UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
 
 FORM
10-K
 
 xANNUAL REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES AND
 EXCHANGE
ACT OF 1934
 
 For the
fiscal year ended June 30, 2009
 
 OR
 
 o TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES AND
 EXCHANGE
ACT OF 1934
 
 For the
transition period from ________________ to ________________
 
 Commission
File Number 333-136806
 
 LATERAL
MEDIA INC.
 (Exact
name of registrant as specified in its charter)
 
 DELAWARE
                98-0539032(State
      of other jurisdiction of incorporation or
                  organization)
                (IRS
      Employer Identification Number)
 
 2121
Avenue of the Stars, Suite 2550
 Los
Angeles, CA 90067
 (Address
of principal executive offices)
 
 (310)
601-2500
 (Registrant's
telephone number, including area code)
 
 Securities
registered pursuant to Section 12(b) of the Exchange Act: None
 
 Securities
registered pursuant to Section 12(g) of the Exchange Act:
 
 Common Stock, $0.001 Par
Value Per Share
 (Title of
Class)
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
 Yes   ̈    No  x
 
 Indicate
by check mark whether the issuer is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act.    Yes   ̈    No  x
 
 Indicate
by check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x   No   ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).Yes   ̈    No   ̈
 
 Indicate
by check mark if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B (§229.405) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.   x
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large accelerated filer  ̈
                
                Accelerated filer  ̈
                
                Non-accelerated filer  ̈Smaller reporting company x
                
                
                
                (Do not check if a smaller reporting company)
 
 Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes ̈ No x
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant, computed by reference to the closing sales
price for the registrant’s common equity, as reported on the Over-the-Counter
Bulletin Board, was $606,000 as of December 31, 2008.
 
 As of
October 12, 2009, there were 9,493,836 shares of common stock, par value $0.001
per share, of the registrant outstanding.
 
 DOCUMENTS
INCORPORATED BY REFERENCE
 
 None.
 
  Lateral
Media, Inc.
 
 ANNUAL
REPORT ON FORM 10-K
 FOR THE
YEAR ENDED JUNE 30, 2009
 
 TABLE
OF CONTENTS
 
 PART IITEM
      1.
                        
                        BUSINESS
                        
                        1ITEM
      1A.
                        
                        RISK
      FACTORS
                        
                        3ITEM
      1B.
                        
                        UNRESOLVED
      STAFF COMMENTS
                        
                        10ITEM
      2.
                        
                        PROPERTIES
                        
                        10ITEM
      3.
                        
                        LEGAL
      PROCEEDINGS
                        
                        10ITEM
      4.
                        
                        SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                        
                        10PART IIITEM
      5.
                        
                        MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
                        
                        10ITEM
      6.
                        
                        SELECTED
      FINANCIAL DATA
                        
                        12ITEM
      7.
                        
                        MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION
                        
                        12ITEM
      7A.
                        
                        QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                        
                        15ITEM
      8.
                        
                        FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                        
                        15ITEM
      9.
                        
                        CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                        
                        15ITEM
      9A(T).
                        
                        CONTROLS
      AND PROCEDURES
                        
                        15ITEM
      9B.
                        
                        OTHER
      INFORMATION
                        
                        16PART IIIITEM
      10.
                        
                        DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
                        
                        16ITEM
      11.
                        
                        EXECUTIVE
      COMPENSATION
                        
                        18ITEM
      12.
                        
                        SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                        
                        19ITEM
      13.
                        
                        CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                        
                        20ITEM
      14.
                        
                        PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                        
                        21PART IVITEM
      15.
                        
                        EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES
                        
                        23SIGNATURES
                        
                        25
  i
  PART
I
 
 Safe Harbor Statement under
the Private Securities Litigation Reform Act of 1995
  Information
included in this Annual Report on Form 10-K may contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). This information may involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Lateral Media, Inc., a Delaware
corporation (“Lateral Media” or the “Company”) to be materially
different from future results, performance or achievements expressed or implied
by any forward-looking statements. Forward-looking statements, which involve
assumptions and describe future plans, strategies and expectations of the
Company, are generally identifiable by use of the words “may,” “will,” “should,”
“expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the
negative of these words or other variations on these words or comparable
terminology. Forward-looking statements are based on assumptions that may be
incorrect, and there can be no assurance that any projections or other
expectations included in any forward-looking statements will come to pass. The
actual results of the Company could differ materially from those expressed or
implied by the forward-looking statements as a result of various factors. Except
as required by applicable laws, Lateral Media undertakes no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
  Unless
the context otherwise indicates, the use of the terms “we,” “our,” “us” or the
“Company” refers to the business and operations of Lateral
Media.
 
 ITEM
1. BUSINESS
 
 Historical
Operations of Lateral Media
 
 Lateral
Media, formally known as Asianada, Inc., was incorporated in the State of Nevada
on February 17, 2006, as an exploration stage company. The Company was engaged
in acquiring and exploring mineral properties until June 15, 2007, when this
activity was abandoned.
 
 On June
15, 2007, Trinad Capital Master Fund, Ltd., an exempted Cayman Island Company
(“TCMF”), entered into a Securities Purchase Agreement (the “Securities Purchase
Agreement”) with certain stockholders, (the “Stockholders”) of the Company.
Pursuant to the terms of the Securities Purchase Agreement, the Stockholders
sold 7,595,200 shares (the “Shares”) of the Company’s common stock, par value
$0.001 per share (“Common Stock”), representing 94% of the issued and
outstanding Common Stock as of June 15, 2007 (the “Closing”), to TCMF. In
consideration of the purchase of the Shares, TCMF paid at Closing the total sum
of seven hundred thousand dollars ($700,000), pursuant to and in accordance with
the terms of the Securities Purchase Agreement.
 
 On
September 27, 2007, the Company, through a merger of Asianada, Inc., a Nevada
corporation with and into its wholly-owned, newly formed Delaware subsidiary,
Asianada, Inc., reincorporated in the State of Delaware.
 
 On
December 2, 2008, the Company entered into an asset purchase agreement (the
“Purchase Agreement”) with Grupo Grandioso, LLC (“Grupo Grandioso” or the
“Seller”) and Jeffrey Schwartz, the managing member of the Seller, pursuant to
which the Company acquired a portfolio of a variety of website domain names,
including some relating to the auto industry such as AutoSuperSaver.com and
LuxuryCarSpot.com, from the Seller (the “Assets”). In consideration for the
Assets, the Company issued to the Seller a warrant to purchase 1,800,000 shares
of the Company’s Common Stock at an exercise price of $1.25 per share, and an
unsecured contingent promissory note with an initial principal balance of
$1,000,000.
 
 In
connection with the Purchase Agreement, the Company entered into an employment
agreement with Jeffrey Schwartz, pursuant to which Mr. Schwartz became Chairman
of the Board of Directors and Chief Executive Officer of the Company. On October
7, 2009, Mr. Schwartz resigned as Chairman of the Board of Directors and Chief
Executive Officer of the Company.
 
 On
December 4, 2008, the Company merged into its newly formed, wholly-owned
subsidiary, Lateral Media, Inc., a Delaware corporation, effectively changing
its name from Asianada, Inc. to Lateral Media, Inc.
 
 On
January 12, 2009, the Company announced the launch of the Recycler Publishing
Network of websites including www.expertautos.com,
www. RecyclerClassics, and www.RecyclerCycles.com.
 
 Prior to
February 12, 2009, the Company was a shell company as the term is defined in
Rule 405 of the Securities Act and Rule12-b-2 of the Exchange Act, as the
Company had minimal operations and minimal assets. Beginning on December 2,
2008, the Company hired employees and started actively pursuing the acquisition
of additional assets while continuing to develop and utilize its current assets.
Through June 30, 2009, the Company has purchased additional domains names,
software and other assets, hired employees and has expanded its
operations.
  1
 
 The
Company also creates and markets content for websites, using content designed to
optimize visitors through search engine optimization.
 
 The
executive office of the Company is now located at 2121 Avenue of the Stars,
Suite 2550, Los Angeles, California 90067. Its telephone number is (310)
601-2500.
 
 DESCRIPTION
OF OUR BUSINESS
 
 Overview
  Lateral
Media’s mission is to build a unique combination of online publishing and
performance marketing companies through asset acquisition, merger, exchange of
capital stock, or other business combination with domestic or foreign
businesses.
  The
Company intends to operate in several sectors within online publishing and
performance marketing, including the automotive sector, financial services, and
professional services.  With the recent launch of the Recycler
Publishing Network, the Company owns and maintains a portfolio of websites and
domains in the automotive sectors.  The domains, including www.expertautos.com,
are designed to facilitate the sales process for private parties attempting to
sell their car, classic, boat, motorcycle, or heavy equipment
online.  The sites are designed to distribute their inventory across
the Internet to increase exposure for our private party
advertisers.
 
 Intellectual
Property
 
 Lateral
Media will build software systems that may be proprietary in
nature.  Lateral Media acquired certain assets from Grupo Grandioso,
including domains and a software system designed to facilitate the Recycler
Publishing Network.  As the Company makes acquisitions, it may
purchase other intellectual property.
 
 Competition
 
 Lateral
Media operates in the online publishing and performance marketing
sector.  As such, there are several companies who compete with Lateral
Media, including web content and search portals, such as Yahoo, Google, and MSN,
who garner a substantial amount of web searches and traffic related to the
current and future business categories of Lateral Media.  Lateral
Media also competes with vertical specific companies, such as AutoTrader and
Cars.com, who have substantial traffic and sales in the automotive categories.
Additionally, Lateral Media competes with a number of performance marketing
companies, including QuinnStreet, TranzAct, and Moxy Media who have substantial
performance marketing businesses in various categories.
 
 Employees
 
 As
of  October 12, 2009, we had six employees and approximately 35
independent sales representatives. None of our employees are represented by a
labor union or are parties to a collective bargaining agreement, and we believe
our relationship with our employees is good.
  Government
Regulation
  Our
business is subject to various laws and regulations relating to Internet
commerce and telemarketing.
  Regulation Relating to Internet
Commerce. Several jurisdictions have recently proposed or adopted
privacy-related laws that restrict or prohibit unsolicited email solicitations,
commonly known as “spam,” that impose complex and often burdensome requirements
in connection with sending commercial email.
  Telemarketing Laws. Both
federal and state laws regulate the practice of telemarketing. Most
jurisdictions have implemented “do not call” lists. In addition, a number of
states require telemarketers to register with the state and post a bond,
prohibit automated systems and recorded messages, impose disclosure requirements
upon sales calls, and require written sales contracts for certain telemarketing
transactions.
 
 The
current application of most of these laws does not have a material affect on us.
We occasionally field small complaints that we are able to handle in the
ordinary course of business.
  2
 
 ITEM
1A. RISK FACTORS
 
 You
should carefully consider each of the risks described below and other
information contained in this Annual Report on Form 10-K, including our
financial statements and the related notes.  The following risks and
the risks described elsewhere in this Annual Report on Form 10-K, including in
the section entitled “Management’s Discussion and Analysis of Financial
Condition and Results of Operation,” could materially affect our business,
prospects, financial condition, operating results or cash
flow.  Additional risks and uncertainties not currently known to us or
that we currently deem immaterial may also adversely affect our
business.  If any of these risks materialize, the trading price of our
Common Stock could decline.
 
 Risks
Related to Our Business
 
 We have a limited operating history, which may
make it difficult to evaluate our business.
 
 Lateral
Media was organized in February 2006 and has a limited history of generating
revenues, and the future revenue potential of our business is uncertain. As a
result of our short operating history, we have limited financial data that can
be used to evaluate our business. Any evaluation of our business and our
prospects must be considered in light of our limited operating history and the
risks and uncertainties encountered by companies in our stage of development. We
cannot assure our investors that we will be able to introduce our proposed
products, operate our business successfully or implement our strategies as
described in this Annual Report on Form 10-K or otherwise be successful in
generating any revenues from our activities.  We are subject to all of
the business risks and uncertainties associated with any new business, including
the risk that we will not achieve our business objectives.
 
 We
have experienced operating losses, and expect to incur future
losses.
 
 We are
currently incurring start-up costs which consist primarily of management and
corporate salaries, rent, and professional fees. Until we generate sufficient
income to cover these costs, we will continue to report operating
losses.
 
 If
we lose our key personnel or are unable to attract, train and retain additional
highly qualified sales, marketing, managerial and technical personnel, our
business may suffer.
 
 Our
future success depends on our ability to identify, hire, train and retain highly
qualified sales, marketing, managerial and technical personnel. In addition, as
we introduce new services we may need to hire additional personnel. We may not
be able to attract, assimilate or retain such personnel in the future. The
inability to attract and retain the necessary managerial, technical, sales and
marketing personnel could have a material adverse effect on our business,
results of operations and financial condition.
 
 Our
business and operations are substantially dependent on the performance of our
executive officers and key employees. The loss of the services of one or more of
our executive officers or key employees could have a material adverse effect on
our business, results of operations and financial condition.
 
 Growth
may place significant demands on our management and our
infrastructure.
 
 We
operate in an emerging market and have experienced, and may continue to
experience, growth in our business through internal growth and acquisitions.
This growth has placed, and may continue to place, significant demands on our
management and our operational and financial infrastructure. Continued growth
could strain our ability to:
  •
                develop
      and improve our operational, financial and management
      controls;
 
 •
                enhance
      our reporting systems and
procedures;
 
 •
                recruit,
      train and retain highly skilled
personnel;
 
 •
                maintain
      our quality standards; and
 
 •
                maintain
      branded content owner, wireless carrier and end-user
      satisfaction.
  Managing
our growth will require significant expenditures and allocation of valuable
management resources. If we fail to achieve the necessary level of efficiency in
our organization as it grows, our business, operating results and financial
condition would be harmed.
 
 Our
business activities may require additional financing that might not be
obtainable on acceptable terms, if at all, which could have a material adverse
effect on our financial condition, liquidity and our ability to operate going
forward.
 
 If we
incur operating losses, or if unforeseen events occur that would require
additional funding, we may need to raise additional capital or incur debt to
fund our operations. We would expect to seek such capital through sales of
additional equity or debt securities and/or loans from financial institutions,
but there can be no assurance that funds will be available to us on acceptable
terms, if at all, and any sales of additional securities will be dilutive to
investors.
  3
 
 Failure
to obtain financing or obtaining financing on unfavorable terms could result in
a decrease in our stock price and could have a material adverse effect on future
operating prospects, or require us to significantly reduce
operations.
 
 Changes
to financial accounting standards could make it more expensive to issue stock
options to employees, which would increase compensation costs and might cause us
to change our business practices.
 
 We
prepare our financial statements to conform with accounting principles generally
accepted in the United States. These accounting principles are subject to
issuance of new principles and interpretation of existing principles by the
Financial Accounting Standards Board, or FASB, the SEC, and various other
bodies. A change in those principles could have a significant effect on our
reported results and might affect our reporting of transactions completed after
a change is announced. For example, we have used stock options as a fundamental
component of our employee compensation packages. We believe that stock options
directly motivate our employees to maximize long-term stockholder value and,
through the use of vesting, encourage employees to remain in our employ. Several
regulatory agencies and entities may make regulatory changes that could make it
more difficult or expensive for us to grant stock options to
employees.  We may, as a result of these changes, incur increased
compensation costs, change our equity compensation strategy or find it difficult
to attract, retain and motivate employees, any of which could materially and
adversely affect our business, operating results and financial
condition.
 
 Our
quarterly financial results are subject to significant fluctuations which may
make it difficult for investors to predict our future performance.
 
 Our
quarterly operating results may fluctuate in the future due to many factors. Our
expense levels are based in part on our expectations of future revenues which
may vary significantly. If revenues do not increase faster than expenses, our
business, results of operations and financial condition will be materially and
adversely affected. Other factors that may adversely affect our quarterly
operating results include:
  •
              our
      ability to retain existing customers, attract new customers, and maintain
      customer satisfaction,
 
 •
              the
      announcement or introduction of new sites, services and products by us or
      our competitors,
 
 •
              general
      economic conditions and economic conditions specific to the Internet,
      online commerce or the automotive
industry,
 
 •
              a
      decline in the usage levels of online services and consumer acceptance of
      the Internet and commercial online services for the purchase of consumer
      products and services such as those marketed or advertised by
      us,
 
 •
              our
      ability to upgrade and develop our systems and infrastructure and to
      attract new personnel in a timely and effective
  manner,
 
 •
              the
      level of traffic on our websites and other sites that refer traffic to our
      websites,
 
 •
              technical
      difficulties, system downtime, Internet brownouts or electricity
      blackouts,
 
 •
              the
      amount and timing of operating costs and capital expenditures relating to
      expansion of our business, operations and
  infrastructure,
 
 •
              costs
      of any adverse judgments resulting from
  litigation,
 
 •
              costs
      of defending and enforcing our intellectual property
    rights,
 
 •
              governmental
      regulation,
 
 •
              unforeseen
      events affecting the industry, and
 
 •
              the
      current economic climate.
  4
 
 We
are a relatively new business in an emerging industry and need to manage the
introduction of new products and services in order to avoid increased expenses
without corresponding revenues.
 
 We have
been introducing new products and services to consumers and dealers in order to
establish ourselves as a leader in the evolving market for Internet marketing
services. Introducing new or enhanced products and services, requires us to
increase expenditures before we generate revenues. For example, we may need to
hire personnel to oversee the introduction of new services before we generate
revenues from these services. Our inability to generate satisfactory revenues
from such expanded services to offset costs could have a material adverse effect
on our business, results of operations and financial condition.
 
 We must
also:
  •
              test,
      introduce and develop new services and products, including enhancing our
      websites,
   •
              expand
      the breadth of products and services
offered,
 
 •
              expand
      our market presence through relationships with third parties,
      and
 
 •
              acquire
      new or complementary businesses, products or
  technologies.
 
 We cannot
assure that we can successfully achieve these objectives.
  If
we cannot build and maintain strong brand loyalty, our business may
suffer.
 
 We
believe that the importance of brand recognition will increase as more companies
engage in commerce over the Internet. Development and awareness of our
brands will depend largely on our ability to obtain a leadership position in
Internet commerce. If consumers do not perceive us as an effective channel for
sales, or consumers do not perceive us as offering reliable information, we will
be unsuccessful in promoting and maintaining our brands. Our failure to develop
our brands sufficiently would have a material adverse effect on our business,
results of operations and financial condition.
 
 Competition
could reduce our market share and harm our financial performance. Our market is
competitive not only because the Internet has minimal barriers to entry, but
also because we compete directly with other companies in the offline
environment.
 
 Our
vehicle marketing services compete against a variety of Internet and traditional
vehicle purchasing services, automotive brokers and classified advertisement
providers. Therefore, we are affected by the competitive factors faced by both
Internet commerce companies as well as traditional, offline companies within the
automotive and automotive-related industries. The market for Internet-based
commercial services is relatively new. Our business is characterized by minimal
barriers to entry, and new competitors can launch a competitive service at
relatively low cost. To compete successfully, we must significantly increase
awareness of our services and brand names and deliver satisfactory value to our
customers. Failure to compete successfully will cause our revenues to decline
and would have a material adverse effect on our business, results of operations
and financial condition.
 
 We
may be particularly affected by general economic conditions due to the nature of
the automotive industry.
 
 At this
time, the economic strength of the automotive industry significantly impacts the
revenues we derive and consumer traffic to our websites. The automotive industry
is cyclical, with vehicle sales fluctuating due to changes in national and
global economic forces. Purchases of vehicles are typically discretionary for
consumers and may be particularly affected by negative trends in the general
economy. The success of our operations depends to a significant extent upon a
number of factors relating to discretionary consumer spending, including
economic conditions (and perceptions of such conditions by consumers) affecting
disposable consumer income (such as employment, wages and salaries, business
conditions, energy prices and interest rates in regional and local markets).
Because the purchase of a vehicle is a significant investment and is relatively
discretionary, any reduction in disposable income in general or a general
increase in interest rates, energy prices or a general tightening of lending may
affect us more significantly than companies in other industries. Given the
general economic downturn that we are is currently experiencing, we expect the
decline of total vehicle sales to negatively impact our business and financial
decision.
 
 Threatened
terrorist acts and the ongoing military action have created uncertainties in the
automotive industry and domestic and international economies in general. These
events may have an adverse impact on general economic conditions, which may
reduce demand for vehicles and consequently our services and products which
could have an adverse effect on our business, financial condition and results of
operations. At this time, however, we are not able to predict the nature, extent
and duration of these effects on overall economic conditions on our business,
financial condition and results of operations.
 
 We cannot
assure that our business will not be materially adversely affected as a result
of an industry or general economic downturn.
 
 Marketing
laws and regulations may materially limit our ability to offer our products and
services to consumers.
 
 We market
our consumer products and services through a variety of marketing channels,
including direct mail, outbound telemarketing, inbound telemarketing, inbound
customer service and account activation calls, email, mass media and the
internet. These channels are subject to both federal and state laws and
regulations. Federal and state laws and regulations may limit our ability to
market to new subscribers or offer additional services to existing subscribers,
which may have a material impact on our ability to sell our
services.
  5
 
 Our
sales activities are or may in the future be subject to laws regulating
telemarketing, which could subject us to penalties or limit our ability to
market our services.
  Both
federal and state laws regulate the practice of telemarketing. All 50 states
have enacted some form of telemarketing law. In particular, the federal
government and a significant number of states have implemented “do not call”
lists. In addition, a number of states require telemarketers to register with
the state and post a bond, prohibit automated systems and recorded messages,
impose disclosure requirements upon sales calls and require written sales
contracts for certain telemarketing transactions. We are subject to certain of
these laws, and our failure to register in a jurisdiction where we are required
to do so could subject us to penalties, limit our ability to market our services
and hamper our ability to enforce contracts in these jurisdictions.
 
 Changes
in government regulations of Internet commerce may result in increased costs
that may reduce our future earnings.
 
 Because
our business is dependent on the Internet, the adoption of new local, state or
national laws or regulations may decrease the growth of Internet usage or the
acceptance of Internet commerce which could, in turn, decrease the demand for
our services and increase our costs or otherwise have a material adverse effect
on our business, results of operations and financial condition.
 
 Tax
authorities in a number of states are currently reviewing the appropriate tax
treatment of companies engaged in Internet commerce. New state tax regulations
may subject us to additional state sales, use and income taxes.
 
 Evolving
government regulations may require future licensing which could increase
administrative costs or adversely affect our revenues.
 
 In a
regulatory climate that is uncertain, our operations may be subject to direct
and indirect adoption, expansion or reinterpretation of various laws and
regulations. Compliance with these future laws and regulations may require us to
obtain appropriate licenses at an undeterminable and possibly significant
initial monetary and annual expense. These additional monetary expenditures may
increase future overhead, thereby potentially reducing our future results of
operations.
 
 If we are
unable to be licensed to comply with additional regulations, or are otherwise
unable to comply with regulations required by changes in current operations or
the introduction of new services, we could be subject to fines or other
penalties or be compelled to discontinue operations in such states, and our
business, results of operation and financial condition could be materially and
adversely affected.
 
 There
are many risks associated with consummated and potential
acquisitions.
 
 We may
evaluate potential acquisitions which we believe will complement or enhance our
existing business. If we acquire another company in the future, it may dilute
the value of existing stockholders’ ownership. The impact of dilution may
restrict our ability or otherwise not allow us to consummate acquisitions.
Issuance of equity securities may restrict utilization of net operating loss
carry forwards because of an annual limitation due to ownership change
limitations under the Internal Revenue Code. We may also incur debt and losses
related to the impairment of goodwill and acquired intangible assets if we
acquire another company or business, and this could negatively impact our
results of operations. We currently do not have any definitive agreements to
acquire any company or business, and we may not be able to identify or complete
any acquisition in the future.
 
 Acquisitions
involve numerous risks. For example:
  •
              It
      may be difficult to assimilate the operations and personnel of an acquired
      business into our own business,
 
 •
              Management
      information and accounting systems of an acquired business must be
      integrated into our current
systems,
 
 •
              Our
      management must devote its attention to assimilating the acquired business
      which diverts attention from other business
  concerns,
 
 •
              We
      may enter markets in which we have limited prior experience,
      and
 
 •
              We
      may lose key employees of an acquired
business.
  6
 
 Our
success is dependent on keeping pace with advances in technology. If we are
unable to keep pace with advances in technology, consumers may stop using our
services and our revenues will decrease. If we are required to invest
substantial amounts in technology, our results of operations will
suffer.
 
 The
Internet and electronic commerce markets are characterized by rapid
technological change, changes in user and customer requirements, frequent new
service and product introductions embodying new technologies and the emergence
of new industry standards and practices that could render our existing websites
and technology obsolete. These market characteristics are exacerbated by the
emerging nature of the market and the fact that many companies are expected to
introduce new Internet products and services in the near future. If we are
unable to adapt to changing technologies, our business, results of operations
and financial condition could be materially and adversely affected. Our
performance will depend, in part, on our ability to continue to enhance our
existing services, develop new technology that addresses the increasingly
sophisticated and varied needs of our prospective customers, license leading
technologies and respond to technological advances and emerging industry
standards and practices on a timely and cost-effective basis. The development of
our websites and other proprietary technology entails significant technical and
business risks. We may not be successful in using new technologies effectively
or adapting our websites, or other proprietary technology to customer
requirements or to emerging industry standards. In addition, if we are required
to invest substantial amounts in technology in order to keep pace with
technological advances, our results of operations will suffer.
 
 We
are vulnerable to electricity and communications system interruptions. The
majority of our primary servers are located in a few locations. If electricity
or communications to such locations or to our headquarters were interrupted, our
operations would be adversely affected.
 
 Our
production websites and certain systems, are currently hosted at secure
third-party hosting facilities.
 
 Although
backup servers are available, our primary servers are vulnerable to interruption
by damage from fire, earthquake, flood, power loss, telecommunications failure,
break-ins and other events beyond our control. In the event that we experience
significant system disruptions, our business, results of operations and
financial condition would be materially and adversely affected. We have, from
time to time, experienced periodic systems interruptions and anticipate that
such interruptions will occur in the future.
 
 Our main
production systems and our content management systems are hosted in secure
facilities with generators and other alternate power supplies in case of a power
outage. In the event we are affected by interruptions in service, our business,
results of operations and financial condition could be materially and adversely
affected.
 
 Internet-related
issues may reduce or slow the growth in the use of our services in the
future.
 
 Critical
issues concerning the commercial use of the Internet, such as ease of access,
security, privacy, reliability, cost, and quality of service may impact the
growth of Internet use. If periods of decreased performance, outages or delays
on the Internet occur frequently or other critical issues concerning the
Internet are not resolved, overall Internet usage or usage of our websites could
increase more slowly or decline, which would cause our business, results of
operations and financial condition to be materially and adversely
affected.
 
 Our
computer infrastructure may be vulnerable to security breaches. Any such
problems could jeopardize confidential information transmitted over the
Internet, cause interruptions in our operations or cause us to have liability to
third persons.
 
 Our
computer infrastructure is potentially vulnerable to physical or electronic
computer break-ins, viruses and similar disruptive problems and security
breaches. Any such problems or security breaches could cause us to have
liability to one or more third parties and disrupt all or part of our
operations. A party able to circumvent our security measures could
misappropriate proprietary information, customer information or consumer
information, jeopardize the confidential nature of information transmitted over
the Internet or cause interruptions in our operations. Concerns over the
security of Internet transactions and the privacy of users could also inhibit
the growth of the Internet in general, particularly as a means of conducting
commercial transactions. To the extent that our activities or those of
third-party contractors involve the storage and transmission of proprietary
information such as personal financial information, security breaches could
expose us to a risk of financial loss, litigation and other liabilities. Our
current insurance program may protect us against some, but not all, of such
losses. Any of these events could have a material adverse effect on our
business, results of operations and financial condition.
 
 Misappropriation
or infringement of our intellectual property and proprietary rights could impair
our competitive position. Enforcement actions to protect our intellectual
property could materially and adversely affect our business, results of
operations and financial condition.
 
 Our
ability to compete depends upon our proprietary systems and technology. While we
rely on trademark, trade secret, patent and copyright law, confidentiality
agreements and technical measures to protect our proprietary rights, we believe
that the technical and creative skills of our personnel, continued development
of our proprietary systems and technology, brand name recognition and reliable
website maintenance are more essential in establishing and maintaining a
leadership position and strengthening our brands. As part of our confidentiality
procedures, we generally enter into confidentiality agreements with our
employees and consultants and limit access to our trade secrets and technology.
Despite our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy aspects of our services or to obtain and use information that we
regard as proprietary. Policing unauthorized use of our proprietary rights is
difficult. We cannot assure that the steps taken by us will prevent
misappropriation of technology or that the agreements entered into for that
purpose will be enforceable. Effective trademark, service mark, patent,
copyright and trade secret protection may not be available where our products
and services are made available online. In addition, litigation may be necessary
to enforce or protect our intellectual property rights or to defend against
claims of infringement or invalidity. Any litigation, even if successful, could
result in substantial costs and diversion of resources and management attention
and could materially adversely affect our business, results of operations and
financial condition. Misappropriation of our intellectual property or potential
litigation could also have a material adverse effect on our business, results of
operations and financial condition.
  7
 
 We
may face risk of claims from third parties relating to intellectual property. In
addition, we may incur liability for retrieving and transmitting information
over the Internet. Such claims and liabilities could harm our
business.
 
 As part
of our business, we make Internet services and content available to our
customers. This creates the potential for claims to be made against us, either
directly or through contractual indemnification provisions with third parties.
We could face liability for information retrieved from or transmitted over the
Internet and liability for products sold over the Internet. We could be exposed
to liability with respect to third-party information that may be accessible
through our websites, links or car review services. Such claims might, for
example, be made for defamation, negligence, patent, copyright or trademark
infringement, personal injury, breach of contract, unfair competition, false
advertising, invasion of privacy or other legal theories based on the nature,
content or copying of these materials. Such claims might assert, among other
things that, by directly or indirectly providing links to websites operated by
third parties we should be liable for copyright or trademark infringement or
other wrongful actions by such third parties through such websites. It is also
possible that, if any third-party content provided on our websites contains
errors, consumers could make claims against us for losses incurred in reliance
on such information. Any claims could result in costly litigation, divert
management’s attention and resources, cause delays in releasing new or upgrading
existing services or require us to enter into royalty or licensing
agreements.
 
 We also
enter into agreements with other companies under which any revenue that results
from the purchase or use of services through direct links to or from our
websites or on our websites is shared. Such arrangements may expose us to
additional legal risks and uncertainties, including disputes with such parties
regarding revenue sharing, local, state and federal government regulation and
potential liabilities to consumers of these services, even if we do not provide
the services ourselves. We cannot assure that any indemnification provided to us
in our agreements with these parties, if available, will be
adequate.
 
 Even to
the extent such claims do not result in liability to us, we could incur
significant costs in investigating and defending against such claims. The
imposition upon us of potential liability for information carried on or
disseminated through our system could require us to implement measures to reduce
our exposure to such liability, which might require the expenditure of
substantial resources or limit the attractiveness of our services to consumers,
dealers and others.
 
 Litigation
regarding intellectual property rights is common in the Internet and software
industries. We expect that Internet technologies and software products and
services may be increasingly subject to third-party infringement claims as the
number of competitors in our industry segment grows and the functionality of
products in different industry segments overlaps. There can be no assurance that
our services do not infringe on the intellectual property rights of third
parties.
 
 From time
to time, plaintiffs have brought these types of claims and sometimes
successfully litigated them against online services. Our liability insurance may
not cover all potential claims to which we are exposed and may not be adequate
to indemnify us for all liability that may be imposed. Any imposition of
liability that is not covered by insurance or is in excess of our insurance
coverage could have a material adverse effect on our business, results of
operations and financial condition.
 
 Risks
Relating to Our Common Stock
 
 There
is a limited trading market for our Common Stock.
 
 Although
prices for our shares of Common Stock are quoted on the OTC Bulletin Board
(under the symbol LTLM.OB), there is no established public trading market for
our Common Stock, and no assurance can be given that a public trading market
will develop or, if developed, that it will be sustained.
 
 The
liquidity of our Common Stock will be affected by its limited trading
market.
 
 Bid and
ask prices for shares of our Common Stock are quoted on the OTC Bulletin Board
under the symbol LTLM.OB. There is currently no broadly followed, established
trading market for our Common Stock. While we are hopeful that, now that we are
an operating company, we will command the interest of a greater number of
investors, an established trading market for our shares of Common Stock may
never develop or be maintained. Active trading markets generally result in lower
price volatility and more efficient execution of buy and sell orders. The
absence of an active trading market reduces the liquidity of our Common Stock.
As a result of the lack of trading activity, the quoted price for our Common
Stock on the OTC Bulletin Board is not necessarily a reliable indicator of its
fair market value. Further, if we cease to be quoted, holders of our Common
Stock would find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, our Common Stock, and the market value of
our Common Stock would likely decline.
  8
 
 If
and when a trading market for our Common Stock develops, the market price of our
Common Stock is likely to be highly volatile and subject to wide fluctuations,
and you may be unable to resell your shares at or above the current
price.
 
 The
market price of our Common Stock is likely to be highly volatile and could be
subject to wide fluctuations in response to a number of factors that are beyond
our control, including announcements of new products or services by our
competitors. In addition, the market price of our Common Stock could be subject
to wide fluctuations in response to a variety of factors,
including:
 
 •
              quarterly
      variations in our revenues and operating
  expenses,
 
 •
              developments
      in the financial markets, and the worldwide or regional
      economies,
 
 •
              announcements
      of innovations or new products or services by us or our
      competitors,
 
 •
              fluctuations
      in merchant credit card interest
rates,
 
 •
              significant
      sales of our Common Stock or other securities in the open market,
      and
 
 •
              changes
      in accounting principles.
 
 In the
past, stockholders have often instituted securities class action litigation
after periods of volatility in the market price of a company’s securities. If a
stockholder were to file any such class action suit against us, we would incur
substantial legal fees and our management’s attention and resources would be
diverted from operating our business to respond to the litigation, which could
harm our business.
 
 The
sale of securities by us in any equity or debt financing could result in
dilution to our existing stockholders and have a material adverse effect on our
earnings.
 
 Any sale
of Common Stock by us in a future private placement offering could result in
dilution to the existing stockholders as a direct result of our issuance of
additional shares of our capital stock. In addition, our business strategy may
include expansion through internal growth by acquiring complementary businesses,
acquiring or additional assets, or establishing strategic relationships with
targeted customers and manufacturers. In order to do so, or to finance the cost
of our other activities, we may issue additional equity securities that could
dilute our stockholders’ stock ownership. We may also assume additional debt and
incur impairment losses related to goodwill and other tangible assets if we
acquire another company, and this could negatively impact our earnings and
results of operations.
 
 If
securities or industry analysts do not publish research or reports about our
business, or if they downgrade their recommendations regarding our Common Stock,
our stock price and trading volume could decline.
 
 The
trading market for our Common Stock will be influenced by the research and
reports that industry or securities analysts publish about us or our business.
If any of the analysts who cover us downgrade our Common Stock, our Common Stock
price would likely decline. If analysts cease coverage of our company or fail to
regularly publish reports on us, we could lose visibility in the financial
markets, which in turn could cause our Common Stock price or trading volume to
decline.
 
 “Penny stock” rules may restrict the
market for our Common Stock.
 
 Our
Common Stock is subject to rules promulgated by the SEC relating to “penny
stocks,” which apply to companies whose shares are not traded on a national
stock exchange or on NASDAQ, trade at less than $5.00 per share, or who do not
meet certain other financial requirements specified by the SEC. These rules
require brokers who sell “penny stocks” to persons other than established
customers and “accredited investors” to complete certain documentation, make
suitability inquiries of investors, and provide investors with certain
information concerning the risks of trading in such penny stocks. These rules
may discourage or restrict the ability of brokers to sell our Common Stock and
may affect the secondary market for our Common Stock. These rules could also
hamper our ability to raise funds in the primary market for our Common Stock
..
  9
 
 If
we fail to maintain an effective system of internal controls, we might not be
able to report our financial results accurately or prevent fraud; in that case,
our stockholders could lose confidence in our financial reporting, which could
negatively impact the price of our stock.
 
 Effective
internal controls are necessary for us to provide reliable financial reports and
prevent fraud. In addition, Section 404 of the Sarbanes-Oxley Act of 2002,
or the Sarbanes-Oxley Act, requires us to evaluate and report on our internal
control over financial reporting and will require us to have our independent
registered public accounting firm attest to our evaluation beginning with our
Annual Report on Form 10-K for the year ending June 30, 2010. We are in the
process of preparing and implementing an internal plan of action for compliance
with Section 404 and strengthening and testing our system of internal
controls to provide the basis for our report. The process of implementing our
internal controls and complying with Section 404 will be expensive and
time– consuming, and will require significant attention of management. We cannot
be certain that these measures will ensure that we implement and maintain
adequate controls over our financial processes and reporting in the future. Even
if we conclude, and our independent registered public accounting firm concurs,
that our internal control over financial reporting provides reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles, because of its inherent limitations, internal control
over financial reporting may not prevent or detect fraud or misstatements.
Failure to implement required new or improved controls, or difficulties
encountered in their implementation, could harm our operating results or cause
us to fail to meet our reporting obligations. If we or our independent
registered public accounting firm discover a material weakness or a significant
deficiency in our internal control, the disclosure of that fact, even if quickly
remedied, could reduce the market’s confidence in our financial statements and
harm our stock price.  In addition, a delay in compliance with
Section 404 could subject us to a variety of administrative sanctions,
including ineligibility for short form resale registration, action by the SEC,
and the inability of registered broker-dealers to make a market in our Common
Stock, which could further reduce our stock price and harm our
business.
 
 We do not anticipate paying
dividends.
 
 We have
never paid cash or other dividends on our Common Stock. Payment of dividends on
our Common Stock is within the discretion of our Board of Directors and will
depend upon our earnings, our capital requirements and financial condition, and
other factors deemed relevant by our Board of Directors. However, the earliest
our Board would likely consider a dividend is if we begin to generate excess
cash flow.
 
 Our
officers, directors and principal stockholders can exert significant influence
over us and may make decisions that are not in the best interests of all
stockholders.
 
 Our
officers, directors and principal stockholders (greater than 5% stockholders)
collectively beneficially own approximately 95.7% of our outstanding Common
Stock. As a result, this group will be able to affect the outcome of, or exert
significant influence over, all matters requiring stockholder approval,
including the election and removal of directors and any change in control. In
particular, this concentration of ownership of our Common Stock could have the
effect of delaying or preventing a change of control of us or otherwise
discouraging or preventing a potential acquirer from attempting to obtain
control of us. This, in turn, could have a negative effect on the market price
of our Common Stock. It could also prevent our stockholders from realizing a
premium over the market prices for their shares of Common Stock. Moreover, the
interests of this concentration of ownership may not always coincide with our
interests or the interests of other stockholders, and, accordingly, this group
could cause us to enter into transactions or agreements that we would not
otherwise consider.
 
 ITEM
1B. UNRESOLVED STAFF COMMENTS
 
 Not
applicable as the Company is a smaller reporting company.
 
 ITEM
2. PROPERTIES
 
 On
May 1, 2008, the Company entered into a lease for office space with Trinad
Management, LLC (“Trinad”) on a
month-to-month sublease of the current premises occupied by Trinad from the
Irvine Company in the amount of $8,500 per month. Effective September 1, 2009,
we entered into a lease extension with Gatski Commercial in Las Vegas, Nevada
for six months on a month-to-month basis for $3,500 per month.
 
 ITEM
3. LEGAL PROCEEDINGS.
 
 We are
involved in various disputes from time to time regarding telemarketing
regulation that we deem immaterial to our business.  We are not a party to
any material legal proceedings.
 
 ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.
 
 None.
 
 PART
II
 
 ITEM
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 
 Our
Common Stock is listed for trading on the OTC Bulletin Board under the
symbol “LTLM.OB.”  Prior to February 2009, our Common Stock was listed
for trading on the OTC Bulletin Board under the symbol “ASND.OB.”  The
market for our common stock has often been sporadic, volatile and
limited.
  10
 
 The
following table sets forth, for the periods indicated, the high and low bid
quotations for our common stock as reported by the OTC Bulletin Board. The
prices reflect inter-dealer quotations, without retail markup, markdown or
commissions, and may not represent actual transactions. There was no trading of
our Common Stock during the year ended June 30, 2007 through February 5,
2008.
  High
                    
                    
                    Low2008First
      Quarter
                    
                    $
                    N/A
                    
                    
                    $
                    N/ASecond
      Quarter
                    
                    $
                    N/A
                    
                    
                    $
                    N/AThird
      Quarter
                    
                    $
                    3.00
                    
                    
                    $
                    2.50Fourth
      Quarter
                    
                    $
                    2.50
                    
                    
                    $
                    2.50High
                    
                    
                    Low2009First
      Quarter*
                    
                    $
                    2.50
                    
                    
                    $
                    1.25Second
      Quarter*
                    
                    $
                    1.25
                    
                    
                    $
                    1.25Third
      Quarter*
                    
                    $
                    1.25
                    
                    
                    $
                    1.25Fourth
      Quarter*
                    
                    $
                    1.25
                    
                    
                    $
                    1.25
 *Commencing
on September 24, 2008 through October 12, 2009, there have been no trades in the
Common Stock.
 
 Holders
of Common Stock.
 
 On
October 12, 2009, we had approximately 6 registered stockholders of record of
the 9,493,836 outstanding shares. There were also an undetermined number of
holders who hold their stock in nominee or "street" name.
  Dividends
and Dividend Policy.
 
 Since our
inception, we have not declared or paid any cash dividends to stockholders. The
declaration of any future cash dividend will be at the discretion of our Board
of Directors and will depend upon our earnings, if any, our capital requirements
and financial position, our general economic conditions, and other pertinent
conditions. It is our present intention not to pay any cash dividends in the
foreseeable future, but rather to reinvest earnings, if any, in our business
operations.
 
 Securities
Authorized for Issuance under Equity Compensation Plans.
 
 Equity
Compensation Plan Information
 
 The
following table sets forth information concerning our equity compensation plans
as of June 30, 2009.
  Plan Category
                  
                  Number of securities to
                    be issued upon exercise
                    of outstanding options,
                    warrants and rights
                    (a)
                  
                  
                  Weighted-average
                    exercise price of
                    outstanding
                    options,warrants
                    and rights
                    (b)
                  
                  
                  Number of securities
                    remaining available for
                    future issuance under
                    equity compensation
                    plans (excluding
                    securities reflected in
                    column (a))
                    (c)Equity
      compensation plans approved by security holders(1)
                  
                  
                  678,596
                  
                  
                  $
                  0.048
                  
                  
                  
                  3,321,404Equity
      compensation plans not approved by security holdersTotal
                  
                  
                  678,596
                  
                  
                  $
                  0.048
                  
                  
                  
                  3,321,404
  (1) These
options were issued pursuant to the Company’s 2007 Employee, Director and
Consultant Stock Plan, as amended (the “2007 Plan”). Under the 2007 Plan,
Eligible Participants (as the term is defined in the 2007 Plan) may be issued
stock awards as compensation for their services to the Company. The 2007
Plan authorizes and entitles the Company to issue to Eligible Participants
awards up to 4,000,000 shares of Common Stock.
  11
 
 Unregistered
Sales of Equity Securities.
 None.
 
 Issuer
Purchases of Equity Securities.
 None.
 
 ITEM
6. SELECTED FINANCIAL DATA
 
 Not
applicable as the Company is a smaller reporting company.
 
 ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 The
following discussion should be read in conjunction with, and is qualified in its
entirety by, the Financial Statements and the Notes thereto included in this
report. This discussion contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this report, the words
"anticipate," "believe," "estimate," "expect” and similar expressions as they
relate to our management or us are intended to identify such forward-looking
statements. Our actual results, performance or achievements could differ
materially from those expressed in, or implied by, these forward-looking
statements. Historical operating results are not necessarily indicative of the
trends in operating results for any future period.
 
 Overview
 
 Lateral
Media is a development stage company whose mission is to build a unique
combination of online publishing and performance marketing companies through
asset acquisition, merger, exchange of capital stock, or other business
combination with domestic or foreign businesses.
 
 The
Company intends to operate in several sectors within online publishing and
performance marketing, including the automotive sector, financial services, and
professional services.  With the launch of the Recycler Publishing
Network, the Company owns and maintains a portfolio of websites and domains in
the automotive sectors.  The domains, including www.expertautos.com,
are designed to facilitate the sales process for private parties attempting to
sell their car, classic, boat, motorcycle, or heavy equipment
online.  The sites are designed to distribute the sites’ inventory
across the Internet in order to increase exposure for our private party
advertisers.
 
 Several factors will impact the success
of our business at this time, including but not limited to, the general economy,
the automotive market, our ability to generate visitors to our websites, our
ability to acquire advertiser leads, our ability to manage multiple websites,
and our ability to effectively sell and deliver on the value proposition to
consumers.  We are also heavily reliant on marketing partnerships,
both paid and unpaid, to distribute our customers’ advertisements across the
Internet, and on various telemarketing strategies to contact prospective
advertisers.
 
 As Lateral Media continues, the
expectation is that we will acquire and build businesses outside of the
automotive sector.  At that time, we will be impacted by the
aforementioned factors as well as the risk factors discussed herein, among other
factors.
 
 Results
of Operations
 
 Operations
for the fiscal years ended June 30, 2009 and 2008 are not comparable because
during fiscal 2008 the Company was inactive.
 
 During
the year ended June 30, 2009, the Company commenced operations, generated
revenue of $529,009 and recorded cost of revenues of $470,496.
 
 General
and administrative expenses for the year ended June 30, 2009 was $1,867,738 as
compared to $523,923 for the fiscal year ended June 30, 2008, an increase of
$1,343,815 or 256%, resulting primarily from payroll, increased management fees
and increased professional fees.
 
 Interest
expense, including amortization of loan discounts and financing costs
of  $31,805, was $160,624 for the year ended June 30, 2009 as compared
to interest of $18,676 for the year ended June 30, 2008, an increase of $141,948
resulting from increased borrowings.
 
 Net loss
for the year ended June 30, 2009 was $1,969,849 as compared to a loss of
$542,690 for the year ended June 30, 2008. This increase of $1,427,159 is
related to the Company having commenced operations.
  12
 
 Asset
Purchase
 
 In December 2008, we purchased a
variety of internet domain names and technology software, including some
relating to the automobile industry, such as AutoSuperSaver.com and LuxuryCarSpot.com, in exchange
for a note and a warrant as explained in Note 5 to the financial
statements.
 
 Liquidity
and Capital Resources
 
 As of the
date of the filing of this Annual Report on Form 10-K, we have generated minimal
revenues from the launching of our websites.
 
 On
December 18, 2008, we repaid our outstanding loans to TCMF of $797,876 under
that certain Loan Agreement, by and between the Company and TCMF (the “Loan
Agreement”), including outstanding principal plus accrued interest, by issuance
of 1,063,836 shares of our Common Stock.
 
 On April
30, 2009, the Company entered into a fourth amendment to the Loan Agreement,
which increased the principal amount of the loan amount to up to $1,000,000 and
provided that the principal amount of the loan and accrued interest thereon are
due and payable by the Company upon a sale of securities (other than a sale of
shares of the Company’s Common Stock to officers, directors or employees
of or consultants to the Company in connection with their provision of
services to the Company) to a third party or parties with proceeds to the
Company of not less than $1,250,000.
 
 On June
11, 2009, the Company entered into a fifth amendment to the Loan Agreement,
pursuant to which the Company and TCMF agreed to (i) increase the principal
amount of the Loan up to $1,250,000 and (ii) provide that the entire outstanding
principal amount of the loan amount and any accrued interest thereon shall be
due and payable by the Company upon, and not prior to, the consummation of a
sale of securities (other than a sale of shares of Common Stock to officers,
directors or employees of, or consultants to, the Company in connection with
their services to the Company), to a third party or parties with proceeds to the
Company of not less than $1,500,000.
 
 On June
26, 2009, the Company entered into a Letter Agreement (the “Letter Agreement”)
with TCMF pursuant to which the parties agreed to convert $350,000 of the
current principle under the Loan Agreement into a convertible promissory note in
the aggregate principal amount of $350,000 and a warrant to purchase 350,000
shares of the Common Stock. The warrant has a two-year term and an exercise
price of $0.01 per share.
 
 Through
June 30, 2009, we borrowed $850,000 under the Loan Agreement with TCMF and in
September and October 2009, we borrowed an additional$250,000 from
TCMF.
 
 On June
26, 2009, the Company issued convertible promissory notes in the amount of
$700,000 (the “Notes”), including $350,000 of notes issued to TCMF (as described
above).  The Notes have a two-year term and bear interest at a rate of
seven percent (7%) per annum.  The entire outstanding principal plus
accrued and unpaid interest under the Notes shall automatically convert into
Qualified New Securities (as defined in the Notes) upon the closing of an equity
financing of the Company, the gross proceeds of which, in the aggregate, equal
or exceed $3,000,000 or such other amount as shall be agreed upon by the Company
and the holders of the Notes, at a conversion price per share equal to the price
per share at which the Qualified New Securities are sold in such financing. The
Notes were issued with warrants to purchase 700,000 shares of Common Stock (the
“Warrants”).  The Warrants have a two-year term and an exercise price
of $0.01 per share.
 
 As of
June 30, 2009, the Company had $363,771 of cash, accounts
receivable of $23,751 and $400,000 available under the Loan Agreement. Although
management believes operations will generate sufficient cash if the Company’s
plan of operation is successful, there can be no assurance that the cash will be
sufficient to satisfy the Company’s monetary needs in the next twelve months.
Therefore, we still may  require additional cash resources due to
changed business conditions or other future developments, including any
investments or acquisitions we may decide to pursue. If these sources are
insufficient to satisfy our cash requirements, we may seek to sell additional
equity or debt securities in order to obtain a credit facility. The sale of
additional equity or debt securities could result in additional dilution to our
stockholders. The incurrence of increased indebtedness would result in
additional debt services obligations and could result in additional operating
and financial covenants that could restrict our operations. In addition, there
can be no assurance that any additional financing will be available on
acceptable terms, if at all.
 
 Off-Balance
Sheet Arrangements
 
 The
Company has no off-balance sheet arrangements.
 
 CRITICAL
ACCOUNTING POLICIES
 
 Management's
discussion and analysis of our financial condition and results of operations are
based upon our financial statements included elsewhere in this Annual Report on
Form 10-K, which have been prepared in accordance with accounting principles
generally accepted in the United States.
  13
 
 Revenue
Recognition
 
 Revenue
is recognized when evidence of an arrangement exists, pricing is fixed and
determinable, collection is reasonably assured, and delivery or performance of
service has occurred. Website marketing revenue is recognized upon placement on
the Company’s website and content design revenue is recognized when services are
provided.
 
 Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
 
 Income
Taxes
 
 Deferred
income taxes have been provided for temporary differences between financial
statement and income tax reporting under the liability method, using expected
tax rates and laws that are expected to be in effect when the differences are
expected to reverse.  A valuation allowance is provided when realization is
not considered more likely than not.
 
 RECENT
ACCOUNTING PRONOUNCEMENTS
 
 In June
2009, the FASB issued Statement No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, a
replacement of FASB Statement No. 162” (“SFAS 168”). The new standard sets forth
that the FASB Accounting Standards Codification (“Codification”) will become the
source of authoritative U.S. generally accepted accounting principles (“GAAP”)
recognized by the FASB to be applied to all entities.  Rules and
interpretive releases of the Securities and Exchange Commission (“SEC”) under
authority of Federal securities laws are also source for authoritative GAAP for
SEC registrants.  When the statement is effective, the Codification
will supersede all then-existing non-SEC accounting and reporting
standards.  All other nongrandfathered non-SEC accounting
literature not included in the Codification will become
nonauthoritative.
 
 In April
2009, the FASB issued Financial Staff Position (“FSP”) 141(R)-1, “Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies” (“FSP 141(R)-1”). The statement amended and clarified
SFAS 141R to address application issues associated with initial recognition and
measurement, subsequent measurement and accounting, and disclosure of assets and
liabilities arising from contingencies in a business combination. FSP 141(R)-1
is effective for assets or liabilities arising from contingencies in business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 31, 2008. This
statement will apply to acquisitions completed after July 1, 2009.
  In April
2009, the FASB issued Staff Position No. 107-1 and APB No.28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB
28-1”), FSP FAS 107-1 and APB 28-1 amend SFAS 107, “Disclosures about Fair
Value of Financial Instruments”, to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements.  This FSP also amends APB
Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in
summarized financial information at interim reporting periods. FSP FAS 107-1 and
APB 28-1 are effective for interim reporting periods ending after June 15,
2009 and do not require disclosures for earlier periods presented for
comparative purposes at initial adoption.  In periods after initial
adoption, this FSP requires comparative disclosures only for periods ending
after initial adoption. The Company does not believe that adoption of FSP 107-1
and APB 28-1 will have a material impact on the financial
statements.
 
 In April,
2008, the FASB issued Statement of Financial Accounting Standards Staff Position
142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”).
FSP 142-3 amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset under FASB No. 142, “Goodwill and Other Intangible Assets”. FSP
SFAS 142-3 is effective for financial statements issued for fiscal years
beginning after December 31, 2008 and must be applied prospectively to
intangible assets acquired after the effective date.  The adoption of
FSP 142-3 is not expected to have a material impact on the financial
statements.
  14
  In
December, 2007 the FASB issued Statement of Financial Accounting Standards No.
141(R), “Business Combinations” (“SFAS 141(R)”), which replaced SFAS No. 141,
“Business Combinations”, establishes principles and requirements for determining
how an enterprise recognizes and measures the fair value of certain assets and
liabilities acquired in a business combination, including noncontrolling
interests, contingent consideration and certain acquired
contingencies.  SFAS 141(R) also requires acquisition-related
transaction expenses and restructuring costs be expensed as incurred rather than
capitalized as a component of the business combination. SFAS 141(R) applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 31, 2008. This statement will apply to acquisitions completed after
July 1, 2009. The Company is currently assessing the effects of adoption of SFAS
141  (R ) which will be reflected in the financial statements on July 1,
2009.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – An Amendment of ARB No. 51” (“SFAS 160”).
SFAS 160 establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary (previously referred to as minority interests). SFAS
160 also requires that a retained noncontrolling interest upon the
deconsolidation of a subsidiary be initially measured at its fair value. Upon
adoption of SFAS 160, the Company would be required to report any noncontrolling
interests as a separate component of stockholders’ equity. The Company would
also be required to present any net income allocable to noncontrolling interests
and net income attributable to stockholders of the Company separately in its
consolidated statements of income. SFAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. SFAS 160 requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests. All other requirements of SFAS 160
shall be applied prospectively. The adoption of SFAS 160 is not expected to
have a material impact on the financial statements.
  Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
 
 ITEM
7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 Not
applicable as the Company is a smaller reporting company.
 
 ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 The
financial statements required by Item 8 are submitted in a separate section
of this report, beginning on Page F-1, and are incorporated herein and made a
part hereof.
 
 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
 
 None.
 
 ITEM
9A(T). CONTROLS AND PROCEDURES
 
 Evaluation
of Disclosure Controls and Procedures
 
 Our
principal executive officer and principal financial officer, after evaluating
the effectiveness of our disclosure controls and procedures as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered
by this Annual Report on Form 10-K, have concluded that, based on such
evaluation, our disclosure controls and procedures were not effective to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC’s rules and forms, and is
accumulated and communicated to our management, including our principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
 
 Changes
in Controls and Procedures
 
 There
were no changes in our internal controls over financial reporting or in other
factors identified in connection with the evaluation required by Exchange Act
Rules 13a-15(d) or 15d-15(d) that occurred during the fiscal quarter ended June
30, 2009 that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.
 
 Management’s
Report on Internal Control Over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal controls over financial reporting are
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.
 
 Because
of inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. In addition, projections of any evaluation of
effectiveness to future periods are subject to risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
  15
 
 Our
management assessed the effectiveness of our internal controls over financial
reporting as of June 30, 2009 based on the framework in Internal Control-Integrated
Framework, published by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).  Based on our assessment, we have concluded
that our internal controls over financial reporting were not effective as of
June 30, 2009.
 
 Although management is working to
improve its disclosure controls and procedures over financial reporting and to
resolve deficiencies, our most significant deficiencies in controls are as
follows:
  We do not
have adequate personnel to assure that complex transactions are timely analyzed
and reviewed to ensure that all information required to be disclosed in our
periodic reports filed under the Exchange Act is accumulated to allow for timely
decisions regarding required disclosure.
  Further,
we have not completed our design of our controls in regard to recent acquisition
and commencement of revenues.
 We plan
to resolve these deficiencies during our next fiscal year ending June 30, 2010
by designing a complete system of internal controls.
 This
Annual Report on Form 10-K does not include an attestation report by our
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the SEC that permit us to
provide only our management’s report in this Annual Report on Form
10-K.
  ITEM
9B. OTHER INFORMATION
  None.
 
 PART
III
 
 ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE
 
 The
following table sets forth our current directors and executive
officers:
  Name
                
                Age
                
                Position(s)Jay
      Wolf
                
                36
                
                Director
      and SecretaryCharles
      Bentz
                
                46
                
                Chief
      Financial OfficerMichael
      Rose
                
                54
                
                Executive
      Vice President, OperationsRobert
      S. Ellin
                
                44
                
                DirectorBarry
      Regenstein
                
                52
                
                DirectorJeffrey
      Schwartz
                
                43
                
                Director
 
 Biographical
information for our directors and executive officers are as
follows:
  Jay A. Wolf. Mr. Wolf has served as a
director since June 25, 2007 and as the Company’s Secretary since June 15,
2007 and is one of the Managing Members of Trinad Management,
LLC. Mr. Wolf is also a Managing Director of Trinad Capital Master Fund
Ltd. and Secretary of Zoo Entertainment, Inc. Mr. Wolf currently sits on the
boards of Mandalay Media, Inc., Zoo Entertainment, Inc., Hythiam, Inc. and
Xcorporeal, Inc.  Mr. Wolf has ten years of investment and operations
experience in a broad range of industries. Mr. Wolf is a co-founder of Trinad
Capital, L.P., where he served as a managing director since its inception in
2003. Prior to founding Trinad, Mr. Wolf served as the Executive Vice–President
of Corporate Development for Wolf Group Integrated Communications where he was
responsible for the company's acquisition program. Prior to Wolf Group
Integrated Communications, Mr. Wolf worked at Canadian Corporate Funding, a
Toronto-based merchant bank, in the senior debt department, and subsequently for
Trillium Growth, the Canadian Corporate Funding's venture capital fund. Mr. Wolf
received his B.A from Dalhousie University.
 
 Charles Bentz. Mr.
Bentz has served as our Chief Financial Officer since June 15, 2007
and has 20 years of accounting and administrative experience and is a Certified
Public Accountant.  Mr. Bentz is also Chief Financial Officer and Secretary
of Noble Medical Technologies, Inc. Prior to joining to joining Trinad
Management, LLC, Mr. Bentz was a Vice President and the Controller of Fletcher
Asset Management; Vice President, Controller and Head of Fund Administration
& Compliance of the Reserve Funds; Vice President and head of Fund
Administration & Compliance of BlackRock Inc.; Vice President and Controller
of HHF Acquisition Corp.; and Associate Vice President of Prudential Mutual Fund
Management.  Mr. Bentz began his career at Deloitte & Touche, and holds
a B.S. in Accounting from Villanova University.
  Michael Rose.Mr. Rose has served as
our Executive Vice President, Operations since April 15, 2009.  From
2007 through 2009, Mr. Rose served as the Senior Vice President of Lead
Operations and Reporting at Autobytel, Inc. (“Autobytel”) where he designed
innovative lead tracking/reporting technologies for member dealers (patents
pending) and grew wholesale lead volumes in excess of 300 percent. Under his
oversight, Autobytel's outbound lead sales increased over $1 million each month
while wholesale lead net expenditures were reduced by $40,000 per month and the
monthly spend on unbillable retail leads was reduced by $50,000. Prior to that
from 2002 to 2007, Mr. Rose served in various capacities at Autobytel, as
director, senior director  and Vice President. From November 2001 to
May 2002, Mr. Rose managed major product development projects for WageWorks and
from April 1999 through November 2001, Mr. Rose managed product development
projects for and Autoweb.com, Inc. During his tenure at Autoweb.com, Mr. Rose
designed and launched the Auto Buying Channel for AOL, Lycos and Yahoo , all
innovative online services that required building a nationwide data feed which
facilitated cross-platform interaction by synchronizing AOL, AutoNation,
PersonaLogic, Autoweb and Lycos data sets. Mr. Rose designed, implemented and
managed business operations and policies in previous
positions.
  16
 Robert S. Ellin. Mr. Ellin has served as a
director since June 15, 2007 and until December 2, 2008 served as our Chief
Executive Officer. Mr. Ellin is one of the Managing Members of Trinad
Management, LLC.  Mr. Ellin is also a Managing Member of Trinad
Capital Master Fund, Ltd., our principal stockholder and a hedge fund
dedicated to investing in micro-cap public companies. Mr. Ellin currently sits
on the boards of Command Security Corporation, Zoo Entertainment, Inc., Mandalay
Media, Inc. and  Intrinsic, Inc.Prior to joining Trinad
Capital Master Fund Ltd., Mr. Ellin was the founder and President of Atlantis
Equities, Inc. (“Atlantis”), a personal investment company. Founded in 1990,
Atlantis has actively managed an investment portfolio of small capitalization
public company as well as select private company investments. Mr. Ellin
frequently played an active role in Atlantis investee companies including board
representation, management selection, corporate finance and other advisory
services. Through Atlantis and related companies, Mr. Ellin spearheaded
investments into ThQ, Inc, Grand Toys, Forward Industries, Inc. and completed a
leveraged buyout of S&S Industries, Inc. where he also served as President
from 1996 to 1998. Prior to founding Atlantis Equities, Mr. Ellin worked in
Institutional Sales at LF Rothschild and prior to that he was the Manager of
Retail Operations at Lombard Securities. Mr. Ellin received his B.A. from Pace
University.
 Barry I. Regenstein. Mr. Regenstein has served as a
director since June 15, 2007.  Mr. Regenstein is also the
President and Chief Financial Officer of Command Security Corporation. Trinad
Capital Master Fund, Ltd. is a significant shareholder of Command Security
Corporation and Mr. Regenstein has formerly served as a consultant for Trinad
Capital Master Fund, Ltd. Mr. Regenstein has over 28 years of experience with 23
years of such experience in the aviation services industry. Mr. Regenstein was
formerly Senior Vice President and Chief Financial Officer of Globe Ground North
America (previously Hudson General Corporation), and previously served as the
company’s Controller and as a Vice President. Prior to joining Hudson General
Corporation in 1982, he had been with Coopers & Lybrand in Washington, D.C.
since 1978. Mr. Regenstein currently sits of the boards of GTJ Co., Inc.,
ProLink Holdings Corp. and Zoo Entertainment, Inc.  Mr. Regenstein is a
Certified Public Accountant and received his Bachelor of Science in Accounting
from the University of Maryland and an M.S. in Taxation from Long Island
University.
 
 Jeffrey Schwartz. Mr. Schwartz
has served as a member of our Board of Directors since December 2,
2008. Prior to his resignation on October 7, 2009, Mr. Schwartz also served as
Chairman and Chief Executive Officer of the Company. Mr. Schwartz currently
serves Interim Chief Executive Officer of Atrinsic, Inc. Previously, Mr.
Schwartz served as President and Chief Executive Officer of Autobytel, Inc. from
December 2001 to April 2005, and as its Vice Chairman from April 2005 to April
2006, where he created a leading online automotive marketing services company,
with a market capitalization exceeding $500 million, and having over 25,000
participating dealer franchises and operations in the U.S., Europe and Asia.
Prior to joining Autobytel, Mr. Schwartz was President and Chief Executive
Officer and a director of Autoweb.com, Inc. from November 2000 to August 2001.
He previously served as Autoweb’s Vice President, Strategic Development from
October 1999 to November 2000. From 1995 to October 1999, Mr. Schwartz held
various positions at The Walt Disney Company, including Corporate Vice President
with responsibilities in corporate alliance business development.  In 2006,
Mr. Schwartz founded and was chairman of AutoCentro, an automotive retail
network focused on the Hispanic market, and most recently, from June 2007 to
present, Mr. Schwartz was founder and managing partner of Vertical Passion
Media, LLC, a creator of web publishing and advertising properties.  Mr.
Schwartz received Bachelor of Arts, Master of Arts, and Ph.D. degrees in
Political Science from the University of Southern California.  Mr. Schwartz
serves as a director of U.S. Auto Parts Network, Inc., a leading automotive
ecommerce company listed on Nasdaq, and New Motion, Inc., a leading online
marking services company also listed on Nasdaq.
 
 Section
16(a) Beneficial Ownership Reporting Compliance.
 
 Section
16(a) of the Securities Exchange Act of 1934 requires our officers and
directors, and persons who own more than ten percent of a registered class of
our equity securities, to file reports of ownership and changes in ownership
with the SEC. These persons are required by regulation to furnish us with copies
of all Section 16(a) reports that they file. Based on our review of the copies
of these reports received by us, or written representations from the reporting
persons that no other reports were required, we believe that, during the fiscal
year ended June 30, 2009, all filing requirements applicable to our current
officers, directors and greater than ten percent beneficial owners were complied
with.
  Code
of Ethics.
 
 Now that
we are no longer a shell company, we intend to establish a code of
ethics.
 
 Committees
of the Board of Directors.
 
 Audit
Committee
 
 As of
October 12, 2009, the Board of Directors had not established an audit committee.
We are exempt from the listing standards for audit committees under Rule
10A-3, Listing Standards Relating to Audit Committees, as promulgated under the
Exchange Act. However, for certain purposes of the rules and regulations of the
SEC, our Board of Directors is deemed to be our audit committee. Our Board of
Directors has determined that Barry Regensteinis an “audit committee
financial expert” within the meaning of the rules and regulations of the SEC. We
plan on establishing an audit committee that complies with the standards of Rule
10A-3 in the next 12 months.
  17
  Nominating
Committee
 
 The
entire Board of Directors currently operates as our Nominating
Committee.
 
 ITEM
11.  EXECUTIVE COMPENSATION
 
 Summary
Compensation Table
 
 The
following table sets forth information concerning all compensation paid during
our fiscal year ended June 30, 2009 to our named executive
officers:
  Name
      and
                                                            Principal Position
                                                          
                                                          Year
                                                          
                                                          Salary
                                                          
                                                          
                                                          Bonus
                                                          
                                                          
                                                          Stock
                                                            Awards
                                                          
                                                          
                                                          Option
                                                            Awards
                                                          
                                                          
                                                          All Other
                                                            Compensation
                                                          
                                                          
                                                          Total($)
                                                          
                                                          
                                                          ($)
                                                          
                                                          
                                                          ($)
                                                          
                                                          
                                                          ($)
                                                          
                                                          
                                                          ($)
                                                          
                                                          
                                                          ($)Robert
      S. Ellin,
                                                            Former Chief
                                                            Executive
      Officer
                                                            (1)(2)
                                                          
                                                          2009
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          360,000
                                                          
                                                          
                                                          
                                                          360,0002008
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          2,166
                                                          
                                                          
                                                          
                                                          349,355
                                                          
                                                          
                                                          
                                                          351,521Jeffrey
      Schwartz
                                                            Chief
      Executive
                                                            Officer
      (3)
                                                          
                                                          2009
                                                          
                                                          
                                                          139,423
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          139,4232008
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -Charles
      Bentz
                                                          
                                                          2009
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -Chief
      Financial
                                                            Officer
                                                          
                                                          2008
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,083
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,083Michael
      Rose
                                                            Executive
      Vice
                                                            President
                                                          
                                                          2009
                                                          
                                                          
                                                          39,807
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,852
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          41,6592008
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
 
 (1)
              As
      of December 2, 2008, the Company hired Jeffrey Schwartz as its Chief
      Executive Officer.(2)
              Includes
      other compensation fees paid to Trinad Management, LLC as described in “
      Certain Relationships
      and Related Party Transactions .”(3)
              Mr.
      Schwartz resigned as Chief Executive Officer effective as of October 7,
      2009.
 
 On
December 2, 2008, the Company entered into an employment agreement with Jeffrey
Schwartz, pursuant to which Mr. Schwartz became Chairman of the Board and Chief
Executive Officer of the Company. Mr. Schwartz’s employment is for a term of
three years at a base salary of $250,000 per year. Effective October 7, 2009,
Mr. Schwartz resigned as Chairman of the Board and Chief Executive Officer of
the Company.
 
 Effective April 15, 2009, the Company
entered into an employment agreement with Michael Rose, pursuant to which Mr.
Rose became Executive Vice President, Operations of the Company. Mr. Rose’s
employment may be terminated by the Company or Mr. Rose at any time, for any
reason or for no reason.  Mr. Rose’s base salary is $200,000 per year,
and he is eligible to receive certain quarterly commissions. Additionally, the
Company granted Mr. Rose an option to purchase 228,596 shares of Common Stock,
at an exercise price of $1.25 per share, pursuant to the 2007 Plan.
 
 Other
than as described above, we have no plans or arrangements with respect to
remuneration received or that may be received by our named executive officers to
compensate such officers in the event of termination of employment (as a result
of resignation, retirement, change of control) or a change of responsibilities
following a change of control.
 
 OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
 
 The
following table presents information regarding outstanding options held by
certain of our executive officers as of June 30, 2009.
 
 18
 
 Name
                    
                    Number of
                      Securities
                      Underlying
                      Unexercised
                      Options
                      (#)
                      Exercisable
                    
                    
                    Number of
                      Securities
                      Underlying
                      Unexercised
                      Options
                      (#)
                      Unexercisable
                    
                    
                    Equity
                      Incentive Plan
                      Awards:
                      Number of
                      Securities
                      Underlying
                      Unexercised
                      Unearned
                      Options
                      (#)
                    
                    
                    Option
                      Exercise Price
                      ($)
                    
                    Option
                      Expiration
                      DateRobert
      S. Ellin,
                      Former
      Chief
                      Executive
      Officer
                    
                    
                    37,500
                    
                    
                    
                    112,500
                    
                    
                    
                    112,500
                    
                    
                    
                    .09
                    
                    10/31/2017Michael
      Rose
                      Vice
      President
                      Operations
                    
                    
                    0
                    
                    
                    
                    228,596
                    
                    
                    
                    228,596
                    
                    
                    
                    1.25
                    
                    4/15/2019Charles
      Bentz
                      Chief
      Financial
                      Officer
                    
                    
                    12,500
                    
                    
                    
                    37,500
                    
                    
                    
                    37,500
                    
                    
                    
                    .09
                    
                    10/31/2017
 
 DIRECTOR
COMPENSATION
  The Company did not pay compensation to
its directors during the fiscal year ended June 30, 2009.
 
 ITEM 12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
  Reference
is made to the information contained in the Equity Compensation Plan Information
table contained in Item 5 of this Annual Report on Form 10-K, which is
incorporated herein by reference.
 
 The
following table sets forth certain information regarding the beneficial
ownership of our Common Stock on October 12, 2009 by (i) each of our executive
officers and directors, (ii) all persons, including groups, known to us to own
beneficially more than five percent (5%) of our outstanding Common Stock, and
(iii) all current executive officers and directors as a group. As of October 12,
2009, there were a total of 9,493,836 shares of our Common Stock
outstanding.
  Beneficially Owned as of
                    October 12, 2009 (2)Number of
                    Shares
                  
                  
                  Percent of
                    ClassName
      and Address of Owner(1)5%
      StockholdersTrinad
      Capital Master Fund Ltd. (TCMF)(3)
                  
                  
                  9,009,036
                  
                  
                  
                  91.52
                  %Grupo
      Grandioso, LLC(4)
                  
                  
                  1,800,000
                  
                  
                  
                  15.9
                  %Current
      directors or officers:Robert
      S. Ellin (5)
                  
                  
                  9,046,536
                  
                  
                  
                  91.6
                  %Jay
      A. Wolf (6)
                  
                  
                  9,027,786
                  
                  
                  
                  91.5
                  %Jeffrey
      Schwartz (4)
                  
                  
                  1,800,000
                  
                  
                  
                  15.9
                  %Charles
      Bentz (7)
                  
                  
                  12,500
                  
                  
                  
                  *Barry
      Regenstein (8)
                  
                  
                  6,250
                  
                  
                  
                  *Michael
      Rose
                  
                  
                  0
                  
                  
                  
                  *All
      current directors and named executive officers as a group (six
      persons)
                  
                  
                  10,884,036
                  
                  
                  
                  95.7
                  %
 * Less
than one percent
 
 (1)
Except as otherwise indicated, the address of each of the following persons is
c/o Lateral Media, Inc., 2121 Avenue of the Stars, Suite 2550, Los Angeles, CA
90067.
 
 19
 
 (2)
Except as specifically indicated in the footnotes to this table, the persons
named in this table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them, subject to community
property laws where applicable. Beneficial ownership is determined in accordance
with the rules of the SEC. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, shares of Common Stock
subject to options, warrants or rights held by that person that are currently
exercisable or exercisable, convertible or issuable within 60 days of October
12, 2009, are deemed outstanding. Such shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any other
person.
 
 (3)
Represents 8,659,036 shares of Common Stock and 350,000 shares of Common Stock
underlying a currently exercisable warrant held by TCMF. Each of Robert Ellin
and Jay Wolf disclaim beneficial ownership of these securities except to the
extent of their pecuniary interest therein.
 
 (4)
Represents 1,800,000 shares of Common Stock underlying a currently exercisable
warrant held by Grupo Grandioso, LLC. Jeffrey Schwartz is the managing member of
Grupo Grandioso, LLC and could be deemed to indirectly and beneficially own the
shares held by Grupo Grandioso, LLC. The address for Grupo Grandioso, LLC is
23679 Calabasas Road, Suite 773, Calabasas, CA 91302.
 
 (5)
Consists of 9,009,036 shares of Common Stock and a warrant held by TCMF and
37,500 shares of Common Stock underlying options.
 
 (6)
Consists of 9,009,036 shares of Common Stock and a warrant held by TCMF and
18,750 shares of Common Stock underlying options.
 
 (7)
Represents 12,500 shares of Common Stock underlying options.
 
 (8)
Represents 6,250 shares of Common Stock underlying options.
 
 ITEM
13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
 
 On July 11, 2007, as amended on
November 15, 2007, April 18, 2008 and August 1, 2008, the Company executed a
loan agreement (“Loan Agreement”), with TCMF, a principal stockholder of the
Company, whereby TCMF agreed to lend the Company up to a principal amount of
$750,000. The loans under the Loan Agreement bear interest at 10%, per annum.
The entire outstanding principal amount of the loans and accrued interest
thereon are payable by the Company upon a sale of securities (other than a sale
of shares of Common Stock to officers, directors or employees of or
consultants to the Company in connection with their provision of services to the
Company) to a third party or parties with proceeds to the Company of not less
than $1,000,000.  TCMF may, at its option, receive any payment of
principal and interest due on the loans in the form of Common Stock or other
securities that may be issued by the Company in the event the Company
consummates a financing in connection with a change of control or similar
transaction involving the Company, calculated based on the value of the shares
of Common Stock or other securities sold or issued by the Company in such
financing transaction.
 
 $500,000
was advanced during the year ended June 30, 2008 under the Loan Agreement, and
an additional $250,000 was advanced through December 31, 2008.
 
 On
December 18, 2008, the Company repaid the entire principal and accrued interest
outstanding under the Loan Agreement, $750,000 and $47,876, respectively, by the
issuance of 1,063,836 shares of Common Stock to TCMF.
 
 TCMF may
continue to make additional loans to the Company in accordance with the Loan
Agreement.
 
 On April
30, 2009, the Company entered into a fourth amendment to the Loan Agreement,
which increased the principal amount of the Loan to up to $1,000,000 and
provided that the principal amount of the loan and accrued interest thereon are
due and payable by the Company upon a sale of securities (other than a sale of
shares of Common Stock to officers, directors or employees of or
consultants to the Company in connection with their provision of services to the
Company) to a third party or parties with proceeds to the Company of not less
than $1,250,000.
 
 On June
11, 2009, the Company entered into a fifth amendment to the Loan Agreement,
pursuant to which the Company and TCMF agreed to (i) increase the principal
amount of the Loan up to $1,250,000 and (ii) provide that the entire outstanding
principal amount of the Loan and any accrued interest thereon shall be due and
payable by the Company upon, and not prior to, the consummation of a sale of
securities (other than a sale of shares of Common Stock to officers, directors
or employees of, or consultants to, the Company in connection with their
services to the Company), to a third party or parties with proceeds to the
Company of not less than $1,500,000.
 
 On June
26, 2009, The Company entered into a Letter Agreement (the “Letter Agreement”)
with TCMF pursuant to which the parties agreed to convert $350,000 of the
current principle plus accrued but unpaid interest outstanding under the Loan
Agreement into a convertible promissory note in the aggregate principal amount
of $350,000 and a warrant to purchase 350,000 shares of Common Stock. The
warrant has a two-year term and an exercise price of $0.01 per
share.
 
 20
 
 Through
June 30, 2009, we borrowed $850,000 under the Loan Agreement with TCMF and in
September and October 2009, we borrowed an additional $250,000 from
TCMF.
 
 On July 11, 2007, the Company entered
into a Management Agreement (the “Management Agreement”) with Trinad Management,
LLC (“Trinad”). Pursuant to the terms of the Management Agreement, Trinad agreed
to provide certain management services, including, without limitation, the
sourcing, structuring and negotiation of a potential business combination
transaction involving the Company. The Company agreed to pay Trinad a management
fee of $90,000 per quarter, plus reimbursement of all expenses reasonably
incurred by Trinad in connection with the provision of management services.
Management fee expenses for the year ended June 30, 2006, 2007 and 2008 totaled
$0, $0 and $180,000, respectively. The Management Agreement was terminable by
either party upon written notice, subject to a termination fee of $1,000,000
upon termination by the Company. On August 1, 2008, the Company and Trinad
amended the Management Agreement to provide that payment of the termination fee
set forth in Section 7(b) of the Management Agreement may be satisfied by the
delivery of shares of the Company’s Common Stock or other securities that may be
issued by the Company in the event the Company consummates a financing in
connection with a change of control or similar transaction involving the
Company, calculated based on the value of the shares of Common Stock or other
securities sold or issued by the Company in such financing
transaction.
  In
addition, TCMF beneficially owns 9,009,036 shares of our Common Stock. Robert
Ellin and Jay Wolf, two of our directors, are the managing members of
TCMF.
 
 Director
Independence.
 
 Our Board
of Directors currently consists of four members. They are Robert Ellin, Jay
Wolf, Barry Regenstein and Jeffrey Schwartz. We have determined that Mr.
Regenstein is independent using the definition of independence set forth in
Nasdaq Marketplace Rule 4200.
 
 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  The
following table presents fees for professional services related to the audits
and reviews of our interim and annual financial statements and other audit
related services for the years ended June 30, 2009 and June 30,
2008:
 
 2009
                          
                          
                          2008Audit
      fees:(1)
                          
                          $
                          50,180
                          
                          $
                          9,475Audit
      related fees:(2)
                          
                          
                          27,031
                          
                          
                          0Tax
      fees:(3)
                          
                          
                          0
                          
                          
                          0All
      other fees:(4)
                          
                          
                          0
                          
                          
                          0Total
                          
                          $
                          77,211
                          
                          $
                          9,475
 
 Policy
on Pre-Approval of Audit and Permissible Non-audit Services of Independent
Auditors
 
 Consistent
with SEC policies regarding auditor independence, the Board of Directors has
responsibility for appointing, setting compensation and overseeing the work of
the independent auditor. In recognition of this responsibility, the Board of
Directors has established a policy to pre-approve all audit and permissible
non-audit services provided by the independent auditor.
 
 Prior to
engagement of the independent auditor for the next year’s audit, management will
submit an aggregate of services expected to be rendered during that year for
each of the following four categories of services to the Board of Directors for
approval.
 
 1.  
Auditservices include
audit work performed in the preparation of financial statements, as well as work
that generally only the independent auditor can reasonably be expected to
provide, including comfort letters, statutory audits, and attest services and
consultation regarding financial accounting and/or reporting
standards.
 
 2.  
Audit-Relatedservices
are for assurance and related services that are traditionally performed by the
independent auditor, including due diligence related to mergers and
acquisitions, employee benefit plan audits, and special procedures required to
meet certain regulatory requirements.
 
 3.  
Taxservices include all
services performed by the independent auditor’s tax personnel except those
services specifically related to the audit of the financial statements, and
includes fees in the areas of tax compliance, tax planning, and tax
advice.
 
 4. 
Other Feesare
those associated with services not captured in the other
categories.
 
 21
 
 Prior to
engagement, the Board of Directors pre-approves these services by category of
service. The fees are budgeted and the Board of Directors requires the
independent auditor and management to report actual fees versus the budget
periodically throughout the year by category of service. During the year,
circumstances may arise when it may become necessary to engage the independent
auditor for additional services not contemplated in the original pre-approval.
In those instances, the Board of Directors requires specific pre-approval before
engaging the independent auditor.
 
 The Board
of Directors may delegate pre-approval authority to one or more of its members.
The member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to the Board of Directors at its next
scheduled meeting.
 
 The
Company’s Board of Directors pre-approved the retention of Most & Company,
LLP for all audit and audit-related services during fiscal 2010.
 
 22
 
 PART
IV
 
 ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
 2.1
                  
                  Plan and
      Agreement of Merger dated August 17, 2007 between the Company and
      Asianada, Inc., a Nevada Company (previously filed with the
      Commission on the Company’s DEF 14C Information Statement filed on
      September 5, 2007 and incorporated herein by
reference).3.1
                  
                  Certificate
      of Incorporation (previously filed with the Commission as Exhibit 3.1 to
      the Company’s Annual Report on Form 10-KSB filed on October 15, 2007 and
      incorporated herein by reference).3.2
                  
                  Bylaws
      (previously filed with the Commission as Exhibit 3.2 to the Company’s
      Annual Report on Form 10-KSB filed on October 15, 2007 and incorporated
      herein by reference).3.3
                  
                  Certificate
      of Ownership and Merger, filed with the Secretary of State of the State of
      Delaware on December 4, 2008 (previously filed with the Commission as
      Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December
      8, 2008 and incorporated herein by reference).4.1
                  
                  Warrant,
      issued to Grupo Grandioso, dated as of December 2, 2008 (previously filed
      with the Commission as Exhibit 4.1 to the Company’s Current Report on Form
      8-K filed on December 8, 2008 and incorporated herein by
      reference).4.2
                  
                  Form
      of Note, issued by the Lateral Media, Inc. on June 26, 2009 (previously
      filed with the Commission as Exhibit 4.1 to the Company’s Current Report
      on Form 8-K filed on July 2, 2009 and incorporated herein by
      reference).4.3
                  
                  Form
      of Note, issued by the Lateral Media, Inc. on June 26, 2009 (previously
      filed with the Commission as Exhibit 4.2 to the Company’s Current Report
      on Form 8-K filed on July 2, 2009 and incorporated herein by
      reference).10.1
                  
                  Loan
      Agreement with Trinad Capital Master Fund, Ltd., dated July 11, 2007
      (previously filed with the Commission as Exhibit 10.1 to the Company’s
      Current Report on Form 8-K filed on July 17, 2007 and incorporated herein
      by reference).10.2
                  
                  Amendment
      1 to Letter Agreement with Trinad Capital Master Fund, Ltd., dated
      November 15, 2007 (previously filed with the Commission as Exhibit 10.1 to
      the Company’s Current Report on Form 8-K filed on November 15, 2007 and
      incorporated herein by reference).10.3
                  
                  Amendment
      2 to Letter Agreement with Trinad Capital Master Fund, Ltd., dated April
      18, 2008 (previously filed with the Commission as Exhibit 10.1 to the
      Company’s Current Report on Form 8-K/A filed on April 24, 2008 and
      incorporated herein by reference).10.4
                  
                  Amendment
      3 to Letter Agreement, by and between Asianada Inc. and Trinad Capital
      Master Fund, Ltd., dated August 1, 2008 (previously filed with the
      Commission as Exhibit 10.2 to the Company’s Current Report on Form 8-K
      filed on August 7, 2008 and incorporated herein by
    reference).10.5
                  
                  Amendment
      4 to the Letter Agreement, by and between Lateral Media, Inc. and Trinad
      Capital Master Fund, Ltd., dated as of April 30, 2009 (previously filed
      with the Commission as Exhibit 10.1 to the Company’s Current Report on
      Form 8-K filed on May 6, 2009 and incorporated herein by
      reference).10.6
                  
                  Amendment
      5 to the Letter Agreement, by and between Lateral Media, Inc. and Trinad
      Capital Master Fund, Ltd., dated as of June 11, 2009 (previously filed
      with the Commission as Exhibit 10.1 to the Company’s Current Report on
      Form 8-K filed on June 16, 2009 and incorporated herein by
      reference).10.7
                  
                  Letter
      Agreement, by and between Lateral Media, Inc. and Trinad Capital Master
      Fund, Ltd., dated as of December 18, 2008 (previously filed with the
      Commission as Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed on December 22, 2008 and incorporated herein by
      reference).10.8
                  
                  Letter
      Agreement, by and between Lateral Media, Inc. and Trinad Capital Master
      Fund, Ltd., dated June 26, 2009(previously
      filed with the Commission as Exhibit 4.2 to the Company’s Current Report
      on Form 8-K filed on July 2, 2009 and incorporated herein by
      reference).10.9
                  
                  Commercial
      Lease Agreement with Trinad Management, LLC, dated May 1, 2008 (previously
      filed with the Commission as Exhibit 10.1 to the Company’s Current Report
      on Form 8-K filed on May 7, 2008 and incorporated herein by
      reference).
  23
  10.10
              
              Management
      Agreement dated July 11, 2007 between the Registrant and Trinad
      Management, LLC (previously filed with the Commission as Exhibit 10.2 to
      the Company’s Current Report on Form 8-K filed on July 17, 2007 and
      incorporated herein by reference).10.11
              
              Amendment
      No. 1 to the Management Agreement, by and between Asianada, Inc. and
      Trinad Management, LLC, dated August 1, 2008 (previously filed with the
      Commission as Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed on August 7, 2008 and incorporated herein by
    reference).10.12
              
              2007
      Employee, Director and Consultant Stock Plan (previously filed with the
      Commission as Exhibit 10.3 to the Company’s Annual Report on Form 10-KSB
      filed on October 15, 2007 and incorporated herein by
      reference).10.13
              
              Amended
      and Restated Non-Qualified Stock Option Agreement (previously filed
      with the Commission as Exhibit 10.1 to the Company’s Quarterly Report on
      Form 10-QSB filed on November 14, 2007 and incorporated herein by
      reference).10.14
              
              Amendment
      to 2007 Employee, Director and Consultant Stock Plan (previously filed
      with the Commission as Exhibit 10.4 to the Company’s Current Report on
      Form 8-K filed on December 8, 2008 and incorporated herein by
      reference).10.15
              
              Form
      of Incentive Stock Option Agreement (previously filed with the
      Commission as Exhibit 10.5 to the Company’s Annual Report on Form 10-KSB
      filed on October 15, 2007 and incorporated herein by
      reference).10.16
              
              Asset
      Purchase Agreement, by and among Lateral Media, Inc., Grupo Grandioso, LLC
      and Jeffrey Schwartz, dated as of December 2, 2008 (previously filed with
      the Commission as Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed on December 8, 2008 and incorporated herein by
      reference).10.17
              
              Promissory
      Note, issued to Grupo Grandioso, LLC, dated as of December 2, 2008
      (previously filed with the Commission as Exhibit 10.2 to the Company’s
      Current Report on Form 8-K filed on December 8, 2008 and incorporated
      herein by reference).10.18
              
              Employment
      Agreement, by and between Lateral Media, Inc. and Jeffrey Schwartz, dated
      as of December 2, 2008 (previously filed with the Commission as Exhibit
      10.3 to the Company’s Current Report on Form 8-K filed on December 8, 2008
      and incorporated herein by reference).10.19
              
              Employment
      Agreement, by and between Lateral Media, Inc. and Michael Rose, dated as
      of April 15, 2009 (previously filed with the Commission as Exhibit 10.1 to
      the Company’s Current Report on Form 8-K filed on April 17, 2009 and
      incorporated herein by reference).16.1
              
              Letter
      regarding change in certifying accountant dated November 6, 2008 from
      Madsen & Associates, CPA’s Inc. (previously filed with the Commission
      as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on
      November 6, 2008 and incorporated herein by reference).16.2
              
              Letter
      regarding change in certifying accountant dated November 13, 2008 from
      Madsen & Associates, CPA’s Inc. (previously filed with the Commission
      as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on
      November 18, 2008 and incorporated herein by
reference).16.3
              
              Letter
      regarding change in certifying accountant, dated July 28, 2009 from Raich
      Ende Malter & Co. LLP. (previously filed with the Commission as
      Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on July 29,
      2009 and incorporated herein by reference).31.1
              
              Certification
      of Principal Executive Officer *31.2
              
              Certification
      of Principal Financial Officer *32
              
              Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      U.S.C. Section 1350 *
 
 * Filed
herewith.
 
 24
 
 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.
 
 Lateral
      Media, Inc.Dated:
      October 13, 2009
                  By:
                  /s/
      Charles BentzCharles
      BentzChief
      Financial Officer (Principal Executive
      Officer andPrincipal Financial Officer)
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities indicated below and on the dates indicated.
 
 Signatures
                          
                          Title
                          
                          Date/s/
      Charles Bentz
                          
                          Chief
      Financial Officer (Principal Executive
      Officer andPrincipal Financial Officer)
                          
                          October
      13, 2009Charles Bentz/s/ Michael Rose
                          
                          Vice
      President, Operations
                          
                          October
      13, 2009Michael Rose/s/ Jay A. Wolf
                          
                          Director
      and Secretary
                          
                          October
      13, 2009Jay
      A. Wolf/s/ Robert S. Ellin
                          
                          Director
                          
                          October
      13, 2009Robert S. Ellin/s/ Barry Regenstein
                          
                          Director
                          
                          October
      13, 2009Barry
      Regenstein/s/ Jeffrey Schwartz
                          
                          Director
                          
                          October
      13, 2009Jeffrey
      Schwartz
 
 25
  Lateral
Media, Inc.
  Index
to Financial Statements
  PageReport
      of Independent Registered PublicAccounting
      Firm – Most & Company, LLP
                      F-2Report
      of Independent Registered PublicAccounting
      Firm – Madsen & Associates
                      F-3Consolidated
      Balance Sheets as of June 30, 2009 and 2008
                      F-4Consolidated
      Statement of Operations for the  years ended June 30, 2009 and
      2008
                      F-5Consolidated
      Statement of Stockholders' Deficit for the years ended June 30, 2009 and
      2008
                      F-6Consolidated
      Statement of Cash Flows for the years ended June 30, 2009 and
      2008
                      F-7Notes
      to Financial Statements
                      F-8
  F-1
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders
 Lateral
Media, Inc.
 
 We have
audited the accompanying balance sheets of Lateral Media, Inc as of June 30,
2009 and the related statements of income, stockholders' equity and cash flows
for the year ended June 30, 2009.  Lateral Media, Inc. is responsible
for these financial statements. Our responsibility is to express an opinion on
these financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
 
 In our
opinion, the financial statement referred to above presents fairly, in all
material respects, the financial position of Lateral Media, Inc. as of June 30,
2009 and the results of its operations and its cash flows for the year ended
June 30, 2009, in conformity with accounting principles generally accepted in
the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has incurred losses since inception, resulting in an
accumulated deficit of $2,561,739. This issue raises substantial doubt about its
ability to continue as a going concern. Management’s plans in regards to these
matters are also described in Note 3. The accompanying financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
 
 Most & Company,
  LLP
 
 Most
& Company, LLP
 
 New York,
New York
 October
11, 2009
  F-2
 
 MADSEN & ASSOCIATES, CPA’s
      INC.
                
                684
      East Vine St . #3Certified
      Public Accountants and Business Consultants
                
                Murray,
      Utah 84107Telephone
      801-268-2632Fax
      801-262-3978
  Board of
Directors
 Asianada,
Inc.
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 We have
audited the accompanying balance sheets of Asianada, Inc. (developmental stage
company) at June 30, 2008 and 2007 and the related statements of operations,
stockholders' equity, and cash flows for the years ended June 30, 2008 and 2007
and the period February 17, 2006 (date of inception) to June 30, 2008. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to nor
were we engaged to perform an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness for the company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Asianada, Inc. (developmental stage
company) at June 30, 2008 and 2007 and the related statements of operations, and
cash flows for the years ended June 30, 2008 and 2007 and the period February
17, 2006 (date of inception) to June 30, 2008 in conformity with accounting
principles generally accepted in the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The Company will need additional working
capital for its planned activity and to service it’s debt, which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are described in the notes to the financial
statements. These financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
  Murray,
      UtahSeptember
      25, 2008
              /s/
      Madsen & Associates, CPA’s
Inc.
  F-3
  LATERAL
MEDIA, INC.
 (Formerly
Asianada, Inc.)
 BALANCE
SHEET
 
 June 30, 2009
                                      
                                      
                                      June 30, 2008ASSETSCURRENT ASSETSCash
                                      
                                      $
                                      363,771
                                      
                                      
                                      $
                                      85,187Accounts
      receivable
                                      
                                      
                                      23,751
                                      
                                      
                                      
                                      -Prepaid
      expenses
                                      
                                      
                                      99,562
                                      
                                      
                                      
                                      -Total
      Current Assets
                                      
                                      
                                      487,084
                                      
                                      
                                      
                                      85,187PROPERTY
      AND EQUIPMENT - net
                                      
                                      
                                      78,507
                                      
                                      
                                      
                                      -OTHER
      ASSETSTechnology
      software, net
                                      
                                      
                                      445,100
                                      
                                      
                                      
                                      -Covenant
      not-to-compete, net
                                      
                                      
                                      367,670
                                      
                                      
                                      
                                      -Domain
      names
                                      
                                      
                                      190,000
                                      
                                      
                                      
                                      -Deferred
      financing costs
                                      
                                      
                                      8,461
                                      
                                      
                                      
                                      -Security
      deposits
                                      
                                      
                                      5,005
                                      
                                      
                                      
                                      -Total
      Assets
                                      
                                      $
                                      1,581,827
                                      
                                      
                                      $
                                      85,187LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
                                      
                                      $
                                      577,793
                                      
                                      
                                      $
                                      124,346Related
      party note payable
                                      
                                      
                                      850,000
                                      
                                      
                                      
                                      500,000Note
      payable - insurance
                                      
                                      
                                      5,918
                                      
                                      
                                      
                                      -Total
      Current Liabilities
                                      
                                      
                                      1,433,711
                                      
                                      
                                      
                                      624,346LONG-TERM
      LIABILITIESNote
      payable
                                      
                                      
                                      846,547
                                      
                                      
                                      
                                      -Convertible
      note payable
                                      
                                      
                                      558,612
                                      
                                      
                                      
                                      -Total
      Long-Term Liabilities
                                      
                                      
                                      1,405,159Total
      Liabilities
                                      
                                      
                                      2,838,870
                                      
                                      
                                      
                                      624,346STOCKHOLDERS'
      DEFICITPreferred
      Stock 5,000,000 shares authorized at par value $0.001  - none
      outstanding
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Common
      stock 75,000,000 shares authorized at $0.001 par value; 9,143,836 and
      8,080,000 shares issued and outstanding at June 30, 2009 and June 30,
      2008, respectively
                                      
                                      
                                      9,144
                                      
                                      
                                      
                                      8,080Additional
      paid - in capital
                                      
                                      
                                      1,295,552
                                      
                                      
                                      
                                      44,651Accumulated
      deficit
                                      
                                      
                                      (2,561,739
                                      )
                                      
                                      
                                      (591,890
                                      )Total
      Stockholders' Deficit
                                      
                                      
                                      (1,257,043
                                      )
                                      
                                      
                                      (539,159
                                      )Total
      Liabilities and Stockholders' Deficit
                                      
                                      $
                                      1,581,827
                                      
                                      
                                      $
                                      85,187
 
 See notes
to financial statements.
  F-4
  LATERAL
MEDIA, INC.
 (Formerly
Asianada, Inc.)
 STATEMENT
OF OPERATIONS
 
 Years Ended June 30,2009
                        
                        
                        2008REVENUES
                        
                        $
                        529,009
                        
                        
                        $
                        -COST
      OF REVENUES
                        
                        
                        (470,496
                        )
                        
                        
                        -GROSS
      PROFIT
                        
                        
                        58,513
                        
                        
                        
                        -GENERAL
      AND ADMINISTRATIVE EXPENSES
                        
                        
                        (1,867,738
                        )
                        
                        
                        (523,923
                        )INTEREST
      EXPENSE
                        
                        
                        (160,624
                        )
                        
                        
                        (18,767
                        )NET
      LOSS
                        
                        $
                        (1,969,849
                        )
                        
                        $
                        (542,690
                        )NET
      LOSS PER COMMON SHARE  - basic and dilutive
                        
                        $
                        (0.23
                        )
                        
                        $
                        (0.07
                        )WEIGHTED
      AVERAGE SHARES OUTSTANDING - basic and diluted
                        
                        
                        8,645,436
                        
                        
                        
                        8,080,000
 
 See notes
to financial statements.
  F-5
  
 LATERAL
MEDIA, INC.
 (formerly
Asianada, Inc.)
 STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
 FOR
THE YEARS ENDED JUNE 30, 2009 AND 2008
 
 AdditionalCommon Stock
                      
                      
                      Paid - In
                      
                      
                      AccumulatedShares
                      
                      
                      Amount
                      
                      
                      Capital
                      
                      
                      Deficit
                      
                      
                      TotalBalance
      June 30, 2007
                      
                      
                      8,080,000
                      
                      
                      $
                      8,080
                      
                      
                      $
                      31,120
                      
                      
                      $
                      (49,200
                      )
                      
                      $
                      (10,000
                      )Stock-based
      compensation
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      13,531
                      
                      
                      
                      -
                      
                      
                      
                      13,531Net
      loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (542,690
                      )
                      
                      
                      (542,690
                      )Balance
      June 30, 2008
                      
                      
                      8,080,000
                      
                      
                      
                      8,080
                      
                      
                      
                      44,651
                      
                      
                      
                      (591,890
                      )
                      
                      
                      (539,159
                      )Warrants
      - asset purchase agreement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      294,261
                      
                      
                      
                      -
                      
                      
                      
                      294,261Conversion
      of related party note payable and outstanding interest
                      
                      
                      1,063,836
                      
                      
                      
                      1,064
                      
                      
                      
                      796,812
                      
                      
                      
                      -
                      
                      
                      
                      797,876Warrants
      - convertible notes payable, net of financing costs
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      140,002
                      
                      
                      
                      -
                      
                      
                      
                      140,002Stock-based
      compensation
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      19,826
                      
                      
                      
                      -
                      
                      
                      
                      19,826Net
      loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (1,969,849
                      )
                      
                      
                      (1,969,849
                      )Balance
      June 30, 2009
                      
                      
                      9,143,836
                      
                      
                      $
                      9,144
                      
                      
                      $
                      1,295,552
                      
                      
                      $
                      (2,561,739
                      )
                      
                      $
                      (1,257,043
                      )
 
 See notes
to  financial statements.
  F-6
 
 LATERAL
MEDIA, INC.
 (Formerly
Asianada, Inc.)
 STATEMENTS
OF CASH FLOWS
 
 FOR
      THE YEARSENDED JUNE 30,2009
                                                    
                                                    
                                                    2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                                    
                                                    $
                                                    (1,969,849
                                                    )
                                                    
                                                    $
                                                    (542,690
                                                    )Adjustments
      to reconcile net loss to net cash used   in operating
      activities:Stock
      based compensation
                                                    
                                                    
                                                    19,826
                                                    
                                                    
                                                    
                                                    13,531Depreciation
      and amortization expense
                                                    
                                                    
                                                    15,900
                                                    
                                                    
                                                    
                                                    -Amortization
      of discount on notes payable
                                                    
                                                    
                                                    31,472
                                                    
                                                    
                                                    
                                                    -Amortization
      of intangibles
                                                    
                                                    
                                                    107,347
                                                    
                                                    
                                                    
                                                    -Changes
      in assets and liabilities:Prepaid
      expenses
                                                    
                                                    
                                                    (90,000
                                                    )
                                                    
                                                    
                                                    -Accounts
      receivable
                                                    
                                                    
                                                    (23,751
                                                    )
                                                    
                                                    
                                                    -Capitalization
      of legal fees
                                                    
                                                    
                                                    (10,676
                                                    )
                                                    
                                                    
                                                    -Accounts
      payable and accrued liabilities
                                                    
                                                    
                                                    501,323
                                                    
                                                    
                                                    
                                                    114,346Net
      cash used in operating activities
                                                    
                                                    
                                                    (1,418,408
                                                    )
                                                    
                                                    
                                                    (414,813
                                                    )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchases
      of property and equipment
                                                    
                                                    
                                                    (91,121
                                                    )
                                                    
                                                    
                                                    -Increase
      in security deposit
                                                    
                                                    
                                                    (5,005
                                                    )
                                                    
                                                    
                                                    -Net
      cash used in investing activities
                                                    
                                                    
                                                    (96,126
                                                    )
                                                    
                                                    
                                                    -CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from related party loan payable
                                                    
                                                    
                                                    1,450,000
                                                    
                                                    
                                                    
                                                    500,000Proceeds
      from note payable
                                                    
                                                    
                                                    350,000
                                                    
                                                    
                                                    
                                                    -Payments
      of financing - insurance
                                                    
                                                    
                                                    (6,882
                                                    )
                                                    
                                                    
                                                    -Net
      cash provided by financing activities
                                                    
                                                    
                                                    1,793,118
                                                    
                                                    
                                                    
                                                    500,000(Decrease)
      increase in cash
                                                    
                                                    
                                                    278,584
                                                    
                                                    
                                                    
                                                    85,187Cash,
      beginning of period
                                                    
                                                    
                                                    85,187
                                                    
                                                    
                                                    
                                                    -Cash,
      end of period
                                                    
                                                    $
                                                    363,771
                                                    
                                                    
                                                    $
                                                    85,187Noncash
      Transactions:Issuance
      of common stock in payment of related party loan payable and accrued
      interest thereon
                                                    
                                                    $
                                                    797,876
                                                    
                                                    
                                                    
                                                    -Acquisition
      of intangible assets (in exchange for note payable and a warrant to
      purchase common stock)
                                                    
                                                    $
                                                    1,110,117
                                                    
                                                    
                                                    
                                                    -
 
 See notes
to  financial statements.
  F-7
  LATERAL
MEDIA, INC.
  (Formerly
Asianada, Inc.)
  NOTES
TO FINANCIAL STATEMENTS
  1.
              ORGANIZATION
      AND OPERATIONS
  Lateral
Media, Inc. (the “Company”) was incorporated under the laws of the State of
Nevada on February 17, 2006. On September 27, 2007, the Company
reincorporated in Delaware and increased its authorized capital stock from
75,000,000 shares to 80,000,000 shares, consisting of 75,000,000 shares of
common stock, par value $0.001, per share, and 5,000,000 shares of “blank check”
preferred stock, par value $0.001, per share. No terms have been established for
the preferred stock.
  The
Company was planning to acquire and explore mineral properties through June 15,
2007 when this was abandoned, and the Company became an inactive development
stage company.
  On
December 4, 2008, the Company merged into its newly formed, wholly-owned
subsidiary, Lateral Media, Inc., a Delaware corporation, effectively changing
its name from Asianada, Inc. to Lateral Media, Inc.
  On
December 2, 2008, the Company commenced nominal operations and, on
January 12, 2009, launched The Recycler Publishing Network, websites designed to
assist sellers of cars, boats, RVs and motorcycles to market their products
using the internet.
  Through
June 30, 2009, the Company has purchased additional domains names, software and
other assets, hired employees and has expanded its operations.
  The
Company also creates and markets content for websites, using content designed to
optimize visitors through search engine optimization.
  The
Company had formerly been a development stage company.
  2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
  Financial
Statements
  The
financial statements include all the accounts of the Company.
  Use
of Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.
  F-8
  Reclassifications
  Certain
amounts for prior years have been reclassified to conform to 2009 financial
statement presentation.
  Intangible
Assets
  Intangible
assets are recorded at fair value and, if they have a definitive life, will be
amortized. The carrying value of the intangible assets will be evaluated by
management for impairment at least annually or upon the occurrence of an event
which may indicate that the carrying amount may be greater than its fair value.
If impaired, the Company will write-down such impairment. In addition, the
useful life of the intangible assets will be evaluated by management at least
annually or upon the occurrence of an event which may indicate that the useful
life may be definitive and the Company will commence amortization over such
useful life.
  Financial
Instruments
  The
Company considers the carrying amounts of financial instruments, including cash,
accounts payable and accrued expenses to approximate their fair values because
of their relatively short maturities.
  Property
and Equipment
  Property
and equipment are recorded at cost and depreciated over their estimated useful
lives using the straight-line method.
  Maintenance
and repairs are charged to operating expenses as they are incurred. Improvements
and betterments which extend the lives of the assets are
capitalized.  The cost and accumulated depreciation of assets retired
or otherwise disposed of are relieved from the appropriate accounts and any
profit or loss on the sale or disposition of such assets is credited or charged
to income.
  Revenue
Recognition
  Revenue
is recognized when evidence of an arrangement exists, pricing is fixed and
determinable, collection is reasonably assured, and delivery or performance of
service has occurred.
  Website
marketing revenue is recognized upon placement on the Company’s website and
content design revenue is recognized when services are provided.
  Share-Based
Compensation
  The
Company recognizes compensation expense for all share-based payment awards made
to employees, directors and others based on the estimated fair values on the
date of the grant. Common stock equivalents are valued using the Black-Scholes
Option-Pricing Model using the market price of our common stock on the date of
valuation, an expected dividend yield of zero, the remaining period or maturity
date of the common stock equivalent and the expected volatility of our common
stock
  Loss
per Common Share
  Basic
loss per share is calculated using the weighted-average number of common shares
outstanding during each period. Diluted loss per share includes potentially
dilutive securities such as outstanding options and warrants, using various
methods such as the treasury stock or modified treasury stock method in the
determination of dilutive shares outstanding during each period.
  For the
years ended June 30, 2009, there were 968,494 potentially dilutive securities
not included in the calculation of weighted-average common shares outstanding
since it was anti-dilutive.
  F-9
  Taxes
  Deferred
income taxes have been provided for temporary differences between financial
statement and income tax reporting under the liability method, using expected
tax rates and laws that are expected to be in effect when the differences are
expected to reverse.  A valuation allowance is provided when realization is
not considered more likely than not.
  The
Company’s policy is to classify income tax assessments, if any, for interest in
interest expense and for penalties in general and administrative
expenses.
  Recent
Accounting Pronouncements
  In June
2009, the FASB issued Statement No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, a
replacement of FASB Statement No. 162” (“SFAS 168”). The new standard sets forth
that the FASB Accounting Standards Codification (“Codification”) will become the
source of authoritative U.S. generally accepted accounting principles (“GAAP”)
recognized by the FASB to be applied to all entities.  Rules and
interpretive releases of the Securities and Exchange Commission (“SEC”) under
authority of Federal securities laws are also source for authoritative GAAP for
SEC registrants.  When the statement is effective, the Codification
will supersede all then-existing non-SEC accounting and reporting
standards.  All other nongrandfathered non-SEC accounting literature
not included in the Codification will become nonauthoritative.
  In April
2009, the FASB issued Financial Staff Position (“FSP”) 141(R)-1, “Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies” (“FSP 141(R)-1”). The statement amended and clarified
SFAS 141R to address application issues associated with initial recognition and
measurement, subsequent measurement and accounting, and disclosure of assets and
liabilities arising from contingencies in a business combination. FSP 141(R)-1
is effective for assets or liabilities arising from contingencies in business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 31, 2008. This
statement will apply to acquisitions completed after July 1, 2009.
  In
April 2009, the FASB issued Staff Position No. 107-1 and APB No.28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB
28-1”), FSP FAS 107-1 and APB 28-1 amend SFAS 107, “Disclosures about Fair
Value of Financial Instruments”, to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements.  This FSP also amends APB
Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in
summarized financial information at interim reporting periods. FSP FAS 107-1 and
APB 28-1 are effective for interim reporting periods ending after June 15,
2009 and do not require disclosures for earlier periods presented for
comparative purposes at initial adoption.  In periods after initial
adoption, this FSP requires comparative disclosures only for periods
ending after initial adoption. The Company does not believe that adoption
of FSP 107-1 and APB 28-1 will have a material impact on the financial
statements.
  In April,
2008, the FASB issued Statement of Financial Accounting Standards Staff Position
142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”).
FSP 142-3 amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset under FASB No. 142, “Goodwill and Other Intangible Assets”. FSP
SFAS 142-3 is effective for financial statements issued for fiscal years
beginning after December 31, 2008 and must be applied prospectively to
intangible assets acquired after the effective date.  The adoption of
FSP 142-3 is not expected to have a material impact on the financial
statements.
  F-10
  In
December, 2007 the FASB issued Statement of Financial Accounting Standards No.
141(R), “Business Combinations” (“SFAS 141(R)”), which replaced SFAS No. 141,
“Business Combinations”, establishes principles and requirements for determining
how an enterprise recognizes and measures the fair value of certain assets and
liabilities acquired in a business combination, including noncontrolling
interests, contingent consideration and certain acquired
contingencies.  SFAS 141(R) also requires acquisition-related
transaction expenses and restructuring costs be expensed as incurred rather than
capitalized as a component of the business combination. SFAS 141(R) applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 31, 2008. This statement will apply to acquisitions completed after
July 1, 2009. The Company is currently assessing the effects of adoption of SFAS
141  (R ) which will be reflected in the financial statements on July 1,
2009.
  In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – An Amendment of ARB No. 51” (“SFAS 160”).
SFAS 160 establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary (previously referred to as minority interests). SFAS
160 also requires that a retained noncontrolling interest upon the
deconsolidation of a subsidiary be initially measured at its fair value. Upon
adoption of SFAS 160, the Company would be required to report any noncontrolling
interests as a separate component of stockholders’ equity. The Company would
also be required to present any net income allocable to noncontrolling interests
and net income attributable to stockholders of the Company separately in its
consolidated statements of income. SFAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. SFAS 160 requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests. All other requirements of SFAS 160
shall be applied prospectively. The adoption of SFAS 160  is not
expected to have a material impact on the financial statements.
  Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
  3.
              GOING
      CONCERN
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company has incurred operating losses and negative operating cash flow since
inception, and future losses are anticipated. The Company's plan of operation,
even if successful, may not result in cash flow sufficient to finance and expand
its business. These factors raise substantial doubt about the Company's ability
to continue as a going concern. Realization of assets is dependent upon
continued operations of the Company, which in turn is dependent upon
management's plans to meet its financing requirements and the success of its
future operations. These financial statements do not include any adjustments
related to the recoverability and classification of asset amounts or the amounts
and classification of liabilities that might be necessary should the Company be
unable to continue in existence.
  4.
              RELATED
      PARTY TRANSACTIONS
  Loan
Agreement
  On July
11, 2007, the Company entered into a loan agreement (“Loan Agreement”) ,as
amended, with Trinad Capital Master Fund (“TCMF”), a principal stockholder of
the Company, whereby TCMF agreed to lend the Company up to $750,000. The loans
under the Loan Agreement bear interest at 10%, per annum. The entire outstanding
principal amount of the loans and accrued interest thereon are payable by the
Company upon a sale of securities (other than a sale of shares of the Company’s
common stock to officers, directors or employees of or consultants to
the Company in connection with their provision of services to the Company) to a
third party or parties with proceeds to the Company of not less than
$1,0000,000.  TCMF may, at its option, receive any payment of
principal and interest due on the loans in the form of common stock or other
securities that may be issued by the Company in the event the Company
consummates a financing in connection with a change of control or similar
transaction involving the Company, calculated based on the value of the shares
of common stock or other securities sold or issued by the Company in such
financing transaction. Upon repayment, TCMF may continue to make additional
loans to the Company in accordance with the Loan Agreement.
  F-11
  The
Company borrowed $500,000 during the year ended June 30, 2008 and an additional
$250,000 was advanced through December 31, 2008. On December 18, 2008, the
Company repaid the entire principal and accrued interest outstanding under the
Loan Agreement, $750,000 and $47,876, respectively, by the issuance of 1,063,836
shares of common stock to TCMF.
  On April
30 and June 11, 2009, the Company entered into amendments to the Loan Agreement,
which increased the principal amount of the Loan to up to $1,000,000 and
$1,250,000, respectively, and provided that the principal amount of the loan and
accrued interest thereon are due and payable by the Company upon a sale of
securities (other than a sale of shares of the Company’s common stock to
officers, directors or employees of or consultants to the Company in
connection with their provision of services to the Company) to a third party or
parties with proceeds to the Company of not less than $1,250,000 and $1,500,000,
respectively.
  On June
26, 2009, the Company entered into a Letter Agreement (the “Letter Agreement”)
with TCMF to convert $350,000 of loans under the Loan Agreement into a
convertible promissory note of $350,000 and a warrant to purchase 350,000 shares
of the Company’s common stock, par value $0.001, per share, (Note
7).
  In
September and October 2009, the Company borrowed an additional $250,000 from
TCMF.
  For the
years ended June 30, 2009 and 2008, interest expense on the related party note
payable were $64,778 and $18,767, respectively.
  Management
Agreement
  On July
11, 2007, the Company entered into a Management Agreement (the “Management
Agreement”) with Trinad Management, LLC (“Trinad”), an affiliate of TCMF.
Pursuant to the terms of the Management Agreement, which is for a term of five
years, Trinad will provide certain management services, including, without
limitation, the sourcing, structuring and negotiation of a potential business
combination transaction involving the Company. The Company has agreed to pay
Trinad a management fee of $90,000, per quarter, plus reimbursement of all
expenses reasonably incurred by Trinad in connection with the provision of
management services. The Company may terminate the Management Agreement
immediately by giving written notice and payment of a termination fee of
$1,000,000. The Company has paid $360,000 and $349,355 in management fees for
the years ended June 30, 2009 and 2008, respectively.
  On August
1, 2008, the Company entered into an amendment  to the Management
Agreement with Trinad, which provided that payment of the termination fee may be
satisfied by the issuance of shares of the Company’s common stock or other
securities that may be issued by the Company in the event the Company
consummates a financing in connection with a change of control or similar
transaction involving the Company, calculated based on the value of the shares
of common stock or other securities sold or issued by the Company in such
financing transaction.
  Lease
  On May 1,
2008, the Company entered into a sublease for office space with Trinad, on a
month-to-month basis, with rent of $3,500 through January 2009 and increasing to
$8,500 thereafter, per month.
  F-12
  5.
              ASSET
      PURCHASE
  On
December 2, 2008, the Company entered into an asset purchase agreement (the
“Purchase Agreement”) with an entity owned by the Company’s new Chairman of the
Board of Directors and Chief Executive Officer to purchase a variety of internet
domain names and technology software, including some relating to the automobile
industry, such as RecyclerClassics.com and ExpertAutos.com, in exchange for
a warrant to purchase 1,800,000 shares of the Company’s common stock,
exercisable at $1.25, per share, over five years, and an unsecured
contingent promissory note of $1,000,000. The Purchase Agreement also
provides for an agreement not-to-compete for an aggregate period of five
years.
  The
shares of common stock underlying the warrant are subject to a two
year lock-up period, commencing upon issuance of the shares underlying the
warrant. The note bears interest at 6%, per annum, and is payable
in 36 equal monthly installments contingent upon sufficient cash flow of
the Company during each monthly period, as defined in the note. If there is
not sufficient working capital during any such monthly period, any principal and
interest otherwise payable pursuant to the note shall be deferred and, on the
final due date, any outstanding deferred payments shall be cancelled and the
note and interest thereon shall be deemed to be paid-in full.
  The
Company determined the fair value of the assets purchased under SFAS 157, “Fair
Value Measurements”, and, as part of the determination, utilized the services of
an independent valuation specialist.  Based on the determination, the
Company recorded the assets purchased, note payable and warrant at their
estimated fair values at the date of purchase, as follows:
  Technology
      software
                    
                    $
                    503,886Internet
      domain names
                    
                    
                    190,000Covenant
      not-to-compete
                    
                    
                    416,232Total
      assets purchased
                    
                    $
                    1,110,118Note
      payable
                    
                    $
                    815,857Warrant
                    
                    $
                    294,261
  The
purchased technology software and covenant not-to-complete are being amortized
over 5 years. Amortization expense for the year ended June 30, 2009 was
$107,347.  As of June 30, 2009, amortization expense for each of the
five succeeding years was as follows:
  2010
                    
                    $
                    184,0242011
                    
                    $
                    184,0242012
                    
                    $
                    184,0242013
                    
                    $
                    184,0242014
                    
                    $
                    76,675
 F-13
  The
domain names are not being amortized as they have an indefinite
life.
  The
effective interest rate on the note payable is 19%, per annum. The discount on
the note of $184,143 is being amortized over the term of the note and included
in interest expense.
  The
warrants were valued using a Black-Scholes model, assuming a risk free interest
rate of 5.6%, an expected term of 1 year and expected volatility of
56%.
  6.
              INTANGIBLE
      ASSETS
  As
      of June 30, 2009, intangible assets consisted of the
      following:
  Technology
      software
                    
                    $
                    503,886Covenant
      not-to-compete
                    
                    
                    416,232Domain
      names
                    
                    
                    190,0001,110,118Less:
      accumulated amortization
                    
                    
                    (107,347
                    )$
                    1,002,771
  7.
              CONVERTIBLE
      NOTES PAYABLE
  On June
26, 2009, the Company sold convertible promissory notes in the aggregate of
$350,000 to an investor (together with the note issued on the same date to
Trinad, the “Notes”) and warrants to purchase 350,000 shares of common stock of
the Company for an aggregate purchase price of $350,000 (together with the
warrant issued on the same date to Trinad, the “Warrants”).  The Notes
are due in two years term, with interest at 7%, per annum. The Warrants are
exercisable in two years term at $0.01, per share.
  The
outstanding principal and accrued interest under the Notes shall automatically
convert into Qualified New Securities (as defined in the Notes) upon the closing
of an equity financing of the Company, of at least $3,000,000 or such other
amount as shall be agreed upon by the Company and the holders of the Notes, at a
conversion price per share equal to the price per share of the Qualified New
Securities.
  As of
June 30, 2009, the Company related party note payable was:
  Note
      payable
                    
                    $
                    700,000Discount
      (net of amortization of $782)
                    
                    
                    141,388$
                    558,612
  F-14
  For the
years ended June 30, 2009, interest expense on the Notes from TCMF was
$268.
  The
aggregate purchase price of the Notes of $700,000 has been allocated to the
Notes and Warrants in the proportion to their fair values under SFAS 157, “Fair
Value Measurements”, utilizing the services of an independent valuation
specialist to assist with the determination of fair value, as
follows:
  Notes
                      
                      $
                      557,830Warrants
                      
                      
                      142,170$
                      700,000
  The
amount allocated to the Warrants has been recorded a discount to the Notes and
is being amortized over the term of the notes.
  Financing
expenses of $10,676 have been allocated in the same proportion. The amount
allocated to the Notes has been recorded as deferred financing expenses and is
being amortized over the term of the Note and the amount allocated to the
Warrants has been record as additional paid-in capital.
  The
warrants were valued using a Black-Scholes model, assuming a risk free interest
rate of  5.6%, an expected term of 1 year and expected volatility of
75%.
  The effective rate of interest on the
Notes is 27%, per annum.
  In July 2009, Warrants to purchase
350,000 shares of common  stock were exercised, at $1.00, per
share.
  8.
              EMPLOYMENT
      AGREEMENTS
  On
December 2, 2008, the Company entered into an employment agreement with its
chairman of the board of directors and chief executive officer for a term of
three years. The Agreement provides for a base salary of $250,000, per year, and
a bonus on terms and conditions pursuant to the discretion of the board of
directors of the Company, prior to February 15 of each calendar year during
which the chief executive officer remains employed by the Company. Effective
October 7, 2009, Mr. Schwartz terminated the employment agreement and resigned
as Chairman of the Board of Directors and Chief Executive Officer.
  Effective
as of April 15, 2009, the Company entered into an employment agreement with an
executive vice president of operations of the Company, at an annual base salary
of $200,000, plus quarterly commissions.  Additionally, the Company
granted an option under the 2007 Plan (as defined below) to purchase 228,596
shares of the Company’s common stock, exercisable at $1.25, per share, with
a fair value of $1,852. The options were valued using a Black-Scholes model,
assuming a risk free interest rate of 5.6%, an expected term of 1 year and
expected volatility of 75%.
  F-15
  9.
              INCOME
      TAXES
  The
Company anticipates filing income tax returns for the years ended June 30, 2009
and 2008 with no significant income tax expenses as a result of these
filings.
  As of
June 30, 2009, management has evaluated and concluded that there are no
significant uncertain tax positions requiring recognition in the Company’s
financial statements.
  As of
June 30, 2009, the Company has net operating loss carryforwards of approximately
$2,005,000 to reduce future Federal and state taxable income through
2029.
  As of
June 30, 2009, realization of the Company’s deferred tax assets of $998,000 wase
not considered more likely than not and, accordingly, a valuation allowance of
$998,000 has been provided.
  As of
June 30, 2009 and 2008, components of deferred tax assets were as
follows:
  2009
                    
                    
                    2008Stock
      based compensation
                    
                    $
                    (13,000
                    )
                    
                    $
                    (5,000
                    )Amortization
                    
                    
                    (34,000
                    )
                    
                    
                    -Net
      operating loss
                    
                    
                    1,045,000
                    
                    
                    
                    222,000998,000
                    
                    
                    
                    217,000Allowance
                    
                    
                    (998,000
                    )
                    
                    
                    (217,000
                    )-
                    
                    
                    
                    -
  For the
years ended June 30, 2009 and 2008, deferred income tax expense consisted of the
following:
  2009
                    
                    
                    2008Stock
      based compensation
                    
                    $
                    (8,000
                    )
                    
                    $
                    (5,000
                    )Amortization
                    
                    
                    (34,000
                    )
                    
                    
                    -Net
      operating loss
                    
                    
                    802,000
                    
                    
                    
                    222,000760,000
                    
                    
                    
                    217,000Valuation
      allowance
                    
                    
                    (760,000
                    )
                    
                    
                    (217,000
                    )-
                    
                    
                    
                    -
  F-16
  For the years ended June 30, 2009 and
2008, the following is a reconciliation of the expected income tax benefit
utilizing the statutory Federal tax rate to the income tax benefit reported on
the statement of operations:
  2009
                    
                    
                    2008Tax
      benefit at Federal statutory
                    
                    
                    33
                    %
                    
                    
                    33
                    %State
      and local income taxes, net ofFederal income tax
      benefit
                    
                    
                    6
                    %
                    
                    
                    6
                    %Change
      in valuation allowance
                    
                    
                    (39
                    )%
                    
                    
                    (39
                    )%Total
                    
                    NONE
                    
                    
                    NONE
  10.
              2007
      EMPLOYEE DIRECTOR AND CONSULTANT STOCK
PLAN
  On
September 27, 2007, the Company implemented the 2007 Employee, Director and
Consultant Stock Plan (the “2007 Plan”), under which directors, certain
employees and consultants received stock options and other equity-based awards.
The shareholders of the Company approved the 2007 Plan on August 17,
2007. Stock options under the 2007 Plan are generally granted with an
exercise price equal to 100% of the market value of a share of Common Stock on
the date of the grant, have 10 year terms and vest within one to four years from
the date of the grant. Subject to customary anti-dilution adjustments and
certain exceptions, the Company may issue options and other equity-based awards
up to 1,000,000 shares of common stock of the Company under the 2007
Plan.
  On
December 2, 2008, the Company amended the 2007 Plan to increase the number of
shares of common stock that may be issued under the 2007 Plan from 1,000,000 to
4,000,000 shares.
  On
October 31, 2007, the Company entered into non-qualified stock option agreements
with certain of its employees, directors, officers and consultants (“Eligible
Participants”) pursuant to its 2007 Plan, whereby the Company issued
options to purchase an aggregate of 450,000 shares of its Common Stock,
valued at $38,970 (“Options”). The Options were issued in connection with
services provided to the Company by the Eligible Participants. The Options are
exercisable through October 31, 2011 at $0.09, per share, with one quarter of
the Options granted vesting on October 31, 2008 and an additional one-fourth of
the total Options vesting annually thereafter. The options were valued using a
Black-Scholes model, assuming a risk free interest rate of 4.98%, an expected
term of 4 years and expected volatility of 203.6%.
  The
Options are being amortized to expense over the vesting period. Stock based
compensation was  $19,826 and $13,531 for years ended June 30, 2009
and 2008, respectively.
  The
following table presents a summary of the Company's stock option activity for
the year ended June 30, 2009 and 2008:
  F-17
  Number of
                        Shares
                      
                      
                      Weighted
                        Average Exercise
                        Price
                      
                      
                      Aggregate
                        IntrinsicValue
                      
                      
                      Weighted
                        AverageFair
                        Value
                      
                      
                      Weighted Average
                        RemainingContractual
                        LifeOutstanding,
      July 1, 2007
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Granted
                      
                      
                      450,000
                      
                      
                      
                      0.09
                      
                      
                      
                      
                      
                      
                      
                      0.086Exercised
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Expired
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Outstanding,
      June 30, 2008
                      
                      
                      450,000
                      
                      
                      
                      0.09
                      
                      
                      
                      
                      
                      
                      
                      0.086
                      
                      
                      
                      3.34Granted
                      
                      
                      228,596
                      
                      
                      
                      1.25
                      
                      
                      
                      —
                      
                      
                      
                      0.008Exercised
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Expired
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Outstanding,
      June 30, 2009
                      
                      
                      678,596
                      
                      
                      
                      0.481
                      
                      
                      
                      -
                      
                      
                      
                      0.060
                      
                      
                      
                      4.85Vested
                      
                      
                      112,500Unvested
                      
                      
                      566,096Exercisable,
      June 30, 2009
                      
                      
                      112,500
  As of
June 30, 2009, there was approximately $9,315 of total unrecognized compensation
expense related to unvested stock options granted under the Company's
share-based compensation plan.
  11.
              RESERVED
      SHARES
  As of
June 30, 2009, the Company has reserved shares of common stock, as
follows:
  Options
      under Plan
                    
                    
                    4,000,000Warrants
      under the convertible notes
                    
                    
                    700,000Warrants
      under the asset purchase agreement
                    
                    
                    1,800,0006,500,000
  F-18
  12.      
  On March 1, 2009, the Company entered into a lease for office space for a
term of six months and has a right to renew for an additional six
months.  The lease is payable in monthly installments of
$3,718.
  13.
              ADOPTION OF ACCOUNTING
      POLICIES
  Effective
July 1, 2008, the Company adopted both SFAS 157 and SFAS 159 without any
effect.
  Statement
of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”
(“SFAS 157”), defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements. SFAS 157 applies
to other accounting pronouncements that require the use of fair value
measurements.  A fair value measurement assumes that the transaction to
sell an asset or transfer a liability occurs in the principal market for the
asset or liability, or, in the absence of a principal market, the most
advantageous market for the asset of liability.
  SFAS No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities –
Including an Amendment of FASB Statement 115” (“SFAS 159”), permits an entity to
elect to measure various financial instruments and certain other items at fair
value that are not currently required to be measured at fair value.
 Unrealized gains and losses on items for which the fair value option has
been elected should be reported in earnings at each subsequent reporting
date.
  In
May 2009, the FASB issued Statement of Financial Accounting Standards No. 165
“Subsequent Events” (“SFAS 165”). The objective of SFAS 165 is to establish
general standards of accounting for; and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued.  SFAS 165 sets forth: (a) the period
after the balance sheet date during which management of a reporting entity
should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements; (b) the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial statements; and (c) the disclosures that an entity should
make about events or transactions that occurred after the balance sheet date.
The Company has evaluated subsequent events through October 11, 2009, which the
date the financial statements were issued.
  F-19