Seven Arts Entertainment Inc (SAPX)

[wEaReLeGiOn]

Recent Issuances of Unregistered Securities

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As of the information contained in our last periodic report, dated July 23, 2012 we had 1,382,757shares of our common stock issued and outstanding. Since then and through the date of this Current Report, we have issued the following unregistered securities, the descriptions of which do reflect our 1-for-70 common stock reverse split that was effective immediately after the close of the markets on August 31, 2012:

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On June 22, 2012, we sold and issued 357,143 shares of our common stock to our chief executive officer. The per-share issuance price was $0.0775, which was above market price as of such date, was paid through an exchange of historic debt that was owed to our chief executive officer, and is subject to a potential increase in such issuance price by our independent directors. We relied on the exemption from registration provided pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). Management believed that such exemption was available because no advertising or general solicitation was employed in offering the debt securities and the offering and sale thereof were made solely to our chief executive officer.

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On June 27, 2012, we sold and issued 71,429 restricted shares of our common stock to one investor as a $150,000 fee in connection with a loan transaction between us and the investor. We relied on the exemption from registration provided pursuant to Section 4(2) of the Securities Act. Management believed that such exemption was available because (i) no advertising or general solicitation was employed in offering the debt securities, (ii) the offering and sale thereof were made solely to a limited number of persons, and (iii) transfer of the shares was restricted in accordance with the requirements of such Act.

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Between July 19, 2012, and August 14, 2012, we sold and issued an aggregate of 267,422 shares of our common stock to three persons in connection with their conversion of an aggregate of $400,000 of our debt at an average conversion price of $0.021 per share at prices ranging from $1.40 to $2.10. We relied on the exemption from registration provided pursuant to Section 4(2) of the Securities Act. Management believed that such exemption was available because (i) no advertising or general solicitation was employed in offering the debt securities, (ii) the offering and sale thereof were made solely to a limited number of accredited investors, and (iii) transfer of the shares was restricted in accordance with the requirements of such Act. More than six months passed between the issuance of the converted debt and the conversion into ordinary shares. Further and in accordance therewith, any resale of such shares would have been exempt from the registration of such Act pursuant to the exemption provided by Rule 144.

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Between July 12, 2012, and August 16, 2012, we sold and issued an aggregate of 305,758 shares of our common stock to three persons in connection with their conversion of an aggregate of $503,405 of our overhead and film asset debt at an average conversion price of $0.024 per share at prices ranging from $1.40 to $2.80. We relied on the exemption from registration provided pursuant to Section 4(2) of the Securities Act. Management believed that such exemption was available because (i) no advertising or general solicitation was employed in offering the debt securities, (ii) the offering and sale thereof were made solely to a limited number of accredited investors, and (iii) transfer of the shares was restricted in accordance with the requirements of such Act. More than six months passed between the issuance of the converted debt and the conversion into ordinary shares. Further and in accordance therewith, any resale of such shares would have been exempt from the registration of such Act pursuant to the exemption provided by Rule 144.

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On August 9, 2012, we sold and issued 8,571 restricted shares of our common stock to one investor at $35.00 per share. We relied on the exemption from registration provided pursuant to Section 4(2) of the Securities Act. Management believed that such exemption was available because (i) no advertising or general solicitation was employed in offering the debt securities, (ii) the offering and sale thereof were made solely to a limited number of persons, and (iii) transfer of the shares was restricted in accordance with the requirements of such Act.

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Between August 9, 2012, and August 16, 2012, we sold and issued an aggregate of 6,667 restricted shares of our common stock to two consultants for services rendered totalling $14,000 at an average price of $2.10 per share. We relied on the exemption from registration provided pursuant to Section 4(2) of the Securities Act. Management believed that such exemption was available because (i) no advertising or general solicitation was employed in offering the debt securities, (ii) the offering and sale thereof were made solely to a limited number of persons, and (iii) transfer of the shares was restricted in accordance with the requirements of such Act

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As September 4, 2012 when we announced our 1-for-70 reverse split, we had 2,907,100 post-split shares of our common stock issued and outstanding.


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Between September 6, 2012, and September 29, 2012, we sold and issued an aggregate of 380,607 shares of our common stock to three persons in connection with their conversion of an aggregate of $279,250 of our overhead debt at an average conversion price of $0.73 per share at prices ranging from $0.17 to $2.10. We relied on the exemption from registration provided pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act"). Management believed that such exemption was available because we exchanged such debt securities solely with the current holders thereof and we did not pay or give, directly or indirectly, any commission or other remuneration for soliciting any such exchange. In respect of the underlying debt securities, we relied on the exemption from registration provided pursuant to Section 4(2) of such Act. Management believed that such exemption was available because (i) no advertising or general solicitation was employed in offering the debt securities, (ii) the offering and sale thereof were made solely to a limited number of accredited investors, and (iii) transfer of the debt securities was restricted in accordance with the requirements of such Act. More than six months passed between the issuance of the converted debt and the conversion into ordinary shares. Further and in accordance therewith, any resale of such shares would have been exempt from the registration requirements of such Act pursuant to the exemption provided by Rule 144.

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Between September 14, 2012, and September 28, 2012, we sold and issued an aggregate of 653,259 shares of our common stock to three persons in connection with their conversion of an aggregate of $279,438 of our film asset debt at an average conversion price of $0.43 per share at prices ranging from $0.25 to $0.70. We relied on the exemption from registration provided pursuant to Section 3(a)(9) of the Securities Act. Management believed that such exemption was available because we exchanged such debt securities solely with the current holders thereof and we did not pay or give, directly or indirectly, any commission or other remuneration for soliciting any such exchange. In respect of the underlying debt securities, we relied on the exemption from registration provided pursuant to Section 4(2) of such Act. Management believed that such exemption was available because (i) no advertising or general solicitation was employed in offering the debt securities, (ii) the offering and sale thereof were made solely to a limited number of accredited investors, and (iii) transfer of the debt securities was restricted in accordance with the requirements of such Act. More than six months passed between the issuance of the converted debt and the conversion into ordinary shares. Further and in accordance therewith, any resale of such shares would have been exempt from the registration requirements of such Act pursuant to the exemption provided by Rule 144.