Quarterly report pursuant to sections 13 or 15(d)

Note 5: Stockholders' Equity

Note 5: Stockholders' Equity
9 Months Ended
Sep. 30, 2011
Stockholders' Equity Note Disclosure [Text Block]
Note 5:  Stockholders’ Equity

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 September 30, 2011 and December 31, 2010 to recognize the change from no par common stock to a par value of $0.001 per share.  As of September 30, 2011, 60,448,815 shares of common stock were outstanding.

The Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001 subject to the approval of the Board of Directors.  As of September 30, 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 $.40 per share.  On July 13, 2010, the Board of Directors amended 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 a term 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 had been received and 471,108 shares had been issued.  Costs of the offering in the amount of $17,396 were offset against the additional paid in capital account.  This offering expired.

During March and April, 2011, the Company conducted a private placement to certain accredited investors only 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 have been 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 $.50 per share.  On March 31, 2011, an additional 32,300 shares were issued in exchange for services valued at $9,690, or $0.30 per share.

Through September 30, 2011, stock option grant notices for up to 14,045,000 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 $1,832,179 has been recognized as Additional Paid in Capital as the value of these options granted, which includes $385,137 and $117,610 for the nine months ended September 30, 2011 and the year ended December 31, 2010, respectively.   Of the total grants for shares issued, 40,000 have expired as of September 30, 2011 and options to purchase up to 14,005,000 shares of common stock are outstanding. Additional details regarding the stock options granted is found in Note 8:  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 trading on the OTCBB.  The trading symbol is PENT.

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.  As of November 14, 2011, FINRA is conducting a review of the application.