IA: Initiation of Coverage Report on Max Sound (MAXD).

[Institutional Analyst Inc.]

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Internet Stock Review, Friday, 10/07/2011.

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1. Initiation of Coverage Report on Max Sound (MAXD).
2. Disclaimer.

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1. Initiation of Coverage Report on Max Sound (MAXD).

Report can be found here (top left corner): http://internetstockreview.ning.com/

Okay, we took a little longer than we anticipated in getting this report out, but the more we delved into this, the more confident we got that we really may be onto something here. Like the proverbial blind squirrel-- we think we've found ourselves a nice sized nut.

Admittedly, the audio compression and expansion business can be a bit dry at first blush.

But we did quite a bit of study on Dolby (DLB) which is in the audio enhancement business and while the stock is down significantly from its peak -- it is still valued at near $3 billion and they will do near $1 billion in revenues this year. And most of the money they make is from licensing fees, which carry to die for margins. GAAP gross margin was 87.2% in the third quarter and 88.2% on a non-GAAP basis. Their licensing gross margin was 97.7% in the third quarter on a GAAP basis and 98.5% on a non-GAAP basis.

Plus they have $1,184,000,000 on the balance sheet.

They make money all day...all night. They money just keeps coming in, like they can't stop it. Viva La Fiesta, Viva La Noche, Viva La Cash Machine, Viva La Dolby* !

Dolby 3rd Quarter Conference Call: http://seekingalpha.com/article/284866-dolby-laboratories-ceo-discu...

Anyway, the more we studied Max Sound and the more we thought about it -- the more we became convinced that Max Sound (MAXD) truly has the potential for being the "Next Dolby." And possibly another amazing little cash machine.

Read our report and then you decide. Here's a few juicy excerpts, to quote ourselves.

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If Dolby (DLB), with a $3 billion market cap and estimated $950 million in sales for 2011, is the "established" leader in the audio enhancement business, then Max Sound® (MAXD) with its revolutionary HD Audio™ can be described as the "800 pound Gorilla (in the room)" with the technology to be the dominant player in the HD Audio industry.

What is exciting about the Max Sound® technology is that it substantially improves sound quality and significantly reduces file size, which is exactly what the music, film, video gaming and cellular industries are desperately looking for! Max Sound® can make all audio sound far more alive and substantially better than it ever has, while simultaneously decreasing file size by up to 90%.

If Max Sound® does indeed have the ability to improve sound quality and reduce file size as it says it can, then few would argue against the potential for it to become the "new" industry standard and the next multi-billion-dollar property. The world has been waiting for a High Definition audio solution with file size reduction capability. In fact, it's dying for it! The World Wide Web is struggling under the weight of its traffic!

The Max Sound® HD Audio™ process restores both frequency and dynamic ranges on all audio from 48k down to MP3 or AAC as no other process can, while significantly reducing file size. Max Sound® and HD Audio™ technologies and designs are Patent and Trademark pending. On February 8, 2011 the words Max Sound® were issued to the Company by the US Patent and Trademark office under serial number 85050705 and the words HD Audio™ are pending under the serial number 85232456.

Record Label owner Joe Bilotta - "Max Sound® and their HD Audio™ has changed the sound of music forever in my books, my artist Tim Foust will release the first ever Max Sound® HD Audio MP3 CD this week, and it is absolutely, hands down the most amazing sound I have heard in decades in the industry, and possibly ever. I give it a 200% in the 'Wow!!' factor."

Currently, the Company is demonstrating its advanced HD Audio solution to a number of multi-media companies that could benefit from its use. This list contains major players in broadcasting, movies, games and music industries. The adoption from any of these key players will move the Max Sound® technology into the mainstream, and in our opinion simultaneously move the share price considerably higher.

In the “big picture,” Max Sound® actually has the opportunity to help generate hundreds of millions, if not billions of dollars of new revenues -- for the record industry alone, if it can convince consumers that they “have to have” the latest and best version of their favorite artists work. When CD’s came out three decades ago the first thing everyone did was retool to the new technology. Why? Because they couldn’t believe how good and clean the new sound was. You only had to hear the CD one time and then you had to run out and buy it.

Max Sound® is to audio what HD (High Definition) is to video. The Max Sound® HD Audio™ Process can convert any audio file to high definition quality while maintaining its existing format without encoding or decoding, significantly reducing the file size to benefit bandwidth providers and decreasing compressed square waves which can damage the listeners hearing.

But let's look at just the Music Industry, which if they adopt Max Sound® technology, would enable them to re-mix and re-master entire collections and libraries into HD Audio™. In other words, they get to re-sell their libraries all over again creating substantial new profit streams on existing content - a model the music industry has employed and embraced in the past with open arms. And at the same time providing customers with a dramatically enhanced listening experience that is a better re-creation and acoustically correct representation than ever before available.

Importantly again, there is no need to encode or decode using only software. This means there are no obstacles and minimal cost to achieve widespread adoption because there are no required changes to existing infrastructure in the communication and entertainment industries.

Read more here: http://internetstockreview.ning.com/

 

Chart:

 

*Viva La Dolby theme song, La Gente Esta Muy Loca, http://www.youtube.com/watch?v=mwq-T2CrJRU

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Disclaimer: MAXD, Statements in this press release which are not purely historical, including statements regarding Max Sound's intentions, beliefs, expectations, representations, projections, plans or strategies regarding the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties including, but not limited to, the risks associated with the effect of changing economic conditions, trends in the products markets, variations in the company's cash flow or adequacy of capital resources, market acceptance risks, technical development risks, and other risk factors. The company cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Max Sound disclaims any obligation and does not undertake to update or revise any forward-looking statements in this press release. We have been compensated with four hundred thousand restricted shares for a long term investor relations services.
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