10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

(Mark One)

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

For the quarterly period ended June 30, 2017

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

 For the transition period from ______to______. 

Commission file number 000-51886

MAX SOUND CORPORATION
(Exact name of registrant as specified in its charter)
Delaware	26-3534190
State or other jurisdiction of incorporation or organization	(I.R.S.  Employer Identification No.)
8837 Villa La Jolla Drive, Unit 12109, La Jolla, California	92037
(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.

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

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

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock. As of August 3, 2017, the registrant had 1,423,359,797 shares, par value $0.00001 per share, of common stock issued and outstanding. 

INDEX  

PART I-- FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II-- OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	31
Item 6.	Exhibits	31
SIGNATURES		31

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

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

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

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

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

CERTAIN TERMS USED IN THIS REPORT

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

PART I Ð FINANCIAL INFORMATION

Item 1. Financial Statements

MAX SOUND CORPORATION

CONTENTS

PAGE	3	CONDENSED BALANCE SHEETS AS OF JUNE 30, 2017 (UNAUDITED) AND AS OF DECEMBER 31, 2016 (AUDITED).
PAGE	4	CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH ENDED JUNE 30, 2017 AND 2016 (UNAUDITED).
PAGE	5	CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH ENDED JUNE 30, 2017 AND 2016 (UNAUDITED).
PAGES	6	NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED).

Max Sound Corporation

Condensed Balance Sheets

ASSETS

	June 30, 2017			December 31, 2016
		(UNAUDITED)
Current Assets
Cash	$	45,544		$	185,026
Prepaid expenses		104,151			62,230
Debt offering costs - net		37,577			42,499
Total Current Assets		187,272			289,755
Property and equipment, net		60,489			61,423
Other Assets
Security deposit		413			413
Total Other Assets		413			413
Total Assets	$	248,174		$	351,591
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable		244,760		$	238,594
Accrued expenses		614,063			453,387
Demand Note		—			20,000
Derivative liability		6,501,388			5,906,940
Convertible note payable, net of debt discount of $1,040,745 and $1,227,865 respectively		4,969,659			4,369,733
Total Current Liabilities		12,329,870			10,988,654
Commitments and Contingencies
Stockholders' Deficit
Preferred stock,  $0.0001 par value; 10,000,000 shares authorized, No shares issued and outstanding		—			—
Series, A Convertible Preferred stock,  $0.00001 par value; 10,000,000 shares authorized, 5,000,000 and 0 shares issued and outstanding, respectively		50			50
Common stock,  $0.00001 par value; 3,250,000,000 shares authorized, 1,335,363,631 and 935,642,114 shares issued and outstanding, respectively		13,352			9,355
Additional paid-in capital		66,247,327			64,355,387
Treasury stock		(519,575	)		(519,575	)
Accumulated deficit		(77,822,850	)		(74,482,280	)
Total Stockholders' Deficit		(12,081,696	)		(10,637,063	)
Total Liabilities and Stockholders' Deficit		248,174		$	351,591

See accompanying notes to condensed unaudited financial statements.

Max Sound Corporation

Condensed Statements of Operations

(UNAUDITED)

	For the Three Months Ended,						For the Six Months Ended,
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Revenue	$	—		$	—		$	—		$	—
Operating Expenses
General and administrative		108,077			197,381			216,952			741,905
Consulting		30,000			70,142			62,600			139,832
Professional fees		228,995			119,833			316,880			229,753
Website development		—			7,000			10,000			28,000
Compensation		162,000			198,000			324,000			410,000
Total Operating Expenses		529,072			592,356			930,432			1,549,490
Loss from Operations		(529,072	)		(592,356	)		(930,432	)		(1,549,490	)
Other Income / (Expense)
Other income		—			1,315			11			36,529
Interest expense		(112,238	)		(74,684	)		(200,251	)		(164,145	)
Derivative Expense		(263,589	)		(424,320	)		(543,172	)		(2,505,412	)
Amortization of debt offering costs		(41,032	)		(23,532	)		(62,697	)		(58,000	)
Gain/(Loss) on debt settlement		(211,916	)		(215,161	)		(239,203	)		(316,270	)
Amortization of debt discount		(862,033	)		(1,508,607	)		(1,656,217	)		(2,847,565	)
Change in fair value of embedded derivative liability		(1,369,868	)		2,550,645			291,391			76,297
Total Other Income / (Expense)		(2,860,676	)		305,656			(2,410,138	)		(5,778,566	)
Provision for Income  Taxes		—			—			—			—
Net Loss	$	(3,389,748	)	$	(286,700	)	$	(3,340,570	)	$	(7,328,056	)
Net Loss Per Share  - Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Weighted average number of shares outstandingduring the year Basic and Diluted		1,102,463,245			825,352,459			1,031,934,049			710,704,959

See accompanying notes to condensed unaudited financial statements.

Max Sound Corporation

Condensed Statements of Cash Flows

(UNAUDITED)

	For the Six Months Ended,
	June 30, 2017			June 30, 2016
Cash Flows From Operating Activities:
Net Loss	$	(3,340,570	)	$	(7,328,056	)
Adjustments to reconcile net loss to net cash used in operations
Depreciation/Amortization		24,933			40,498
Stock and stock options issued for services		53,500			105,894
Warrants issued for services		—			91,556
Amortization of intangible assets		—			56,390
Amortization of debt offering costs		62,697			58,000
Amortization of debt discount		1,656,217			2,847,565
Change in fair value of derivative liability		(291,391	)		(76,297	)
Gain on debt extinguishment		—			(35,200	)
Derivative Expense		543,172			2,505,412
Changes in operating assets and liabilities:
Cash paid on accrued interest		—
(Increase)/Decrease in prepaid expenses		(41,921	)		16,773
Increase/(Decrease) accounts payable		6,181			391,285
Increase/(Decrease) in accrued expenses		217,032			165,286
Net Cash Used In Operating Activities		(1,110,150	)		(1,160,894	)
Cash Flows From Investing Activities:
Purchase of property equipment		(24,000	)		(6,398	)
Net Cash Used In Investing Activities		(24,000	)		(6,398	)
Cash Flows From Financing Activities:
Repayment of convertible note		(233,743	)		(1,197,096	)
Proceeds from issuance of convertible note, less offering costs and OID costs paid		1,248,411			2,195,547
Repayment of note payable		(20,000	)		(40,000	)
Net Cash Provided by Financing Activities		994,668			958,451
Net Decrease in Cash		(139,482	)		(208,841	)
Cash at Beginning of Year		185,026			211,064
Cash at End of Year	$	45,544		$	2,223
Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,297		$	—
Cash paid for taxes	$	—		$	—
Supplemental disclosure of non-cash investing and financing activities:
Shares issued in conversion of convertible debt and accrued interest	$	798,096		$	1,000,029
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability	$	1,044,341		$	3,131,579
Reclass of convertible debt to demand note	$	—		$	100,000

See accompanying notes to condensed unaudited financial statements.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

NOTE 1           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Organization and Basis of Presentation

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

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

On August 9, 2016 the Company has 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, which remain active and are paid current with OTC Markets through the end of 2016, may re-apply at any time after a price increase to meet all of 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 statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

These unaudited interim consolidated 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, 2016, filed with the SEC on March 31, 2017.

(B) Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

(C) Cash and Cash Equivalents

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of June 30, 2017 and December 31, 2016, the Company had no cash equivalents.

(D) Property and Equipment

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

(E) Research and Development

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

(F) Concentration of Credit Risk

The Company at times has cash in banks in excess of FDIC insurance limits. The Company had $0 in excess of FDIC insurance limits as of June 30, 2017 and December 31, 2016.

(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. The Company has not yet commenced revenue generating activities.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

(H) Impairment of Long-Lived Assets and Intangible Assets with Definite Life

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. The Company recorded $1,008,035 and $15,703,617 in impairment of the intangible asset for the year ended December 31, 2016 and the year ended December 31, 2015, respectively. As of December 31, 2016 the intangible assets were fully impaired.

(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 six months ended June 30, 2017 and 2016 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

	June 30, 2017		June 30, 2016
Stock Warrants (Exercise price - $0.25 - $.52/share)		19,470,690		18,270,690
Stock Options (Exercise price - $0.10 - $.50/share)		2,866,652		2,866,652
Convertible Debt (Exercise price - $0.0017 - $.0126/share)		5,725,047,704		2,791,745,292
Series A Convertible Preferred Shares ($0.0/share)		125,000,000		125,000,000
Total		5,872,385,046		2,937,882,634

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 3,957,748,676 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.

The Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2012, and the related state income tax returns are no longer subject to examination by state authorities for the years prior to 2011.

 MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

(K) Business Segments

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

(L) Recent Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. This guidance will be effective for us in the first quarter of 2018 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter of 2020 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

 In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of adopting ASU No. 2016-02 on our financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer and provides additional guidance about how to apply the control principle when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual

periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on our financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years.  In May 2016, the FASB issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients,” which amends the guidance on transition, collectability, non-cash consideration, and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The standard allows for both retrospective and modified retrospective methods of adoption. The Company has not yet determined the impact of ASU 2016-10 on its financial statements.

In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Statements," which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019 (fiscal year 2021 for the Company). The Company has not yet determined the potential effects of the adoption of ASU 2016-13 on its Financial Statements.

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which aims to eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017 (fiscal year 2019 for the Company). The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest–Imputation of Interest (Subtopic 835-30) (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company is currently in the process of evaluating the impact of adoption of ASU 2015-03 on its balance sheets.

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: 

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following are the major categories of liabilities measured at fair value on a recurring basis: as of June 30, 2017 and December 31, 2016, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

	June 30, 2017					December 31, 2016
	Fair Value Measurement Using					Fair Value Measurement Using
		Level 1	Level 2	Level 3	Total		Level 1	Level 2	Level 3	Total
Derivative Liabilities		—	6,501,388	—	6,501,388		—	5,906,940	—	5,906,940

(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 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.

(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.

(P) 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, 2017

(UNAUDITED)

(Q) 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.

(R) 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.

(S) Licensing & Distribution

On June 20, 2015, the Company entered into a license agreement with Santok LTD of United Kingdom (“Santok). The term of the agreement is three years. Santok will pay the Company a royalty fee of $1.50 for each licensed product. Santok guarantees to the Company a minimum total of 150,000 cumulative licensed product installation with a minimum total guaranteed value of $225,000 over the three years of the agreement. If the total royalty paid is less than the guaranteed value, Santok will pay the difference.

On July 13, 2015, the Company entered into a license agreement with Luna Mobile, Inc. of United States (“Luna). The term of the agreement is three years. Luna will pay the Company a royalty fee of $1.50 for each licensed product manufactured and sold. As of June 30, 2017 Luna Mobile continues to seek to distribute its products.

NOTE 2           GOING CONCERN 

As reflected in the accompanying condensed unaudited financial statements, the Company had a net loss of $3,340,570 for the six months ended June 30, 2017, has an accumulated deficit of $77,822,850 as of June 30, 2017, and has negative cash flow from operations of $1,110,150 for the six months ended June 30, 2017.

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

The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings. Based on the Company’s operating plan, existing working capital at December 31, 2016 was not sufficient to meet the cash requirements to fund planned operations through December 31, 2017 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:

	AS of June 30, 2017			As of December 31, 2016
Convertible debt	$	6,010,404		$	5,597,598
Less: debt discount		(1,040,745	)		(1,227,865	)
Convertible debt - net		4,969,659			4,369,733
Demand note		—			20,000
Total current debt		4,969,659		$	4,389,733

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

(A) Convertible Debt

During the six months ended June 30, 2017 and year ended December 31, 2016, the Company issued convertible notes totaling $1,388,276, less the original issue discount and debt issue costs of $139,865, for net proceeds of $1,248,411 and $3,392,813, respectively.

The convertible notes issued for year ended June 30, 2017 and year ended December 31, 2016, consist of the following terms:

		Six months ended June 30, 2017 Amount of Principal Raised	Year ended December 31, 2016 Amount of Principal Raised
Interest Rate		0% - 8%		0% - 10%
Default interest rate		14% - 22%		14% - 22%
Maturity		November 4, 2015 –August 31, 2018		November 4, 2015 –March 10, 2018
Conversion terms 1	65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.	3,515,900		3,412,400
Conversion terms 2	65% of the “Market Price”, which is the one lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	1,212,867		624,087
Conversion terms 3	70% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 4	75% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.	765,000		765,000
Conversion terms 5	60% of the “Market Price”, which is the lowest trading prices for the common stock during the fifteen  (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 6	Conversion at $0.10 per share	Paid on conversion		Paid on conversion
Conversion terms 7	60% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	paid on conversion		127,000
Conversion terms 8	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	516,637		536,669
Conversion terms 9	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		79,810
Conversion terms 10	65% of the “Market Price”, which is the one lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 11	60% of the “Market Price”, which is the two lowest trading prices for the common stock during the twelve (12) trading day period prior to the conversion.	paid on conversion		52,632

Convertible Debt		6,010,398			5,597,598
Less: Debt Discount		(1,040,745	)		(1,227,865	)
Convertible Debt - net	$	4,969,659		$	4,369,733

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

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 and warrants as a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of shares of common stock required to net-share settle or due to the existence of a ratchet due to an anti-dilution provision. See Note 4 regarding accounting for derivative liabilities.

During the six months ended June 30, 2017, the Company converted debt and accrued interest, totaling $798,096 into 394,721,516 shares of common stock

During the year ended December 31, 2016, the Company converted debt and accrued interest, totaling $1,189,849 into 420,556,227 shares of common stock

Convertible debt consisted of the following activity and terms:

Convertible Debt Balance as of December 31, 2016	5,597,598		4% - 10%		November 4, 2015 - March 10, 2018
Borrowings during the six months ended June 30, 2017	1,388,276		8	%
Non-Cash Reclassification of accrued interest converted	56,369
Repayments	(233,743	)
Conversion of debt to into 394,721,516 shares of common stock with a valuation of $798,096 ($0.00092 - $0.00731/share) including the accrued interest of $56,369	(798,096	)
Convertible Debt Balance as of June 30, 2017	6,010,404		4% - 8%		November 4, 2015 –June 27, 2018

(D) Debt Issue Costs

During the six months ended June 30, 2017, the Company paid debt issue costs totaling $57,775.

During the six months ended June 30, 2016, the Company paid debt issue costs totaling $21,737.

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

	Six Months ended June 30, 2017			Year Ended December 31, 2016
Debt issue costs	$	320,398			262,623
Accumulated amortization of debt issue costs		(282,821	)		(220,124	)
Debt issue costs - net	$	37,577			42,499

During the six months ended June 30, 2017 and 2016 the Company amortized $62,697 and $58,000 of debt issue costs, respectively.

(E) Debt Discount & Original Issue Discount

During the six months ended June 30, 2017 and year ended December 31, 2016, the Company recorded debt discounts totaling $1,469,098 and $3,313,472, respectively.

The debt discount and the original issue discount recorded in 2017 and 2016 pertains to convertible debt that contains embedded conversion options that are required to be bifurcated and reported at fair value and original issue discounts.

The Company amortized $1,656,217 and $2,847,565 during the six months ended June 30, 2017 and 2016, respectively, to amortization of debt discount expense.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

	Six months ended June 30, 2017			Year Ended December 31, 2016
Debt discount	$	11,825,492			10,356,394
Accumulated amortization of debt discount		(10,784,747	)		(9,128,529	)
Debt discount - Net	$	1,040,745			1,227,865

NOTE 4           DERIVATIVE LIABILITIES

The Company identified conversion features embedded within convertible debt issued in 2016 and 2015 and warrants issued in 2016 and 2015. The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability.

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

Derivative Liability -December 31, 2016	$	5,906,940
Fair value at the commitment date for convertible instruments		1,930,180
Change in fair value of embedded derivative liability for warrants issued		(191,200	)
Change in fair value of embedded derivative liability for convertible instruments		(100,191	)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability		(657,847	)
Change from repayments		(386,494	)
Derivative Liability –June 30, 2017	$	6,501,388

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 six months ended June 30, 2017 and 2016 of $543,172 and $2,505,412, 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, 2017:

	Commitment Date	Re-measurement Date
Expected dividends:	—	—
Expected volatility:	133% - 262%	156%-203
Expected term:	0.08 - 3 Years	0.07–1.91 Years
Risk free interest rate:	0.06% - 1.60%	0.01% - 1.14%

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, 2016:

	Commitment Date	Re-measurement Date
Expected dividends:	—	—
Expected volatility:	133% - 262%	157% -216%
Expected term:	0.08 - 3 Years	0.01–2.40 Years
Risk free interest rate:	0.06% - 1.60%	0.12% - .1.47%

 MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

NOTE 5           PROPERTY AND EQUIPMENT

At June 30, 2017 and December 31, 2016, respectively, property and equipment is as follows:

	June 30, 2017			December 31, 2016
Website Development	$	294,795		$	294,795
Furniture and Equipment		141,971			117,971
Leasehold Improvements		6,708			6,708
Software		54,598			54,598
Music Equipment		2,578			2,578
Office Equipment		80,710			80,710
Domain Name		1,500			1,500
Sign		628			628
Total		583,488			559,488
Less: accumulated depreciation and amortization		(522,999	)		(498,065	)
Property and Equipment, Net	$	60,489		$	61,423

Depreciation/amortization expense for the six months ended June 30, 2017 and 2016 totaled $24,933 and $40,498, respectively.

NOTE 6          STOCKHOLDERS’ DEFICIT

On March 4, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors created and authorized the issuance of Series A Convertible Preferred stock, with a par value of $0.00001 per share. The face amount of state value of each Preferred Share of stock is $0.96 and the conversion price of $0.04 per share.

On June 24, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 120,000,000 shares of common stock from 450,000,000 million shares of common stock to 570,000,000 shares of common stock.

On September 24, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 120,000,000 shares of common stock from 450,000,000 million shares of common stock to 570,000,000 shares of common stock.

On August 19, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 280,000,000 shares of common stock from 570,000,000 million shares of common stock to 850,000,000 shares of common stock.

On January 13, 2016, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the Securities and Exchange Commission a Schedule 14C and with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 800,000,000 shares of common stock from 850,000,000 million shares of common stock to 1,650,000,000 shares of common stock.

On April 4, 2017, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the Securities and Exchange Commission a Schedule 14C and with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 600,000,000 shares of common stock from 1,650,000,000 shares of common stock to 2,250,000,000 shares of common stock.

On April 23, 2017, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the Securities and Exchange Commission a Schedule 14C and with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 1,000,000,000 shares of common stock from 2,250,000,000 shares of common stock to 3,250,000,000 shares of common stock.

(A) Common Stock 

During the six months ended June 30, 2017, the Company issued the following common stock:

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

Transaction Type	Quantity		Valuation		Range of Value per share
Conversion of convertible debt and accrued interest		394,721,516	$	798,096		$0.00092 to- $0.00731
Services - rendered		5,000,000		53,500	$	0.0107
Total shares issued		399,721,516	$	851,596

During the year ended December 31, 2016, the Company issued the following common stock:

Transaction Type	Quantity		Valuation		Range of Value per share
Conversion of convertible debt and accrued interest		420,556,227	$	1,189,849		$0.00143 to- $0.01056
Services  rendered		12,775,195		115,600		$0.09-$0.013
Patents		80,000,000		1,600,000	$	0.02
Total shares issued		513,331,422	$	2,905,449

The Company maintains on its books and within the above financials, debt to Venture Champion Asia Limited and ICG USA LLC or its designee(s) which is currently in default and has not been converted due to ICG’s settled administrative proceeding with the SEC, where the Company awaits any rightful exemption or regulatory no-action that would render any forward moving action compliant by all the parties.

The Company announced that it entered into an Agreement with Vedanti Systems Limited and Vedanti Licensing Limited (VLL) that resolves their dispute over the international Optimized Data Transmission (ODT) patent portfolio previously owned by Vedanti. The Agreement further provides that VLL and the Company will become co-owners of the pioneering portfolio. In consideration of the patent portfolio purchase, the Company issued 80,000,000 shares of its common stock to VLL. This patent portfolio consists of patents in the following countries: The United States, Australia, Austria, Cyprus, Denmark, Spain, Finland, France, Ireland, Italy, Luxembourg, Monaco, Portugal, Sweden, Turkey, Belgium, Switzerland/ Liechtenstein, United Kingdom, Greece, Netherlands and Germany. The Company continues to pursue its litigations against Google.

Return of Shares and Issuance of Preferred shares

On March 4, 2015 the Company filed a form 8K with the SEC associated with the Company entering into a Securities Exchange Agreement and the Company filing with the Secretary of State Delaware a Certificate of Designations, Preferences and Rights whereby, among other things, the Company for good and valuable consideration, agreed that in consideration of a large shareholder exchanging 120,000,000 shares of common stock back to the Company, the shareholder would receive 5,000,000 shares of Series A Convertible Preferred Stock of the Company at a Stated Value of $0.96 per share and a Conversion Price of $0.04 per share. The Series A Convertible Preferred Stock carries certain voting preferences and will accrue dividends at a rate of 8% per annum Stated Value, payable in cash or in kind at the election of the Board of Directors. For the six months ended June 30, 2017 and for the year ended December 31, 2016, the Company has not declared dividends.

 (B) Stock Warrants

The following tables summarize all warrant grants as of June 30, 2017, and the related changes during these periods are presented below:

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Balance, December 31, 2016		19,970,690		$	0.01		2.2
Granted		—
Exercised		—
Cancelled/Forfeited		(500,000	)
Balance, June 30, 2017		19,470,690		$	0.01		1.7

A summary of all outstanding and exercisable warrants as of June 30, 2017 is as follows:

						Weighted Average		Aggregate Intrinsic
Exercise		Warrants		Warrants		Remaining		Value
Price		Outstanding		Exercisable		Contractual Life
$	0.01		2,000,000		2,000,000		1.67	$	—
$	0.005		1,000,000		1,000,000		1.91	$	—
$	0.0029		8,620,690		8,620,690		1.75	$	—
$	0.006		5,600,000		5,600,000		1.89
$	0.12		2,000,000		2,000,000		1.27	$	—
$	0.40		250,000		250,000		0.11	$	—
			19,470,690		19,470,690		1.7	$	—

 A summary of all outstanding and exercisable warrants as of December 31, 2016 is as follows:

						Weighted Average		Aggregate Intrinsic
Exercise		Warrants		Warrants		Remaining		Value
Price		Outstanding		Exercisable		Contractual Life
$	0.01		2,000,000		2,000,000		2.16	$	—
$	0.005		1,000,000		1,000,000		2.40	$	—
$	0.0029		8,620,690		8,620,690		2.25	$	—
$	0.006		5,600,000		5,600,000		2.39
$	0.12		2,000,000		2,000,000		1.76	$	—
$	0.40		750,000		750,000		0.40	$	—
			19,970,690		19,970,690		2.2	$	—

(C) Stock Options

The following tables summarize all option grants as of June 30, 2017, and the related changes during these periods are presented below:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life  (in Years)
Outstanding – December 31, 2016		2,866,652	$	0.13		1.02
Granted		—	$	—		—
Exercised		—	$	—		—
Forfeited or Canceled		—	$	—		—
Outstanding – June 30, 2017		2,866,652	$	0.13		0.02
Exercisable – June 30, 2017		2,866,652

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

NOTE 7         COMMITMENTS

(A) Employment Agreement

On January 31, 2016 Mr. Lloyd Trammell (“Trammell”) submitted a notice of resignation ending employment on March 1, 2016. In connection with Trammell’s resignation a dispute arose between the Company and Trammell concerning Trammell’s desiring to sell 13 million shares of the Company’s stock. The Company filed an action in the Superior court of the State of California, County of San Diego (assigned Case No. 37-2016-00033037-CU-MU-NC) seeking to enjoin or restrict the sale of the Company shares. The lawsuit was settled June 26, 2017 amicably and the Company has agreed to buy back the referenced shares for $15,000. Further, in the event closing of the buyback is delayed by any availability of funds, the Company agrees to pay an additional amount to Trammel equal to $150 per day for each day beyond August 1^st 2017 the closing is delayed.

On January 8, 2016, the Company extended the employment agreement with its CEO, John Blaisure for an additional five years. The Company issued 12,000,000 shares of Company’s common stock as part of the compensation with a fair value of $105,600 ($0.0088) based on the stock trading price.

(B) Consulting Agreement

On April 14, 2016, the Company entered into an agreement, for consulting services, for which the Company issued 1,000,000 warrants at a strike price of ($0.005/share) per share.

On March 6, 2016, the Company entered into a revised engagement with its corporate counsel, McMenamin Law Group, for corporate legal services to be provided by legal counsel beginning July 28, 2015 through December 31, 2016, pursuant to which the Company has agreed to issue a five (5) year warrant at an exercise price totaling $25,000 at a strike price of ($0.0029/share) per share of common stock of the Company, which share price was the closing price of the Company’s stock on March 3, 2016. In addition the Company has agreed to pay McMenamin Law Group cash consideration totaling $15,000 on or before March 31, 2016, or a funding of the Company, whichever occurs first. As of December 31, 2016, the payment was not made. This new engagement shall replace and supersede any previous engagements or other agreements between the Company and McMenamin Law Group.

On October 14, 2016 the Company entered into a new engagement with its corporate counsel McMenamin Law Group, for corporate legal services to be provided from January 1, 2017 through December 31, 2017. Specifically the Company agreed to pay a flat fee totaling $32,500 in the following installment, (i) $10,000 on October 17, 2016, (ii) $7,500 on January 3, 2017, (iii) $7,500 on June 30, 2017, and (iv) $7,500 on June 30, 2017.

(C) Other Agreements

On February 21, 2017 the Company entered into an Agreement with architect Eli Attia. This Agreement terminated and replaced the previous Representation Agreement and allows the Company to continue to pursue litigations against Google and Flux.  

NOTE 8       LITIGATION

From time to time, the Company has 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 January 21, 2015, the Company filed a patent infringement action against Netflix Inc., Netflix Luxembourg S.a.r.l. and Netflix International B.V. with the District Court of Mannheim, Germany. The asserted patent is the same patent as in the German proceedings

against Google Inc. and its subsidiaries. The Complaint alleges that Netflix Inc. and its subsidiaries are offering and transmitting video streams to German customers as part of their video-on-demand business model; the videos being encoded and transmitted in a manner claimed and protected by the patent. The Company primarily seeks a permanent injunction against the Defendants, plus damages and information regarding past infringements. The Company, on or about December 2015 upon advice of counsel, decided withdraw the litigation prior to oral argument, which withdrawal is without prejudice to re-file the lawsuit in the future.

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

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

On January 26, 2015, the Company was named as a defendant in an action filed in the Superior Court for the State of California and the County of Los Angeles captioned Bibicoff Family Trust v. Max Sound Corporation (Case No. SC123679). The parties participated in mediation and arrived successfully at a settlement and resolution of the matter. In March 2017 the Company successfully completed paying the agreed upon settlement amount.

On August 11, 2014, the Company and VSL simultaneously filed trade secret and patent infringement actions against Google, Inc., and its subsidiaries YouTube, LLC, and On2 Technologies, Inc., relating to proprietary and patented technology owned by Vedanti Systems Limited (“Vedanti”), a subsidiary of VSL.  The patent infringement complaint was originally filed in the U.S. District Court for the District of Delaware; the trade secret suit was filed in Superior Court of California, County of Santa Clara.  On September 30, 2014, the Company filed notices of voluntary dismissal without prejudice as to both lawsuits. On October 1, 2014, the Company amended the patent complaint and filed it in the U.S. District Court for the Northern District of California. In this patent lawsuit, the Company contends that, in 2010, while Google was in discussions with Vedanti about the possibility of acquiring Vedanti's patented digital video streaming techniques and other proprietary methods, Google gained access to and received technical guidance regarding Vedanti’s proprietary codec, a computer program capable of encoding and decoding a digital data stream or signal.  The lawsuit further alleges that soon after Google and Vedanti initiated negotiations, Google willfully infringed Vedanti's patent by incorporating Vedanti's patented technology into Google's own VP8, VP9, WebM, YouTube, Google Adsense, Google Play, Google TV, Chromebook, Google Drive, Google Chromecast, Google Play-per-view, Google Glasses, Google+, Google’s Simplify, Google Maps, and Google Earth, without compensating Vedanti for such use.  On May 13, 2015 Google's “motion to dismiss” was denied by the Northern District of California court in a seven page order, stating that Max Sound had sufficiently alleged the existence and validity of the '339 Patent.  However, on November 24, 2015, the court granted a second motion to dismiss for lack of subject matter jurisdiction based on the defendants’ argument that the agreements between the Company and VSL/Vedanti did not clearly give the Company standing to enforce the patent rights.  The Company appealed that decision on February 22, 2016. One January 18, 2017 the Company received a notice from the Federal Circuit Court of Appeals that affirmed the order of the District Court dismissing MAXD's patent infringement lawsuit against Google for lack of standing. The Court did not issue a written decision explaining its reasoning or that the Company's arguments were not correct; however, The Company believes that their decision was predicated on the fact that as now co-owners of the patents with Vedanti, the Company can simply re-file together against Google. The Court also issued an order denying Google's motion arguing that the Company's appeal should be dismissed as moot.

In connection with the dismissal of the aforementioned litigation, the Company initiated an arbitration against VSL Communications, Ltd., Vedanti Systems, Ltd., Constance Nash, Robert Newell and eTech Investments as respondents before the American Arbitration Association for breach of contract, fraud, and other causes of action. Subsequently, the Company is pursuing in arbitration claims against VSL to enforce the agreement and to compel VSL to comply with the agreement’s terms and conditions that inter alia VSL must fully cooperate with the Company to cure any issues the Court raised with standing to pursue the claims. On January 17, 2017 the AAA notified the Company’s counsel that the respondent’s counterclaim was withdrawn this arbitration claim was formally concluded.

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

prosecuted, and the Company believes it has a good likelihood of success.  Defendants have filed multiple demurrers to the complaint, and the Court has issued orders allowing the case to proceed.  Defendants filed another demurrer on March 17, 2016, which was denied by the Court on August 12, 2016.  The parties continue to file motions and are expected to begin the discovery phase of the litigation.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

On June 1, 2016, the Company was named as a defendant in an action filed in the Superior Court of the State of California, County of Los Angeles – Central District, captioned Adli Law Group, PC v. Max Sound Corporation (Case No. BC621886). Plaintiff alleges two causes of action for Breach of Contract and a cause of action for Common Counts, all arising out of the Company’s alleged failure to pay for Plaintiff’s legal services. Despite the fact that the Company was never served with the Complaint, default was entered against the Company. The Default has been set aside and the Company has responded to the Complaint with an Answer and Cross-Complaint for Breach of Contract, Professional Negligence, Breach of Fiduciary Duty, Conversion, and Fraud, due to the fact, that among other things, Adli Law reassigned the Company's primary patent to itself. 

On September 22, 2016, the Company filed an action in the Superior Court of the State of California, County of San Diego – North County Regional Center, captioned Max Sound Corporation v. Globex Transfer, LLC (Case No. 37-2016-0003037-CU-MC-NC). The Company requests injunctive relief and declaratory relief regarding the release of 13 million restricted shares of Company stock. On September 26, 2016, the Court granted the Company a preliminary injunction, enjoining Defendant from releasing any restriction of the subject shares without first obtaining the Company’s consent, pending the outcome of the litigation.”

In November 2016, the Company entered into an agreement with Vedanti Licensing Limited ("VLL") and Vedanti Systems Limited ("Vedanti") under (the "VLL/Max Sound Agreement") granting the Company co-ownership of U.S. Patent No. 7,974,339 (the "`339 Patent") along with the other patents owned by Vedanti Systems Limited. Thus, the Company is now a co-owner with VLL of the `339 Patent and ODT Patent portfolio, pursuant to the VLL/Max Sound Agreement, the Company and VLL intend to file new lawsuit against Google and others for infringement as co-owners. 

On December 20, 2016 Companies House, the United Kingdom's registrar of companies, notified the Company that VSL Communications Limited was dissolved, thereafter voiding any remaining agreement with VSL Communications or its previous Officers, Directors or Management.

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

NOTE 9       SUBSEQUENT EVENTS

On July 6, 2017, the Company converted a total of $20,000 in convertible debt comprised of principal into 17,574,692 common shares.

On July 10, 2017, the Company converted a total of $23,400 in convertible debt comprised of principal into 20,000,000 common shares.

On July 27, 2017, the Company converted a total of $42,165 in convertible debt comprised of principal and interest into 49,899,976 common shares.

On July 26, 2017 the Company entered into a settlement agreement with Lloyd Trammell to buy back 13 million shares of Max Sound to settle the legal action. In consideration for the transfer the Company agrees to pay$15,000 and all transfer fees and other third party costs associated with the buyback. If closing of the buyback is delayed by any availability of funds, the Company agrees to pay an additional amount to Trammel equal to $150 per day for each day beyond August 1^st 2017 the closing is delayed.

On July 27, 2017, the Company entered into an agreement with Power Up Lending Group, LTD to issue up to $123,000 in a convertible note. The note matures on April 30, 2018 and bears an interest charge of 12%. The conversion price equals the “Variable Conversion Price”, which is 61% 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 unpaid principal amount into shares of common stock after six months. The Company received $120,000 proceeds on July 28, 2017.

August 5, 2017, the Company entered into an agreement with GS Capital Partners, LLC to issue up to $105,000 in a convertible note. The note matures on August 3, 2018 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is

65% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $120,000 proceeds on August 4, 2017.

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

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

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

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

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

On June 20, 2015, the Company entered into a license agreement with Santok LTD of United Kingdom (“Santok). The term of the agreement is three years. Santok agreed to pay the Company a royalty fee of $1.50 for each licensed product it integrates into its line of electronics. Santok has guaranteed to the Company a minimum total of 150,000 cumulative licensed product installations with a minimum total guaranteed value of $225,000 over the three years of the agreement. If the total royalty paid is less than the guaranteed value, Santok will pay the difference.

On July 13, 2015, the Company entered into a license agreement with Luna Mobile, Inc. of United States (“Luna). The term of the agreement is three years. Luna has agreed to pay the Company a royalty fee of $1.50 for each licensed product manufactured and sold.

On November 29, 2016, MAXD entered into an agreement with Vedanti Systems Limited and Vedanti Licensing Limited (VLL) that resolves their dispute over the international Optimized Data Transmission (ODT) patent portfolio previously owned by Vedanti. The agreement further provides that VLL and MAXD will become co-owners of the pioneering portfolio. This patent portfolio consists of patents in the following countries: The United States, Australia, Austria, Cyprus, Denmark, Spain, Finland, France, Ireland, Italy, Luxembourg, Monaco, Portugal, Sweden, Turkey, Belgium, Switzerland/ Liechtenstein, United Kingdom, Greece, Netherlands and Germany. The Company continues to pursue its litigations against Google.

The Company has entered into agreements with a few technology companies’ to use our HD Audio solution, and is in negotiations with several other multi-media companies that we believe will utilize our HD Audio solution in the future.

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

Plan of Operation

We began our operations on October 8, 2008, when we purchased the Form 10 Company from the previous owners.  Since that date, 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.  

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

The Company believes that Max Sound HD Audio Technology is a game changer for several vertical markets whose demand will create revenue opportunities in 2017.

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

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 and six months ended June 30, 2017 and 2016:

	For the Three Months Ended,						For the Six Months Ended,
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Revenue	$	—		$	—		$	—		$	—
Operating Expenses
General and administrative		108,077			197,381			216,952			741,905
Consulting		30,000			70,142			62,600			139,832
Professional fees		228,995			119,833			316,880			229,753
Website development		—			7,000			10,000			28,000
Compensation		162,000			198,000			324,000			410,000
Total Operating Expenses		529,072			592,356			930,432			1,549,490
Loss from Operations		(529,072	)		(592,356	)		(930,432	)		(1,549,490	)
Other Income / (Expense)
Other income		—			1,315			11			36,529
Interest expense		(112,238	)		(74,684	)		(200,251	)		(164,145	)
Derivative Expense		(263,589	)		(424,320	)		(543,172	)		(2,505,412	)
Amortization of debt offering costs		(41,032	)		(23,532	)		(62,697	)		(58,000	)
Gain/(Loss) on debt settlement		(211,916	)		(215,161	)		(239,203	)		(316,270	)
Amortization of debt discount		(862,033	)		(1,508,607	)		(1,656,217	)		(2,847,565	)
Change in fair value of embedded derivative liability		(1,369,868	)		2,550,645			291,391			76,297
Total Other Income / (Expense)		(2,860,676	)		305,656			(2,410,138	)		(5,778,566	)
Provision for Income Taxes		—			—			—			—
Net Loss	$	(3,389,748	)	$	(286,700	)	$	(3,340,570	)	$	(7,328,056	)
Net Loss Per Share  - Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Weighted average number of shares outstanding during the year Basic and Diluted		1,102,463,245			825,352,459			1,031,934,049			710,704,959

For the three months ended June 30, 2017 and 2016.

 MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

General and Administrative Expenses: Our general and administrative expenses were $108,077 for the three months ended June 30, 2017 and $197,381 for the three months ended June 30, 2016, representing a decrease of $89,304, or approximately 45%, as a result of decrease in the general operation of the Company included decreasing personnel, product development and marketing of our Max Sound Technology.

Consulting Fees:  Our consulting fees were $30,000 for the three months ended June 30, 2017 and $70,142 for the three months ended June 30, 2016, representing a decrease of $40,142, or approximately 57%. The Company has decreased the use of consultants to assist the Company.

Professional Fees: Our professional fees were $228,995 for the three months ended June 30, 2017 and $119,833 for the three months ended June 30, 2016, representing an increase of $109,162 or approximately 91%, as a result of ongoing litigation.

Compensation: Our compensation expenses were $162,000 for the three months ended June 30, 2017 and $198,000 for the three months ended June 30, 2016, representing a decrease of $36,000, or approximately 18%, as a result of our expensing of monthly compensation to our management and employees.

Net Loss: Our net income for the three months ended June 30, 2017 was $3,389,748 While the operational expenses in marketing our Max Sound technology decreased from the same period of last year, the overall amount of our net loss substantially increased as a result of an decrease in the change in the fair value of embedded derivative liability associated with the convertible debt and the impairment of the intangible asset.

For the six months ended June 30, 2017 and 2016.

General and Administrative Expenses: Our general and administrative expenses were $216,952 for the six months ended June 30, 2017 and $741,905 for the six months ended June 30, 2016, representing a decrease of $524,953, or approximately 71%, as a result of decrease in the general operation of the Company included decreasing personnel, product development and marketing of our Max Sound Technology.

Consulting Fees:  Our consulting fees were $62,600 for the six months ended June 30, 2017 and $139,832 for the six months ended June 30, 2016, representing a decrease of $77,232, or approximately 55%. The Company has decreased the use of consultants to assist the Company.

Professional Fees: Our professional fees were $316,880 for the six months ended June 30, 2017 and $229,753 for the six months ended June 30, 2016, representing an increase of $87,127 or approximately 38%, as a result of ongoing litigation.

Compensation: Our compensation expenses were $324,000 for the six months ended June 30, 2017 and $410,000 for the six months ended June 30, 2016, representing a decrease of $86,000, or approximately 21%, as a result of our expensing of monthly compensation to our management and employees.

Net Loss: Our net loss for the six months ended June 30, 2017 was $3,340,570. While the operational expenses in marketing our Max Sound technology decreased from the same period of last year, the overall amount of our net loss substantially decreased as a result of an decrease in the change in the fair value of embedded derivative liability associated with the convertible debt and the impairment of the intangible asset.

Liquidity and Capital Resources

Revenues for the six months ended June 30, 2017 and 2016, were $0 and $0, respectively. We have an accumulated deficit of $77,822,850 for the period from December 9, 2005 (inception) to June 30, 2017, and have negative cash flow from operations of $1,110,150 for the six months ended June 30, 2017.  

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 June 30, 2017, 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.  

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

Below is a summary of our capital-raising activities for the six months ended June 30, 2017:

During the six months ended June 30, 2017 and December 31, 2016, the Company issued convertible notes totaling $1,388,276 and $3,392,813, respectively.

Loans and Advances

We have entered into three Credit Line Agreements with Greg Halpern.  The first two were for $100,000 each and matured and expired in 2011.  The third Credit Line Agreement issued by Mr. Halpern in March 2010 is for an additional $500,000 and matured and expired in 2012.  All three agreements accrue interest at the prime rate as of the date of issuance.  The prime rate of interest is the rate of interest that major banks charge their most creditworthy customers.  For the purposes of these agreements, we shall determine the prime rate by using the prime rate reported by the Wall Street Journal on the date funds are extended to the Company.  Based on the prime rate as of the date of issuance, the prime rate shall be 3.25%. On September 26, 2013, we entered into a Credit Line Agreement with Mr. Halpern for $1,000,000 that will mature and expire on or before the second anniversary of September 26, 2015.  Interest will accrue on each advance at an annual rate of 4%. As of December 31, 2013, the Company owed $0 in principal and $0 in accrued interest related to these loans and lines of credit.  We believe that the $1,000,000 line of credit issued will not be sufficient to cover the additional expense arising from maintenance of our regulatory filings with the SEC, and the marketing of our technology over the next twelve months, thus the Company will continue to pursue additional financing and/or additional funding in 2016 to continue marketing the Max Sound HD Audio Technology aggressively to Multi-Media Industry Users of Audio and Audio with Video products. 

In 2015, the Company has received from Mr. Halpern additional net advances on the established lines of credit in the amount of $264,000 of which it has repaid $536,000.  As of December 31, 2015, the balance including accrued interest on the line of credit is $473. During the year ended December 31, 2016 the line of credit balance of $473 was repaid and the remaining balance is $0.  This further demonstrates our Chairman’s ongoing commitment to continue financing the Company’s needs.  While the Company expects to have ongoing needs for additional financing, the amount of those needs are not clearly established as the Company moves forward.

During the year ended December 31, 2015, the principal stockholder was repaid $536,000.  As of December 31, 2015, the line of credit balance including accrued interest totaled $473.

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

Recent Accounting Pronouncements

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of adopting ASU No. 2016-02 on our financial statements.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer and provides additional guidance about how to apply the control principle when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on our financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years.  In May 2016, the FASB issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients,” which amends the guidance on transition, collectability, non-cash consideration, and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The standard allows for both retrospective and modified retrospective methods of adoption. The Company has not yet determined the impact of ASU 2016-10 on its financial statements.

In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Statements," which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019 (fiscal year 2021 for the Company). The Company has not yet determined the potential effects of the adoption of ASU 2016-13 on its Financial Statements.

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which aims to eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic

230, Statement of Cash Flows, and other Topics. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017 (fiscal year 2019 for the Company). The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. This guidance will be effective for us in the first quarter of 2018 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter of 2020 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest–Imputation of Interest (Subtopic 835-30) (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company is currently in the process of evaluating the impact of adoption of ASU 2015-03 on its balance sheets.

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:  

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 $0 and $0 in revenue for the six months endedJune 30, 2017 and 2016, 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.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

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.  For the year ended December 31, 2015, the Company completed an impairment analysis on its' long-lived assets, their technology rights, and determined that no impairment was necessary.

ASC 350 prescribes a two-step process for impairment testing of goodwill and intangibles with indefinite lives, which is performed annually, as well as when an event triggering impairment may have occurred. ASC 350 also allows preparers to qualitatively assess goodwill impairment through a screening process which would permit companies to forgo Step 1 of their annual goodwill impairment process. This qualitative screening process will hereinafter be referred to as "Step 0". Goodwill and intangible assets deemed to have an indefinite life are tested for impairment on an annual basis, or earlier when events or changes in circumstances suggest the carrying amount may not be fully recoverable. The Company has elected to perform its annual assessment on $16,796,237 of intangible assets. For the year ended December 31, 2016 and December 31, 2015, $1,008,036 and $15,703,616, respectively impairment loss has been recorded due to a change in business model, this being significantly impacted by the impairment of Liquid Spins assets, as digital music sales are no longer relevant in today’s market. For the year ended December 31, 2016, the intangible asset is fully impaired and the remaining balance is $0.

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

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

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

As part of the impairment test, the Company reviewed its' initial useful life analysis, in reference to their technology, and updated this analysis with factors that existed at the time of the impairment testing and determined that nothing had occurred in the marketplace that would change their initial determination of the useful life of their technology. The analysis included researching known technological advances in the marketplace and determining if those advances which are similar to the Company's products would limit the useful life of the asset. The Company believes that the technological advances in the marketplace are geared to developing different playback devices and the implementation of technology that is similar to the Company's technology. Thus, the Company concluded that their technology

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

rights continue to have an indefinite useful life. However, it is understood that technological advancements could happen in the future that would limit the useful life of their technology.  If a technology was created in the future that would limit the useful life of the technology, the Company would be required to update their impairment testing to include a useful life determination of the technology and may be required to record impairment charges at some time in the future.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4.  Controls and Procedures

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

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

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

See NOTE 8 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.

Below is a summary of our capital-raising activities for the six months endedJune 30, 2017 and underlying terms:

On April 12, 2017, the Company entered into a conversion agreement with Iliad Research & Trading, LP relating to a convertible promissory note dated May 18, 2016, with the original principal amount of $171,665 for 5,085,177 shares based on a conversion price of $0.00393 per share (See Note 6).

 On May 5, 2017, the Company entered into a conversion agreement with Iliad Research & Trading, LP relating to a convertible promissory note dated May 18, 2016, with the original principal amount of $171,665 for 7,788,162 shares based on a conversion price of $0.00257 per share (See Note 6).

On May 25, 2017, the Company entered into a conversion agreement with Iliad Research & Trading, LP relating to a convertible promissory note dated May 18, 2016, with the original principal amount of $171,665 for 17,574,692 shares based on a conversion price of $0.00114 per share (See Note 6).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

On June 8, 2017, the Company entered into a conversion agreement with Iliad Research & Trading, LP relating to a convertible promissory note dated May 18, 2016, with the original principal amount of $171,665 for 16,625,104 shares based on a conversion price of $0.00120 per share (See Note 6).

On June 19, 2017, the Company entered into a conversion agreement with Iliad Research & Trading, LP relating to a convertible promissory note dated May 18, 2016, with the original principal amount of $171,665 for 19,961,522 shares based on a conversion price of $0.00123 per share (See Note 6).

On April 11, 2017, the Company entered into a conversion agreement with JSJ Investments, Inc. relating to a convertible promissory note dated October 10, 2016, with the original principal amount of $77,000 for 6,060,606 shares based on a conversion price of $0.00330 per share (See Note 6).

On April 19, 2017, the Company entered into a conversion agreement with JSJ Investments, Inc. relating to a convertible promissory note dated October 10, 2016, with the original principal amount of $77,000 for 6,944,444 shares based on a conversion price of $0.00288 per share (See Note 6).

On May 2, 2017, the Company entered into a conversion agreement with JSJ Investments, Inc. relating to a convertible promissory note dated October 10, 2016, with the original principal amount of $77,000 for 8,658,008 shares based on a conversion price of $0.00231 per share (See Note 6).

On May 10, 2017, the Company entered into a conversion agreement with JSJ Investments, Inc. relating to a convertible promissory note dated October 10, 2016, with the original principal amount of $77,000 for 9,439,828 shares based on a conversion price of $0.00212 per share (See Note 6).

On April 5, 2017, the Company entered into a conversion agreement with Crown Bridge Partners, LLC relating to a convertible promissory note dated September 8, 2016, with the original principal amount of $40,000 for 2,800,000 shares based on a conversion price of $0.00347 per share (See Note 6).

On May 11, 2017, the Company entered into a conversion agreement with Crown Bridge Partners, LLC relating to a convertible promissory note dated September 8, 2016, with the original principal amount of $40,000 for 3,700,000 shares based on a conversion price of $0.00208 per share (See Note 6).

On June 8, 2017, the Company entered into a conversion agreement with Crown Bridge Partners, LLC relating to a convertible promissory note dated September 8, 2016, with the original principal amount of $40,000 for 8,300,000 shares based on a conversion price of $0.00092 per share (See Note 6).

On June 16, 2017, the Company entered into a conversion agreement with Crown Bridge Partners, LLC relating to a convertible promissory note dated September 8, 2016, with the original principal amount of $40,000 for 6,111,684 shares based on a conversion price of $0.00109 per share (See Note 6).

On June 6, 2017, the Company entered into a conversion agreement with Eagle Equities, LLC relating to a convertible promissory note dated December 2, 2016, with the original principal amount of $147,000 for 4,707,891 shares based on a conversion price of $0.00110 per share (See Note 6).

On June 8, 2017, the Company entered into a conversion agreement with Eagle Equities, LLC relating to a convertible promissory note dated December 2, 2016, with the original principal amount of $147,000 for 8,477,828 shares based on a conversion price of $0.00111 per share (See Note 6).

On June 14, 2017, the Company entered into a conversion agreement with Eagle Equities, LLC relating to a convertible promissory note dated December 2, 2016, with the original principal amount of $147,000 for 8,439,045 shares based on a conversion price of $0.00123 per share (See Note 6).

On June 8, 2017, the Company entered into a conversion agreement with Lucas Hoppel relating to a convertible promissory note dated December 5, 2016, with the original principal amount of $78,750 for 13,000,000 shares based on a conversion price of $0.00117 per share (See Note 6).

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

On June 15, 2017, the Company entered into a conversion agreement with Lucas Hoppel relating to a convertible promissory note dated December 5, 2016, with the original principal amount of $78,750 for 20,000,000 shares based on a conversion price of $0.00124 per share (See Note 6).

On April 6, 2017, the Company entered into a conversion agreement with LG Capital Funding, LLC relating to a convertible promissory note dated September 19, 2016, with the original principal amount of $78,750 for 13,268,411 shares based on a conversion price of $0.00422 per share (See Note 6).

On May 15, 2017, the Company entered into a conversion agreement with LG Capital Funding, LLC relating to a convertible promissory note dated September 19, 2016, with the original principal amount of $78,750 for 12,412,898 shares based on a conversion price of $0.00244 per share (See Note 6).

On June 2, 2017, the Company entered into a conversion agreement with LG Capital Funding, LLC relating to a convertible promissory note dated September 19, 2016, with the original principal amount of $78,750 for 10,681,248 shares based on a conversion price of $0.00114 per share (See Note 6).

On June 12, 2017, the Company entered into a conversion agreement with LG Capital Funding, LLC relating to a convertible promissory note dated September 19, 2016, with the original principal amount of $78,750 for 17,840,615 shares based on a conversion price of $0.00114 per share (See Note 6).

On June 23, 2017, the Company entered into a conversion agreement with LG Capital Funding, LLC relating to a convertible promissory note dated September 19, 2016, with the original principal amount of $78,750 for 14,417,520 shares based on a conversion price of $0.00110 per share (See Note 6).

On May 5, 2017, the Company entered into a conversion agreement with Bellridge Capital, LP, relating to a convertible promissory note dated October 13, 2016, with the original principal amount of $120,000 for 8,029,503 shares based on a conversion price of $0.00260 per share (See Note 6).

On May 11, 2017, the Company entered into a conversion agreement with Bellridge Capital, LP, relating to a convertible promissory note dated October 13, 2016, with the original principal amount of $120,000 for 15,632,594 shares based on a conversion price of $0.00234 per share (See Note 6).

On May 17, 2017, the Company entered into a conversion agreement with Bellridge Capital, LP, relating to a convertible promissory note dated October 13, 2016, with the original principal amount of $120,000 for 16,099,472 shares based on a conversion price of $0.00195 per share (See Note 6).

On May 23, 2017, the Company entered into a conversion agreement with Bellridge Capital, LP, relating to a convertible promissory note dated October 13, 2016, with the original principal amount of $120,000 for 20,149,635 shares based on a conversion price of $0.00104 per share (See Note 6).

On June 12, 2017, the Company entered into a conversion agreement with Bellridge Capital, LP, relating to a convertible promissory note dated October 13, 2016, with the original principal amount of $120,000 for 12,779,328 shares based on a conversion price of $0.00123 per share (See Note 6).

On June 27, 2017, the Company entered into a conversion agreement with Bellridge Capital, LP, relating to a convertible promissory note dated November 22, 2016, with the original principal amount of $120,000 for 42,976,892 shares based on a conversion price of $0.00097 per share (See Note 6).

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

Item 5. Other Information.

None.

Item 6. Exhibits

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

Exhibit Number		Description
	10.1	Convertible Redeemable Note, Dated 6/30/17 issued to Bellridge Capital, LP.
	10.2	Convertible Redeemable Note, Dated 5/12/17 issued to Bellridge Capital, LP.
	10.3	Convertible Redeemable Note, Dated 6/27/17 issued to Bellridge Capital, LP.
	10.4	Convertible Redeemable Note, Dated 6/27/17 issued to Bellridge Capital, LP
	10.5	Convertible Redeemable Note, Dated 5/1/17 issued to GS Capital Partners, LLC
	10.6	Convertible Redeemable Note, Dated 5/19/17 issued to LG Capital Funding, LLC.
	31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer
	31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer
	32	Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

Date: August 11, 2017.

MAX SOUND CORPORATION
(Registrant)
By:	/s/ John Blaisure
	John Blaisure
	Chief Executive Officer (Principal Executive Officer)
By:	/s/ Greg Halpern
	Greg Halpern
	Chief Financial Officer (Principal Financial and Accounting Officer)

EX-31

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John Blaisure, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Max Sound Corporation (the "registrant");
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 11, 2017	Signature:	/s/ John Blaisure
		John Blaisure Chief Executive Officer
		(principal executive officer)

EX-31

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Greg Halpern, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Max Sound Corporation (the "registrant");
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 11, 2017	Signature:	/s/ Greg Halpern
		Greg Halpern Chief Financial Officer (principal financial and accounting officer)

EX-32

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Max Sound Corporation, a Delaware corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the "Form 10-Q") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 11, 2017	By:	/s/ John Blaisure
		John Blaisure Chief Executive Officer
		(principal executive officer)

By:	/s/ Greg Halpern
	Greg Halpern Chief Financial Officer
	(principal financial and accounting officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of Form 10-K or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-10

NEITHERTHISSECURITYNORTHESECURITIESINTOWHICHTHISSECURITYISCONVERTIBLEHAVEBEENREGISTEREDWITHTHESECURITIESANDEXCHANGECOMMISSIONORTHESECURITIESCOMMISSIONOFANYSTATEINRELIANCEUPONANEXEMPTIONFROMREGISTRATIONUNDERTHESECURITIESACTOF1933,ASAMENDED(THE“SECURITIESACT”),AND,ACCORDINGLY,MAYNOTBEOFFEREDORSOLDEXCEPTPURSUANTTOANEFFECTIVEREGISTRATIONSTATEMENTUNDERTHE SECURITIESACTOR PURSUANTTOANAVAILABLEEXEMPTIONFROM,ORINATRANSACTIONNOTSUBJECTTO, THE REGISTRATION REQUIREMENTS OF THE SECURITIESACT AND INACCORDANCEWITHAPPLICABLESTATESECURITIESLAWSASEVIDENCEDBYALEGALOPINIONOFCOUNSELTOTHETRANSFERORTOSUCHEFFECT,THESUBSTANCEOFWHICHSHALLBEREASONABLYACCEPTABLETOTHECOMPANY.THISSECURITYANDTHESECURITIES ISSUABLEUPON CONVERSIONOF THISSECURITYMAYBE PLEDGEDINCONNECTIONWITHABONAFIDEMARGINACCOUNTOROTHERLOANSECUREDBYSUCHSECURITIES.

OriginalIssueDate:June30,2017

$147,000

8%CONVERTIBLENOTE

THIS8%CONVERTIBLENOTEisoneofaseriesofdulyauthorizedandvalidlyissued8%ConvertibleNotesissuedata8%originalissuediscountbyMaxSoundCorporation.,aDelawarecorporation(the“Company”)(thisnote,the“Note”and,collectivelywiththeothernotesofsuchseries,the“Notes”).ThisNotereplacesthe“BackEnd”NoteissuedonJanuary7,2017,dueJanuary15,2018,assignedfromEagleEquities,LLC,whichnotewasissuedinexchangeforthecollateralizedsecondpromissorynoteofJanuary5,2017ofEagleEquitiesinfavoroftheCompanywhichtheHolderhaspaidoffinfull.

FORVALUERECEIVED,theCompanypromisestopaytoBellridgeCapital,LPitsregisteredassigns(the “Holder”),orshall havepaid pursuanttotheterms hereunder,theprincipalsumof$147,000(“OriginalPrincipalAmount”) onJanuary 5,2018(the “MaturityDate”)or suchearlier dateasthis Noteisrequiredorpermittedtoberepaidasprovidedhereunder,andtopayinteresttotheHolderontheaggregateunconvertedandthenoutstandingprincipalamountofthisNoteinaccordancewiththeprovisionshereof.ThisNoteissubjecttothefollowingadditionalprovisions:

Section1. Definitions.Forthepurposeshereof,(a)capitalizedtermsnototherwisedefinedhereinshallhavethemeaningssetforthinthePurchaseAgreementand(b)thefollowingtermsshallhavethefollowingmeanings:

“AlternateConsideration”shallhavethemeaningsetforthinSection5(e).

“BankruptcyEvent”meansanyofthefollowingevents:(a)theCompanyoranySignificantSubsidiary(assuchtermisdefinedinRule1-02(w)ofRegulationS-X)thereofcommencesacaseorother proceeding under any bankruptcy,reorganization,arrangement,adjustment of debt, relief ofdebtors,dissolution,insolvencyorliquidationorsimilarlawofanyjurisdictionrelatingtotheCompanyoranySignificantSubsidiarythereof,(b)thereiscommencedagainsttheCompanyoranySignificantSubsidiarythereofanysuchcaseorproceedingthatisnotdismissedwithin60daysaftercommencement,

(c)theCompanyoranySignificantSubsidiarythereofisadjudicatedinsolventorbankruptoranyorderofrelieforotherorderapprovinganysuchcaseorproceedingisentered,(d)theCompanyoranySignificant Subsidiarythereofsuffersanyappointmentofanycustodianorthelike foritoranysubstantialpartofitspropertythatisnotdischargedorstayedwithin60calendardaysaftersuchappointment,(e)theCompanyoranySignificantSubsidiarythereofmakesageneralassignmentforthebenefitofcreditors,or(f)theCompanyoranySignificantSubsidiarythereof,byanyactorfailuretoact,expresslyindicatesitsconsentto,

.

“BaseConversionPrice”shallhavethemeaningsetforthinSection5(b).“BeneficialOwnershipLimitation”shallhavethemeaningsetforthinSection4(d).

“BusinessDay”meansanydayexceptanySaturday,anySunday,anydaywhichisafederallegalholidayintheUnitedStatesoranydayonwhichbankinginstitutionsintheStateofNewYorkareauthorizedorrequiredbylaworothergovernmentalactiontoclose.

“Buy-In”shallhavethemeaningsetforthinSection4(c)(v).

“ChangeofControlTransaction”meanstheoccurrenceafterthedatehereofofanyof(a)anacquisitionafterthedatehereofbyanindividualorlegalentityor“group”(asdescribedinRule13d-5(b)(1)promulgatedundertheExchangeAct)ofeffectivecontrol(whetherthroughlegalorbeneficialownershipofcapitalstockoftheCompany,bycontractorotherwise)ofinexcessof50%ofthevotingsecuritiesoftheCompany(otherthanbymeansofconversion,exerciseorexchangeoftheNotesortheSecuritiesissuedtogetherwiththeNotes),(b)theCompanymergesintoorconsolidateswithanyotherPerson,oranyPersonmergesintoorconsolidateswiththeCompanyand,aftergivingeffecttosuchtransaction,theshareholdersoftheCompanyimmediatelypriortosuchtransactionownlessthan50%oftheaggregatevotingpowerofthe Companyorthesuccessor entityofsuchtransaction,(c) theCompanysellsortransfersallorsubstantiallyallofitsassetstoanotherPersonandtheshareholdersoftheCompanyimmediatelypriortosuchtransactionownlessthan50%oftheaggregatevotingpoweroftheacquiringentityimmediatelyafterthetransaction,(d)areplacementatonetimeorwithinathreeyearperiodofmorethanone-halfofthemembersoftheBoardofDirectorsoftheCompany(the“BoardofDirectors”)whichisnotapprovedbyamajorityofthoseindividualswhoaremembersoftheBoardofDirectorsontheOriginalIssueDate(orbythoseindividualswhoareservingasmembersoftheBoardofDirectorsonanydatewhosenominationtotheBoardofDirectorswasapprovedbyamajorityofthemembersoftheBoardofDirectorswhoaremembersonthedatehereof),or(e)theexecutionbytheCompanyof anagreementtowhichtheCompanyisapartyorbywhichitis bound,providingfor anyoftheeventssetforthinclauses(a)through(d)above.

“Conversion”shallhavethemeaningascribedtosuchterminSection4.“ConversionDate”shallhavethemeaningsetforthinSection4(a).“ConversionPrice”shallhavethemeaningsetforthinSection4(b).

hereto.

“ConversionSchedule”meanstheConversionScheduleintheformofSchedule1attached

“ConversionShares”means,collectively,thesharesofCommonStockissuableuponconversionofthisNoteinaccordancewiththetermshereof.

“DefaultInterestRate”shallhavethemeaningsetforthinSection2(a).“DilutiveIssuance”shallhavethemeaningsetforthinSection5(b).“DilutiveIssuanceNotice”shallhavethemeaningsetforthinSection5(b).

“DWAC”meanstheDepositorWithdrawalatCustodiansystematTheDepositoryTrustCompany.

“EventofDefault”shallhavethemeaningsetforthinSection7(a).“FundamentalTransaction”shallhavethemeaningsetforthinSection5(e).

“MandatoryDefaultAmount”meansthesumof(a)150%oftheoutstandingprincipalamountofthisNote,plus150%ofaccruedandunpaidinteresthereon,and(b)allotheramounts,costs,expensesandliquidateddamagesdueinrespectofthisNote.

“NewYorkCourts”shallhavethemeaningsetforthinSection8(e).“NoteRegister”shallmeanthenoteregistermaintainedbytheCompany.“NoticeofConversion”shallhavethemeaningsetforthinSection4(a).

“OptionValue”meansthevalueofaCommonStockEquivalentbasedontheBlackScholesOptionPricingmodelobtainedfromthe"OV"functiononBloombergdeterminedasof(A)theTradingDaypriortothe public announcementoftheissuanceoftheapplicable CommonStock Equivalent,if theissuanceofsuchCommonStockEquivalentispubliclyannouncedor(B)theTradingDayimmediatelyfollowingtheissuanceoftheapplicableCommonStockEquivalentiftheissuanceofsuchCommonStockEquivalentisnotpubliclyannounced,forpricingpurposesandreflecting(i)arisk-freeinterestratecorrespondingtotheU.S.TreasuryrateforaperiodequaltotheremainingtermoftheapplicableCommonStockEquivalentasof the applicabledateofdetermination, (ii)anexpectedvolatilityequaltothegreaterof100%andthe100dayvolatilityobtainedfromtheHVTfunctiononBloombergasof(A)theTradingDayimmediatelyfollowingthepublicannouncementoftheapplicableCommonStockEquivalentiftheissuanceofsuchCommonStockEquivalentispubliclyannouncedor(B)theTradingDayimmediatelyfollowingtheissuanceoftheapplicableCommonStockEquivalentiftheissuanceofsuchCommonStockEquivalentisnotpubliclyannounced,(iii)theunderlyingpricepershareusedinsuchcalculationshallbethehighestVWAPoftheCommonStockduringtheperiodbeginningontheTradingDaypriortotheexecutionofdefinitivedocumentationrelatingtotheissuanceoftheapplicableCommonStockEquivalentandendingon(A)theTradingDayimmediatelyfollowingthepublicannouncementofsuchissuance,iftheissuanceofsuchCommonStockEquivalentispubliclyannouncedor (B)theTradingDayimmediatelyfollowingtheissuanceoftheapplicableCommonStockEquivalentiftheissuanceofsuchCommonStockEquivalentisnotpubliclyannounced,(iv)azerocostofborrowand(v)a360dayannualizationfactor.

“OriginalIssueDate”meansthedateofthefirstissuanceoftheNotes,regardlessofanytransfersofanyNoteandregardlessofthenumberofinstrumentswhichmaybeissuedtoevidencesuchNotes.

“PaymentDate”shallhavethemeaningsetforthinSection2(b).

“PermittedIndebtedness”means(a)IndebtednessoutstandingasoftheOriginalIssueDate,

(b)theindebtednessevidencedbytheNotes,and(c)capitalleaseobligationsandpurchasemoneyindebtednessincurredinconnectionwiththeacquisitionofmachineryandequipment.

“PurchaseAgreement”meanstheSecuritiesPurchaseAgreement,datedasofJune27,2017amongtheCompanyandtheoriginalHolders, as amended, modifiedorsupplementedfromtimetotimeinaccordancewithitsterms.

“SecuritiesAct”meanstheSecuritiesActof1933,asamended,andtherulesandregulationspromulgated thereunder.

“ShareDeliveryDate”shallhavethemeaningsetforthinSection4(c)(ii).“SuccessorEntity”shallhavethemeaningsetforthinSection5(e).

“TradingDay”meansadayonwhichtheprincipalTradingMarketisopenfortrading.

“TradingMarket”meansanyofthefollowingmarketsorexchangesonwhichtheCommonStockislistedorquotedfortradingonthedateinquestion:theNYSEMKT,theNasdaqCapitalMarket,theNasdaqGlobalMarket,theNasdaqGlobalSelectMarket, theNewYorkStockExchange, oranymarketoftheOTCMarkets,Inc.(oranysuccessorstoanyoftheforegoing).

“VWAP”means,foranydate,thepricedeterminedbythefirstofthefollowingclausesthatapplies:(a)iftheCommonStockisthenlistedorquotedonaTradingMarket,thedailyvolumeweightedaveragepriceoftheCommonStockforsuchdate(orthenearestprecedingdate)ontheTradingMarketon whichthe Common Stockisthenlistedor quotedasreported byBloomberg L.P. (basedon aTradingDayfrom9:30a.m.(NewYorkCitytime)to4:02p.m.(New YorkCitytime)), (b)iftheCommonStockisnotthenlistedorquotedfortradingontheOTCQBorOTCQXandifpricesfortheCommonStockarethenreportedbytheOTCPinkmarketplacepublishedbyOTCMarkets,Inc.(orasimilarorganizationoragencysucceedingtoitsfunctionsofreportingprices),themostrecentbidpricepershareoftheCommonStocksoreported,or(c)inallothercases,thefairmarketvalueofashareofCommonStockasdeterminedbyanindependentappraiserselectedingoodfaithbytheHoldersofamajorityininterestoftheNotesthenoutstandingandreasonablyacceptabletotheCompany,thefeesandexpensesofwhichshallbepaidbytheCompany.

Section2. Interest;Payments.

(a)Interest.InterestshallaccruetotheHolderontheaggregateunconvertedandthenoutstandingprincipalamountofthisNoteattherateofeightpercent(8%)perannum,calculatedonthebasisofa365-dayyearandshallaccruedailycommencingontheOriginalIssueDateuntilpaymentinfulloftheoutstandingprincipal(orconversiontotheextentapplicable),togetherwithallaccruedandunpaidinterest,liquidateddamagesandotheramountswhichmaybecomeduehereunder,hasbeenmade.FollowinganEventofDefault,untilsuchEventofDefaulthasbeencured,interestshallaccrueatthelesserof(i)therateof24%perannum,or(ii)themaximumamountpermittedbylaw(thelesserofclause

(i)or(ii),the“DefaultInterestRate”).IntheeventthatsuchEventofDefaultissubsequentlycured,theadjustmentreferredtointheprecedingsentenceshallceasetobeeffectiveasofthecalendardayimmediatelyfollowingthedateofsuchcure;providedthattheinterestascalculatedandunpaidattheDefaultInterestRateduringthecontinuanceofsuchEventofDefaultshallcontinuetoapplytotheextentrelatingtothedaysaftertheoccurrenceofsuchEventofDefaultthroughandincludingthedateofsuchcureofsuchEventofDefault.

(b)Payments.Interestpaymentsare dueandpayableonthe MaturityDate,exceptasotherwiseset forthin thisNote. IfanyPaymentDate isnotaBusinessDay,then theapplicablepaymentshallbedueonthenextsucceedingBusinessDay.EachMonthlyPaymentshallbeequaltoallaccruedbutunpaidinterest.TheCompanyshallpayinteresttotheHolderontheaggregateunconvertedandthenoutstandingprincipalamountofthisNoteontheMaturityDate(the“PaymentDate”)exceptasotherwiseset forthin thisNote. IfanyPaymentDate isnotaBusinessDay,then theapplicablepaymentshallbedueonthenextsucceedingBusinessDay.EachMonthlyPaymentshallbeequaltoallaccruedbutunpaidinterest.

(c) PaymentinCash.AllpaymentsshallbemadeincashonanyPaymentDate.

(d)PrepaymentandRedemption.DuringthefirstsixmonthsthisNoteisineffect,theCompanymayredeemthisNotebypayingtotheHolderanamountasfollows:(i)iftheredemptionispriortothe30thdaythisNoteisineffect(includingthe30thday),thenforanamountequalto110%oftheunpaidprincipalamountofthisNotealongwithanyinterestthathasaccruedduringthatperiod;(ii)iftheredemptionisonthe31stdaythisNoteisineffect,uptoandincludingthe60thdaythisNoteisineffect,thenforanamountequalto115%oftheunpaidprincipalamountofthisNotealongwithanyaccruedinterest;(iii)iftheredemptionisonthe61stdaythisNoteisineffect,uptoandincludingthe

120thdaythisNoteisin effect,thenforanamountequal to135%oftheunpaidprincipalamountofthisNotealongwithanyaccruedinterest;(iv)iftheredemptionisonthe121stdaythisNoteisineffect,uptoandincludingthe180thdaythisNoteisineffect,thenforanamountequalto150%oftheunpaidprincipalamountofthisNotealongwithanyaccruedinterest.ThisNotemaynotberedeemedafterthe180thdaythisNoteisineffect.Theredemptionmustbeclosedandpaidforwithin3businessdaysoftheCompanysendingtheredemptiondemandortheredemptionwillbeinvalidandtheCompanymaynotredeemthisNote.IntheeventtheHolderhasdeliveredaNoticeofConversiontotheCompanypriortothereceiptofaredemptionnoticefromtheCompany,theNoticeofConversionshallprevail.

Section3. RegistrationofTransfersandExchanges.

(a)DifferentDenominations.ThisNoteisexchangeableforanequalaggregateprincipalamountofNotesofdifferentauthorizeddenominations(ofnolessthan$1,000inprincipalamount),asrequestedbytheHoldersurrenderingthesame.Noservicechargewillbepayableforsuchregistrationoftransferorexchange.

(b)InvestorRepresentations.ThisNotehasbeenissuedsubjecttocertaininvestmentrepresentationsoftheoriginalHoldersetforthinthePurchaseAgreementandmaybetransferredorexchangedonlyincompliancewiththePurchaseAgreementandapplicablefederalandstatesecuritieslawsandregulations.

(c)RelianceonNoteRegister.PriortoduepresentmentfortransfertotheCompanyofthisNote,theCompanyandanyagentoftheCompany maytreatthe Person inwhosenamethisNote isdulyregisteredontheNoteRegisterastheownerhereofforthepurposeofreceivingpaymentashereinprovidedandforallotherpurposes,whetherornotthisNoteisoverdue,andneithertheCompanynor anysuchagentshallbeaffectedbynoticetothecontrary.

Section4. Conversion.

(a) VoluntaryConversion.AftertheOriginalIssueDateuntilthisNoteis no longeroutstanding,andprovidedthatthattheprovisionsofRule144undertheSecuritiesActsopermit,thisNoteshallbeconvertible,inwholeorinpart,atanytime,andfromtimetotime, intosharesofCommonStockattheoptionoftheHolder.TheCompanyacknowledgesthatthedateofthisNotefortrackingpurposesisJanuary7,2017andtheCompanywillnottakeanypositiontothecontrary.TheHoldershalleffectconversionsbydeliveringtotheCompanyaNoticeofConversion,theformofwhichisattachedheretoasAnnexA(each,a“NoticeofConversion”),specifyingthereintheprincipalamountofthisNotetobeconvertedandthedateonwhichsuchconversionshallbeeffected(suchdate,the“ConversionDate”).IfnoConversionDateisspecifiedinaNoticeofConversion,theConversionDateshallbethedatethatsuchNoticeofConversionisdeemeddeliveredhereunder.Noink-originalNoticeofConversionshallberequired,norshallanymedallionguarantee(orothertypeofguaranteeornotarization)ofanyNoticeofConversionformberequired.Toeffectconversionshereunder,theHoldershallnotberequiredtophysicallysurrenderthisNotetotheCompanyunlesstheentireprincipalamountofthisNote,plusallaccruedandunpaidinterestthereon,hasbeensoconverted.ConversionshereundershallhavetheeffectofloweringtheoutstandingprincipalamountofthisNoteinanamountequaltotheapplicableconversion.TheHolderandtheCompanyshallmaintainrecordsshowingtheprincipalamount(s)convertedin eachconversion, thedateof eachconversion,and theConversion Price ineffectatthe timeofeachconversion.TheCompanymaydeliveranobjectiontoanyNoticeofConversionwithinoneBusinessDayofdeliveryofsuchNoticeofConversion.Intheeventofanydisputeordiscrepancy,therecordsoftheHoldershallbecontrollinganddeterminativeintheabsenceofmanifesterror.TheHolder, andanyassignee byacceptance of thisNote,acknowledgeandagree that, byreasonoftheprovisionsofthisparagraph,followingconversionofaportionofthisNote,theunpaidandunconvertedprincipalamountofthisNotemaybelessthantheamountstatedonthefacehereof.

(b)ConversionPrice.The“ConversionPrice”ineffectonanyConversionDatemeans,asofanyConversionDateorotherdateofdetermination,shallbe65%ofthelowesttradingpricefortheCompany’sCommonStockduringthetenTradingDaysimmediatelyprecedingthedeliverybytheHolderofaNoticeofConversion,providedhoweverandnotwithstandinganythingtothecontraryherein,duringanEventofDefaulttheConversionPriceinineffectonanyConversionDatemeans,asofanyConversionDateorotherdateofdetermination,shallbe55%ofthelowesttradingpricefortheCompany’sCommonStockduringthetenTradingDaysimmediatelyprecedingthedeliverybytheHolderofaNoticeofConversion.TheapplicablepricesshallbeasreportedbyBloombergL.P.Notwithstandingtheforegoing,innoeventshalltheConversionPricebelessthentheparvalueoftheCommonStock.

(c) MechanicsofConversionorPrepayment.

(i)ConversionSharesIssuableUponConversionofPrincipal Amount.ThenumberofConversionSharesissuableuponaconversionhereundershallbe determined bythequotientobtainedbydividing(x)theoutstandingprincipalamountofthisNotetobeconvertedby(y)theConversionPriceineffectatthetimeofsuchconversion.

(ii)DeliveryofCertificateUponConversion.Notlaterthanthree(3)TradingDaysaftereachConversionDate(the“ShareDeliveryDate”),theCompanyshalldeliver,orcausetobedelivered,totheHolderanycertificateorcertificatesrequiredtobedeliveredbytheCompany underthisSection4(c).

(iii)FailuretoDeliverCertificates.If,inthecaseofanyNoticeofConversion,suchcertificateorcertificatesarenotdeliveredtoorasdirectedbytheapplicableHolderbytheShareDeliveryDate,theHoldershallbeentitledtoelectbywrittennoticetotheCompanyatanytimeonorbeforeitsreceiptofsuchcertificateorcertificates,torescindsuchConversion,inwhicheventtheCompanyshallpromptlyreturn tothe Holderany originalNotedelivered totheCompany andtheHolder shallpromptlyreturntotheCompanytheCommonStockcertificatesissuedtosuchHolderpursuanttotherescindedConversionNotice.

(iv)PartialLiquidatedDamages.IftheCompanyfailsforanyreasontodelivertotheHoldersuchcertificateorcertificatespursuanttoSection4(c)(ii)bytheShareDeliveryDate,theCompany shall paytotheHolder,incash, asliquidateddamagesandnot asapenalty,foreach$1,000 ofprincipalamountbeingconverted,$10perTradingDay(increasingto$20perTradingDayonthetenthTradingDayaftersuchConversionDate)foreachTradingDayaftersuchShareDeliveryDateuntilsuchcertificatesaredeliveredorHolderrescindssuchconversion.NothinghereinshalllimitaHolder’srighttopursueactualdamagesordeclareanEventofDefault pursuant toSection7hereoffortheCompany’sfailuretodeliverConversionSharesor,ifapplicable,cash,withintheperiodspecifiedhereinandtheHoldershallhavetherighttopursueallremediesavailabletoithereunder,atLaworinequityincluding,withoutlimitation,adecreeofspecificperformanceand/orinjunctiverelief.TheexerciseofanysuchrightsshallnotprohibittheHolderfromseekingtoenforcedamagespursuanttoanyotherSectionhereoforunderapplicableLaw.

(v)CompensationforBuy-InonFailuretoTimelyDeliverCertificatesUponConversion.InadditiontoanyotherrightsavailabletotheHolder,iftheCompanyfailsforanyreasontodelivertotheHoldersuchcertificateorcertificatesbytheShareDeliveryDatepursuanttoSection4(c)(ii),andifaftersuchShareDeliveryDatetheHolderisrequiredbyitsbrokeragefirmtopurchase(inanopenmarkettransactionorotherwise),ortheHolder’sbrokeragefirmotherwisepurchases,sharesofCommonStocktodeliverinsatisfactionofasalebytheHolderoftheConversionShareswhichtheHolderwasentitledtoreceiveupontheconversionrelatingtosuchShareDeliveryDate(a“Buy-In”),thentheCompanyshall(A)payincashtotheHolder(inadditiontoanyotherremediesavailabletoor

electedbytheHolder)theamount,ifany,bywhich(x)theHolder’stotalpurchaseprice(includinganybrokeragecommissions)fortheCommonStocksopurchasedexceeds(y)theproductof(1)theaggregatenumberofsharesofCommonStockthattheHolderwasentitledtoreceivefromtheconversionatissuemultipliedby(2)theactualsalepriceatwhichthesellordergivingrisetosuchpurchaseobligationwasexecuted(includinganybrokeragecommissions)and(B)attheoptionoftheHolder,eitherreissue(ifsurrendered)thisNoteinaprincipalamountequaltotheprincipalamountoftheattemptedconversion(inwhichcasesuchconversionshallbedeemedrescinded)ordelivertotheHolderthenumberof sharesofCommonStockthatwouldhavebeenissuediftheCompanyhadtimelycompliedwithitsdeliveryrequirementsunderSection4(c)(ii).Forexample,iftheHolderpurchasesCommonStockhavingatotalpurchasepriceof$11,000tocoveraBuy-InwithrespecttoanattemptedconversionofthisNotewithrespecttowhichtheactualsalepriceoftheConversionShares(includinganybrokeragecommissions)givingrisetosuchpurchaseobligationwasatotalof$10,000underclause(A)oftheimmediatelyprecedingsentence,theCompanyshallberequiredtopaytheHolder$1,000.TheHoldershallprovidetheCompanywrittennoticeindicatingtheamountspayabletotheHolderinrespectoftheBuy-Inandevidenceoftheamountofsuchloss.NothinghereinshalllimitaHolder’srighttopursueanyotherremediesavailabletoithereunder,atLaworinequityincluding,withoutlimitation,adecreeofspecificperformanceand/orinjunctivereliefwithrespecttotheCompany’sfailuretotimelydelivercertificatesrepresentingsharesofCommonStockuponconversionofthisNoteasrequiredpursuanttothetermshereof.

(vi)ReservationofSharesIssuableUponConversion.TheCompanycovenantsthatitwillreserveandkeepavailableoutofitsauthorizedandunissuedsharesofCommonStockforthepurposeofissuancesuponconversionofthisNoteandtheissuedwiththisNote,freefrompreemptiverightsoranyotheractualcontingentpurchaserightsofPersonsotherthantheHolder(andtheotherholdersoftheNotes),notlessthan300%oftheRequiredMinimum;andifatanytimethenumberofauthorizedbutunissuedsharesofCommonStockshallbeinsufficienttoeffecttheconversionofthisnoteorshallbelessthantheRequiredMinimum,theCompanyshalltakesuchcorporateactionasmay,intheopinionofitscounsel,benecessarytoincreaseitsauthorizedbutunissuedsharesofCommonStocktosuchnumberofsharesasshallbesufficientforsuchpurpose.TheCompanycovenantsthatallsharesofCommonStockthat shallbe issuableuponconversionof thisNoteshall,uponissue, bedulyauthorized,validlyissued,fullypaidandnonassessable.

(vii)FractionalShares.NofractionalsharesorscriprepresentingfractionalsharesshallbeissuedupontheconversionofthisNote.AstoanyfractionofasharewhichtheHolderwouldotherwisebeentitledtopurchaseuponsuchconversion,theCompanyshallatitselection,eitherpayacashadjustmentinrespectofsuchfinalfractioninanamountequaltosuchfractionmultipliedbytheConversionPriceorrounduptothenextwholeshare.

(viii)TransferTaxesandExpenses.TheissuanceofcertificatesforsharesoftheCommonStockonconversionofthisNoteshallbemadewithoutchargetotheHolderhereofforanydocumentarystamporsimilartaxesthatmaybepayableinrespectoftheissueordeliveryofsuchcertificates,providedthat,theCompanyshallnotberequiredtopayanytaxthatmaybepayableinrespectof anytransferinvolvedin theissuanceand deliveryofanysuchcertificateuponconversioninanameotherthanthatoftheHolderofthisNotesoconvertedandtheCompanyshallnotberequiredtoissueordeliversuchcertificatesunlessoruntilthePersonorPersonsrequestingtheissuancethereofshallhavepaidtotheCompanytheamountofsuchtaxorshallhaveestablishedtothesatisfactionoftheCompanythatsuchtax hasbeen paid.The CompanyshallpayallTransfer Agentfeesrequiredforsame-dayprocessingofanyNoticeofConversionandallfeestotheDepositoryTrustCompany(oranotherestablishedclearingcorporationperformingsimilarfunctions)requiredforsame-dayelectronicdeliveryoftheConversionShares.

(d)Holder’sConversionLimitations.TheCompanyshallnoteffectanyconversionofthisNote,andaHoldershallnothavetherighttoconvertanyportionofthisNote,totheextentthataftergivingeffecttotheconversionsetforthontheapplicableNoticeofConversion,theHolder(togetherwiththeHolder’sAffiliates,andanyPersonsactingasagrouptogetherwiththeHolderoranyoftheHolder’sAffiliates)wouldbeneficiallyowninexcessoftheBeneficialOwnershipLimitation(asdefinedbelow).Forpurposesoftheforegoingsentence,thenumberofsharesofCommonStockbeneficiallyownedbytheHolderanditsAffiliatesshallincludethenumberofsharesofCommonStockissuableuponconversionofthisNotewithrespecttowhichsuchdeterminationisbeingmade,butshallexcludethenumberofsharesofCommonStockwhichareissuableupon(i)conversionoftheremaining,unconvertedprincipalamountofthisNotebeneficiallyownedbytheHolderoranyofitsAffiliatesand(ii)exerciseorconversionoftheunexercisedorunconverted portionofanyothersecuritiesoftheCompanysubjecttoalimitationonconversionorexerciseanalogoustothelimitationcontainedherein(including,withoutlimitation,anyotherNotesortheWarrants)beneficiallyownedbytheHolderoranyofitsAffiliates.Exceptassetforthintheprecedingsentence,forpurposesofthisSection4(d),beneficialownershipshallbecalculatedinaccordancewithSection13(d)oftheExchangeActandtherulesandregulationspromulgatedthereunder.TotheextentthatthelimitationcontainedinthisSection4(d)applies,thedeterminationofwhetherthisNoteisconvertible(inrelationtoothersecuritiesownedbytheHoldertogetherwithanyAffiliates)andofwhichprincipalamountofthisNoteisconvertibleshallbeinthesolediscretionoftheHolder,andthesubmissionofaNoticeofConversionshallbedeemedtobetheHolder’sdeterminationofwhetherthis Notemaybeconverted(inrelationtoothersecuritiesownedbytheHoldertogetherwith anyAffiliates)and whichprincipal amountof thisNote is convertible,ineachcasesubjecttotheBeneficialOwnershipLimitation.Toensurecompliancewiththisrestriction,theHolderwillbedeemedtorepresenttotheCompanyeachtimeitdeliversaNoticeofConversionthatsuchNoticeofConversionhasnotviolatedtherestrictionssetforthinthisparagraphandtheCompanyshallhavenoobligationto verify or confirmtheaccuracy of such determination.In addition,a determination asto anygroupstatusascontemplatedaboveshallbedeterminedinaccordancewithSection13(d)oftheExchangeActandtherulesandregulationspromulgatedthereunder.ForpurposesofthisSection4(d),indeterminingthenumberofoutstandingsharesofCommonStock,theHoldermayrelyonthenumberofoutstandingsharesofCommonStockasstatedinthemostrecentofthefollowing:(i)theCompany’smostrecentperiodicorannualreportfiledwiththeSEC,asthecasemaybe,(ii)amorerecentpublicannouncementbytheCompany,or(iii)amorerecentwrittennoticebytheCompanyortheCompany’stransferagentsetting forth thenumberofshares of Common Stock outstanding.Upon thewritten or oralrequestofaHolder,theCompanyshallwithintwoTradingDaysconfirmorallyandinwritingtotheHolderthenumberof shares ofCommon Stock thenoutstanding.In anycase,the number ofoutstandingsharesofCommonStockshallbedeterminedaftergivingeffecttotheconversionorexerciseofsecuritiesoftheCompany,includingthisNote,bytheHolderoritsAffiliatessincethedateasofwhichsuchnumberofoutstandingsharesofCommonStockwasreported.The“BeneficialOwnershipLimitation”shallbe4.99%ofthenumberofsharesoftheCommonStockoutstandingimmediatelyaftergivingeffecttotheissuanceofsharesofCommonStockissuableuponconversionofthisNoteheldbytheHolder.TheHolder,upon notlessthan61 days’ priornotice tothe Company,may increasethe BeneficialOwnershipLimitationprovisionsofthisSection4(d)solelywithrespecttotheHolder’sNote,providedthattheBeneficialOwnershipLimitationinnoeventexceeds9.99%ofthenumberofsharesofCommonStockoutstanding immediatelyafter givingeffect totheissuanceofsharesofCommonStockuponconversionofthisNoteheldbytheHolderandtheprovisionsofthisSection4(d)shallcontinuetoapply.Anysuchincreaseordecreasewillnotbeeffectiveuntilthe61stdayaftersuchnoticeisdeliveredtotheCompany.TheHoldermayalsodecreasetheBeneficialOwnershipLimitationprovisionsofthisSection4(d)solelywithrespecttotheHolder’sNoteatanytime,whichdecreaseshallbeeffectivelyimmediatelyupondeliveryofnoticetotheCompany.TheBeneficialOwnershipLimitationprovisionsofthisparagraphshallbeconstruedandimplementedinamannerotherwisethaninstrictconformitywiththetermsofthisSection4(d)tocorrectthisparagraph(oranyportionhereof)whichmaybedefectiveorinconsistentwiththeintendedBeneficialOwnershipLimitationcontainedhereinortomakechangesorsupplements

necessaryordesirabletoproperlygiveeffecttosuchlimitation.ThelimitationscontainedinthisparagraphshallapplytoasuccessorholderofthisNote.

Section5. Certain Adjustments.

(a)StockDividendsandStockSplits.IftheCompany,atanytimewhilethisNoteisoutstanding:(i)paysastockdividendorotherwisemakesadistributionordistributionspayableinsharesofCommonStockonsharesofCommonStockoranyCommonStockEquivalents(which,foravoidanceofdoubt,shallnotincludeanysharesofCommonStockissuedbytheCompanyuponconversionof,orpaymentofintereston,theNotesorpursuanttoanyoftheotherTransaction Documents),(ii)subdividesoutstanding shares ofCommon Stock intoalargernumber ofshares, (iii) combines (includingby wayofareversestocksplit) outstanding sharesofCommon Stockintoasmaller number ofsharesor(iv)issues,intheeventofareclassificationofsharesoftheCommonStock,anysharesofcapitalstockoftheCompany,thentheConversionPriceshallbemultipliedbyafractionofwhichthenumeratorshallbethenumberofsharesofCommonStock(excludinganytreasurysharesoftheCompany)outstandingimmediatelybefore such event, andofwhich the denominator shallbe thenumberof sharesofCommonStockoutstandingimmediatelyaftersuchevent.AnyadjustmentmadepursuanttothisSectionshallbecomeeffectiveimmediatelyaftertherecorddateforthedeterminationofshareholdersentitledtoreceivesuchdividendordistributionandshallbecomeeffectiveimmediatelyaftertheeffectivedateinthecaseofasubdivision,combinationorre-classification.

(b)Subsequent Equity Sales. If, at anytime, for solongasthe Noteoranyamountsaccruedandpayablethereunderremainoutstanding,theCompanyoranySubsidiary,asapplicable,sellsorgrantsanyoptiontopurchaseorsellsorgrantsanyrighttoreprice,orotherwisedisposesoforissues,anyCommonStockorCommonStockEquivalentsentitlinganyPersontoacquiresharesofCommonStockataneffectivepricepersharethatislowerthantheConversionPricethenineffect(suchlowerprice,the“BaseConversionPrice”andeachsuchissuancea“DilutiveIssuance”),thentheConversionPriceshallbeimmediatelyreducedtoequaltheBaseConversionPrice.

Iftheholderof Common Stock orCommonStockEquivalentsoutstandingontheOriginalIssueDateorissuedthereaftershallatanytime,whetherbyoperationofpurchasepriceadjustments,resetprovisions,floatingconversion,exerciseorexchangepricesorotherwise,orduetowarrants,optionsorrightspersharewhichareissuedinconnectionwithsuchissuance,receiveorbeentitledtoreceivesharesofCommonStockataneffectivepricepersharethatislowerthantheConversionPricethenineffect,such issuanceshall be deemedto haveoccurred forless than the ConversionPriceonsuchdate andsuchissuanceshallbedeemedtobeaDilutiveIssuance.

IfafteranyDilutiveIssuanceofCommonStockEquivalents,thepricepershareforwhichsharesofCommon Stock maybe issuablethereafterisamendedoradjusted,andsuchpriceassoamendedshallbelessthantheConversionPriceineffectatthetimeofsuchamendmentoradjustment,thentheConversionPriceshallbeadjusteduponeachsuchissuanceoramendmentasprovidedinthisSection5(b).

IncaseanyCommonStockEquivalentisissuedinconnectionwiththeissueorsaleofothersecuritiesoftheCompany,togethercomprisingoneintegratedtransaction,(x)theCommonStockEquivalentswillbedeemedtohavebeenissuedfortheOptionValueofsuchCommonStockEquivalentsand(y)theothersecuritiesissuedorsoldinsuchintegratedtransactionshallbedeemedtohavebeenissuedorsoldforthedifferenceof(I)theaggregateconsiderationreceivedbytheCompanylessanyconsiderationpaidorpayablebytheCompanypursuanttothetermsofsuchothersecuritiesoftheCompany,less (II) theOption Value.Ifany sharesofCommonStock or Common Stock Equivalents areissued or sold or deemedtohavebeenissued or soldforcash,theamount of suchconsideration receivedbytheCompanywillbedeemedtobethenetamountreceivedbytheCompanytherefor.Ifanysharesof

CommonStockorCommonStockEquivalentsare issued orsold fora considerationother thancash,theamountofsuchconsiderationreceivedbytheCompanywillbethefairvalueofsuchconsideration,exceptwheresuchconsiderationconsistsofpubliclytradedsecurities,inwhichcasetheamountofconsiderationreceivedby theCompany willbethe VWAPof suchpublictraded securitieson the date ofreceipt.IfanysharesofCommonStockorCommonStockEquivalentsareissuedtotheownersofthenon-survivingentityinconnectionwithanymergerinwhichtheCompanyisthesurvivingentity,theamount ofconsiderationtherefor will bedeemedtobethefairvalueof suchportionof thenetassetsandbusinessofthenon-survivingentityasisattributabletosuchsharesofCommonStockorCommonStockEquivalents,asthecasemaybe.

IftheCompanyentersintoaVariableRateTransactiondespitetheprohibitionsetforthinthePurchaseAgreement,theCompanyshallbedeemedtohaveissuedCommonStockorCommonStockEquivalentsatthelowestpossibleconversionpriceatwhichsuchsecuritiesmaybeconvertedorexercisedunderthetermsofsuchVariableRateTransaction.

TheCompanyshallnotifytheHolderinwriting,nolaterthantheTradingDayfollowingtheissuanceofanyCommonStockorCommonStockEquivalentssubjecttothisSection5(b),indicatingthereintheapplicableissuanceprice,orapplicableresetprice,exchangeprice,conversionpriceandotherpricingterms(suchnotice,the“DilutiveIssuanceNotice”).Forpurposesofclarification,whetherornottheCompanyprovidesaDilutiveIssuanceNoticepursuanttothisSection5(b),upontheoccurrenceofanyDilutiveIssuance,theHolderisentitledtoreceiveanumberofConversionSharesbasedupontheBaseConversionPriceonorafterthedateofsuchDilutiveIssuance,regardlessofwhethertheHolderaccuratelyreferstotheBaseConversionPriceintheNoticeofConversion.

TheprovisionsofthisSection5(b)shallapplyeachtimeaDilutiveIssuanceoccursaftertheOriginalIssueDateforsolongastheNoteoranyamountsaccruedandpayablethereunderremainoutstanding,butanyadjustmentoftheConversionPricepursuanttothisSection5(b)shallbedownwardonly.

NotwithstandinganythinginthisSection5(b),noadjustmentwillbemadeunderthisSection5(b)inrespectofanExemptIssuance.

(c)SubsequentRightsOfferings.InadditiontoanyadjustmentspursuanttoSection5(a)above,ifatanytimetheCompanygrants,issuesorsellsanyCommonStock,CommonStockEquivalentsorrightstopurchasestock,warrants,securitiesorotherpropertyproratatotherecordholdersofanyclassofsharesofCommonStock(the“PurchaseRights”),thentheHolderwillbeentitledtoacquire,uponthetermsapplicabletosuchPurchaseRights,theaggregatePurchaseRightswhichtheHoldercouldhaveacquirediftheHolderhadheldthenumberofsharesofCommonStockacquirableuponcompleteconversionofthisNote(withoutregardtoanylimitationsonconversionhereof,includingwithoutlimitation,theBeneficialOwnershipLimitation)immediatelybeforethedateonwhicharecordistakenforthegrant,issuanceorsaleofsuchPurchaseRights,or,ifnosuchrecordistaken,thedateasofwhichtherecordholdersofsharesofCommonStockaretobedeterminedforthegrant,issueorsaleofsuchPurchaseRights(provided,however,totheextentthattheHolder’srighttoparticipateinanysuchPurchaseRightwouldresultintheHolderexceedingtheBeneficialOwnershipLimitation,thentheHoldershallnotbeentitledtoparticipateinsuchPurchaseRighttosuchextent(orinthebeneficialownershipofanysharesofCommonStockasaresultofsuchDistributiontosuchextent)).

(d)ProRataDistributions.DuringsuchtimeasthisNoteisoutstanding,iftheCompanyshalldeclareormakeanydividendorotherdistributionofitsassetsorrightsorwarrantstoacquireitsassets,orsubscribefororpurchaseanysecurityotherthanCommonStock,toholdersofsharesofCommonStock,bywayofreturnofcapitalorotherwise(including,withoutlimitation,anydistributionofcash,stockorothersecurities,propertyoroptionsbywayofadividend,spinoff,reclassification,

corporaterearrangement,schemeofarrangementorothersimilartransaction)(a“Distribution”),atanytimeaftertheissuanceofthisNote,then,ineachsuchcase,theHoldershallbeentitledtoparticipateinsuchDistributiontothesameextentthattheHolderwouldhaveparticipatedthereiniftheHolderhadheldthenumberofsharesofCommonStockacquirableuponcompleteconversionofthisNote(withoutregardtoanylimitationsonexercisehereof,includingwithoutlimitation,theBeneficialOwnershipLimitation)immediatelybeforethedateofwhicharecordistakenforsuchDistribution,or,ifnosuchrecordistaken, thedateasofwhichtherecordholdersofsharesofCommonStock aretobedeterminedfortheparticipationinsuchDistribution(provided,however,totheextentthattheHolder'srighttoparticipateinanysuchDistributionwouldresultintheHolderexceedingtheBeneficialOwnershipLimitationwithrespecttotheCompanyoranyotherpublicly-tradedcorporationsubjecttoSection13(d)oftheExchangeAct,thentheHoldershallnotbeentitledtoparticipateinsuchDistributiontosuchextent(orinthebeneficialownershipofanysharesofCommonStockasaresultofsuchDistributiontosuchextent)).)andtheportionofsuchDistributionshallbeheldinabeyanceforthebenefitoftheHolderuntilsuchtime,ifever,as itsrighttheretowouldnotresultintheHolderexceedingtheBeneficialOwnershipLimitationwithrespecttotheCompanyoranyotherpublicly-tradedcorporationsubjecttoSection13(d)oftheExchangeAct).).

(e)FundamentalTransaction.If,atanytimewhilethisNoteisoutstanding,(i)theCompany,directlyorindirectly,inoneormorerelatedtransactionseffectsanymergerorconsolidationoftheCompanywithorintoanotherPerson,(ii)theCompany,directlyorindirectly,effectsanysale,lease,license,assignment,transfer,conveyanceorotherdispositionofallorsubstantiallyallofitsassetsinoneoraseriesofrelatedtransactions,(iii)any,directorindirect,purchaseoffer,tenderofferorexchangeoffer(whetherbytheCompanyoranotherPerson)iscompletedpursuanttowhichholdersofCommonStockarepermittedtosell,tenderorexchangetheirsharesforothersecurities,cashorpropertyandhasbeenacceptedbytheholdersof50%ormoreoftheoutstandingCommonStock,(iv)theCompany,directlyorindirectly,inoneormorerelatedtransactionseffectsanyreclassification,reorganizationorrecapitalizationoftheCommonStockoranycompulsoryshareexchangepursuanttowhichtheCommonStockiseffectivelyconvertedintoorexchangedforothersecurities,cashorproperty,(v)theCompany,directlyorindirectly,inoneormorerelatedtransactionsconsummatesastockorsharepurchaseagreementorotherbusinesscombination(including,withoutlimitation,areorganization,recapitalization,spin-offorschemeofarrangement)withanotherPersonwherebysuchotherPersonacquiresmorethan50%oftheoutstandingsharesofCommonStock(notincludinganysharesofCommonStockheldbytheotherPersonorotherPersonsmakingorpartyto,orassociatedoraffiliatedwiththeotherPersonsmakingorpartyto,suchstockorsharepurchaseagreementorotherbusinesscombination)(eacha“FundamentalTransaction”),then,uponanysubsequentconversionofthisNote,theHoldershallhavetherighttoreceive,foreachConversionSharethatwouldhavebeenissuableuponsuchconversionimmediatelypriortotheoccurrenceofsuchFundamentalTransaction(withoutregardtoanylimitationontheconversionofthisNote),thenumberofsharesofCommonStockofthesuccessororacquiringcorporationoroftheCompany,ifitisthesurvivingcorporation,andanyadditionalconsideration(the“AlternateConsideration”)receivableasaresultofsuchFundamentalTransactionbyaholderofthenumberofsharesofCommonStockforwhichthisNoteisconvertibleimmediatelypriortosuchFundamental Transaction(withoutregardto anylimitationonthe conversionof thisNote).Forpurposesofanysuchconversion,thedeterminationoftheConversionPriceshallbeappropriatelyadjustedtoapplytosuchAlternateConsiderationbasedontheamountofAlternateConsiderationissuableinrespectofone

(1)shareofCommonStockinsuchFundamentalTransaction,andtheCompanyshallapportiontheConversionPrice among theAlternate Considerationin areasonablemanner reflecting therelativevalueofanydifferentcomponentsoftheAlternateConsideration.IfholdersofCommonStockaregivenanychoiceastothesecurities, cash orpropertytobe receivedina Fundamental Transaction,thenthe HoldershallbegiventhesamechoiceastotheAlternateConsiderationitreceivesuponanyconversionofthisNotefollowingsuchFundamentalTransaction. Notwithstandinganythingtothecontrary, intheeventofaFundamentalTransactionthatis(1)anallcashtransaction,(2)a“Rule13e-3transaction”asdefinedin

Rule13e-3undertheExchangeAct,or(3)aFundamentalTransactioninvolvingapersonorentitynottradedonaTradingMarket,theCompanyoranySuccessorEntity(asdefinedbelow)shall,attheHolder’soption,exercisableconcurrentlywiththeconsummationoftheFundamentalTransaction,purchasethis Notefrom the Holder bypaying to theHolder theproductof (a) thenumberof ConversionSharesissuableuponfullconversionofthisNote(withoutregardtoanylimitationonconversionofthisNote)and(b)thepositivedifferencebetweenthecashpersharepaidinsuchFundamentalTransactionminusthethenineffectConversionPrice.TheCompanyshallcauseanysuccessorentityinaFundamentalTransactioninwhichtheCompanyisnotthesurvivor(the“SuccessorEntity”)toassumeinwritingalloftheobligationsoftheCompanyunderthisNoteandtheotherTransactionDocumentsinaccordancewiththeprovisionsofthisSection 5(e)pursuanttowrittenagreementsinformandsubstancereasonablysatisfactorytotheHolderandapprovedbytheHolder(withoutunreasonabledelay)priortosuchFundamentalTransactionandshall, attheoptionoftheholderofthisNote,deliver totheHolder inexchangeforthisNoteasecurityofthe Successor Entityevidencedby a writteninstrumentsubstantiallysimilarinformandsubstancetothisNotewhichisconvertibleforacorrespondingnumberofsharesofcapitalstockofsuchSuccessorEntity(oritsparententity)equivalenttothesharesofCommonStockacquirableandreceivableuponconversionofthisNote(withoutregardtoanylimitationsontheconversionofthisNote)priortosuchFundamentalTransaction,andwithaconversionpricewhichappliestheConversionPricehereundertosuchsharesofcapitalstock(buttakingintoaccounttherelativevalueofthesharesofCommonStockpursuanttosuchFundamentalTransactionandthevalueofsuchsharesofcapitalstock,suchnumberofsharesofcapitalstockandsuchconversionpricebeingforthepurposeofprotectingtheeconomicvalueofthisNoteimmediatelypriortotheconsummationofsuchFundamentalTransaction),andwhichisreasonablysatisfactoryinformandsubstancetotheHolder.UpontheoccurrenceofanysuchFundamentalTransaction,theSuccessorEntityshallsucceedto,andbesubstitutedfor(sothatfromandafterthedateofsuchFundamentalTransaction,theprovisionsofthisNoteand theotherTransactionDocumentsreferringtothe“Company”shallreferinsteadtotheSuccessorEntity),andmayexerciseeveryrightandpoweroftheCompanyandshallassumealloftheobligationsoftheCompanyunderthisNoteandtheotherTransactionDocumentswiththesameeffectasifsuchSuccessorEntityhadbeennamedastheCompanyherein.NotwithstandinganythinginthisSection5(e),anExemptIssuanceshallnotbedeemedaFundamentalTransaction.

(f)Calculations.AllcalculationsunderthisSection5shallbemadetothenearestcentorthenearest1/100thofashare,asthecasemaybe.ForpurposesofthisSection5,thenumberofsharesofCommonStockdeemedtobeissuedandoutstandingasofagivendateshallbethesumofthenumberofsharesofCommonStock(excludinganytreasurysharesoftheCompany)issuedandoutstanding.

(g) NoticetotheHolder.

(i)AdjustmenttoConversionPrice.WhenevertheConversionPriceisadjustedpursuanttoanyprovisionofthisSection5,theCompanyshallpromptlydelivertoeachHolderanoticesettingforththeConversionPriceaftersuchadjustmentandsettingforthabriefstatementofthefactsrequiringsuchadjustment.

(ii)NoticetoAllowConversionbyHolder.If(A)theCompanyshalldeclareadividend(oranyotherdistributioninwhateverform)ontheCommonStock,(B)theCompanyshalldeclareaspecialnonrecurringcashdividendonoraredemptionoftheCommonStock,(C)theCompanyshallauthorizethegrantingtoallholdersoftheCommonStockofrightsorwarrantstosubscribefororpurchaseanysharesofcapitalstockofanyclassorof anyrights,(D)theapprovalofanyshareholdersoftheCompanyshallberequiredinconnectionwithanyreclassificationoftheCommonStock,anyconsolidationormergertowhichtheCompanyisaparty,anysaleortransferofallorsubstantiallyalloftheassetsoftheCompany,oranycompulsoryshareexchangewherebytheCommonStockisconvertedintoothersecurities,cashorpropertyor(E)theCompanyshallauthorizethevoluntaryorinvoluntarydissolution,liquidationorwindingupoftheaffairsoftheCompany,then,ineachcase,theCompany

shallcausetobefiledateachofficeoragencymaintainedforthepurposeofconversionofthisNote,andshallcausetobedeliveredtotheHolderatitslastaddressasitshallappearupontheNoteRegister,atleasttencalendardayspriortotheapplicablerecordoreffectivedatehereinafterspecified,anoticestating(x)thedateonwhicharecordistobetakenforthepurposeofsuchdividend,distribution,redemption,rightsorwarrants,orifarecordisnottobetaken,thedateasofwhichtheholdersoftheCommonStockofrecordtobeentitledtosuchdividend,distributions,redemption,rightsorwarrantsaretobedeterminedor(y)thedateonwhichsuchreclassification,consolidation,merger,sale,transferorshareexchangeisexpectedtobecomeeffectiveorclose,andthedateasofwhichitisexpectedthatholdersoftheCommonStockofrecordshallbeentitledtoexchangetheirsharesoftheCommonStockforsecurities,cashorotherpropertydeliverableuponsuchreclassification,consolidation,merger,sale,transferorshareexchange,providedthatthefailuretodeliversuchnoticeoranydefectthereinorinthedeliverythereofshallnotaffectthevalidityofthecorporateactionrequiredtobespecifiedinsuchnotice.Totheextentthatanynoticeprovidedhereunderconstitutes,orcontains,material,non-publicinformationregardingtheCompanyoranyoftheSubsidiaries(asdeterminedingoodfaithbytheCompany),theCompanyoritssuccessorshallsimultaneouslyfilesuchnoticewiththeSECpursuanttoaCurrentReportonForm8-K.TheHoldershallremainentitledtoconvertthisNoteduringthe20-dayperiodcommencingonthedateofsuchnoticethroughtheeffectivedateoftheeventtriggeringsuchnoticeexceptasmayotherwisebeexpresslysetforthherein.

Section6. Negative Covenants. Aslong asany portionof this Noteremainsoutstanding,unless theholdersofamajorityinprincipalamountofthethenoutstandingNotesshallhaveotherwisegivenpriorwrittenconsent,theCompanyshallnot,andshallnotpermitanyoftheSubsidiariesto,directlyorindirectly:

(a)otherthanPermittedIndebtedness,enterinto,create,incur,assume,guaranteeorsuffertoexistanyIndebtednessforborrowedmoneyofanykind,including,butnotlimitedto,aguarantee,onorwithrespecttoanyofitspropertyorassetsnowownedorhereafteracquiredoranyinterestthereinoranyincomeorprofitstherefrom;

(b)amenditscharterdocuments,including,withoutlimitation,itscertificateofincorporationandbylaws,inanymannerthatmateriallyandadverselyaffectsanyrightsoftheHolder;

(C) enterintoanytransactionwithanyAffiliateoftheCompanywhichwouldberequiredtobedisclosedinanypublicfilingwiththeSECassumingthattheCompanyissubjecttotheSecuritiesActortheExchangeAct,unlesssuchtransactionismadeonanarm’s-lengthbasisandexpresslyapprovedbyamajorityofthedisinteresteddirectorsoftheCompany(eveniflessthanaquorumotherwiserequiredforboardapproval);or

(d) enterintoanyagreementwithrespecttoanyoftheforegoing.Section7. EventsofDefault.

(a)“Event ofDefault” means, whereverused herein, anyofthefollowingevents (whateverthereasonforsucheventandwhethersucheventshallbevoluntaryorinvoluntaryoreffectedbyoperationofLaworpursuanttoanyjudgment,decreeororderofanycourt,oranyorder,ruleorregulationofanyadministrativeorgovernmentalbody):

(i)any default in the payment of (A) the principal amount ofany Note or

(B)interest,latefees,liquidateddamagesandotheramountsowingtoaHolderonanyNote,asandwhenthesameshallbecomedueandpayable(whetheronaConversionDateortheMaturityDateorbyaccelerationorotherwise)whichdefault,solelyinthecaseofaninterestpaymentorotherdefaultunderclause(B)above,isnotcuredwithinthreeTradingDays;

(ii)theCompanyshallfailtoobserveorperformanyothercovenantoragreementcontainedintheNotes(otherthanabreachbytheCompanyofitsobligationstodeliversharesofCommonStocktotheHolderuponconversion,whichbreachisaddressedinclause(x)below)oranyTransactionDocumentwhichfailureisnotcured,ifpossibletocure,withintheearliertooccurof(A)3TradingDays afternoticeofsuchfailuresent bytheHolderorby any otherHolder totheCompanyand

(B)5TradingDaysaftertheCompanyhasbecomeawareofsuchfailure;

(iii)Ifafterforth-five(45)daysfromthedatehereofwhiletheHolderownsanyRegistrableSecurities,theRegistrationStatementisnoteffectiveundertheSecuritieActregisteringtheRegistrableSecurities;

(iv)ifninety(90)days fromthedatehereof,whiletheHolderownsanyRegistrableSecurities,the RegistrationStatementis noteffective undertheSecurities Actregisteringthe RegistrableSecurities;

(v)anyrepresentationorwarrantymadeinthisNote,anyotherTransactionDocument,anywrittenstatementpursuantheretoortheretooranyotherreport,financialstatementorcertificatemadeordeliveredto theHolder oranyother Holderpursuanthereto or thereto shallbeuntrueorincorrectinanymaterialrespectasofthedatewhenmadeordeemedmade;

(vi)theCompanyoranySignificantSubsidiary(assuchtermisdefinedinRule1-02(w)ofRegulationS-X)shallbesubjecttoaBankruptcyEvent;

(vii)the Companyorany Subsidiary shalldefault on anyofits obligations under any,mortgage,creditagreementorotherfacility,indentureagreement,factoringagreementorotherinstrumentunderwhichtheremaybeissued,orbywhichtheremaybesecuredorevidenced, anyindebtednessforborrowedmoney,includingdebenturesorpromissorynotesormoneydueunderanylongtermleasingorfactoringarrangementthat(a)involvesanobligationgreaterthan$5,000,whethersuchindebtednessnowexistsorshallhereafterbecreated,and(b)resultsinsuchindebtednessbecomingorbeingdeclareddueandpayablepriortothedateon whichitwouldotherwisebecomedueandpayableandsuchdefaultisnotcuredwithinthreeTradingDays;

(viii)theCommonStockshallnotbeeligiblefor listingorquotationfortradingonitsTradingMarketforaperiodlongerthan10TradingDays;

(ixi)theCompanyshallhaveconsummatedaChangeofControlTransactionor/Fundamental TransactionwithouttheLead Investorsconsentwithoutpaying in fullall amountsowedundertheNoteatorpriortosuchconsummation;

(x)afinaljudgmentforthepaymentofmoneyaggregatinginexcessof$50,000isrenderedagainsttheCompanyand/oranyofitsSubsidiariesandwhichjudgmentisnot,within45daysafter theentrythereof,bonded, dischargedorstayedpendingappeal,orisnotdischargedwithin60daysaftertheexpirationofsuchstay;provided,however,anyjudgmentthatiscoveredbyinsuranceoranindemnityfromacredit-worthypartywillnotbeincludedincalculatingtheamountofthejudgmentsolongastheCompanyprovidestheHolderawrittenstatementfromsuchinsurerorindemnityprovider(whichwrittenstatementshallbereasonablysatisfactorytotheHolder)totheeffectthatsuchjudgmentiscoveredbyinsuranceoranindemnityandtheCompanyorsuchSubsidiary(asthecasemaybe)willreceivetheproceedsofsuchinsuranceorindemnitywithin30daysoftheissuanceofsuchjudgment.

(xi)the Companyshallprovide at anytimenoticetotheHolder,includingbywayofpublicannouncement,oftheCompany’sintentiontonothonorrequestsforconversionsofanyNotesinaccordancewiththetermshereofortheCompanydoesnothonorarequestforconversionofanyNotesasrequiredbytheNotes

(xii) theCompanyshallbeinbreachofanymaterialcontractoragreement.

(b)RemediesUponEventofDefault.IfanyEventofDefaultoccurs,theoutstandingprincipalamountofthisNote,plusaccruedbutunpaidinterest,liquidateddamagesandotheramountsowinginrespectthereofthroughthedateofacceleration,shallbecome,at theHolder’selection,immediatelydue andpayableincash at theMandatoryDefaultAmount.Uponthepaymentinfull oftheMandatoryDefaultAmount,theHoldershallpromptlysurrenderthisNotetoorasdirectedbytheCompany.Inconnectionwithsuchaccelerationdescribedherein,theHolderneednotprovide,andtheCompanyherebywaives,anypresentment,demand,protestorothernoticeofanykind,andtheHoldermayimmediatelyandwithoutexpirationofanygraceperiodenforceanyandallofitsrightsandremedieshereunderandallotherremediesavailabletoitunderapplicableLaw.SuchaccelerationmayberescindedandannulledbyHolderatanytimepriortopaymenthereunderandtheHoldershallhaveallrightsasaholderoftheNoteuntilsuchtime,ifany,astheHolderreceivesfullpaymentpursuanttothisSection7(b).NosuchrescissionorannulmentshallaffectanysubsequentEventofDefaultorimpairanyrightconsequentthereon.

(c)InterestRateUponEventofDefault.CommencingontheoccurrenceofanyEventofDefaultanduntilsuchEventofDefaultiscured,thisNoteshallaccrueinterestataninterestrateequaltotheDefaultInterestRate.

Section8. Miscellaneous.

(a)NoRightsas StockholderUntilConversion.This Note doesnotentitlethe Holderto anyvotingrights,dividendsorotherrightsasastockholderoftheCompanypriortotheconversionhereofotherthanasexplicitlysetforthinSection4.

(b)Notices.Allnotices,offers,acceptanceandanyotheractsunderthisAgreement(exceptpayment)shallbeinwriting,andshallbesufficientlygivenifdeliveredtotheaddresseesinperson,byFederalExpressorsimilarreceiptednextbusinessdaydelivery,asfollows:

IftotheCompany: MaxSoundCorporation.

2902A ColoradoAvenue,SantaMonica, CA 90904

IftoHolder:

BellridgeCapitalLP.

515 E.LasOlasBoulevard, Suite 120AFortLauderdale,Florida33301,

ortosuchotheraddressasanyofthem,bynoticetotheothermaydesignatefromtimetotime.

Timeshallbecountedto,orfrom,asthecasemaybe,thedateofdelivery.

(c)AbsoluteObligation.Exceptasexpresslyprovidedherein,noprovisionofthisNoteshallalterorimpairtheobligationoftheCompany,whichisabsoluteandunconditional,topaytheprincipalof,liquidateddamagesandaccruedinterestandlatefees,asapplicable,onthisNoteatthetime,place,andrate,andinthecoinorcurrency,hereinprescribed.ThisNoteisadirectdebtobligationoftheCompany.ThisNoteranksparipassuwithallotherNotesnoworhereafterissuedunderthePurchaseAgreement.

(d)LostorMutilatedNote.IfthisNoteshallbemutilated,lost,stolenordestroyed,theCompanyshallexecuteanddeliver,inexchangeandsubstitutionforanduponcancellationofamutilatedNote,orinlieuoforinsubstitutionforalost,stolenordestroyedNote,anewNotefortheprincipalamountofthisNotesomutilated,lost,stolenordestroyed,butonlyuponreceiptofevidenceofsuchloss,theftordestructionofsuchNote,andoftheownershiphereof,reasonablysatisfactorytotheCompany.TheapplicantforanewNoteundersuchcircumstancesshallalsopayanyreasonablethird-partycosts(includingcustomaryindemnity)associatedwiththeissuanceofthenewNote.

(e)ExclusiveJurisdiction;GoverningLaw.Allquestionsconcerningtheconstruction,validity, enforcementandinterpretationofthisNoteshallbegovernedbyandconstruedandenforcedinaccordancewiththeinternallawsoftheStateofNewYork,withoutregardtotheprinciplesofconflictoflawsthereof.Eachparty agrees thatalllegalproceedings concerning the interpretation,enforcementanddefenseofthetransactionscontemplatedbyanyoftheTransactionDocuments(whetherbroughtagainstapartyheretooritsrespectiveAffiliates,directors,officers,shareholders, employeesoragents)shallonlybecommencedinthestateandfederalcourtssittinginNewYork,NewYork(the“NewYorkCourts”).EachpartyheretoherebyirrevocablysubmitstotheexclusivejurisdictionoftheNewYorkCourtsfortheadjudicationofanydisputehereunderorinconnectionherewithorwithanytransactioncontemplatedherebyordiscussedherein(includingwithrespecttotheenforcementofanyoftheTransactionDocuments),andherebyirrevocablywaives,andagreesnottoassertinanysuit,actionorproceeding,anyclaimthatitisnotpersonallysubjecttothejurisdictionofsuchNewYorkCourts,orsuchNewYorkCourtsareimproperorinconvenientvenueforsuchproceeding.Eachpartyherebyirrevocablywaivespersonalserviceofprocessandconsentstoprocessbeingservedinanysuchsuit,actionorproceedingbymailingacopythereofviaregisteredorcertifiedmailorovernightdelivery(withevidenceofdelivery)tosuchpartyattheaddressineffectfornoticestoitunderthisNoteandagreesthatsuchserviceshallconstitutegoodandsufficientserviceofprocessandnoticethereof.NothingcontainedhereinshallbedeemedtolimitinanywayanyrighttoserveprocessinanyothermannerpermittedbyapplicableLaw.Eachpartyheretoherebyirrevocablywaives,tothefullestextentpermittedbyapplicableLaw,anyandallrighttotrialbyjuryinanylegalproceedingarisingoutoforrelatingtothisNoteorthetransactionscontemplatedhereby.

(f)Waiver.AnywaiverbytheCompanyortheHolderofabreachofanyprovisionofthisNoteshallnotoperateasorbeconstruedtobeawaiverofanyotherbreachofsuchprovisionorofanybreach of anyotherprovisionofthis Note. ThefailureoftheCompanyorthe Holdertoinsist uponstrictadherencetoanytermofthisNoteononeormoreoccasionsshallnotbeconsideredawaiverordeprivethatpartyoftherightthereaftertoinsist uponstrict adherencetothat termoranyotherterm ofthis Noteonanyotheroccasion.AnywaiverbytheCompanyortheHoldermustbeinwriting.

(g)Severability.IfanyprovisionofthisNoteisinvalid,illegalorunenforceable,thebalanceofthisNoteshallremainineffect,aslongastheessentialtermsandconditionsofthisNoteforeachpartyremainvalid,binding,andenforceable.IfitshallbefoundthatanyinterestorotheramountdeemedinterestduehereunderviolatestheapplicableLawgoverningusury,theapplicablerateofinterestduehereundershallautomaticallybeloweredtoequalthemaximumrateofinterestpermittedunderapplicableLaw.

(h)Remedies,Characterizations,OtherObligations,BreachesandInjunctiveRelief.TheremediesprovidedinthisNoteshallbecumulativeandinadditiontoallotherremediesavailableunderthis Note and anyof the other TransactionDocumentsat Law or inequity(including adecree of specificperformanceand/orotherinjunctiverelief),andnothinghereinshalllimittheHolder’srighttopursueactualand consequentialdamages for any failure bythe Company to comply withtheterms ofthis Note.Amountssetforthorprovidedforhereinwithrespecttopayments,conversionandthelike(andthecomputationthereof)shallbetheamountstobereceivedbytheHolderandshallnot,exceptasexpresslyprovidedherein,besubjecttoanyotherobligationoftheCompany(ortheperformancethereof).The

CompanyacknowledgesthatabreachbyitofitsobligationshereunderwillcauseirreparableharmtotheHolderandthattheremedyatLawforanysuchbreachwouldbeinadequate.TheCompanythereforeagrees that, intheeventofany suchbreachorthreatened breach, theHolder shall beentitled, inadditiontoallotheravailableremedies,toaninjunctionrestraininganysuchbreachoranysuchthreatenedbreach,withoutthenecessityofshowingeconomiclossandwithoutanybondorothersecuritybeingrequired.TheCompanyshallprovideallinformationanddocumentationtotheHolderthatisreasonablyrequestedbytheHoldertoenabletheHoldertoconfirmtheCompany’scompliancewiththetermsandconditionsofthisNote.

(i)NextBusinessDay.WheneveranypaymentorotherobligationhereundershallbedueonadayotherthanaBusinessDay,suchpaymentshallbemadeonthenextsucceedingBusinessDay.

(SignaturePagesFollow)

INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecutedbyadulyauthorizedofficerasofthedatefirstaboveindicated.

MAXSOUNDCORPORATION.

By: Name: JohnBlaisure

Title:CEO

ANNEXANOTICEOFCONVERSION

Theundersignedherebyelectstoconvertprincipalunderthe8%ConvertibleNotedueJanuary 5,2018issuedbyMaxSoundCorporation,aDelawarecorporation(the“Company”),intosharesofcommonstock(the“CommonStock”),oftheCompanyaccordingtotheconditionshereof,asofthedatewrittenbelow.IfsharesofCommonStockaretobeissuedinthenameofapersonotherthantheundersigned,theundersignedwillpayalltransfertaxespayablewithrespecttheretoandisdeliveringherewithsuchcertificatesandopinionsasreasonablyrequestedbytheCompanyinaccordancetherewith.Nofeewillbechargedtotheholderforanyconversion,exceptforsuchtransfertaxes,ifany.

BythedeliveryofthisNoticeofConversiontheundersignedrepresentsandwarrantstotheCompanythatitsownershipoftheCommonStockdoesnotexceedtheamountsspecifiedunderSection4ofthisNote,asdeterminedinaccordancewithSection13(d)oftheExchangeAct.

TheundersignedagreestocomplywiththeprospectusdeliveryrequirementsundertheapplicablesecuritieslawsinconnectionwithanytransferoftheaforesaidsharesofCommonStock.

Conversioncalculations:

DatetoEffectConversion:

PrincipalAmountofNotetobeConverted:PaymentofInterestinCommonStock yes no

If yes, $ of Interest Accrued on AccountofConversionatIssue.

NumberofsharesofCommonStocktobeissued:

Signature:Name:

DWACInstructions:

BrokerNo:

AccountNo:

Schedule1CONVERSION SCHEDULE

The8%Convertible Note dueonJanuary5,2018in the originalprincipalamountof$147,000areissuedbyMaxSoundCorporation.,aDelawarecorporation.ThisConversionSchedulereflectsconversionsmadeunderSection4oftheabovereferencedNote

Dated:

    DateofConversion(orforfirstentry,OriginalIssueDate)       AmountofConvertedPrincipal   AggregatePrincipalAmountRemainingSubsequenttoConversion (ororiginalPrincipalAmount)   ApplicableConversionPrice         CompanyAttest

EX-10

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A UNDER SAID ACT OR SUCH OTHER APPLICABLE EXEMPTION FROM REGISTRATION. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

US$120,000.00

MAX SOUND CORPORATION

8% CONVERTIBLE REDEEMABLE NOTE DUE MAY 11, 2018

FOR VALUE RECEIVED, Max Sound Corporation. (the “Company”) promises to pay to the order of Bellridge Capital, LP. and its authorized successors and permitted assigns (“Holder”), the aggregate principal face amount of One Hundred twenty Thousand Dollars exactly (US$120,000.00) on MAY 11, 2018 (“Maturity Date”) and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on MAY 11, 2018. This Note contains a US$9,600 original issue discount such that the purchase price of the Note shall be US105,400.00 after deduction of expenses of

US$5,000.00. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at Suite 403 - 2727 Steeles Ave. W., Toronto, Ontario M3J 3G9, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. Interest shall be payable in Common Stock (as defined below) at the election of the Holder pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

1. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

2. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

3. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”) and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company’s records as the owner hereof for all other purposes, whether or

CAN: 21236632.2

not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy or email) of such Notice of Conversion shall be the Conversion Date.

4.

(a) The Holder of this Note is entitled, at its option at any time and from time to time after the date which is 180 days after the of issuance of this Note, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) at a price (“Conversion Price”) for each share of Common Stock equal to 65% of the lowest price for any trade of the Common Stock during the ten (10) trading day period prior to conversion. Such trading price shall be determined based on trades of the Common Stock as reported on the OTC Pink markets (the “OTCP”) which the Company’s shares are traded on or, at the election of the Holder, any other exchange upon which the Common Stock may be traded in the future (“Exchange”), for the ten (10) prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day trading prices). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded by the Holder. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be payable in cash, subject to conversion at the Conversion Price in the same manner as the principal face amount at the election of the Holder. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the Company.

(b) Interest on any unpaid principal balance of this Note shall accrue and be paid at the rate of 8% per annum without compounding based on a 365 day year. Interest shall be paid by the Company in cash on the Maturity Date (as defined below) unless earlier converted by the Holder into Common Stock (“Interest Shares”). Holder may, at any time and from time to time, send in a Notice of Conversion to the Company to convert accrued interest into Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares may at the election of the Holder be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

(c) During the first six months this Note is in effect, the Company may redeem this Note by paying to the Holder an amount as follows: (i) if the redemption is prior to the 30th day this Note is in effect (including the 30th day), then for an amount equal to 110% of the unpaid principal amount of this Note along with any interest that has accrued during that period; (ii) if the redemption is on the 31st day this Note is in effect, up to and including the 60th day this Note is in effect, then for an amount equal to 115% of the unpaid principal amount of this Note along with any accrued interest; (iii) if the redemption is on the 61st day this Note is in effect, up to and including the 120th day this Note is in effect, then for an amount equal to 135% of the unpaid principal amount of this Note along with any

accrued interest; (iv) if the redemption is on the 121st day this Note is in effect, up to and including the 180th day this Note is in effect, then for an amount equal to 150% of the unpaid principal amount of this Note along with any accrued interest. This Note may not be redeemed after the 180th day this Note is in effect. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note. In the event the Holder has delivered a Notice of Conversion to the Company prior to the receipt of a redemption notice from the Company, the Notice of Conversion shall prevail.

(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a “Reorganization Event”), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock at the Conversion Price determined in accordance with Section 4(a) at any time prior to the Reorganization Event. The foregoing provisions shall similarly apply to successive Reorganization Events.

(e) In case of any Reorganization Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note (together with the amount of accrued but unpaid interest), to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon conversion of the Note (together with the amount of accrued but unpaid interest) and at the same Conversion Price, as defined in this Note, immediately prior to such Reorganization Event. The foregoing provisions shall similarly apply to successive Reorganization Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

6. The Company hereby expressly waives demand and presentment for payment, notice of non- payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

7. The Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses on a solicitor-client basis, which may be incurred by the Holder in collecting any amount due under this Note.

8. If one or more of the following described “Events of Default” shall occur:

(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the securities purchase agreement under which this Note was issued shall be false or misleading in any respect; or

(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder or the securities purchase agreement under which this Note was issued; or

(d) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or (6) the board of directors of the Company shall resolve to undertake any actions which could lead to or to confirm any of the foregoing; or

(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty

(60) days after such appointment; or

(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

(h) The Company shall have defaulted on or breached any term, covenant or condition of any other debt instrument or debt obligation by which it is bound, or if, in the reasonable opinion of the Holder, an adverse material change occurs in the financial condition of any of the Company; or

(i) The Company shall have its Common Stock delisted from an exchange (including the OTCP) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;

(j) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;

(k) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or

(l) The Company shall not replenish the reserve set forth in Section 13, within 3 business days of the request of the Holder.

(m) The Company shall not be “current” in its filings with the Securities and Exchange Commission; or

(n) The Company shall lose the “bid” price for its stock and a market (including the OTCBB marketplace or other exchange).

Then, or at any time thereafter, unless cured within 5 days, and in each and every such case, un- less such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder’s sole discretion, the Holder may consider this Note immediately due and payable, with- out presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies afforded by law.

9. Upon an Event of Default, in addition to any other rights or remedies of the Holder:

(a) interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law;

(b) in the event of a breach of Section 8(k), the Company shall pay the Holder $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day (provided that in either case if such rate is usurious or not permitted by current law, then at a per diem penalty that is equal to the highest rate of interest permitted by law). Amounts payable hereunder shall be convertible at the election of the Holder in the same manner as the principal amount;

(c) in the event of a breach of Section 8(n) the outstanding principal amount shall be deemed to be increased by 20% without further action by the Company or the Holder and the Company shall issue a replacement certificate reflecting such increase at the request of the Holder;

(d) in the event of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50% without further action by the Company or the Holder and the Company shall issue a replacement certificate reflecting such increase at the request of the Holder;

(e) if this Note is not paid when due, the outstanding principal due under this Note shall increase by 50% without further action by the Company or the Holder and the Company shall issue a replacement certificate reflecting such increase at the request of the Holder;

(f) if the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding on a solicitor-client basis;

(g) at the Holder’s election, if the Company fails for any reason to deliver to the Holder the Common Stock issuable upon conversion of this Note (or any interest as applicable) by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss (as defined below), then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:

“Failure to Deliver Loss” = (Highest trade price at any time on or after the Conversion Date) x (Number of shares subject to the Notice of Conversion)

The Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the 3rd business day from the time of the Holder’s written notice to the Company.

10. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

11. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

12. The Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a “shell” issuer. Further, the Company will instruct its counsel to either (i) write a 144 opinion to allow for salability of the

Conversion Shares or (ii) accept such opinion from Holder’s counsel.

13. The Company shall issue irrevocable transfer agent instructions reserving 20,000,000 shares of its Common Stock for conversions under this Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all costs associated with issuing and delivering the shares. If such amounts are to be paid by the Holder, the Holder may deduct such amounts from the Conversion Price. Conversion Notices may be sent to the Company or its transfer agent via electronic mail. The Company shall at all times reserve a minimum of three times the amount of shares required if the Note were to be fully converted. The Holder may reasonably request increases from time to time to reserve such amounts.

14. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

15. This Note shall be governed by and construed in accordance with the laws of the Province of Ontario and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually consent to exclusive jurisdiction and venue in the courts of the Province of Ontario. This Agreement may be executed in counterparts, and the facsimile or email transmission of an executed counterpart to this Agreement shall be effective as an original. All references to “$”, “US$” or “dollars” herein are to United States dollars unless otherwise indicated.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.

Dated: May 12th 2017

MAX SOUND CORPORATION.

By:

Title: CEO

EXHIBIT A NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $ of the [principal amount] [accrued interest] of the Note into Shares of Common Stock of Max Sound Corporation. (“Shares”) according to the conditions set forth in such Note, as of the date written below.

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

Date of Conversion:

Applicable Conversion Price:

Address:

SSN or EIN:

Shares are to be registered in the following name:

Name:

Address:

Tel:

Fax:

SSN or EIN:

Shares are to be sent or delivered to the following account:

Account Name:

Address:

EX-10

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: June 27, 2017

$171,250

8% CONVERTIBLE NOTE

THIS 8% CONVERTIBLE NOTE is one of a series of duly authorized and validly issued 8% Convertible Notes issued at a 8% original issue discount by Max Sound Corporation., a Delaware corporation (the “Company”) (this note, the “Note” and, collectively with the other notes of such series, the “Notes”).

FOR VALUE RECEIVED, the Company promises to pay to Bellridge Capital, LP its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $171,250 (“Original Principal Amount”) on June 27, 2018 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This Note is being issued as consideration for the payment by Holder of $116,150 to Eagle Equities, LLC pursuant to the Assignment Agreement for the benefit of the Company and $41,400 to Power Up Lending LLC benefits the Company, which benefits and payments are hereby acknowledged by the Company. This Note contains an 8% original issue discount which is why the fair value of this Note is $171,250. This Note is subject to the following additional provisions:

Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:

“Alternate Consideration” shall have the meaning set forth in Section 5(e).

“Assignment Agreement” means the Assignment Agreement, dated as of June 27, 2017 among the Company, the Holder and Eagle Equities, LLC, as amended, modified or supplemented from time to time in accordance with its terms and the Assignment Agreement, dated as of June 27, 2017 among the Company, the Holder and Power Up Lending LLC amended, modified or supplemented from time to time in accordance with tis terms. Collectively the “Assignment Agreements”.

“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company

or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement,

(c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, or (f) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of theforegoing.

“Base Conversion Price” shall have the meaning set forth in Section 5(b). “Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(d).

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Buy-In” shall have the meaning set forth in Section 4(c)(v).

“Change of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d- 5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion, exercise or exchange of the Notes or the Securities issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the shareholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the shareholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors of the Company (the “Board of Directors”) which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d)above.

“Conversion” shall have the meaning ascribed to such term in Section 4. “Conversion Date” shall have the meaning set forth in Section 4(a). “Conversion Price” shall have the meaning set forth in Section 4(b).

hereto.

“Conversion Schedule” means the Conversion Schedule in the form of Schedule 1 attached

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.

“Default Interest Rate” shall have the meaning set forth in Section 2(a).

“Dilutive Issuance” shall have the meaning set forth in Section 5(b). “Dilutive Issuance Notice” shall have the meaning set forth in Section 5(b).

“DWAC” means the Deposit or Withdrawal at Custodian system at The Depository Trust Company.

“Event of Default” shall have the meaning set forth in Section 7(a). “Fundamental Transaction” shall have the meaning set forth in Section 5(e).

“Mandatory Default Amount” means the sum of (a) 150% of the outstanding principal amount of this Note, plus 150% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Note.

“New York Courts” shall have the meaning set forth in Section 8(e). “Note Register” shall mean the note register maintained by the Company. “Notice of Conversion” shall have the meaning set forth in Section 4(a).

“Option Value” means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the "OV" function on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable Common Stock Equivalent, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Common Stock Equivalent as of the applicable date of determination, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of (A) the Trading Day immediately following the public announcement of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iii) the underlying price per share used in such calculation shall be the highest VWAP of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive documentation relating to the issuance of the applicable Common Stock Equivalent and ending on (A) the Trading Day immediately following the public announcement of such issuance, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.

“Original Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Notes.

“Payment Date” shall have the meaning set forth in Section 2(b).

“Permitted Indebtedness” means (a) Indebtedness outstanding as of the Original Issue Date,

(b)the indebtedness evidenced by the Notes, and (c) capital lease obligations and purchase money indebtedness incurred in connection with the acquisition of machinery and equipment.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Share Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

“Successor Entity” shall have the meaning set forth in Section 5(e).

“Trading Day” means a day on which the principal Trading Market is open for trading.

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, or any market of the OTC Markets, Inc. (or any successors to any of the foregoing).

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is not then listed or quoted for trading on the OTCQB or OTCQX and if prices for the Common Stock are then reported by the OTC Pink marketplace published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Notes then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

Section 2. Interest; Payments.

(a)Interest. Interest shall accrue to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate of eight percent (8%) per annum, calculated on the basis of a 365-day year and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal (or conversion to the extent applicable), together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Following an Event of Default, until such Event of Default has been cured, interest shall accrue at the lesser of (i) the rate of 24% per annum, or (ii) the maximum amount permitted by law (the lesser ofclause

(i) or (ii), the “Default Interest Rate”). In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the calendar day immediately following the date of such cure; provided that the interest as calculated and unpaid at the Default Interest Rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.

(b)Payments. Interest payments are due and payable on the Maturity Date, except as otherwise set forth in this Note. If any Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day. Each Monthly Payment shall be equal to all accrued but unpaid interest. The Company shall pay interest to the Holder o n the aggregate unconverted and then outstanding principal amount of this Note on the Maturity Date (the “Payment Date”) except as otherwise set forth in this Note. If any Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day. Each Monthly Payment shall be equal to all accrued but unpaid interest.

(c) Payment in Cash. All payments shall be made in cash on any Payment Date.

(d)Prepayment and Redemption. During the first six months this Note is in effect, the Company may redeem this Note by paying to the Holder an amount as follows: (i) if the redemption is prior to the day this Note is in effect (including the 60th day), then for an amount equal to 115% of the unpaid principal amount of this Note along with any interest that has accrued during that period; (ii) if the redemption is on the 61st day this Note is in effect, up to and including the

120th day this Note is in effect, then for an amount equal to 120% of the unpaid principal amount of this Note along with any accrued interest; (iii) if the redemption is on the 121st day this Note is in effect, up to and including the 360th day this Note is in effect, then for an amount equal to 125% of the unpaid principal amount of this Note along with any accrued interest. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note. In the event the Holder has delivered a Notice of Conversion to the Company prior to the receipt of a redemption notice from the Company, the Notice of Conversion shall prevail.

Section 3. Registration of Transfers and Exchanges.

(a)Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations (of no less than $1,000 in principal amount), as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.

(b)Investor Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Assignment Agreement and may be transferred or exchanged only in compliance with the Assignment Agreement and applicable federal and state securities laws and regulations.

(c)Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company norany such agent shall be affected by notice to the contrary.

Section 4. Conversion.

(a) Voluntary Conversion. After the Original Issue Date until this Note is no longer outstanding, and provided that that the provisions of Rule 144 under the Securities Act so permit, this Note shall be convertible, in whole or in part, at any time, and from time to time, into shares of Common Stock at the option of the Holder. The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted in each conversion, the date of each conversion, and the Conversion Price in effect at the time of each conversion. The Company may deliver an objection to any Notice of Conversion within one Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.

(b)Conversion Price. The “Conversion Price” in effect on any Conversion Date means, as of any Conversion Date or other date of determination, shall be 65% of the lowest trading price for the

Company’s Common Stock during the ten Trading Days immediately preceding the delivery by the Holder of a Notice of Conversion, provided however and notwithstanding anything to the contrary herein, during an Event of Default the Conversion Price in in effect on any Conversion Date means, as of any Conversion Date or other date of determination, shall be 55% of the lowest trading price for the Company’s Common Stock during the ten Trading Days immediately preceding the delivery by the Holder of a Notice of Conversion. The applicable prices shall be as reported by Bloomberg L.P. Notwithstanding the foregoing, in no event shall the Conversion Price be less then the par value of the Common Stock.

(c) Mechanics of Conversion or Prepayment.

(i)Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion Price in effect at the time of such conversion.

(ii)Delivery of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder any certificate or certificates required to be delivered by the Company under this Section 4(c).

(iii)Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.

(iv)Partial Liquidated Damages. If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the tenth Trading Day after such Conversion Date) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 7 hereof for the Company’s failure to deliver Conversion Shares or, if applicable, cash, within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at Law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable Law.

(v)Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or

elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at Law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

(vi)Reservation of Shares Issuable Upon Conversion. The Company covenants that it will reserve and keep available out of its authorized and unissued shares of Common Stock for the purpose of issuances upon conversion of this Note and the issued with this Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not less than 300% of the Required Minimum; and if at any time the number of authorized but unissued shares of Common Stock shall be insufficient to effect the conversion of this note or shall be less than the Required Minimum, the Company shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. The Company covenants that all shares of Common Stock that shall be issuable upon conversion of this Note shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

(vii)Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

(viii)Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same- day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

(d) Holder’s Conversion Limitations. The Company shall not effect any conversion of this

Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the SEC, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions of this Section 4(d) solely with respect to the Holder’s Note, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the provisions of this Section 4(d) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The Holder may also decrease the Beneficial Ownership Limitation provisions of this Section 4(d) solely with respect to the Holder’s Note at any time, which decrease shall be effectively immediately upon delivery of notice to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements

necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.

Section 5. Certain Adjustments.

(a)Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, the Notes or pursuant to any of the other Transaction Documents), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(b)Subsequent Equity Sales. If, at any time, for so long as the Note or any amounts accrued and payable thereunder remain outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues, any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the Conversion Price then in effect (such lower price, the “Base Conversion Price” and each such issuance a “Dilutive Issuance”), then the Conversion Price shall be immediately reduced to equal the Base Conversion Price.

If the holder of Common Stock or Common Stock Equivalents outstanding on the Original Issue Date or issued thereafter shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, receive or be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price then in effect, such issuance shall be deemed to have occurred for less than the Conversion Price on such date and such issuance shall be deemed to be a Dilutive Issuance.

If after any Dilutive Issuance of Common Stock Equivalents, the price per share for which shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the Conversion Price in effect at the time of such amendment or adjustment, then the Conversion Price shall be adjusted upon each such issuance or amendment as provided in this Section 5(b).

In case any Common Stock Equivalent is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Common Stock Equivalents will be deemed to have been issued for the Option Value of such Common Stock Equivalents and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the amount of such consideration received by the Company will be deemed to be the net amount received by the Company therefor. If any shares of

9Common Stock or Common Stock Equivalents are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the VWAP of such public traded securities on the date of receipt. If any shares of Common Stock or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.

If the Company enters into a Variable Rate Transaction despite the prohibition set forth in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised under the terms of such Variable Rate Transaction.

The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.

The provisions of this Section 5(b) shall apply each time a Dilutive Issuance occurs after the Original Issue Date for so long as the Note or any amounts accrued and payable thereunder remain outstanding, but any adjustment of the Conversion Price pursuant to this Section 5(b) shall be downward only.

Notwithstanding anything in this Section 5(b), no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance.

(c)Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues or sells any Common Stock, Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent)).

(d)Pro Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend or other distribution of its assets or rights or warrants to acquire its assets, or subscribe for or purchase any security other than Common Stock, to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution

of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded corporation subject to Section 13(d) of the Exchange Act, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent)).) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded corporation subject to Section 13(d) of the Exchange Act).).

(e)Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Personsmaking or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation on the conversion of this Note). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one

(1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in

Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a Trading Market, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable concurrently with the consummation of the Fundamental Transaction, purchase this Note from the Holder by paying to the Holder the product of (a) the number of Conversion Shares issuable upon full conversion of this Note (without regard to any limitation on conversion of this Note) and (b) the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Conversion Price. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which applies the Conversion Price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Notwithstanding anything in this Section 5(e), an Exempt Issuance shall not be deemed a Fundamental Transaction.

(f)Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

(g) Notice to the Holder.

(i)Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(ii)Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and

shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least ten calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries (as determined in good faith by the Company), the Company or its successor shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 6. Negative Covenants. As long as any portion of this Note remains outstanding, unless the holders of a majority in principal amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

(a)other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness for borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

(b)amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

(C) enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the SEC assuming that the Company is subject to the Securities Act or the Exchange Act, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

(d) enter into any agreement with respect to any ofthe foregoing. Section 7. Events of Default.

(a)“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of Law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)any default in the payment of (A) the principal amount of any Note or

(B) interest, late fees, liquidated damages and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within three Trading Days;

(ii) the Company shall fail to observe or perform any other covenant or agreement

contained in the Notes (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (x) below) or any Transaction Document which failure is not cured, if possible to cure, within the earlier to occur of (A) 3 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and

(B) 5 Trading Days after the Company has become aware of such failure;

(iii)If after forth-five (45) days from the date hereof while the Holder owns any Registrable Securities, the Registration Statement is not effective under the Securitie Act registereing the Registrable Securities;

(iv)if ninety (90) days from the date hereof, while the Holder owns any Registrable Securities, the Registration Statement is not effective under the Securities Act registering the Registrable Securities;

(v)any representation or warranty made in this Note, any other Transaction Document, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder pursuant hereto or thereto shall be untrue or incorrect in any material respect as of the date when made or deemed made;

(vi)the Company or any Significant Subsidiary (as such term is defined in Rule 1- 02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;

(vii)the Company or any Subsidiary shall default on any of its obligations under any, mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money, including debentures or promissory notes or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $5,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable and such default is not cured within three Trading Days;

(viii)the Common Stock shall not be eligible for listing or quotation for trading on its Trading Market for a period longer than 10 Trading Days;

(ixi) the Company shall have consummated a Change of Control Transaction or/Fundamental Transaction without the Lead Investors consent without paying in full all amounts owed under the Note at or prior to such consummation;

(x)a final judgment for the payment of money aggregating in excess of $50,000 is rendered against the Company and/or any of its Subsidiaries and which judgment is not, within 45 days after the entry thereof, bonded, discharged or stayed pending appeal, or is not discharged within 60 days after the expiration of such stay; provided, however, any judgment that is covered by insurance or an indemnity from a credit-worthy party will not be included in calculating the amount of the judgment so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within 30 days of the issuance of such judgment.

(xi)the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof or the Company does not honor a request for conversion of any Notes as required by the Notes the Company shall be in breach of any material contract or agreement.

(b) Remedies Upon Event of Default. If any Event of Default occurs, the outstanding

principal amount of this Note, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable Law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 7(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

(c)Interest Rate Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default is cured, this Note shall accrue interest at an interest rate equal to the Default Interest Rate.

Section 8. Miscellaneous.

(a)No Rights as Stockholder Until Conversion. This Note does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the conversion hereof other than as explicitly set forth in Section 4.

(b)Notices. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted next business day delivery, as follows:

If to the Company: Max Sound Corporation. 2902A Colorado Avenue, Santa Monica, CA 90904

If to Holder:

Bellridge Capital LP.

515 E. Las Olas Boulevard, Suite 120A Fort Lauderdale, Florida 33301

or to such other address as any of them, by notice to the other may designate from time to time.

Time shall be counted to, or from, as the case may be, the date of delivery.

(c)Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest and late fees, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This Note ranks pari passu with all other Notes now or hereafter issued under the Purchase Agreement.

(d)Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company. The applicant for a new Note under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of the new Note.

(e)Exclusive Jurisdiction; Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought againsta party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall only be commenced in the state and federal courts sitting in New York, New York (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable Law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable Law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby.

(f)Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by the Company or the Holder must be inwriting.

(g)Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, as long as the essential terms and conditions of this Note for each party remain valid, binding, and enforceable. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable Law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable Law.

(h)Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at Law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at Law for any such breach would be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is reasonably requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.

(i)Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(Signature Pages Follow)

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.

MAX SOUND CORPORATION.

By: Name: John Blaisure

Title: CEO

ANNEX A NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the 8% Convertible Note due

, 2018 issued by Max Sound Corporation, a Delaware corporation (the “Company”), into shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.

Conversion calculations:

Date to Effect Conversion:

Principal Amount of Note to be Converted: Payment of Interest in Common Stock yes no

If yes, $ of Interest Accrued on Account of Conversion at Issue.

Number of shares of Common Stock to be issued:

Signature: Name:

DWAC Instructions:

Broker No:

Account No:

Schedule 1 CONVERSION SCHEDULE

The 8% Convertible Note due on June 27, 2018 in the original principal amount of $171,250 are issued by Max Sound Corporation., a Delaware corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.

Dated:

  Date of Conversion (or for first entry, Original Issue Date)     Amount of Converted Principal   Aggregate Principal Amount Remaining Subsequent to Conversion (or original Principal Amount)   Applicable Conversion Price       Company Attest

EX-10

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: June 27, 2017

$268,000

8% CONVERTIBLE NOTE

THIS 8% CONVERTIBLE NOTE is one of a series of duly authorized and validly issued 8% Convertible Notes issued at a 8% original issue discount by Max Sound Corporation., a Delaware corporation (the “Company”) (this note, the “Note” and, collectively with the other notes of such series, the “Notes”).

FOR VALUE RECEIVED, the Company promises to pay to Bellridge Capital, LP its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $268,000 (“Original Principal Amount”) on June 27, 2018 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This Note is subject to the following additional provisions:

Section 1. Definitions. For the purposes hereof, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:

“Alternate Consideration” shall have the meaning set forth in Section 5(e).

“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement,

(c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, or (f) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of theforegoing.

“Base Conversion Price” shall have the meaning set forth in Section 5(b). “Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(d).

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Buy-In” shall have the meaning set forth in Section 4(c)(v).

“Change of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d- 5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion, exercise or exchange of the Notes or the Securities issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the shareholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the shareholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors of the Company (the “Board of Directors”) which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d)above.

“Conversion” shall have the meaning ascribed to such term in Section 4. “Conversion Date” shall have the meaning set forth in Section 4(a). “Conversion Price” shall have the meaning set forth in Section 4(b).

hereto.

“Conversion Schedule” means the Conversion Schedule in the form of Schedule 1 attached

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.

“Default Interest Rate” shall have the meaning set forth in Section 2(a). “Dilutive Issuance” shall have the meaning set forth in Section 5(b). “Dilutive Issuance Notice” shall have the meaning set forth in Section 5(b).

“DWAC” means the Deposit or Withdrawal at Custodian system at The Depository Trust Company.

“Event of Default” shall have the meaning set forth in Section 7(a).

“Mandatory Default Amount” means the sum of (a) 150% of the outstanding principal amount of this Note, plus 150% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Note.

“New York Courts” shall have the meaning set forth in Section 8(e). “Note Register” shall mean the note register maintained by the Company. “Notice of Conversion” shall have the meaning set forth in Section 4(a).

“Option Value” means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the "OV" function on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable Common Stock Equivalent, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Common Stock Equivalent as of the applicable date of determination, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of (A) the Trading Day immediately following the public announcement of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iii) the underlying price per share used in such calculation shall be the highest VWAP of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive documentation relating to the issuance of the applicable Common Stock Equivalent and ending on (A) the Trading Day immediately following the public announcement of such issuance, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.

“Original Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Notes.

“Payment Date” shall have the meaning set forth in Section 2(b).

“Permitted Indebtedness” means (a) Indebtedness outstanding as of the Original Issue Date,

(b)the indebtedness evidenced by the Notes, and (c) capital lease obligations and purchase money indebtedness incurred in connection with the acquisition of machinery and equipment.

“Purchase Agreement” means the Securities Purchase Agreement, dated as of June 27, 2017 among the Company and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Share Delivery Date” shall have the meaning set forth in Section 4(c)(ii). “Successor Entity” shall have the meaning set forth in Section 5(e).

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, or any market of the OTC Markets, Inc. (or any successors to any of the foregoing).

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is not then listed or quoted for trading on the OTCQB or OTCQX and if prices for the Common Stock are then reported by the OTC Pink marketplace published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Notes then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

Section 2. Interest; Payments.

(a)Interest. Interest shall accrue to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate of eight percent (8%) per annum, calculated on the basis of a 365-day year and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal (or conversion to the extent applicable), together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Following an Event of Default, until such Event of Default has been cured, interest shall accrue at the lesser of (i) the rate of 24% per annum, or (ii) the maximum amount permitted by law (the lesser ofclause

(i) or (ii), the “Default Interest Rate”). In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the calendar day immediately following the date of such cure; provided that the interest as calculated and unpaid at the Default Interest Rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.

(b)Payments. Interest payments are due and payable on the Maturity Date, except as otherwise set forth in this Note. If any Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day. Each Monthly Payment shall be equal to all accrued but unpaid interest. The Company shall pay interest to the Holder o n the aggregate unconverted and then outstanding principal amount of this Note on the Maturity Date (the “Payment Date”) except as otherwise set forth in this Note. If any Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day. Each Monthly Payment shall be equal to all accrued but unpaid interest.

(c) Payment in Cash. All payments shall be made in cash on any Payment Date.

(d)Prepayment and Redemption. During the first six months this Note is in effect, the Company may redeem this Note by paying to the Holder an amount as follows: (i) if the redemption is prior to the 30th day this Note is in effect (including the 30th day), then for an amount equal to 110% of the unpaid principal amount of this Note along with any interest that has accrued during that period; (ii) if the redemption is on the 31st day this Note is in effect, up to and including the 60th day this Note is in effect, then for an amount equal to 115% of the unpaid principal amount of this Note along with any accrued interest; (iii) if the redemption is on the 61st day this Note is in effect, up to and including the

120th day this Note is in effect, then for an amount equal to 135% of the unpaid principal amount of this Note along with any accrued interest; (iv) if the redemption is on the 121st day this Note is in effect, up to and including the 180th day this Note is in effect, then for an amount equal to 150% of the unpaid principal amount of this Note along with any accrued interest. This Note may not be redeemed after the 180th day this Note is in effect. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note. In the event the Holder has delivered a Notice of Conversion to the Company prior to the receipt of a redemption notice from the Company, the Notice of Conversion shall prevail.

Section 3. Registration of Transfers and Exchanges.

(a)Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations (of no less than $1,000 in principal amount), as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.

(b)Investor Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.

(c)Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

Section 4. Conversion.

(a) Voluntary Conversion. After the Original Issue Date until this Note is no longer outstanding, and provided that that the provisions of Rule 144 under the Securities Act so permit, this Note shall be convertible, in whole or in part, at any time, and from time to time, into shares of Common Stock at the option of the Holder. The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted in each conversion, the date of each conversion, and the Conversion Price in effect at the time of each conversion. The Company may deliver an objection to any Notice of Conversion within one Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.

(b)Conversion Price. The “Conversion Price” in effect on any Conversion Date means, as of any Conversion Date or other date of determination, shall be 65% of the lowest trading price for the Company’s Common Stock during the ten Trading Days immediately preceding the delivery by the Holder of a Notice of Conversion, provided however and notwithstanding anything to the contrary herein, during an Event of Default the Conversion Price in in effect on any Conversion Date means, as of any Conversion Date or other date of determination, shall be 55% of the lowest trading price for the Company’s Common Stock during the ten Trading Days immediately preceding the delivery by the Holder of a Notice of Conversion. The applicable prices shall be as reported by Bloomberg L.P. Notwithstanding the foregoing, in no event shall the Conversion Price be less then the par value of the Common Stock.

(c) Mechanics of Conversion or Prepayment.

(i)Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion Price in effect at the time of such conversion.

(ii)Delivery of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder any certificate or certificates required to be delivered by the Company under this Section 4(c).

(iii)Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.

(iv)Partial Liquidated Damages. If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the tenth Trading Day after such Conversion Date) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 7 hereof for the Company’s failure to deliver Conversion Shares or, if applicable, cash, within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at Law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable Law.

(v)Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or

elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at Law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

(vi)Reservation of Shares Issuable Upon Conversion. The Company covenants that it will reserve and keep available out of its authorized and unissued shares of Common Stock for the purpose of issuances upon conversion of this Note and the issued with this Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not less than 300% of the Required Minimum; and if at any time the number of authorized but unissued shares of Common Stock shall be insufficient to effect the conversion of this note or shall be less than the Required Minimum, the Company shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. The Company covenants that all shares of Common Stock that shall be issuable upon conversion of this Note shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

(vii)Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

(viii)Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same- day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

(d)Holder’s Conversion Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the SEC, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions of this Section 4(d) solely with respect to the Holder’s Note, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the provisions of this Section 4(d) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The Holder may also decrease the Beneficial Ownership Limitation provisions of this Section 4(d) solely with respect to the Holder’s Note at any time, which decrease shall be effectively immediately upon delivery of notice to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements

necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.

Section 5. Certain Adjustments.

(a)Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, the Notes or pursuant to any of the other Transaction Documents), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(b)Subsequent Equity Sales. If, at any time, for so long as the Note or any amounts accrued and payable thereunder remain outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues, any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the Conversion Price then in effect (such lower price, the “Base Conversion Price” and each such issuance a “Dilutive Issuance”), then the Conversion Price shall be immediately reduced to equal the Base Conversion Price.

If the holder of Common Stock or Common Stock Equivalents outstanding on the Original Issue Date or issued thereafter shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, receive or be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price then in effect, such issuance shall be deemed to have occurred for less than the Conversion Price on such date and such issuance shall be deemed to be a Dilutive Issuance.

If after any Dilutive Issuance of Common Stock Equivalents, the price per share for which shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the Conversion Price in effect at the time of such amendment or adjustment, then the Conversion Price shall be adjusted upon each such issuance or amendment as provided in this Section 5(b).

In case any Common Stock Equivalent is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Common Stock Equivalents will be deemed to have been issued for the Option Value of such Common Stock Equivalents and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the amount of such consideration received by the Company will be deemed to be the net amount received by the Company therefor. If any shares of

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Common Stock or Common Stock Equivalents are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the VWAP of such public traded securities on the date of receipt. If any shares of Common Stock or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.

If the Company enters into a Variable Rate Transaction despite the prohibition set forth in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised under the terms of such Variable Rate Transaction.

The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.

The provisions of this Section 5(b) shall apply each time a Dilutive Issuance occurs after the Original Issue Date for so long as the Note or any amounts accrued and payable thereunder remain outstanding, but any adjustment of the Conversion Price pursuant to this Section 5(b) shall be downward only.

Notwithstanding anything in this Section 5(b), no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance.

(c)Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues or sells any Common Stock, Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent)).

(d)Pro Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend or other distribution of its assets or rights or warrants to acquire its assets, or subscribe for or purchase any security other than Common Stock, to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification,

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corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded corporation subject to Section 13(d) of the Exchange Act, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent)).) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded corporation subject to Section 13(d) of the Exchange Act).).

(e)Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation on the conversion of this Note). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one

(1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in

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Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a Trading Market, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable concurrently with the consummation of the Fundamental Transaction, purchase this Note from the Holder by paying to the Holder the product of (a) the number of Conversion Shares issuable upon full conversion of this Note (without regard to any limitation on conversion of this Note) and (b) the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Conversion Price. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which applies the Conversion Price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Notwithstanding anything in this Section 5(e), an Exempt Issuance shall not be deemed a Fundamental Transaction.

(f)Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

(g) Notice to the Holder.

(i)Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(ii)Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company

shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least ten calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries (as determined in good faith by the Company), the Company or its successor shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 6. Negative Covenants. As long as any portion of this Note remains outstanding, unless the holders of a majority in principal amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

(a)other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness for borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

(b)amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

(C) enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the SEC assuming that the Company is subject to the Securities Act or the Exchange Act, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

(d) enter into any agreement with respect to any ofthe foregoing. Section 7. Events of Default.

(a)“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of Law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)any default in the payment of (A) the principal amount of any Note or

(B) interest, late fees, liquidated damages and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within three Trading Days;

(ii)the Company shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (x) below) or any Transaction Document which failure is not cured, if possible to cure, within the earlier to occur of (A) 3 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and

(B) 5 Trading Days after the Company has become aware of such failure;

(iii)If after forth-five (45) days from the date hereof while the Holder owns any Registrable Securities, the Registration Statement is not effective under the Securitie Act registering the Registrable Securities;

(iv)if ninety (90) days from the date hereof, while the Holder owns any Registrable Securities, the Registration Statement is not effective under the Securities Act registering the Registrable Securities;

(v)any representation or warranty made in this Note, any other Transaction Document, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder pursuant hereto or thereto shall be untrue or incorrect in any material respect as of the date when made or deemed made;

(vi)the Company or any Significant Subsidiary (as such term is defined in Rule 1- 02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;

(vii)the Company or any Subsidiary shall default on any of its obligations under any, mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money, including debentures or promissory notes or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $5,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable and such default is not cured within three Trading Days;

(viii)the Common Stock shall not be eligible for listing or quotation for trading on its Trading Market for a period longer than 10 Trading Days;

(ixi) the Company shall have consummated a Change of Control Transaction or/Fundamental Transaction without the Lead Investors consent without paying in full all amounts owed under the Note at or prior to such consummation;

(x)a final judgment for the payment of money aggregating in excess of $50,000 is rendered against the Company and/or any of its Subsidiaries and which judgment is not, within 45 days after the entry thereof, bonded, discharged or stayed pending appeal, or is not discharged within 60 days after the expiration of such stay; provided, however, any judgment that is covered by insurance or an indemnity from a credit-worthy party will not be included in calculating the amount of the judgment so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within 30 days of the issuance of such judgment.

(xi)the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof or the Company does not honor a request for conversion of any Notes as required by the Notes

(xii) the Company shall be in breach of any material contract or agreement.

(b)Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable Law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 7(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

(c)Interest Rate Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default is cured, this Note shall accrue interest at an interest rate equal to the Default Interest Rate.

Section 8. Miscellaneous.

(a)No Rights as Stockholder Until Conversion. This Note does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the conversion hereof other than as explicitly set forth in Section 4.

(b)Notices. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipted next business day delivery, as follows:

If to the Company: Max Sound Corporation.

8837 Villa La Jolla Drive, Unit 12109, La Jolla, California 92039

If to Holder:

Bellridge Capital LP.

515 E. Las Olas Boulevard, Suite 120A Fort Lauderdale, Florida 33301,

or to such other address as any of them, by notice to the other may designate from time to time.

Time shall be counted to, or from, as the case may be, the date of delivery.

(c)Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest and late fees, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This Note ranks pari passu with all other Notes now or hereafter issued under the Purchase Agreement.

(d)Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company. The applicant for a new Note under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of the new Note.

(e)Exclusive Jurisdiction; Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall only be commenced in the state and federal courts sitting in New York, New York (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable Law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable Law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby.

(f)Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by the Company or the Holder must be inwriting.

(g)Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, as long as the essential terms and conditions of this Note for each party remain valid, binding, and enforceable. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable Law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable Law.

(h)Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at Law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The

Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at Law for any such breach would be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is reasonably requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.

(i)Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(Signature Pages Follow)

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.

MAX SOUND CORPORATION.

By: Name: John Blaisure

Title: CEO

ANNEX A NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the 8% Convertible Note due June 27, 2017 issued by Max Sound Corporation, a Delaware corporation (the “Company”), into shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.

Conversion calculations:

Date to Effect Conversion:

Principal Amount of Note to be Converted: Payment of Interest in Common Stock yes no

If yes, $ of Interest Accrued on Account of Conversion at Issue.

Number of shares of Common Stock to be issued:

Signature: Name:

DWAC Instructions:

Broker No:

Account No:

Schedule 1 CONVERSION SCHEDULE

The 8% Convertible Note due on June 27,2018 in the original principal amount of $ are issued by Max Sound Corporation., a Delaware corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note

Dated:

  Date of Conversion (or for first entry, Original Issue Date)     Amount of Converted Principal   Aggregate Principal Amount Remaining Subsequent to Conversion (or original Principal Amount)   Applicable Conversion Price       Company Attest

EX-10

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. LENDERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

GHS CAPITAL PARTNERS, LLC COLLATERALIZED SECURED PROMISSORY NOTE

$111,111.00 New York, NY

May 1, 2017

1. Principal and Interest

FOR VALUE RECEIVED, GS Capital Partners, LLC (the "Company") hereby absolutely and unconditionally promises to pay to Max Sound Corporation. (the “Lender"), or order, the principal amount of One Hundred Eleven Thousand One Hundred Eleven Dollars ($111,111.00) no later than January 1, 2018, unless the Lender does not meet the “current information requirements” required under Rule 144 of the Securities Act of 1933, as amended, in which case the Company may declare the offsetting note issued by the Lender on the same date herewith to be in Default (as defined in that note) and cross cancel its payment obligations under this Note as well as the Lenders payment obligations under the offsetting note. This Full Recourse Note shall bear simple interest at the rate of 8%.

2. Repayments and Prepayments; Security.

a.All principal under this Note shall be due and payable no later than January 1, 2018, unless the Lender does not meet the “current information requirements” required under Rule 144 of the Securities Act of 1933, as amended, in which case the Company may declare the offsetting note issued by the Lender on the same date herewith to be in Default (as defined in that note) and cross cancel its payment obligations under this Note as well as the Lenders payment obligations under the offsetting note.

b.The Company may pay this Note at any time. This note may not be assigned by the Lender, except by operation of law.

c.This Note shall initially be secured by the pledge of the $111,111.00 8% convertible promissory note issued to the Company by the Lender on even date herewith (the “Lender Note”). The Company may exchange this collateral for other collateral with an appraised value of at

least $111,111.00, by providing 3 days prior written notice to the Lender. If the Lender does not object to the substitution of collateral in that 3 day period, such substitution of collateral shall be deemed to have been accepted by the Lender. Notwithstanding the foregoing, an exchange of collateral for $111,111.00 in cash shall not require the approval of the Lender. Any collateral exchange shall not constitute a waiver of any defaults under a Lender note. All collateral shall be retained by New Venture Attorneys, P.C., which shall act as the escrow agent for the collateral for the benefit of the Lender. The Company may not effect any conversions under the Lender Note until it has made full cash payment for the portion of the Lender Note being converted

3. Events of Default; Acceleration.

a.The principal amount of this Note is subject to prepayment in whole or in part upon the occurrence and during the continuance of any of the following events (each, an “Event of Default”): the initiation of any bankruptcy, insolvency, moratorium, receivership or reorganization by or against the Company, or a general assignment of assets by the Company for the benefit of creditors. Upon the occurrence of any Event of Default, the entire unpaid principal balance of this Note and all of the unpaid interest accrued thereon shall be immediately due and payable. The Company may offset amounts due to the Lender under this Note by similar amounts that may be due to the Company by the Lender resulting from breaches under the Lender Note.

b.No remedy herein conferred upon the Lender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and in addition to every other remedy hereunder, now or hereafter existing at law or in equity or otherwise. The Company accepts and agrees that this Note is a full recourse note and that the Holder may exercise any and all remedies available to it under law.

4. Notices.

a.All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed (i) if to a Lender, at such Lender’s address as the Lender shall have furnished the Company in writing and (ii) if to the Company at such address as the Company shall have furnished the Lender(s) in writing.

b.Each such notice, report or other communication shall for all purposes under this Note be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by electronic communication with confirmation, upon the delivery of electronic communication.

5. Miscellaneous.

a.Neither this Note nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by a signed statement in writing.

b.No failure or delay by the Lender to exercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other right, power or privilege. The provisions of this Note are severable and if any one provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity or unenforceability shall affect only such provision in such jurisdiction. This Note expresses the entire understanding of the parties with respect to the transactions contemplated hereby. The Company and every endorser and guarantor of this Note regardless of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or secondarily liable.

c.If Lender retains an attorney for collection of this Note, or if any suit or proceeding is brought for the recovery of all, or any part of, or for protection of the indebtedness respected by this Note, then the Company agrees to pay all costs and expenses of the suit or proceeding, or any appeal thereof, incurred by the Lender, including without limitation, reasonable attorneys' fees.

d.This Note shall for all purposes be governed by, and construed in accordance with the laws of the State of New York (without reference to conflict of laws).

e.This Note shall be binding upon the Company's successors and assigns, and shall inure to the benefit of the Lender's successors and assigns.

IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written.

GS CAPITAL PARTNERS, LLC

By:

Title:

APPROVED:

MAX SOUND CORPORATION

By:

Title:

John Blaisure

EX-10

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)

US $78,750.00

MAX SOUND CORPORATION.

8% CONVERTIBLE REDEEMABLE NOTE DUE SEPTEMBER 19, 2017

FOR VALUE RECEIVED, Max Sound Corporation. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors and permitted as- signs ("Holder"), the aggregate principal face amount of Seventy Eight Thousand Seven Hun- dred Fifty Dollars exactly (U.S. $78,750.00) on September 19, 2017 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum com- mencing on September 19, 2016. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

GH

Initials

1.This Note is exchangeable for an equal aggregate principal amount of

Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

2.The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

3.This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due present- ment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

4.(a) The Holder of this Note is entitled, at its option, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Compa- ny's common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock equal to 65% of the average of the two lowest closing bid prices of the Com- mon Stock as reported on the National Quotations Bureau OTCQB exchange which the Compa- ny’s shares are traded or any exchange upon which the Common Stock may be traded in the fu- ture ("Exchange"), for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of Conver- sion is delivered by fax or other electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to in- clude the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Compa- ny delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conver- sion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 55% instead of 65% while that “Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affili- ates would exceed 9.9% of the outstanding shares of the Common Stock of the Company.

(b)Interest on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

(c)During the first six months this Note is in effect, the Company may re- deem this Note by paying to the Holder an amount as follows: (i) if the redemption is within the first 90 days this Note is in effect, then for an amount equal to 125% of the unpaid principal amount of this Note along with any interest that has accrued during that period, (ii) if the re- demption is after the 91st day this Note is in effect, but less than the 150th day this Note is in ef- fect, then for an amount equal to 135% of the unpaid principal amount of this Note along with any accrued interest during that period, (iii) if the redemption is after the 151st day this Note is in effect, but less than the 180th day this Note is in effect, then for an amount equal to 145% of the unpaid principal amount of this Note along with any accrued interest. This Note may not be re- deemed after 180 days. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note.

(d)Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being re- ferred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the un- paid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

(e)In case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the considera- tion received by the holders of Common Stock is other than cash, the value shall be as deter-

mined by the Board of Directors of the Company or successor person or entity acting in good faith.

5.No provision of this Note shall alter or impair the obligation of the Com- pany, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

6.The Company hereby expressly waives demand and presentment for pay- ment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

7.The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

8. If one or more of the following described "Events of Default" shall occur:

(a)The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b)Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Se- curities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or

(c)The Company shall fail to perform or observe, in any respect, any cove- nant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

(d)The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trus- tee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a peti- tion for bankruptcy relief, consent to the filing of such petition or have filed against it an invol- untary petition for bankruptcy relief, all under federal or state laws as applicable; or

(e)A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged with- in sixty (60) days after such appointment; or

(f)Any governmental agency or any court of competent jurisdiction at the in- stance of any governmental agency shall assume custody or control of the whole or any substan-

tial portion of the properties or assets of the Company; or

(g)One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

(h)The Company shall have defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such de- fault within the appropriate grace period; or

(i)The Company shall have its Common Stock delisted from an exchange (including the OTC Market platform) or, if the Common Stock trades on an exchange, then trad- ing in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934 act reports with the SEC;

(j)If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;

(k)The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or

(l)The Company shall not replenish the reserve set forth in Section 12, with- in 3 business days of the request of the Holder.

(m)The Company shall not be “current” in its filings with the Securities and Exchange Commission; or

(n)The Company shall lose the “bid” price for its stock and a market (includ- ing the OTC Market or other exchange)

Then, or at any time thereafter, unless cured within 5 days, and in each and every such case, un- less such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, with- out presentment, demand, protest or (further) notice of any kind (other than notice of accelera- tion), all of which are hereby expressly waived, anything herein or in any note or other instru- ments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provid- ed herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permit- ted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k) the parties agree that damages shall be difficult to determine and agree on liqui-

5

dated damages in the amount of $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company. The agreed liquidated damages shall increase to $500 per day beginning on the 10th day. In the event of a breach of Section 8(n), the parties agree that damages shall be difficult to determine and hereby agree to an increase of the outstanding principal amounts by 20% as a liquidated damages payment. In case of a breach of Section 8(i), the parties agree that damages will be difficult to determine and agree that the out- standing principal due under this Note shall increase by 50% as a liquidated damages payment. If

this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delin- quency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per share.

If the Holder shall commence an action or proceeding to enforce any provisions of this Note, in- cluding, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

Make-Whole for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:

Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Num- ber of conversion shares)]

The Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Com- pany.

9.In case any provision of this Note is held by a court of competent jurisdic- tion to be excessive in scope or otherwise invalid or unenforceable, such provision shall be ad- justed rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

10.Neither this Note nor any term hereof may be amended, waived, dis- charged or terminated other than by a written instrument signed by the Company and the Holder.

11.The Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a “shell issu- er. Further. The Company will instruct its counsel to either (i) write a 144 opinion to allow for

salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.

12.The Company shall issue irrevocable transfer agent instructions reserving 29,914,000 shares of its Common Stock for conversions under this Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer agent costs associated with issuing and delivering the share certificates to Holder. If such amounts are to be paid by the Holder, it may deduct such amounts from the Conversion Price. The company should at all times reserve a minimum of four times the amount of shares required if the note would be fully converted. The Holder may reasonably re- quest increases from time to time to reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection with its conver- sions.

13.The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

14.This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York or in the Federal courts sitting in the county or city of New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

IN WITNESS WHEREOF, the Company has caused this Note to be duly execut- ed by an officer thereunto duly authorized.

Dated: 9/19/16

MAX SOUND CORPORATION

By:

Title: Chairman & CFO

EXHIBIT A

NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $ of the above Note into Shares of Common Stock of Max Sound Corporation. (“Shares”) accord- ing to the conditions set forth in such Note, as of the date written below.

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

Date of Conversion: Applicable Conversion Price: Signature:

[Print Name of Holder and Title of Signer]

Address:

SSN or EIN:

Shares are to be registered in the following name:

Name: Address: Tel: Fax: SSN or EIN:

Shares are to be sent or delivered to the following account:

Account Name: Address:

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Sep. 03, 2017
Document And Entity Information
Entity Registrant Name	Max Sound Corporation
Entity Central Index Key	0001353499
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	Yes
Is Entity a Voluntary Filer?	Yes
Is Entity's Reporting Status Current?	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1,423,359,797
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2017

XML

Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current Assets
Cash	$ 45,544	$ 185,026
Prepaid expenses	104,151	62,230
Debt offering costs - net	37,577	42,499
Total Current Assets	187,272	289,755
Property and equipment, net	60,489	61,423
Other Assets
Security deposit	413	413
Total Other Assets	413	413
Total Assets	248,174	351,591
Current Liabilities
Accounts payable	244,760	238,594
Accrued expenses	614,063	453,387
Demand Note		20,000
Derivative liabilities	6,501,388	5,906,940
Convertible note payable, net of debt discount of $1,040,745 and $1,227,865 respectively	4,969,659	4,369,733
Total Current Liabilities	12,329,870	10,988,654
Stockholders' Deficit	(12,081,696)	(10,637,063)
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, No shares issued and outstanding Series, A Convertible Preferred stock, $0.00001 par value; 10,000,000 shares authorized, 5,000,000 and 0 shares issued and outstanding, respectively	50	50
Common stock, $0.00001 par value; 3,250,000,000 shares authorized, 1,335,363,631 and 935,642,114 shares issued and outstanding, respectively	13,352	9,355
Additional paid-in capital	66,247,327	64,355,387
Treasury stock	(519,575)	(519,575)
Accumulated deficit	(77,822,850)	(74,482,280)
Total Stockholders' Deficit	(12,081,696)	(10,637,063)
Total Liabilities and Stockholders' Deficit	$ 248,174	$ 351,591

XML

Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Common Stock
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, shares authorized	3,250,000,000	2,250,000,000
Common stock, shares issued	1,335,363,631
Common stock, shares outstanding	935,642,114
Preferred Stock
Preferred stock, par value	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series A Preferred Stock
Preferred stock, par value	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	5,000,000	0
Preferred stock, shares outstanding	0	0

XML

Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Revenue
Operating Expenses
General and administrative	108,077	197,381	216,952	741,905
Consulting	30,000	70,142	62,600	139,832
Professional fees	228,995	119,833	316,880	229,753
Website development		7,000	10,000	28,000
Compensation	162,000	198,000	324,000	410,000
Total Operating Expenses	529,072	592,356	930,432	1,549,490
Loss from Operations	(529,072)	(592,356)	(930,432)	(1,549,490)
Other Income / (Expense)
Other income		1,315	11	36,529
Interest expense	(112,238)	(74,684)	(200,251)	(164,145)
Derivative Expense	(263,589)	(424,320)	(543,172)	(2,505,412)
Amortization of debt offering costs	(41,032)	(23,532)	(62,697)	(58,000)
Loss on debt settlement	(211,916)	(215,161)	(239,203)	(316,270)
Amortization of debt discount	(862,033)	(1,508,607)	(1,656,217)	(2,847,565)
Change in fair value of embedded derivative liability	(1,369,868)	2,550,645	291,391	76,297
Total Other Income / (Expense)	(2,860,676)	305,656	(2,410,138)	(5,778,566)
Provision for Income Taxes
Net Income (Loss)	$ (3,389,748)	$ (286,700)	$ (3,340,570)	$ (7,328,056)
Net Loss Per Share - Diluted	$ 0.00	$ 0.00	$ (0.00)	$ (0.01)
Weighted average number of shares outstanding during the year Diluted	1,102,463,245	825,352,459	1,031,934,049	710,704,959

XML

Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash Flows From Operating Activities:
Net Loss	$ (3,340,570)	$ (7,328,056)
Adjustments to reconcile net loss to net cash used in operations
Depreciation/Amortization	24,933	40,498
Stock and stock options issued for services	53,500	105,894
Warrants issued for services		91,556
Amortization of intangible assets		56,390
Amortization of debt offering costs	62,697	58,000
Amortization of debt discount	1,656,217	2,847,565
Change in fair value of derivative liability	(291,391)	(76,297)
Loss on debt extinguishment		(35,200)
Derivative Expense	543,172	2,505,412
Changes in operating assets and liabilities:
(Increase)/Decrease in prepaid expenses	(41,921)	16,773
Increase in accounts payable	6,181	391,285
Increase in accrued expenses	217,032	165,286
Net Cash Used In Operating Activities	(1,110,150)	(1,160,894)
Cash Flows From Investing Activities:
Purchase of property equipment	(24,000)	(6,398)
Net Cash Used In Investing Activities	(24,000)	(6,398)
Cash Flows From Financing Activities:
Repayment of convertible note	233,743	1,197,096
Proceeds from issuance of convertible note, less offering costs and OID costs paid	1,248,411	2,195,547
Repayment of note payable	(20,000)	(40,000)
Net Cash Provided by Financing Activities	$ 994,668	$ 958,451
Net Decrease in Cash	(139,482)	(208,841)
Cash at Beginning of Year	$ 185,026	$ 211,064
Cash at End of Year	45,544	2,223
Supplemental disclosure of cash flow information:
Cash paid for interest	4,297
Cash paid for taxes
Supplemental disclosure of non-cash investing and financing activities:
Shares issued in conversion of convertible debt and accrued interest	798,096	1,000,029
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability	1,044,341	3,131,579
Reclass of convertible debt to demand note		$ 100,000

XML

Summary of Significant Accounting Policies and Organization

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Summary of Significant Accounting Policies and Organization

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

NOTE 1           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Organization and Basis of Presentation

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

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

On August 9, 2016 the Company has 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, which remain active and are paid current with OTC Markets through the end of 2016, may re-apply at any time after a price increase to meet all of 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 statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

These unaudited interim consolidated 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, 2016, filed with the SEC on March 31, 2017.

(B) Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

(C) Cash and Cash Equivalents

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of June 30, 2017 and December 31, 2016, the Company had no cash equivalents.

(D) Property and Equipment

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

(E) Research and Development

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

(F) Concentration of Credit Risk

The Company at times has cash in banks in excess of FDIC insurance limits. The Company had $0 in excess of FDIC insurance limits as of June 30, 2017 and December 31, 2016.

(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. The Company has not yet commenced revenue generating activities.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

(H) Impairment of Long-Lived Assets and Intangible Assets with Definite Life

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. The Company recorded $1,008,035and $15,703,617 in impairment of the intangible asset for the year ended December 31, 2016 and the year ended December 31, 2015, respectively. As of December 31, 2016 the intangible assets were fully impaired.

(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 six months ended June 30, 2017 and 2016 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

	June 30, 2017		June 30, 2016
Stock Warrants (Exercise price - $0.25 - $.52/share)		19,470,690		18,270,690
Stock Options (Exercise price - $0.10 - $.50/share)		2,866,652		2,866,652
Convertible Debt (Exercise price - $0.0017 - $.0126/share)		5,725,047,704		2,791,745,292
Series A Convertible Preferred Shares ($0.0/share)		125,000,000		125,000,000
Total		5,872,385,046		2,937,882,634

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 3,957,748,676 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.

The Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2012, and the related state income tax returns are no longer subject to examination by state authorities for the years prior to 2011.

 MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

(K) Business Segments

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

(L) Recent Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. This guidance will be effective for us in the first quarter of 2018 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter of 2020 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

 In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of adopting ASU No. 2016-02 on our financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer and provides additional guidance about how to apply the control principle when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual

periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on our financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years.  In May 2016, the FASB issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients,” which amends the guidance on transition, collectability, non-cash consideration, and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The standard allows for both retrospective and modified retrospective methods of adoption. The Company has not yet determined the impact of ASU 2016-10 on its financial statements.

In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Statements," which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019 (fiscal year 2021 for the Company). The Company has not yet determined the potential effects of the adoption of ASU 2016-13 on its Financial Statements.

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which aims to eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017 (fiscal year 2019 for the Company). The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest–Imputation of Interest (Subtopic 835-30) (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company is currently in the process of evaluating the impact of adoption of ASU 2015-03 on its balance sheets.

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: 

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following are the major categories of liabilities measured at fair value on a recurring basis: as of June 30, 2017 and December 31, 2016, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

	June 30, 2017					December 31, 2016
	Fair Value Measurement Using					Fair Value Measurement Using
		Level 1	Level 2	Level 3	Total		Level 1	Level 2	Level 3	Total
Derivative Liabilities		—	6,501,388	—	6,501,388		—	5,906,940	—	5,906,940

(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 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.

(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.

(P) 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, 2017

(UNAUDITED)

(Q) 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.

(R) 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.

(S) Licensing & Distribution

On June 20, 2015, the Company entered into a license agreement with Santok LTD of United Kingdom (“Santok). The term of the agreement is three years. Santok will pay the Company a royalty fee of $1.50 for each licensed product. Santok guarantees to the Company a minimum total of 150,000 cumulative licensed product installation with a minimum total guaranteed value of $225,000 over the three years of the agreement. If the total royalty paid is less than the guaranteed value, Santok will pay the difference.

On July 13, 2015, the Company entered into a license agreement with Luna Mobile, Inc. of United States (“Luna). The term of the agreement is three years. Luna will pay the Company a royalty fee of $1.50 for each licensed product manufactured and sold. As of June 30, 2017 Luna Mobile continues to seek to distribute its products.

XML

Going Concern

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Going Concern

NOTE 2           GOING CONCERN 

As reflected in the accompanying condensed unaudited financial statements, the Company had a net loss of $3,340,570 for the six months ended June 30, 2017, has an accumulated deficit of $77,822,850 as of June 30, 2017, and has negative cash flow from operations of $1,110,150 for the six months ended June 30, 2017.

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

The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings. Based on the Company’s operating plan, existing working capital at December 31, 2016 was not sufficient to meet the cash requirements to fund planned operations through December 31, 2017 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.

XML

Debt

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Debt

NOTE 3           DEBT AND ACCOUNTS PAYABLE

Debt consists of the following:

	AS of June 30, 2017			As of December 31, 2016
Convertible debt	$	6,010,404		$	5,597,598
Less: debt discount		(1,040,745	)		(1,227,865	)
Convertible debt - net		4,969,659			4,369,733
Demand note		—			20,000
Total current debt		4,969,659		$	4,389,733

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

(A) Convertible Debt

During the six months ended June 30, 2017 and year ended December 31, 2016, the Company issued convertible notes totaling $1,388,276, less the original issue discount and debt issue costs of $139,865, for net proceeds of $1,248,411 and $3,392,813, respectively.

The convertible notes issued for year ended June 30, 2017 and year ended December 31, 2016, consist of the following terms:

		Six months ended June 30, 2017 Amount of Principal Raised	Year ended December 31, 2016 Amount of Principal Raised
Interest Rate		0% - 8%		0% - 10%
Default interest rate		14% - 22%		14% - 22%
Maturity		November 4, 2015 –August 31, 2018		November 4, 2015 –March 10, 2018
Conversion terms 1	65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.	3,515,900		3,412,400
Conversion terms 2	65% of the “Market Price”, which is the one lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	1,212,867		624,087
Conversion terms 3	70% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 4	75% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.	765,000		765,000
Conversion terms 5	60% of the “Market Price”, which is the lowest trading prices for the common stock during the fifteen  (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 6	Conversion at $0.10 per share	Paid on conversion		Paid on conversion
Conversion terms 7	60% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	paid on conversion		127,000
Conversion terms 8	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	516,637		536,669
Conversion terms 9	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		79,810
Conversion terms 10	65% of the “Market Price”, which is the one lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 11	60% of the “Market Price”, which is the two lowest trading prices for the common stock during the twelve (12) trading day period prior to the conversion.	paid on conversion		52,632

Convertible Debt		6,010,398			5,597,598
Less: Debt Discount		(1,040,745	)		(1,227,865	)
Convertible Debt - net	$	4,969,659		$	4,369,733

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

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 and warrants as a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of shares of common stock required to net-share settle or due to the existence of a ratchet due to an anti-dilution provision. See Note 4 regarding accounting for derivative liabilities.

During the six months ended June 30, 2017, the Company converted debt and accrued interest, totaling $798,096 into 394,721,516 shares of common stock

During the year ended December 31, 2016, the Company converted debt and accrued interest, totaling $1,189,849 into 420,556,227 shares of common stock

Convertible debt consisted of the following activity and terms:

Convertible Debt Balance as of December 31, 2016	5,597,598		4% - 10%		November 4, 2015 - March 10, 2018
Borrowings during the six months ended June 30, 2017	1,388,276		8	%
Non-Cash Reclassification of accrued interest converted	56,369
Repayments	(233,743	)
Conversion of debt to into 394,721,516 shares of common stock with a valuation of $798,096 ($0.00092 - $0.00731/share) including the accrued interest of $56,369	(798,096	)
Convertible Debt Balance as of June 30, 2017	6,010,404		4% - 8%		November 4, 2015 –June 27, 2018

(D) Debt Issue Costs

During the six months ended June 30, 2017, the Company paid debt issue costs totaling $57,775.

During the six months ended June 30, 2016, the Company paid debt issue costs totaling $21,737.

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

	Six Months ended June 30, 2017			Year Ended December 31, 2016
Debt issue costs	$	320,398			262,623
Accumulated amortization of debt issue costs		(282,821	)		(220,124	)
Debt issue costs - net	$	37,577			42,499

During the six months ended June 30, 2017 and 2016 the Company amortized $62,697 and $58,000 of debt issue costs, respectively.

(E) Debt Discount & Original Issue Discount

During the six months ended June 30, 2017 and year ended December 31, 2016, the Company recorded debt discounts totaling $1,469,098 and $3,313,472, respectively.

The debt discount and the original issue discount recorded in 2017 and 2016 pertains to convertible debt that contains embedded conversion options that are required to be bifurcated and reported at fair value and original issue discounts.

The Company amortized $1,656,217 and $2,847,565 during the six months ended June 30, 2017 and 2016, respectively, to amortization of debt discount expense.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

	Six months ended June 30, 2017			Year Ended December 31, 2016
Debt discount	$	11,825,492			10,356,394
Accumulated amortization of debt discount		(10,784,747	)		(9,128,529	)
Debt discount - Net	$	1,040,745			1,227,865

XML

Convertible Debt - Derivative Liabilities

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Convertible Debt - Derivative Liabilities

NOTE 4           DERIVATIVE LIABILITIES

The Company identified conversion features embedded within convertible debt issued in 2016 and 2015 and warrants issued in 2016 and 2015. The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability.

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

Derivative Liability -December 31, 2016	$	5,906,940
Fair value at the commitment date for convertible instruments		1,930,180
Change in fair value of embedded derivative liability for warrants issued		(191,200	)
Change in fair value of embedded derivative liability for convertible instruments		(100,191	)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability		(657,847	)
Change from repayments		(386,494	)
Derivative Liability –June 30, 2017	$	6,501,388

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 six months ended June 30, 2017 and 2016 of $543,172 and $2,505,412, 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, 2017:

	Commitment Date	Re-measurement Date
Expected dividends:	—	—
Expected volatility:	133% - 262%	156%-203
Expected term:	0.08 - 3 Years	0.07–1.91 Years
Risk free interest rate:	0.06% - 1.60%	0.01% - 1.14%

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, 2016:

	Commitment Date	Re-measurement Date
Expected dividends:	—	—
Expected volatility:	133% - 262%	157% -216%
Expected term:	0.08 - 3 Years	0.01–2.40 Years
Risk free interest rate:	0.06% - 1.60%	0.12% - .1.47%

 MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

NOTE 5           PROPERTY AND EQUIPMENT

At June 30, 2017 and December 31, 2016, respectively, property and equipment is as follows:

	June 30, 2017			December 31, 2016
Website Development	$	294,795		$	294,795
Furniture and Equipment		141,971			117,971
Leasehold Improvements		6,708			6,708
Software		54,598			54,598
Music Equipment		2,578			2,578
Office Equipment		80,710			80,710
Domain Name		1,500			1,500
Sign		628			628
Total		583,488			559,488
Less: accumulated depreciation and amortization		(522,999	)		(498,065	)
Property and Equipment, Net	$	60,489		$	61,423

Depreciation/amortization expense for the six months ended June 30, 2017 and 2016 totaled $24,933 and $40,498, respectively.

XML

Property and Equipment

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Property and Equipment

NOTE 5           PROPERTY AND EQUIPMENT

At June 30, 2017 and December 31, 2016, respectively, property and equipment is as follows:

	June 30, 2017			December 31, 2016
Website Development	$	294,795		$	294,795
Furniture and Equipment		141,971			117,971
Leasehold Improvements		6,708			6,708
Software		54,598			54,598
Music Equipment		2,578			2,578
Office Equipment		80,710			80,710
Domain Name		1,500			1,500
Sign		628			628
Total		583,488			559,488
Less: accumulated depreciation and amortization		(522,999	)		(498,065	)
Property and Equipment, Net	$	60,489		$	61,423

Depreciation/amortization expense for the six months ended June 30, 2017 and 2016 totaled $24,933 and $40,498, respectively.

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 6          STOCKHOLDERS’ DEFICIT

On March 4, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors created and authorized the issuance of Series A Convertible Preferred stock, with a par value of $0.00001 per share. The face amount of state value of each Preferred Share of stock is $0.96 and the conversion price of $0.04 per share.

On June 24, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 120,000,000 shares of common stock from 450,000,000 million shares of common stock to 570,000,000 shares of common stock.

On September 24, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 120,000,000 shares of common stock from 450,000,000 million shares of common stock to 570,000,000 shares of common stock.

On August 19, 2015, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 280,000,000 shares of common stock from 570,000,000 million shares of common stock to 850,000,000 shares of common stock.

On January 13, 2016, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the Securities and Exchange Commission a Schedule 14C and with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 800,000,000 shares of common stock from 850,000,000 million shares of common stock to 1,650,000,000 shares of common stock.

On April 4, 2017, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the Securities and Exchange Commission a Schedule 14C and with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 600,000,000 shares of common stock from 1,650,000,000 shares of common stock to 2,250,000,000 shares of common stock.

On April 23, 2017, the Company with the consent of the Majority Shareholder and Unanimous Written Consent of the Board of Directors filed with the Securities and Exchange Commission a Schedule 14C and with the State of Delaware an Amended Certificate of Incorporation increasing the authorized shares of common stock by 1,000,000,000 shares of common stock from 2,250,000,000 shares of common stock to 3,250,000,000 shares of common stock.

(A) Common Stock 

During the six months ended June 30, 2017, the Company issued the following common stock:

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

Transaction Type	Quantity		Valuation		Range of Value per share
Conversion of convertible debt and accrued interest		394,721,516	$	798,096		$0.00092 to- $0.00731
Services - rendered		5,000,000		53,500	$	0.0107
Total shares issued		399,721,516	$	851,596

During the year ended December 31, 2016, the Company issued the following common stock:

Transaction Type	Quantity		Valuation		Range of Value per share
Conversion of convertible debt and accrued interest		420,556,227	$	1,189,849		$0.00143 to- $0.01056
Services  rendered		12,775,195		115,600		$0.09-$0.013
Patents		80,000,000		1,600,000	$	0.02
Total shares issued		513,331,422	$	2,905,449

The Company maintains on its books and within the above financials, debt to Venture Champion Asia Limited and ICG USA LLC or its designee(s) which is currently in default and has not been converted due to ICG’s settled administrative proceeding with the SEC, where the Company awaits any rightful exemption or regulatory no-action that would render any forward moving action compliant by all the parties.

The Company announced that it entered into an Agreement with Vedanti Systems Limited and Vedanti Licensing Limited (VLL) that resolves their dispute over the international Optimized Data Transmission (ODT) patent portfolio previously owned by Vedanti. The Agreement further provides that VLL and the Company will become co-owners of the pioneering portfolio. In consideration of the patent portfolio purchase, the Company issued 80,000,000 shares of its common stock to VLL. This patent portfolio consists of patents in the following countries: The United States, Australia, Austria, Cyprus, Denmark, Spain, Finland, France, Ireland, Italy, Luxembourg, Monaco, Portugal, Sweden, Turkey, Belgium, Switzerland/ Liechtenstein, United Kingdom, Greece, Netherlands and Germany. The Company continues to pursue its litigations against Google.

Return of Shares and Issuance of Preferred shares

On March 4, 2015 the Company filed a form 8K with the SEC associated with the Company entering into a Securities Exchange Agreement and the Company filing with the Secretary of State Delaware a Certificate of Designations, Preferences and Rights whereby, among other things, the Company for good and valuable consideration, agreed that in consideration of a large shareholder exchanging 120,000,000 shares of common stock back to the Company, the shareholder would receive 5,000,000 shares of Series A Convertible Preferred Stock of the Company at a Stated Value of $0.96 per share and a Conversion Price of $0.04 per share. The Series A Convertible Preferred Stock carries certain voting preferences and will accrue dividends at a rate of 8% per annum Stated Value, payable in cash or in kind at the election of the Board of Directors. For the six months ended June 30, 2017 and for the year ended December 31, 2016, the Company has not declared dividends.

 (B) Stock Warrants

The following tables summarize all warrant grants as of June 30, 2017, and the related changes during these periods are presented below:

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Balance, December 31, 2016		19,970,690		$	0.01		2.2
Granted		—
Exercised		—
Cancelled/Forfeited		(500,000	)
Balance, June 30, 2017		19,470,690		$	0.01		1.7

A summary of all outstanding and exercisable warrants as of June 30, 2017 is as follows:

						Weighted Average		Aggregate Intrinsic
Exercise		Warrants		Warrants		Remaining		Value
Price		Outstanding		Exercisable		Contractual Life
$	0.01		2,000,000		2,000,000		1.67	$	—
$	0.005		1,000,000		1,000,000		1.91	$	—
$	0.0029		8,620,690		8,620,690		1.75	$	—
$	0.006		5,600,000		5,600,000		1.89
$	0.12		2,000,000		2,000,000		1.27	$	—
$	0.40		250,000		250,000		0.11	$	—
			19,470,690		19,470,690		1.7	$	—

 A summary of all outstanding and exercisable warrants as of December 31, 2016 is as follows:

						Weighted Average		Aggregate Intrinsic
Exercise		Warrants		Warrants		Remaining		Value
Price		Outstanding		Exercisable		Contractual Life
$	0.01		2,000,000		2,000,000		2.16	$	—
$	0.005		1,000,000		1,000,000		2.40	$	—
$	0.0029		8,620,690		8,620,690		2.25	$	—
$	0.006		5,600,000		5,600,000		2.39
$	0.12		2,000,000		2,000,000		1.76	$	—
$	0.40		750,000		750,000		0.40	$	—
			19,970,690		19,970,690		2.2	$	—

(C) Stock Options

The following tables summarize all option grants as of June 30, 2017, and the related changes during these periods are presented below:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life  (in Years)
Outstanding – December 31, 2016		2,866,652	$	0.13		1.02
Granted		—	$	—		—
Exercised		—	$	—		—
Forfeited or Canceled		—	$	—		—
Outstanding – June 30, 2017		2,866,652	$	0.13		0.02
Exercisable – June 30, 2017		2,866,652

XML

Commitments

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS

NOTE 7         COMMITMENTS

(A) Employment Agreement

On January 31, 2016 Mr. Lloyd Trammell (“Trammell”) submitted a notice of resignation ending employment on March 1, 2016. In connection with Trammell’s resignation a dispute arose between the Company and Trammell concerning Trammell’s desiring to sell 13 million shares of the Company’s stock. The Company filed an action in the Superior court of the State of California, County of San Diego (assigned Case No. 37-2016-00033037-CU-MU-NC) seeking to enjoin or restrict the sale of the Company shares. The lawsuit was settled June 26, 2017 amicably and the Company has agreed to buy back the referenced shares for $15,000. Further, in the event closing of the buyback is delayed by any availability of funds, the Company agrees to pay an additional amount to Trammel equal to $150 per day for each day beyond August 1^st 2017 the closing is delayed.

On January 8, 2016, the Company extended the employment agreement with its CEO, John Blaisure for an additional five years. The Company issued 12,000,000 shares of Company’s common stock as part of the compensation with a fair value of $105,600 ($0.0088) based on the stock trading price.

(B) Consulting Agreement

On April 14, 2016, the Company entered into an agreement, for consulting services, for which the Company issued 1,000,000 warrants at a strike price of ($0.005/share) per share.

On March 6, 2016, the Company entered into a revised engagement with its corporate counsel, McMenamin Law Group, for corporate legal services to be provided by legal counsel beginning July 28, 2015 through December 31, 2016, pursuant to which the Company has agreed to issue a five (5) year warrant at an exercise price totaling $25,000 at a strike price of ($0.0029/share) per share of common stock of the Company, which share price was the closing price of the Company’s stock on March 3, 2016. In addition the Company has agreed to pay McMenamin Law Group cash consideration totaling $15,000 on or before March 31, 2016, or a funding of the Company, whichever occurs first. As of December 31, 2016, the payment was not made. This new engagement shall replace and supersede any previous engagements or other agreements between the Company and McMenamin Law Group.

On October 14, 2016 the Company entered into a new engagement with its corporate counsel McMenamin Law Group, for corporate legal services to be provided from January 1, 2017 through December 31, 2017. Specifically the Company agreed to pay a flat fee totaling $32,500 in the following installment, (i) $10,000 on October 17, 2016, (ii) $7,500 on January 3, 2017, (iii) $7,500 on June 30, 2017, and (iv) $7,500 on June 30, 2017.

(C) Other Agreements

On February 21, 2017 the Company entered into an Agreement with architect Eli Attia. This Agreement terminated and replaced the previous Representation Agreement and allows the Company to continue to pursue litigations against Google and Flux.  

XML

Litigation

6 Months Ended

Jun. 30, 2017

Loss Contingency [Abstract]

LITIGATION

NOTE 8       LITIGATION

From time to time, the Company has 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 January 21, 2015, the Company filed a patent infringement action against Netflix Inc., Netflix Luxembourg S.a.r.l. and Netflix International B.V. with the District Court of Mannheim, Germany. The asserted patent is the same patent as in the German proceedings

against Google Inc. and its subsidiaries. The Complaint alleges that Netflix Inc. and its subsidiaries are offering and transmitting video streams to German customers as part of their video-on-demand business model; the videos being encoded and transmitted in a manner claimed and protected by the patent. The Company primarily seeks a permanent injunction against the Defendants, plus damages and information regarding past infringements. The Company, on or about December 2015 upon advice of counsel, decided withdraw the litigation prior to oral argument, which withdrawal is without prejudice to re-file the lawsuit in the future.

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

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

On January 26, 2015, the Company was named as a defendant in an action filed in the Superior Court for the State of California and the County of Los Angeles captioned Bibicoff Family Trust v. Max Sound Corporation (Case No. SC123679). The parties participated in mediation and arrived successfully at a settlement and resolution of the matter. In March 2017 the Company successfully completed paying the agreed upon settlement amount.

On August 11, 2014, the Company and VSL simultaneously filed trade secret and patent infringement actions against Google, Inc., and its subsidiaries YouTube, LLC, and On2 Technologies, Inc., relating to proprietary and patented technology owned by Vedanti Systems Limited (“Vedanti”), a subsidiary of VSL.  The patent infringement complaint was originally filed in the U.S. District Court for the District of Delaware; the trade secret suit was filed in Superior Court of California, County of Santa Clara.  On September 30, 2014, the Company filed notices of voluntary dismissal without prejudice as to both lawsuits. On October 1, 2014, the Company amended the patent complaint and filed it in the U.S. District Court for the Northern District of California. In this patent lawsuit, the Company contends that, in 2010, while Google was in discussions with Vedanti about the possibility of acquiring Vedanti's patented digital video streaming techniques and other proprietary methods, Google gained access to and received technical guidance regarding Vedanti’s proprietary codec, a computer program capable of encoding and decoding a digital data stream or signal.  The lawsuit further alleges that soon after Google and Vedanti initiated negotiations, Google willfully infringed Vedanti's patent by incorporating Vedanti's patented technology into Google's own VP8, VP9, WebM, YouTube, Google Adsense, Google Play, Google TV, Chromebook, Google Drive, Google Chromecast, Google Play-per-view, Google Glasses, Google+, Google’s Simplify, Google Maps, and Google Earth, without compensating Vedanti for such use.  On May 13, 2015 Google's “motion to dismiss” was denied by the Northern District of California court in a seven page order, stating that Max Sound had sufficiently alleged the existence and validity of the '339 Patent.  However, on November 24, 2015, the court granted a second motion to dismiss for lack of subject matter jurisdiction based on the defendants’ argument that the agreements between the Company and VSL/Vedanti did not clearly give the Company standing to enforce the patent rights.  The Company appealed that decision on February 22, 2016. One January 18, 2017 the Company received a notice from the Federal Circuit Court of Appeals that affirmed the order of the District Court dismissing MAXD's patent infringement lawsuit against Google for lack of standing. The Court did not issue a written decision explaining its reasoning or that the Company's arguments were not correct; however, The Company believes that their decision was predicated on the fact that as now co-owners of the patents with Vedanti, the Company can simply re-file together against Google. The Court also issued an order denying Google's motion arguing that the Company's appeal should be dismissed as moot.

In connection with the dismissal of the aforementioned litigation, the Company initiated an arbitration against VSL Communications, Ltd., Vedanti Systems, Ltd., Constance Nash, Robert Newell and eTech Investments as respondents before the American Arbitration Association for breach of contract, fraud, and other causes of action. Subsequently, the Company is pursuing in arbitration claims against VSL to enforce the agreement and to compel VSL to comply with the agreement’s terms and conditions that inter alia VSL must fully cooperate with the Company to cure any issues the Court raised with standing to pursue the claims. On January 17, 2017 the AAA notified the Company’s counsel that the respondent’s counterclaim was withdrawn this arbitration claim was formally concluded.

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

prosecuted, and the Company believes it has a good likelihood of success.  Defendants have filed multiple demurrers to the complaint, and the Court has issued orders allowing the case to proceed.  Defendants filed another demurrer on March 17, 2016, which was denied by the Court on August 12, 2016.  The parties continue to file motions and are expected to begin the discovery phase of the litigation.

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

On June 1, 2016, the Company was named as a defendant in an action filed in the Superior Court of the State of California, County of Los Angeles – Central District, captioned Adli Law Group, PC v. Max Sound Corporation (Case No. BC621886). Plaintiff alleges two causes of action for Breach of Contract and a cause of action for Common Counts, all arising out of the Company’s alleged failure to pay for Plaintiff’s legal services. Despite the fact that the Company was never served with the Complaint, default was entered against the Company. The Default has been set aside and the Company has responded to the Complaint with an Answer and Cross-Complaint for Breach of Contract, Professional Negligence, Breach of Fiduciary Duty, Conversion, and Fraud, due to the fact, that among other things, Adli Law reassigned the Company's primary patent to itself. 

On September 22, 2016, the Company filed an action in the Superior Court of the State of California, County of San Diego – North County Regional Center, captioned Max Sound Corporation v. Globex Transfer, LLC (Case No. 37-2016-0003037-CU-MC-NC). The Company requests injunctive relief and declaratory relief regarding the release of 13 million restricted shares of Company stock. On September 26, 2016, the Court granted the Company a preliminary injunction, enjoining Defendant from releasing any restriction of the subject shares without first obtaining the Company’s consent, pending the outcome of the litigation.”

In November 2016, the Company entered into an agreement with Vedanti Licensing Limited ("VLL") and Vedanti Systems Limited ("Vedanti") under (the "VLL/Max Sound Agreement") granting the Company co-ownership of U.S. Patent No. 7,974,339 (the "`339 Patent") along with the other patents owned by Vedanti Systems Limited. Thus, the Company is now a co-owner with VLL of the `339 Patent and ODT Patent portfolio, pursuant to the VLL/Max Sound Agreement, the Company and VLL intend to file new lawsuit against Google and others for infringement as co-owners. 

On December 20, 2016 Companies House, the United Kingdom's registrar of companies, notified the Company that VSL Communications Limited was dissolved, thereafter voiding any remaining agreement with VSL Communications or its previous Officers, Directors or Management.

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

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Subsequent Events

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 9       SUBSEQUENT EVENTS

On July 6, 2017, the Company converted a total of $20,000 in convertible debt comprised of principal into 17,574,692 common shares.

On July 10, 2017, the Company converted a total of $23,400 in convertible debt comprised of principal into 20,000,000 common shares.

On July 27, 2017, the Company converted a total of $42,165 in convertible debt comprised of principal and interest into 49,899,976 common shares.

On July 26, 2017 the Company entered into a settlement agreement with Lloyd Trammell to buy back 13 million shares of Max Sound to settle the legal action. In consideration for the transfer the Company agrees to pay$15,000 and all transfer fees and other third party costs associated with the buyback. If closing of the buyback is delayed by any availability of funds, the Company agrees to pay an additional amount to Trammel equal to $150 per day for each day beyond August 1^st 2017 the closing is delayed.

On July 27, 2017, the Company entered into an agreement with Power Up Lending Group, LTD to issue up to $123,000 in a convertible note. The note matures on April 30, 2018 and bears an interest charge of 12%. The conversion price equals the “Variable Conversion Price”, which is 61% 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 unpaid principal amount into shares of common stock after six months. The Company received $120,000 proceeds on July 28, 2017.

August 5, 2017, the Company entered into an agreement with GS Capital Partners, LLC to issue up to $105,000 in a convertible note. The note matures on August 3, 2018 and bears an interest charge of 8%. The conversion price equals the “Variable Conversion Price”, which is

65% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion. The holder of the note has a right to convert all or any part of the outstanding unpaid principal amount into shares of common stock after six months. The Company received $120,000 proceeds on August 4, 2017.

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Summary of Significant Accounting Policies and Organization (Policies)

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Organization and Basis of Presentation

(A) Organization and Basis of Presentation

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

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

On August 9, 2016 the Company has 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, which remain active and are paid current with OTC Markets through the end of 2016, may re-apply at any time after a price increase to meet all of 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 statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

These unaudited interim consolidated 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, 2016, filed with the SEC on March 31, 2017.

Use of Estimates

(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.

Cash and Cash Equivalents

(C) Cash and Cash Equivalents

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of June 30, 2017 and December 31, 2016, the Company had no cash equivalents.

Property and Equipment

(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.

Research and Development

(E) Research and Development

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

Concentration of Credit Risk

(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, 2017 and December 31, 2016.

Revenue Recognition

(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. The Company has not yet commenced revenue generating activities.

Impairment of Long-Lived Assets

(H) Impairment of Long-Lived Assets and Intangible Assets with Definite Life

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. The Company recorded $1,008,035 and $15,703,617 in impairment of the intangible asset for the year ended December 31, 2016 and the year ended December 31, 2015, respectively. As of December 31, 2016 the intangible assets were fully impaired.

Loss Per Share

(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 six months ended June 30, 2017 and 2016 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

	June 30, 2017		June 30, 2016
Stock Warrants (Exercise price - $0.25 - $.52/share)		19,470,690		18,270,690
Stock Options (Exercise price - $0.10 - $.50/share)		2,866,652		2,866,652
Convertible Debt (Exercise price - $0.0017 - $.0126/share)		5,725,047,704		2,791,745,292
Series A Convertible Preferred Shares ($0.0/share)		125,000,000		125,000,000
Total		5,872,385,046		2,937,882,634

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 3,957,748,676 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.

Income Taxes

(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.

The Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2012, and the related state income tax returns are no longer subject to examination by state authorities for the years prior to 2011.

Business Segments

(L) Business Segments

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

Recent Accounting Pronouncements

(L) Recent Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. This guidance will be effective for us in the first quarter of 2018 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter of 2020 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

 In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of adopting ASU No. 2016-02 on our financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer and provides additional guidance about how to apply the control principle when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual

periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on our financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years.  In May 2016, the FASB issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients,” which amends the guidance on transition, collectability, non-cash consideration, and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The standard allows for both retrospective and modified retrospective methods of adoption. The Company has not yet determined the impact of ASU 2016-10 on its financial statements.

In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Statements," which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019 (fiscal year 2021 for the Company). The Company has not yet determined the potential effects of the adoption of ASU 2016-13 on its Financial Statements.

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which aims to eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017 (fiscal year 2019 for the Company). The Company has not yet determined the potential effects of the adoption of ASU 2016-15 on its Financial Statements.

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest–Imputation of Interest (Subtopic 835-30) (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company is currently in the process of evaluating the impact of adoption of ASU 2015-03 on its balance sheets.

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

Fair Value of Financial Instruments

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: 

MAX SOUND CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017

(UNAUDITED)

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following are the major categories of liabilities measured at fair value on a recurring basis: as of June 30, 2017 and December 31, 2016, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

	June 30, 2017					December 31, 2016
	Fair Value Measurement Using					Fair Value Measurement Using
		Level 1	Level 2	Level 3	Total		Level 1	Level 2	Level 3	Total
Derivative Liabilities		—	6,501,388	—	6,501,388		—	5,906,940	—	5,906,940

Stock-Based Compensation

(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 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.

Reclassification

(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.

Derivative Financial Instruments

(P) 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. 

Original Issue Discount

(Q) 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.

Debt Issue Costs and Debt Discount

(R) 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.

Licensing and Distribution

(S) Licensing & Distribution

On June 20, 2015, the Company entered into a license agreement with Santok LTD of United Kingdom (“Santok). The term of the agreement is three years. Santok will pay the Company a royalty fee of $1.50 for each licensed product. Santok guarantees to the Company a minimum total of 150,000 cumulative licensed product installation with a minimum total guaranteed value of $225,000 over the three years of the agreement. If the total royalty paid is less than the guaranteed value, Santok will pay the difference.

On July 13, 2015, the Company entered into a license agreement with Luna Mobile, Inc. of United States (“Luna). The term of the agreement is three years. Luna will pay the Company a royalty fee of $1.50 for each licensed product manufactured and sold. As of June 30, 2017 Luna Mobile continues to seek to distribute its products.

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Summary of Significant Accounting Policies and Organization (Tables)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Summary of potentially dilutive securities

	June 30, 2017		June 30, 2016
Stock Warrants (Exercise price - $0.25 - $.52/share)		19,470,690		18,270,690
Stock Options (Exercise price - $0.10 - $.50/share)		2,866,652		2,866,652
Convertible Debt (Exercise price - $0.0017 - $.0126/share)		5,725,047,704		2,791,745,292
Series A Convertible Preferred Shares ($0.0/share)		125,000,000		125,000,000
Total		5,872,385,046		2,937,882,634

Fair Value of Financial Instruments

	June 30, 2017					December 31, 2016
	Fair Value Measurement Using					Fair Value Measurement Using
		Level 1	Level 2	Level 3	Total		Level 1	Level 2	Level 3	Total
Derivative Liabilities		—	6,501,388	—	6,501,388		—	5,906,940	—	5,906,940

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Debt (Tables)

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Summary of Convertable Debt

	AS of June 30, 2017			As of December 31, 2016
Convertible debt	$	6,010,404		$	5,597,598
Less: debt discount		(1,040,745	)		(1,227,865	)
Convertible debt - net		4,969,659			4,369,733
Demand note		—			20,000
Total current debt		4,969,659		$	4,389,733

Convertible Debt

		Six months ended June 30, 2017 Amount of Principal Raised	Year ended December 31, 2016 Amount of Principal Raised
Interest Rate		0% - 8%		0% - 10%
Default interest rate		14% - 22%		14% - 22%
Maturity		November 4, 2015 –August 31, 2018		November 4, 2015 –March 10, 2018
Conversion terms 1	65% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.	3,515,900		3,412,400
Conversion terms 2	65% of the “Market Price”, which is the one lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	1,212,867		624,087
Conversion terms 3	70% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 4	75% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.	765,000		765,000
Conversion terms 5	60% of the “Market Price”, which is the lowest trading prices for the common stock during the fifteen  (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 6	Conversion at $0.10 per share	Paid on conversion		Paid on conversion
Conversion terms 7	60% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	paid on conversion		127,000
Conversion terms 8	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	516,637		536,669
Conversion terms 9	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		79,810
Conversion terms 10	65% of the “Market Price”, which is the one lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	paid on conversion		paid on conversion
Conversion terms 11	60% of the “Market Price”, which is the two lowest trading prices for the common stock during the twelve (12) trading day period prior to the conversion.	paid on conversion		52,632

Convertable Debt Terms

Convertible Debt Balance as of December 31, 2016	5,597,598		4% - 10%		November 4, 2015 - March 10, 2018
Borrowings during the six months ended June 30, 2017	1,388,276		8	%
Non-Cash Reclassification of accrued interest converted	56,369
Repayments	(233,743	)
Conversion of debt to into 394,721,516 shares of common stock with a valuation of $798,096 ($0.00092 - $0.00731/share) including the accrued interest of $56,369	(798,096	)
Convertible Debt Balance as of June 30, 2017	6,010,404		4% - 8%		November 4, 2015 –June 27, 2018

Debt Issue Costs

	Six Months ended June 30, 2017			Year Ended December 31, 2016
Debt issue costs	$	320,398			262,623
Accumulated amortization of debt issue costs		(282,821	)		(220,124	)
Debt issue costs - net	$	37,577			42,499

Debt Discount

	Six months ended June 30, 2017			Year Ended December 31, 2016
Debt discount	$	11,825,492			10,356,394
Accumulated amortization of debt discount		(10,784,747	)		(9,128,529	)
Debt discount - Net	$	1,040,745			1,227,865

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Convertible Debt - Derivative Liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Fair Value of the Conversion Feature

Derivative Liability -December 31, 2016	$	5,906,940
Fair value at the commitment date for convertible instruments		1,930,180
Change in fair value of embedded derivative liability for warrants issued		(191,200	)
Change in fair value of embedded derivative liability for convertible instruments		(100,191	)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability		(657,847	)
Change from repayments		(386,494	)
Derivative Liability –June 30, 2017	$	6,501,388

Management Assumptions

	Commitment Date	Re-measurement Date
Expected dividends:	—	—
Expected volatility:	133% - 262%	156%-203
Expected term:	0.08 - 3 Years	0.07–1.91 Years
Risk free interest rate:	0.06% - 1.60%	0.01% - 1.14%

Management Assumptions

	Commitment Date	Re-measurement Date
Expected dividends:	—	—
Expected volatility:	133% - 262%	157% -216%
Expected term:	0.08 - 3 Years	0.01–2.40 Years
Risk free interest rate:	0.06% - 1.60%	0.12% - .1.47%

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Summary of property and equipment

	June 30, 2017			December 31, 2016
Website Development	$	294,795		$	294,795
Furniture and Equipment		141,971			117,971
Leasehold Improvements		6,708			6,708
Software		54,598			54,598
Music Equipment		2,578			2,578
Office Equipment		80,710			80,710
Domain Name		1,500			1,500
Sign		628			628
Total		583,488			559,488
Less: accumulated depreciation and amortization		(522,999	)		(498,065	)
Property and Equipment, Net	$	60,489		$	61,423

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Summary of Common Stock

Transaction Type	Quantity		Valuation		Range of Value per share
Conversion of convertible debt and accrued interest		394,721,516	$	798,096		$0.00092 to- $0.00731
Services - rendered		5,000,000		53,500	$	0.0107
Total shares issued		399,721,516	$	851,596

Summary of warrants activity

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Balance, December 31, 2016		19,970,690		$	0.01		2.2
Granted		—
Exercised		—
Cancelled/Forfeited		(500,000	)
Balance, June 30, 2017		19,470,690		$	0.01		1.7

Summary of all outstanding and exercisable warrants

						Weighted Average		Aggregate Intrinsic
Exercise		Warrants		Warrants		Remaining		Value
Price		Outstanding		Exercisable		Contractual Life
$	0.01		2,000,000		2,000,000		1.67	$	—
$	0.005		1,000,000		1,000,000		1.91	$	—
$	0.0029		8,620,690		8,620,690		1.75	$	—
$	0.006		5,600,000		5,600,000		1.89
$	0.12		2,000,000		2,000,000		1.27	$	—
$	0.40		250,000		250,000		0.11	$	—
			19,470,690		19,470,690		1.7	$	—

Summary of Stock Options

						Weighted Average		Aggregate Intrinsic
Exercise		Warrants		Warrants		Remaining		Value
Price		Outstanding		Exercisable		Contractual Life
$	0.01		2,000,000		2,000,000		2.16	$	—
$	0.005		1,000,000		1,000,000		2.40	$	—
$	0.0029		8,620,690		8,620,690		2.25	$	—
$	0.006		5,600,000		5,600,000		2.39
$	0.12		2,000,000		2,000,000		1.76	$	—
$	0.40		750,000		750,000		0.40	$	—
			19,970,690		19,970,690		2.2	$	—

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Summary of Significant Accounting Policies and Organization (Details) - shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Preferred Stock
Summary of potentially dilutive securities
Potentially dilutive securities	125,000,000	125,000,000
Convertible Debt Securities [Member]
Summary of potentially dilutive securities
Potentially dilutive securities	5,725,047,704	2,791,745,292
Equity Option [Member]
Summary of potentially dilutive securities
Potentially dilutive securities	2,866,652	2,866,652
Warrant [Member]
Summary of potentially dilutive securities
Potentially dilutive securities	19,470,690	18,270,690

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Going Concern (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Notes to Financial Statements
Net Loss (Income)	$ (3,389,748)	$ (286,700)	$ (3,340,570)	$ (7,328,056)
Working Capital Deficit			(77,822,850)
Cash Flow from Operations			$ (1,110,150)

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Debt - Summary of Convertable Debt (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Debt Disclosure [Abstract]
Convertible debt	$ 5,597,598	$ 6,010,404
Less: debt discount	(1,227,865)	(1,040,745)
Convertible debt - net	4,369,733	4,969,659
Demand note	20,000
Total current debt	$ 4,389,733	$ 4,969,659

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Debt - Convertible Debt (Details)	6 Months Ended
	Jun. 30, 2017 USD ($)
Debt Disclosure [Abstract]
Borrowings during period	$ 1,388,276
Repayments	233,743
Conversion of debt to into 394,721,516 shares of common stock with a valuation of $798,096 ($0.00092 - $0.00731/share) including the accrued interest of $56,369	798,096
Convertible Debt Ending Balance, Value	$ 6,010,404

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Debt - Debt Issue Costs (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Debt issue costs	$ 320,398	$ 262,623
Accumulated amortization of debt issue costs	(282,821)	(220,124)
Debt issue costs - net	$ 37,577	$ 42,499

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Debt - Debt Discount (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Debt discount	$ 11,825,492	$ 10,356,394
Accumulated amortization of debt discount	(10,784,747)	(9,128,529)
Debt discount - Net	$ 1,040,745	$ 1,227,865

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Debt - Schedule Of Debt Instruments (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Conversion Terms 1
Conversion Terms	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.	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.
Amount of Principle Raised	$ 3,515,900	$ 3,412,400
Conversion Terms 2
Conversion Terms	65% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	65% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.
Amount of Principle Raised	$ 1,212,867	$ 624,087
Conversion Terms 3
Conversion Terms	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.	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.
Amount of Principle Raised
Conversion Terms 4
Conversion Terms	75% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.	75% of the “Market Price”, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion.
Amount of Principle Raised	$ 765,000	$ 765,000
Conversion Terms 5
Conversion Terms	60% of the “Market Price”, which is the lowest trading prices for the common stock during the fifteen  (15) trading day period prior to the conversion.	60% of the “Market Price”, which is the lowest trading prices for the common stock during the fifteen  (15) trading day period prior to the conversion.
Amount of Principle Raised
Conversion Terms 6
Conversion Terms	Conversion at $0.10 per share	Conversion at $0.10 per share
Amount of Principle Raised
Conversion Terms 7
Conversion Terms	60% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	60% of the “Market Price”, which is the lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.
Amount of Principle Raised		$ 127,000
Conversion Terms 8
Conversion Terms	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the ten (10) trading day period prior to the conversion.
Amount of Principle Raised	$ 516,637	$ 536,669
Conversion Terms 9
Conversion Terms	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	65% of the “Market Price”, which is the two lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.
Amount of Principle Raised		$ 79,810
Conversion Terms 10
Conversion Terms	60% of the “Market Price”, which is the lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.	60% of the “Market Price”, which is the lowest trading prices for the common stock during the fifteen (15) trading day period prior to the conversion.
Amount of Principle Raised		$ 52,632
Debt Instruments
Convertible Debt	6,010,398	5,597,598
Less: Debt Discount	(1,040,745)	(1,227,865)
Convertible Debt - net	$ 4,969,659	$ 4,369,733

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Property and Equipment (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Summary of property and equipment
Total		$ 559,488	$ 583,488
Less: accumulated depreciation and amortization		(498,065)	(522,999)
Property & Equipment, Net	$ 60,489	61,423	$ 60,489
Furniture and Equipment [Member]
Summary of property and equipment
Total	141,971	117,971
Internet Domain Names [Member]
Summary of property and equipment
Total	1,500	1,500
Sign [Member]
Summary of property and equipment
Total	628	628
Office Equipment [Member]
Summary of property and equipment
Total	80,710	80,710
Computer Software, Intangible Asset [Member]
Summary of property and equipment
Total	54,598	54,598
Leasehold Improvements [Member]
Summary of property and equipment
Total	6,708	6,708
Music Equipment [Member]
Summary of property and equipment
Total	2,578
Website Development [Member]
Summary of property and equipment
Total	$ 294,795	$ 294,795

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Stockholders' Equity - Summary of Common Stock (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Conversion of convertible debt and accrued interest, Shares	394,721,515	420,556,227
Conversion of convertible debt and accrued interest, Value	$ 798,096	$ 1,189,849
Services - rendered, Shares	5,000,000	12,775,195
Services - rendered, Value	$ 53,500	$ 12,775,195
Shares issued for Patents, Shares		80,000,000
Shares issued for Patents, Value		1,600,000
Shares issued for Patents, Value per share		$ 0
Total shares issued, Shares	399,721,516	513,331,422
Total shares issued, Value	851,596	2,905,449
Maximum
Conversion of convertible debt and accrued interest, Value per share	$ 0.00731
Services - rendered, Value per share	$ 0
Minimum
Conversion of convertible debt and accrued interest, Value per share	$ 0.00092

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Stockholders' Equity - Summary of warrants activity (Details)	Jun. 30, 2017 $ / shares shares
Equity [Abstract]
Number of Warrants, Balance	19,470,690
Number of Warrants, Granted
Number of Warrants, Cancelled / Forfeited	(500,000)
Weighted Average Exercise Price, Balance | $ / shares	$ .01

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Stockholders' Equity - Summary of all outstanding and exercisable warrants (Details) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Warrants Outstanding	19,470,690	19,970,690
Warrants Exercisable	19,470,690	19,970,690
$0.01
Exercise Price	$ 0.01
Warrants Outstanding	2,000,000
Warrants Exercisable	2,000,000
$0.005
Exercise Price	$ 0.005
Warrants Outstanding	1,000,000
Warrants Exercisable	1,000,000
$0.0029
Exercise Price	$ 0.0029
Warrants Outstanding	8,620,690
Warrants Exercisable	8,620,690
$0.006
Exercise Price	$ 0.006
Warrants Outstanding	5,600,000
Warrants Exercisable	5,600,000
$0.12
Exercise Price	$ 0.12
Warrants Outstanding	2,000,000
Warrants Exercisable	2,000,000
$0.40
Exercise Price	$ 0.40
Warrants Outstanding	250,000
Warrants Exercisable	250,000

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Stockholders' Equity - Summary of option activity (Details)	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Equity [Abstract]
Outstanding, Shares	2,866,652
Granted
Exercized
Forfeited or Canceled
Exercisable, Shares	2,866,652
Weighted Average Excerise Price | $ / shares	$ 0.13