Annual report pursuant to section 13 and 15(d)

Note 5: Stockholders' Equity

Note 5: Stockholders' Equity
12 Months Ended
Dec. 31, 2011
Stockholders' Equity Note Disclosure [Text Block]
Note 5:  Stockholders’ Equity (Deficit)

As part of the Reincorporation, the total number of authorized shares of common stock was changed to 250,000,000 shares of $0.001 par value.  The common stock and additional paid in capital accounts were restated as of December 31, 2011 and December 31, 2010, and for the years then ended, to recognize the change from no par common stock to a par value of $0.001 per share.  As of December 31, 2011 and December 31, 2010, there were 60,698,815 and 55,116,515 shares of common stock outstanding, respectively.

The Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001. The Board of Directors is authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series.  Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.  As of December 31, 2011, no shares were outstanding and the Board of Directors has not authorized issuance of preferred shares.

On April 6, 2010, the Company commenced a confidential private placement offering to certain accredited investors for up to 12,500,000 shares of common stock at a purchase price of $0.40 per share.  On July 13, 2010, the Board of Directors amended the terms of the offering to include the issuance of a warrant to purchase one additional share of common stock for each share of common stock sold through the offering.  Each warrant has an expiration of three years from the date of purchase and an exercise price of $0.40 per share.  As of December 31, 2010, a total subscription of $188,443 was received and 471,108 shares have been issued.  Costs of the offering in the amount of $17,396 were offset against the additional paid in capital account through December 31, 2010.  The offering is closed.

During March and April, 2011, the Company conducted a private placement offering to certain accredited investors under Rule 506.  As a result of the offering, the Company received subscriptions in the total amount of $860,000 and 4,300,000 shares were issued.  Ms. Isabel Moeller also subscribed for 1,000,000 shares. In lieu of cash payment for the subscribed shares, Ms. Moeller agreed to a $200,000 reduction in the outstanding principal balance of her note effective April 1, 2011.  Costs of the offering in the amount of $1,770 were offset against the additional paid in capital account.

On September 30, 2010, 50,000 shares were issued in exchange for services valued at $25,000, or $0.50 per share.  On March 31, 2011, an additional 32,300 shares were issued in exchange for debt valued at $9,690, or $0.30 per share.  On December 31, 2011, 250,000 shares of common stock were issued in exchange for services valued at $42,500, or $0.17 per share.

Through December 31, 2011, stock option grant notices for up to 15,035,000 shares of common stock have been issued to employees and service providers of the Company pursuant to the 2008 Stock Option Plan, in accordance with the provisions of Topic 718, Compensation, of the Accounting Standards Codification, which requires companies to measure the cost of employee services received in exchange for equity instruments based on the grant date fair value of those awards and to recognize the compensation expense over the requisite service period during which the awards are expected to vest.  A total of $1,879,464 has been recognized as additional paid in capital as the value of these options granted, which includes $432,422 and $117,610 for the twelve months ended December 31, 2011 and the year ended December 31, 2010, respectively.  Of the total grants for shares issued, 40,000 have expired as of December 31, 2011 and options to purchase up to 14,995,000 shares of common stock are outstanding. Additional details regarding the stock options granted is found in Note 9: Stock Options.

On June 2, 2009, the Company, through Glendale Securities, Inc. of Sherman Oaks, California as broker-dealer, filed a Disclosure Statement with the Financial Investment Regulatory Agency (FINRA) pursuant to Rule 15c2-11 of the Securities and Exchange Act of 1934, as amended, to establish a secondary trading market on the Pink Sheets Electronic OTC Markets system.  Glendale Securities’ request for un-priced quotation on the Pink OTC Markets was cleared by FINRA on July 13, 2009 and trading began on July 24, 2009.  In May 2011, the OTC Markets, Inc. moved the Company to the OTCQB trading platform.  On September 7, 2011, FINRA cleared the Company for quotation on the OTCBB.  In connection with the change in domicile and name change from Pacific Entertainment Corporation to Genius Brands International, Inc., the Company filed an application for a new ticker symbol for trading purposes.  The new trading symbol is GNUS.