10-K 1 g3990.txt ANNUAL REPORT FOR THE YEAR ENDED 12-31-09 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2009 Commission File Number 333-146263 IN Media Corporation (Exact name of Registrant as specified in its charter)
Nevada 1711 20-8644177 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employee Incorporation or Organization) Classification Code Number) Identification No.) 4920 El Camino Real, Suite 100, Los Altos, CA 94022 408-849-9499 (Address of principal executive offices) (Registrant's telephone number, including area code)
Tres Estrellas Enterprises, Inc. 3401 Adams Avenue, Suite 302 San Diego, CA 92116-2490 (Former Name and Former Address) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to section 12(g) of the Act: Common Stock, $.001 par value Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S- K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] 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 definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. 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 April 1, 2010, the registrant had 45,000,000 shares of common stock issued and outstanding. The current market value of our common stock as of April 1, 2010 is $1.18 per share. The aggregate market value, as at the last business day of the registrant's most recently completed second fiscal quarter was $0.00. DOCUMENTS INCORPORATED BY REFERENCE: None IN MEDIA CORPORATION (formerly Tres Estrellas Enterprises, Inc.) TABLE OF CONTENTS Page No. -------- Part I Item 1. Business 3 Item 1A. Risk Factors 7 Item 1B. Unresolved Staff Comments 13 Item 2. Properties 13 Item 3. Legal Proceedings 13 Item 4. Reserved 13 Part II Item 5. Market for Common Equity and Related Stockholder Matters 14 Item 6. Selected Financial Data 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 7A. Quantitative and Qualitative Disclosures About Market Research 19 Item 8. Financial Statements 20 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 30 Item 9A. Controls and Procedures 30 Item 9B. Other Information 31 Part III Item 10. Directors and Executive Officers 32 Item 11. Executive Compensation 33 Item 12. Security Ownership of Certain Beneficial Owners and Management 36 Item 13. Certain Relationships and Related Transactions 37 Item 14. Principal Accounting Fees and Services 37 Part IV Item 15. Exhibits 38 Signatures 39 2 As used in this report, the terms "we", "us", "our"and "our company" refer to IN Media Corporation (formerly Tres Estrellas Enterprises, Inc.). CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Our disclosure and analysis in this Current Report on Form 10-K contains some forward-looking statements. Certain of the matters discussed concerning our operations, cash flows, financial position, economic performance and financial condition, and the effect of economic conditions include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar expressions are forward-looking statements. Although we believe that these statements are based upon reasonable assumptions, including projections of orders, sales, operating margins, earnings, cash flow, research and development costs, working capital, capital expenditures and other projections, they are subject to several risks and uncertainties. Investors are cautioned that our forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements. As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainty of estimates, forecasts and projections may be better or worse than projected. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this filing to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events. PART I ITEM 1. BUSINESS ORGANIZATION IN THE LAST FIVE YEARS IN Media Corporation was incorporated in Nevada on March 5, 2007 as Tres Estrellas Enterprises, Inc. for the purpose of utilizing the latest products and methods in pipe restoration plumbing contractor services for commercial and residential rental buildings in Baja California, Mexico. Due to a downturn in the construction industry we were forced to abandon our business plan and on October 16, 2009, we executed an agreement between In-Media Corporation (a California corporation), and Tres Estrellas Enterprises, Inc., whereby pursuant to the terms and conditions of the Agreement, In-Media shareholders acquired thirty three million, five hundred thousand (33,500,000) shares of our common stock, subsequent to which In-Media was merged into the Company. This issuance of stock did not involve any public offering, general advertising or solicitation. Based in Los Altos, CA, we are a development stage company positioned to exploit the emerging market for Internet Protocol Television ("IPTV") services for cable, satellite, internet, telephony and mobile services. IPTV delivers video content from public domain and premium content sources over the internet to consumer displays ranging from large screen TVs in the home, to mobile display devices such as the I-Phone. Our goal is to become a global leader of IPTV implementation systems, services and content aggregation for our distribution partners ("Platform Providers"). To date we have built our business by focusing on outsourcing as much as possible to reduce the risk of development problems 3 and delays, market and employee acquisition, and up-front cash flow. Our relationship with our outsource partners gives us access to development and engineering facilities in China and India, distribution channels in China, customer sales, billing and support services, and over 4,000 entertainment titles from Hollywood to "Bollywood" (the informal term popularly used for the Mumbai-based Hindi-language Film Industry in India) movies. As a result, we believe we are well positioned to effectively and efficiently launch and implement IPTV solutions in Asia and around the world. Our business model is comprised of both content fees and shared revenue from large infrastructure providers offering total solutions: television, telephony and internet services, also referred to as "Triple Play" services. The addition of content or video on demand (VoD) adds to the solution or "Quad Play" services. Led by our President and CEO, Nick Karnik, we believe that we have established key relationships in China and India to launch IPTV services. The first implementation of our services is intended to be launched in China with cable providers from major cities. With the multitudes of options of content on the Internet traditional television programming is under pressure to come up with new models and options for consumers. Video on Demand, once only available on cable is the de-facto standard for internet access. The platform providers like Comcast, AT&T, DirecTV, etc. are central to providing the core services of: telephony, television, internet and content to the mass market. However, adding to the complexity are the divergent number and types of devices available to access the internet and content. THE IN MEDIA SOLUTION We focus on providing integrated IPTV services for Platform Providers for any device from large screen televisions to handheld mobile phones. We provide a combination of hardware, software, manufacturing and content services for platform providers to either complete their proprietary offerings or provide an all-in-one solution. Our partnerships with Platform Providers such as Comcast, AT&T, DirecTV, provide an installed base of customers as well as allowing Platform Providers to be the billing and service interface to customers. We are currently planning our first implementation in China through our Chinese Distributor, which will include provision of Set Top Boxes ("STB") related system support, reference platforms and technology, and access to over 4,000 titles of Hollywood and Bollywood movies. THE MARKET OPPORTUNITY We believe that the overall IPTV market potential is very large and can be viewed as a function of the growth in the number of broadband subscribers. In 2007, the top ten countries totaled over 226,000,000 broadband subcribers. According to eMarketer, the total worldwide broadband subscriber base is expected grow to over 500,000,000 subscribers by 2011. We have focused our initial efforts on implementation of our IPTV solutions in China, because it is one of the largest IPTV markets in the world. With 378 million TV households and 152 million cable TV households at the end of 2007, [GRAPHIC SHOWING THE TOP 10 COUNTRIES BY NUMBER OF BROADBAND SUBSCRIBERS] 4 China is the world's largest TV market. (source; eMarketer) Cable dominates the multi-channel industry as satellite reception is banned and IPTV is in its infancy. As a result 40% of all homes have cable TV, and cable accounts for 99% of the pay TV market. (source; eMarketer) With significant investment in the technological infrastructure across the country, we have determined that the cable industry is rapidly converting to digital in anticipation of the planned conversion from analog to digital transmission standards in 2015. The recent Olympics acted as a catalyst for this - as the Beijing Olympics was the first all-HD Olympic Games. Digitization and the growth of interactive TV services is expected to lead to an increase in the number of subscribers, the frequency of use and average revenue per subscriber. [GRAPHIC SHOWING THE NUMBER OF IPTV SUBSCRIBERS IN CHINA] OPPORTUNITIES FOR FOREIGN TECHNOLOGY SUPPLIERS IN THE CHINESE DOMESTIC MARKET Despite the restrictions on foreign investment in the Chinese media industry, opportunities exist for overseas technology providers like IN Media Corporation, in particular, those that supply head-end and studio equipment, video-on-demand systems, last-mile components and conditional access. Although local competition is tough, foreign companies that take the time to understand the intricacies of the market and work through local partners have the potential to compete in this huge marketplace. OUR INITIAL ROLL-OUT PLAN IN CHINA The initial rollout of our technology to the Chinese market will be in a "set-top" cable box style unit which will integrate traditional broadcast television and internet media content streamed into the user's existing TV through the IPTV unit. The application of this technology will appear and operate in many ways just like the familiar "cable box" menu driven user interface. The key difference is that the media will not be limited to a broadcast television signal but rather will include the vast library of existing internet content. With the help of our Chinese distribution partner, we are hoping to be in a position to commence shipments to Chinese cable providers by mid 2010. Once complete, this product deployment, as well as future deployments, will allow for seamless viewing of internet and network broadcast content in high definition on the user's existing television. Finally, there will be a number of portals allowing the user instant and easy access to thousands of public domain and premium movies and television programming. 5 OUR BUSINESS MODEL AND SALES STRATEGY * BUSINESS MODEL Our business model centers on a combination of hardware, software, manufacturing and content: 1. SET-TOP BOX SOLUTION. We provide reference hardware and software for mass market manufacturing as well as manufacturing of the actual set-top boxes to Platform Provider specifications. Revenue sharing is based on the fees collected by Platform Providers as a percentage of their overall access fees. 2. CONTENT LICENSING. We provide access to a library of over 4,000 Hollywood and Bollywood movies. Fees are based on either Video on Demand (VoD) or advertising fees depending on the Platform Provider agreements. * SALES STRATEGY Our sales strategy is based on working with Platform Providers of IPTV services. Because of the market size and readiness for IPTV solutions in general in China and the fact that we have developed our first distribution agreement in China we are focusing first on this market and then plan subsequent expansion into India, North America and Europe. Although the final timing cannot be assured, our implementation plan is as follows: Phase Duration ----- -------- 1 DEVELOPMENT: Complete reference hardware and software for set-top box implementation in China Completed 2 CHINA: Launch first implementation with China's Cable operators into first targeted province Mid 2010 3 CHINA EXPANSION: Expand into additional provinces with China Cable Operators 2010-2011 4 US: Business development to secure Platform Providers in the US 2H 2010 5 EUROPE: Business development into major European countries via Platform Providers 1H 2011 THE COMPETITION AND COMPETITIVE ADVANTAGE The competitive landscape for IPTV services is very crowded as the market potential is very large. The key players will be the Platform Providers who control access to telephony, television, internet and content for consumers. However, new players like Microsoft, Apple, Amazon, and the major Hollywood studios are moving forward on their own solutions to monetize content and services over the internet. Key hardware vendors like Motorola, Cisco, Intel, etc. are also potential competitors for set-top box solutions as they have previously established relationships with the Platform Providers. [GRAPHIC SHOWING THE IPTV SOLUTIONS] 6 Although our competitors have strong brands and significant engineering and marketing budgets we believe that we will have an opportunity to compete because we have outsourced our manufacturing and distribution function in China to local partners who know and operate in the Chinese market where the power of established US brands may not be so powerful. Since we already have a fully functional product offering and have established local distribution we believe our market offering in China is fully competitive with solutions from our competitors. Because of size of the Chinese market, we have an opportunity to further improve the competitiveness of our offering through design efficiencies and economies of scale, thereby enhancing our competitiveness in subsequent markets. Moreover, our access to a large content library gives us the opportunity to supplement traditional television programming with Video-on-Demand services or content portal access with advertising or subscription fees. Whereas, solutions provided by major brands like Microsoft or Apple may compete against the Platform Providers, we are more likely to be perceived as a revenue sharing partner to a Platform Provider. EMPLOYEES We outsource our employees, consequently, we have access to the services of approximately 10 contract employees including 1 executive and administration, 1 in business development, with the balance working in engineering. REPORTS TO SECURITIES HOLDERS We will make available free of charge any of our filings as soon as reasonably practicable after we electronically file these materials with, or otherwise furnish them to, the Securities and Exchange Commission ("SEC"). We are not including the information contained in our website as part of, or incorporating it by reference into, this report on Form 10-K. The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20002. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at (http://www.sec.gov). ITEM 1A. RISK FACTORS As a smaller reporting company we are not required to provide a statement of risk factors. However, we believe this information may be valuable to our shareholders for this filing. We reserve the right to not provide risk factors in our future filings. Each of these risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock. Our primary risk factors and other considerations include: Our business is subject to numerous risk factors, including the following: MINIMAL OPERATING HISTORY AND NO REVENUE. Prior to the merger, we had a minimal operating history and have generated no revenues or earnings from operations. We had no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until we begin selling our product. This may result in us incurring a net operating loss which will increase continuously until we can generate sufficient revenue. There is no assurance that we can generate or sustain profitable operations. 7 SPECULATIVE NATURE OF THE COMPANY'S PROPOSED OPERATIONS. The success of our proposed plan of operation will depend to a great extent on the operations, financial condition and management of the company. In the immediate future we will spend most of our resources, efforts and expenditures in two primary areas. 1) The securing of key customers in China and 2) the development of our IPTV set top box. We have generated no revenue since inception due to the fact that we have not yet made any commercial shipments of our products. The success of our operations will be dependent upon acceptance of our product and numerous other factors beyond our control. REPORTING REQUIREMENTS MAY UTILIZE A SUBSTANTIAL PORTION OF OUR CASH We will incur ongoing costs and expenses for SEC reporting and compliance. To be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY DISCOURAGE THE TRADABILITY OF THE COMPANY'S SECURITIES. We are a "penny stock" company. We are subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination of the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of purchasers in this offering to sell their securities in any market that might develop, because it imposes additional regulatory burdens on penny stock transactions. In addition, the Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because our securities constitute "penny stocks" within the meaning of the rules, the rules would apply to us and to our securities. The rules will further affect the ability of owners of shares to sell their securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions. Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, leaving investors with losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the 8 behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to the Company's securities. RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON THE COMPANY'S STOCK PRICE. All of the outstanding shares of common stock held by the present officers, directors, and affiliate stockholders are "restricted securities" within the meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state securities laws. Officers, directors and affiliates will be able to sell their shares if this Registration Statement becomes effective. Rule 144 provides in essence that a person who is an affiliate or officer or director who has held restricted securities for six months may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1.0% of a company's outstanding common stock. There is no limit on the amount of restricted securities that may be sold by a nonaffiliate after the owner has held the restricted securities for a period of six months if the company is a current, reporting company under the '34 Act. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to subsequent registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop. In addition, if we are deemed a shell company pursuant to Section 12(b)-2 of the Act, our "restricted securities", whether held by affiliates or non-affiliates, may not be re-sold for a period of 12 months following the filing of a Form 10 level disclosure or registration pursuant to the Act. THE COMPANY'S INVESTORS MAY SUFFER FUTURE DILUTION DUE TO ISSUANCES OF SHARES FOR VARIOUS CONSIDERATIONS IN THE FUTURE. There may be substantial dilution to our shareholders purchasing in future offerings as a result of future decisions of the Board to issue shares without shareholder approval for cash, services, or acquisitions. THE STOCK WILL IN ALL LIKELIHOOD BE THINLY TRADED AND AS A RESULT INVESTORS MAY BE UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF THEY NEED TO LIQUIDATE SHARES. Our shares of common stock may be thinly-traded on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that it is a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if the Company came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as ours or purchase or recommend the purchase of any of our Securities until such time as it became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in the Company's securities is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on the securities price. We cannot give investors any assurance that a broader or more active public trading market for the Company's common securities will develop or be sustained, or that any trading levels will be sustained. Due to these conditions, we can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if they need money or otherwise desire to liquidate their securities of the Company. FAILURE TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION 4-4 OF THE SARBANES-OXLEY ACT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND OPERATING RESULTS. 9 It may be time consuming, difficult and costly for us to develop and implement the additional internal controls, processes and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal auditing and other finance staff in order to develop and implement appropriate additional internal controls, processes and reporting procedures. If we are unable to comply with these requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires of publicly traded companies. If we fail to comply in a timely manner with the requirements of Section 404 of the Sarbanes-Oxley Act regarding internal control over financial reporting or to remedy any material weaknesses in our internal controls that we may identify, such failure could result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our common stock. Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations, beginning with our annual report on Form 10-K for our fiscal period ending December 31, 2007, we will be required to prepare assessments regarding internal controls over financial reporting and beginning with our annual report on Form 10-K for our fiscal period ending December 31, 2008, furnish a report by our management on our internal control over financial reporting. We have begun the process of documenting and testing our internal control procedures in order to satisfy these requirements, which is likely to result in increased general and administrative expenses and may shift management time and attention from revenue-generating activities to compliance activities. While our management is expending significant resources in an effort to complete this important project, there can be no assurance that we will be able to achieve our objective on a timely basis. There also can be no assurance that our auditors will be able to issue an unqualified opinion on management's assessment of the effectiveness of our internal control over financial reporting. Failure to achieve and maintain an effective internal control environment or complete our Section 404 certifications could have a material adverse effect on our stock price. In addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we may discover "material weaknesses" in our internal controls as defined in standards established by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The PCAOB defines "significant deficiency" as a deficiency that results in more than a remote likelihood that a misstatement of the financial statements that is more than inconsequential will not be prevented or detected. In the event that a material weakness is identified, we will employ qualified personnel and adopt and implement policies and procedures to address any material weaknesses that we identify. However, the process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we will take will remediate any material weaknesses that we may identify or that we will implement and maintain adequate controls over our financial process and reporting in the future. Any failure to complete our assessment of our internal control over financial reporting, to remediate any material weaknesses that we may identify or to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of the 10 periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we may identify, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 4-4 of the Sarbanes-Oxley Act. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. CERTAIN NEVADA CORPORATION LAW PROVISIONS COULD PREVENT A POTENTIAL TAKEOVER, WHICH COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK. We are incorporated in the State of Nevada. Certain provisions of Nevada corporation law could adversely affect the market price of our common stock. Because Nevada corporation law requires board approval of a transaction involving a change in our control, it would be more difficult for someone to acquire control of us. Nevada corporate law also discourages proxy contests making it more difficult for you and other shareholders to elect directors other than the candidate or candidates nominated by our board of directors RISKS INVOLVING THE PEOPLE'S REPUBLIC OF CHINA ("PRC") CERTAIN POLITICAL AND ECONOMIC CONSIDERATIONS RELATING TO PRC COULD ADVERSELY AFFECT OUR COMPANY. The PRC is passing from a planned economy to a market economy. The Chinese government has confirmed that economic development will follow a model of market economy under socialism. While the PRC government has pursued economic reforms since its adoption of the open-door policy in 1978, a large portion of the PRC economy is still operating under five-year plans and annual state plans adopted by the government that set down national economic development goals. Through these plans and other economic measures, such as control on foreign exchange, taxation and restrictions on foreign participation in the domestic market of various industries, the PRC government exerts considerable direct and indirect influence on the economy. Many of the economic reforms are unprecedented or experimental for the PRC government, and are expected to be refined and improved. Other political, economic and social factors can also lead to further readjustment of such reforms. This refining and readjustment process may not necessarily have a positive effect on our operations or future business development. Our operating results may be adversely affected by changes in the PRC's economic and social conditions as well as by changes in the policies of the PRC government, which we may not be able to foresee, such as changes in laws and regulations (or the official interpretation thereof), measures which may be introduced to control inflation, changes in the rate or method of taxation, and imposition of additional restrictions on currency conversion. THE RECENT NATURE AND UNCERTAIN APPLICATION OF MANY PRC LAWS APPLICABLE TO US CREATE AN UNCERTAIN ENVIRONMENT FOR BUSINESS OPERATIONS AND THEY COULD HAVE A NEGATIVE EFFECT ON US. The PRC legal system is a civil law system. Unlike the common law system, such as the legal system used in the United States, the civil law system is based on written statutes in which decided legal cases have little value as precedents. In 1979, the PRC began to promulgate a comprehensive system of laws and has since introduced many laws and regulations to provide general guidance on economic and business practices in the PRC and to regulate foreign investment. Progress has been made in the promulgation of laws and regulations dealing with economic matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. The promulgation of new laws, changes of existing laws and the abrogation of local regulations by national laws could have a negative impact on our business and business prospects. In addition, as these laws, regulations and legal requirements are relatively recent, their interpretation and enforcement involve significant uncertainty. 11 IF RELATIONS BETWEEN THE UNITED STATES AND CHINA WORSEN, OUR STOCK PRICE MAY DECREASE AND WE MAY HAVE DIFFICULTY ACCESSING THE U.S. CAPITAL MARKETS. At various times during recent years, the United States and China have had disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China could adversely affect the market price of our common stock and our ability to access U.S. capital markets. GOVERNMENTAL CONTROL OF CURRENCY CONVERSION MAY AFFECT THE VALUE OF YOUR INVESTMENT. The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Currently, the Renminbi is not a freely convertible currency. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans and corporate debt obligations denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain of our expenses as they come due. THE FLUCTUATION OF THE RENMINBI ("RMB") MAY MATERIALLY AND ADVERSELY AFFECT YOUR INVESTMENT. The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political and economic conditions. Any significant revaluation of the Renminbi may materially and adversely affect our cash flows, revenues and financial condition. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar could have a material adverse effect on our business, financial condition and results of operations. Conversely, if we decide to convert our Renminbi into U.S. dollars for business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of the Renminbi we convert would be reduced. Any significant devaluation of Renminbi may reduce our operation costs in U.S. dollars but may also reduce our earnings in U.S. dollars. In addition, the depreciation of significant U.S. dollar denominated assets could result in a charge to our income statement and a reduction in the value of these assets. Commencing from July 21, 2005, China has adopted a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. The exchange rate of the US dollar against the RMB was adjusted from approximately RMB 8.28 per US dollar to approximately RMB 8.11 per US dollar on July 21, 2005. Since then, the PBOC administers and regulates the exchange rate of US dollar against RMB taking into account demand and supply of RMB, as well as domestic and foreign economic and financial conditions and as of March 25, 2010 stood at RMB 6.82. In addition, there can be no assurance that we will be able to obtain sufficient foreign exchange to pay dividends or satisfy other foreign exchange requirements in the future and we currently do not intend to pay dividends. 12 SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This filing contains forward-looking statements about our business, financial condition and prospects that reflect our management's assumptions and good faith beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements. The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our proposed services and the products we expect to market, our ability to establish a customer base, managements' ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry. There may be other risks and circumstances that management may be unable to predict. When used in this filing, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates" and similar expressions are intended to identify and qualify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. ITEM 2. PROPERTIES Our principal executive office address is 4920 El Camino Real, Suite 100, Los Altos, CA 94022. We currently use the office of a third party at no expense (direct or accrued). As a consequence, we currently have no long term lease obligations. We currently have no investment policies as they pertain to real estate, real estate interests or real estate mortgages. ITEM 3. LEGAL PROCEEDINGS We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions. ITEM 4. RESERVED 13 PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION Our Common stock is currently traded on the OTC Bulletin Board under the symbol "TLLA". We received our listing for quotation on December 4, 2007. The following table sets forth, for the periods indicated, the high and low inter-dealer closing prices per share of our common stock as reported on the OTC Bulletin Board, without retail mark-up, mark-down or commission and may not represent actual transactions. The following table sets forth the high and low bid prices for our common stock for the last two years. Year Quarter High Low ---- ------- ---- --- 2008 First 0.00 0.00 2008 Second 0.00 0.00 2008 Third 0.00 0.00 2008 Fourth 0.00 0.00 2009 First 0.00 0.00 2009 Second 0.00 0.00 2009 Third 0.00 0.00 2009 Fourth 1.40 0.60 HOLDERS As of December 31, 2009, there were 45,000,000 shares of our common stock issued and outstanding with 34 shareholders of record. TRANSFER AGENT Our Transfer Agent is TranShare Corporation. DIVIDEND POLICY Dividends, if any, will be contingent upon our revenues and earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will be within the discretion of our Board of Directors. We presently intend to retain all earnings, if any, for use in our business operations. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS As of the fiscal year ended December 31, 2009, the Company did not have any equity compensation plans and therefore did not grant any stock options or authorize securities for issuance under an equity compensation plan. 14 PENNY STOCK RULES The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares are considered penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which: - contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading; - contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended; - contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" price for the penny stock and the significance of the spread between the bid and ask price; - contains a toll-free telephone number for inquiries on disciplinary actions; - defines significant terms in the disclosure document or in the conduct of trading penny stocks; and - contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation; The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer: - the bid and offer quotations for the penny stock; - the compensation of the broker-dealer and its salesperson in the transaction; - the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and - monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt 15 of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities. SHARES AVAILABLE UNDER RULE 144 There are currently 39,000,000 shares of common stock that are considered restricted securities under Rule 144 of the Securities Act of 1933. All 39,000,000 shares are held by affiliates, as that term is defined in Rule 144(a)(1) and other shareholders. Under Rule 144, such shares can be publicly sold, subject to volume restrictions and certain restrictions on the manner of sale, commencing six months after their acquisition for those companies that have been subject to the reporting requirements of section 13 or 15(d) of the Exchange Act for a period of at least 90 days before the sale. ITEM 6. SELECTED FINANCIAL DATA Not required for smaller reporting companies. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our financial statements and related notes thereto included elsewhere in this annual report. Portions of this document that are not statements of historical or current fact are forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this annual report should be read as applying to all related forward-looking statements wherever they appear in this annual report. From time to time, we may publish forward-looking statements relative to such matters as anticipated financial performance, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. All statements other than statements of historical fact included in this section or elsewhere in this report are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, the following: changes in the economy or in specific customer industry sectors; changes in customer procurement policies and practices; changes in product manufacturer sales policies and practices; the availability of product and labor; changes in operating expenses; the effect of price increases or decreases; the variability and timing of business opportunities including acquisitions, alliances, customer agreements and supplier authorizations; our ability to realize the anticipated benefits of acquisitions and other business strategies; the incurrence of debt and contingent liabilities in connection with acquisitions; changes in accounting policies and practices; the effect of organizational changes within the Company; the emergence of new competitors, including firms with greater financial resources than ours; adverse state and federal regulation and legislation; and the occurrence of extraordinary events, including natural events and acts of God, fires, floods and accidents. The following discussion and analysis of our plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this report. This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those presented under the heading of "Risk Factors" and elsewhere in this annual report. 16 RESULTS OF OPERATIONS We are a development stage company. From inception to the year ended December 31, 2009 we have spent most of our resources, efforts and expenditures in two primary areas. 1) the development of distribution capability in China and 2) the development of our IPTV set top box. We have generated no revenue since inception due to the fact that we are a development stage company and have not yet made any commercial shipments of our products. We have incurred $820,348 in expenses from inception through December 31, 2009. For the year ended December 31, 2009 we incurred $716,586 in expenses. These costs included $415,000 of contracted maintenance costs under the terms of the licensing agreement under which we acquired the rights and designs to our set top boxes and supporting systems and the balance were general, marketing and business development expenses incurred for services provided by outsourced service providers. For the year ended December 31, 2008 we incurred $32,038 in general and administrative expenses. The following table provides selected financial data about our company for the years ended December 31, 2009 and 2008. Balance Sheet Data: 12/31/09 12/31/08 ------------------- -------- -------- Cash $ 63 $ 4,803 Total assets $ 417,033 $ 6,773 Total liabilities $ 947,381 $ 24,570 Shareholders' equity $(530,348) $ 17,797 There was no cash provided from operating activities for the quarter ended December 31, 2009. Over the period from inception to December 31, 2009 one of our directors provided loans to the company amounting to $30,565 to fund operating expenses. Cash provided by financing since inception was $35,000, consisting of $11,000 from the sale of shares to our officer and director and $24,000 resulting from the sale of our common stock to 40 unaffiliated investors. CAPITAL RESOURCES AND LIQUIDITY We expect to generate revenue and cash through the rollout of our set top boxes in China. Based on the installed base of cable customers in the Chinese cities and provinces, we believe, but cannot guarantee, we should be able to be cash flow positive within 12 months. We plan to use our relationships and partnerships in China to help facilitate the manufacturing of our hardware and the integration of the software platform. We may need to raise interim funding to bridge any delays in cash flow from anticipated generation of revenue. 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 of operations, liquidity, capital expenditures or capital resources that is material to investors. SIGNIFICANT ACCOUNTING POLICIES Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. The financial statements have, in our opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below: 17 a) BASIS OF PRESENTATION The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (US GAAP) applicable to development stage companies. b) USE OF ESTIMATES The preparation of financial statements in conformity with U.S. 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. c) CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. d) FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS Financial instruments as defined by FASB ASC 825-10-50 include cash, trade accounts receivable, and accounts payable and accrued expenses. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2009. FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1. Observable inputs such as quoted prices in active markets; Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. We do not have any assets or liabilities measured at fair value on a recurring basis at December 31, 2009 and 2008. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the periods ended December 31, 2009 and 2008. e) INCOME TAXES The Company accounts for income taxes under ASC 740 "INCOME TAXES" which codified SFAS 109, "ACCOUNTING FOR INCOME TAXES" and FIN 48 "ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES - AN INTERPRETATION OF FASB STATEMENT NO. 109." Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be 18 recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. f) EARNINGS (LOSS) PER SHARE FASB ASC 260, "EARNINGS PER SHARE" provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Basic and diluted loss per share was the same, at the reporting dates, as there were no common stock equivalents outstanding. g) STOCK-BASED COMPENSATION ASC 718 "COMPENSATION - STOCK COMPENSATION" codified SFAS No. 123 prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. , may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (A) the option to settle by issuing equity instruments lacks commercial substance or (B) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity. The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 "EQUITY - BASED PAYMENTS TO NON-EMPLOYEES" which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "ACCOUNTING FOR EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR ACQUIRING OR IN CONJUNCTION WITH SELLING, GOODS OR SERVICES". Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (A) the goods or services received; or (B) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date. h) REVENUE RECOGNITION The Company recognizes revenue from the sale of products and services in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition in Financial Statements." Revenue will consist of services income and will be recognized only when all of the following criteria have been met: (i) Persuasive evidence for an agreement exists; (ii) Service has occurred; (iii) The fee is fixed or determinable; and (iv) Revenue is reasonably assured. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RESEARCH We do not hold any derivitive instruments and do not engage in any hedging activities. 19 ITEM 8. FINANCIAL STATEMENTS GEORGE STEWART, CPA 316 17th AVENUE SOUTH SEATTLE, WASHINGTON 98144 (206) 328-8554 FAX(206) 328-0383 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors In Media Corporation I have audited the accompanying balance sheet of In Media Corporation (A Development Stage Company) as of December 31, 2009, and the related statement of operations, stockholders' equity and cash flows for the period from March 5, 2007 (inception), to December 31, 2009. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of In Media Corporation, (A Development Stage Company) as of December 31, 2009, and the results of its operations and cash flows for the period from March 5, 2007 (inception), to December 31, 2009 in conformity with generally accepted accounting principles in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note # 1 to the financial statements, the Company has had no operations and has no established source of revenue. This raises substantial doubt about its ability to continue as a going concern. Management's plan in regard to these matters is also described in Note #1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ George Stewart ------------------------------ Seattle, Washington March 29, 2010 20 In Media Corporation (A Development Stage Company) Balance Sheet --------------------------------------------------------------------------------
As of As of December 31, December 31, 2009 2008 --------- --------- ASSETS CURRENT ASSETS Cash $ 63 $ 4,803 --------- --------- TOTAL CURRENT ASSETS 63 4,803 OTHER ASSETS Licensing agreement 415,000 -- Organization costs 1,970 1,970 --------- --------- TOTAL OTHER ASSETS 416,970 1,970 TOTAL ASSETS $ 417,033 $ 6,773 ========= ========= LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 21,816 $ 2,100 Fees and contracts payable 895,000 -- Loans from directors 30,565 22,470 --------- --------- TOTAL CURRENT LIABILITIES 947,381 24,570 --------- --------- TOTAL LIABILITIES 947,381 24,570 --------- --------- STOCKHOLDERS' EQUITY Common stock, ($0.001 par value, 75,000,000 shares authorized; 45,000,000 and 11,500,000 shares issued and outstanding as of December 31, 2009 and 2008 respectively 45,000 11,500 Additional paid-in capital 245,000 23,500 Deficit accumulated during development stage (820,348) (52,797) --------- --------- TOTAL STOCKHOLDERS' EQUITY (530,348) (17,797) --------- --------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 417,033 $ 6,773 ========= =========
See Notes to Financial Statements 21 In Media Corporation (A Development Stage Company) Statement of Operations --------------------------------------------------------------------------------
March 5, 2007 (inception) Year Ended Year Ended through December 31, December 31, December 31, 2009 2008 2009 ------------ ------------ ------------ REVENUES Revenues $ -- $ -- $ -- ------------ ------------ ------------ TOTAL REVENUES -- -- -- GENERAL & ADMINISTRATIVE EXPENSES 716,586 32,038 820,348 ------------ ------------ ------------ TOTAL GENERAL & ADMINISTRATIVE EXPENSES (716,586) (32,038) (820,348) ------------ ------------ ------------ NET INCOME (LOSS) $ (716,586) $ (32,038) $ (820,348) ============ ============ ============ BASIC EARNING (LOSS) PER SHARE $ (0.04) $ (0.00) ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 17,282,192 11,500,000 ============ ============
See Notes to Financial Statements 22 In Media Corporation (A Development Stage Company) Statement of Changes in Stockholders' Equity From March 5, 2007 (Inception) through December 31, 2009 --------------------------------------------------------------------------------
Deficit Accumulated Common Additional During Common Stock Paid-in Development Stock Amount Capital Stage Total ----- ------ ------- ----- ----- BALANCE, MARCH 5, 2007 -- $ -- $ -- $ -- $ -- Stock issued for cash on April 3, 2007 @ $0.002 per share 5,500,000 5,500 5,500 11,000 Stock issued for cash on October 11, 2007 @ $0.004 per share 6,000,000 6,000 18,000 24,000 Net loss, December 31, 2007 (20,759) (20,759) ---------- ------- -------- --------- --------- BALANCE, DECEMBER 31, 2007 11,500,000 11,500 23,500 (20,759) 14,241 ========== ======= ======== ========= ========= Net loss, December 31, 2008 (32,038) (32,038) ---------- ------- -------- --------- --------- BALANCE, DECEMBER 31, 2008 11,500,000 11,500 23,500 (52,797) (17,797) ========== ======= ======== ========= ========= Merger of In Media and Tres Estrellas October 30, 2009 33,500,000 33,500 221,500 (50,965) 204,035 Net loss, December 31, 2009 (716,586) (716,586) ---------- ------- -------- --------- --------- BALANCE, DECEMBER 31, 2009 45,000,000 $45,000 $245,000 $(820,348) $(530,348) ========== ======= ======== ========= =========
See Notes to Financial Statements 23 In Media Corporation (A Development Stage Company) Statement of Cash Flows --------------------------------------------------------------------------------
March 5, 2007 (inception) Year Ended Year Ended through December 31, December 31, December 31, 2009 2008 2009 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (716,586) $ (32,038) $ (820,348) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Changes in operating assets and liabilities: (Increase) decrease organization costs -- -- (1,970) Increase (decrease) accounts payable 19,716 2,100 21,816 Increase (decrease) loans from directors 8,095 7,000 30,565 ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (688,775) (22,938) (769,937) CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease licensing agreement (415,000) -- (415,000) ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (415,000) -- (415,000) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock 33,500 -- 45,000 Additional paid-in capital 221,500 -- 245,000 Accumulated deficit (50,965) -- -- Increase (decrease) fees and contracts payable 895,000 -- 895,000 ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,099,035 -- 1,185,000 ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH (4,740) (22,938) 63 CASH AT BEGINNING OF PERIOD 4,803 27,741 -- ----------- ----------- ----------- CASH AT END OF YEAR $ 63 $ 4,803 $ 63 =========== =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during year for: Interest $ -- $ -- $ -- =========== =========== =========== Income taxes $ -- $ -- $ -- =========== =========== ===========
See Notes to Financial Statements 24 IN Media Corporation (A Development Stage Company) Notes to Financial Statements December 31, 2009 -------------------------------------------------------------------------------- 1. ORGANIZATION IN Media Corporation (the "Company") is a Nevada corporation incorporated on March 5, 2007 as Tres Estrellas Enterprises, Inc. Effective February 3, 2010, the Company changed its name to IN Media Corporation. The Company is a development stage company. On October 30, 2009, we executed an agreement between IN Media Corporation ("IN-Media") and Tres Estrellas Enterprises, Inc., whereby IN Media shareholders acquired thirty three million five hundred thousand (33,500,000) shares of the Company's common stock and IN Media was merged into the Company. The Company reported this event on Form 8-K, filed with the Securities and Exchange Agreement on November 2, 2009. The Company's fiscal year end is December 31. GOING CONCERN AND LIQUIDITY CONSIDERATIONS The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As at December 31, 2009, the Company had a loss from operations of $820,348 and has earned no revenues since inception. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2010. The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, development of its business plan and generation of revenue. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. 2. SIGNIFICANT ACCOUNTING POLICIES A) BASIS OF PRESENTATION The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (US GAAP) applicable to development stage companies. B) USE OF ESTIMATES The preparation of financial statements in conformity with U.S. 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. 25 IN Media Corporation (A Development Stage Company) Notes to Financial Statements December 31, 2009 -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED C) CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. D) FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, trade accounts receivable, and accounts payable and accrued expenses. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2009. FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1. Observable inputs such as quoted prices in active markets; Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. The Company does not have any assets or liabilities measured at fair value on a recurring basis at December 31, 2009 and 2008. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the periods ended December 31, 2009 and 2008. E) INCOME TAXES The Company accounts for income taxes under ASC 740 "Income Taxes" which codified SFAS 109, "Accounting for Income Taxes" and FIN 48 "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109." Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. 26 IN Media Corporation (A Development Stage Company) Notes to Financial Statements December 31, 2009 -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED F) EARNINGS (LOSS) PER SHARE FASB ASC 260, "Earnings Per Share" provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Basic and diluted loss per share was the same, at the reporting dates, as there were no common stock equivalents outstanding. G) STOCK-BASED COMPENSATION ASC 718 "Compensation - Stock Compensation" codified SFAS No. 123 prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights, may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 "Equity - Based Payments to Non-Employees" which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date. H) REVENUE RECOGNITION The Company recognizes revenue from the sale of products and services in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition in Financial Statements." Revenue will consist of services income and will be recognized only when all of the following criteria have been met: (i) Persuasive evidence for an agreement exists; (ii) Service has occurred; (iii) The fee is fixed or determinable; and (iv) Revenue is reasonably assured. 27 IN Media Corporation (A Development Stage Company) Notes to Financial Statements December 31, 2009 -------------------------------------------------------------------------------- 3. 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 corporation is sought. B) SHARE ISSUANCES Since inception (March 5, 2007), to December 31, 2009, the Company has issued the following shares: 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. 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. 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. The shares bear a restrictive transfer legend in accordance with Rule 144 under the Securities Act. 4. INCOME TAXES The company has incurred operating losses of $820,348, which, if unutilized, will begin to expire in 2027. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, and have been off set by a valuation allowance. Details of future income tax assets are as follows: December 31, 2009 ----------------- Future income tax assets: Net operating loss (from inception (March 5, 2007 to December 31, 2009) $ 820,348 Statutory tax rate (combined federal and state) 34% --------- Non-capital tax loss 278,918 Valuation allowance (278,918) --------- $ -- ========= The potential future tax benefits of these losses have not been recognized in these financial statements due to uncertainty of their realization. When the future utilization of some portion of the carryforwards is determined not to be "more likely than not," a valuation allowance is provided to reduce the recorded tax benefits from such assets. 28 IN Media Corporation (A Development Stage Company) Notes to Financial Statements December 31, 2009 -------------------------------------------------------------------------------- 5. NEW ACCOUNTING PRONOUNCEMENTS The Company does not expect any recent accounting pronouncements to have a material impact on its financial statements. 6. RELATED PARTY TRANSACTIONS Between inception and December 31, 2009 one of our directors advanced funds to the Company to pay for operating expenses. These funds are interest free and there are no specific terms of repayment or any contract regarding the funds loaned. The balance due was $30,565 on December 31, 2009, and $22,470 on December 31, 2008. One of our shareholders and officers has an interest in Numerity Corporation from whom we have licensed our engineering technology, IP and set top box designs, and to whom we are committed to pay maintenance and royalties. One of our shareholders and officers has an interest in Numerity Corporation with whom we have contracted the provision of executive, administration and business development services and to whom we are committed to pay monthly service contract fees. One of our shareholders has an interest in the Chinese distributor who we have appointed to represent us in developing our business in China, and with whom we have committed to share future revenue. One of our shareholders and officers owns the library of film content which has been made available at no charge to us, which we intend to include as part of our product offerings. 7. SUBSEQUENT EVENT Effective February 3, 2010, Tres Estrellas Enterprises, Inc., a Nevada corporation (the "Company"), changed its name from Tres Estrellas Enterprises, Inc. to IN Media Corporation. The Company requested that FINRA issue a new symbol for the common stock on the Over the Counter Bulletin Board. This event was report on a Form 8-K filed with the Securities and Exchange Commission on February 10, 2010. On February 18, 2010, the Board of Directors appointed Simon Westbrook as the new Chief Financial Officer of IN Media Corporation. This event was report on a Form 8-K filed with the Securities and Exchange Commission on February 22, 2010. 29 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officers, recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to our company, particularly during the period when this report was being prepared. MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING We are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Under the supervision and with the participation of our president, we conducted an evaluation of the effectiveness of our internal control over financial reporting, as of December 31, 2009, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, we concluded that our internal control over financial reporting was not effective as of the evaluation date due to the factors stated below. 30 We assessed the effectiveness of the Company's internal control over financial reporting as of evaluation date and identified the following material weaknesses: INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting. INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to properly implement control procedures. LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS: We do not have a functioning audit committee or outside directors on our board of directors, resulting in lack of independent oversight in the establishment and monitoring of required internal controls and procedures. We are committed to improving the internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist us with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future. We have discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only our report in this annual report. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter for our fiscal year ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 31 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS As at December 31, 2009 our Board of Directors was comprised of the following: Name & Address Age Position -------------- --- -------- Nitin Karnik 48 CEO, CFO & Director Jose Chavez 31 Director Dr. Nitin Karnik has been the Chief Executive Officer of IN Media from October 2008 to present. Dr. Nitin Karnik has been the President and Chief Executive Officer of Tres Estrellas Enterprises, Inc. since April 9, 2009. From 2007 through 2009, Dr. Karnik served as the Chief Executive Officer of RSR Consulting Inc, a California company covering media consulting in the area of IPTV, broadband, voice over IP technology, video on demand technology, and streaming technology with clients in India and China. From 2002 through 2007, Dr. Karnik was the Senior Vice President of Mars Entertainment Group, Singapore , where his assignments included content production, distribution, movie production, designing technology for media, digital cinema technology development and business development to Hollywood studios, Bollywood studios and world wide television networks. Jose Chavez has served as a director of the Company for the period from inception to December 31, 2009. Additionally he served as CEO and CFO of the Company from inception until the date of the merger in October 2009. Mr. Chavez has operated as a general plumbing contractor and construction superintendent in Mexico since 2003. AUDIT COMMITTEE FINANCIAL EXPERT We do not have an audit committee or a compensation committee of our board of directors. In addition, our board of directors has determined that we do not have an audit committee financial expert serving on the board. When we develop our operations, we will create an audit and a compensation committee and will seek an audit committee financial expert for our board and audit committee. CONFLICTS OF INTEREST There are no conflicts of interest with any officers, directors or executive staff. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS To the best of our knowledge, during the past five years, none of the following occurred with respect to a present or former director or executive officer of the Company: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the commodities futures trading commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. 32 CODE OF ETHICS We do not currently have a code of ethics. Because we currently have only limited business operations and two officers and directors, we believe a code of ethics would have limited utility. We intend to adopt a code of ethics as our business operations expand and we have additional directors, officers and employees. ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE
Change in Pension Value and Non-Equity Nonqualified Name and Incentive Deferred Principal Stock Option Plan Compensation All Other Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($) -------- ---- --------- -------- --------- --------- --------------- ----------- --------------- --------- Nitin Karnik 2008 -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- $895,000(a) -- Jose Chavez 2007 $ 800 -- -- -- -- -- -- -- 2008 $ 4,800 -- -- -- -- -- -- -- 2009 $ 4,660(b) -- -- -- -- -- -- --
---------- (a) We were billed, accrued, but did not pay, $480,000 for executive, administrative and engineering services provided by Numerity Corporation. We were also billed, accrued, but did not pay, $415,000 under the terms of a license agreement with Numerity Corporation. Mr. Karnik has an executive and ownership interest in Numerity Corporation. (b) Mr. Chavez resigned as an officer at the end of October, 2009. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
Option Awards Stock Awards --------------------------------------------------------------- --------------------------------------------- Equity Incentive Equity Plan Incentive Awards: Plan Market or Awards: Payout Equity Number of Value of Incentive Number Unearned Unearned Plan Awards; of Market Shares, Shares, Number of Number of Number of Shares Value of Units or Units or Securities Securities Securities or Units Shares or Other Other Underlying Underlying Underlying of Stock Units of Rights Rights Unexercised Unexercised Unexercised Option Option That Stock That That That Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not Name Year Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#) ---- ---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- --------- Nitin 2008 -- -- -- -- -- -- -- -- -- Karnik 2009 -- -- -- -- -- -- -- -- -- Jose 2007 -- -- -- -- -- -- -- -- -- Chavez 2008 -- -- -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- -- -- --
33 OPTION EXERCISES AND STOCK VESTED TABLE
Option Awards Stock Awards --------------------------------------------------------------- --------------------------------------------- Equity Incentive Equity Plan Incentive Awards: Plan Market or Awards: Payout Equity Number of Value of Incentive Number Unearned Unearned Plan Awards; of Market Shares, Shares, Number of Number of Number of Shares Value of Units or Units or Securities Securities Securities or Units Shares or Other Other Underlying Underlying Underlying of Stock Units of Rights Rights Unexercised Unexercised Unexercised Option Option That Stock That That That Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not Name Year Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#) ---- ---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- --------- Nitin 2008 -- -- -- -- -- -- -- -- -- Karnik 2009 -- -- -- -- -- -- -- -- -- Jose 2007 -- -- -- -- -- -- -- -- -- Chavez 2008 -- -- -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- -- -- -- PENSION BENEFITS TABLE Number of Present Years Value of Payments Plan Credited Accumulated During Last Name Year Name Service(#) Benefit($) Fiscal Year($) ---- ---- ---- ---------- ---------- -------------- Nitin Karnik 2008 -- -- -- -- 2009 -- -- -- -- Jose Chavez 2007 -- -- -- -- 2008 -- -- -- -- 2009 -- -- -- -- NONQUALIFIED DEFERRED COMPENSATION TABLE Executive Registrant Agregate Aggregate Contributions Contributions Earnings Aggregate Balance in Last Fiscal in Last Fiscal in Last Fiscal Withdrawals at Last Fiscal Name Year Year($) Year($) Year($) Distributions($) Year-end($) ---- ---- ------- ------- ------- ---------------- ----------- Nitin Karnik 2008 -- -- -- -- -- 2009 -- -- -- -- -- Jose Chavez 2007 -- -- -- -- -- 2008 -- -- -- -- -- 2009 -- -- -- -- --
34 DIRECTOR COMPENSATION TABLE
Change in Pension Value and Fees Non-Equity Nonqualified Earned Incentive Deferred Paid in Stock Option Plan Compensation All Other Name Year Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($) ---- ---- ------- --------- --------- --------------- ----------- --------------- -------- Nitin Karnik 2008 -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- -- Jose Chavez 2007 -- -- -- -- -- -- -- 2008 -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- -- ALL OTHER COMPENSATION TABLE Perquisites Company Change and Other Contributions to Severance in Control Personal Tax Insurance Retirement and Payments / Payments / Name Year Benefits($) Reimbursements($) Premiums($) 401(k) Plans($) Accruals($) Accruals($) Total($) ---- ---- ----------- ----------------- ----------- --------------- ----------- ----------- -------- Nitin Karnik 2008 -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- -- Jose Chavez 2007 -- -- -- -- -- -- -- 2008 -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- -- PERQUISITES TABLE Total Perquisites Personal Use Financial and Other of Company Planning/ Executive Personal Name Year Car/Parking Legal Fees Club Dues Relocation Benefits ---- ---- ----------- ---------- --------- ---------- -------- Nitin Karnik 2008 -- -- -- -- -- 2009 -- -- -- -- -- Jose Chavez 2007 -- -- -- -- -- 2008 -- -- -- -- -- 2009 -- -- -- -- -- POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE Before Change After Change in Control in Control Termination Termination w/o Cause or for w/o Cause or Voluntary Change in Name Year Benefit Good Reason for Good Reason Termination Death Disability Control ---- ---- ------- ----------- --------------- ----------- ----- ---------- ------- Nitin Karnik 2008 -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- -- Nitin Karnik 2007 -- -- -- -- -- -- -- 2008 -- -- -- -- -- -- -- 2009 -- -- -- -- -- -- --
---------- * List each applicable type of benefit in a separate row, e.g., severance pay, bonus payment, stock option vesting acceleration, health care benefits continuation, relocation benefits, outplacement services, financial planning services or tax gross-ups. 35 EMPLOYMENT AGREEMENTS As of this time, there are no employment agreements with any named executive officer. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, CONFLICTS OF INTEREST. No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by us for the benefit of our employees. LEGAL PROCEEDINGS. We are currently not involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company's or our company's subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table lists stock ownership of our common stock, as of December 31, 2009 based on an aggregate of 45,000,000 common shares of the combined entities. The information includes beneficial ownership by (i) holders of more than 5% of our common stock, (ii) each of our directors and executive officers and (iii) all of our directors and executive officers as a group. Except as noted below, to our knowledge, each person named in the table has sole voting and investment power with respect to all shares of our common stock beneficially owned by them. Name and Address Amount of Percentage of Beneficial Owner Beneficial Ownership of Class ------------------- -------------------- -------- Nitin Karnik* 11,823,529 26.3% 255 W. El Camino Real Sunnyvale, CA 94087 Jose Chavez 0 0% 3401 Adams Avenue #302 San Diego, CA 92116 Directors and Officer as a Group (2) * 11,823,529 26.3% Guifeng Qui 13,137,255 29.2% 6-03 Xue Xi Yuan Vanke New Town Xin Yi Bau Da Doe Tianjin 300402 Sulu Karnik ** 4,269,608 9.5% 255 W. El Camino Real Sunnyvale, CA 94087 Maxway Electronics, Ltd.*** 4,269,608 9.5% Rm. 1609-12 Nan Fung Tower 173 Des Voeux Road C. Hong Kong ---------- * Excludes holdings by Nitin Karnik's spouse, Sulu Karnik. ** Spouse of Nitin Karnik, excludes holdings by Nitin Karnik. *** Maxway Electronics, Ltd. is controlled by Sanjeev Deshpande 36 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS One of our directors has advanced funds to the Company to cover operating expenses from inception to December 31, 2009. The loan is interest free and has no specific terms of repayment. The balance due on December 31, 2009 and December 31, 2008 was $30,565 and $22,470, respectively. One of our shareholders and officers has an interest in Numerity Corporation with whom we have entered into a non-exclusive license agreement for the rights to use engineering technology, IP and set top box designs, and to whom we are committed to pay maintenance and royalties. During the year ended December 31, 2009, we accrued but did not pay $415,000 under the terms of the license agreement with this Company. One of our shareholders and officers has an interest in Numerity Corporation with whom we have contracted the provision of executive, administration and business development services and to whom we are committed to pay monthly service contract fees. During the year ended December 31, 2009 we accrued but did not pay $480,000 for services provided by this Company. One of our shareholders has an interest in the Chinese distributor who we have appointed to represent us in developing our business in China, and with whom we have committed to share future revenue. As at December 31, 2009 we had not incurred any expenses, nor received any revenue from this distributor. One of our shareholders and officers owns the library of film content which has been made available at no charge to us, which we intend to include as part of our product offerings. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The following table sets forth fees related to services performed by George Stewart, CPA: 2009 2008 ------ ------ Audit Fees (1) $8,400 $8,400 Audit-Related Fees (2) 0 0 Tax Fees (3) 0 0 All Other Fees (4) 0 0 ------ ------ Total $8,400 $8,400 ====== ====== ---------- (1) Audit fees represent fees for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements. (2) During 2009, we did not incur fees for assurance services related to the audit of our financial statements and for services in connection with audits of our benefit plans, which services would be reported in this category. (3) Tax fees principally included tax advice, tax planning and tax return preparation. (4) Other fees related to registration statement reviews and comments. The Board of Directors has reviewed and discussed with the Company's management and independent registered public accounting firm the audited financial statements of the Company contained in the Company's Annual Report on Form 10-K for the Company's 2009 fiscal year. The Board has also discussed with the auditors the matters required to be discussed pursuant to SAS No. 61 (Codification of Statements on Auditing Standards, AU Section 380), which includes, among other items, matters related to the conduct of the audit of the Company's financial statements. The Board has received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and has discussed with its auditors its independence from the Company. The Board has considered whether the provision of services other than audit services is compatible with maintaining auditor independence. 37 Based on the review and discussions referred to above, the Board approved the inclusion of the audited financial statements be included in the Company's Annual Report on Form 10-K for its 2009 fiscal year for filing with the SEC. PRE-APPROVAL POLICIES The Board's policy is now to pre-approve all audit services and all permitted non-audit services (including the fees and terms thereof) to be provided by the Company's independent registered public accounting firm; provided, however, pre-approval requirements for non-audit services are not required if all such services (1) do not aggregate to more than five percent of total revenues paid by the Company to its accountant in the fiscal year when services are provided; (2) were not recognized as non-audit services at the time of the engagement; and (3) are promptly brought to the attention of the Board and approved prior to the completion of the audit. The Board pre-approved all fees described above. PART IV ITEM 15. EXHIBITS The following exhibits are included with this filing: Exhibit Number Description ------ ----------- 3(i) Articles of Incorporation* 3(ii) Bylaws* 31.1 Sec. 302 Certification of CEO** 31.2 Sec. 302 Certification of CFO** 32.1 Sec. 906 Certification of CEO** 32.1 Sec. 906 Certification of CFO** ---------- * Included in our original SB-2 filed with the Securities & Exchange Commission on September 24, 2007 under File Number 333-146263. ** Filed herein. 38 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. April 1, 2010 IN Media Corporation (formerly Tres Estrellas Enterprises, Inc.) By /s/ Nitin Karnik ------------------------------------------------- Nitin Karnik Chief Executive Officer and Director (Principal Executive Officer) By /s/ Simon P. Westbrook ------------------------------------------------- Simon P. Westbrook Chief Financial Officer, Chief Accounting Officer (Principal Financial Officer) In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and dates stated. /s/ Nitin Karnik April 1, 2010 ------------------------------------------------- ------------- Nitin Karnik Date Chief Executive Officer and Director (Principal Executive Officer) /s/ Simon P. Westbrook April 1, 2010 ------------------------------------------------- ------------- Simon P. Westbrook Date Chief Financial Officer, Chief Accounting Officer (Principal Financial Officer) /s/ Jose Chavez April 1, 2010 ------------------------------------------------- ------------- Jose Chavez Date Director 39