UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2010
OR
|_| 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 0-53574
MMAX Media, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 20-4959207
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 Greenville Ave., Suite 240, Dallas, TX 75206
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(Address of principal executive offices)(Zip Code)
Issuer's telephone number, including area code: (972) 719-0170
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes |X| No |_|
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 definition of "accelerated filer and large accelerated filer" in Rule
12b-2 of the Exchange Act (Check one).
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller Reporting Company |X|
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes |X| No |_|
As of March 31, 2010, the registrant had issued and outstanding 9,381,674
shares of its $0.001 par value Common Stock, 195,000,000 common voting shares
authorized; and, 839,272 convertible and callable preferred issued and
outstanding, 5,000,000 preferred shares authorized.
Table of Contents
MMAX Media, Inc.
Index to Form 10-Q
For the Quarterly Period Ended March 31, 2010
Part I. Financial Information
Page
Item 1. Financial Statements
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statements of Cash Flows 5
Notes to the Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk 23
Item 4. Controls and Procedures 24
Part II Other Information
Item 1. Legal Proceedings 26
Item 1A. Risk Factors 26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
Item 3. Defaults Upon Senior Securities 26
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 5. Other Information 26
Item 6. Exhibits 27
Signatures 28
2
Part I. Financial Information
Item 1. Financial Statements
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Condensed Balance Sheets
March 31,
2010 September 30,
(Unaudited) 2009
------------ ------------
ASSETS
Current Assets:
Cash $ 14,611 $ -
Prepaid expense 700,969 1,000
------------ ------------
Total current assets 715,580 1,000
Other Assets:
Non-operating asset (Note 7) 1 -
Distribution license, net amortization 3,636
of $727
------------ ------------
Total other assets 3,637 -
------------ ------------
TOTAL ASSETS $ 719,217 $ 1,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ - $ 775
Accrued expense 2,000 -
------------ ------------
Total current liabilities 2,000 775
------------ ------------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, 839,272 and 872,690
shares issued and outstanding as of 3/31/10
and 9/30/09, respectively 839 873
Common stock, $0.001 par value, 195,000,000
shares authorized, 9,381,674 and 3,375,000
issued and outstanding as of 3/31/10 and
9/30/09, respectively 9,382 3,375
Additional paid-in capital 2,667,647 733,768
Deficit accumulated during development stage (1,960,651) (737,791)
------------ ------------
Total stockholders' equity 717,217 225
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 719,217 $ 1,000
============ ============
The accompanying notes are an integral part of these financial statements.
3
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Condensed Statements of Operations
(Unaudited)
For the three For the six From
months ending months ending Inception
March 31, March 31, (May 30, 2006) to
-------------------- -------------------- March 31,
2010 2009 2010 2009 2010
--------- --------- --------- --------- --------------
REVENUE $ - $ - $ - $ - $ -
EXPENSES
Amortization 727 - 727 - 727
General and
administrative 6,693 - 6,693 - 16,693
Professional fees 65,970 1,875 70,030 5,125 90,943
--------- --------- --------- --------- --------------
Total Expenses 73,390 1,875 77,450 5,125 108,363
--------- --------- --------- --------- --------------
Net operating loss $(73,390) $ (1,875) $(77,450) $ (5,125) $ (108,363)
---------- --------- ---------- --------- --------------
OTHER EXPENSES
Beneficial Conversion
Feature of
Preferred stock - - - - (706,878)
Settlement fee (1,145,410) - (1,145,410) - (1,145,410)
--------- --------- --------- --------- --------------
NET LOSS $(1,218,800) $ (1,875) $(1,222,860) $ (5,125) $ (1,960,651)
=========- ========= ========== ========= ==============
NET LOSS PER
SHARE - BASIC $ (0.17) $ (0.00) $ (0.23) $ (0.00)
========= ========= ========= ==========
WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING -
BASIC 7,175,587 3,375,000 5,254,411 3,375,000
========= ========= ========= =========
The accompanying notes are an integral part of these statements
4
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Condensed Statements of Cash Flows
(Unaudited)
For the six From
months ending Inception
March 31, (May 30, 2006) to
-------------------- March 31,
2010 2009 2010
---------- --------- --------------
OPERATING ACTIVITIES
Net loss $(1,222,860) $ (5,125) $ (1,960,651)
Adjustments to reconcile
net loss to net cash
used by operating activities:
Settlement fees 1,145,410 - 1,145,410
Beneficial Interest on
Conversion - - 706,878
Amortization 727 - 727
Contributed services - - 10,000
Changes in operating assets
and liabilities:
Increase in accrued expense 2,000 - 2,000
(Increase) Decrease in
prepaid expense 63,634 (4,500) 62,634
Decrease in accounts payable (775) - -
---------- --------- --------------
Cash used by operating activities (11,864) (9,625) (33,002)
FINANCING ACTIVITIES
Sale of Common Stock - - 5,850
Sale of Preferred Stock - - 873
Contributed Capital 26,475 9,625 40,890
---------- --------- --------------
Cash provided by financing activities 26,475 9,625 47,613
---------- --------- --------------
NET CHANGE IN CASH 14,611 - 14,611
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD - - -
---------- --------- --------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 14,611 $ - $ 14,611
========== ========= ==============
SUPPLEMENTAL DISCLOSURES:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
Non-cash transactions
Prepaid Compensation $ 763,603 $ - $ 763,603
Distribution license $ 4,363 $ - $ 4,363
Non-operating assets $ 1 $ - $ 1
The accompanying notes are an integral part of these financial statements.
5
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to the Condensed Financial Statements
March 31, 2010
(Unaudited)
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at March 31,
2010, and for all periods presented, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
September 30, 2009 audited financial statements filed with its annual
report. The results of operations for the periods ended March 31, 2010
and 2009 are not necessarily indicative of the operating results for the
full year.
NOTE 2 - GOING CONCERN
These condensed financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. As of
March 31, 2010, the Company has not recognized any revenues and has
accumulated operating losses of approximately $1,960,651 since inception.
The Company's ability to continue as a going concern is contingent upon
the successful completion of additional financing arrangements and its
ability to achieve and maintain profitable operations. Management plans
to raise equity capital to finance the operating and capital requirements
of the Company. Amounts raised will be used to further development of the
Company's services, to provide financing for marketing and promotion, to
secure additional property and equipment, and for other working capital
purposes. While the Company is putting forth its best efforts to achieve
the above plans, there is no assurance that any such activity will generate
funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
6
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to the Condensed Financial Statements
March 31, 2010
(Unaudited)
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
The relevant accounting policies are listed below.
Basis of Accounting
-------------------
The basis is United States generally accepted accounting principles.
Cash and Cash Equivalents
-------------------------
The Company considers all short-term investments with a maturity of three
months or less at the date of purchase to be cash equivalents.
Fair Value of Financial Instruments
-----------------------------------
The Company's cash and cash equivalents, short-term investments, accounts
receivable, accounts payable and accrued liabilities are considered financial
instruments whose carrying value approximates fair value based on their short
term nature.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue recognition
-------------------
The Company recognizes revenue on an accrual basis as it invoices for
services. Revenue is generally realized or realizable and earned when all of
the following criteria are met: 1) persuasive evidence of an arrangement
exists between the Company and the customer(s); 2) services have been
rendered; 3) the price to the customer is fixed or determinable; and 4)
collectability is reasonably assured.
7
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to the Condensed Financial Statements
March 31, 2010
(Unaudited)
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings per Share
------------------
The basic earnings (loss) per share is calculated by dividing the Company's
net income (loss) available to common shareholders by the weighted average
number of common shares during the year. The diluted earnings (loss) per
share is calculated by dividing the Company's net income (loss) available to
common shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number of shares
outstanding is the basic weighted number of shares adjusted as of the first
of the year for any potentially dilutive debt or equity.
The Company has not issued any options or warrants or similar securities
since inception.
Income Taxes
------------
The provision for income taxes is the total of the current taxes payable and
the net of the change in the deferred income taxes. Provision is made for
the deferred income taxes where differences exist between the period in which
transactions affect current taxable income and the period in which they enter
into the determination of net income in the financial statements.
Year-end
--------
The Company's fiscal year-end is September 30.
8
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to the Condensed Financial Statements
March 31, 2010
(Unaudited)
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
--------------------------------
In January 2010, the FASB issued Accounting Standards Update 2010-01, "Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force)". This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit
on the amount of cash that will be distributed is not a stock dividend for
purposes of applying Topics 505 and 260. Effective for interim and annual
periods ending on or after December 15, 2009, and would be applied on a
retrospective basis. The Company does not expect the provisions of ASU 2010-
01 to have a material effect on the financial position, results of operations
or cash flows of the Company.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-03 (ASU 2010-03), Extractive Activities-Oil
and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures. This
amendment to Topic 932 has improved the reserve estimation and disclosure
requirements by (1) updating the reserve estimation requirements for changes
in practice and technology that have occurred over the last several decades
and (2) expanding the disclosure requirements for equity method investments.
This is effective for annual reporting periods ending on or after December
31, 2009. However, an entity that becomes subject to the disclosures because
of the change to the definition oil- and gas- producing activities may elect
to provide those disclosures in annual periods beginning after December 31,
2009. Early adoption is not permitted. The Company does not expect the
provisions of ASU 2010-03 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-04 (ASU 2010-04), Accounting for Various
Topics-Technical Corrections to SEC Paragraphs.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-05 (ASU 2010-05), Compensation - Stock
Compensation (Topic 718). This standard codifies EITF Topic D-110 Escrowed
Share Arrangements and the Presumption of Compensation.
9
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to the Condensed Financial Statements
March 31, 2010
(Unaudited)
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements (Continued)
--------------------------------------------
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements
and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements. This amendment to Topic 820 has improved disclosures about
fair value measurements on the basis of input received from the users of
financial statements. This is effective for interim and annual reporting
periods beginning after December 15, 2009, except for the disclosures about
purchases, sales, issuances, and settlements in the roll forward of activity
in Level 3 fair value measurements. Those disclosures are effective for
fiscal years beginning after December 15, 2010, and for interim periods
within those fiscal years. Early adoption is permitted. The Company does
not expect the provisions of ASU 2010-06 to have a material effect on the
financial position, results of operations or cash flows of the Company.
In February 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-08 (ASU 2010-08), Technical Corrections to
Various Topics. This amendment eliminated inconsistencies and outdated
provisions and provided the needed clarifications to various topics within
Topic 815. The amendments are effective for the first reporting period
(including interim periods) beginning after issuance (February 2, 2010),
except for certain amendments. The amendments to the guidance on accounting
for income taxes in reorganization (Subtopic 852-740) should be applied to
reorganizations for which the date of the reorganization is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. For those reorganizations reflected in interim financial
statements issued before the amendments in this Update are effective,
retrospective application is required. The clarifications of the guidance on
the embedded derivates and hedging (Subtopic 815-15) are effective for fiscal
years beginning after December 15, 2009, and should be applied to existing
contracts (hybrid instruments) containing embedded derivative features at the
date of adoption. The Company does not expect the provisions of ASU 2010-08
to have a material effect on the financial position, results of operations or
cash flows of the Company.
In February 2010, the FASB issued Accounting Standards Update 2010-09 (ASU
2010-09), Subsequent Events (Topic 855), amending guidance on subsequent
events to alleviate potential conflicts between FASB guidance and SEC
requirements. Under this amended guidance, SEC filers are no longer required
to disclose the date through which subsequent events have been evaluated in
originally issued and revised financial statements. This guidance was
effective immediately and we adopted these new requirements for the period
ended March 31, 2010. The adoption of this guidance did not have a material
impact on our financial statements.
10
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to the Condensed Financial Statements
March 31, 2010
(Unaudited)
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements (Continued)
--------------------------------------------
In April 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-14 (ASU 2010-14), Accounting for Extractive
Activities - Oil and Gas. This amendment makes amendments to paragraph 932-
10-S99-1 due to SEC release No. 33-8995, Modernization of Oil and Gas
Reporting. The Company does not expect the provisions of ASU 2010-14 to have
a material effect on the financial position, results of operations or cash
flows of the Company.
The company evaluated all of the other recent accounting pronouncements
through ASU 2010-19 and deemed that they were immaterial.
NOTE 4 - STOCKHOLDERS' EQUITY
The Company is authorized to issue up to 195,000,000 shares of common stock,
par value $0.001 and up to 5,000,000 preferred shares, par value $0.001.
On May 30, 2006 (inception), the Company issued 3,100,000 shares of its
$0.001 par value common stock for $3,100 at $0.001 per share.
On June 1, 2006, the Company issued 872,690 shares of its $0.001 par value
preferred stock for $8,727 at $0.01 per share.
Each share of the Convertible Preferred Stock can be exchanged for ten
(10) shares of Common Stock of the corporation. This Series A
preferred stock was issued with a beneficial conversion feature totaling
$706,878 measured as the difference between the $0.01 offering price of the
underlying common stock and the conversion benefit price of $0.10 per
share. This non-cash expense related to the beneficial conversion features
of those securities and is recorded with a corresponding credit to
paid-in-capital. If the preferred stock were to be converted into common
stock, the common stock would be increased by 7,854,210 to a total of
8,726,900 shares. These 8,726,900 shares would represent 72.1% of all
common stock outstanding.
11
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to the Condensed Financial Statements
March 31, 2010
(Unaudited)
NOTE 4 - STOCKHOLDERS' EQUITY (Continued)
On June 30, 2008, the Company issued 275,000 shares of its $0.001
par value common stock for $2,750 at $0.01 per share.
In November 2009, an officer contributed cash of $975 to the Company
to pay for transfer agent fees.
In January 2010, an officer contributed cash of $3,000 to the Company
to pay for audit fees.
On February 1, 2010, the Company accepted completed contracts and resolved
to issue shares and thus entered into agreements with 55 individuals for the
issuance of a total of 3,272,598 shares of its common stock, valued at
$1,145,410, in exchange for a release of claims and liability relating to
the MMAX Assets which were concurrently assigned to us by the legal owners
of the assets. These shares were issued pursuant to an exemption from
registration under Section 4(2) and/or Rule 506 of Regulation D.
On February 1, 2010, the Company entered into Employment Agreements with its
new executive officers which require the Company to issue a total of
2,181,724 shares, valued at $763,603, to its new executives. These shares
were issued pursuant to an exemption from registration under Section 4(2)
and/or Rule 506 of Regulation D.
On February 1, 2010, the Company agreed to issue 218,172 shares of its common
Stock, valued at $4,363, to Michael Wortsman, executive officer of
HollywoodLaundromat.Com, Inc., the Company's distributor. These shares were
issued pursuant to an exemption from registration under Section 4(2) and/or
Rule 506 of Regulation D.
On March 10, 2010, 33,418 preferred shares of stock were converted into
334,180 shares of common stock at a conversion rate of 10 to 1.
On March 10, 2010, a shareholder contributed $22,500 to the Company in
order to provide working capital.
There were no other issuances of common or preferred stock or equivalents
since May 30, 2006 (inception) through March 31, 2010.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company does not lease or rent any property. Office services are
provided without charge by a director. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the
resolution of such conflicts.
12
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to the Condensed Financial Statements
March 31, 2010
(Unaudited)
NOTE 6 - CONCENTRATION OF CREDIT RISK
Cash Balances
-------------
The Company maintains its cash in various financial institutions in the
United States. Balances maintained in the United States are insured by the
Federal Deposit Insurance Corporation (FDIC). This government corporation
insured balances up to $100,000 through October 13, 2008. As of October 14,
2008 all non-interest bearing transaction deposit accounts at an FDIC-insured
institution, including all business checking deposit accounts that do not
earn interest, are fully insured for the entire amount in the deposit
account. This unlimited insurance coverage is temporary and will remain in
effect for participating institutions until December 31, 2009. All other
deposit accounts at FDIC-insured institutions are insured up to at least
$250,000 per depositor until December 31, 2013.
NOTE 7 NON-OPERATING ASSETS
On February 1, 2010, the Company entered into an assignment agreement to
acquire a video library of raw and edited television programs and related
intellectual property such as brands and trademarks for the video content.
The intellectual property assets were acquired by the assignors in a non-
judicial foreclosure process and then were improved by the assignors through
additional investment and development, however, the assets were not being
utilized in a business and there was insufficient capital available to the
assignors to commercialize the properties. As these assets currently do
not have the capitalization necessary to complete their purpose, the
Company has deemed them as non-operational assets, as reflected herein
to these financial statements. As the Company did not pay any direct
costs for these assets and given the fact that they are currently
non-operational, the Company has valued these assets at $1.
NOTE 8 PREPAID EXPENSE
On February 1, 2010, the Company entered into Employment Agreements with its
new executive officers which require the Company to issue a total of
2,181,724 shares, valued at $763,603, to its new executives. These shares
were issued pursuant to an exemption from registration under Section 4(2)
and/or Rule 506 of Regulation D. The value of these shares has been
amortized over the 24 month period of the contract, with the remaining
balance of the value presented as a prepaid expense.
Prepaid travel expenses are also included as a prepaid expense. This
prepaid expense is expected to be expensed during the subsequent quarter.
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Information
The Company may from time to time make written or oral "forward-looking
statements" including statements contained in this report and in other
communications by the Company, which are made in good faith by the Company
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements include statements of the Company's plans,
objectives, expectations, estimates and intentions, which are subject to
change based on various important factors (some of which are beyond the
Company's control). The following factors, in addition to others not listed,
could cause the Company's actual results to differ materially from those
expressed in forward looking statements: the strength of the domestic and
local economies in which the Company conducts operations, the impact of
current uncertainties in global economic conditions and the ongoing financial
crisis affecting the domestic and foreign banking system and financial
markets, including the impact on the Company's suppliers and customers,
changes in client needs and consumer spending habits, the impact of
competition and technological change on the Company, the Company's ability to
manage its growth effectively, including its ability to successfully
integrate any business which it might acquire, and currency fluctuations. All
forward-looking statements in this report are based upon information
available to the Company on the date of this report. The Company undertakes
no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events, or otherwise, except
as required by law.
Critical Accounting Policies
----------------------------
There have been no material changes to our critical accounting policies and
estimates from the information provided in Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations", included in
our Annual Report on Form 10-K for the fiscal year ended September 30, 2009.
14
Results of Operations
---------------------
Overview of Current Operations
------------------------------
MMAX Media, Inc. ("the Company") was formed on May 30, 2006 as Nevada
Processing Solutions. On February 1, 2010, the Company entered into an
assignment agreement that assigned to the Company all contractual rights
previously held by three entities, one of which is a shareholder, relating
to a television "Distribution Agreement" with HollywoodLaundromat.Com, Inc.,
a California corporation. At the time of the assignment to the Company, the
contract had not been completed and no payments or other monetary benefit
had been received by any party, thus the contract is deemed a contingent or
prospective right to benefit from the future commercialization of the MMAX
Assets and not based on any ongoing or current business operations. The
Distribution Agreement grants distribution rights to all of the Company's
television series and video assets to HollywoodLaundromat.Com, Inc. The
terms of the Distribution Agreement require the distributor,
HollywoodLaundromat.Com, Inc., to pay a variable percentage of all
proceeds derived from television syndication of the Company's video
assets, based on the market and language of the programming. Currently,
our distributor has secured distribution of 39 episodes (three seasons)
of the MMAX Fights one hour television series on a limited basis in Puerto
Rico which is scheduled to commence this month.
There is no guaranty that all of the episodes will air because the
television network has reserved the right to terminate the syndication
agreement subject to its own discretion. The Company's distributor has
entered into a revenue sharing arrangement with a network station, which
means that our revenue derived from syndication of the MMAX Fights
television series, if any, will be based on a percentage of the revenue
generated by the television network which will air our content. Thus,
because the contract has not commenced and has not produced any revenues,
we do not have any basis upon which to make a revenue projection and the
Company does not have a contractually committed sum or payment due from
its distributor. We anticipate that the Company's distributor will seek
additional markets for our MMAX Fights series and the Campeon Mmaximo
reality program.
15
Business Strategy
-----------------
On February 1, 2010, the Company changed its business plan based on the
acquisition of a video library of raw and edited television programs and
related intellectual property such as brands and trademarks for the video
content. The intellectual property assets were acquired with the intent to
change our business plan and operate as a media production and distribution
company with our main production emphasis being Spanish language mixed
martial arts event promotion and television programming. The new business
model adopted by the Company, with the intended commercialization of the
acquired television programming and related intellectual property rights,
is to promote live mixed martial arts combat events throughout Latin
America and primarily in Mexico, with fighters being drawn from Spanish
speaking countries, including the United States. Similar to the business
model of the UFC (Ultimate Fighting Championship) and its related television
reality program, TUF (The Ultimate Fighter), we intend to promote live
events and develop a comprehensive video catalog of filmed events which
are then edited and produced into television programming for consumption by
Spanish speaking television networks throughout the Spanish speaking world.
Included in the assets being acquired is a reality program filmed in
Cuernavaca, Mexico in March, 2009. The reality program, entitled "Campeon
Mmaximo" or "Mmaximum Champion" in English, requires post-production
completion and awaits the final event, which we intend to film as a live
championship event in Mexico, some time in 2010. Also included in the video
assets is video footage and content for 39 one hour television episodes
(three seasons of programming) under the title "MMAX Fights" which is an
edited program based on over a dozen live MMA events filmed in various
cities in Mexico, all in Spanish and featuring Latin American fighters and
former UFC competitors.
16
Plan of Operations
------------------
Management does not believe that the Company will be able to generate any
significant profit during the coming year. The Company's need for capital
may change dramatically if it can generate revenues from its operations.
In the event the Company requires additional funds, the Company will have
to seek loans or equity placements to cover such cash needs. There are
no assurances additional capital will be available to the Company on
acceptable terms.
Management believes the Company can sustain itself for the next twelve
months. However, there can be no assurances to that effect. The Company
will require additional funds; the Company will have to seek loans or
equity placements to cover such cash needs. There is no assurance
additional capital will be available to the Company on acceptable terms.
17
Results of Operations for the three months ended March 31, 2010
---------------------------------------------------------------
MMAX Media, Inc. earned no revenues since its inception on May 30, 2006
through March 31, 2010. Management does not anticipate earning any
significant revenues until such time as the Company's business plan becomes
fully operational. MMAX Media, Inc. is presently in the development stage of
its business and management can provide no assurances that the Company will
be successful in developing its business.
For the period inception through March 31, 2010, MMAX Media, Inc. generated
no income and has experienced a net loss of $(1,960,651). This loss was
attributed to settlement fees of $1,145,410, as well as the beneficial
conversion feature of our preferred stock of $706,878. The bulk of the
Company's expenses since inception dealt with keeping the Company fully
reporting. Management anticipates the Company's operating expenses will
increase as the Company begins its operations.
For the three months ending March 31, 2010, MMAX Media, Inc. experienced a
net loss of $(1,218,800) as compared to a net loss of $(1,875) for the same
period last year. The net loss for the three months ending March 31, 2010
was attributed to settlement fees of $1,145,410 and professional fees of
$65,970. Most of the professional fees since the Company's inception consist
of legal, consulting and audit fees. The Company had cash on hand of
$14,611 at March 31, 2010. In the September 30, 2009 year-end financials
the Company's auditor issued an opinion that MMAX Media, Inc.'s financial
condition raises substantial doubt about the Company's ability to continue
as a going concern.
Revenues
--------
The Company generated no revenues for the period from May 30, 2006
(inception) through March 31, 2010. Management does not anticipate
generating any revenues for at least the next year.
Going Concern
-------------
Our independent auditors included an explanatory paragraph in their report
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure by our independent auditors.
18
Summary of any product research and development that we will perform for the
term of our plan of operation.
-----------------------------------------------------------------------------
MMAX Media, Inc. does not anticipate performing any additional significant
product research and development under its current plan of operation.
Expected purchase or sale of plant and significant equipment.
-------------------------------------------------------------
MMAX Media, Inc. does not anticipate the purchase or sale of any plant or
significant equipment; as such items are not required by the Company at this
time.
Significant changes in the number of employees.
-----------------------------------------------
As of March 31, 2010, the Company does not have any employees. The Company
is dependent upon its sole officer and a director for the Company's future
business development. As the Company's operations expand management
anticipates the need to hire additional employees, consultants and
professionals; however, the exact number is not quantifiable at this time.
Liquidity and Capital Resources
-------------------------------
The Company's balance sheet as of March 31, 2010 reflects cash on hand of
$14,611 and $2,000 in current liabilities. Cash and cash equivalents from
inception to date have been sufficient to provide the operating capital
necessary to operate to date. Since the Company has no cash reserves,
management has agreed to donate funds to the operations of the Company,
in order to keep it fully reporting for the next twelve (12) months, without
seeking reimbursement for the funds donated.
During the period from inception to March 31, 2010, proceeds were received
from the sale of common stock and preferred stock in connection with various
private placements. At the time of incorporation, we issued 872,690
non-voting Callable and Convertible Preferred shares. We filed with the
Nevada Secretary of State the designation that "These Series A Preferred
shares shall be designated as 'Callable and Convertible Preferred Stock.'"
The corporation has the right to call for and purchase these shares at any
time, within twelve months of issue, either at par value or at a slight
premium above par value, or if corporation should designate that these
shares are deemed not callable, the holders of these non-voting Series A
Preferred Shares shall have the right to cause the corporation to redeem
shares for Common Stock at any time. Each holder of the non voting Series A
Callable and Convertible Preferred Stock shall have the right to convert all
or any portion of such shares as such holder desires to convert, into shares
of the Common Stock of the corporation, as follows: each share of Series A
Convertible Preferred Stock can be exchanged for ten (10) shares of Common
Stock of the corporation."
19
Through a Board Resolution, it was resolved that we shall not call nor redeem
our Series A non-voting Callable and Convertible Preferred shares. The
shareholders of the Series A Preferred shares will be permitted to convert
each Series A Preferred share owned for ten common shares, at their
sole discretion. The conversion of 872,690 Series A Preferred Shares
converts into 8,726,900 registered common shares.
A critical component of our operating plan impacting our continued existence
is the ability to obtain additional capital through additional equity and/or
debt financing. We do not anticipate generating sufficient positive internal
operating cash flow until such time as we can deliver our product to market,
complete additional financial service company acquisitions and generate
substantial revenues, which may take the next few years to fully realize.
In the event we cannot obtain the necessary capital to pursue our strategic
plan, we may have to cease or significantly curtail our operations. This
would materially impact our ability to continue operations.
The Company has limited financial resources available, which has had an
adverse impact on the Company's liquidity, activities and operations. These
limitations have adversely affected the Company's ability to obtain certain
projects and pursue additional business. Without realization of additional
capital, it would be unlikely for the Company to continue as a going concern.
In order for the Company to remain a Going Concern it will need to find
additional capital. Additional working capital may be sought through
additional debt or equity private placements, additional notes payable to
banks or related parties (officers, directors or stockholders), or from other
available funding sources at market rates of interest, or a combination of
these. The ability to raise necessary financing will depend on many factors,
including the nature and prospects of any business to be acquired and the
economic and market conditions prevailing at the time financing is sought.
No assurances can be given that any necessary financing can be obtained on
terms favorable to the Company, or at all.
As a result of the Company's current limited available cash, no officer or
director received cash compensation through the quarter ended March 31, 2010.
Future Financing
----------------
Management anticipates continuing to rely on equity sales of its common
shares in order to continue to fund its business operations. Issuances of
additional shares will result in dilution to our existing shareholders.
There are no assurances that the Company will achieve any sales of its
equity securities or arrange for debt or other financing to fund its
business plan.
The Company seeks to raise a $100,000 in an offering of its common stock. In
the event the Company is unable to raise $100,000, the Company may be unable
to conduct any operations and may consequently go out of business. There are
no formal or informal agreements to attain such financing and management
cannot make any assurances that any financing can be obtained. If management
is unable to raise these funds, the Company will not be able to implement any
of its proposed business activities and may be forced to cease operations.
20
Management has been seeking funding from a number of sources, but has yet
to secure any funding, especially during this current economic downturn.
Management continues to seek different funding sources in order to initiate
its business plan. The downturn in the economy has limited various sources
of financing. Management continues to seek financing with no success. If
we are unable to raise these funds, we will not be able to implement any of
our proposed business activities and may be forced to cease operations.
Off-Balance Sheet Arrangements
------------------------------
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results or operations,
liquidity, capital expenditures or capital resources that is material to
investors.
Critical Accounting Policies and Estimates
------------------------------------------
Revenue Recognition: We recognize revenue from service sales once all of the
following criteria for revenue recognition have been met: persuasive evidence
that an agreement exists; the services have been rendered; the fee is fixed
and determinable and not subject to refund or adjustment; and collection of
the amount due is reasonably assured.
New Accounting Standards
------------------------
In January 2010, the FASB issued Accounting Standards Update 2010-01, "Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force)". This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit
on the amount of cash that will be distributed is not a stock dividend for
purposes of applying Topics 505 and 260. Effective for interim and annual
periods ending on or after December 15, 2009, and would be applied on a
retrospective basis. The Company does not expect the provisions of ASU 2010-
01 to have a material effect on the financial position, results of operations
or cash flows of the Company.
21
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-03 (ASU 2010-03), Extractive Activities-Oil
and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures. This
amendment to Topic 932 has improved the reserve estimation and disclosure
requirements by (1) updating the reserve estimation requirements for changes
in practice and technology that have occurred over the last several decades
and (2) expanding the disclosure requirements for equity method investments.
This is effective for annual reporting periods ending on or after December
31, 2009. However, an entity that becomes subject to the disclosures because
of the change to the definition oil- and gas- producing activities may elect
to provide those disclosures in annual periods beginning after December 31,
2009. Early adoption is not permitted. The Company does not expect the
provisions of ASU 2010-03 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-04 (ASU 2010-04), Accounting for Various
Topics-Technical Corrections to SEC Paragraphs.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-05 (ASU 2010-05), Compensation - Stock
Compensation (Topic 718). This standard codifies EITF Topic D-110 Escrowed
Share Arrangements and the Presumption of Compensation.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements
and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements. This amendment to Topic 820 has improved disclosures about
fair value measurements on the basis of input received from the users of
financial statements. This is effective for interim and annual reporting
periods beginning after December 15, 2009, except for the disclosures about
purchases, sales, issuances, and settlements in the roll forward of activity
in Level 3 fair value measurements. Those disclosures are effective for
fiscal years beginning after December 15, 2010, and for interim periods
within those fiscal years. Early adoption is permitted. The Company does
not expect the provisions of ASU 2010-06 to have a material effect on the
financial position, results of operations or cash flows of the Company.
22
In February 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-08 (ASU 2010-08), Technical Corrections to
Various Topics. This amendment eliminated inconsistencies and outdated
provisions and provided the needed clarifications to various topics within
Topic 815. The amendments are effective for the first reporting period
(including interim periods) beginning after issuance (February 2, 2010),
except for certain amendments. The amendments to the guidance on accounting
for income taxes in reorganization (Subtopic 852-740) should be applied to
reorganizations for which the date of the reorganization is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. For those reorganizations reflected in interim financial
statements issued before the amendments in this Update are effective,
retrospective application is required. The clarifications of the guidance on
the embedded derivates and hedging (Subtopic 815-15) are effective for fiscal
years beginning after December 15, 2009, and should be applied to existing
contracts (hybrid instruments) containing embedded derivative features at the
date of adoption. The Company does not expect the provisions of ASU 2010-08
to have a material effect on the financial position, results of operations or
cash flows of the Company.
In February 2010, the FASB issued Accounting Standards Update 2010-09 (ASU
2010-09), Subsequent Events (TOPic 855), amending guidance on subsequent
events to alleviate potential conflicts between FASB guidance and SEC
requirements. Under this amended guidance, SEC filers are no longer required
to disclose the date through which subsequent events have been evaluated in
originally issued and revised financial statements. This guidance was
effective immediately and we adopted these new requirements for the period
ended March 31, 2010. The adoption of this guidance did not have a material
impact on our financial statements.
In April 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-14 (ASU 2010-14), Accounting for Extractive
Activities - Oil and Gas. This amendment makes amendments to paragraph 932-
10-S99-1 due to SEC release No. 33-8995, Modernization of Oil and Gas
Reporting. The Company does not expect the provisions of ASU 2010-14 to have
a material effect on the financial position, results of operations or cash
flows of the Company.
The company evaluated all of the other recent accounting pronouncements
through ASU 2010-19 and deemed that they were immaterial.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
23
Item 4T. Controls and Procedures
(a) Evaluation of Internal Controls and Procedures
MMAX Media, Inc. is committed to maintaining disclosure controls and
procedures that are designed to ensure that information required to be
disclosed in its Exchange Act reports is recorded, processed, summarized,
and reported within the time periods specified in the U.S. Securities and
Exchange Commission's rules and forms, and that such information is
accumulated and communicated to its management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.
As required by Rule 13a-15(b) of the Exchange Act, MMAX Media, Inc. has
carried out an evaluation, under the supervision and with the participation
of its management, including its Chief Executive Officer who also serves as
the Chief Financial Officer, who is also the sole member of our Board of
Directors, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of the financial statements in
accordance with U. S. generally accepted accounting principles.
The evaluation examined those disclosure controls and procedures as of
March 31, 2010, the end of the period covered by this report. Based on
that evaluation, they concluded that, during the period covered by this
report, such internal controls and procedures were not effective to detect
the inappropriate application of US GAAP rules as more fully described below.
This was due to deficiencies that existed in the design or operation of our
internal controls over financial reporting that adversely affected our
internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public
Company Accounting Oversight Board were: (1) lack of a functioning audit
committee due to a lack of a majority of independent members and a lack of a
majority of outside directors on our board of directors, resulting in
ineffective oversight in the establishment and monitoring of required
internal controls and procedures; (2) inadequate segregation of duties
consistent with control objectives; and (3) ineffective controls over period
end financial disclosure and reporting processes. The aforementioned
material weaknesses were identified by our Chief Executive Officer in
connection with the review of our financial statements as of March 31, 2010.
Management believes that the material weaknesses set forth in items (2) and
(3) above did not have an effect on our financial results. However,
management believes that the lack of a functioning audit committee and the
lack of a majority of outside directors on our board of directors results in
ineffective oversight in the establishment and monitoring of required
internal controls and procedures, which could result in a material
misstatement in our financial statements in future periods.
24
Additional procedures were performed in order for management to conclude with
reasonable assurance that the Company's financial statements contained in this
Quarterly Report on Form 10-Q present fairly, in all material respects, the
Company's financial position, results of operations and cash flows for the
periods presented.
This quarterly report does not include an attestation report of the
Corporation's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation
by the Corporation's registered public accounting firm pursuant to temporary
rules of the SEC that permit the Corporation to provide only the management's
report in this quarterly report.
(b) Management's Remediation Initiatives
-----------------------------------------
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan
to initiate, the following series of measures:
We will create a position to segregate duties consistent with control
objectives and will increase our personnel resources and technical accounting
expertise within the accounting function when funds are available to us. And,
we plan to appoint one or more outside directors to our board of directors
who shall be appointed to an audit committee resulting in a fully functioning
audit committee who will undertake the oversight in the establishment and
monitoring of required internal controls and procedures such as reviewing
and approving estimates and assumptions made by management when funds are
available to us.
(c) Changes in internal controls over financial reporting
----------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
25
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
From time to time, the Company may become involved in various lawsuits and
legal proceedings, which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in
these or other matters may arise from time to time that may harm our business.
MMAX Media, Inc. is not presently a party to any material litigation, nor to
the knowledge of management is any litigation threatened against the Company,
which may materially affect the Company.
Item 1A - Risk Factors
See Risk Factors set forth in Part I, Item 1A of the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 2009 and the discussion
in Item 1, above, under "Financial Condition - Liquidity and Capital
resources.
Item 2 -- Unregistered Sales of Equity Securities and Use of Proceeds
On February 1, 2010, the Company accepted completed contracts and resolved
to issue shares and thus entered into agreements with 55 individuals for the
issuance of a total of 3,272,598 shares of its common stock, valued at
$1,145,410, in exchange for a release of claims and liability relating to
the MMAX Assets which were concurrently assigned to us by the legal owners of
the assets. These shares were issued pursuant to an exemption from
registration under Section 4(2) and/or Rule 506 of Regulation D.
On February 1, 2010, the Company entered into Employment Agreements with its
new executive officers which require the Company to issue a total of
2,181,724 shares to its new executives, valued at $763,603. These shares
were issued pursuant to an exemption from registration under Section 4(2)
and/or Rule 506 of Regulation D.
On February 1, 2010, the Company agreed to issue 218,172 shares of its common
Stock, valued at $4,363, to Michael Wortsman, executive officer of
HollywoodLaundromat.Com, Inc., the Company's distributor. These shares
were issued pursuant to an exemption from registration under Section 4(2)
and/or Rule 506 of Regulation D.
Item 3 -- Defaults Upon Senior Securities
None.
Item 4 -- Submission of Matters to a Vote of Security Holders
None.
Item 5 -- Other Information
None.
26
Item 6 -- Exhibits
Incorporated by reference
-------------------------
Filed Period Filing
Exhibit Exhibit Description herewith Form ending Exhibit date
-----------------------------------------------------------------------------
3.1 Articles of Incorporation, S-1 9/30/08 3.1 11/04/08
dated May 30, 2006
-----------------------------------------------------------------------------
3.2 Bylaws dated May 31, 2006 S-1 9/30/08 3.2 11/04/08
as currently in effect
-----------------------------------------------------------------------------
3.3 Amended Articles of Incorporation S-1 9/30/08 3.3 11/04/08
dated February 23, 2007
as currently in effect
-----------------------------------------------------------------------------
3.4 Articles/Designation dated S-1 9/30/08 3.4 11/04/08
April 29, 2008 as currently
in effect
-----------------------------------------------------------------------------
10.1 Preferred share lock-up 10-Q 3/31/09 10.1 4/21/09
agreement dated Apr. 1, 2009
-----------------------------------------------------------------------------
10.2 First Amendment to Stock Lock-up 8-K 4/19/10 10.2 4/26/10
Agreement, dated April 19, 2010
-----------------------------------------------------------------------------
31.1 Certification of President X
and Principal Financial
Officer, pursuant to Section
302 of the Sarbanes-Oxley
Act
-----------------------------------------------------------------------------
32.1 Certification of President X
and Principal Financial
Officer, pursuant to Section
906 of the Sarbanes-Oxley
Act
-----------------------------------------------------------------------------
27
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.
MMAX Media, Inc.
---------------------------
Registrant
Date: May 24, 2010 By: /s/ Tommy Habeeb
------------ ----------------------
Tommy Habeeb
Chief Executive Officer,
Chief Financial Officer
and Director
28