Imagination TV Inc. (IMTV)

[HollywoodFastLane]

Operating expenses were $5,129,771, $174,971, $5,291,233 and $508,275 for the three and nine month periods ended September 30, 2012 and 2011, respectively. Significant operating expenses were related to stock-based share payments which were $4,801,625, $110,124, $4,842,875 and $349,473 for the three and nine month periods ended September 30, 2012 and 2011, respectively. Shares were issued as compensation for services rendered. The Company is recording stock-based compensation, valued at the date of the issuance, and ratably expensing over the service period. Other significant operating expenses were also related to the maintenance of the corporate entity, primarily accounting and legal fees. Expenses incurred in the development of the web-based search site are expensed as incurred.