Max Sound Corp (OTCBB:MAXD) Turns up the Volume
Some pun-loving investors around the message boards are proudly saying that Max Sound Corp (OTCBB:MAXD) is “a sound investment”. We’re not sure what their idea of a sound investment is, but in our book, the chart on the right certainly doesn’t fit in it.
In November 2014, the ticker hit a 52-week high of $0.13 per share. A couple of weeks ago, it finally found bottom at less than $0.02.
The latest 10-Q doesn’t look like it belongs to the most solid OTC offering, either. It covers the second quarter of 2015 and it looks like this:
- cash: $6,125
- current assets: $89,655
- current liabilities: $6,085,238
- NO quarterly revenue
- quarterly net loss: $2,831,325
Couple all this with the promotional history which is pretty extensive, and you’ll see that MAXD doesn’t really look like the soundest investment out there. Yet, some people are willing to take the risk.
Thanks to those people MAXD bounced back up yesterday and after gaining 24%, it reached a close of $0.024 per share. The people in question also pushed the dollar volume up to more than $155 thousand and we haven’t seen that happen in a while. But what are they so excited about?
That’s a tricky one. There are no new press releases or filings and this time, the pumpers are keeping their distance as well. Some investors reckon that, after consulting their crystal balls, they’ve reached the answer. A German Court recently set a hearing date of December 8 for MAXD‘s lawsuit against Google and the investors in question are suggesting that everybody wants to get in ahead of the ruling so that they can reap maximum gains. Whether that really is the reason is for you to decide.
Regardless of the trigger, some of you will probably want to take advantage of the current hype and excitement and they’ll try to flip the stock for a few quick and easy dollars. This might not necessarily be a bad strategy, but in order to be successful, you need to be aware of all the dangers. And in MAXD‘s case, there is one big danger that could pierce a rather massive hole in your pocket.
The decline described in the second paragraph of our article was mostly due to the truly terrible toxic debt-related dilution MAXD was put through. The stock printing was quite exuberant. So much so, that despite the cancellation of more than 120 million shares, the O/S count grew from about 326 million in May 2014 to 330 million a couple of months ago.
On June 30, the company’s books contained notes with the principal amount of around $2.7 million which were convertible at discounts that range from 25% to 40%. Instead of trying to sever MAXD‘s reliance on toxic debt, the management team borrowed another $425 thousand under similar convertible note agreements between July 2 and August 7.
With that in mind, nobody, not even the investors’ crystal balls, can predict when the stock might stumble and fall down.
