 19, 2012, the Company entered into a conversion agreement executed by a note holder for 150,000 shares based on a conversion price of $0.1764 per share (See Note 6).

On November 23, 2012, the Company entered into a conversion agreement executed by a note holder for 166,543 shares based on a conversion price of $0.18013 per share (See Note 6).

On December 12, 2012, the Company entered into a conversion agreement executed by a note holder for 180,000 shares based on a conversion price of $0.19151 per share (See Note 6).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On December 31, 2012, the Company entered into a conversion agreement executed by a note holder for 146,780 shares based on a conversion price of $0.17032 per share (See Note 6).

On January 7, 2013, the Company entered into a conversion agreement executed by a note holder for 147,754 shares based on a conversion price of $.1692 per share (See Note 6).

On January 9, 2013, the Company entered into a conversion agreement executed by a note holder for 92,194 shares based on a conversion price of $.1627 per share (See Note 6).

On January 15, 2013, the Company entered into a conversion agreement executed by a note holder for 134,229 shares based on a conversion price of $.149 per share (See Note 6).

On January 15, 2013, the Company entered into a conversion agreement executed by a note holder for 112,259 shares based on a conversion price of $.164733 per share (See Note 6).

On January 30, 2013, the Company entered into a conversion agreement executed by a note holder for 210,000 shares based on a conversion price of $.145369 per share (See Note 6).

On January 31, 2013, the Company entered into a conversion agreement executed by a note holder for 112,782 shares based on a conversion price of $.133 per share (See Note 6).

On February 1, 2013, the Company entered into a conversion agreement executed by a note holder for 173,370 shares based on a conversion price of $.14420 per share (See Note 6).

On February 11, 2013, the Company entered into a conversion agreement executed by a note holder for 138,696 shares based on a conversion price of $.14420 per share (See Note 6).

On February 14, 2013, the Company entered into a conversion agreement executed by a note holder for 185,293 shares based on a conversion price of $.13533 per share (See Note 6).

On February 21, 2013, the Company entered into a conversion agreement executed by a note holder for 104,445 shares based on a conversion price of $.1436 per share (See Note 6).

On February 26, 2013, the Company entered into a conversion agreement executed by a note holder for 100,000 shares based on a conversion price of $.14 per share (See Note 6).

On February 27, 2013, the Company entered into a conversion agreement executed by a note holder for 115,208 shares based on a conversion price of $.1302 per share (See Note 6).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On March 1, 2013, the Company entered into a conversion agreement executed by a note holder for 129,652 shares based on a conversion price of $.1388 per share (See Note 6).

On March 1, 2013, the Company entered into a conversion agreement executed by a note holder for 565,007 shares based on a conversion price of $.150885 per share (See Note 6).

On March 6, 2013, the Company entered into a conversion agreement executed by a note holder for 93,637 shares based on a conversion price of $.1388 per share (See Note 6).

On March 7, 2013, the Company entered into a conversion agreement executed by a note holder for 437,654 shares based on a conversion price of $.13323 per share (See Note 6).

On March 12, 2013, the Company entered into a conversion agreement executed by a note holder for 69,560 shares based on a conversion price of $.1575 per share (See Note 6).

On March 20, 2013, the Company entered into a conversion agreement executed by a note holder for 108,809 shares based on a conversion price of $.1302 per share (See Note 6).

On March 28, 2013, the Company entered into a conversion agreement executed by a note holder for 58,013 shares based on a conversion price of $.1379 per share (See Note 6).

On April 8, 2013, the Company entered into a conversion agreement executed by a note holder for 181,291 shares based on a conversion price of $.1379 per share (See Note 6).

On April 12, 2013, the Company entered into a conversion agreement executed by a note holder for 549,173 shares based on a conversion price of $.155302 per share (See Note 6).

On April 15, 2013, the Company entered into a conversion agreement executed by a note holder for 224,048 shares based on a conversion price of $.1339 per share (See Note 6).

On April 16, 2013, the Company entered into a conversion agreement executed by a note holder for 261,389 shares based on a conversion price of $.1339 per share (See Note 6).

On April 18, 2013, the Company entered into a conversion agreement executed by a note holder for 205,353 shares based on a conversion price of $.14609 per share (See Note 6).

On April 30, 2013, the Company entered into a conversion agreement executed by a note holder for 146,370 shares based on a conversion price of $.17080 per share (See Note 6).

On May 1, 2013, the Company entered into a conversion agreement executed by a note holder for 350,000 shares based on a conversion price of $.162167 per share (See Note 6).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On May 10, 2013, the Company entered into a conversion agreement executed by a note holder for 175,644 shares based on a conversion price of $.1708 per share (See Note 6).

On May 23, 2013, the Company entered into a conversion agreement executed by a note holder for 195,993 shares based on a conversion price of $.1530667 per share (See Note 6).

On May 31, 2013, the Company entered into a conversion agreement executed by a note holder for 400,000 shares based on a conversion price of $.144667 per share (See Note 6).

On June 5, 2013, the Company entered into a conversion agreement executed by a note holder for 182,167 shares based on a conversion price of $.1435 per share (See Note 6).

On June 5, 2013, the Company entered into a conversion agreement executed by a note holder for 187,547 shares based on a conversion price of $.1333 per share (See Note 6).

On June 10, 2013, the Company entered into a conversion agreement executed by a note holder for 226,929 shares based on a conversion price of $.1322 per share (See Note 6).

On June 11, 2013, the Company entered into a conversion agreement executed by a note holder for 201,513 shares based on a conversion price of $.1322 per share (See Note 6).

On June 17, 2013, the Company entered into a conversion agreement executed by a note holder for 146,771 shares based on a conversion price of $.1362667 per share (See Note 6).

On June 21, 2013, the Company entered into a conversion agreement executed by a note holder for 224,383 shares based on a conversion price of $.1337 per share (See Note 6).

On June 26, 2013, the Company entered into a conversion agreement executed by a note holder for 300,000 shares based on a conversion price of $.1225 per share (See Note 6).

(H) 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).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

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:

	6 Months Ended		Year Ended
	June 30, 2013		December 31, 2012

Goodwill at fair value, Opening Balance	$	9,655,588	$	-

Consideration transferred at fair value:
Common stock - 24,752,475 Shares		-		10,000,000

Net assets acquired:
Current assets		-		281,527
Cash		7,736		62,885
Total net assets acquired		7,736		344,412

Goodwill at fair value, Ending Balance	$	9,647,852	$	9,655,588

During the six months ended June 30, 2013, the Company received an additional $7,736 related to the acquisition which reduced the carrying value of the goodwill as of June 30, 2013.

(I) Stock Options

On January 17, 2011, the Company issued 12,000,000 options to buy common shares of the Company's stock at $0.12 per share, good for three years, to its' new CEO pursuant to an employment agreement. The Company recognized an expense of $1,199,794 for the year ended December 31, 2011. The Company recorded the fair value of the options based on the fair value of each option grant estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2010; dividend yield of zero, expected volatility of 436.04%, risk-free interest rates of 1.00%, expected life of three years.

On June 14, 2013, the Company amended the terms of 12,000,000 fully vested stock options held by the chief financial officer of the Company. In connection with the modification, the Company extended the expiration date of the stock options by 2 years.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

The extension is considered a modification for which incremental compensation cost was recognized as the excess of the fair value of the modified award over the fair value of the original award immediate before its terms are modified which was calculated to be $994,141, using the Black-Scholes valuation model. The fair value was based upon the following management assumptions:

Expected dividends		0	%
Expected volatility		299	%
Expected term:	2.59 years
Risk free interest rate		0.49	%

On January 1, 2013, the Company issued 700,000 options to buy common shares of the Company's stock at $0.50 per share, good for three years, to the Chief Technical Officer to an employment agreement. The Company recognized an expense of $115,288 for the six months ended June 30, 2013. The Company recorded the fair value of the options based on the fair value of each option grant estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2013; dividend yield of zero, expected volatility of 140.3%, risk-free interest rates of .37%, expected life of three years.

The following tables summarize all option grants as of June 30, 2013, and the related changes during these periods are presented below:

					Weighted
					Average
			Weighted		Remaining
			Average		Contractual
	Number of		Exercise		Life
	Options		Price		(in Years)
Outstanding - December 31, 2010	-		$	-		-
Granted		12,000,000		0.120
Exercised		-		-
Forfeited or Canceled		-		-
Outstanding - December 31, 2011		12,000,000		0.12		2.05
Granted		-		-		-
Exercised		-		-		-
Forfeited or Canceled		-		-		-
Outstanding - December 31, 2012		12,000,000		0.12		1.04
Granted		700,000	$	0.500		3.00
Exercised		-		-		-
Forfeited or Canceled		-		-		-
Outstanding - June 30, 2013		12,700,000		0.14		2.55
Exercisable - June 30, 2013		12,700,000
Per Detail Schedule		12,700,000
Difference		-

As of June 30, 2013, the Company has reserved 12,700,000 shares of common stock for the future exercise of the options.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

NOTE 9 COMMITMENTS

(A) Employment Agreement

On October 13, 2008, the Company executed an employment agreement with its President and CEO. The term of the agreement is for ten years. As compensation for services, the President will receive a monthly compensation of $18,000 beginning October 13, 2008. In addition, to the base salary, the employee is entitled to receive a 10% commission of all sales of the Corporation. The agreement also calls for the employee to receive health benefits. In January of 2011, the President/CEO resigned and was appointed to the Chairman and CFO. For the year ended December 31, 2012, the Company has recorded $216,000 in compensation expense (See Note 9). In May of 2013, the Company amended the agreement for the Chairman and CFO to receive monthly compensation of $24,000 beginning May 1, 2013.

On January 17, 2011, the Company executed an employment agreement with an executive to be the President and CEO for five years. As compensation for services, the executive will receive a monthly compensation of $8,000 beginning after the completion of at least one million dollars of new funding to the Corporation or can be paid as commissions from sales brought to the Company, whichever comes first. In addition to the base salary, the employee is entitled to receive a 20% commission of all sales the executive is directly responsible for bringing to the Company. The agreement also calls for the executive to receive, upon execution of the agreement, three million shares of Rule 144 common stock and twelve million options, which are good for three years, to buy shares of Rule 144 common stock at $0.12/share. As a supplement to the agreement, on February 4, 2011, the executive shall receive an additional twenty million common shares directly from the Chairman of the Company. On August 25, 2011, the agreement was updated to increase the monthly compensation to $12,000 per month beginning September 1, 2011, terminate the initial 20% commission on sales and to add a commission on sales equal to 10% of gross quarterly profits. The agreement also calls for the employee to receive health benefits (See Note 8(B) and 8(I)). In May of 2013, the Company amended the agreement for the President and CEO to receive monthly compensation of $18,000 beginning May 1, 2013.

On May 17, 2011, the Company executed an employment agreement with its Chief Internet Officer (“CIO”). The term of the agreement is for five years. As compensation for services, the CIO will receive a monthly compensation of $9,000 beginning at the completion of at least one million dollars of new funding. In addition to the base salary, the employee is entitled to receive health benefits. The agreement also calls for the CIO to receive two million shares of Rule 144 common stock upon the execution of the agreement. On August 25, 2011, the agreement was updated to increase the monthly compensation to $12,000 per month beginning October 1, 2011. (See Note 8(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On October 1, 2011, the Company executed an employment agreement with its Chief Technical Officer (“CTO”). The term of the agreement is for five years. As compensation for services, the CTO will receive a monthly compensation of $10,000, monthly commission equal to 5% of all profits derived from the sales of all products and services related to Max Sound, and an annual bonus of 5% of all profits derived from the sales of all products and services related to Max Sound that is over one million dollars. In addition to the base salary, the employee is entitled to receive health benefits. Effective January 1, 2012, the Company increased the monthly compensation to $12,000. On December 31, 2012 the Company amended the agreement that effective January 1, 2013 the CTO will receive 300,000 shares of common stock and 700,000 three year options at 50 cents per share.

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 the year ended December 31, 2012, the Company issued 250,000 shares with a fair value of $62,500 ($0.25/share) (See Note 8(B)).

On November 26, 2012, the Company executed an employment agreement with its VP of Music Development. . 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. As of June 30, 2013 the employee received 250,000 shares with a fair value of $58,750 (See Note 8(B)),

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. As of June 30, 2013 the employee received 250,000 shares with a fair value of $58,750 (See Note 8(B)),

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, 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.

(B) Consulting Agreement

On January 19, 2009, the Company entered into a development services agreement to construct social network software for a fee of $150 and $375 an hour. The contract will remain in place until either party desires to cancel. A retainer fee of $20,000 has been paid upon the execution of the agreement and will be used towards the services provided. In addition, on January 14, 2009 the Company issued 20,000 shares in exchange for services valued at $5,000 ($0.25/share). As a result of the forward split, the 20,000 shares were increased to 80,000 shares and its purchase price was similarly adjusted to $0.0625 (See Note 7(B) and Note 7(D)). On May 29, 2009, the Company amended the consulting agreement by reducing the hourly rate to $75 an hour and reducing the outstanding balance due by $17,163. On August 31, 2009, the Company issued 885,714 shares of common stock in exchange for services valued at $62,000 related to the development services agreement entered into on January 19, 2009. Based on the most recent fair market value at that time, the shares were valued at $55,357 ($0.0625/share), resulting in the recognition of a gain on the extinguishment of debt of $6,643 (See Note 8(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On January 20, 2009, the Company entered into a service agreement with a transfer agent to become the Company's transfer agent for the purpose of maintaining stock ownership and transfer records for the Company.

On September 17, 2009, the Company entered into a six month consulting agreement with an unrelated third party to provide public relations services. In exchange for the services provided, on September 18, 2009 the Company issued 500,000 shares of common stock having a fair value of $175,000 ($0.35/share) based upon fair value on the date of grant. The Company has an option to cancel the contract during the first ninety days of the agreement and 200,000 shares will be returned back to the Company. On November 11, 2009, the Company cancelled the agreement and 300,000 shares of common stock were returned to the Company. As of December 31, 2009, $70,000 is recorded as consulting expense and $105,000 of deferred compensation was reclassified to $0 (See Note 8(B)).

On September 18, 2009, the Company entered into a six month consulting agreement with an unrelated third party to provide public relations services. In exchange for the services provided the Company issued 600,000 shares of common stock having a fair value of $210,000 ($0.35/share) based upon fair value on the date of grant. Shares will be issued on or before December 18, 2009 in six 100,000 increments. The Company has an option to cancel the contract at any time, in such event; the consultant will return a prorated amount of shares based on the months remaining in the consulting agreement. On November 18, 2009, the Company cancelled the agreement and 400,000 shares of common stock were returned to the Company. As of December 31, 2009, $70,000 is recorded as consulting expense and $140,000 of deferred compensation was reclassified to $0 (See Note 8(B)).

On September 21, 2009, the Company entered into an eight month consulting agreement with an unrelated third party to provide public relations services. In exchange for the services provided, the Company issued 600,000 shares of common stock having a fair value of $210,000 ($0.35/share) based upon fair value on the date of grant. Shares will be issued on or before September 18, 2009, December 18, 2009, and March 18, 2010, in 200,000 increments. The Company has an option to cancel the contract at any time and no additional stock issuances will be due. On December 18, 2009, the Company cancelled the agreement and 400,000 shares of common stock were returned to the Company. As of December 31, 2009, $70,000 is recorded as consulting expense and $140,000 of deferred compensation was reclassified to $0 (See Note 8(B)).

On October 20, 2009, the Company entered into a marketing agreement with an unrelated third party. In exchange for the services provided, on November 21, 2009, the Company issued 30,000 shares of common stock having a fair value $53,100 ($1.77/share) based upon fair value on the date of grant, and compensation of $5,000, of which $2,500 was paid in 2009 upon the execution of the agreement and the remaining $2,500 was paid in 2010 upon completion (See Note 8(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

During the months of November and December 2009, the Company entered into celebrity endorsement agreements for a period of one to two years of service. In total, 1,710,000 shares of common stock were issued having a fair value of $3,285,400 based upon fair value on the respective date of grant. During 2009 and 2010, $87,805 and $1,712,815 was recorded as consulting expense, respectively. For the year ended December 31, 2011, $1,484,780 is recorded as consulting expense, and $0 is recorded as deferred compensation (See Note 8(B)).

On December 3, 2009, the Company entered into a commission agreement with an unrelated third party. The company will pay a 10% commission in shares of common stock for every passive endorsement. In exchange for the services provided the Company issued 35,000 shares of common stock having a fair value $68,250 ($1.95/share) based upon fair value on the date of grant (See Note 8(B)).

On December 3, 2009, the Company entered into a commission agreement with an unrelated third party. The company will pay a 10% commission in shares of common stock for every passive endorsement. In exchange for the services provided the Company issued 240,000 shares of common stock having a fair value $468,000 ($1.95/share) based upon fair value on the date of grant (See Note 8(B)).

On December 3, 2009, the Company entered into a commission agreement with an unrelated third party. The company will pay a 10% commission in shares of common stock for every passive endorsement. In exchange for the services provided the Company issued 10,000 shares of common stock having a fair value $19,500 ($1.95/share) based upon fair value on the date of grant (See Note 8(B)).

On December 15, 2009, the Company entered into a consulting agreement with an unrelated third party to provide investor services. The Company will receive a 10% of the gross receipts from the investor relations revenue for a two year period. In exchange for the satisfactory services provided, on December 15, 2009, the Company issued 100,000 shares of common stock having a fair value of $200,000 ($2/share) based upon fair value on the date of grant (See Note 8(B)).

On December 27, 2009, the Company entered into a consulting agreement with an unrelated third party to provide film work. In exchange for the services provided the Company issued 10,000 shares of common stock having a fair value $19,400 ($1.94/share) based upon fair value on the date of grant (See Note 8(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On December 27, 2009, the Company entered into an endorsement agreement with an unrelated third party to provide film work. In exchange for the services provided the Company issued 10,000 shares of common stock having a fair value $19,400 ($1.94/share) based upon fair value on the date of grant (See Note 7(B)).

On December 27, 2009, the Company entered into a consulting agreement with an unrelated third party to provide film scripting, editing and production work. In exchange for the services provided the Company issued 10,000 shares of common stock having a fair value $19,400 ($1.94/share) based upon fair value on the date of grant (See Note 8(B)).

On December 30, 2009, the Company entered into a marketing agreement with an unrelated third party for a period from January 2010 to December 2010. In exchange for the services provided, the Company issued 500,000 shares of common stock having a fair value of $965,000 ($1.93/share) based upon fair value on the date of grant. An additional 1,000,000 shares of common stock having a fair value of $1,930,000 ($1.93/share) based upon fair value on the date of grant, were issued for an additional sponsorship commitment. The additional 1,000,000 shares were to be held in escrow until June 30, 2010, at which point the unrelated party would have 15 days to accept or decline the additional shares. As of December 31, 2010, the shares were returned back to the Company’s treasury due to non-performance of services and no additional shares will be issued (See Note 8(B)).

On December 31, 2009, the Company entered into a consulting agreement with an unrelated third party for a period from December 31, 2009 through March 30, 2011. In exchange for the services provided, the Company issued 75,000 shares of common stock having a fair value of $144,750 ($1.93/share) based upon fair value on the date of grant, and deliverable in three increments of 25,000 shares of common stock each. The first 25,000 shares will be delivered upon the execution of the agreement and the other two increments will be delivered in six and twelve months upon the successful fulfillment of the agreement (See Note 8(B)).

On December 31, 2009, the Company entered into a consulting agreement with an unrelated third party for a period from December 31, 2009 through March 30, 2011. In exchange for the services provided, the Company issued 75,000 shares of common stock having a fair value of $144,750 ($1.93/share) based upon fair value on the date of grant, and deliverable in three increments of 25,000 each. The first 25,000 shares will be delivered upon the execution of the agreement and the other two will be delivered in six and twelve months upon the successful fulfillment of the agreement (See Note 8(B)).

On December 31, 2009, the Company entered into a consulting agreement with an unrelated third party for a period from December 31, 2009 through December 31, 2010. In exchange for the services provided, the Company issued 500,000 shares of common stock having a fair value of $965,000 ($1.93/share) based upon fair value on the date of grant (See Note 8(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On January 11, 2010, the Company entered into a twelve month agreement with an unrelated third party for investor relations press release service for an annual fee of $14,250 and an initial onetime fee of $250.

On January 15, 2010, the Company entered into a two year celebrity endorsement agreement. In total, 100,000 shares of common stock were issued having a fair value of $170,000($1.70/share) based upon fair value on the date of grant (See Note 8(B)).

On February 1, 2010, the Company entered into a twelve month consulting agreement effective February 5, 2010, with an unrelated third party to produce music compositions for a fee of $500. The agreement can be renewed for up to two additional years for a fee of $500 for the first renewal year and $750 for the second renewal year.

On June 1, 2010, the Company entered into a twelve month consulting agreement to provide for consulting and business services in raising capital. The Company agrees to pay a finder’s fee on all capital raised in stock and warrants. The Company paid an initial nonrefundable retainer fee by issuing 40,000 shares of stock having a value of $10,000 ($0.25/share) based upon fair value on the date of the agreement. In conjunction with the stock payment, the Company also issued one warrant attached to each share of stock exercisable at $0.50 per warrant. Based upon the number of shares (40,000 shares) of stock issued, the Company issued 40,000 warrants (See Note 8(B) and Note 8(C).

In accordance with the share exchange, the former owners to the rights of Max became Executives of the Company. The two new executives individually entered into employment agreements with the Company on May 11, 2010. The term of the employment agreements are for ten years of service at a monthly compensation of $8,500 for each executive. In addition, the Executives are entitled to receive 5% of all revenues derived from the sale of all products and services related to the Max Audio Technology. On January 2, 2011, the agreement was cancelled.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On April 15, 2010, the Company entered into a finder’s fee agreement. For each qualified investor introduced to the Company by the consultant, the Company will pay a 10% fee in cash equal to 10% of the dollar amount of securities purchased, In addition, the Company will pay a 10% fee in warrants equal to 10% of the number of shares of stock purchased (See Note 8(C)).

On August 8, 2010, the Company entered into a consulting agreement with an unrelated third party to provide consulting services. Upon the execution of the agreement, the consultant received 100,000 shares of common stock. A monthly issuance of 100,000 shares of common stock will be issued as a compensation of services provided. The term of the agreement is for three months and will continue to renew for three month intervals unless cancelled by either party. The agreement was cancelled on November 1, 2010 (See Note 8(B)).

On August 17, 2010, the Company entered into a consulting agreement. The agreement shall remain in effect until terminated. In exchange for the services provided, the consultant will receive a $500 a month allowance for general expenses. In addition, for all the new business brought to the Company the consultant will receive a 10% compensation for each gross dollar received by the Company. On February 15, 2011, the Company terminated the agreement.

On December 14, 2010, the Company entered into to a consulting agreement for consulting and advertising services. Upon the execution of the agreement, the consultant received 250,000 shares with an additional 750,000 shares to be issued upon consultant obtaining sponsorship rights in the year 2011. The sponsorship rights were not obtained and the agreement was cancelled in 2011 and the additional 750,000 shares were never issued (See Note 8(B)).

On February 17, 2011, the Company entered into a consulting agreement for public relations and communications services. In exchange for the services provided, the consultant received 500,000 shares of common stock. The term of the agreement is for one year (See Note 8 (B)).

On March 3, 2011, the Company entered into a consulting agreement for public relations and communications services. In exchange for the services provided, the consultant received 1,000,000 shares of common stock. The term of the agreement is for one year (See Note 8 (B)).

On June 10, 2011, the Company entered into a five year advisory board consulting agreement with three persons to provide for consulting and business services. In exchange for the services provided, the consultants received 100,000 shares of common stock each. (See Note 8(B)).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On June 15, 2011, the Company entered into a consulting agreement with an unrelated third party for software and computer technology services. In exchange for the services provided, the consultant will be paid $70 per hour with $50 per hour paid in cash and $20 per hour paid in Company stock at $0.10 per share. The term of the agreement is for one year. (See Note 8(B)).

On July 1, 2011, the Company entered into a consulting agreement with an unrelated third party for trade show services. In exchange for the services provided, the consultant received 6,500 shares of common stock at $0.08/per share. The agreement was for one-time services. (See Note 8(B)).

During the year ended December 31, 2011, the Company entered into an agreement with an unrelated third party for software and computer technology services. In exchange for the services provided, the consultant received 76,483 shares of common stock at $0.10 – 0.39 per share. The term of the agreement is for one year. (See Note 8(B)).

In September 2011, the Company entered into a five year advisory board consulting agreement with three persons to provide for consulting and business services. In exchange for the services provided, the consultants received 100,000 shares of Company stock at $0.23 – 0.39 per share. The terms of the agreements are for five years. (See Note 8(B)).

On September 21, 2011, the Company entered into a consulting agreement with an unrelated third party for investor relation services. In exchange for the services provided, the consultant received 400,000 shares of Company stock at $0.25 per share. The term of the agreement is for six months. (See Note 8(B)).

During the three months ended December 31, 2011, the Company entered into a five year advisory board consulting agreement with five persons to provide for consulting and business services. In exchange for the services provided, the consultants received 100,000 shares of Company stock at $0.47 – 0.88 per share. The terms of the agreements are for five years. (See Note 8(B)).

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 (See Note 8(B)). The delivery of the shares will be made in four 750,000 tranches to coincide with each of the four points listed below:

●	Record two (2) one-minute video endorsements (English and Spanish)

●	Release of Mobile Application

●	Use of MAXD HD technology in the next two major music projects.

●	Any addition projects that effectively promote the use of MAXD technology.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

As December 31, 2012, the first two of the four points listed above have been completed and the Company recorded $480,000 as deferred compensation and $480,000 in endorsement expense.

On August 22, 2012, the Company entered into a consulting agreement with an unrelated third party for a period from September 1, 2012 through August 31, 2013. In exchange for the services provided, the Company issued 500,000 shares of common stock having a fair value of $150,000 ($0.30/share) based upon fair value on the date of grant (See Note 8(B)).

On September 14, 2012, the Company entered into a licensing agreement with an unrelated third party for a period from September 14, 2012 through September 14, 2013. The agreement will automatically extend on a year to year basis unless terminated by either party. Upon the execution of the agreement, the Company paid a non-refundable $15,000 upfront fee for the use of the license. Any additional technical support will be provided on as needed basis at an hourly rate of $250/hour.

On December 1, 2012, the Company entered into a consulting agreement with an unrelated third party for a period from December 1, 2012 through November 30, 2013. In exchange for the services provided, the Company will pay a monthly consulting fee of $10,000. A bonus may be provided for $26,000 after one year of service in the sole discretion of the Company. In addition, the Company will grant 500,000 three year warrants with an exercise price of $0.45 per share. Within 10 days of executing the consulting agreement the consultant will loan the Company $120,000 in convertible note converted at 50 cents per share (See Note 7).

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.

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.

NOTE 10 RELATED PARTY TRANSACTIONS

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On May 11, 2009, the Company received $9,500 from a principal stockholder. During the year ended December 31, 2009, the Company repaid $1,500 in principal to the principal stockholder. Pursuant to the terms of the loan, the loan is bearing an annual interest rate of 3.25% and is due on demand (See Note 3).

On May 22, 2009, the Company received $15,000 from a principal stockholder. During the year ended December 31, 2010, the Company repaid $6,000 in principal to a principal stockholder under the terms of the loan. Pursuant to the terms of the loan, the loan is bearing an annual interest rate of 3.25% and is due on demand (See Note 3).

On May 26, 2009, the Company received $16,700 from a principal stockholder. During the year ended December 31, 2010, the Company repaid $15,700 in principal to the principal stockholder under the terms of this loan. Pursuant to the terms of the loan, the loan is bearing an annual interest rate of 3.25% and is due on demand (See Note 3).

During the year ended December 31, 2011, the Company repaid $18,000 in principal and $2,116 of accrued interest to the principal stockholder related to these principal loans (See Note 3).

On May 28, 2009, the Company entered into a two year line of credit agreement with a principal stockholder in the amount of $100,000. The line of credit carries an interest rate at 3.25%. As of December 31, 2011, the principal shareholder has advanced the Company $100,000 under the terms of this line of credit agreement (See Note 4).

On November 10, 2009, the Company entered into a two year line of credit agreement with a principal stockholder in the amount of $100,000. The line of credit carries an interest rate at 3.25%. As of December 31, 2011, the principal shareholder has advanced $100,000 to the Company under the terms of this line of credit agreement (See Note 4).

On March 25, 2010, the Company entered into a two year line of credit agreement with the principal stockholder in the amount of $500,000. The line of credit carries an interest rate of 3.25%. On February 17, 2011, the principal stockholder converted $100,000 of the line of credit owed into 909,091 shares of common stock at $0.11 per share. As of December 31, 2011, the principal stockholder has advanced $360,580 to the Company under this line of credit agreement (See Note 8(G) and Note 4).

As of December 31, 2011, the Company repaid $460,580 in principal and $11,283 of accrued interest to the principal stockholder related to these lines of credit (See Note 4).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

On October 13, 2008, the Company executed an employment agreement with its President and CEO. The term of the agreement is ten years. As compensation for services, the President will receive a monthly compensation of $18,000 beginning October 13, 2008. In addition, to the base salary, the employee is entitled to receive a 10% commission of all sales of the Corporation. The agreement also calls for the employee to receive health benefits (See Note 9(A)).

On June 2, 2010, a principal stockholder converted $283,652 of accrued compensation into 945,507 shares of common stock at $0.30 per share. (See Note 8(G)).

On February 17, 2011, a principal stockholder converted $144,000 of accrued compensation into 1,309,091 shares of common stock at $.0.11 per share. (See Note 8(G)).

During the fourth quarter of 2008, the principal stockholder contributed office space with a fair market value of $2,913 (See Note 8(F)).

For the year ended December 31, 2009, the principal stockholder contributed office space with a fair market value of $12,600 (See Note 8(F)).

For the year ended December 31, 2010, the principal stockholder contributed office space with a fair value of $9,450 (See Note 8(F)).

NOTE 11 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 6, 2012, the Company filed a suit for declaratory judgment and rescission of contract associated with a former consultant for failure to perform contractual requirements. It seeks clarification that the former consultant is not owed 750,000 shares of restricted common stock. The defendants have been served. This case will be vigorously prosecuted and has a good likelihood of a favorable outcome. The case seeks in excess of the jurisdictional amount, which is $50,000 dollars. Subsequent to the year end, on March 5, 2013, the suit was settled in favor of Max Sound Corporation and 750,000 shares issued to the former consultant were returned to the treasury.

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. This case will be vigorously prosecuted and has a good likelihood of success. The case seeks in excess of the jurisdictional amount which is $50,000 dollars.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2013

(UNAUDITED)

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

NOTE 12 SUBSEQUENT EVENTS

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. In addition, the Company agreed to issue 1,500,000 common shares as consideration for these services.

Through the filing of these financial statements, the Company converted a total of approximately $728,856 in convertible debt comprised of principal and accrued interest into approximately 5,724,614 common shares.

On August 8, 2013, the Company entered into an agreement whereby the Company will issue up to $103,500 in a convertible note. The note matures on May 12, 2014, and bears an interest rate of 8%. The conversion price equals the “Variable Conversion Price”, which is 65% of the “Market Price”, which is the average the closing bid prices for the lowest three (3) trading prices of 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 an unpaid principal amount into shares of common stock after six months.

On August 7, 2013, the Company issued 100,000 warrants under a consulting agreement. The warrants expire in three years from the date of issuance and have an exercise price of $0.40 per share.

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. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Corporate History and Structure

Max Sound Corporation (the “Company”) was 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 2011, 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.

In January of 2011, the Company hired its’ current President and CEO, and Mr. Halpern retained the title of Chairman and CFO.

On December 3, 2012, the Company completed the purchase of the assets of Liquid Spins, Inc., a Colorado corporation (“LSI”)(the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, the assets of LSI 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 $0.404 per share. The assets of LSI purchased included: record label distribution agreements; Liquid Spins technology inventory; independent arts programs; retail contracts for music distribution; gift card retail contracts via incomm; 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.

A new video is currently available on the Company website at http://www.maxsound.com. The amazing Max Sound® Technology Highlights Video is 10 minutes long and summarizes the HD Audio™ process including meeting the inventor of the technology and showing the need for high definition audio in several key vertical markets. The video explains Max Sound® as currently the only Company offering dynamic HD Audio™ to various markets and how the technology reduces the audio file size during the conversion process to help reduce bandwidth issues companies are currently facing and how it also decreases compressed square waves which can damage listeners hearing.

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 2011, we have completed financing 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.

We have also received three loans from Mr. Greg Halpern, in the amount of $9,500, $15,000 or $16,700 on May 11, May 22, and May 26, 2009, respectively. Each of the loans bears an interest rate equal to the primate rate as of the date of issuance. These loans matured and expired in 2011. 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 will mature 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%. As of December 31, 2012, the Company owed $0 in principal and $0 in accrued interest related to these loans and lines of credit. We believe that the $500,000 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 2013 to continue marketing the Max Sound HD Audio Technology aggressively to Multi-Media Industry Users of Audio and Audio with Video products.

In 2011, the Company received from Mr. Halpern additional net advances on the established lines of credit in the amount of $134,000 and forgiveness of $244,000 through conversion of debt notes and accrued salary into shares at 11 cents per share. 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.

The Company believes that Max Sound HD Audio Technology is a game changer for several vertical markets whose demand will create revenue opportunities in 2013 that will meet the Company’s needs to eliminate its going concern status in 2014.

We expect our financial requirements to increase with the additional expenses needed to market and promote the Max Sound® Audio technology. We plan to fund these additional expenses by loans from Mr. Halpern 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.

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.

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,
	June 30, 2013			June 30, 2012

Revenue	$	732		$	-

Operating Expenses
General and administrative		492,879			144,717
Consulting		143,211			139,611
Professional fees		110,630			26,059
Compensation		411,340			162,000
Total Operating Expenses		1,158,060			472,387

Loss from Operations		(1,157,328	)		(472,387	)

Other Income / (Expense)
Interest income		-			57
Interest expense		(32,453	)		(127,730	)
Derivative Expense		(71,752	)		-
Amortization of debt offering costs		(72,418	)		(29,178	)
Amortization of debt discount		(660,334	)		(185,392	)
Change in fair value of embedded derivative liability		47,534			(9,285	)
Total Other Income / (Expense)		(789,423	)		(351,528	)

Provision for Income Taxes		-			-

Net Loss	$	(1,946,751	)	$	(823,915	)

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

Weighted average number of shares outstanding during the year Basic and Diluted		295,880,176			255,335,394

For the three months ended June 30, 2013 and for the three months ended June 30, 2012

General and Administrative Expenses: Our general and administrative expenses were $492,879 for the three months ended June 30, 2013 and $144,717 for the three months ended June 30, 2012, representing an increase of $348,162, as a result of our expenses on the general operation of the Company including added personnel, product development and marketing of our Max Sound Technology.

Consulting Fees: Our consulting fees were $143,211 for the three months ended June 30, 2013 and $139,611 for the three months ended June 30, 2012, representing an increase of $3,600. While the Company has increased the use of consultants to assist the Company in raising capital, and the promotion of the Max Sound Technology, the overall substantial increase was due primarily to the discontinued use of consultants needed for promotional and marketing services related to our social networking website which was abandoned on August 16, 2011.

Professional Fees: Our professional fees were $110,630 for the three months ended June 30, 2013 and $26,059 for the three months ended June 30, 2012, representing an increase of $84,571 as a result of legal fees in connection with patent work.

Compensation: Our compensation expenses were $411,340 for the three months ended June 30, 2013 and $162,000 for the three months ended June 30, 2012, representing an increase of $249,340, 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 June 30, 2013 and 2012, were $1.946.751, compared to $823.915, respectively. While the operational expenses in marketing our Max Sound technology increased from the same period of last year, the overall amount of net loss substantially increased as a result of increase in general and administrative expenses, endorsement fees, legal fees and compensation expense.

	For the Six Months Ended
	June 30, 2013			June 30, 2012

Revenue	$	1,720		$	-

Operating Expenses
General and administrative		1,440,696			338,332
Endorsement fees		480,000			-
Consulting		270,287			259,611
Professional fees		603,388			84,629
Compensation		681,699			324,000
Total Operating Expenses		3,476,070			1,006,572

Loss from Operations		(3,474,350	)		(1,006,572	)

Other Income / (Expense)
Interest income		-			129
Interest expense		(62,109	)		(127,730	)
Derivative Expense		(95,877	)		-
Amortization of debt offering costs		(121,655	)		(30,380	)
Loss on conversions		(46,093	)		-
Amortization of debt discount		(1,082,097	)		(189,925	)
Change in fair value of embedded derivative liability		236,026			(79,789	)
Total Other Income / (Expense)		(1,171,805	)		(427,695	)

Provision for Income Taxes		-			-

Net Loss	$	(4,646,155	)	$	(1,434,267	)

Net Loss Per Share - Basic and Diluted	$	(0.02	)	$	(0.01	)

Weighted average number of shares outstanding during the year Basic and Diluted		293,158,844			255,274,304

For the six months ended June 30, 2013 and for the six months ended June 30, 2012

General and Administrative Expenses: Our general and administrative expenses were $1,440,696 for the six months ended June 30, 2013 and $338,332 for the six months ended June 30, 2012, representing an increase of $1,102,364 or approximately 389.54%, as a result of our expenses on the general operation of the Company including added personnel, product development and marketing of our Max Sound Technology.

Endorsement Fees: Our endorsement fees were $480,000 for the six months ended June 30, 2013 and $0 for the six months ended June 30, 2012, representing an increase of $480,000 or approximately 100% as a result of endorsement agreement with a music entertainer to promote and market our Max Sound HD Audio Technology.

Consulting Fees: Our consulting fees were $270,287 for the six months ended June 30, 2013 and $259,611 for the six months ended June 30, 2012, representing an increase of $10,676 or approximately 4.11%, as a result of our continued use of consultants to further develop our Max Sound HD Audio Technology.

Professional Fees: Our professional fees were $603,388 for the six months ended June 30, 2013 and $84.629 for the six months ended June 30, 2012, representing an increase of $518,759 or approximately 612.98% as a result of legal fees in connection with patent work and an increase in the expenses associated with the preparation of our financial statements and other regulatory filings required for publicly traded companies.

Compensation: Our compensation expenses were $681,699 for the six months ended June 30, 2013 and $324,000 for the six months ended June 30, 2012, representing an increase of $357,699, or 110.4%, 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 six months ended June 30, 2013 and 2012, were $4,646,155, compared to $1,434,267, respectively. While the operational expenses in marketing our Max Sound technology increased from the same period of last year, the overall amount of net loss substantially increased as a result of increase in general and administrative expenses, endorsement fees, legal fees and compensation expense.

Liquidity and Capital Resources

As reflected in the accompanying financial statements, the Company is in the development stage with minimal operations. Revenue was $1,720 and $0 for the six months ended June 30, 2013 and 2012, respectively. We have an accumulated deficit of $23,114,321 for the period from December 9, 2005 (inception) to June 30, 2013, and have negative cash flow from operations of $5,454,740 from inception.

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. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that would be necessary if the Company is unable to continue as a going concern.

Management believes the actions presently being taken to obtain additional funding and implement its strategic plans provide for the Company to continue as a going concern.

From our inception through June 30, 2013, our primary source of funds has been the proceeds of private offerings of our common stock and loans from our principal stockholder and unrelated third parties. 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.

We have received three loans from Mr. Greg Halpern, in the amount of $9,500, $15,000 and $16,700 on May 11, May 22, and May 26, 2009, respectively. Each of these loans is due upon demand and 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 this agreement, 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, we have determined that the prime rate shall be 3.25%. As of June 30, 2013, we owed $0 in principal and $0 in accrued interest.

We have entered into three lines of credit with our principal stockholder, Mr. Greg Halpern, in the amount of $100,000, $100,000, and $500,000, respectively. Pursuant to the lines of credit agreements, the lines of credits bear an annual interest rate of 3.25% and were due on May 29, 2011, November 11, 2011, and March 25, 2012. As of June 30, 2013, we owe $0 in principal and accrued interest of $0 related to these lines of credit.

On October 13, 2008, the Company entered into an employment agreement with the principal stockholder whereby the principal stockholder would be paid $18,000 per month for a term of ten (10) years for services rendered as the Chief Executive Officer of the Company.

On February 18, 2011 the Company’s Board authorized the issuance and conversion of 2,218,182 shares of par value $0.0001 common stock at $0.11 per share as payment to the principal stockholder for conversion of $100,000 of the debt outstanding and the full $144,000 in accrued wages payable owed as of January 31, 2011. Pursuant to the Board’s authorization and resulting issuance of shares, the principal shareholder has entered into an agreement (the “Conversion Agreement”) with the Company relinquishing the Company from any further obligation to the principal shareholder with respect to $100,000 of the note payable outstanding and all amounts due and payable as wages as of January 31, 2011.

Recent Accounting Pronouncements

The Company’s management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted would have a material impact on the accompanying financial statements.

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 $1,720 and $0 in revenue for the six months ended June 30, 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.

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, 2012, 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 of 2011, the Company's business operations were related to the development and launching of a social networking website. However, since February of 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 around 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” (SPEs).

Subsequent Events

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. In addition, the Company agreed to issue 1,500,000 common shares as consideration for these services.

On August 7, 2013, the Company issued 100,000 warrants under a consulting agreement. The warrants expire in three years from the date of issuance and have an exercise price of $0.40 per share.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for Smaller Reporting Companies.

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.

On February 6, 2012, the Company and Greg Halpern (our Chief Financial Officer) filed a suit in Superior Court of California, Los Angeles County – West District for declaratory judgment and rescission of contract associated with a former consultant (Roy Anthony and Creative Licensing, Inc.) for failure to perform contractual requirements. It seeks clarification that the former consultant is not owed 750,000 shares of restricted common stock. The defendants have been served. The case seeks in excess of the jurisdictional amount which is $50,000 dollars. The defendants have answered the complaint and have filed a cross-complaint for breach of contract, claiming that they are entitled to the 750,000 shares of common stock and that the Company breached the agreement. On March 5, 2013, the suit was settled in favor of Max Sound Corporation and 750,000 shares issued to the former consultant were returned to the treasury.

On February 21, 2012, the Company filed a suit against a former consultant (the “Consultant”) in the Superior Court of California, Los Angeles County – Central District for breach of contract, intentional misrepresentation, negligent misrepresentation, fraud, false advertising, and unfair competition. It seeks damages from the former consultant due to their alleged failure to meet the contractual requirements regarding promotions and seeks in excess of the jurisdictional amount which is $50,000 dollars. The attorneys for the Consultant filed a motion to withdraw from the case based on non-payment, which was recently granted. A status conference has been scheduled for August 16, 2013, at which time the Consultant is responsible to find new representation.

On August 14, 2012, Max Sound Corporation was named as a defendant in an action filed in the Superior Court for the State of California and the County of San Diego. Two shareholders of Max Sound Corporation, Mr. Lloyd Trammell and Mr. Robert Wolff, were also named as defendants in the lawsuit. The plaintiff Robert Steele alleges he was terminated by “Acoustics Control Sciences, LLC” in August, 2008 without receiving wages and other compensation allegedly due him. The plaintiff further claims that two of members or “shareholders” wrongfully transferred a patent owned by from his former employer and this transfer prevented his former employer from paying the wages alleged due. According to the plaintiff, when So Act Network, Inc. (which later changed its name to Max Sound Corporation) purchased the assets of Audio Genesis LLC, 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. Max Sound answered the complaint denying these allegations, denying that is a successor-in-interest and denying any obligation to pay wages to someone that was never employed by Max Sound Corporation. Max Sound Corporation’s answer was served on June 28, 2013 and discovery has only begun. A trial date was set for September 19, 2014. Although Max Sound Corporation anticipates filing dispositive motions prior to trial, the outcome is presently unknown.

On August 23, 2012, Koss Corporation filed a lawsuit against Max Sound Corporation in the United States District Court for the Eastern District of Wisconsin alleging trademark infringement. Based upon its federally registered trademark “Hearing is Believing” for stereo headphones, Koss Corporation contends that Max Sound’s use of “Hearing in Believing” in advertisements for mobile phone software and Max Sounds’ related trademark application for mobile phone software constitutes trademark infringement and unfair competition. Max Sound denies these allegations. Max Sound contends that the goods and services of the two companies are not related and are, in fact, sold or distributed in different channels. Moreover, Max Sound contends that consumers in this area are sophisticated and will not be confused about the origins of the parties’ respective goods or services. On October 26, 2012, Max Sound filed a motion to dismiss the lawsuit pending in the Eastern District of Wisconsin The Wisconsin lawsuit was dismissed for lack of personal jurisdiction. On June 7, 2013, Koss Corp. re-filed its lawsuit in the U.S. District Court for the Central District of California. About the same time, the U.S. Patent and Trademark Office published in the Official Gazette “Hearing is Believing” as a trademark for Max Sound Corporation. Koss Corp. responded by filing an opposition to registration of that mark by Max Sound Corporation. Koss opposition to registration, pending before the Trademark Trial and Appeal Board (“TTAB”), repeats the same allegations that appear in Koss’ federal complaint. Max Sound Corporation denied the allegations of the TTAB opposition and the federal complaint. Max Sound Corporation contends there is no likelihood of consumer confusion because the parties’ respective products are quite different and are marketed to consumers by very different methods and by different channels of trade. Hence, consumers will not be deceived or confused into believing that mobile phone software from Max Sound Corporation originates from the same source as Koss’ stereophones. Since the lawsuit was only recently filed, discovery has just begun. No trial date has been set and the outcome is presently unknown.

On April 8, 2013, Max Sound Corporation filed an Arbitration Complaint with the United States Mediation and Arbitration Company bearing Civil Case No. 210483 in the State of California, for the County of San Diego, entitled Max Sound Corporation v. Christopher Record, et al. naming Christopher Record, individually, and doing business as Team Take Massive Action as defendants. The arbitration action arose out of Christopher Record’s actions while employed with Max Sound Corporation. Counsel for Max Sound Corporation and Christopher Record entered into settlement negotiations, and the parties were able to reach resolution with regard to the claims and allegations concerning the arbitration action. Whereas, in settlement of the arbitration action, Christopher Record has agreed to return to Max Sound Corporation Four Million (4,000,000) shares of Max Sound Corporation common stock that was either issued or vested to Christopher Record in consideration for Max Sound Corporation’s dismissal of the arbitration action. Counsel for Max Sound Corporation and Christopher Record have exchanged a Settlement Agreement and Release to memorialize the terms of the settlement and counsel expect the Settlement Agreement and Release to be executed by the parties shortly.

Item 1A.

Risk Factors.

Not required for smaller reporting companies.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

On April 5, 2013, the Company issued 250,000 to shares of common stock for services having a fair value of $60,000 ($0.24/share).

On April 5, 2013, the Company issued 250,000 to shares of common stock for services having a fair value of $57,500 ($0.23/share).

On April 8, 2013, the Company entered into a conversion agreement executed by a note holder for 181,291 shares based on a conversion price of $.1379 per share.

On April 12, 2013, the Company entered into a conversion agreement executed by a note holder for 549,173 shares based on a conversion price of $.155302 per share.

On April 15, 2013, the Company entered into a conversion agreement executed by a note holder for 224,048 shares based on a conversion price of $.1339 per share.

On April 15, 2013, the Company issued 57,692 shares of common stock for services having a fair value of $15,000 ($0.26/share).

On April 16, 2013, the Company entered into a conversion agreement executed by a note holder for 261,389 shares based on a conversion price of $.1339 per share.

On April 18, 2013, the Company entered into a conversion agreement executed by a note holder for 205,353 shares based on a conversion price of $.14609 per share.

On April 30, 2013, the Company entered into a conversion agreement executed by a note holder for 146,370 shares based on a conversion price of $.17080 per share.

On May 1, 2013, the Company entered into a conversion agreement executed by a note holder for 350,000 shares based on a conversion price of $.162167 per share.

On May 10, 2013, the Company entered into a conversion agreement executed by a note holder for 175,644 shares based on a conversion price of $.1708 per share.

On May 20, 2013, the Company issued 26,087 shares of common stock for services having a fair value of $6,000 ($0.23/share).

On May 23, 2013, the Company entered into a conversion agreement executed by a note holder for 195,993 shares based on a conversion price of $.1530667 per share.

On May 31, 2013, the Company entered into a conversion agreement executed by a note holder for 400,000 shares based on a conversion price of $.144667 per share.

On June 5, 2013, the Company entered into a conversion agreement executed by a note holder for 182,167 shares based on a conversion price of $.1435 per share.

On June 5, 2013, the Company entered into a conversion agreement executed by a note holder for 187,547 shares based on a conversion price of $.1333 per share.

On June 10, 2013, the Company entered into a conversion agreement executed by a note holder for 226,929 shares based on a conversion price of $.1322 per share.

On June 11, 2013, the Company entered into a conversion agreement executed by a note holder for 201,513 shares based on a conversion price of $.1322 per share.

On June 17, 2013, the Company entered into a conversion agreement executed by a note holder for 146,771 shares based on a conversion price of $.1362667 per share.

On June 21, 2013, the Company entered into a conversion agreement executed by a note holder for 224,383 shares based on a conversion price of $.1337 per share.

On June 26, 2013, the Company entered into a conversion agreement executed by a note holder for 300,000 shares based on a conversion price of $.1225 per share.

As of June 30, 2013, the Company issued 250,000 shares of common stock for services having a fair value of $62,500 ($0.25/share).

As of June 30, 2013, the Company issued 250,000 shares of common stock for services having a fair value of $63,750 ($0.26/share).

During the 3 months ended June 30, 2013, the Company issued 1,000,000 warrants in connection with convertible debenture agreements.

The foregoing securities were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). These securities qualified for exemption under Section 4(2) of the Securities Act of 1933 since the issuance securities by us did not involve a public offering. The offerings were not “public offerings” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake offerings in which we sold a high number of shares to a high number of investors. In addition, these holders of our securities had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such shares are restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act of 1933 for the foregoing transactions.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not applicable

Item 5.

Other Information.

None

Item 6.

Exhibits

Exhibit No.		Title of Document

31.1*		Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS *		XBRL Instance Document

101.SCH *		XBRL Taxonomy Extension Schema Document

101.CAL *		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF *		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB *		XBRL Taxonomy Extension Label Linkbase Document

101.PRE *		XBRL Taxonomy Extension Presentation Linkbase Document

Filed or furnished herewith.

In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

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.

Dated: August 14, 2013	MAX SOUND CORPORATION

	By:	/s/ John Blaisure
		John Blaisure President and Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer)

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