##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (MARK ONE)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ending March 31, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from to
 Commission File Number: 000-51418
 Equity Media Holdings Corporation
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    20-2763411
(I.R.S. Employer Identification No.)
 One Shackleford Drive, Suite 400
Little Rock, Arkansas 72211
 (501) 219-2400
 þ o
  o o þ
 o þ




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##### 



EQUITY MEDIA HOLDINGS CORPORATION
INDEX
 PagePART IFINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets  As of March 31, 2007 (unaudited) and As of December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations (unaudited)  Three Months Ended March 31, 2007 and
March 31, 2006
    
    
    5Condensed Consolidated Statements of Common Stockholders Equity (unaudited)  From January 1, 2006
to March 31, 2007
    
    
    6Condensed Consolidated Statements of Cash Flows (unaudited)  Three Months Ended March 31,
2007 and March 31, 2006
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4
and Item 4T. Controls and Procedures
    
    
    24PART IIOTHER INFORMATIONItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 6. Exhibits
    
    
    27Signatures
    
    
    28Exhibit Index
    
    
    29EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
  2




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 EQUITY MEDIA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31, 2007(Unaudited)
    
    
    December 31, 2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    23,845,957
    
    
    $
    1,630,973Certificate of deposit
    
    
    108,831
    
    
    
    107,611Trade accounts receivable, net of allowance for uncollectible accounts
    
    
    3,918,417
    
    
    
    3,893,887Program broadcast rights
    
    
    5,191,455
    
    
    
    5,104,685Investments held in trust
    
    
    10,899,882
    
    
    
    Assets held for sale
    
    
    3,933,793
    
    
    
    12,352,613Other current assets
    
    
    672,696
    
    
    
    811,231Total current assets
    
    
    48,571,031
    
    
    
    23,901,000Property and equipmentLand and improvements
    
    
    2,025,008
    
    
    
    2,200,330Buildings
    
    
    2,696,709
    
    
    
    2,348,475Broadcast equipment
    
    
    24,847,378
    
    
    
    23,354,491Transportation equipment
    
    
    266,157
    
    
    
    232,776Furniture and fixtures
    
    
    3,581,301
    
    
    
    3,337,654Construction in progress
    
    
    236,329
    
    
    
    203,81633,652,882
    
    
    
    31,677,542Accumulated depreciation
    
    
    (13,379,032
    )
    
    
    (12,161,846
    )Net property and equipment
    
    
    20,273,850
    
    
    
    19,515,696Intangible assetsIndefinite-lived assets, netBroadcast licenses
    
    
    72,177,386
    
    
    
    63,064,692Goodwill
    
    
    1,940,282
    
    
    
    1,940,282Total indefinite-lived assets, net
    
    
    74,117,668
    
    
    
    65,004,974Other assetsBroadcasting construction permits
    
    
    925,040
    
    
    
    926,000Program broadcast rights
    
    
    4,198,613
    
    
    
    4,120,753Investment in joint ventures
    
    
    651,344
    
    
    
    681,605Deposits and other assets
    
    
    265,430
    
    
    
    302,630Broadcasting station acquisition rights pursuant to assignment agreement
    
    
    40,000
    
    
    
    Total other assets
    
    
    6,080,427
    
    
    
    6,030,988Total assets
    
    $
    149,042,976
    
    
    $
    114,452,658
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March 31, 2007(Unaudited)
    
    
    December 31, 2006LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesTrade accounts payable
    
    $
    4,024,832
    
    
    $
    1,980,509Accrued expenses and other liabilities
    
    
    3,191,100
    
    
    
    1,455,526Line of credit
    
    
    995,000
    
    
    
    Deposits held for sales of broadcast licenses
    
    
    213,500
    
    
    
    219,024Deferred revenue
    
    
    329,111
    
    
    
    212,299Current portion of program broadcast rights obligations
    
    
    1,896,204
    
    
    
    1,126,580Current portion of deferred barter revenue
    
    
    3,240,655
    
    
    
    3,903,770Current portion of notes payable
    
    
    18,898,845
    
    
    
    3,934,615Current portion of capital lease obligations
    
    
    29,674
    
    
    
    35,267Liability for shares converted to cash
    
    
    10,899,882
    
    
    
    Total current liabilities
    
    
    43,718,803
    
    
    
    12,867,590Non-current liabilitiesNotes payable, net of current portion
    
    
    57,272,097
    
    
    
    53,966,446Capital lease obligations, net of current portion
    
    
    23,773
    
    
    
    25,736Program broadcast rights obligations, net of current portion
    
    
    1,206,795
    
    
    
    1,020,937Deferred barter revenue, net of current portion
    
    
    2,676,265
    
    
    
    2,889,424Due to affiliates
    
    
    1,176,500
    
    
    
    1,390,056Security and other deposits
    
    
    1,024,601
    
    
    
    1,024,601Total non-current liabilities
    
    
    63,380,031
    
    
    
    60,317,200Total liabilities
    
    
    107,098,834
    
    
    
    73,184,790Commitments and ContingenciesMandatorily
redeemable preferred stock  $.0001 par value; 25,000,000 shares authorized;
2,050,519 issued and outstanding
    
    
    10,519,162
    
    
    
    STOCKHOLDERS EQUITYCommon stock  $.0001 par value; 100,000,000 shares
authorized; 38,756,919 and 25,371,332 issued and
outstanding at March 31, 2007 and at December 31, 2006,
respectively
    
    
    3,876
    
    
    
    2,537Additional paid-in-capital
    
    
    125,281,924
    
    
    
    98,915,163Accumulated deficit
    
    
    (93,860,820
    )
    
    
    (57,649,832
    )Total stockholders equity
    
    
    31,424,980
    
    
    
    41,267,868Total liabilities and stockholders equity
    
    $
    149,042,976
    
    
    $
    114,452,658
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EQUITY MEDIA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 Three
Months EndedMarch 31, 2007
    
    

March 31, 2006Broadcast Revenue
    
    $
    6,774,075
    
    
    $
    7,273,901Operating ExpensesProgram, production & promotion
    
    
    1,470,941
    
    
    
    1,320,195Selling, general & administrative
    
    
    8,234,371
    
    
    
    7,709,966Management agreement settlement
    
    
    8,000,000
    
    
    
    Depreciation & amortization
    
    
    944,057
    
    
    
    765,973Rent
    
    
    605,031
    
    
    
    527,434Total operating expenses
    
    
    19,254,400
    
    
    
    10,323,569Loss from operations
    
    
    (12,480,325
    )
    
    
    (3,049,668
    )Other income (expense)Interest income
    
    
    3,875
    
    
    
    6,711Interest expense
    
    
    (2,120,674
    )
    
    
    (1,742,695
    )Gain on sale of assets
    
    
    453,753
    
    
    
    Other income, net
    
    
    160,399
    
    
    
    461,538Losses from affiliates and joint ventures
    
    
    (30,261
    )
    
    
    (235,159
    )Total other (expense), net
    
    
    (1,532,908
    )
    
    
    (1,509,605
    )Loss before provision for income taxes
    
    
    (14,013,233
    )
    
    
    (4,559,274
    )Provision for income taxes
    
    
    
    
    
    
    Net loss
    
    
    (14,013,233
    )
    
    
    (4,559,274
    )Preferred dividend
    
    
    (12,134,943
    )
    
    
    Net loss available to common shareholders
    
    $
    (26,148,176
    )
    
    $
    (4,559,274
    )Weighted average number of common shares outstanding:Basic
    
    
    25,668,789
    
    
    
    25,371,332Diluted
    
    
    25,668,789
    
    
    
    25,371,332Net loss available to common shareholders per share:Basic
    
    $
    (1.02
    )
    
    $
    (0.18
    )Diluted
    
    $
    (1.02
    )
    
    $
    (0.18
    )
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EQUITY MEDIA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS EQUITY
(UNAUDITED)
 Paid-in CapitalCommon Stock

    
    
    in
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Excess of Par
    
    
    Deficit
    
    
    TotalBalance at January 1, 2006, as
restated
    
    
    25,371,332
    
    
    $
    2,537
    
    
    $
    98,915,163
    
    
    $
    (54,421,723
    )
    
    $
    44,495,977Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,228,109
    )
    
    
    (3,228,109
    )Balance at December 31, 2006
    
    
    25,371,332
    
    
    
    2,537
    
    
    
    98,915,163
    
    
    
    (57,649,832
    )
    
    
    41,267,868Retirement of preferred shareholders
    
    
    
    
    
    
    
    
    
    
    (29,937,188
    )
    
    
    (10,062,812
    )
    
    
    (40,000,000
    )Shares issued per consulting agreement
    
    
    43,860
    
    
    
    4
    
    
    
    (4
    )
    
    
    
    
    
    
    Common stock issued as payment of
preferred dividends
    
    
    314,966
    
    
    
    32
    
    
    
    1,615,749
    
    
    
    (1,615,781
    )
    
    
    Preferred shares issued as payment of
preferred dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,519,162
    )
    
    
    (10,519,162
    )Acquisition of net assets of Coconut
Palm Acquisition Corporation
    
    
    12,091,089
    
    
    
    1,209
    
    
    
    50,638,304
    
    
    
    
    
    
    
    50,639,513Charge to
additional paid-in capital for prepaid merger costs
    
    
    
    
    
    
    
    
    
    
    (750,006
    )
    
    
    
    
    
    
    (750,006
    )Common stock portion of settlement to
terminate Arkansas Media Management
Agreement
    
    
    935,672
    
    
    
    94
    
    
    
    4,799,906
    
    
    
    
    
    
    
    4,800,000Net loss for the three months ended
March 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,013,233
    )
    
    
    (14,013,233
    )Balance
at March 31, 2007
    
    
    38,756,919
    
    
    $
    3,876
    
    
    $
    125,281,924
    
    
    $
    (93,860,820
    )
    
    $
    31,424,980
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EQUITY MEDIA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Cash flows from operating activities:Net loss
    
    $
    (14,013,233
    )
    
    $
    (4,559,274
    )Adjustments to reconcile net loss to net cash used by operating activities:Provision for bad debt
    
    
    432,335
    
    
    
    77,170Depreciation
    
    
    913,871
    
    
    
    742,457Amortization of intangibles
    
    
    30,186
    
    
    
    23,516Amortization of program broadcast rights
    
    
    1,706,926
    
    
    
    1,396,424Amortization of discounts on interest-free debt
    
    
    14,634
    
    
    
    Equity in losses of subsidiaries and joint ventures
    
    
    30,261
    
    
    
    235,159(Gain) on sale of equipment
    
    
    (453,753
    )
    
    
    Management agreement settlement
    
    
    4,800,000
    
    
    
    Changes in operating assets and liabilities:Trade accounts receivable
    
    
    (456,865
    )
    
    
    (289,112
    )Deposits and other assets
    
    
    (409,806
    )
    
    
    134,423Accounts payable and accrued expenses
    
    
    1,308,084
    
    
    
    1,126,169Program broadcast rights
    
    
    (1,843,102
    )
    
    
    (2,210,653
    )Program broadcast obligations
    
    
    955,479
    
    
    
    (118,502
    )Security deposits
    
    
    (5,513
    )
    
    
    17,166Deferred income
    
    
    (780,125
    )
    
    
    912,975Net cash used by operating activities
    
    
    (7,770,621
    )
    
    
    (2,512,082
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (1,126,822
    )
    
    
    (677,816
    )Proceeds from sale of property and equipment
    
    
    621,462
    
    
    
    Acquisition of broadcast assets
    
    
    (1,225,000
    )
    
    
    Purchase of certificate of deposit
    
    
    (1,220
    )
    
    
    (924
    )Net advances to affiliates
    
    
    (227,011
    )
    
    
    134,984Net cash used in investing activities
    
    
    (1,958,591
    )
    
    
    (543,756
    )Cash flows from financing activities:Proceeds from notes payable
    
    
    4,750,980
    
    
    
    8,237,314Payments of notes payable
    
    
    (706,081
    )
    
    
    (6,112,457
    )Payments of capital lease obligations
    
    
    (7,556
    )
    
    
    (11,034
    )Recapitalization through merger
    
    
    52,906,853
    
    
    
    Purchase of preferred stock
    
    
    (25,000,000
    )
    
    
    Net cash provided by financing activities
    
    
    31,944,196
    
    
    
    2,113,823Net increase (decrease) in cash and cash equivalents
    
    
    22,214,984
    
    
    
    (942,015
    )Cash and cash equivalents  beginning of period
    
    
    1,630,973
    
    
    
    2,254,236Cash and cash equivalents  end of period
    
    $
    23,845,957
    
    
    $
    1,312,221Supplemental cash flow information:Cash paid during the period for interest
    
    $
    1,859,178
    
    
    $
    1,664,211Supplemental non-cash activities:Issuance of note payable to redeem preferred stock
    
    $
    15,000,000
    
    
    
    Issuance of mandatory redeemable preferred stock to pay accrued preferred
dividends
    
    $
    10,519,162
    
    
    
    Issuance of common stock to pay preferred dividends
    
    $
    1,615,781
    
    
    
    Acquisition of real property through assumption of debt
    
    $
    205,347
    
    
    
    Charge to stockholders equity for prepaid merger costs
    
    $
    750,006
    
    
    
    Assumption
of net liabilities of Coconut Palm Acquisition Corporation
    
    $
    (2,267,340
    )
    
    
    
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EQUITY MEDIA HOLDINGS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  ORGANIZATION AND BUSINESS OPERATIONS;
     NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Use of estimates:
 Cash and cash equivalents:
 Barter and trade transactions:
 New Accounting Pronouncements:
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NOTE 3  MERGER TRANSACTION
      NOTE 4  ARKANSAS MEDIA SETTLEMENT TRANSACTION
  
    
    EBCs payment to Actron, Inc. (a controlling interest in which is owned by Larry
Morton and Gregory Fess) of $533,000 in settlement of EBCs obligations under a
Promissory Note to Actron, Inc. dated January 1, 2003, including accrued
interest through March 30, 2007. This obligation relates to EBCs purchase of Central
Arkansas Payroll Company in 2003;
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
    
    The agreement of Max Hooper and Gregory Fess to resign as directors of Kaleidoscope
Foundation, a nonprofit corporation, and a related agreement that Larry Morton may
remain as a director of Kaleidoscope Foundation provided his duties do not conflict with
those owed to the Company;
    
    The purchase by EBC from Arkansas Media of one low-power broadcast station in
Oklahoma City, Oklahoma and two low-power broadcast stations in Little Rock, Arkansas,
for a combined purchase price of $1,300,000;
    
    EBCs purchase of an office building in Fort Smith, Arkansas from Arkansas Media,
which prior to the settlement, the Company leased from Arkansas Media for use as its
local sales office. The purchase price was approximately $268,000; and
    
    The cancellation of a management agreement, dated June 1, 1998, between Arkansas
Media and EBC in exchange for the following: (i) payment to Arkansas Media of (a)
$3,200,000 in cash, and (b) 640,000 newly issued shares of EBCs Class A common stock
(valued at $4,800,000); and (ii) payment of all accrued management fees and commissions
through the closing date of the Merger Transaction. EBC is also required to reimburse
Arkansas Media, Morton, Fess and Hooper for all expenses incurred in negotiating and
consummating the settlement agreement. In connection with the cancellation of the
management agreement, the Company recorded a charge of $8,000,000 to operations during
the quarter ended March 31, 2007. As of March 31, 2007, there is a balance of $95,209
due Arkansas Media in connection with management fees and commissions incurred during
the quarter ended March 31, 2007.
 NOTE 5  ASSETS HELD FOR SALE
   NOTE 6  INVESTMENT IN JOINT VENTURES
  OwnershipPercentage
    
    
    March 31, 2007
    
    
    December 31, 2006Little Rock TV 14, LLC
    
    
    50.0
    %
    
    $
    23,022
    
    
    $
    23,282Spinner Network Systems, LLC
    
    
    33.0
    %
    
    
    628,322
    
    
    
    658,323$
    651,344
    
    
    $
    681,605
  NOTE 7  LINE OF CREDIT
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NOTE 8  NOTES PAYABLE
   NOTE 9  STOCKHOLDERS EQUITY
      Founding
Stockholders Registration Rights
  NOTE 10  MANDATORILY REDEEMABLE SERIES A CONVERTIBLE NON-VOTING PREFERRED STOCK
  11




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Univision Registration Rights
  NOTE 11  SHARES HELD IN ESCROW
  NOTE 12  STOCK OPTION PLANS
 2007 Stock Incentive Plan
  12




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Prior Plans
  Accounting for Stock Option Plans
    NOTE 13  INCOME TAXES
  13




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NOTE 14  COMMITMENT AND CONTINGENCIES
 Stock options to underwriters
  Employment Agreements
  Litigation
     14




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EBC Dissenting Shareholders
  Obligations
  NOTE 15  RELATED PARTY TRANSACTIONS
    March 31,
    
    
    December 31,2007
    
    
    2006Arkansas Media, LLC and affiliates
    
    $
    (95,209
    )
    
    $
    (86,462
    )Actron, Inc.
    
    
    
    
    
    
    (526,092
    )Univision Communications, Inc.
    
    
    (1,055,759
    )
    
    
    (726,003
    )Little Rock TV 14, LLC
    
    
    (67,622
    )
    
    
    (67,622
    )Other
    
    
    42,090
    
    
    
    16,123Due from (to) affiliates
    
    $
    (1,176,500
    )
    
    $
    (1,390,056
    )
   Management Services Agreement
  15




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Univision Affiliation Agreement
  16




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following is a discussion of the Companys financial condition and results of operations
comparing the interim quarters ended March 31, 2007 and March 31, 2006. You should read this
section together with the Companys consolidated financial statements including the notes to those
financial statements, as applicable, for the years and periods mentioned above.
 Overview
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
    
    acquiring syndicated programming;
    
    improving technical facilities;
    
    increasing and improving cable distribution;
    
    hiring new personnel; and
    
    marketing our television stations to viewers.
  RESULTS OF OPERATIONS  THREE MONTHS ENDED MARCH 31, 2007 COMPARED TO THREE MONTHS ENDED MARCH 31, 2006
 Revenue
  For the Three Months Ended March 31,%2007
    
    
    2006
    
    
    Change
    
    
    Change(In thousands, except percentages)Broadcast RevenuesLocal
    
    $
    2,405
    
    
    $
    2,962
    
    
    $
    (558
    )
    
    
    (18.8
    )%National
    
    
    1,987
    
    
    
    2,077
    
    
    
    (90
    )
    
    
    (4.3
    )Other
    
    
    247
    
    
    
    410
    
    
    
    (163
    )
    
    
    (39.7
    )Trade & Barter Revenue
    
    
    2,136
    
    
    
    1,825
    
    
    
    311
    
    
    
    17.0Total Broadcast Revenue
    
    $
    6,775
    
    
    $
    7,274
    
    
    $
    (500
    )
    
    
    (6.9
    )%
   18




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Results of Operations
  For the Three Months Ended March 31,%2007
    
    
    2006
    
    
    Change
    
    
    Change(In thousands, except percentages, net income per share and weighted average shares)Broadcast Revenue
    
    $
    6,774
    
    
    $
    7,274
    
    
    $
    (500
    )
    
    
    (6.9
    )Program, production & promotion
    
    
    1,471
    
    
    
    1,320
    
    
    
    151
    
    
    
    11.4Selling, general & administrative
    
    
    8,234
    
    
    
    7,710
    
    
    
    524
    
    
    
    6.8Management agreement settlement
    
    
    8,000
    
    
    
    
    
    
    
    8,000
    
    
    
    100.0Depreciation expense
    
    
    944
    
    
    
    766
    
    
    
    178
    
    
    
    23.2Rent
    
    
    605
    
    
    
    527
    
    
    
    78
    
    
    
    14.7Operating (loss)
    
    
    (12,480
    )
    
    
    (3,049
    )
    
    
    (9,431
    )
    
    
    46.9Interest income
    
    
    4
    
    
    
    7
    
    
    
    (3
    )
    
    
    42.9Interest Expense, net
    
    
    (2,121
    )
    
    
    (1,743
    )
    
    
    (378
    )
    
    
    21.7Gain on sale of assets
    
    
    454
    
    
    
    0
    
    
    
    (454
    )
    
    
    100Other income, net
    
    
    130
    
    
    
    226
    
    
    
    (96
    )
    
    
    (42.5
    )(1,533
    )
    
    
    (1,510
    )
    
    
    (23
    )
    
    
    1.5(Loss) before income taxes
    
    
    (14,013
    )
    
    
    (4,559
    )
    
    
    (9,454
    )
    
    
    207.4Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss)
    
    
    (14,013
    )
    
    
    (4,559
    )
    
    
    (9,454
    )
    
    
    207.4Preferred dividend
    
    
    (12,135
    )
    
    
    
    
    
    
    (12,135
    )
    
    
    100.0Net loss available to common shareholders
    
    
    (26,148
    )
    
    
    (4,559
    )
    
    
    21,589
    
    
    
    473.5Basic net (loss) per common share
    
    $
    (1.02
    )
    
    $
    (0.18
    )
    
    $
    (0.84
    )
    
    
    466.7Basic shares used in earnings per share
calculation
    
    
    25,668,789
    
    
    
    25,371,332
 Program, production and promotion expenses
  19




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##### Table of Contents



Selling, general and administrative
  Depreciation and Amortization
  Rent
  Interest Expense, net
  Gain on sale of assets
  Other income, net
  Liquidity and Capital Resources
 General
  As ofMarch
31,   2007
    
    

December
31,2006(In thousands)Cash and cash equivalents
    
    $
    23,846
    
    
    $
    1,631Long term debt including current portion and lines of credit
    
    $
    77,220
    
    
    $
    57,962Available credit under senior credit agreement
    
    $
    2,258
    
    
    $
    5,440
   20




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##### Table of Contents



Sources and Uses of Cash
 For the Three MonthsEnded March 31,2007
    
    
    2006(In thousands)Net cash used by operating activities
    
    $
    (7,771
    )
    
    $
    (2,512
    )Net cash used by investing activities
    
    
    (1,959
    )
    
    
    (544
    )Net cash provided by financing activities
    
    
    31,944
    
    
    
    2,114Net decrease in cash and cash equivalents
    
    $
    22,214
    
    
    $
    (942
    )
 Operating Activities
  Investing Activities
  Financing Activities
  Income Taxes
  Debt Instruments and Related Covenants
  21




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##### Table of Contents



Inflation
  Off-Balance Sheet Arrangements
  Related Party Transactions
      Critical Accounting Policies and Estimates
   22




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##### Table of Contents



Recent Accounting Pronouncements
   Forward-Looking Statements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 General
  Interest Rates
  23




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##### Table of Contents



ITEM
4 and ITEM 4T. CONTROLS AND PROCEDURES
   24




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##### Table of Contents



PART IIOTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
     
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 IPO
  Use of IPO Proceeds
  25




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##### Table of Contents



(in thousands)IPO proceeds held in trust
    
    $
    65,700,672Cash portion of purchase price
    
    
    25,000,000Fees to underwriter
    
    
    1,250,000Conversion of common stock
    
    
    10,899,882Cash portion of Management Settlement Agreement
    
    
    5,096,551Professional Fees, Legal, Accounting, and Printing Fees
    
    
    1,900,000Funds applied to working capital and general corporate expenses
    
    
    21,554,239
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              26




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##### Table of Contents



ITEM 6. EXHIBITS
  31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
or 15d-14(a) of the Securities Exchange Act of 1934, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
or 15d-14(a) of the Securities Exchange Act of 1934, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)
or 15d-14(b) and 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)
or 15d-14(b) and 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 27




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##### Table of Contents



SIGNATURES
  EQUITY MEDIA HOLDINGS CORPORATIONDate: May 21, 2007
    By:
    /s/ Larry MortonChief Executive Officer and President(principal executive officer) Date: May 21, 2007
    By:
    /s/ Glenn CharlesworthInterim Chief Financial Officer(principal financial and accounting officer) 28




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##### Table of Contents



EXHIBIT INDEX
 31.1
    
    Certification of Chief Executive Officer Pursuant to
Rule 13a-14(a) or 15d-14(a) of the Securities Exchange
Act of 1934, As Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to
Rule 13a-14(a) or 15d-14(a) of the Securities Exchange
Act of 1934, As Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to
Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to
Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 29