Max Sound Corp - Quarter Report: 2021 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 For the transition period from ______to______.

Commission file number 000-51886

3525 Del Mar Heights Road # 802, San Diego, CA 92130

(Address of principal executive offices) (Zip Code)

(800) 327-6293

(Registrant’s telephone number, including area code)

N/A

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒     No ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No ☒

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

As of May 17, 2021, the registrant had 6,882,102,823 shares, par value $0.00001 per share, of common stock issued and outstanding.

INDEX

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. Considering these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

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

CERTAIN TERMS USED IN THIS REPORT

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

PART I FINANCIAL INFORMATION

MAX SOUND CORPORATION

CONTENTS

Max Sound Corporation

Condensed Balance Sheets

See accompanying notes to condensed unaudited financial statements

Max Sound Corporation

Condensed Statements of Operations

(UNAUDITED)

See accompanying notes to condensed unaudited financial statements

Max Sound Corporation

  Condensed Statement of Changes in Stockholders' Deficit

For the three months ended March 31, 2021 and 2020

(UNAUDITED)

See accompanying notes to condensed unaudited financial statements

Max Sound Corporation

Condensed Statements of Cash Flows

(UNAUDITED)

See accompanying notes to condensed unaudited financial statements

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Organization and Basis of Presentation

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

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

On August 9, 2016, the Company moved a level down from OTCQB to OTC Pink Current Information where it is within the continued standards and pricing requirements as found in Section 2 of the OTCQB Eligibility Standards. The Company’s services may re-apply at any time after a price increase to meet all the OTCQB Eligibility Standards to be moved back to the higher OTCQB marketplace.

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 statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

These unaudited interim financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 30, 2021.

(B) Risks and Uncertainties

In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally.

Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. As a result, all of our office locations have been closed effective April 1, 2020.

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations.

(C) 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.

(D) Cash Equivalents

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of March 31, 2021, and December 31, 2020, the Company had no cash equivalents.

(E) 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.

(F) Research and Development

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

(G) Concentration of Credit Risk

The Company at times has had cash in banks in excess of FDIC insurance limits. The Company had $0 in excess of FDIC insurance limits as of March 31, 2021 and December 31, 2020.

(H) Revenue Recognition

Effective January 1, 2018, the Company adopted ASC 606 - Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 - Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.

(I) Loss Per Share

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

The computation of basic and diluted loss per share for the three months ended March 31, 2021 and 2020, excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

The Company’s obligations to issue shares upon conversion of its outstanding convertible notes, the exercise of stock options and warrants and conversion of its preferred stock (the “Convertible Instruments”) at current market prices for its common stock exceeds by the 115,089,177,087 authorized but unissued shares of Common Stock as of the date of this report (the “Potentially Issuable Shares”). While it is uncertain whether the Company would receive requests to issue all of the Potentially Issuable Shares and the number of such shares fluctuates based on the market price of the Company’s common stock, the Company may increase the number of its authorized shares of common stock or effectuate a recapitalization, or a combination of both, in order to make available additional shares of its Common Stock for the Potentially Issuable Shares. Such action would require shareholder approval. Until such time as the Company has a sufficient number of shares of its Common Stock for issuance to cover the Potentially Issuable Shares, the Company could be subject to penalties and damages to the holders of the Convertible Instruments in the event it does not deliver the Potentially Issuable Shares upon request by a holder of the Convertible Instruments. Furthermore, the lack of available shares of common stock may be deemed a default under one or more of the Convertible Instruments.

(J) 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.

(K) Business Segments

The Company operates in one segment and therefore no segment information is not presented.

(L) Recent Accounting Pronouncements

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

(M) Fair Value of Financial Instruments

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

We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures.

This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

The following are the major categories of liabilities measured at fair value on a recurring basis: as of March 31, 2021 and December 31, 2020, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

(N) 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 based on 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 grant as defined in the FASB Accounting Standards Codification.

(O) 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.

NOTE 2 GOING CONCERN

As reflected in the accompanying condensed unaudited financial statements, the Company has an accumulated deficit of $83,069,352, stockholders’ deficit of $12,529,876 and working capital deficit of $12,529,876. These matters raise substantial doubt about the Company’s 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.

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

The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings. Based on the Company’s operating plan, existing working capital at March 31, 2021 was not sufficient to meet the cash requirements to fund planned operations through December 31, 2021 without additional sources of cash. The Company continues to explore various financing alternatives, including debt and equity financings and strategic partnerships, as well as trying to generate revenue. However, at this time, the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all. If the Company is unable to obtain additional funding and improve its operations, the Company’s financial condition and results of operations may be materially adversely affected, and the Company may not be able to continue operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.

NOTE 3 DEBT AND ACCOUNTS PAYABLE

Debt consists of the following:

Line of credit - related party

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

Accounts payable consists of the following:

(A) Convertible Debt

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. On December 20, 2019, the Company removed the variable component and penalties related to its convertible debt and made it a fixed price. Therefore, as of December 31, 2019 there is no longer an existing derivative liability.

Convertible debt consisted of the following activity and terms:

(D) Line of Credit - Related Party

During the three months ended March 31, 2021, the principal stockholder has advanced $4,000 and accrued $4,067 in interest. During the year ended December 31, 2020, the principal stockholder has advanced $89,655 and accrued $15,698 in interest and was repaid $71,453. The line of credit balance and accrued interest as of March 31, 2021 and December 31, 2020 is $447,440 and $436,373, respectively.

NOTE 4 STOCKHOLDERS’ DEFICIT

Common Stock

On March 8, 2021, the Company entered into a conversion agreement executed by a note holder for 275,000,000 shares based on a conversion price of $0.0008 per share in exchange for $220,000 convertible loan balance.

Stock Warrants

The Company had no outstanding and exercisable warrants as of March 31, 2021 and December 31, 2020.

Stock Options

The Company had no outstanding and exercisable stock options as of March 31, 2021 and December 31, 2020.

NOTE 5 COMMITMENTS AND CONTINGENCIES

The Company had no outstanding and exercisable stock options as of March 31, 2021 and December 31, 2020.

On March 4, 2021, the Company signed a 10-year exclusive licensing agreement with TIP Solutions (Licensee) to implement the MAXD HD Audio Source Code into their mobile phone app and platforms. The Licensee was granted an exclusive license of MAX-D HD audio technology for an annual payment of $100,000 or $25,000 paid quarterly for up to 10 years.

The agreement also calls for a license fee split in the event the following occurs:

On March 10, 2021, the Company received a $100,000 payment from the Licensee.

On March 23, 2021, the Company signed a 10-year exclusive licensing agreement with Formula 4 Protocol (Licensee) to implement the MAXD HD Audio Source Code into their mobile phone app and platforms. The Licensee was granted an exclusive license of MAX-D HD audio technology for an annual payment of $100,000 or $25,000 paid quarterly for up to 10 years.

The agreement also calls for a license fee split in the event the following occurs:

On March 23, 2021, the Company received a $150,000 payment from the Licensee.

NOTE 6 LITIGATION

None.

NOTE 7 SUBSEQUENT EVENTS

On April 20, 2021, the Company issued 20,000,000 shares of its common stock with a fair value of $60,000 ($0.003 /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.

Overview

MAXD “The Consumer Audio Brand”

MAX-D is the only audio brand proven over and over in CONSUMER TEST AFTER TEST to be THE PREFERRED AUDIO CHOICE always chosen by RETAIL CUSTOMER BUYERS (YOU & EVERYONE YOU KNOW). Think "The Pepsi Challenge" According to thousands of participants, over the past several years "MAX-D just sounds better" than whatever listening device was used. Bose, Beats, Sony headphones, Harmon Kardon & Bang & Olufsen Car Audio Infotainment Systems, Apple Air Pods, Samsung Galaxy Mobile Smart Phones and JBL Speaker Bars are just a few of those tested straight up. In the only study of its type, the renowned hearing research center at the University of Florida Gainesville Blind Consumer Study demonstrated that the significant majority of Consumers preferred MAX-D at safe hearing levels.

MAXD “The Secret Sauce”

The MAX-D Secret Sauce is an epic proprietary breakthrough and patented-process that uses advanced resynthesis to restore lost, compressed harmonics and bring true high definition (HD) live sound to digital media without affecting file size or energy consumption. Consumers have shown their love for MAX-D by previously downloading the MAX-D app from both app stores over a million times which occurred with an unprecedented zero marketing dollars campaign. A new Native App to all formats will be launched later in 2021 that will be greatly improved and is expected to generate significant revenue for MAX-D and its partners. Late summer and early fall of 2021 will feature the release of the cloud based player version of MAX-D onto high traffic web platforms in mainstream Music, TV, Movies, eSports and Online Gaming with many of the brands consumers already know, use and pay for.

A MARKET FOR BETTER AUDIO

MAX-D HD requires no special software, no altering of file formats and does not change the files size. Consumers get the convenience, as well as better audio.

MAX-D BENEFITS:

ANYWHERE AUDIO CAN GO SO CAN MAX-D

MOBILE - Communication | Voice - Data | Entertainment

ENTERTAINMENT - Music | Movies | Audiobooks | Streaming Content | Live Events

MULTI-MEDIA - Computing | Gaming | E-Sports

CONSUMER - Home Theater | Portable Audio Players | Live Concert Sound | Automotive

CONSUMERS WANT BETTER AUDIO

Consumers have unknowingly sacrificed better audio quality for portable convenience.

Throughout history, we have attempted to capture, enhance and reproduce audio. During past century almost every generation has used a different audio delivery system and player reproduce audio. Some advancements in "Audio" were superior and some were sub-par, most were more convenient but often had inferior quality.

The most commonly used digital audio file today is an MP3. The general population has sacrificed the audio quality for convenience.

MAX-D DELIVERY & IMPLEMENTATION

The MAX-D process is the ONLY true dynamic process with the ability to deliver Pure HD Audio on existing hardware in real time. MAX-D consumers have the ability to “customize” their playback - as everyone wants to hear their audio differently.

The MAX-D process is available in four different versions, they are:

MAX-D Cloud Player - The MAX-D Cloud Player is a full featured version of the MAX-D Technology that can be implemented on any streaming service, or online platform in a very short amount of time, with very little coding or development required. This allows MAX-D partners to quickly adopt MAX-D HD Audio with no hassle.

MAX-D Smart Phone App - The MAX-D APP is used on a Smartphone with a least a 1 GHz processor. Android and iOS versions will be available in the very near future. The APP is a full-featured player with all the controls you would expect. Included are: genre settings for the consumer to choose the type of audio, a bypass for on/off functionality so the consumer can hear and feel the MAX-D difference and a harmonic tone control with three dynamic ranges for further customization.

API (Application Program Interface) - Devices (Original Equipment Manufacturer). The API allows the OEM developers to design their own custom interface. NOTE: The genre presets can be customized by MAX SOUND if necessary for specific types or applications.

MAX-D Software Program - The MAX-D Software program is a able to process audio in a fully dynamic fashion. The MAX-D program has the ability to simply restore or significantly change any audio, especially compressed formats. Now any user can experience clean, clear, dynamically enhanced audio, without the need to encode/decode or use proprietary formats. Existing hardware is able to play HD Audio using any one of our products Bringing Global Innovation and New Technologies to the MAX

MAX-D IS NOT JUST ABOUT AUDIO
Max Sound Corporation is a technology company that works to bring the best innovations of small business to the global stage. From HD-Video transmission codecs, to Perpetual Energy Inventions, everything does better when it’s taken to the MAX.

1. The Movie Studio is focused on the independent motion picture content sector as a disruptor of the Hollywood model and operates as a vertically integrated motion picture and reality show production and distribution company, as well as a movie streaming service and a first-mover digital disruptor operating an over-the-top (“OTT”) platform and blockchain platform for foreign licensing of content for distribution.

2. MAX-D will be implemented into The Movie Studio’s platform and streaming services via the MAX-D Cloud Player and will provide HD audio for all of their content.

3. MAX-D’s Partnership with The Movie Studio Opens up the movie streaming market for MAX-D HD Audio. This will open the gates to future partnerships in the industry (ie. Netflix, Hulu, Peacock etc.)

1. SongSecure is the first ever decentralized software platform designed to enable musicians and music producers with the ability to streamline the process of protecting their original content in the quickest, easiest, most secure, and most affordable way.

2. MAX-D will be implemented into Song Secures online platform and streaming services via the MAX-D Cloud Player and will provide HD audio for all of their content.

3. Trusted by thousands of musicians worldwide, securing over 50,000 songs which included Grammy award winners. This is MAX-D’s foot in the door to the entire music industry.

1. ViBelt is the developer and owner of a patented HAPTIC FEEDBACK technology which provides users with vibrational and force feedback that responds to the media source. This brings users deeper into their media experience, providing a “4^th Dimension” of sensory experience.

2. MAX-D will acquire these patents and bring them into their other deals such as ESTV, where haptic feedback in addition to HD Audio will bring the ULTIMATE content consumer experience.

1. Hende Moto is creating ultra-advanced electric and hybrid super cars, one for daily institutional use and one for exotic sporting world use. This E-car manufacturer is bringing innovations to Zimbabwe and the Rest of the world. HENDE MOTO, will be the cutting-edge car making technology company based in USA and Africa, has developed global strategic partners that facilitate taking the big the 5, redesigning the cars to be in sync with slickness and nature, developing within culture realms of innovation in all continents and fight against digital colonization. Engage locals to be involved in the design process from the onset, protecting the environment.

2. MAX-D HD Audio will be built into every model of Hende Moto’s vehicles, bringing the best audio experience to their users available in the world.

1. Formula 4 Protocol is an online life mastery and meditation course utilizing an ultra-advanced hybrid of digital and analog stimuli, incorporating cybernetics, the blended hypnosis principles of Milton Erickson and Delores Cannon (QHHT), as well as health producing sonic frequencies and multi-layered visualizers, that are sequenced to consistently energize and rapidly retrain the living ecosystem to the highest form of our positive capabilities, the net-effect of which is to give each Formula 4 practitioner amazing (yet often outrageous sounding results) that manifest daily improvements in health, happiness, abundance, gratitude, love and celebration.

2. MAX-D HD-Audio will be built into the Formula 4 Protocol Course material, offering audio that enhances the effects of their out of this world meditations.

1. ABOUT TIP SOLUTIONS, INC. (TIP)

TIP Solutions is a transformative market innovator providing cutting edge applications now becoming accessible by Android Smartphone users worldwide. TIP is committed to change the way the world uses, manages and answers billions of mobile devices by providing unique phone functionality enabling rapid responses, improved productivity, with refined and effective communication, that match today's constantly accelerating technological advances.

2. Partnering with TIP opens MAX-D up to the worldwide smartphone market and deeper collaboration with Qualcomm through the development of the Snapdragon 800 Series Chip.

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, we have conducted financings to raise initial start-up money for the building of our internet search engine and social networking website and to start our operations. In 2011, the Company shifted the focus of its business operations from their social networking website to the marketing of the Max Sound HD Audio Technology and in 2014 the Company began litigations against Google and others for infringement of its technologies and associated legal rights to the various proprietary technologies.

The Company believes that Max Sound HD Audio Technology is a game changer for several vertical markets whose demand will create revenue opportunities in 2021.

On March 4, 2021, the Company signed a 10-year exclusive licensing agreement with TIP Solutions (Licensee) to implement the MAXD HD Audio Source Code into their mobile phone app and platforms. The Licensee was granted an exclusive license of MAX-D HD audio technology for an annual payment of $100,000 or $25,000 paid quarterly for up to 10 years.

The agreement also calls for a license fee split in the event the following occurs:

On March 9, 2021, the Company received a $100,000 payment from the Licensee.

On March 23, 2021, the Company signed a 10-year exclusive licensing agreement with Formula 4 Protocol (Licensee) to implement the MAXD HD Audio Source Code into their mobile phone app and platforms. The Licensee was granted an exclusive license of MAX-D HD audio technology for an annual payment of $100,000 or $25,000 paid quarterly for up to 10 years.

The agreement also calls for a license fee split in the event the following occurs:

On March 23, 2021, the Company received a $150,000 payment from the Licensee.

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

Results of Operations

For the three months ended March 31, 2021 and 2020.

Revenues: During the three months ended March 31, 2021, we realized 251,000 of revenues from our business. During the three months ended March 31, 2020, we realized $0 of revenues from our business. The change in revenues between the quarter ended March 31, 2021 and 2020 was $251,000 or 100% as a result of the licensing agreements entered into during the three months ended March 31, 2021.

General and Administrative Expenses: Our general and administrative expenses were $18,161 for the three months ended March 31, 2021 and $30,755 for the three months ended March 31, 2020, representing a decrease of $12,594 or approximately 41%, as a result of a decrease in the general operation of the Company.

Professional Fees: Our professional fees were $4,000 for the three months ended March 31, 2021 and $46,000 for the three months ended March 31, 2020, representing a decrease of $42,000 or approximately 91%, the decrease in professional fees was mostly attributable to legal fees and expenses attributable to fees required in connection with filings with the Securities and Exchange Commission.

Compensation: Our compensation expenses were $72,000 for the three months ended March 31, 2021 and $126,000 for the three months ended March 31, 2020, representing change of $54, or approximately 43%, as a result of our expensing of monthly compensation to our management and employees.

Net Loss: The Company's net loss from operations was $96,881 during the three months ended March 31, 2021 as compared to $433,486 for the three months ended March 31, 2020. The decrease was primarily due to increase in licensing revenue during the three months ended March 31, 2021 and offset by a decrease in operating expenses.

Liquidity and Capital Resources

Revenues for the three months ended March 31, 2021 and 2020, were $251,000 and $0, respectively. We have an accumulated deficit of $83,069,352 for the period from December 9, 2005 (inception) to March 31, 2021 and have positive cash flow from operations of $246,275 for the three months ended March 31, 2020.

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

From our inception through March 31, 2021, our primary source of funds has been the proceeds of private offerings of our common stock, private financing, and loans from stockholders. Our need to obtain capital from outside investors is expected to continue until we are able to achieve profitable operations, if ever. There is no assurance that management will be successful in fulfilling all or any elements of its plans.

The convertible notes in the amount of $5,940,429 outstanding as of March 31, 2021 and $6,160,429 for the year ended December 31, 2020, consist of the debt holders who 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 fixed conversion price.

Loans and Advances - Related Party

During the three months ended March 31, 2021, the principal stockholder has advanced $4,000 and accrued $4,067 in interest.

The line of credit balance and accrued interest as of March 31, 2021 is $447,440.

Recent Accounting Pronouncements

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

Critical Accounting Policies and Estimates

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Use of Estimates:

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.

Revenue Recognition:

Effective January 1, 2018, the Company adopted ASC 606 - Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 - Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists;(2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.

We had $251,000 and $0 in revenue for the ended March 31, 2021 and 2020, respectively.

Stock-Based Compensation:

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

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

Derivative Financial Instruments

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.

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.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

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

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

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

See NOTE 6 titled LITIGATION for information on Legal Proceedings.

Item 1A. Risk Factors.

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

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

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.