Max Sound Corp (OTCBB:MAXD) Bounces
Last Thursday the stock of Max Sound Corp (OTCBB:MAXD) crashed by nearly 16% and closed at $0.0211. During the session the company actually registered a new 52-week low of $0.0202 per share. It seems that sinking to such record lows spurred some investors to jump into the stock and on Friday MAXD managed to bounce recovering 12.8% and climbing back to a close at $0.0238. Is this just a one-day spike though?
Well, MAXD are still sitting precariously close to the 52-week low. Not to mention that for the past couple of months the performance of the ticker has been simply atrocious. Back in April after an impressive climb the company moved to prices above 10 cents. Five months later and they are now sitting 76% lower.
The disastrous decline is far less surprising when you take into consideration the dire financial state of the company. According to the latest financial report as of June 30 MAXD had:
• $6215 cash
• $89 thousand total current assets
• $6 million total current liabilities
• ZERO revenues
• $2.8 million net loss
For the first half of 2015 the company generated zero revenues while incurring a net loss of 4.8 million. MAXD finished 2014 with revenues of less than $2500. The lack of resources means that new sources of capital must be found and in the case of Max Sound this means more convertible debt – the subsequent events section of the report shows that between June 24 and August 7 the company entered into agreements to issue over $425 thousand in convertible notes. Keep in mind that as of June 30 MAXD already had Convertible Debt Balance of more than $3.1 million. The notes can be turned into common shares at discounts ranging from 25% to 40%. During the six months ended June 30 as a conversion of debt nearly 64.5 million shares were issued at an average price of $0.026 per share.
So, if MAXD is surrounded by so many extremely serious red flags why are investors even considering putting their money in the stock? The reason for that are the two patent infringement lawsuits the company filed against Google and YouTube. The trial in Germany will be heard on December 8 while the US case had its date for trial set in November 2016. There is no guarantee that the outcome of either case will be favorable for MAXD.
With the nearest trial still months away MAXD is most likely going to remain a rather volatile choice that should be approached with caution.
