UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549







FORM
10-Q







(Mark
One)


x
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the quarterly period ended April 30, 2008




o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the transition period from ___________ to ___________




Commission
File number 000-28881





MEGA
MEDIA GROUP, INC.


(Exact
name of registrant as specified in its charter)




Nevada
            88-0403762(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)




1122 Coney Island Avenue, Brooklyn,
      NY
            11235(Address
      of principal executive offices)
            (Zip
      Code)





(718) 947-1100(Registrant’s
      telephone number, including area
code)




Indicate
by check mark if the registrant (1) has filed 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 Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes xNo o





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):




Large
      Accelerated Filer o
            Accelerated
      Filer  o
            Non
      Accelerated Filer  oSmaller
      Reporting Company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). oYes     xNo





As of
June 20, 2008, we had 83,752,254 outstanding shares of Common Stock, $0.001 par
value.






















MEGA
MEDIA GROUP, INC.


TABLE OF CONTENTS





PART I - FINANCIAL
      INFORMATIONItem
      1. Financial Statements
            1Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operation
            16Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
            18Item
      4. Controls and Procedures
            18PART
      II - OTHER INFORMATIONItem
      1. Legal Proceedings
            19Item
      1A. Risk Factors
            19Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            19Item
      3. Defaults Upon Senior Securities
            19Item
      4. Submission of Matters to a Vote of Security Holders
            19Item
      5. Other Information
            19Item
      6. Exhibits
            20SIGNATURES
            21















Except as
otherwise required by the context, all references in this report to "we", "us”,
"our", “MMDA”, “Mega Media Group”, “MMG” or "Company" refer to the consolidated
operations of Mega Media Group, Inc., a Nevada corporation, and its wholly-owned
subsidiaries.





Forward-Looking
Statements and Associated Risks




The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
certain forward-looking statements. Some of the statements contained in this
annual report of the Company discuss future expectations, contain
projections of our operations or financial condition or state other
forward-looking information. Some statements contained in this quarterly report
on Form 10-QSB that are not historical facts (including without limitation
statements to the effect that we "believe," "expect," "anticipate," "plan,"
"intend," "foresee," or other similar expressions) and are forward-looking
statements. These forward-looking statements are based on our current
expectations and beliefs concerning future developments and their potential
effects on us. There can be no assurance that future developments affecting us
will be those anticipated by us. All comments concerning our expectations for
future revenue and operating results are based on our forecasts of our plan of
operation and do not include the potential impact of any future acquisitions or
operations. These forward-looking statements involve significant risks and
uncertainties (some of which are beyond our control) and assumptions. Should one
or more of these risks or uncertainties materialize, or should any of our
assumptions prove incorrect, actual results may vary in material respects from
those projected in the forward-looking statements.















PART
I - FINANCIAL INFORMATION





Item 
1.  Financial Statements.




MEGA
      MEDIA GROUP, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSApril
      30,
              
              
              January
      31,ASSETS
              
              2008
              
              
              2008Current
      Assets
              
              (Unaudited)Cash
              
              $
              -
              
              
              $
              396Accounts
      receivable, net (Note3)
              
              
              146,186
              
              
              
              68,036Accrued
      revenues
              
              
              3,222
              
              
              
              -Prepaid
      Expenses
              
              
              53,227
              
              
              
              76,222Total
      Current Assets
              
              
              202,635
              
              
              
              144,654Fixed
      assets, net (Note 4)
              
              
              346,821
              
              
              
              391,244Master
      records, net (Note 5)
              
              
              125,000
              
              
              
              125,000Other
      intangible assets, net (Note 5)
              
              
              166,667
              
              
              
              176,667Advances
              
              
              20,000
              
              
              
              20,000Note
      Receivable-Golden Gate Investors (Note 14)
              
              
              1,400,000
              
              
              
              -Deposits
              
              
              183,486
              
              
              
              183,486Other
              
              
              16,010
              
              
              
              16,010TOTAL
      ASSETS
              
              $
              2,460,619
              
              
              $
              1,057,061LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      LiabilitiesAccounts
      payable
              
              $
              760,649
              
              
              $
              458,009Bank
      overdraft
              
              
              14,178
              
              
              
              -Sales
      tax payable
              
              
              616
              
              
              
              616Payroll
      taxes payable (Note 13)
              
              
              862,338
              
              
              
              728,350Accrued
      Offices' Compensation
              
              
              491,806
              
              
              
              473,786Equipment
      loan - current portion (Note 9)
              
              
              8,304
              
              
              
              8,304Equipment
      lease - current portion (Note 10)
              
              
              19,440
              
              
              
              19,440Loans
      payable (Note 7)
              
              
              1,160,000
              
              
              
              795,000Due
      to related party (Note 6)
              
              
              386,283
              
              
              
              398,783Deferred
      revenues
              
              
              285,869
              
              
              
              301,661Accrued
      expenses
              
              
              57,029
              
              
              
              24,508Payable
      to shareholders (Note 6)
              
              
              364,148
              
              
              
              239,148Stock
      Payable (Note 10)
              
              
              44,000
              
              
              
              -Total
      Current Liabilities
              
              
              4,454,661
              
              
              
              3,447,605Equipment
      Loan Payable (Note 9)
              
              
              3,383
              
              
              
              4,767Equipment
      Lease Payable (note 10)
              
              
              25,920
              
              
              
              30,780Note
      Payable (Note 14)
              
              
              1,500,000
              
              
              
              -TOTAL
      LIABILITIES
              
              
              5,983,964
              
              
              
              3,483,152Commitments
      and contingencies
              
              
              -
              
              
              
              -Stockholders'
      DeficitPreferred
      stock, $.001 par value, 20,000,000 shares authorized, 0 shares issued and
      outstanding as of 04/30/08 and 01/31/08 (Note 8)
              
              
              -
              
              
              
              -Common
      stock, $.001 par value, 500,000,000 shares authorized, 80,729,984 shares
      issued and outstanding as of 04/30/08 and 80,552,254 shares issued and
      outstanding as of 01/31/08 (Note 8)
              
              
              80,730
              
              
              
              80,552Additional
      paid-in capital
              
              
              7,998,512
              
              
              
              7,233,835Deferred
      compensation
              
              
              (375,912
              )
              
              
              (435,009
              )Accumulated
      Deficit
              
              
              (11,226,675
              )
              
              
              (9,305,469
              )Total
      Stockholders' Deficit
              
              
              (3,523,345
              )
              
              
              (2,426,091
              )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              2,460,619
              
              
              $
              1,057,061
  The
      accompanying notes are an integral part of these financial
      statements.






1




MEGA
      MEDIA GROUP, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONSUNAUDITEDThree
      Months Ended April 30,2008
              
              
              2007(unaudited)
              
              
              (unaudited)Revenues:Advertising
      revenues
              
              $
              237,250
              
              
              $
              955,241Other
      revenues
              
              
              7,964
              
              
              
              113,344Total
      Revenues
              
              
              245,214
              
              
              
              1,068,585Operating
      Expenses
              
              
              770,632
              
              
              
              747,031Selling,
      general and administrative
              
              
              609,369
              
              
              
              897,825Depreciation
      and amortization
              
              
              54,423
              
              
              
              44,3781,434,425
              
              
              
              1,689,234Net
      loss from operations
              
              
              (1,189,211
              )
              
              
              (620,649
              )Other
      Expenses:Interest
      Expenses
              
              
              731,995
              
              
              
              25,156Net
      loss before tax benefit
              
              
              (1,921,206
              )
              
              
              (645,805
              )Tax
      benefitNet
      loss
              
              $
              (1,921,206
              )
              
              $
              (645,805
              )Basic
      and diluted loss per share
              
              
              (0.02
              )
              
              
              (0.04
              )Weighted-Average
      shares used in computation of basic and diluted loss per
    share
              
              
              79,750,352
              
              
              
              17,676,595
  The
      accompanying notes are an integral part of these financial
      statements.






2




MEGA
      MEDIA GROUP, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSUNAUDITEDApril
      30,
              
              
              April
      30,2008
              
              
              2007(Unaudited)
              
              
              (Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (1,921,206
              )
              
              $
              (645,805
              )Adjustments
      to reconcile net loss to net cashused
      by operating activities:Depreciation
      and amortization
              
              
              54,423
              
              
              
              44,378Beneficial
      conversion of loans from shareholders
              
              
              650,320
              
              
              
              -Stock
      options issued to officers for services
              
              
              6,720
              
              
              
              -Stock
      compensation for consulting services
              
              
              59,097
              
              
              
              1,000Changes
      in operating assets and liabilities:(Increase)
      in note receivable
              
              
              (1,400,000
              )
              
              
              -(Increase)
      in accounts receivable
              
              
              (78,150
              )
              
              
              28,079(Increase)
      decrease in accrued revenues
              
              
              (3,222
              )
              
              
              -(Increase)
      decrease in prepaid expenses
              
              
              22,995
              
              
              
              22,995Increase
      in bank overdraft
              
              
              14,178
              
              
              
              -Increase
      in note payable
              
              
              1,400,000
              
              
              
              -Increase
      in accounts payable
              
              
              302,640
              
              
              
              (23,265
              )Increase
      in stock payable
              
              
              44,000
              
              
              
              -Increase
      in sales tax payable
              
              
              -
              
              
              
              (276
              )Increase
      in accrued officers' compensation
              
              
              18,021
              
              
              
              19,039Increase
      in accrued expenses
              
              
              32,521
              
              
              
              23,292Increase
      in deferred revenue
              
              
              (15,792
              )
              
              
              84,349Increase
      in payroll liabilities
              
              
              133,988
              
              
              
              145,314Increase
      in other current liabilities
              
              
              -
              
              
              
              5,902Total
      adjustments
              
              
              1,241,739
              
              
              
              350,807NET
      CASH USED BY OPERATING ACTIVITIES
              
              
              (679,467
              )
              
              
              (294,998
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Master
      records
              
              
              -
              
              
              
              (14,000
              )Fixed
      assets
              
              
              (4,860
              )
              
              
              (15,100
              )CASH
      USED BY INVESTING ACTIVITIES
              
              
              (4,860
              )
              
              
              (29,100
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Loan
      proceeds, net of repayments
              
              
              463,616
              
              
              
              94,329Loans
      from shareholders
              
              
              125,000
              
              
              
              233,030Loans
      from related parties
              
              
              (12,500
              )
              
              
              (5,000
              )Capital
      Contributions
              
              
              52,719
              
              
              
              -Sale
      of common stock
              
              
              -
              
              
              
              50,000Options
      exercised by officers
              
              
              55,096
              
              
              
              -CASH
      PROVIDED BY FINANCING ACTIVITIES
              
              
              683,931
              
              
              
              372,359NET
      INCREASE IN CASH
              
              
              (396
              )
              
              
              48,261CASH:
      Beginning of period
              
              
              396
              
              
              
              37,444End
      of period
              
              $
              (0
              )
              
              $
              85,705Supplemental
      disclosure of noncash financing and investing activities:Cash
      paid during the period for income taxes
              
              $
              2,275
              
              
              $
              2,275Cash
      paid during the period for interest
              
              $
              16,674
              
              
              $
              25,156Non
      Cash Financing and Investing Activities:Preferred
      stock issued for services
              
              $
              -
              
              
              $
              1,100
  The
      accompanying notes are an integral part of these financial
      statements.








3




MEGA
MEDIA GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Amounts
and Disclosures at and for the three months


Ended
April 30, 2008 and 2007 Are Unaudited)





NOTE
1 - ORGANIZATION AND NATURE OF BUSINESS





Mega
Media Group, Inc. (the “MMG”) was incorporated in New York State on February 3,
2004. The Company is a multi-media holding company with five wholly owned
subsidiaries. The Company’s focus is mainstream entertainment and
media.  The corporate headquarters is located in Brooklyn,
NY.





As
reflected in the accompanying combined financial statements, the Company has an
accumulated deficit of $9,305,469 at January 31, 2008 that includes losses of
$3,055,461 for the year ended January 31, 2008 and a working deficit of
$3,302,951 at January 31, 2008. Also, as reflected in the accompanying combined
financial statements, the Company has an accumulated deficit of $11,226,675 and
$6,792,525 at April 30, 2008 and 2007 respectively that includes losses of
$1,921,206 and $645,805 for three months ended April 30, 2008 and 2007
respectively and a working deficit of $4,252,026 and $3,676,083 at April 30,
2008 and 2007 respectively. The Company’s shareholders have funded the losses
and cash shortfalls allowing management to develop sales and contingencies
plans. The Company’s also arranging for additional funding. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.





Management
has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. The Company is actively pursing
additional funding and a potential merger or acquisition candidate and strategic
partners, which would enhance stockholders’ investment. Management believes that
the above actions will allow the Company to continue operations through the next
fiscal year.





NOTE-2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Preparation of Interim
Financial Statements





The
accompanying unaudited consolidated financial statements were prepared by Mega
Media Group, Inc. pursuant to the rules and regulations of the Securities and
Exchange Commission (“SEC”) and, in the opinion of management, include all
adjustments (consisting of normal recurring accruals and adjustments necessary
for adoption of new accounting standards) necessary to present fairly the
results of the interim periods shown. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles in the United States have been
condensed or omitted pursuant to such SEC rules and regulations. Management
believes that the disclosures made are adequate to make the information
presented not misleading. Due to seasonality and other factors, the results for
the interim periods are not necessarily indicative of results for the full year.
The financial statements contained herein should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company’s
2008Annual Report on Form 10-KSB/A filed May 20, 2008 .





Basis Of
Consolidation





The
accompanying consolidated financial statements include the accounts of the Mega
Media Group Inc., and its subsidiary Mega Media Film, Inc., Mega Media Studios,
Inc., Mega Media Records, Inc., VSE Magazine, Inc., and Echo Broadcasting Group,
Inc. All significant intercompany balances and transactions have been
eliminated.







4




Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that effects the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the of the combined financial statements and the reported amounts of revenue and
expenses during the reported period. Actual results could differ from these
estimates.





Cash And Cash
Equivalents




Short-term
investments with an original maturity of three months or less are considered to
be cash equivalents.





Depreciation and
Amortization





The cost
of furniture and equipment is depreciated over the estimated useful lives of the
related assets. The cost of leaseholds improvements is amortized over the lesser
of the length of the related lease or the estimated useful life of the assets.
Depreciation is computed on a straight line basis, with lives ranging from 3 to
7 years.  Leasehold improvements are amortized over the life of the
lease.





Master
Records





The
Company records the cost of a record master borne by the Company as an asset if
the past performance and current popularity of the artist provides a sound basis
for estimating that the cost will be recovered from future sales. Otherwise,
that cost is charged to expense. The amount recognized as an asset is amortized
over the estimated life of the recorded performance.





Accounts
Receivable





Accounts
receivable are stated at the amount management expects to collect from
outstanding balances.  Management provides for probable uncollected
amounts through a charge to earnings and a credit to a allowance for bad debts
based on its assessment of the current status of individual
accounts.  Balances that are still outstanding after management has
used reasonable collection efforts are written off through a charge to the
allowance for bad debts and a credit to accounts receivable.





Revenue
Recognition





The
Company recognizes revenue for broadcast advertising when the commercial is
broadcast and is reported, net of agency and outside sales representative
commissions, in accordance with Staff Accounting Bulletin (“SAB”) No. 104,
Topic 13, “Revenue
Recognition, Revised and Updated.” Agency and outside sales
representative commissions are calculated based on a stated percentage applied
to gross billing. Generally, clients remit the gross billing amount to the
agency or outside sales representative, and the agency or outside sales
representative remits the gross billing, less their commission, to the
Company.





Financial
Instruments





Due to
their short maturity, the carrying amounts of accounts and notes receivable,
accounts payable, accrued liabilities, and short-term borrowings approximated
their fair values at April 30, 2008 and January 31, 2008.





Income
Taxes





The
Company accounts for income taxes using the liability method. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting bases and tax bases of assets and liabilities and are
measured using the enacted tax rates expected to apply to taxable income in the
periods in which the deferred tax asset or liability is expected to be realized
or settled. Deferred tax assets are reduced by valuation allowances if the
Company believes it is more likely than not that some portion or all of the
asset will not be realized.







5




Certain
Reclassifications





The
Company has reclassified a portion of prior quarters selling, general and
administrative expense to be included as a separate component of operating
expenses.





Barter
Transactions





The
Company provides broadcast advertising time in exchange for advertising time in
other media, as well as certain goods and services. The terms of the exchanges
generally permit the Company to preempt such broadcast time in favor of
advertisers who purchase time in exchange for cash. The Company includes the
value of such exchanges in both broadcasting net revenues and station operating
expenses. The valuation of barter time is based upon the fair value of the
advertising time provided and goods and services received. For the year ended
January 31, 2008, barter transactions reflected in net broadcast revenue,
operating expenses and selling, general and administrative expenses were
approximately $290,896. For the three months ended April 30, 2008 and 2007,
barter transactions reflected in net broadcast revenue, operating expenses and
selling, general and administrative expenses were approximately $21,268 and
$97,753 respectively.





On July
16th, 2007
VSE Magazine, Inc., a subsidiary of the Company, entered into asset and
trademark purchase agreements to acquire a Russian language publication
currently operating under the name “METPO” that is distributed in the greater
New York metro area. The total consideration for this transaction was $200,000
of advertising time on a related company’s radio station, Radio
VSE.





New Accounting
Pronouncements





In
March 2008, the FASB issued SFAS 161, “Disclosures about Derivative
Instruments and Hedging Activities”. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The Company is currently evaluating the impact of adopting SFAS 161
on its consolidated financial statements.





On
December 4, 2007, the FASB issued SFAS No. 160, Noncontrolling interest in
Consolidated Financial Statements(SFAS No. 160).  SFAS No. 160
requires all entities to report noncontrolling (minority) interests in
subsidiaries as equity in the consolidated financial statements.  The
statement establishes a single method of accounting for changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation and
expands disclosures in the consolidated financial statements.  SFAS
No. 160 is effective for fiscal years beginning after December 15, 2008 and
interim periods within those fiscal years.  We have not yet determined
the impact of the adoption of SFAS No. 160 on our consolidated financial
statements and footnote disclosures.





On
December 4, 2007, the FASB issued SFAS No.141R, Business Combinations (SFAS
No. 141R).  SFAS No. 141R requires the acquiring entity in a business
combination to recognize all the assets acquired and liabilities assumed,
establishes the acquisition date fair value as the measurement objective for all
assets acquired and liabilities assumed, and requires the acquirer to expand
disclosures about the nature and financial effect of the business
combination.  SFAS No. 141R is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008.  We have not
yet determined the impact of the adoption of SFAS No. 141R on our consolidated
financial statements and footnote disclosures.





In
September 2006, the FASB issued Statement of Financial Accounting Standards
(“SFAS”) No. 157, “Fair Value Measurements”, which establishes a framework for
reporting fair and expands disclosure about fair value measurements. SFAS No.
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007 and interim periods within those fiscal years. The
adoption of this standard had no impact on the Company’s financial position or
results of operations.





6
   In
February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities-Including an amendment of FASB Statement No. 115,
(“SFAS No. 159”). SFAS No. 159 permits entities to choose to
measure many financial instruments and certain other items at fair value. Most
of the provisions of this Statement apply only to entities that elect the fair
value option. However, the amendment to FASB Statement No. 115, “Accounting
for Certain Investments in Debt and Equity Securities,”
(“SFAS No. 115”), applies to all entities with available-for-sale and
trading securities. SFAS No. 159 is effective for the Company’s
consolidated financial statements for the annual reporting period beginning
after November 15, 2007. The adoption of SFAS 159 is not expected to have
impact on the consolidated financial position or results of
operations.





NOTE
3 – ACCOUNTS RECEIVABLE





Accounts
      receivable consist of the following:
              
              April 30,
                2008
              
              
              January 31,
                2008Accounts
      receivable-trade
              
              $
              159,186
              
              
              $
              81,036Allowance
      for doubtful accounts
              
              
              (13,000
              )
              
              
              (13,000
              )$
              146,186
              
              
              $
              68,036




NOTE
4 – FIXED ASSETS




April
      30,
                2008
              
              
              January
      31,
                2008Fixed
      Assets consist of the following:Equipment
              
              $
              505,065
              
              
              $
              505,065Leasehold
              
              
              230,969
              
              
              
              230,969Furniture
              
              
              38,162
              
              
              
              38,162Trucks
              
              
              41,188
              
              
              
              41,188Computer
      software
              
              
              43,988
              
              
              
              43,988859,372
              
              
              
              859,372Less
      accumulated depreciation
              
              
              512,553
              
              
              
              468,129$
              346,821
              
              
              $
              391,243




Depreciation
expense was $44,423 and $44,378 for the three months ended April 30, 2008 and
2007.





In August
2007 Company disposed one of its trucks. In addition, in August 2007 Company
abandoned leasehold improvements for one of its office locations, since the
lease agreement was terminated.





NOTE
5 – INTANGIBLE ASSETS




April
      30,
                2008
              
              
              January
      31,
                2008Intangible
      Assets consist of the following:Master
      records
              
              $
              320,676
              
              
              $
              320,676Other
      intangible assets (see Note 2)
              
              
              200,000
              
              
              
              200,000Less
      accumulated amortization
              
              
              (229,009
              )
              
              
              (219,009
              )$
              291,667
              
              
              $
              301,667




Amortization
expense was $10,000 and $0 for the three months ended April 30, 2008 and
2007.






7





NOTE
6 – LOANS FROM SHARESHOLDERS AND RELATED PARTY TRANSACTIONS





In June,
2007 the company entered into debt conversion agreements with company's
shareholders according to which loans from shareholders and certain loans due to
related party in the amount of $877,000 were converted into shares of common
stock at the conversion prices of $0.30 and $0.25 per share. These conversion
agreements were part of the reverse merger agreement between the company and
Family Healthcare Solutions, Inc., a Nevada Corporation (see note
12).





In
January 2008 the company borrowed two loans of $100,000 each from the
shareholders. Each loan has a beneficial conversion clause proving the option
that the loan can be converted into the company’s common shares at a discount of
20% to market value, with a conversion price limit not to exceed $.40 per share.
The company recognizes beneficial conversion features in accordance with the
FASB Emerging Issues Task Force Issue 98-5. Accordingly, the company fully
amortized the discount through the interest expense in the amount of $51,810 at
the date of issuance of the loans.





At
January 31, 2008 total loans payable to shareholders of $239,148 and due to
related party of $398,783 mature in various amounts from July 11, 2008 to
January 24, 2009 and have a stated interest rate of 9%.





During
three months ended 04/30/08, the Company borrowed from its shareholders three
loans of $50,000, $50,000 and $25,000, a total of $125,000. Loans from
shareholders mature in various amounts from July 12, 2008 to September 18, 2008
and have a stated interest rate of 9%.





At April
30, 2008 total loans payable to shareholders of $364,148 and due to related
party of $386,283 mature in various amounts from July 11, 2008 to January 24,
2009 and have a stated interest rate of 9%.





Certain
founding shareholders of Echo Broadcasting Group Inc. have received free
advertising time on Radio VSE. The fair market value of these services was $0
and $176,130 at April 30, 2008 and January 31, 2008 respectively.





NOTE
7 - LOANS PAYABLE





During
fiscal 2006, the Company borrowed two loans of $220,000 each, a total of
$440,000 payable on June 7, 2007.   ("STATUS") Extended for 12
months





The
interest rate is the UBS Rate plus 5.5%.





During
2007, the Company borrowed $250,000 from First Capital Invest Corp (“FCIC”),
Swiss-based financial institution. Loan is payable in six months from the
inception. Due date on the loan is extended to June 30, 2008.





In August
2007, the Company borrowed $105,000 from Ocean Bridge, Inc. Loan has interest
payable on the unpaid balance at the rate of 12%. Loan matures on February 28,
2008.





In
February 2008 the Company borrowed $90,000 from ESJA Enterprises Inc. Loan has
interest payable on the unpaid balance at the rate of 9%. Loan matures on August
20, 2008. Loan has a beneficial conversion clause proving the option that the
loan can be converted into the company’s common shares at a discount of 20% to
market value, with a conversion price limit not to exceed $.40 per share. The
company recognizes beneficial conversion features in accordance with the FASB
Emerging Issues Task Force Issue 98-5. Accordingly, the company fully amortized
the discount through the interest expense in the amount of $58,171 at the date
of issuance of the loan.







8




In
February 2008 the Company borrowed $100,000 from FD Import & Export Corp.
Loan has interest payable on the unpaid balance at the rate of 9%. Loan matures
on September 28, 2008. Loan has a beneficial conversion clause proving the
option that the loan can be converted into the company’s common shares at a
discount of 20% to market value, with a conversion price limit not to exceed
$.40 per share. The company recognizes beneficial conversion features in
accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the
company fully amortized the discount through the interest expense in the amount
of $145,665 at the date of issuance of the loan.





In March
2008 the Company borrowed another $100,000 from FD Import & Export Corp.
Loan has interest payable on the unpaid balance at the rate of 9%. Loan matures
on September 28, 2008. Loan has a beneficial conversion clause proving the
option that the loan can be converted into the company’s common shares at a
discount of 20% to market value, with a conversion price limit not to exceed
$.40 per share. The company recognizes beneficial conversion features in
accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the
company fully amortized the discount through the interest expense in the amount
of $39,286 at the date of issuance of the loan.





In March
2008 the Company borrowed $75,000 from Tangiers Investors LP. Loan has interest
payable on the unpaid balance at the rate of 9.9%. Loan matures on March 24,
2010. Loan has a beneficial conversion clause proving the option that the loan
can be converted into the company’s common shares at a discount of 30% to market
value, with a conversion price limit not to exceed $.50 per share. The company
recognizes beneficial conversion features in accordance with the FASB Emerging
Issues Task Force Issue 98-5. Accordingly, the company fully amortized the
discount through the interest expense in the amount of $24,668 at the date of
issuance of the loan.





NOTE
8 - PREFERRED AND COMMON STOCK





During
the fiscal year ended January 31, 2008:





In April
2007 the Company sold 50,000 of its $.001 par value common shares to unrelated
investors in private placements for $1.00 per share for proceeds of
$50,000.





In June
2007 the company entered into stock conversion agreements with company's
shareholders according to which all preferred shares issued to shareholders in
the amount of $14,417 shall be converted into shares of common stock at the par
value of 0.001 per share. These conversion agreements were part of the exchange
agreement between the company and Family Healthcare Solutions, Inc., a Nevada
Corporation (see Note 6).





In June
2007 as discussed, in Note 6, the company entered into debt conversion
agreements with company's shareholders according to which loans from
shareholders and certain loans from related party in the amount of $877,000
shall be converted into shares of common stock at the conversion prices of $0.30
and 0.25 per share.





In July
2007 the Company sold 1,000,000 of its $.001 par value common shares to
unrelated investors for $0.30 per share for proceeds of $300,000. Market value
of the stock at the time of sale was $0.60 per share.





In August
2007 the Company sold 166,667 of its $.001 par value common shares to unrelated
investors for $0.30 per share for proceeds of $50,000. Market value of the stock
at the time of sale was $0.35 per share.





On
November 1, 2007, the Company issued to its attorney 177,420 unrestricted shares
of common stock in pay of past and future legal services. Market value of the
stock at the time of agreement was $0.31 per share.





On
November 9, 2007, the Company issued to Island Broadcasting Company 3,000,000
restricted shares of common stock as a part of new Time Brokerage Agreement (see
Note 10). Market value of the stock at the time of agreement was $0.30 per
share.





On
November 23, 2007, the Company issued to Ronn Torrossian, an independent
consultant, 3,000,000 restricted shares of common stock as a part of new
Consulting Agreement (see Note 11). Market value of the stock at the time of
agreement was $0.16 per share.





On
January 16, 2008, the Company issued to its attorney 229,473 unrestricted shares
of common stock in pay of past and future legal services. Market value of the
stock at the time of agreement was $0.18 per share.






9





During
three months ended April 30, 2008:





On
February 6, 2008 certain officers and directors of the Company were granted a
total of 3,200,000 stock options to purchase company’s $.001 par value common
shares for $0.31 per share. The total cost of the stock options granted was
$6,720.





In March
2008 certain officers of the Company exercised their options and purchased a
total of 177,730 of the company’s $.001 par value common shares for $0.31 per
share for a total of $55,096.





NOTE
9 – EQUIPMENT LOANS PAYABLE




April
      30,
                2008
              
              
              January
      31,
                2008Equipment
      loans consist of the following:Raritan
      Bay FCU ("RBFCU")
              
              $
              0
              
              
              $
              0Chrysler
      Credit ("CC")
              
              
              11,687
              
              
              
              13,07111,687
              
              
              
              13,071Less
      current portion
              
              
              8,304
              
              
              
              8,304$
              3,383
              
              
              $
              4,767





The loan
from RBFCU is payable in 72 monthly loan payments of $899 that include principal
and interest at 6.75% per annum and matures on September 1, 2011.  The
loan is secured by the vehicle purchased. The August 2007 loan was terminated
and vehicle was returned to the lender.





The loan
payable CC is payable in 60 monthly payments of $782 which includes principal
and interest at 6.75% per annum and matures on July 9, 2010.  The loan
is secured by the truck purchased.





NOTE
10 - COMMITMENTS AND CONTINGENCIES





Airtime Agreement
(Lease)





The
Company has an agreement (the "Agreement") with Island Broadcasting Company (the
"Licensee") for airtime.  Pursuant to the Agreement the Company has
purchased airtime for the period November 1, 2005 to July 1,
2010.  However, after July 1, 2006 the Licensee may terminate the
Agreement upon 90 days notice to the Company.  Per the Agreement the
airtime is paid monthly.





On
November 9, 2007, Echo Broadcasting Group, Inc. ("Echo Broadcasting "), a
subsidiary of the Company, amended its Time Brokerage Agreement, originally
dated November 1, 2005, with Island Broadcasting Company. In particular, Echo
extended the term of the Time Brokerage Agreement through December 31, 2012 at
12:00 a.m. EST, modified the events of defaults for both Echo and Island
Broadcasting Company, and converted the $170,000 escrow amount currently being
held by Island Broadcasting Company into a payment from Echo to Island
Broadcasting Company. Additionally, Company issued to Island Broadcasting
Company 3,000,000 restricted shares of common stock, at the price of $0.30 per
share.


Finally,
the amended Time Brokerage Agreement now requires Echo to pay Island
Broadcasting Company five percent of the gross receipts received by or credited
to Echo and derived from advertising payments, sponsorships and other sources
relating to the Station's activities. Echo must make such payments within sixty
days following the close of each of Echo's full fiscal quarter from October 1,
2008 through December 31, 2012.





During
the year ended January 31, 2008 the company paid $2,853,775 for
airtime.







10




On April
28, 2008 Echo Broadcasting made a payment postponement agreement with Island
Broadcasting Company. According to this provision, Echo Broadcasting will pay an
annual interest rate charge of 8% on all outstanding monthly balances. In
addition Echo Broadcasting will pay a fee of 200,000 restricted shares of the
Company’s common stock per month for each month for which payment is not made.
All shares are due to be issued on July 1, 2008. Accordingly, on April 28, 2008
the Company made a provision to issue on July 1, 2008 400,000 of its $.001 par
value common shares Island Broadcasting. Market value of the stock at the time
when additional provision to the Time Brokerage Agreement was adopted was $0.11
per share. The Company recorded stock payable in the amount of
$44,000.





During
the three months ended April 30, 2008 and 2007 company paid $644,243 and
$537,819 for airtime respectively.





Remaining
commitments under the Agreement are as follows:




Year
      Ending January 31,2009
              
              $
              2,000,0002010
              
              
              3,100,0002011
              
              
              3,410,0002012
              
              
              3,751,0002013
              
              
              3,670,075$
              16,531,075




Premises and
Equipment





The
Company has entered into lease agreements for office space and equipment, which
expire at various times through April 2009. During the year ended January 31,
2008 the Company paid $155,249 in rent expense. During three months ended April
30, 2008 and 2007 the Company paid $33,018 and $45,433 in rent expense
respectfully. Remaining commitments under the operating leases mature as
follows:




Year Ending January 31,2009
              
              $
              92,7442010
              
              
              15,105$
              140,867


On May 1,
2006 the Company has entered into a new lease agreement for office space, which
was originally expected to expire on April 30, 2011.





On May 1,
2007 the Company and the lessor of the premises, mutually terminated a lease
agreement for office space, which was originally due to expire on April 30,
2011. All prior commitments under the original lease are terminated. The company
continued to rent the office space on the month-to-month basis. During the year
ended January 31, 2008 the Company paid $72,400 in rent expense. As of February
1, 2008 the Company vacated the premises.





Capital
Lease





On
October 4, 2006 the Company has entered into a new lease agreement for office
space, which expire on April 30, 2011. During the year ended January 31, 2008
the company paid $19,440 in lieu of the lease. During the three months ended
April 30, 2008 the company paid $4,860 in lieu of the lease. The commitments
under the lease agreement mature as follows:




11


Year Ending January 31,2009
              
              $
              14,5802010
              
              
              19,4402011
              
              
              11,340$
              45,360








On May 1,
2007 the Company and the lessor of the premises, mutually terminated a lease
agreement for office space, which was originally due to expire on April 30,
2011. All prior commitments under the original lease are terminated. The company
continues to rent the office space on the month-to-month basis.





NOTE
11 - STOCK-BASED COMPENSATION





The
Company accounts for its employee stock-based compensation for all such
compensation awarded beginning February 1, 2006 under FASB Statement No. 123R,
Accounting for Stock-Based Compensation. For employee stock-based compensation
awarded prior to January 1, 2006, we accounted for such compensation under
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees.





In
February 2007, the Company canceled 1,175,000 preferred shares, $.001 par value,
with a market value of $1,175 that were previously awarded to employees and were
part of deferred compensation in the equity section.





Also, in
February 2007, the Company issued 1,100,000, $.001 par value, preferred shares
for past and future services performed by its officers, directors, employees and
consultants. The preferred stock is convertible into common shares in 18 months
after the issuance based upon a 2 to 1 conversion ratio. The shares of preferred
stock have preferential treatment in case of liquidation. Each share of the
preferred stock has 5 voting rights. Out of 1,100,000 preferred shares,
1,000,000 shares, with market value of $1,000, are fully vested and expensed
under selling, general and administrative expenses. 100,000 of preferred shares,
with market value of $100 are included in deferred compensation in the equity
section of the balance sheets at January 31, 2008.





On
November 23, 2007, the Company has issued 3,000,000, $.001 par value, common
shares for future consulting services performed by Ronn Torrosian over a period
two years. Market value of the stock at the time of agreement was $0.16 per
share for a total cost of $480,000. At January 31, 2008, Ronn Torrosian earned
consulting fees in the amount of $45,307.80. The remaining value of the Ronn
Torrosian’s future services in the amount of $434,692.20 are included in
deferred compensation in the equity section of the balance sheets at January 31,
2008.





NOTE
12 – REVERSED MERGER





On June
20, 2007, the company entered into a Stock Purchase and Share Exchange Agreement
(the “Exchange Agreement”) Family Healthcare Solutions, Inc., a Nevada
Corporation (“FHCS”), pursuant to which FHCS acquired 100% of the issued
and outstanding capital stock of the company and wholly owned subsidiaries,
making the company a wholly owned subsidiary of FHCS, and convert into equity
$877,000 in convertible debentures from the company. Note Holders, in exchange
for the issuance by FHCS to the company Shareholders and the company Note
Holders of 49,990,406 shares of FHCS common stock, par value $0.001 per share,
which constituted 68.50% of the company’s issued and outstanding fully diluted
common stock after the transaction is closed. As additional consideration, the
FHCS’s Shareholders agreed to cancel 13,161,033 shares of common
stock.  The FHCS’s stockholders own 28.50% of the issued and
outstanding fully diluted common stock of the company after the transaction was
closed.






12





NOTE
13 - PAYROLL TAXES





The
company has outstanding payroll taxes payable as of April 30, 2008 and January
31, 2008. As of April 30, 2008 the company has recorded an estimate for interest
and penalties that are due to the company’s failure to timely pay payroll taxes
for prior periods. The outstanding payroll tax liability is as
following:




April
      30,
                2008
              
              
              January
      31,
                2008Payroll
      taxes payable
              
              $
              802,035
              
              
              $
              728,350Penalties
      and interest
              
              
              60,303
              
              
              
              0Accrued
      payroll and payroll taxes
              
              $
              862,338
              
              
              $
              728,350





The
Company is in the process of negotiating a payment plan with Internal Revenue
Service.





NOTE
14 – NOTE PAYABLE AND NOTE RECEIVABLE





On April
18, 2008, the Company entered into a Securities Purchase Agreement with Golden
Gate Investors, Inc. The aggregate purchase price was $1,500,000 for the initial
tranche and the investment was as follows:





The
Securities Purchase Agreement includes two tranches. The initial tranche
consists of a 7.00% convertible debenture (the
"Debenture")issued by the Company, in exchange for $100,000 in cash and
a 7.25% Secured Promissory Note  for $1,400,000 issued by the Golden
Gate Investors, Inc which matures on May 31, 2012. The Promissory Note contains
a prepayment provision which requires the Golden Gate Investors, Inc to make
prepayments of interest and principal of $200,000 monthly upon satisfaction of
certain conditions. One of the conditions to prepayment is that shares of the
Company's common stock issued pursuant to the conversion rights under the
debenture must be freely tradable under Rule 144 of the Securities Act of 1933,
as amended. Pursuant to the terms of the debenture, the Golden Gate Investors,
Inc shall have the right from time to time, and at any time on or prior to
maturity to convert all or any part of the outstanding and unpaid principal
amount of this debenture into fully paid and non-assessable shares of the
Company's Common Stock, $.001 par value per share. The number of shares of
Common Stock to be issued upon each conversion of the debenture shall be
determined by dividing the amount of principal and accrued interest to be
converted ("Conversion Amount") by the applicable conversion price then in
effect on the date specified in the notice of conversion, as set forth in
Exhibit A to the Debenture (the "Notice of Conversion"). The conversion price
shall be equal to the lesser of: (i)$0.50 or (ii) the average of the lowest
three (3) volume weighted average prices of the Company's Common Stock as
reported on the OTC Bulletin Board (the "Volume Weighted Average Price") during
the twenty (20) trading days prior to the date of the Conversion Notice (the
"Conversion Date") multiplied by .75. As described in the respective
instruments, the Debenture provides for an upward adjustment of the interest
rate under certain circumstances and the Promissory Note provides for a downward
adjustment of the interest rate under certain circumstances. In addition the
Golden Gate Investors, Inc is required to prepay $250,000 of the Promissory Note
issued on April 18, 2008 on the five month anniversary of the purchase of the
Debenture that occurred on April 18, 2008, provided that certain conditions set
forth in the Securities Purchase Agreement are satisfied.





Provided
that no event of default exists, as defined in the Debenture, the second tranche
of the financing consists of the Company selling and the Golden Gate Investors,
Inc purchasing a Debenture in the principal amount of $1,500,000 in exchange for
a purchase price of $1,500,000 (the "Second Debenture"), with such purchase
price paid via a cash payment of $250,000 and the issuance of a promissory note
in the principal amount of $1,250,000 (the "Second Promissory Note"), with the
form of and terms of the Second Debenture and the Second Promissory Note and
payment of the purchase price subject to the same terms and conditions of the
Securities Purchase Agreement, the Debenture and the Promissory Note, provided
that the Discount Multiplier (as defined in the Second Debenture) for the Second
Debenture shall be 90%, and when the Second Debenture is issued, the term
"Debenture" as used in the Securities Purchase Agreement shall be deemed to
include the Second Debenture in all respects and when the Second Promissory Note
is issued, the term "Promissory Note" as used in the Securities Purchase
Agreement shall be deemed to include the Second Promissory Note in all respects.






13




Pursuant
to the Securities Purchase Agreement, the Golden Gate Investors, Inc may
eliminate the requirement to purchase the Second Debenture by a payment to the
Company of $25,000, which payment shall be reduced under certain conditions to
$5,000 or $0. As also set forth in the Securities Purchase Agreement, the
Company has the right, during a specified ten trading day period prior to the
Golden Gate Investors, Inc's purchase of the Second Debenture, subject to the
satisfaction of certain conditions set forth in the Securities Purchase
Agreement, to terminate the right of the Golden Gate Investors, Inc to purchase
the Second Debenture. If the
Golden Gate Investors, Inc elects to convert a portion of the Debenture and, on
the day that the election is made, the Volume Weighted Average Price per share
of the Company's Common Stock is below $0.04 per share, the Company shall have
the right to prepay that portion of the Debenture that the Golden Gate
Investors, Inc elected to convert, plus any accrued and unpaid interest, at 125%
of such amount. In the event that the Company elects to prepay that portion of
the Debenture, the Golden Gate Investors, Inc shall have the right to withdraw
its Conversion Notice. Pursuant to its terms, the Golden Gate Investors, Inc may
not convert the principal amount of the Debenture to the extent that, following
such conversion, the Golden Gate Investors, Inc would beneficially own in excess
of 4.99% of the Company's outstanding Common Stock, which cap may be increased
to 9.99% or entirely removed by the Investor on not less than 61 days' prior
notice.





Finally,
in the event that the Company obtains a commitment for any other financing
(either debt, equity, or a combination thereof) which is to close during the
term of the Debenture, Golden Gate Investors shall be entitled to a right of
first refusal to enable it to, at Golden Gate Investors, Inc’s option, either:
(i) match the terms of the other financing, or (ii) add additional principal to
the Debenture, in the amount of such other financing, on the same terms and
conditions as the Debenture. Pursuant
to the terms of the Securities Purchase Agreement, the Golden Gate Investors,
Inc does not have any registration rights. Other
than their relationship as a result of the Securities Purchase Agreement, there
is no material relationship between the Company and the Golden Gate Investors,
Inc.





The
company recognizes beneficial conversion features in accordance with the FASB
Emerging Issues Task Force Issue 98-5. Accordingly, the company fully amortized
the discount through the interest expense in the amount of $382,530 at the date
of issuance of the loan.





NOTE
15 - SEGMENT DATA





Currently
the Company has three reportable segments, which it believes best reflects how
the Company is currently managed – radio broadcasting, recorded music and
corporate divisions. The category “other” includes audio & video recording
studios, METRO magazine and other general support services and initiatives.
Revenue and expenses earned and charged between segments are recorded at fair
value and eliminated in consolidation.




Year
Ended January 31, 2008




Radio
              
              
              RecordedMusic
              
              
              Corporate
              
              
              Metro
              
              
              Other
              
              
              TotalRevenue
              
              $
              4,227,882
              
              
              $
              70,000
              
              
              $
              38,345
              
              
              $
              155,806
              
              
              $
              43,421
              
              
              $
              4,535,455Direct
      operating expenses
              
              
              3,605,862
              
              
              
              70,838
              
              
              
              150
              
              
              
              227,888
              
              
              
              12,170
              
              
              
              3,916,908Selling,
      general and administrative expenses
              
              
              1,579,994
              
              
              
              504,223
              
              
              
              1,027,644
              
              
              
              44,305
              
              
              
              31,988
              
              
              
              3,188,154Depreciation
      and amortization
              
              
              52,077
              
              
              
              205,962
              
              
              
              108,525
              
              
              
              23,333
              
              
              
              363
              
              
              
              390,260Loss
      on disposal of fixed assets
              
              
              (4,960
              )
              
              
              64,985
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              60,025Stock
      compensation expense
              
              
              0
              
              
              
              0
              
              
              
              308,333
              
              
              
              0
              
              
              
              0
              
              
              
              308,333Gain
      on extinguishment of debt
              
              
              0
              
              
              
              0
              
              
              
              (403,400
              )
              
              
              0
              
              
              
              0
              
              
              
              (403,400
              )Interest
      expenses
              
              
              64,019
              
              
              
              0
              
              
              
              66,617
              
              
              
              0
              
              
              
              0
              
              
              
              130,636Operating
      income (loss)
              
              $
              (1,069,109
              )
              
              $
              (776,008
              )
              
              $
              (1,069,524
              )
              
              $
              (139,720
              )
              
              $
              (1,100
              )
              
              $
              (3,055,461
              )


14










Year
      Ended April 30, 2008




Radio
              
              
              RecordedMusic
              
              
              Corporate
              
              
              Metro
              
              
              Other
              
              
              TotalRevenue
              
              $
              180,280
              
              
              $
              0
              
              
              $
              3,222
              
              
              $
              61,712
              
              
              $
              0
              
              
              $
              245,455Direct
      operating expenses
              
              
              698,869
              
              
              
              0
              
              
              
              0
              
              
              
              71,763
              
              
              
              0
              
              
              
              770,632Selling,
      general and administrative expenses
              
              
              321,308
              
              
              
              417
              
              
              
              266,129
              
              
              
              20,678
              
              
              
              837
              
              
              
              609,369Depreciation
      and amortization
              
              
              16,079
              
              
              
              2,390
              
              
              
              25,863
              
              
              
              10,000
              
              
              
              91
              
              
              
              54,423Loss
      on disposal of fixed assets
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0Stock
      compensation expense
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0Gain
      on extinguishment of debt
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0Interest
      expenses
              
              
              33,195
              
              
              
              0
              
              
              
              698,800
              
              
              
              0
              
              
              
              0
              
              
              
              731,995Operating
      income (loss)
              
              $
              (889,172
              )
              
              $
              (2,807
              )
              
              $
              (987,570
              )
              
              $
              $(40,729
              )
              
              $
              (928
              )
              
              $
              (1,921,206
              )




NOTE
      16 – SUBSEQUENT EVENTS





On May
12, 2008, the Company entered into a $75,000 9% Promissory Note Agreement with
Eugene Khavinson. Also, the Company entered into a Stock Purchase Agreement with
the Holder which entitles the Holder to purchase 500,000 shares of the Company's
common stock at a price of $0.11 cents per share for a period of 12 months from
the time of the agreement.






15






Item
2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operation.




Forward-Looking
Statements




The
discussion in this section contains certain statements of a forward-looking
nature relating to future events or our future performance. Words such as
“anticipates,” “believes,” “expects,” “intends,” “future,” “may” and similar
expressions or variations of such words are intended to identify forward-looking
statements, but are not the only means of identifying forward-looking
statements. Such statements are only predictions and that actual events or
results may differ materially. In evaluating such statements, you should
specifically consider various factors identified in this report, including the
matters set forth under the caption “business risks,” which could cause actual
results to differ materially from those indicated by such forward-looking
statements.





The
following discussion is provided to afford the reader an understanding of the
material matters of the Company's financial condition, results of operation,
capital resources and liquidity. It should be read in conjunction with the
financial statements and notes thereto and other information appearing elsewhere
in this report.





Background





On June 20, 2007, Mega Media Group, Inc., a Nevada corporation, (formerly named
Family Healthcare Solutions, Inc.) (“the Company”), entered into a Stock
Purchase and Share Exchange Agreement (the “Exchange Agreement”) pursuant to
which the Company acquired 100% of the issued and outstanding capital stock
of Mega Media Group, Inc., a New York corporation ("MMG-NY"), and its wholly
owned subsidiaries, making MMG-NY a wholly owned subsidiary of the Company, and
converted into equity $877,000 in convertible debentures from the MMG-NY Note
Holders, in exchange for the issuance by the company to the MMG-NY Shareholders
and MMG-NY Group Note Holders of 49,990,406 shares of MMDA common stock, par
value $0.001 per share, which constituted 68.50% of the Company’s issued and
outstanding fully diluted common stock after the transaction closed. As
additional consideration, the Company’s Shareholders agreed to cancel 13,161,033
shares of common stock.  The Company’s stockholders immediately prior
to the Closing Date owned 28.50% of the issued and outstanding fully diluted
common stock of MMDA after the transaction closed.  After the closing
of the Share Exchange Agreement, the Company succeeded to the business of MMG-NY
and MMG-NY's wholly-owned subsidiaries as its sole business. The transaction was
accounted for as a reverse acquisition.





Results of
Operations




Results
of operations for the Three Months Ended April 30, 2008 Compared with the Three
Months Ended April 30, 2007





Revenue





We derive
revenue from sales of advertisements and program sponsorships to local
advertisers, independent promotion agreements, ticket and other revenue related
to special events we sponsor throughout the year and management fees from our
subsidiaries. Advertising revenue is affected primarily by the advertising rates
our radio stations and magazine are able to charge as well as the overall demand
for radio advertising time in a market. For the three months ended April 30,
2008 our revenue decreased by $823,371 to $245,214 as compared to $1,068,585 for
the three months ended April 30, 2007. The decrease results primarily from
programming format change.





Operating
Expenses





Our
significant operating expenses are broadcast expenses, consisting of (i)
employee salaries and commissions, (ii) programming expenses, (iii) advertising
and promotion expenses, (iv) rental of premises for studios, (v) rental of
transmission tower space and (vi) freelance consultants. We strive to control
these expenses by centralizing certain functions such as finance, accounting,
legal, human resources and management information systems and the overall
programming management function. For the three months ended April 30, 2008
operating expenses increased by $23,602 to $770,632 as compared to $747,031 for
the three months ended April 30, 2007. The increase is principally attributable
to increased broadcasting expenses.






16





Selling,
General and Administrative Expenses




Selling,
General and Administrative expenses decreased by $288,456 to $609,369 for the
three months ended April 30, 2008 from $897,825 in 2007. The decrease is
attributable to lower corporate expenses, as well as decrease in compensation of
officers. Selling expenses are a significant part of our expenditures and relate
directly to the marketing and development of products. We anticipate similar
expenditures for the foreseeable future.




Depreciation
and Amortization Expenses




Depreciation and Amortization expenses increased by $10,045 to $54,423 for the
three months ended April 30, 2008 from $44,378 in 2007 due to the acquisition of
various fixed and intangible assets.





Interest
Expense




Interest
expense increased by $706,839 to $731,995 for the three months ended April 30,
2008 from $25,156 in 2007 due to the provisions for the beneficial conversion
option of certain convertible debentures.





Net
Loss




We have a
net loss of $1,921,206 for three months ended April 30, 2008 as compared to a
net loss of $645,805 for the three months ended April 30, 2007. The increase in
net loss is primarily attributable to the decrease of our revenues and increase
in interest expense.





Liquidity
and Capital Resources





As of
April 30, 2008, our Working Capital deficiency is $4,252,026.




Cash used in operating activities was $679,467 for the three months ended April
30, 2008 as compared to $294,998 during the three months ended April 30, 2007.
The increase in the cash used by operating activities was primarily the result
of company expansion.





Cash used in investing activities was $4,860 for the nine months period ended
April 30, 2008 as compared to $29,100 cash used in investing activities for the
three months period ended April 30, 2007. The decrease in cash used by investing
activities is primarily due to reduced investments in various projects and
reduction in security deposits.




Cash provided by financing activities was $683,931 for the three months period
ended April 30, 2008 as compared to $372,359 for the three months ended April
30, 2007. The increase in cash provided by financing activities is primarily due
to the additional borrowings.





Going
Concern





As
reflected in the Company’s Financial Statements which accompany this report, our
consolidated financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and liabilities and commitments in
the normal course of business. In the near term, we expect operating costs to
continue to exceed funds generated from operations. As a result, we expect to
continue to incur operating losses and we may not have sufficient funds to grow
our business in the future. We can give no assurance that we will achieve
profitability or be capable of sustaining profitable operations. As a result,
operations in the near future are expected to continue to use working
capital.






17







To
successfully grow the individual segments of the business, we must decrease our
cash burn rate, improve our cash position and the revenue base of each segment,
and succeed in our ability to raise additional capital through a combination of
public or private debt and equity offerings or strategic alliances. We also
depend on certain third party contractors and our executives.




We
incurred net losses of $1,921,206 and $645,805 for the three months ended April
30, 2008 and 2007, respectively, and have an accumulated deficit of $11,226,675
at April 30, 2008. As of April 30, 2008, we had total current assets of $202,635
and total current liabilities of $4,454,661 creating a working capital
deficiency of $4,252,026. The Company currently has bank overdraft of
approximately $14,178 as of April 30, 2008.




Off-Balance
Sheet Arrangements





We do not
have off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).





Critical Accounting
Policies




Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.




Our
significant accounting policies are summarized in the summary “Background and
Significant Accounting Policies” accompanying our financial statements. While
all these significant accounting policies impact our financial condition and
results of operations, we view certain of these policies as critical. Policies
determined to be critical are those policies that have the most significant
impact on our financial statements and require management to use a greater
degree of judgment and estimates. Actual results may differ from those
estimates. Our management believes that given current facts and circumstances,
it is unlikely that applying any other reasonable judgments or estimate
methodologies would cause effect on our consolidated results of operations,
financial position or liquidity for the periods presented in this
report.





Item
3. Quantitative and
Qualitative Disclosures About Market Risk.




Market
Risk




Our exposure to market risk is principally confined to cash in bank which has
short maturities and therefore we believe to be minimal and immaterial market
risk.





Item
4. Controls and
Procedures.




Evaluation of Disclosure
Controls and Procedures




Based on their evaluation as of the end of the period covered by this Quarterly
Report on Form 10-QSB, our Chief Executive Officer and Chief Financial Officer
have concluded that our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms. Recent communications from the Securities and Exchange Commission brought
to current management’s attention that several required filings were delinquent
and current management recognized that Company’s prior management and executive
team did not have adequate controls in place to ensure that filings were made in
an accurate and timely manner.





Changes in Internal
Controls




In
management’s evaluation of the Company’s internal controls and procedures, some
improvements were made as follows:





●     Updating
internal controls and procedures.


●     Continued
education for the Company’s executive management to keep them abreast of changes
in legal accounting rules and SEC regulations.






18






PART
II - OTHER INFORMATION





Item 1.Legal
Proceedings.




Except as stated below, neither the Company nor any of its subsidiaries is a
party to any pending or threatened legal proceedings.




As
disclosed in our 8-K filing on June 26, 2007, we are subject to a debt
collection lawsuit in the Supreme Court of New York, Kings County, filed on May
14, 2007 by Harris Publications, Inc. for not paying for advertising services
rendered.  Plaintiff seeks judgment in the amount of $7,713.00 with
interest from March 1, 2005.  We are working to resolve this
matter.  In the opinion of our management, this matter is not
reasonably expected to have a material adverse effect on our business and
financial condition.  The resolution of this matter is still
pending.





Item 2.Unregistered Sales of Equity
Securities and Use of Proceeds.




As
disclosed in the recent 8-K filings, the Company entered into two agreements as
follows:





On or
about March 14, 2008, Mega Media Group, Inc. (the “Company”) entered into a
$50,000 9% convertible promissory note (individually, the “Note”) with Dr. Lev
Paukman (the Holder”).   Pursuant to the terms of the Note, the
Holder shall have the right from time to time, and at any time on or prior to
maturity to convert all or any part of the outstanding and unpaid principal
amount of this Note into fully paid and non-assessable shares of Common Stock,
$.001 par value per share.





On March
18, 2008, the Mega Media Group, Inc. (the “Company”) entered into a $50,000 9%
convertible promissory note (individually, the “Note”) with Dr. Elan Kaufman or
its registered assigns (the “Holder”).   Pursuant to the terms of
the Note, the Holder shall have the right from time to time, and at any time on
or prior to maturity to convert all or any part of the outstanding and unpaid
principal amount of this Note into fully paid and non-assessable shares of
Common Stock, $.001 par value per share.




The
shares of MMDA common stock issued to the individuals named above are currently
not registered with the Securities and Exchange Commission, but MMDA
contemplates that a registration statement will be filed in the near
future.




These
shares of our common stock qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance shares by us did not involve a public
offering. The offering was not a “public offering” as defined in Section 4(2)
due to the insubstantial number of persons involved in the deal, size of the
offering, manner of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of shares to a high number
of investors. In addition, the individuals named above had the necessary
investment intent as required by Section 4(2) since they agreed to and received
share certificates bearing a legend stating that such shares are restricted
pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that
these shares would not be immediately redistributed into the market and
therefore not be part of a “public offering.” Based on an analysis of the above
factors, we have met the requirements to qualify for exemption under Section
4(2) of the Securities Act of 1933 for this transaction.




Item
3. Defaults Upon Senior
Securities.




None.





Item 4.Submission of Matters to a Vote of
Security Holders.




None.





Item
5. Other
Information.





None.






19




Item
6. Exhibits.




Exhibit No.
            
            Title
      of Document
            
            Location31.1
            
            Certification
      of Chief Executive Officer Pursuant to Rule 13a-14(a) of the
      Securities Exchange Act of 1934
            
            Filed
      herewith31.2
            
            Certification
      of Chief Financial Officer Pursuant to Rule 13a-14(a) of the
      Securities Exchange Act of 1934
            
            Filed
      herewith32.1
            
            Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
            
            Filed
      herewith32.2
            
            Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
            
            Filed
      herewith






20







SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.






MEGA
      MEDIA GROUP, INC.Date: 
      June 21, 2008
            By:
            /s/ Aleksandr
      ShvartsALEKSANDR
      SHVARTS