CAPITAL STOCK

6 Months Ended

Jun. 30, 2013

CAPITAL STOCK

CAPITAL STOCK

4.

CAPITAL STOCK

A)

AUTHORIZED STOCK

The Company has authorized 75,000,000 common shares with $0.001 par value. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholder of the Company is sought.  

On June 17, 2010, the Company filed an S-8 registration with the SEC reserving 2,500,000 common shares for issuance under the Company’s 2010 Stock Option Plan. During the period from registration to December 31, 2012, the Company issued 817,000 shares to consultants as payment for services provided, and 1,600,000 options to employees. On November 21, 2012 the Company filed a second S-8 registering an additional 2,500,000 common shares for issuance under the Company’s 2010 Amended and Restated Stock Option Plan, and at June 30, 2013 has 2,083,000 registered shares available for future issuance

B)

SHARE ISSUANCES

Since inception (October 27, 2008) to June 30, 2013, the Company has issued the following shares:

(i)

A total of 5,500,000 common stock shares to an officer and director at $0.002 per share for a total of $11,000. The shares bear a restrictive transfer legend in accordance with Rule 144 under the Securities Act.

(ii)

A total of 6,000,000 common stock shares to 40 unaffiliated investors at $.004 per share for a total of $24,000, pursuant to an SB-2 Registration Statement.

(iii)

A total of 33,500,000 common stock shares to the shareholders of IN Media Corporation pursuant to the terms and conditions of a Merger Agreement. This issuance of stock did not involve any public offering, general advertising or solicitation. At the time of the issuance, IN Media had fair access to and was in possession of all available material information about our Company.

(iv)

In addition, the Company has issued a total of 12,633,387 common stock shares to (a) consultants for payment of services provided, (b) vendors for the purchase and payment of movie distribution systems including storage and distribution hardware, operating software, and rights to distribute two thousand movie titles, (c) creditors for settlement of outstanding debt, and (d) a noteholder for conversion of certain notes payable and accrued interest thereon as set out in the following table:

	Six months	Year	Period
	ended	ended	from
SUMMARY ISSUANCE OF COMMON STOCK	June 30,	December 31,	Inception
# Shares	2013	2012	Total
Payment of consultants		80,000	897,000
Purchase of assets			250,000
Conversion of notes	275,000	1,961,944	3,786,466
Settlement of debt		3,500,000	8,000,000
Payment of note interest			55,371
Total	275,000	5,541,944	12,988,837
	Six months	Year	Period
	ended	ended	from
	June 30,	December 31,	Inception
Value of Shares	2013	2012	Total
Payment of consultants		24,000	591,999
Purchase of assets			40,000
Conversion of notes	21,250	55,000	249,250
Settlement of debt		350,000	1,025,000
Payment of note interest			6,120
Total	21,250	429,000	1,912,369

The issuance of such shares of our common stock was effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and in Section 4(2) of the Securities Act, based on the following: (a) the debt-holder confirmed to us that they were “accredited investors,” as defined in Rule 501 of Regulation D promulgated under the Securities Act and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the conversion of the debt and issuance of the shares; (c) the debt-holder acknowledged that the shares being issued were “restricted securities” for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act; and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.