UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 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.
------------------------------------------------------
(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
---------------------------------------------------
(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 |_| No |X|
As of February 11, 2011, the registrant had issued and outstanding 12,398,374
shares of its $0.001 par value Common Stock, 195,000,000 common voting shares
authorized; and, 638,602 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 December 31, 2010
Part I. Financial Information
Page
Item 1. Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to the 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 19
Item 4T. Controls and Procedures 20
Part II Other Information
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits 23
Signatures 24
2
Part I. Financial Information
Item 1. Financial Statements
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(a development stage company)
Balance Sheets
December 31, September 30,
2010 2010
(Unaudited) (Audited)
------------ ------------
ASSETS
Current Assets:
Cash $ 21,636 $ 2,231
Prepaid stock compensation 190,900 190,900
------------ ------------
Total current assets 212,536 193,131
Other Assets:
Distribution license, net of amortization
of $2,909 1,454 2,181
Prepaid stock compensation, non current 15,908 63,634
------------ ------------
Total other assets 17,362 65,815
------------ ------------
TOTAL ASSETS $ 229,898 $ 258,946
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,819 $ 16,323
Accounts payable - related party 49,912 37,412
Note payable 2,000 16,000
------------ ------------
Total current liabilities 59,731 69,735
------------ ------------
TOTAL LIABILITIES 59,731 69,735
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, 638,602, 638,602 shares
issued and outstanding as of 12/31/10 and
9/30/10, respectively 638 638
Common stock, $0.001 par value, 195,000,000
shares authorized, 12,398,374, 11,603,374
issued and outstanding as of
12/31/10 and 9/30/10, respectively 12,399 11,599
Additional paid-in capital 2,827,831 2,728,631
Deficit accumulated during development stage (2,670,701) (2,551,657)
------------ ------------
Total stockholders' equity 170,167 189,211
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 229,898 $ 258,946
============ ============
The accompanying notes are an integral part of these financial statements.
3
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(a development stage company)
Statements of Operations
(Unaudited)
For the Period
For the three from
months ended Inception
December 31, (May 30, 2006) to
-------------------- December 31,
2010 2009 2010
--------- --------- --------------
REVENUE $ - $ - $ -
EXPENSES
Amortization 727 - 2,909
Consulting 47,726 - 556,796
General and administrative expenses 67,091 4,200 238,348
Professional fees 3,500 - 20,360
--------- --------- --------------
Total expenses 119,044 4,200 818,413
--------- --------- --------------
Net operating loss (119,044) (4,200) (818,413)
--------- --------- --------------
OTHER EXPENSES
Beneficial Conversion Feature of
Preferred stock - - (706,878)
Impairment loss - - (1,145,410)
---------- ---------- -------------
Total other expenses - - (1,852,289)
---------- ---------- -------------
NET LOSS $ (119,044) $ (4,200) $ (2,670,701)
=========== ========== =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC 11,850,548 3,375,000
=========== ==========
LOSS PER SHARE - BASIC
$ (0.01) $ (0.00)
=========== ==========
The accompanying notes are an integral part of these statements.
4
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(a development stage company)
Statements of Cash Flows
(Unaudited)
For the Period
For the three from
months ended Inception
December 31, (May 30, 2006) to
----------------------- December 31,
2010 2009 2010
------------ --------- --------------
OPERATING ACTIVITIES
Net Loss $ (119,044) $ (4,200) $ (2,670,701)
Adjustments to reconcile
net loss to net cash
used by operating activities:
Stock based compensation 47,726 - 556,796
Impairment loss related
to assets acquired with
common stock - - 1,145,411
Beneficial conversion feature
of preferred stock - - 706,878
Amortization 727 - 2,909
Contributed services - - 10,000
Changes in assets and liabilities:
Decrease in
prepaid expense - 1,000 -
Increase (decrease) in
accounts payable (8,504) 725 7,819
Increase in accounts
payable - related party 12,500 - 49,912
Increase in
accrued expense - 1,500 -
------------ --------- --------------
Cash used by operating activities (66,595) (975) (190,976)
FINANCING ACTIVITIES
Proceeds from note payable 8,000 - 24,000
Payment on note payable (22,000) - (22,000)
Sale of common stock 100,000 - 168,850
Sale of preferred stock - - 873
Contributed capital - 975 40,889
------------ --------- --------------
Cash provided by financing activities 86,000 975 212,612
------------ --------- --------------
NET CHANGE IN CASH 19,405 - 21,636
CASH - BEGINNING OF PERIOD 2,231 - -
------------ --------- --------------
CASH - END OF PERIOD $ 21,636 $ - $ 21,636
============ ========= ==============
SUPPLEMENTAL DISCLOSURES:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
Non-cash transactions
Prepaid stock Compensation $ 206,808 $ - $ 763,603
Distribution license
paid with common stock $ - $ - $ 4,363
Non-operating assets $ - $ - $ 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 Financial Statements
December 31, 2010
(Unaudited)
NOTE 1 - 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 December 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 financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
September 30, 2010 audited financial statements filed with its annual
report. The results of operations for the periods ended December 31, 2010
and 2009 are not necessarily indicative of the operating results for the
full year.
NOTE 2 - GOING CONCERN
These 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
December 31, 2010, the Company has not recognized any revenues and has
accumulated operating losses of approximately $2,670,701 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 for 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 relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of liabilities that
might result from this uncertainty.
6
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to Financial Statements
December 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, 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
-------------------
Revenues are recognized in accordance with ASC 926, "Accounting by Producers
or Distributors of Films". Under ASC 926, revenue from the sale or licensing
of a film should be recognized only when all five of the following conditions
are met: 1. Persuasive evidence of a sale or licensing arrangement with a
customer exists. 2. The film is complete and has been delivered or is
available for immediate and unconditional delivery (in accordance with the
terms of the arrangement). 3. The license period has begun and the customer
can begin its exploitation, exhibition, or sale. 4. The fee is fixed or
determinable. 5. Collection of the fee is reasonably assured.
7
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to Financial Statements
December 31, 2010
(Unaudited)
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 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.
Intangible Assets
-----------------
We amortize intangible assets with finite lives over their estimated useful
lives and review them for impairment whenever an impairment indicator exists.
We continually monitor events and changes in circumstances that could
indicate carrying amounts of our long-lived assets, including our intangible
assets, may not be recoverable. When such events or changes in circumstances
occur, we assess recoverability by determining whether the carrying value of
such assets will be recovered through the undiscounted expected future cash
flows. If the future undiscounted cash flows are less than the carrying
amount of these assets, we recognize an impairment loss based on the excess
of the carrying amount over the fair value of the assets.
8
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to Financial Statements
December 31, 2010
(Unaudited)
Our intangible assets are amortized over their estimated useful lives of
as shown in the table below. Amortization is based on the
pattern in which the economic benefits of the intangible asset will be
consumed. (Refer to Note 6)
Weighted Average
Useful Life (years)
-------------------
Distribution license 2
Film Cost Capitalization
------------------------
The Company capitalizes actual costs it incurs, to the extent it does not
exceed estimated future revenues, for production and post-production of film
that will later be used in accordance with ASC 926, Entertainment - Films.
The Company will begin amortization of capitalized film cost when a film is
released and it begins to recognize revenue from the film.
Year-end
--------
The Company's fiscal year-end is September 30.
Recent Accounting Pronouncements
--------------------------------
The Company's management has evaluated all the recently issued accounting
pronouncements through the filing date of these financial statements and does
not believe that any of these pronouncements will have a material impact on
the Company's financial position and results of operations.
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.
9
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to Financial Statements
December 31, 2010
(Unaudited)
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.
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 2810, an officer contributed cash of $3,000 to the Company
to pay for audit fees.
On February 1, 2010, the Company 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 two Employment Agreements
with its President and Chief Executive Officer which required 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 entered into a distribution license
agreement and 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 capitalized at their fair
market value and will be amortized over an eighteen month period. These shares
were issued pursuant to an exemption from registration under Section 4(2)
and/or Rule 506 of Regulation D. (Refer to Note 6)
10
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to Financial Statements
December 31, 2010
(Unaudited)
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.
On April 20, 2010, 36,125 preferred shares of stock were converted into
361,250 shares of common stock at a conversion rate of 10 to 1.
On May 5, 2010, 37,895 preferred shares of stock were converted into
378,950 shares of common stock at a conversion rate of 10 to 1.
On May 13, 2010, 39,752 preferred shares of stock were converted into
397,520 shares of common stock at a conversion rate of 10 to 1.
On May 25, 2010, 42,410 preferred shares of stock were converted into
424,100 shares of common stock at a conversion rate of 10 to 1.
On June 16, 2010, 44,488 preferred shares of stock were converted into
444,880 shares of common stock at a conversion rate of 10 to 1.
On June 16, 2010 the Company sold 70,000 shares of its restricted common
stock and 140,000 shares of its registered free trading common stock for
cash of $63,000.
In December 2010, the Company issued 800,000 shares of common stock in a
private placement for $100,000. The offering price of the securities
was $0.125 per share.
11
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to Financial Statements
December 31, 2010
(Unaudited)
NOTE 5 - RELATED PARTY TRANSACTIONS
During the fiscal year ended December 31, 2010, an affiliated Company of a
director was paid $3,700 for graphics, redigitizing and production
expenses. 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.
NOTE 6 INTANGIBLE ASSETS
On February 1, 2010, the Company entered into an assignment agreement with a
third party company ("Assignor") to acquire a video library of raw and edited
television programs and related intellectual property such as brands and
trademarks for the video content, collectively ("Acquired Assets"). The
Acquired Assets were acquired by the Assignor in a non-judicial foreclosure
process and then were improved by the Assignor through additional investment
and development, however, the acquired video library and television programs
still required additional post production work for commercial viability and
distribution. Concurrently the Company entered into a separate agreement
with Assignor for a release of claims and liability relating to the Acquired
Assets ("Release of Claims") in exchange for 3,272,598 shares of the
Company's common stock with a fair value of $1,145,410. The value of shares
totaling $1,145,410 issued for the Release of Claims is considered as part of
the overall acquisition cost of the Acquired Assets. Since the video library
and television programs of the Acquired Assets require additional capital to
complete the needed post production in order for such assets to be commercially
viable and distributable, the Company deemed them as non-operational
assets. Consequently, the Company impaired the value of the video library
totaling $1,145,410.
On February 1, 2010, the Company entered into a distribution license
agreement and 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 capitalized at their fair
market value and will be amortized over an eighteen month period.
Amortization expense for the distribution license was $727 and $0 for the
three months ended December 31, 2010 and 2009, respectively.
12
MMAX MEDIA, INC.
(formerly Nevada Processing Solutions)
(A development stage company)
Notes to Financial Statements
December 31, 2010
(Unaudited)
NOTE 7 - PREPAID EXPENSE
On February 1, 2010, the Company entered into two Employment Agreements with
its President and Chief Executive Officer which required the Company to issue
a total of 2,181,724 shares, valued at $763,603, to its new executives, for
services to be performed over a two year period. As a result of the
resignation of Larry Biggs, CEO, on April 30, 2010, the Company expensed
$349,985 to write off the remaining prepaid balance attributed to the
former CEO.
As of December 31, 2010, the prepaid balance totaling $206,808 for the
remaining officer is being amortized over a period of 14 months.
NOTE 8 - 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 9 - NOTES PAYABLE
In December and September 2010, the Company issued unsecured, non-interest
bearing, due on demand notes for $8,000 and $16,000, respectively. During
the quarter ended December 31, 2010 the Company repaid $22,000. As
December 31, 2010, the outstanding principle balance of the notes was
$2,000.
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, 2010.
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.
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
-----------------
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 intended to film as a live
championship event in Mexico, but has since been put on hold due to financing
concerns and social unrest in Mexico. 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. The company has not realized any revenues to date from its
current business plan.
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.
16
Results of Operations for the three months ended December 31, 2010
------------------------------------------------------------------
MMAX Media, Inc. earned no revenues since its inception on May 30, 2006
through December 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 from inception through December 31, 2010, MMAX Media, Inc.
generated no income and has experienced a net loss of $(2,670,701). 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 our net loss represents the accounting of the beneficial conversion
feature of our preferred stock to common stock, impairment loss and
consulting fees.
For the three months ending December 31, 2010, MMAX Media, Inc. experienced
a net loss of $(119,044) as compared to a net loss of $(4,200) for the same
period last year. The Company's expenses for the three months ending
December 31, 2010 consisted of: amortization $727; consulting fees of
$47,726; general and administrative expenses of $67,091 and professional
fees of $3,500. Most of the professional fees since the Company's inception
consist of legal, consulting and audit fees.
The Company had cash on hand of $21,636, current prepaid expenses of $190,900
and long term prepaid expenses of $15,908 at December 31, 2010. As of
December 31, 2010, the company had $59,731 in current liabilities. In the
September 30, 2010 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 inception (May 30,
2006) through December 31, 2010. Management does not anticipate generating
any revenues for at least 24 months.
Going Concern
-------------
Our independent auditors included an explanatory paragraph in their audit
report for the year ended September 30, 2010 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.
17
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 December 31, 2010, we had one employee,our sole officer and director.
We are dependent upon our sole officer and director for our future business
development. As our operations expand we anticipate the need to hire
additional employees, consultants and professionals; however, the exact
number is not quantifiable at this time.
Liquidity and Capital Resources
-------------------------------
Our unaudited balance sheet as of December 31, 2010 reflects current assets of
$212,536, non-current assets of $17,362 and $59,731 in current liabilities.
This compares to our audited balance sheet as of September 30, 2010 which
reflected current assets of $193,131, non-current assets of $65,815 and
$69,735 in current liabilities.
Notwithstanding, we anticipate generating losses and therefore we may be
unable to continue operations in the future. We anticipate we will require
additional capital for operations and we will have to issue debt or equity
or enter into a strategic arrangement with a third party. There can be no
assurance that additional capital will be available to us. We currently
have no agreements, arrangements or understandings with any person to obtain
funds through bank loans, lines of credit or any other sources.
Future Financing
----------------
We anticipate continuing to rely on equity sales of our common shares in
order to continue to fund our business operations. Issuances of additional
shares will result in dilution to our existing shareholders. There is no
assurance that we will achieve any additional sales of our equity
securities or arrange for debt or other financing to fund our exploration and
development activities.
18
We are seeking to raise additional funds in a future offering of our common
stock. In the event we are unable to raise funds, we 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 we cannot assure
you that any financing can be obtained. Management has been seeking funding
from a number of sources, but has yet to secure any consistent or recurring
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
------------------------------------------
Revenues are recognized in accordance with ASC 926 and, "Accounting by
Producers or Distributors of Films". Under ASC 926, revenue from the sale or
licensing of a film should be recognized only when all five of the following
conditions are met: 1. Persuasive evidence of a sale or licensing
arrangement with a customer exists. 2. The film is complete and has been
delivered or is available for immediate and unconditional delivery (in
accordance with the terms of the arrangement). 3. The license period has
begun and the customer can begin its exploitation, exhibition, or sale.
4. The fee is fixed or determinable. 5. Collection of the fee is reasonably
assured.
New Accounting Standards
------------------------
The Company's management has evaluated all the recently issued accounting
pronouncements through the filing date of these financial statements and does
not believe that any of these pronouncements will have a material impact on
the Company's financial position and results of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
19
Item 4T. Controls and Procedures
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.
Management's Report on Internal Control over Financial Reporting
----------------------------------------------------------------
The evaluation examined those disclosure controls and procedures as of
December 31, 2010, the end of the period covered by this report. Based on
that evaluation, management 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 December 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.
20
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.
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. We
also 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.
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.
21
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, 2010 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
In December 2010, the Company issued 800,000 shares of common stock in a
private placement for $100,000. The offering price of the securities was
$0.125 per share.
Item 3 -- Defaults Upon Senior Securities
None.
Item 4 -- Submission of Matters to a Vote of Security Holders
None.
Item 5 -- Other Information
None.
22
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
-----------------------------------------------------------------------------
23
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: February 11, 2011 By: /s/ Tommy Habeeb
----------------- --------------------------------
Tommy Habeeb
Chief Executive Officer,
Chief Financial Officer
and Director
24