UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




AMENDMENT
NO. 1 TO  FORM 10-K





(Mark
One)





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




For
the fiscal year ended January 31, 2009




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




For the
transition period from ___________ to __________




Commission
File No. 000-28881














MEGA
MEDIA GROUP, INC.


(Name
of small business issuer in its charter)




NEVADA
                  88-0403762(State
      or other jurisdiction of
                    incorporation
      or organization)
                  (IRS
      Employer Identification
No.)




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





(718)
947-1100


(Registrant’s
telephone number, including area code)




Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class registered:
                            Name
      of each exchange on which registered:None
                            NoneSecurities
      registered under Section 12(g) of the Exchange Act:Common
      Stock, par value $.001
                              (Title
      of
class)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes xNo o





Indicate
by check mark whether the registrant 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 (§ 229.405 of this
chapter) during the preceeding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes o                      No o












Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) 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.  o


Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act. Yes oNo x




Indicate
by check mark whether the registrant is a large accelerated filer, an
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.




Large
      accelerated filer
             ̈
            Accelerated
      filer
             ̈Non-accelerated
      filer
             ̈
            Smaller
      reporting company
            x(Do
      not check if a smaller reporting company)




Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of May 15, 2009, was: $1,865,413




Number of
shares of the registrant’s common stock outstanding as of May 15, 2009 was:
304,753,677





Documents
Incorporated by Reference: None.













TABLE
OF CONTENTS





PAGEPART
      IITEM
      1.
                    
                    Business
                    
                    1ITEM
      1A.
                    
                    Risk Factors
                    
                    4ITEM
      2.
                    
                    Properties
                    
                    4ITEM
      3.
                    
                    Legal Proceedings
                    
                    4ITEM
      4.
                    
                    Submission of Matters to a Vote of Security
      Holders
                    
                    5PART
      IIITEM
      5.
                    
                    Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
                    
                    5ITEM
      6.
                    
                    Selected Financial Data
                    
                    7ITEM
      7.
                    
                    Management’s Discussion and Analysis of Financial Condition and
      Results of Operation
                    
                    7ITEM
      7A.
                    
                    Quantitative and Qualitative Disclosures About Market
      Risk
                    
                    9ITEM
      8.
                    
                    Financial Statements and Supplementary Data
                    
                    10ITEM
      9.
                    
                    Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure
                    
                    35ITEM
      9A(T).
                    
                    Controls and Procedures
                    
                    35ITEM
      9B.
                    
                    Other Information
                    
                    35PART
      IIIITEM
      10.
                    
                    Directors, Executive Officers and Corporate
      Governance
                    
                    35ITEM
      11.
                    
                    Executive Compensation
                    
                    38ITEM
      12.
                    
                    Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
                    
                    39ITEM
      13.
                    
                    Certain Relationships and Related Transactions, and Director
      Independence
                    
                    40ITEM
      14.
                    
                    Principal Accounting Fees and Services
                    
                    41PART
      IVITEM
      15.
                    
                    Exhibits, Financial Statement Schedules
                    
                    42SIGNATURES
























PART I




ITEM 1.DESCRIPTION OF BUSINESS.





Overview





Mega
Media Group, Inc. (“we”, “MMG” or the “Company”) was incorporated in New
York State on February 3, 2004. In June 2007, we went public through a
reverse merger and current trades on the Over-The-Counter Bulletin Board
(“OTCBB”) under the symbol MMDA. We are a multi-media company whose core
businesses are mainstream radio broadcasting, entertainment branding, music
recording and social media.  Our principal executive office and
studios are located at 1122 Coney Island Avenue, Suite 210, Brooklyn, New
York 11230. Our office number is (718) 947-1100. Our web address is
www.megamediagroup.com.





On
February 11th 2008, we launched a new Rhythmic Top 40 radio station, WNYZ
Pulse 87.7FM (“Pulse 87”). Effective April 1, 2009 Pulse 87 is rated under
Arbitron’s Portable People Meter (PPM) electronic ratings system, which became
NY’s official radio advertising currency on October 8th, 2008.  The
other NY Top 40 CHR radio stations are Z100 WHTZ, which in 2008, generated $49
mil in revenue and WKTU over $25 million.





Pulse 87
has already secured advertising orders from various national and local brands
included but not limited to:  1800-Flowers, Proactive Solutions, Long
Island University, AXA Group, Cash for Gold, Major Word Automotive, New York
City Police Department, Pepsi, LIVENATION, Jive Records Ultra Records, JRA Music
Group, NY Minute Group, Dr. Dello Russo Laser Eye Vision, NYC Department of
Corrections Recruitment and T-Mobile, Plaza Automall, and Fox
Networks





Leveraging
the strength of the Pulse 87 brand in NY, we have also signed
Washington DC market and will start broadcasting by June 1, 2009. Our
strategy is to partner with existing frequencies and provide content with
revenue sharing with frequency owners as well as lease frequency on long term
basis. We are aggressively pursuing immediate expansion into other
markets.  We believe our programming format will make a significant
impact in these markets.  In addition, MMG will actively pursue
partnership agreements for syndication of their programming into various
ancillary markets.  Immediate expansion of the Pulse brand into other
major markets will allow us to tailor custom advertising packages for our
clients, and provide a far grater reach and audience demographic, generating a
far greater impact over our competitors.





Given
our vast exposure and foothold in mainstream media, in 2Q 2009,
we will launch a new division to further promote and expand the Pulse FM
brand.  MUSICiKON will be a unique internet social networking
environment where aspiring music artist and fans can unite, collaborate and make
a real impact in launching a mainstream artist, by participating in various
music contests.  The winner of these contests will be given
significant market exposure by having their music played on mainstream radio
through our radio division.  In addition to promoting the Pulse
87 brand, MUSICiKON will generate revenue from website advertising using
in-house developed systems and 3rd party campaigns.





We are
also the parent company of a Music Recording Division, a Celebrity &
Corporate Branding Division and offers full service Audio and Video production
studios.  We also believe MUSICiKON will generate revenue for these
divisions through artist management, master recording rights and distribution
deals.





Company
Mission





Our
mission is to become a premier player in independent entertainment and media in
the United States.  We will achieve this goal by offering unique,
cutting edge radio programming with an eye toward immediate expansion beyond the
New York market, and by servicing our current and future, branding clients,
artists, and advertisers with personalized attention from our experienced staff
of professionals.





Business
Focus





Mainstream Radio
Programming





·
            PULSE
      87.7 FM – WNYZ-LP





We
recently renegotiated a ten year lease for to WNYZLP- 87.7FM serving New York,
New Jersey and Connecticut. New York being the largest radio market in the
country, generating in excess of $600,000,000 gross annually.





Our
planned launch of Pulse 87.7FM took place in February of 2008 featuring A
Rhythmic top 40 music format. The Pulse format is rhythmic top 40 with a dance
element. This format plays today’s hits from artists like Britney Spears, Justin
Timberlake and Madonna but with original re-mixes by Pulse giving a unique sound
not heard elsewhere.  The station logo is “New York’s Best Dance
Station” however programming also includes – talk radio, music programming and
the news, including national and international headlines, lifestyle and
entertainment. Another staple of the programming is live broadcasting from
in and around New York City. The talk show guest list ranges from celebrities
and entertainers to politicians and governmental officials. All broadcasting is
live, with listener participation and call-in segments. Our portable studio
and road crew will be on the road daily on the streets of New York City,
interacting with the audience and producing entertaining live segments from the
city’s hotspots.







-1-






Based on
the first set of ratings released by Arbitron, the station has taken the 29th
overall position in the market. Ratings are also broken down by day parts and
Pulse87 has matched or beaten ratings in certain Day parts for Flagship stations
like WFAN, WBLI, WRXP, WBAB, WALK, WEPN, these station showed annual billing for
2007 in the range of $7 to $35 million dollars.





In April
2009, we signed a multi-year air lease agreement for the WDCN-LP 87.7 frequency
with Signal Above, LLC. Under the terms of the agreement, revenue will be shared
between the parties with certain minimum lease fees paid by
MMG.  Pulse87 will start broadcasting on WDCN during the 2nd quarter
of 2009 to the Washington, D.C. market.





Pulse 87.7
FM reached a total weekly audience of 705,000 in the first week of April; this
number increased from 671,200 in the month of March.





·
            OUR
      APPROACH TO RADIO ADVERTISING





We
broadcast a new type of radio program with more music and entertainment. 
The result is a better listening environment and better advertising
environment.  Advertisers receive more exposure, better recall and the
comfort of knowing their spot will be heard and remembered.  Our team of
copywriters and producers will come up with effective 15 seconds spots for our
advertisers.  Small and medium-sized firms have sent their return on
investment skyrocket by implementing 15 second spots.  This allows for
added media money to be invested in additional spots or weeks.





·
            RATINGS





On April
1, 2009 we announced that we signed a multi-year contract with Arbitron Inc.,
for station-specific custom Portable People Meter listening estimates for “Pulse
87 FM”. Arbitron provides ratings for Radio Stations across the country. These
ratings are the basis for advertising dollars spent by brands and advertising
agencies. For the first week in April 2009 our weekly audience estimates were
measured at 705,000. The Full ratings for April will be released on May 20, 2009
and we anticipate substantial increase in advertising revenue from major local
and national brands.





·
            EVENTS
      AND CONCERTS





Have been
a large income stream for radio stations and create exposure for the awareness
of the brand. Income is typically generated from corporate sponsors and ticket
sales.





·
            PULSE87.COM





Pulse87.com
is the website portal designed to reflect the radio station. The website is
registration driven and offers listeners news, live streaming, programming and
personality information, ability to purchase music they hear on air and banners
for advertising space. The website has over 180,000 visitors per month, 19
million hits and over 336,316,000 Live Steaming Sessions for the month of March,
we have seen a 215% increase in traffic in the first quarter of 2009. Our site
has successfully surpassed traffic  of WKTU or biggest competitor in
the New York Market. Pulse87.com recently broke the top 100,000 websites in
the world as measured by independent engine alexa.com.  Streaming is
also available through our I-Phone application, as of May 8, 2009 we had 25,021
downloads of the I-Phone Application.





MUSICiKON





MUSICiKON.COM
is currently under development and is planned for launch in the second quarter
of 2009.  MUSICiKON will be a Social Networking website with a
competitive twist for striving undiscovered artists.





·
            BACKGROUND
      AND PHILOSPOHY FOR MUSICIKON





Social
Networks are offering an interactive, user-submitted network of friends,
personal profiles, blogs, groups, photos, music and videos for teenagers and
adults internationally.  Myspace.com and Facebook.com are in the top
10 most visited sites in the world.


American
Idol has become the most watched show on television. The concept is based on
audience participation with over 30 million viewers for the final shows. It is a
proven concept for audience based participation and music artists branding. The
show producers own the rights to all artists and different revenue stream for
years after the contestants finish the shows.





Our
research has showed that social networks combined with aspiring artists and
media can yield high ratings and traffic. MySpace which is the largest place for
aspiring artists to brand themselves is limited because there is no real media
exposure and aspiring artists have to compete for space with well known acts.
Aspiring artists who have tens of thousands of friends still have very little
chance of getting radio play for their music which can result in the break they
so much need. Over the four months that Pulse87 has been broadcasting we have
received thousands of request and submissions from new artists requesting to
play their music however it is impossible to review these entries and without
research, playing new artists music can be very risky for listenership. But
on few occasions that we have done this we found that these aspiring artists
create immense publicity and awareness of the station, i.e. Exit 59 and Velvet
Code.  From one artist the station can gain hundreds of listeners. Now
this number multiplied by many artists can result in hundreds of thousands of
new listeners and a unique listener loyalty.






-2-





·
            MUSICIKON
      DESCRIPTION





The site
will be built in to Pulse87.com and will be a destination for new artists to
create profiles upload music, photos and videos. There will also be a fan
section which will be limited to profiles. Voting will take place for all
submitted materials by artists. The winner will be brought on air for interviews
and the winning song  will be put into a one week rotation on the
station.





The
Revenue from MUSICiKON will be generated from online advertising, Music
downloading and the ownership of artists thru recordings, touring and
branding.





We
anticipate the positive effect of MUSICiKON to have several aspects as
follows:





1.  Ratings
and website traffic - once artists register and upload their profiles they
will be the best advertising for the site and station. We anticipate that each
artists will use many resources to get votes, they will contact friends,
relatives and use their current other social network pages to drive traffic to
MUSICiKON.com and pulse87.com..


2.  After
a month of webcast’s from the Pulse87 studios we will broadcast on-location live
from different venues thus creating event revenue and brand
sponsorship.





3.  The
agreements signed by these artists for management will allow us to possibly tap
into revenue streams from producing the acts, concerts or placing them with
major labels for a fee. Based on today’s recording industry troubles major
record labels would jump to sign acts that have an established awareness,
following and radio play.





4.  The
new website traffic will also increase online advertising revenue.





·
            REVENUE
      STREAMS





We will
generate income from Digital Downloads, Banner and impression advertising, and
thru artist’s management thru Skeleton key Entertainment.





Celebrity and Corporate
Branding





Our branding
division has worked with celebrities and emerging artists, identifying
opportunities to expand the individual’s “brand” into ancillary
markets. Our management team anticipates to relaunch these activities of
this division in 2009.  .





Ancillary
Businesses





In
addition to its core businesses of mainstream radio programming and branding, we
also have a recorded music division that provides all services of a
fully-functioning record label, including funding, artist development, recording
services (with access to our recording studios), promotions, marketing, artwork
creation and retail distribution. DVD projects are also produced in-house in
Mega Media's video facilities. Our recording and editing studios in Brooklyn
provide a comfortable and functional setting for artists to create and record
their art. Our goal is to acquire both established and new recording artists,
balancing risk by tapping into the existing fan base of established artists
while investing in unknown artists who management believes have the potential to
be the superstars of tomorrow.





We have a
multi-room, state-of-the-art, facility located in the heart of Brooklyn, just
Minutes outside of Manhattan. The Studio features a 96 channel Euphonix console,
extensive outboard gear custom Dynaudio Munro monitors, and a large isolation
booth for the ultimate accommodations in live recording. Our studio
personnel are experienced, professional and helpful. The studios are
fully-equipped to handle projects from commencement to conclusion, and provide
the perfect environment for artists signed to the recorded music division to
create their product. Having everything handled in-house enables MMG to control
recording costs, watch budgets and closely monitor the development of its
artists. In addition, the studios will be made available for third-party
projects in an effort to maximize the income-earning potential of the studios.
We will actively market its facilities to independent and major record
labels.





We also
have a full-service film studio with a virtual 3D chromatic room and a 4A
virtual studio.  This studio is utilized to produce music videos for
recording artists and multimedia projects.  In addition to being used
for music-based projects, we produce TV commercials, infomercials, and
other video-related products.  We have a talented and dedicated staff
of full-time animators, visual effect designers and editors.  The
virtual 3D studio allows MMG to produce video products at a fraction of the cost
of traditional films. Most of the video products filmed today require the use of
large, physical sets. This is costly and time-consuming, since actual physical
labor is required along with permits, adequate space on-site, and extensive
personnel. We can create life-like virtual sets by using this new
technology without the hassles of traditional filming. This allows for
faster production time, which ultimately translates into dollars
saved.





·
            ANCILLARY
      BUSINESSES





Our
Ancillary Businesses are used to support our overall business model by
integrating various music and entertainment services into one complete MMG
product and service offering.






-3-





Social Media





We
promote our brands through various social media platforms as
follows:





http://twitter.com/pulse87fm


http://www.myspace.com/pulse87fm


http://www.facebook.com/group.php?gid=12387940411


http://www.youtube.com/user/megamediagroup





Competition





Our
competition is Clearchannel, CBS, Emmis Communications.





Intellectual
Property and Other Proprietary Rights





Most of
our print and radio content and original programming are proprietary and
protected. We have copyrights in songs secured through our music publishing
division and copyrights in master recordings secured through our recorded music
divisions. We also expect that the Mega Media and Skeleton Key brands will have
value beyond corporate identities which will allow us to engage in merchandising
activities.





Government
Regulation




There are
no direct governmental approvals required for our products and services other
then broadcasting policies under the FCC




Employees




We
currently have over 22 fulltime and 21 art time employees and independent
contractors.





ITEM 1A. RISK FACTORS.





Not
applicable because we are a smaller reporting company.




ITEM 2. DESCRIPTION OF PROPERTY.





We
presently maintain our principal executive offices and radio, studio and
technical personnel at 1122 Coney Island Avenue, Suite 210, Brooklyn,
NY 11230.  The company owns much of its studio and radio
broadcasting equipment and leases the remainder.





ITEM 3. LEGAL PROCEEDINGS.




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





As
disclosed in our Form 8-K filed on May 18, 2009, on May 13, 2009, we entered
into a Settlement Agreement and Mutual General Release (the “Settlement
Agreement”) with Golden State Equity Investors, Inc., f/k/a Golden Gate
Investors, Inc., a California corporation (“GSEI”) to settle that certain
lawsuit filed by GSEI against the Company on March 16, 2009 in the Superior
Court of the State of California, County of San Diego.  Under the
Settlement Agreement, we agreed to pay GSEI an aggregate of $250,000 in
installments from June 1, 2009 to November 1, 2010 (the “Settlement Amount”),
and in return GSEI has agreed to dismiss the lawsuit.





However,
in the event that (i) the Company has satisfied all of the payments through
February 1, 2010, for an aggregate payment amount of $125,000, on or prior to
February 1, 2010, and (ii) an Event of Default has not occurred under the
Settlement Agreement on or prior to February 1, 2010, then the Settlement Amount
shall be deemed paid in full. Should any payment described above not be timely
received by GSEI, such that an Event of Default exists under the Settlement
Agreement, the outstanding Settlement Amount shall accrue interest from the date
hereof at a rate of 9.75% per annum





As
disclosed in our Form 8-K filed on March 16, 2009, in this lawsuit, GSEI alleged
that the Company was liable for breach of certain investment agreements by
failing and refusing to (i) pay to GSEI the interest prepayment required under
the terms of certain debenture, and (ii) deliver shares of common stock of the
Company in connection with a conversion of the debenture. The Settlement
Agreement will settle approximately $511,966.53 plus accrued interest. It also
terminates such investment agreements and releases all liabilities of the
Company under the investment agreements.





As
disclosed in our Form 8-K filed on March 16, 2009, on February 27, 2009, the
Company and Aleksandr Shvarts, President and CEO of the Company (collectively,
the “Third-Party Defendants”), were served with a third-party summons and
counterclaim filed by Eric Schwartz, the original defendant (the “Third-Party
Plaintiff”).  The counterclaim is grounded in the Third-Party
Defendants’ failure to repay certain loan agreement. The Third-Party Plaintiff
alleged: (i) fraudulent representations against the Third-Party Defendants
stemming from alleged representations that common stock of the Company will be
issued to plaintiff when the Company becomes a public company and said shares of
common stock will satisfy the amount owed under the loan agreement, and (ii)
that the Company has been unjustly enriched in the amount of not less than
$425,000 by virtue of its receipt of $425,000 from plaintiff. The case was filed
in the Supreme Court of the State of New York, County of New York. The
Third-Party Plaintiff seeks indemnification of not less than $1,000,000 from the
fraudulent representations and not less than $425,000 plus accrued interest
because of unjustified enrichment, all in the sum of not less than $1,425,000.
We deny the allegations made in the complaint and have retained Nesenoff &
Miltenberg, LLP as our legal counsel in this matter.






-4-







As
disclosed on our Form 8-K filed on October 14, 2008, on October 7, 2008, we, the
Company, and our CEO Aleksandr Shvarts (collectively, the “Defendants”) were
served with a summons and complaint filed by AJW Partners, LLC, AJW Offshore,
Ltd., AJW Qualified Partners, LLC, and New Millennium Capital Partners II, LLC
(collectively, the “Plaintiffs”).  The complaint alleged that the
Company has failed to make payments due on a series of notes from 2004 to 2006
issued by the Company, and failed to make payments of interest due on these
notes, and other unlawful conducts by the Company. The case was filed in the
Supreme Court of the State of New York, County of New York. The Plaintiffs seek
all sums due from the notes and other agreements, prejudgment interest,
compensatory damages, punitive damages, and attorneys' fees to be in excess of
$650,000. The Company and Mr. Shvarts deny the allegations made in the complaint
and intend to vigorously contest the allegations. We believe that we did not
enter into any of the above referenced notes with the Plaintiffs and none of the
notes or related legal documents were signed or executed on behalf of the
Company or our CEO.  We deny the allegations made in the complaint and have
retained Nesenoff & Miltenberg, LLP as our legal counsel in this
matter.





As
disclosed in our Form 8-K filed on November 21, 2008, on September 3, 2008, we
were served with a Notice of Motion for Summary Judgment in Lieu of Complaint
filed by David Kokakis (“Plaintiff”).  On November 11, 2008, the
Company settled this litigation and entered into a settlement agreement (the
“Stipulation of Settlement”) with Plaintiff. The Company signed two (2)
confessions of judgment (the “Confession of Judgment”) which is in favor of
Plaintiff.  Pursuant to the first Confession of Judgment, in the event
of default of the Stipulation of Settlement, the Company agrees to pay Plaintiff
a total of $388,810, consisting of a principal amount of $329,500 plus accrued
interests of $59,310. Pursuant to the second Confession of Judgment, in the
event of default of the Stipulation of Settlement, the Company agreed to pay
Plaintiff deferred compensation in the sum of $125,962. The second claim would
be the basis of a second action brought by Plaintiff against the Company, which
Plaintiff was about to commence. If the Company makes all of the payments, which
is $329,500 in total, pursuant to the payment schedule, the two (2) Confessions
of Judgment will not be filed and will be waived and returned to the Company’s
attorney. Failing to make the payments, or failing to pay on time, as
aforedescribed, will be deemed a default and permit Plaintiff’s counsel to file
both Confessions of Judgment and Affidavits of Confession of Judgments with the
Clerk of the Court without further notice.





On
October 9, 2008, the Company and Echo (collectively, the “Defendants”) were
served with a summons and complaint filed by Eric Schwartz, the former Director
and Vice President of the Company until January 27, 2008
(“Plaintiff”).  The complaint alleged that during Plaintiff’s
employment by the Company and Echo, Plaintiff is owed the sum of not less than
$119,621 plus accrued interest with respect to the unpaid base salary for 2006,
2007 and January 2008. The case was filed in the Supreme Court of the State of
New York, County of Kings. The plaintiffs seek all sums for the unpaid base
salary plus interest, compensation, liquidated damages equal to 25% of the total
amount of wages due, attorneys’ fees, and a sum not exceeding $50 for expenses
which may be taxed as costs, all in the sum of not less than $149,526.25. The
Company and Echo deny the allegations made in the complaint and intend to
vigorously contest the allegations. We deny the allegations made in the
complaint and have retained Nesenoff & Miltenberg, LLP as our legal counsel
in this matter and have filed a counterclaim against Eric Schwartz.





ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.




None.





PART II




ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.




Market
Information





Our
common stock has traded on the OTC Bulletin Board system under the symbol “MMDA”
since May 9, 2007.  The following table sets forth the range of high and
low bid quotations for each quarter within the last fiscal year. These
quotations as reported by the OTCBB reflect inter-dealer prices without retail
mark-up, mark-down, or commissions and may not necessarily represent actual
transactions.




High
                          
                          
                          LowMay
      9, 2007 to July 31, 2007
                          
                          $
                          0.75
                          
                          
                          $
                          0.30August
      1, 2007 to October 31, 2007
                          
                          $
                          0.65
                          
                          
                          $
                          0.31November
      1, 2007 to January 31, 2008
                          
                          $
                          0.50
                          
                          
                          $
                          0.11February
      1, 2008 to April 30, 2008
                          
                          $
                          0.41
                          
                          
                          $
                          0.11May
      1, 2008 to July 31, 2008
                          
                          $
                          0.15
                          
                          
                          $
                          0.03August
      1, 2008 to October 31, 2008
                          
                          $
                          0.05
                          
                          
                          $
                          0.005November
      1, 2008 to January 31, 2009
                          
                          $
                          0.03
                          
                          
                          $
                          0.0015February
      1, 2009 to April 30, 2009
                          
                          $
                          0.02
                          
                          
                          $
                          0.005




The
source of these high and low prices was the OTC Bulletin Board. These quotations
reflect inter-dealer prices, without retail mark-up, markdown or commissions and
may not represent actual transactions. The high and low prices listed have been
rounded up to the next highest two decimal places.






-5-




The
market price of our common stock is subject to significant fluctuations in
response to variations in our quarterly operating results, general trends in the
market, and other factors, over many of which we have little or no control. In
addition, broad market fluctuations, as well as general economic, business and
political conditions, may adversely affect the market for our common stock,
regardless of our actual or projected performance.





Holders




As of May
8, 2009 in accordance with our transfer agent records, we had
614 recordholders of our Common Stock.





Dividends




Holders
of our common stock are entitled to receive dividends if, as and when declared
by the Board of Directors out of funds legally available therefore. We have
never declared or paid any dividends on our common stock. We intend to retain
any future earnings for use in the operation and expansion of our business.
Consequently, we do not anticipate paying any cash dividends on our common stock
to our stockholders for the foreseeable future.





Recent Sales of
Unregistered
Securities




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





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





In May
2008 the Company issued 100,000 shares to its contractor in exchange for
consulting services worth $20,000. Market value of the stock at the time of
agreement was $0.09 per share.





On July
1, 2008, the Company issued to Island Broadcasting, Inc 1,000,000 of the
company’s $.001 shares for $0.11 per share for satisfaction of the payment
postponement agreement.





On July
2, 2008, the Company issued to Jaworek Capital LLC 1,224,023 shares in exchange
for satisfaction of the Loan Agreement dated May 29, 2008, for the principal of
$100,000 and accrued interest of $369.86, at conversion price 0.0820 per
share.





On July
2, 2008, the Company issued to Jaworek Capital LLC 1,224,023 shares in exchange
for satisfaction of the Loan Agreement dated June 16, 2008, for the principal of
$100,000 and accrued interest of $369.86, at conversion price 0.0820 per
share.





On July
15, 2008, the Company issued to FCIC 2,729,014 shares in exchange for
satisfaction of the Loan Agreement dated March 14, 2007, for the principal of
$250,000 and accrued interest of $29,301.37, at conversion price 0.10 per
share.





On August
6, 2008, the Company issued to Jaworek Capital LLC 3,241,099 shares in exchange
for satisfaction of the Loan Agreement dated July 1, 2008, for the principal of
$100,000 and accrued interest of $863.01, at conversion price 0.0311 per
share.





On August
8, 2008, the Company issued to Jaworek Capital LLC 3,138,239 shares in exchange
for satisfaction of the Loan Agreement dated July 31, 2008, for the principal of
$100,000 and accrued interest of $172.60, at conversion price 0.0319 per
share.




On August
29, 2008, the Company issued to FD Import & Export Corp. 3,519,308 shares to
in partial satisfaction of the Loan Agreement dated February 28, 2008, for
principle of $71,512.33, at a conversion price 0.02032 per share.





On
October 2, 2008, the Company issued to Tangiers Investors LP 443,656 shares in
exchange for partial satisfaction of the Loan Agreement dated March 25, 2008,
for the principal of $5,000, at conversion price 0.01127 per share.





On
October 13, 2008, the Company issued to Golden Gate Investors, Inc 131,579
shares in exchange for partial satisfaction of the Loan Agreement dated April
18, 2008, for the principal of $1,000, at conversion price 0.0076 per
share.





On
January 16, 2009, the Company issued to Gap Asset Management 7,700,000 shares of
its common stock for a total of $77,000 pursuant to a share purchase
agreement.





On
January 19, 2009, the Company entered into debt conversion agreements with
several debt holders pursuant to which it issued a total of 154,740,295 shares
in exchange for $1,547,402.95outstanding debt including principal and
interest.





On
February 10, 2009, the Company issued to Robert Catell 7,000,000 shares of its
common stock for a total of $70,000 pursuant to a share purchase
agreement.






-6-





On April
27, 2009, the Company issued 25,279,614 shares of its common stock to Island
Broadcasting Company to satisfy unpaid fees of $1,090,000 under certain amended
time brokerage agreement owned by Echo.





From
April 27, 2009 to April 30, 2009, the Company entered into 9% convertible
promissory notes (the “Notes”) with certain investors (the “Holders”) for an
aggregate of $193,000.   The maturity date of these Notes is
October 1, 2009.  Pursuant to the terms of the Notes, the Holders
shall have the right from time to time, and at any time on or prior to maturity
to convert all or any part of the outstanding and unpaid principal amount of
these Notes into fully paid and non-assessable shares of Common Stock, $.001 par
value per share.  The number of shares of Common Stock to be issued
upon each conversion of these Notes shall be determined by dividing the
amount of principal and accrued interest to be converted (“Conversion Amount”)
by the applicable Conversion Price then in effect on the date specified in the
notice of conversion, in the form attached hereto as Exhibit A (the “Notice
of Conversion”).  The Conversion Price shall be equal to the average
closing bid price of the Common Stock (as reported by Bloomberg L.P.) on the OTC
Bulletin Board for the ten (10) trading days prior to the date of the Conversion
Notice (the “Conversion Date”) multiplied by .80 provided that the Notice
of Conversion is submitted by to our company before 6:00 p.m., New York, New
York time on such Conversion Date. However, the Conversion Price shall not
exceed $0.05.





On May
15, 2009, the Company issued 7,000,000 shares of its common stock to Signal
Above, LLC pursuant to a Time Brokerage Agreement and its amendment, as
disclosed in its Form 8-K filed on May 18, 2009.





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





Equity Compensation Plan
Information




The
following table sets forth certain information as of May 12, 2009, with respect
to compensation plans under which our equity securities are authorized for
issuance:




(a)
                  (b)
                  (c)_________________
                  _________________
                  _________________Number
      of securities to be issued
                    upon
      exercise of outstanding
                    options,
      warrants and rights
                  Weighted-average
      exercise price of
                    outstanding
      options, warrants
                    and
      rights
                  Number
      of securities remaining available
                    for
      future issuance under equity
                    compensation
      plans (excluding securities reflected in column (a))Equity
      compensation
                  NonePlans
      approved bySecurity
      holdersEquity
      compensation
                  NonePlans
      not approvedBy
      security holdersTotal





ITEM 6. SELECTED FINANCIAL DATA





Not
applicable because we are a smaller reporting company.





ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS.




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






-7-





BUSINESS
OVERVIEW





We were
incorporated in New York State on February 3, 2004. In June 2007, we went
public through a reverse merger and current trades on the Over-The-Counter
Bulletin Board (“OTCBB”) under the symbol MMDA. We are a multi-media company
whose core businesses are mainstream radio broadcasting, entertainment branding,
music recording and social media.  We are also the parent company of a
Music Recording Division, a Celebrity & Corporate Branding Division and
offers full service Audio and Video production studios.  We also
believe MUSICiKON will generate revenue for these divisions through artist
management, master recording rights and distribution deals. Our principal
executive office and studios are located at 1122 Coney Island Avenue, Suite 210,
Brooklyn, New York 11230. Our office number is (718) 947-1100. Our web
address is www.megamediagroup.com.





Results of
Operations




Results
of Operations for the Year Ended January 31, 2009 Compared to the Year Ended
January 31, 2008





Revenue





We derive
revenue from sales of advertisements and program sponsorships to local
advertisers, independent promotion agreements, ticket and other revenue related
to special events we sponsor throughout the year and management fees from our
subsidiaries. Advertising revenue is affected primarily by the advertising rates
our radio stations and magazine are able to charge as well as the overall demand
for radio advertising time in a market. For the year ended January 31, 2009 our
revenue decreased by $ 3,108,590 to $1,426,865 as compared to $4,535,455
for the year ended January 31, 2008. The decrease results primarily from
programming format change.






Operating
Expenses





Our
significant operating expenses are broadcast expenses, consisting of (i)
employee salaries and commissions, (ii) programming expenses, (iii) advertising
and promotion expenses, (iv) rental of premises for studios, (v) rental of
transmission tower space and (vi) freelance consultants. We strive to control
these expenses by centralizing certain functions such as finance, accounting,
legal, human resources and management information systems and the overall
programming management function. For the year ended January 31, 2009 operating
expenses decreased by $1,947,331 to $1,969,577 as compared to $3,916,908 for the
year ended January 31, 2008. The decrease is principally attributable to
decreased broadcasting expenses.





Selling,
General and Administrative Expenses




Selling,
General and Administrative expenses decreased by $ 390,159 to $2,797,995
for the year ended January 31, 2009 from $3,188,154 in 2008. The decrease is
attributable to lower corporate expenses. Selling expenses are a significant
part of our expenditures and relate directly to the marketing and development of
products. We anticipate similar expenditures for the foreseeable
future.




Depreciation
and Amortization Expenses




Depreciation
and Amortization expenses decreased by $70,038 to $320,222 year ended
January 31, 2009 from $390,260 in 2008 due to the decrease in the
intangible assets.





Stock
Compensation Expense




Non-cash
stock compensation expense decreased by $308,333 to $0 for the year ended
January 31, 2009 from $308,333 in 2008 as result of the decrease in sale of
common stock below the market price.




Loss
on Sale of Intangible Assets




Loss on
sale of intangible assets increased by $40,168 to $40,168 for the year ended
January 31, 2009 from $0 in 2008 as result of the sale of business assets
of VSE Magazine, a whole-owed subsidiary.








Loss
on Disposition of Fixed Assets




Loss on
disposition of fixed assets decreased by $60,025 to $0 for the year ended
January 31, 2009 from $60,025 in 2008 as result of the abandonment of
leasehold improvements due to the termination of the lease agreement in
2008.





Interest
Expense




Interest expense increased
by $229,280to $308,106 for theyearendedJanuary31, 2009from $78,826in 2008due to the additional
borrowings.






-8-





Beneficial
Conversion Expense




Beneficial conversion expenseincreased by $ 676,832 to $728,642 for the year ended January 31,
2009 from $51,810 in 2008 due to the increase of borrowings with the attached
beneficial conversion provisions.





Net
Loss




We have a
net loss of $4,737,845 for the year ended January 31, 2009 as compared to
a net loss of $3,055,461 for the year ended January 31, 2008. The increase in
net loss is primarily attributable to the decrease in our revenues and increase
in interest expense.





Liquidity
and Capital Resources





As of
January 31, 2009, our
Working Capital deficiency is $ 3,811,930.




Cash used
in operating activities was $2,025,3 70for the year ended January 31, 2009 as compared to $1,054,140 during the
year ended January 31, 2008. The decrease in cash used in operating activities
reflects the reduced outlays necessary to achieve the growth in revenues, which
should ultimately result in positive operating cash flow.





Cash
provided in investing activities was $154,904 for the year ended January
31, 2009 as compared to $75,044 cash used by investing activities for the year
ended January 31, 2008. The increase in cash used by investing activities is
primarily due reduced investments in various projects and reduction in security
deposits.




Cash
provided by financing activities was $1,883,947 for the year ended January 31,
2009 as compared to $1,092,135 for the year ended January 31, 2008. The increase
in cash provided by financing activities is primarily due to the additional
borrowings.




Going
Concern





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





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




We incurred
net losses of $4,737,845 and $3,055,461 for the year ended January 31, 2009 and
2008, respectively, and have an accumulated deficit of $14,043,314 at January
31, 2009. As of January 31, 2009, we had total current assets of $175,038 and
total current liabilities of $3,986,968 creating a working capital deficiency of
$3, 811,930 .




OFF-BALANCE
SHEET ARRANGEMENTS




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




CRITICAL
ACCOUNTING POLICIES




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




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





ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable because we are a smaller reporting company.






-9-






ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.










KEMPISTY
      & COMPANYCERTIFIED
      PUBLIC ACCOUNTANTS, P.C.15
      MAIDEN LANE - SUITE 1003 - NEW YORK, NY 10038 - TEL (212) 406-7272 - FAX
      (212) 513-1930REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard
      of DirectorsMega
      Media Group, Inc
 
 Board
      of DirectorsMega
      Media Group, Inc
 
 We
have audited the accompanying consolidated balance sheet of Mega Media Group,
Inc and Subsidiaries (the "Company") as of January 31, 2009 and 2008 and the
related consolidated statements of operations, changes in stockholders' equity
(deficit) and cash flows for each of the years in the two years then
ended.  These consolidated 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 at this time, 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 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Mega Media Group, Inc and
Subsidiaries as of January 31, 2009 and 2008 and the results of its operations
and cash flows for each of the years in the two years then ended in conformity
with accounting principles generally accepted in the United States of
America.
 
 As
discussed in Note 1 to the consolidated financial statements, the
accompanying consolidated balance sheet as of January 31, 2009 and the related
statements of operations, cash flows and stockholders' deficit for the year then
ended have been restated.
  The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company had a net loss of approximately
$4,738,000 an accumulated deficit of approximately $14,000,000 and a working
capital deficiency of approximately $3,812,000.  These factors raise
substantial doubt about its ability to continue as a going concern. Management’s
plans concerning this matter are also described in Note 2. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 Kempisty
      & CompanyCertified
      Public Accountants PCNew
      York, New YorkMay
      20, 2009
  -10-
  MEGA
      MEDIA GROUP, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSJanuary
      31,
                      
                      
                      January
      31,ASSETS
                      
                      2009
                      
                      
                      2008Current
      Assets
                      
                      (Restated)Cash
                      
                      $
                      13,877
                      
                      
                      $
                      396Accounts
      receivable, net (Note 4)
                      
                      
                      137,855
                      
                      
                      
                      68,036Prepaid
      Expenses
                      
                      
                      13,306
                      
                      
                      
                      76,222Note
      Receivable
                      
                      
                      10,000
                      
                      
                      
                      -Total
      Current Assets
                      
                      
                      175,038
                      
                      
                      
                      144,654Fixed
      assets, net (Note 5)
                      
                      
                      227,785
                      
                      
                      
                      391,244Master
      records, net (Note 6)
                      
                      
                      -
                      
                      
                      
                      125,000Other
      intangible assets, net (Note 6)
                      
                      
                      -
                      
                      
                      
                      176,667Advances
                      
                      
                      20,000
                      
                      
                      
                      20,000Deposits
                      
                      
                      13,486
                      
                      
                      
                      183,486Other
                      
                      
                      16,010
                      
                      
                      
                      16,010TOTAL
      ASSETS
                      
                      $
                      452,319
                      
                      
                      $
                      1,057,061LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      LiabilitiesAccounts
      payable
                      
                      $
                      1,138,976
                      
                      
                      $
                      458,009Bank
      overdraft
                      
                      
                      -
                      
                      
                      
                      -Sales
      tax payable
                      
                      
                      616
                      
                      
                      
                      616Payroll
      taxes payable (Note 14)
                      
                      
                      1,112,966
                      
                      
                      
                      728,350Accrued
      Offices' Compensation
                      
                      
                      504,893
                      
                      
                      
                      473,786Equipment
      loan - current portion (Note 10)
                      
                      
                      7,248
                      
                      
                      
                      8,304Equipment
      lease - current portion (Note 11)
                      
                      
                      19,440
                      
                      
                      
                      19,440Loans
      payable (Note 8)
                      
                      
                      496,000
                      
                      
                      
                      795,000Due
      to related party (Note 7)
                      
                      
                      69,328
                      
                      
                      
                      398,783Judgment
      payable (Note 17)
                      
                      
                      296,955
                      
                      
                      
                      -Deferred
      revenues
                      
                      
                      135,920
                      
                      
                      
                      301,661Accrued
      expenses
                      
                      
                      57,478
                      
                      
                      
                      24,508Payable
      to shareholders (Note 7)
                      
                      
                      12,148
                      
                      
                      
                      239,148Settlement
      payable (Note 15)
                      
                      
                      125,000
                      
                      
                      
                      -Stock
      Payable
                      
                      
                      10,000
                      
                      
                      
                      -Total
      Current Liabilities
                      
                      
                      3,986,968
                      
                      
                      
                      3,447,605Equipment
      Loan Payable (Note 10)
                      
                      
                      2,767
                      
                      
                      
                      4,767Equipment
      Lease Payable (Note 11)
                      
                      
                      12,960
                      
                      
                      
                      30,780TOTAL
      LIABILITIES
                      
                      
                      4,002,695
                      
                      
                      
                      3,483,152Commitments
      and contingencies (Note 11)
                      
                      
                      -
                      
                      
                      
                      -Stockholders'
      DeficitPreferred
      stock, $.001 par value, 20,000,000 shares authorized, 0 shares issued and
      outstanding as of 10/31/08 and 01/31/08 (Note 9)
                      
                      
                      -
                      
                      
                      
                      -Common
      stock, $.001 par value, 500,000,000 shares authorized, 261,348,938 shares
      issued and outstanding as of 01/31/09 and 80,552,254 shares issued and
      outstanding as of 01/31/08 (Note 9)
                      
                      
                      261,349
                      
                      
                      
                      80,552Additional
      paid-in capital
                      
                      
                      10,426,270
                      
                      
                      
                      7,233,835Deferred
      compensation
                      
                      
                      (194,681
                      )
                      
                      
                      (435,009
                      )Accumulated
      Deficit
                      
                      
                      (14,043,314
                      )
                      
                      
                      (9,305,469
                      )Total
      Stockholders' Deficit
                      
                      
                      (3,550,376)
                      
                      
                      
                      (2,426,091
                      )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      
                      $
                      452,319
                      
                      
                      $
                      1,057,061
  The
accompanying notes are an integral part of these financial
statements.
  -11-
  MEGA
      MEDIA GROUP, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONSYear
      Ended January 31,2009
                    
                    
                    2008(Restated)Revenues:Advertising
      revenues
                    
                    $
                    1,332,957
                    
                    
                    $
                    4,210,294Other
      revenues
                    
                    
                    93,908
                    
                    
                    
                    325,161Total
      Revenues
                    
                    
                    1,426,865
                    
                    
                    
                    4,535,455Operating
      expenses
                    
                    
                    1,969,577
                    
                    
                    
                    3,916,908Selling,
      general and administrative
                    
                    
                    2,797,995
                    
                    
                    
                    3,188,154Depreciation
      and amortization
                    
                    
                    320,222
                    
                    
                    
                    390,260Stock
      compensation expense
                    
                    
                    -
                    
                    
                    
                    308,3335,087,794
                    
                    
                    
                    7,803,655Net
      loss from operations
                    
                    
                    (3,660,929
                    )
                    
                    
                    (3,268,200
                    )Other
      Expenses:Loss
      on sale of intangible assets (Note 16)
                    
                    
                    40,168
                    
                    
                    
                    -Loss
      on disposition of fixed assets
                    
                    
                    -
                    
                    
                    
                    60,025Gain
      on extinguishment of debt
                    
                    
                    -
                    
                    
                    
                    (403,400
                    )Interest
      expense
                    
                    
                    308,106
                    
                    
                    
                    78,826Beneficial
      conversion expense
                    
                    
                    728,642
                    
                    
                    
                    51,810Net
      loss before tax benefit
                    
                    
                    (4,737,845)
                    
                    
                    
                    (3,055,461
                    )Tax
      benefit (Note 19)
                    
                    
                    -
                    
                    
                    
                    -Net
      loss
                    
                    $
                    (4,737,845)
                    
                    
                    $
                    (3,055,461
                    )Basic
      and diluted loss per share
                    
                    
                    (0.05
                    )
                    
                    
                    (0.04
                    )Weighted-Average
      shares used in computation of basic and diluted loss per
      share
                    
                    
                    95,637,965
                    
                    
                    
                    83,571,228
  The
accompanying notes are an integral part of these financial
statements.
  -12-
  MEGA
      MEDIA GROUP, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)For
      the Years Ended January 31, 2009 (Restated) and January 31,
      2008TotalPreferred
      Stock
                                
                                
                                Common
      Stock
                                
                                
                                Additional
                                
                                
                                Deferred
                                
                                
                                
                                
                                
                                Stockholders'($.001
      par value)
                                
                                
                                ($.001
      par value)
                                
                                
                                Paid-In
                                
                                
                                Stock
                                
                                
                                Accumulated
                                
                                
                                EquityShares
                                
                                
                                Amount
                                
                                
                                Shares
                                
                                
                                Amount
                                
                                
                                Capital
                                
                                
                                Comp
                                
                                
                                Deficit
                                
                                
                                (Deficit)Balance
      January 31, 2007
                                
                                
                                14,492,000
                                
                                
                                $
                                14,492
                                
                                
                                
                                5,277,446
                                
                                
                                $
                                5,277
                                
                                
                                $
                                4,067,546
                                
                                
                                $
                                (1,392
                                )
                                
                                $
                                (6,146,720
                                )
                                
                                $
                                (2,060,797
                                )Sale
      of common stock
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                50,000
                                
                                
                                
                                50
                                
                                
                                
                                49,950
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                50,000Cancellation
      of restricted stock awardto
      officers and shareholders
                                
                                
                                (1,175,000
                                )
                                
                                
                                (1,175
                                )
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                1,175
                                
                                
                                
                                
                                
                                
                                
                                -Restricted
      stock award
                                
                                
                                1,100,000
                                
                                
                                
                                1,100
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (100
                                )
                                
                                
                                
                                
                                
                                
                                1,000to
      officers and shareholdersEffect
      of reversed merger
                                
                                
                                (14,417,000
                                )
                                
                                
                                (14,417
                                )
                                
                                
                                67,651,248
                                
                                
                                
                                67,651
                                
                                
                                
                                857,727
                                
                                
                                
                                
                                
                                
                                
                                (103,288
                                )
                                
                                
                                807,673Sale
      of common stock
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                1,000,000
                                
                                
                                
                                1,000
                                
                                
                                
                                599,000
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                600,000Sale
      of common stock
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                166,667
                                
                                
                                
                                167
                                
                                
                                
                                58,167
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                58,334Capital
      contribution
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                79,737
                                
                                
                                
                                
                                
                                
                                
                                -
                                
                                
                                
                                79,737Beneficial
      conversion of loans from shareholders
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                51,810
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                51,810Stock
      issued in exchange for air lease rent
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                3,000,000
                                
                                
                                
                                3,000
                                
                                
                                
                                897,000
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                900,000Stock
      issued in exchange for legal services
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                406,893
                                
                                
                                
                                407
                                
                                
                                
                                95,898
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                96,305Restricted
      stock award to contractorfor
      future consulting services
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                3,000,000
                                
                                
                                
                                3,000
                                
                                
                                
                                477,000
                                
                                
                                
                                (480,000
                                )
                                
                                
                                
                                
                                
                                
                                -Restricted
      stock award to contractorfor
      earned services during the three months endedJanuary
      31, 2008
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                45,308
                                
                                
                                
                                
                                
                                
                                
                                45,308Loss
      for the year endedJanuary
      31, 2008
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (3,055,461
                                )
                                
                                
                                (3,055,461
                                )Balance
      January 31, 2008
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                80,552,254
                                
                                
                                
                                80,552
                                
                                
                                
                                7,233,835
                                
                                
                                
                                (435,009
                                )
                                
                                
                                (9,305,469
                                )
                                
                                
                                (2,426,091
                                )Stock
      options issued to officers for services
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                6,720
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                6,720Stock
      options issued to lenders in exchange for loans
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                6,250
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                6,250Stock
      issued in exchange for air lease rent
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                1,000,000
                                
                                
                                
                                1,000
                                
                                
                                
                                91,000
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                92,000Stock
      issued in exchange for consulting services
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                100,000
                                
                                
                                
                                100
                                
                                
                                
                                8,900
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                9,000Stock
      issued in exchange for rent
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                8,901,182
                                
                                
                                
                                8,901
                                
                                
                                
                                80,111
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                89,012Beneficial
      conversion of loans payable
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                728,642
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                728,642Stock
      issued for conversion ofloans
      payable
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                162,917,772
                                
                                
                                
                                162,918
                                
                                
                                
                                2,058,366
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                2,221,284Restricted
      stock award to contractorfor
      earned services during the year ended January 31, 2009
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                240,328
                                
                                
                                
                                
                                
                                
                                
                                240,328Sale
      of common stock
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                7,700,000
                                
                                
                                
                                7,700
                                
                                
                                
                                69,300
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                77,000Capital
      contribution
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                88,228
                                
                                
                                
                                
                                
                                
                                
                                -
                                
                                
                                
                                88,228Stock
      options exercised by officers
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                177,730
                                
                                
                                
                                178
                                
                                
                                
                                54,918
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                55,096Loss
      for year endedJanuary
      31, 2009
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (4,737,845
                                )
                                
                                
                                (4,737,845
                                )Balance
      January 31, 2009 (Restated)
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                261,348,938
                                
                                
                                
                                261,349
                                
                                
                                
                                10,426,270
                                
                                
                                
                                (194,681
                                )
                                
                                
                                ( 14,043,314
                                )
                                
                                
                                (3,550,376
                                )
 The
accompanying notes are an integral part of these financial
statements.
  -13-
  MEGA
      MEDIA GROUP, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSYear
      EndedJanuary
      31,
                        
                        
                        January
      31,2009
                        
                        
                        2008(Restated)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                        
                        $
                        (4,737,845
                        )
                        
                        $
                        (3,055,461
                        )Adjustments
      to reconcile net loss to net cashused
      by operating activities:Depreciation
      and amortization
                        
                        
                        320,222
                        
                        
                        
                        390,260Loss
      on sale of intangible assets
                        
                        
                        40,168
                        
                        
                        
                        -Loss
      on disposal of fixed assets
                        
                        
                        -
                        
                        
                        
                        60,025Beneficial
      conversion of loans from shareholders
                        
                        
                        728,642
                        
                        
                        
                        51,810Stock
      options issued to officers for services
                        
                        
                        6,720
                        
                        
                        
                        -Stock
      options issued to lenders in exchange for loans
                        
                        
                        6,250
                        
                        
                        
                        -Stock
      compensation for consulting services
                        
                        
                        249,328
                        
                        
                        
                        46,308Stock
      compensation for legal services
                        
                        
                        -
                        
                        
                        
                        96,305Stock
      issued for air lease rent
                        
                        
                        92,000
                        
                        
                        
                        900,000Stock
      issued for rent
                        
                        
                        89,012
                        
                        
                        
                        -Stock
      issued for interest expense
                        
                        
                        110,286
                        
                        
                        
                        -Loan
      exchange for accounts receivable
                        
                        
                        (25,000)
                        
                        
                        
                        -Intangible
      assets exchange for deferred revenue
                        
                        
                        109,832
                        
                        
                        
                        -Non-cash
      stock based compensation
                        
                        
                        -
                        
                        
                        
                        308,333Settlement
      of notes payable as interest
                        
                        
                        (97,000 )
                        
                        
                        
                        -Extinguishment
      of Debt
                        
                        
                        -
                        
                        
                        
                        (403,400
                        )Changes
      in operating assets and liabilities:(Increase)
      in note receivable
                        
                        
                        (10,000
                        )
                        
                        
                        -(Increase)
      in accounts receivable
                        
                        
                        (69,819
                        )
                        
                        
                        600(Increase)
      decrease in prepaid expenses
                        
                        
                        62,915
                        
                        
                        
                        91,982Increase
      in accounts payable
                        
                        
                        680,967
                        
                        
                        
                        63,139Increase
      in stock payable
                        
                        
                        10,000
                        
                        
                        
                        -Increase
      in sales tax payable
                        
                        
                        -
                        
                        
                        
                        (276
                        )Increase
      in accrued officers' compensation
                        
                        
                        31,107
                        
                        
                        
                        93,957Increase
      in accrued expenses
                        
                        
                        32,970
                        
                        
                        
                        16,963Increase
      in deferred revenue
                        
                        
                        (165,741
                        )
                        
                        
                        (150,739
                        )Increase
      in settlement payable
                        
                        
                        125,000
                        
                        
                        
                        -Increase
      in payroll liabilities
                        
                        
                        384,616
                        
                        
                        
                        443,619Increase
      in other current liabilities
                        
                        
                        -
                        
                        
                        
                        (7,565
                        )Total
      adjustments
                        
                        
                        2,712,475
                        
                        
                        
                        2,001,321NET
      CASH USED BY OPERATING ACTIVITIES
                        
                        
                        (2,025,370
                        )
                        
                        
                        (1,054,140
                        )CASH
      FLOWS FROM INVESTING ACTIVITIES:Master
      records
                        
                        
                        -
                        
                        
                        
                        (14,000
                        )Fixed
      assets
                        
                        
                        (15,096
                        )
                        
                        
                        (103,044
                        )Deposits
                        
                        
                        170,000
                        
                        
                        
                        42,000CASH
      PROVIDED (USED) BY INVESTING ACTIVITIES
                        
                        
                        154,904
                        
                        
                        
                        (75,044
                        )CASH
      FLOWS FROM FINANCING ACTIVITIES:Loan
      proceeds
                        
                        
                        1,347,000
                        
                        
                        
                        355,000Increase
      (decrease) in equipment loan - current portion
                        
                        
                        (1,056
                        )
                        
                        
                        -Equipment
      loan repayments
                        
                        
                        (2,001
                        )
                        
                        
                        (9,192
                        )Proceeds
      from loans from shareholders
                        
                        
                        375,000
                        
                        
                        
                        454,030Repayments
      of loans from shareholders
                        
                        
                        (5,000
                        )
                        
                        
                        (163,000
                        )Repayments
      of loans from related parties
                        
                        
                        (12,500
                        )
                        
                        
                        (5,000
                        )Repayment
      of judgment payable
                        
                        
                        (20,000
                        )
                        
                        
                        -Equipment
      lease repayments
                        
                        
                        (17,820
                        )
                        
                        
                        (19,440
                        )Capital
      Contributions
                        
                        
                        88,228
                        
                        
                        
                        79,737Sale
      of common stock
                        
                        
                        77,000
                        
                        
                        
                        400,000Options
      exercised by officers
                        
                        
                        55,096
                        
                        
                        
                        -CASH
      PROVIDED BY FINANCING ACTIVITIES
                        
                        
                        1,883,947
                        
                        
                        
                        1,092,135NET
      INCREASE IN CASH
                        
                        
                        13,481
                        
                        
                        
                        (37,048
                        )CASH:
      Beginning of period
                        
                        
                        396
                        
                        
                        
                        37,444End
      of period
                        
                        $
                        13,877
                        
                        
                        $
                        396Supplemental
      disclosure of noncash financing and investing
      activities:Cash
      paid during the period for income taxes
                        
                        $
                        2,275
                        
                        
                        $
                        2,275Cash
      paid during the period for interest
                        
                        $
                        58,164
                        
                        
                        $
                        130,636Non
      Cash Financing and Investing Activities:Stock
      issued for conversion of loans to shareholders
                        
                        $
                        596,999
                        
                        
                        $
                        877,000Stock
      issued for air lease rent
                        
                        
                        -
                        
                        
                        
                        900,000Stock
      issued for future consulting services
                        
                        
                        -
                        
                        
                        
                        480,000Stock
      issued for prior legal services
                        
                        
                        -
                        
                        
                        
                        96,305Stock
      issued for conversion of loans from third parties
                        
                        $
                        1,295,000
                        
                        
                        $
                        -Preferred
      stock issued for services
                        
                        $
                        -
                        
                        
                        $
                        1,100Stock
      issues for compensation
                        
                        $
                        -
                        
                        
                        $
                        308,333Extinguishment
      of debt
                        
                        $
                        -
                        
                        
                        $
                        416,866
  The
accompanying notes are an integral part of these financial
statements.
 -14-
  MEGA
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts
and Disclosures at and for the years
 ended
January 31, 2009 and 2008)
  NOTE 1 -
ORGANIZATION AND NATURE OF BUSINESS
 
 On May
19, 2009, Kempisty & Company Certified Public Accountants, P.C. (“Kempisty
& Company”), independent registered public accounting firm of Mega Media, a
Nevada corporation (the “Company”), informed the Company and the management, and
the Board of Directors of the Company concluded, that the Company’s previously
issued financial statements as of and for the year ended 2009, as included in
the Current Report on Form 10-K filed with the Security Exchange Commission (the
“Commission”) on May 18, 2009 (the “May 18, 2009 Form 10-K”), should not be
relied upon.
 
 The
following are explanations of the restatement adjustments and presentation of
the affected accounts in the consolidated balance sheet and statement of
operations as previously reported and restated.
 
 The
company restated its previously reported interest expense as a result of the
incorrect calculation of interest expense on notes issued during
2009.
 
 The
consolidated financial statements as of January 31, 2009 and for the year then
ended, and the notes thereto, have been restated to include the items identified
in the above. The following financial statement line items were
impacted:
 As
      previouslyreported
                    
                    
                    RestatedJanuary
      31
                    
                    
                    January
      31Consolidated
      Balance Sheets
                    
                    2009
                    
                    
                    2009Accrued
      revenues
                    
                    $
                    54,955
                    
                    
                    $
                    -Note
      receivable
                    
                    $
                    1,400,000
                    
                    
                    $
                    -Accrued
      expenses
                    
                    $
                    158,201
                    
                    
                    $
                    57,478Due
      to related party
                    
                    $
                    366,283
                    
                    
                    $
                    69,328Settlement
      payable
                    
                    $
                    -
                    
                    
                    $
                    125,000Judgment
      payable
                    
                    $
                    -
                    
                    
                    $
                    296,955Note
      payable
                    
                    $
                    1,497,000
                    
                    
                    $
                    -Additional
      paid in capital
                    
                    $
                    10,784,132
                    
                    
                    $
                    10,426,270Accumulated
      deficit
                    
                    $
                    (14,418,943
                    )
                    
                    $
                    (14,043,314
                    )
 Consolidated
      Statements of OperationsOther
      revenues
                  
                  $
                  148,862
                  
                  
                  $
                  93,908Total
      Revenues
                  
                  $
                  1,481,820
                  
                  
                  $
                  1,426,865Net
      loss from operatiions
                  
                  $
                  (3,605,974
                  )
                  
                  $
                  (3,660,929
                  )Interest
      expense
                  
                  $
                  380,828
                  
                  
                  $
                  308,106Beneficial
      conversion expense
                  
                  $
                  1,086,504
                  
                  
                  $
                  728,642Net
      loss before tax benefit
                  
                  $
                  (5,113,474
                  )
                  
                  $
                  (4,737,845
                  )Net
      loss
                  
                  $
                  (5,113,474
                  )
                  
                  $
                  (4,737,845
                  )
   -15-
 NOTE-2
– ORGANIZATION
AND NATURE OF BUSINESS
  Mega
Media Group, Inc. (the “MMG”) was incorporated in New York State on
February 3, 2004. The Company is a multi-media holding company with five wholly
owned subsidiaries. The Company’s focus is mainstream entertainment and media.
The corporate headquarters is located in Brooklyn, NY.  All references
to the year ending January 31, 2005 are for the period February 3, 2004 (date of
inception) to January 31, 2005.
 
 As
reflected in the accompanying combined financial statements, the Company has an
accumulated deficit of $14,043,314 and $9,305,469 at January 31, 2009 and 2008
respectively that includes net losses of $4,737,845 and $3,055,461 for the years
ended January 31, 2009 and 2008 respectively and a working deficit of $3,811,930
and $3,302,951 at January 31, 2009 and 2008 respectively. The Company’s
shareholders have funded the losses and cash shortfalls allowing management to
develop sales and contingencies plans. The Company’s also arranging for
additional funding. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
 
 Management
has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. The Company is actively pursing
additional funding and a potential merger or acquisition candidate and strategic
partners, which would enhance stockholders’ investment. Management believes that
the above actions will allow the Company to continue operations through the next
fiscal year.
  NOTE-3
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Basis Of
Consolidation
 
 The
accompanying consolidated financial statements include the accounts of the Mega
Media Group Inc., and its subsidiary Mega Media Film, Inc., Mega Media Studios,
Inc., Mega Media Records, Inc., VSE Magazine, Inc., and Echo Broadcasting Group,
Inc. All significant intercompany balances and transactions have been
eliminated.
 
 Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that effects the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the of the combined financial statements and the reported amounts of revenue and
expenses during the reported period. Actual results could differ from these
estimates.
 
 Cash And Cash
Equivalents
 Short-term
investments with an original maturity of three months or less are considered to
be cash equivalents.
 
 Depreciation and
Amortization
 
 The
cost of furniture and equipment is depreciated over the estimated useful lives
of the related assets. The cost of leaseholds improvements is amortized over the
lesser of the length of the related lease or the estimated useful life of the
assets. Depreciation is computed on a straight line basis, with lives ranging
from 3 to 7 years.  Leasehold improvements are amortized over the life
of the lease.
 
 -16-
  Master
Records
 
 The
Company records the cost of a record master borne by the Company as an asset if
the past performance and current popularity of the artist provides a sound basis
for estimating that the cost will be recovered from future sales. Otherwise,
that cost is charged to expense. The amount recognized as an asset is amortized
over the estimated life of the recorded performance.
 
 Accounts
Receivable
 
 Accounts
receivable are stated at the amount management expects to collect from
outstanding balances.  Management provides for probable uncollected
amounts through a charge to earnings and a credit to an allowance for bad debts
based on its assessment of the current status of individual
accounts.  Balances that are still outstanding after management has
used reasonable collection efforts are written off through a charge to the
allowance for bad debts and a credit to accounts receivable.
 
 Revenue
Recognition
 
 The
Company recognizes revenue for broadcast advertising when the commercial is
broadcast and is reported, net of agency and outside sales representative
commissions, in accordance with Staff Accounting Bulletin (“SAB”) No. 104,
Topic 13, “Revenue
Recognition, Revised and Updated.” Agency and outside sales
representative commissions are calculated based on a stated percentage applied
to gross billing. Generally, clients remit the gross billing amount to the
agency or outside sales representative, and the agency or outside sales
representative remits the gross billing, less their commission, to the
Company.
 
 Financial
Instruments
 
 Due to
their short maturity, the carrying amounts of accounts and notes receivable,
accounts payable, accrued liabilities, and short-term borrowings approximated
their fair values at January 31, 2009 and January 31, 2008.
 
 Income
Taxes
 
 The
Company accounts for income taxes using the liability method. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting bases and tax bases of assets and liabilities and are
measured using the enacted tax rates expected to apply to taxable income in the
periods in which the deferred tax asset or liability is expected to be realized
or settled. Deferred tax assets are reduced by valuation allowances if the
Company believes it is more likely than not that some portion or all of the
assets will not be realized.
 
 Barter
Transactions
 
 The
Company provides broadcast advertising time in exchange for advertising time in
other media, as well as certain goods and services. The terms of the exchanges
generally permit the Company to preempt such broadcast time in favor of
advertisers who purchase time in exchange for cash. The Company includes the
value of such exchanges in both broadcasting net revenues and station operating
expenses. The valuation of barter time is based upon the fair value of the
advertising time provided and goods and services received. For the years ended
January 31, 2009 and 2008, barter transactions reflected in net broadcast
revenue, operating expenses and selling, general and administrative expenses
were approximately $134,931 and
$290,896 respectively.
 
 New Accounting
Pronouncements
 
 In
April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (FSP FAS 157-4).
FSP FAS 157-4 amends SFAS 157 and provides additional guidance for estimating
fair value in accordance with SFAS 157 when the volume and level of activity for
the asset or liability have significantly decreased and also includes guidance
on identifying circumstances that indicate a transaction is not orderly for fair
value measurements. This FSP shall be applied prospectively with retrospective
application not permitted. This FSP shall be effective for interim and annual
periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. An entity early adopting this FSP must
also early adopt FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments” (FSP FAS 115-2 and FAS 124-2). Additionally,
if an entity elects to early adopt either FSP FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (FSP FAS 107-1 and APB
28-1) or FSP FAS 115-2 and FAS 124-2, it must also elect to early adopt this
FSP. The Company is currently evaluating this new FSP but do not believe that it
will have a significant impact on the determination or reporting of the
Company’s financial results.
  -17-
  In
April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairment” (FSP 115-2/124-2). FSP
115-2/124-2 amends the requirements for the recognition and measurement of
other-than-temporary impairment for debt securities by modifying the
pre-existing “intent and ability” indicator. Under FSP 115-2/124-2, an
other-than-temporary impairment is triggered when there is an intent to sell the
security, it is more likely then not that the security will be required to be
sold before recovery, or the security is not expected to recover the entire
amortized cost basis of the security. Additionally, FSP 115-2/124-2 changes the
presentation of an other-than-temporary impairment in the income statement for
those impairments involving credit losses. The credit loss component will be
recognized in earnings and the remainder of the impairment will be recorded in
other comprehensive income. FSP 115-2/124-2 is effective for the Company
beginning in the second quarter of fiscal year 2009. Upon implementation at the
beginning of the second quarter of 2009, FSP 115-2/124-2 is not expected to have
a significant impact on the Company’ consolidated financial
statements.
 
 In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosure
about Fair Value of Financial Instruments” (“FSP 107-1/APB 28-1”). FSP 107-1/APB
28-1 requires interim disclosures regarding the fair values of financial
instruments that are within the scope of FAS 107, “Disclosures about the Fair
Value of Financial Instruments,” Additionally, FSP 107-1/APB 28-1 requires
disclosures of the methods and significant assumptions used to estimate the fair
value of financial instruments on an interim basis as well as changes in the
methods and significant assumptions from prior periods. FSP 107-1/APB 28-1 does
not change the accounting treatment for these financial instruments and is
effective for the Company beginning in the second quarter of fiscal year
2009.
  In the
first quarter of 2009, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 141 (revised 2007), “Business Combinations” (SFAS No.
141(R)) as mended by FASB staff position FSP 141(R)-1, “Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination.” SFAS No. 141(R)
generally requires an entity to recognize the assets acquired, liabilities
assumed, contingencies, and contingent consideration at their fair value on the
acquisition date. In circumstances where the acquisition-date fair value for a
contingency cannot be determined during the measurement period and it is
concluded that it is probable that an asset or liability exists as of the
acquisition date and the amount can be reasonably estimated, a contingency is
recognized as of the acquisition date based on the estimated amount. It further
requires that acquisition related costs be recognized separately from the
acquisition and expensed as incurred, restructuring costs generally be expensed
in periods subsequent to the acquisition date, and changes in accounting for
deferred tax asset valuation allowances and acquired income tax uncertainties
after the measurement period impact income tax expenses. In addition, acquired
in-process research and development is capitalized as an intangibles asset and
amortized over its estimated useful life. SFAS No. 141(R) is applicable to
business combinations on a prospective basis beginning in the first quarter of
2009. The Company does not complete any business combination in the first
quarter of 2009.
  In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
157”). SFAS 157 defines fair value, establishes a framework and gives guidance
regarding the methods used for measuring fair value, and expands disclosures
about fair value measurements. In February 2008, the FASB issued FASB Staff
Position 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13
and Other Accounting Pronouncements That Address Fair Value Measurements for
Purposes of Lease Classification or Measurement under Statement 13 (“FSP 157-1”)
and FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157” (“FSP
157-2”). FSP 157-1 amends SFAS 157 to remove certain leasing transactions from
its scope. FSP 157-2 delays the effective date of SFAS 157 for all non-financial
assets and non-financial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually), until fiscal years beginning after November 15, 2008. SFAS 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. The Company
adopted SFAS 157 effective January 1, 2008 for all financial assets and
liabilities as required. The adoption of SFAS 157 was not material to the
Company’s financial statements or results of operations.
  Effective
January 1, 2009, the Company adopted the provisions of EITF 07-5,"Determining Whether an
Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” (“EITF
07-5”). EITF 07-5 applies to any freestanding financial instruments or embedded
features that have the characteristics of a derivative, as defined by SFAS
No. 133, “Accounting for Derivative Instruments and Hedging Activities,”
and to any freestanding financial instruments that are potentially settled
in an entity’s own common stock. The adoption of EITF 07-5 was not material to
the Company's financial statements or results of operations.
 
 In
July 2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for
Uncertainty in Income Taxes,” which prescribes a comprehensive model for how a
company should recognize, measure, present and disclose in its financial
statements uncertain tax positions that the company has taken or expects to take
on a tax return (including a decision whether to file or not to file a return in
a particular jurisdiction). The accounting provisions of FIN No. 48 are
effective for fiscal years beginning after December 15, 2006. The adoption of
this Interpretation had no impact on the Company’s financial position or results
of operations.
 
 -18-
  In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
157"). SFAS 157 defines fair value, establishes a framework and gives guidance
regarding the methods used for measuring fair value, and expands disclosures
about fair value measurements. In February 2008, the FASB issued FASB Staff
Position 157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13
and Other Accounting Pronouncements That Address Fair Value Measurements for
Purposes of Lease Classification or Measurement under Statement 13" ("FSP
157-1") and FASB Staff Position 157-2, "Effective Date of FASB Statement No.
157" ("FSP 157-2"). FSP 157-1 amends SFAS 157 to remove certain leasing
transactions from its scope. FSP 157-2 delays the effective date of SFAS 157 for
all non-financial assets and non-financial liabilities, except for items that
are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually), until fiscal years beginning after November
15, 2008. SFAS 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years.  The Company adopted SFAS 157 effective January 1, 2008 for all
financial assets and liabilities as required. The adoption of SFAS 157 was not
material to the Company's financial statements or results of
operations.
 
 In
February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities-Including an amendment of FASB Statement No. 115,
(“SFAS No. 159”). SFAS No. 159 permits entities to choose to
measure many financial instruments and certain other items at fair value. Most
of the provisions of this Statement apply only to entities that elect the fair
value option. However, the amendment to FASB Statement No. 115, “Accounting
for Certain Investments in Debt and Equity Securities,”
(“SFAS No. 115”), applies to all entities with available-for-sale and
trading securities. SFAS No. 159 is effective for the Company’s
consolidated financial statements for the annual reporting period beginning
after November 15, 2007. The company has not elected the fair value option
for any assets or liabilities under SFAS No. 159.
 
 On
December 4, 2007, the FASB issued SFAS No. 160, Noncontrolling interest in
Consolidated Financial Statements(SFAS No. 160).  SFAS No. 160
requires all entities to report noncontrolling (minority) interests in
subsidiaries as equity in the consolidated financial statements.  The
statement establishes a single method of accounting for changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation and
expands disclosures in the consolidated financial statements.  SFAS
No. 160 is effective for fiscal years beginning after December 15, 2008 and
interim periods within those fiscal years.  We have not yet determined
the impact of the adoption of SFAS No. 160 on our consolidated financial
statements and footnote disclosures.
 
 In
March 2008, the FASB issued SFAS 161, “Disclosures about Derivative
Instruments and Hedging Activities”. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The Company is currently evaluating the impact of adopting SFAS 161
on its consolidated financial statements.
 NOTE 4
– ACCOUNTS RECEIVABLE
  Accounts
      receivable consist of the following:
                  
                  January
      31,
                    2009
                  
                  
                  January
      31,
                    2008Accounts
      receivable-trade
                  
                  $
                  150,855
                  
                  
                  $
                  81,036Allowance
      for doubtful accounts
                  
                  
                  (13,000
                  )
                  
                  
                  (13,000
                  )$
                  137,855
                  
                  
                  $
                  68,036
    -19-
  NOTE 5
– FIXED ASSETS
  January
      31,
                    2009
                  
                  
                  January
      31,
                    2008Fixed
      Assets consist of the following:Equipment
                  
                  $
                  518,210
                  
                  
                  $
                  505,066Leasehold
                  
                  
                  230,969
                  
                  
                  
                  230,969Furniture
                  
                  
                  38,162
                  
                  
                  
                  38,162Trucks
                  
                  
                  41,188
                  
                  
                  
                  41,188Computer
      software
                  
                  
                  45,940
                  
                  
                  
                  43,988874,469
                  
                  
                  
                  859,373Less
      accumulated depreciation
                  
                  
                  646,684
                  
                  
                  
                  468,129$
                  227,785
                  
                  
                  $
                  391,244
  Depreciation
expense was $178,555 and $171,250 for the years ended January 31, 2009 and
2008.
 
 In
August 2007 Company disposed one of its trucks. In addition, in August 2007
Company abandoned leasehold improvements for one of its office locations, since
the lease agreement was terminated.
  NOTE 6
– INTANGIBLE ASSETS
  January
      31,
                    2009
                  
                  
                  January
      31,
                    2008Intangible
      Assets consist of the following:Master
      records
                  
                  $
                  320,676
                  
                  
                  $
                  320,676Other
      intangible assets (see Notes 2 & 15)
                  
                  
                  -
                  
                  
                  
                  200,000Less
      accumulated amortization
                  
                  
                  (320,676
                  )
                  
                  
                  (219,009
                  )$
                  -
                  
                  
                  $
                  301,667
  Amortization
expense was $141,667 and $219,009 for the years ended January 31, 2009 and
2008.
   -20-
 
 NOTE 7
– LOANS FROM SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 
 In
June 2007 the Company entered into debt conversion agreements with the Company's
shareholders according to which loans from shareholders and certain loans due to
related party in the amount of $877,000 were converted into shares of common
stock at the conversion prices of $0.30 and $0.25 per share. These conversion
agreements were part of the reverse merger agreement between the company and
Family Healthcare Solutions, Inc., a Nevada Corporation (see note
13).
 
 In
January 2008 the Company borrowed two loans of $100,000 each from the
shareholders. Each loan has a beneficial conversion clause providing the option
that the loan can be converted into the company’s common shares at a discount of
20% to market value, with a conversion price limit not to exceed $.40 per share.
The company recognizes beneficial conversion features in accordance with the
FASB Emerging Issues Task Force Issue 98-5. Accordingly, the company fully
amortized the discount through the interest expense in the amount of $51,810 at
the date of issuance of the loans.
 
 At
January 31, 2008 total loans payable to shareholders of $239,148 and due to
related party of $398,783 mature in various amounts from July 11, 2008 to
January 24, 2009 and have a stated interest rate of 9%.
 
 On
April 21, 2008, the Company paid $12,500 on related party note
payable.
 
 During
the year ended January 31, 2009, the Company borrowed from its shareholders five
loans of $50,000, $50,000, $75,000 ($5,000 was repaid), $50,000 and $150,000 a
total of $375,000.
 
 On
January 16, 2009 the Company issued to certain shareholders 63,651,741 common
shares in exchange for satisfaction of the loans from shareholders for the
principles of $596,999 and accrued interest of $39,518.41, at conversion prices
of $0.01 per share.
 
 At
January 31, 2009 total loans payable to shareholders of $12,148 and due to
related party of $69,328.
 
 Certain
founding shareholders of Echo Broadcasting Group Inc. have received free
advertising time on Radio VSE. The fair market value of these services was $0
and $176,130 at January 31, 2009 and January 31, 2008
respectively.
  On
July 14, 2008 the Company entered into an asset purchase agreement with Dr. Lev
Paukman, a director of the Company (see Note 16).
  NOTE 8
- LOANS PAYABLE
 
 During
fiscal 2006, the Company borrowed two loans of $220,000 each, a total of
$440,000 payable on June 7, 2008, with the maturity date subsequently extended
June 7, 2009. The interest rate is the UBS Rate plus 5.5%.
 
 During
2007, the Company borrowed $250,000 from First Capital Invest Corp (“FCIC”),
Swiss-based financial institution. Loan is payable in six months from the
inception.
  On
July 15, 2008, the Company issued to FCIC 2,729,014 common shares in exchange
for satisfaction of the Loan Agreement dated March 14, 2007, for the principal
of $250,000 and accrued interest of $29,301.37, at conversion price 0.10 per
share.
 
 In
August 2007, the Company borrowed $105,000 from Ocean Bridge, Inc. Loan has
interest payable on the unpaid balance at the rate of 12%.
 
 On
January 16, 2009, the Company issued a credit for radio advertising to satisfy
in part the Loan Agreement dated August 17, 2007, for principle of
$25,000.00.
 
 On
January 16, 2009 the Company issued to Ocean Bridge, Inc. 9,794,220 common
shares to satisfy in part the Loan Agreement dated August 17, 2007, for
outstanding principle of $80,000.00 and accrued interest of $17,942.20, at a
conversion price 0.01 per share.
 
 In
February 2008 the Company borrowed $90,000 from ESJA Enterprises Inc. Loan has
interest payable on the unpaid balance at the rate of 9%. Loan matures on August
20, 2008. Loan has a beneficial conversion clause providing the option that the
loan can be converted into the company’s common shares at a discount of 20% to
market value, with a conversion price limit not to exceed $.40 per share. The
company recognizes beneficial conversion features in accordance with the FASB
Emerging Issues Task Force Issue 98-5. Accordingly, the company fully amortized
the discount through the interest expense in the amount of $77,894 at the date
of issuance of the loan.
   -21-
 
 On
January 16, 2009 the Company issued to ESJA Enterprises, Inc. 9,000,000 common
shares to satisfy in part the Loan Agreement dated February 21, 2008, for
principle of $90,000.00, at a conversion price 0.01 per share.
 
 In
February 2008 the Company borrowed $100,000 from FD Import & Export Corp.
Loan has interest payable on the unpaid balance at the rate of 9%. Loan matures
on September 28, 2008. Loan has a beneficial conversion clause providing the
option that the loan can be converted into the company’s common shares at a
discount of 20% to market value, with a conversion price limit not to exceed
$.40 per share. The company recognizes beneficial conversion features in
accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the
company fully amortized the discount through the interest expense in the amount
of $100,000 at the date of issuance of the loan.
 
 On
August 29, 2008 the Company issued to FD Import & Export Corp. 3,519,308
common shares to satisfy in part the Loan Agreement dated February 28, 2008, for
principle of $71,512.33, at a conversion price 0.02032 per
share.
 
 In
March 2008 the Company borrowed another $100,000 from FD Import & Export
Corp. Loan has interest payable on the unpaid balance at the rate of 9%. Loan
matures on September 28, 2008. Loan has a beneficial conversion clause providing
the option that the loan can be converted into the company’s common shares at a
discount of 20% to market value, with a conversion price limit not to exceed
$.40 per share. The company recognizes beneficial conversion features in
accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the
company fully amortized the discount through the interest expense in the amount
of $64,031at the date of issuance of the loan.
 
 On
January 16, 2009 the Company issued to FD Import & Export Corp 14,176,742
common shares to satisfy the Loan Agreement dated February 28, 2008, for
outstanding principle of $28,487.67 and Loan Agreement dated March 10, 2008, for
principle of $100,000 and total accrued interest of $13,279.75, at a conversion
price 0.01 per share.
  On
March 25, 2008 the Company borrowed $75,000 from Tangiers Investors LP. Loan has
interest payable on the unpaid balance at the rate of 9.9%. Loan matures on
March 24, 2010. Loan has a beneficial conversion clause providing the option
that the loan can be converted into the company’s common shares at a discount of
30% to market value, with a conversion price limit not to exceed $.50 per share.
The Company recognizes beneficial conversion features in accordance with the
FASB Emerging Issues Task Force Issue 98-5. Accordingly, the Company fully
amortized the discount through the interest expense in the amount of $0 at the
date of issuance of the loan.
 
 On
October 2, 2008, the Company issued to Tangiers Investors LP 443,656 common
shares in exchange for partial satisfaction of the Loan Agreement dated March
25, 2008, for the principal of $5,000, at conversion price 0.01127 per
share.
 
 On
January 5, 2009, the Company issued to Tangiers Investors LP 350,878 common
shares in exchange for partial satisfaction of the Loan Agreement dated March
25, 2008, for the principal of $2,000, at conversion price 0.0057 per
share.
 
 On
January 16, 2009, the Company issued to Tangiers Investors LP 571,428 common
shares in exchange for partial satisfaction of the Loan Agreement dated March
25, 2008, for the principal of $2,000, at conversion price 0.0035 per
share.
 
 On May
29, 2008 the Company borrowed $100,000 from Jaworek Capital LLC. Loan had
interest payable on the unpaid balance at the rate of 9% with the initial
maturity date as of May 28, 2009. Loan had a beneficial conversion clause
providing the option that the loan can be converted into the company’s common
shares at a discount of 20% to market value, with a conversion price limit not
to exceed $.40 per share. The company recognizes beneficial conversion features
in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly,
the company fully amortized the discount through the interest expense in the
amount of $24,309 at the date of issuance of the loan.
 
 On
July 2, 2008, the Company issued to Jaworek Capital LLC 1,229,435 common shares
in exchange for satisfaction of the Loan Agreement dated May 29, 2008, for the
principal of $100,000 and accrued interest of $814, at conversion price 0.0820
per share.
 
 On
June 16, 2008 the Company borrowed another $100,000 from Jaworek Capital LLC.
Loan had interest payable on the unpaid balance at the rate of 9% with the
initial maturity date as of June 15, 2009. Loan had a beneficial conversion
clause providing the option that the loan can be converted into the company’s
common shares at a discount of 20% to market value, with a conversion price
limit not to exceed $.40 per share. The company recognizes beneficial conversion
features in accordance with the FASB Emerging Issues Task Force Issue 98-5.
Accordingly, the company fully amortized the discount through the interest
expense in the amount of $ 14,679 at the date of issuance of the
loan.
 
 On
July 2, 2008, the Company issued to Jaworek Capital LLC 1,224,023 common shares
in exchange for satisfaction of the Loan Agreement dated June 16, 2008, for the
principal of $100,000 and accrued interest of $370, at conversion price 0.0820
per share.
   -22-
 
 On
July 1, 2008 the Company borrowed another $100,000 from Jaworek Capital LLC.
Loan had interest payable on the unpaid balance at the rate of 9% with the
initial maturity date as of June 30, 2009. Loan had a beneficial conversion
clause providing the option that the loan can be converted into the company’s
common shares at a discount of 20% to market value, with a conversion price
limit not to exceed $.40 per share. The company recognizes beneficial conversion
features in accordance with the FASB Emerging Issues Task Force Issue 98-5.
Accordingly, the company fully amortized the discount through the interest
expense in the amount of $ 38,804 at the date of issuance of the
loan.
 
 Also,
the Company entered into a Stock Purchase Agreement with the lender which
entitles the lender to purchase 500,000 shares of the Company's common stock at
a price of $0.11 cents per share for a period of 12 months from the time of the
agreement. The total cost of the stock options granted was
$4,350.
 
 On
August 6, 2008, the Company issued to Jaworek Capital LLC 3,241,099 common
shares in exchange for satisfaction of the Loan Agreement dated July 1, 2008,
for the principal of $100,000 and accrued interest of $863, at conversion price
0.0311 per share.
  On
July 31, 2008 the Company borrowed another $100,000 from Jaworek Capital LLC.
Loan had interest payable on the unpaid balance at the rate of 9% with the
initial maturity date as of June 30, 2009. Loan had a beneficial conversion
clause providing the option that the loan can be converted into the company’s
common shares at a discount of 20% to market value, with a conversion price
limit not to exceed $.40 per share. The company recognizes beneficial conversion
features in accordance with the FASB Emerging Issues Task Force Issue 98-5.
Accordingly, the company fully amortized the discount through the interest
expense in the amount of $20,192 at the date of issuance of the
loan.
 
 Also,
the Company entered into a Stock Purchase Agreement with the lender which
entitles the lender to purchase 150,000 shares of the Company's common stock at
a price of $0.075 cents per share for a period of 12 months from the time of the
agreement. The total cost of the stock options granted was $0.
 
 On
August 8, 2008, the Company issued to Jaworek Capital LLC 3,138,239 common
shares in exchange for satisfaction of the Loan Agreement dated July 31, 2008,
for the principal of $100,000 and accrued interest of $173, at conversion price
0.0319 per share.
 
 On
August 29, 2008 the Company borrowed $110,000 from Steven Fruman. Loan had
interest payable on the unpaid balance at the rate of 9% with the initial
maturity date as of June 25, 2009. Loan had a beneficial conversion clause
providing the option that the loan can be converted into the company’s common
shares at a discount of 20% to market value, with a conversion price limit not
to exceed $.20 per share. The company recognizes beneficial conversion features
in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly,
the company fully amortized the discount through the interest expense in the
amount of $0 at the date of issuance of the loan.
 
 Also,
the Company entered into a Stock Purchase Agreement with the lender which
entitles the lender to purchase 1,000,000 shares of the Company's common stock
at a price of $0.05 cents per share for a period of 12 months from the time of
the agreement. The total cost of the stock options granted was
$0.
 
 On
January 16, 2009, the Company issued to Steven Fruman 12,450,000 common shares
in exchange for satisfaction of the Loan Agreement dated August 29, 2008, for
the principal of $110,000 and Loan Agreement dated May 12, 2008, for the
principle of $10,000 and a total accrued interest of $4,500, at conversion price
0.01 per share.
 
 On
September 11, 2008 the Company borrowed $62,000 from Jaworek Capital LLC. Loan
had interest payable on the unpaid balance at the rate of 9% with the initial
maturity date as of September 25, 2009. Loan had a beneficial conversion clause
providing the option that the loan can be converted into the company’s common
shares at a discount of 20% to market value, with a conversion price limit not
to exceed $.20 per share. The company recognizes beneficial conversion features
in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly,
the company fully amortized the discount through the interest expense in the
amount of $26,571 at the date of issuance of the loan.
 
 Also,
the Company entered into a Stock Purchase Agreement with the lender which
entitles the lender to purchase 85,000 shares of the Company's common stock at a
price of $0.05 cents per share for a period of 12 months from the time of the
agreement. The total cost of the stock options granted was $0.
 
 On
January 16, 2009, the Company issued to Jaworek Capital LLC 6,322,301 common
shares in exchange for satisfaction of the Loan Agreement dated September 11,
2008, for the principal of $62,000 and accrued interest of $1,223, at conversion
price 0.01 per share.
 
 On
October 24, 2008 the Company borrowed $50,000 from Inga Fruman. Loan had
interest payable on the unpaid balance at the rate of 9% with the initial
maturity date as of November 24, 2008.
 
 On
January 16, 2009, the Company issued to Inga Fruman 5,108,493 common shares in
exchange for satisfaction of the Loan Agreement dated October 24, 2008, for the
principal of $50,000 and accrued interest of $1,085, at conversion price 0.01
per share.
 
 -23-
  On
December 1, 2008 the Company borrowed $250,000 from Robert Catell. Loan had
interest payable on the unpaid balance at the rate of 10% with the initial
maturity date as of June 1, 2009. Loan had a beneficial conversion clause
providing the option that the loan can be converted into the company’s common
shares at a discount of 20% to market value, with a conversion price limit not
to exceed $.20 per share. The company recognizes beneficial conversion features
in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly,
the company fully amortized the discount through the interest expense in the
amount of $82,447 at the date of issuance of the loan.
 
 On
January 16, 2009, the Company issued to Robert Catell 25,335,616 common shares
in exchange for satisfaction of the Loan Agreement dated December 1, 2008, for
the principal of $250,000 and accrued interest of $3,356, at conversion price
0.01 per share.
 
 NOTE 9
- PREFERRED AND COMMON STOCK
 
 During
the fiscal year ended January 31, 2008:
 
 In
April 2007 the Company sold 50,000 of its $.001 par value common shares to
unrelated investors in private placements for $1.00 per share for proceeds of
$50,000.
 
 In
June 2007 the Company entered into stock conversion agreements with the
Company's shareholders according to which all preferred shares issued to
shareholders in the amount of $14,417 shall be converted into shares of common
stock at the par value of 0.001 per share. These conversion agreements were part
of the exchange agreement between the Company and Family Healthcare Solutions,
Inc., a Nevada Corporation (see Note 7).
 
 In
June 2007 as discussed, in Note 7, the Company entered into debt conversion
agreements with the Company's shareholders according to which loans from
shareholders and certain loans from related party in the amount of $877,000
shall be converted into shares of common stock at the conversion prices of $0.30
and 0.25 per share.
 
 In
July 2007 the Company sold 1,000,000 of its $.001 par value common shares to
unrelated investors for $0.30 per share for proceeds of $300,000. Market value
of the common stock at the time of sale was $0.60 per share.
 
 In
August 2007 the Company sold 166,667 of its $.001 par value common shares to
unrelated investors for $0.30 per share for proceeds of $50,000. Market value of
the common stock at the time of sale was $0.35 per share.
 
 On
November 1, 2007, the Company issued to its attorney 177,420 unrestricted shares
of common stock in pay of past and future legal services. Market value of the
common stock at the time of agreement was $0.31 per share.
 
 On
November 9, 2007, the Company issued to Island Broadcasting Company 3,000,000
restricted shares of common stock as a part of new Time Brokerage Agreement (see
Note 10). Market value of the common stock at the time of agreement was $0.30
per share.
 
 On
November 23, 2007, the Company issued to Ronn Torrossian, an independent
consultant, 3,000,000 restricted shares of common stock as a part of new
Consulting Agreement (see Note 11). Market value of the common stock at the time
of agreement was $0.16 per share.
 
 On
January 16, 2008, the Company issued to its attorney 229,473 unrestricted shares
of common stock in pay of past and future legal services. Market value of the
common stock at the time of agreement was $0.18 per share.
 
 During
the year ended January 31, 2009:
 
 On
February 6, 2008 certain officers and directors of the Company were granted a
total of 3,200,000 stock options to purchase Company’s $.001 par value common
shares for $0.31 per share. The total cost of the stock options granted was
$6,720.
 
 In
March 2008 certain officers of the Company exercised their options and purchased
a total of 177,730 of the Company’s $.001 par value common shares for $0.31 per
share for a total of $55,096.
 
 -24-
  In May
2008 the Company issued 100,000 common shares to its contractor in exchange for
consulting services worth $20,000. Market value of the stock at the time of
agreement was $0.09 per share.
 
 On
July 1, 2008, as discussed in the Note 11, the Company issued to Island
Broadcasting, Inc 1,000,000 of the Company’s $.001 common shares for $0.11 per
share for satisfaction of the payment postponement agreement.
 
 On
July 2, 2008, as discussed in the Note 8, the Company issued to Jaworek Capital
LLC 1,224,023 common shares in exchange for satisfaction of the Loan Agreement
dated May 29, 2008, for the principal of $100,000 and accrued interest of $370,
at conversion price 0.0820 per share.
 
 On
July 2, 2008, as discussed in the Note 8, the Company issued to Jaworek Capital
LLC 1,224,023 common shares in exchange for satisfaction of the Loan Agreement
dated June 16, 2008, for the principal of $100,000 and accrued interest of $370,
at conversion price 0.0820 per share.
 
 During
the year ended January 31, 2009 Dr. Paukman, a director of the Company made
capital contributions in the amount of $88,228 to VSE Magazine, Inc as
additional paid-in capital. No common stock issued.
 
 On
July 15, 2008, as discussed in the Note 8, the Company issued to FCIC 2,729,014
common shares in exchange for satisfaction of the Loan Agreement dated March 14,
2007, for the principal of $250,000 and accrued interest of $29,301, at
conversion price 0.10 per share.
 
 On
August 6, 2008, as discussed in the Note 8, the Company issued to Jaworek
Capital LLC 3,241,099 common shares in exchange for satisfaction of the Loan
Agreement dated July 1, 2008, for the principal of $100,000 and accrued interest
of $863, at conversion price 0.0311 per share.
 
 On
August 8, 2008, as discussed in the Note 8, the Company issued to Jaworek
Capital LLC 3,138,239 common shares in exchange for satisfaction of the Loan
Agreement dated July 31, 2008, for the principal of $100,000 and accrued
interest of $173, at conversion price 0.0319 per share.
 
 On
August 29, 2008, as discussed in the Note 8, the Company issued to FD Import
& Export Corp. 3,519,308 common shares to in partial satisfaction of the
Loan Agreement dated February 28, 2008, for principle of $71,512, at a
conversion price 0.02032 per share.
 
 On
October 2, 2008, as discussed in the Note 8, the Company issued to Tangiers
Investors LP 443,656 common shares in exchange for partial satisfaction of the
Loan Agreement dated March 25, 2008, for the principal of $5,000, at conversion
price 0.01127 per share.
 
 On
October 13, 2008, as discussed in the Note 15, the Company issued to Golden Gate
Investors, Inc 131,579 common shares in exchange for partial satisfaction of the
Loan Agreement dated April 18, 2008, for the principal of $1,000, at conversion
price 0.0076 per share.
 
 On
November 11, 2008, as discussed in the Note 15, the Company issued to Golden
Gate Investors, Inc 500,000 common shares in exchange for partial satisfaction
of the Loan Agreement dated April 18, 2008, for the principal of $2,000, at
conversion price 0.004 per share.
 
 On
January 16, 2009, as discussed in the Note 8, the Company issued to Tangiers
Investors LP 571,428 common shares in exchange for partial satisfaction of the
Loan Agreement dated March 25, 2008, for the principal of $2,000, at conversion
price 0.0035 per share.
 
 On
January 16, 2009, as discussed in the Note 8, the Company issued to Jaworek
Capital LLC 6,322,301 common shares in exchange for satisfaction of the Loan
Agreement dated July 31, 2008, for the principal of $62,000 and accrued interest
of $1,223, at conversion price 0.01 per share.
 
 -25-
  On
January 16, 2009, as discussed in the Note 8, the Company issued to FD Import
& Export Corp 14,176,742 common shares to satisfy the Loan Agreement dated
February 28, 2008, for outstanding principle of $28,488 and Loan Agreement dated
March 10, 2008, for principle of $100,000 and total accrued interest of $13,280,
at a conversion price 0.01 per share.
 
 On
January 16, 2009, as discussed in the Note 8, the Company issued to ESJA
Enterprises Inc 9,000,000 common shares in exchange for satisfaction of the Loan
Agreement dated February 21, 2008, for the principal of $90,000, at conversion
price 0.01 per share.
 
 On
January 16, 2009, as discussed in the Note 8, the Company issued to Ocean
Bridge, Inc 9,794,220 common shares in exchange for satisfaction of the Loan
Agreement dated August 17, 2008, for the outstanding principal of $80,000 and
accrued interest of $17,942, at conversion price 0.01 per
share.
 
 On
January 16, 2009, as discussed in the Note 8, the Company issued to Steven
Fruman 12,450,000 common shares in exchange for satisfaction of the Loan
Agreement dated August 29, 2008, for the principal of $110,000 and Loan
Agreement dated May 12, 2008, for the principle of $10,000 and a total accrued
interest of $4,500, at conversion price 0.01 per share.
 
 On
January 16, 2009, as discussed in the Note 8, the Company issued to Inga Fruman
5,108,493 common shares in exchange for satisfaction of the Loan Agreement dated
October 24, 2008, for the principal of $50,000 and accrued interest of $1,085,
at conversion price 0.01 per share.
 
 On
January 16, 2009, as discussed in the Note 8, the Company issued to Robert
Catell 25,335,616 common shares in exchange for satisfaction of the Loan
Agreement dated December 1, 2008, for the principal of $250,000 and accrued
interest of $3,356, at conversion price 0.01 per share.
 
 On
January 16, 2009, as discussed in the Note 7, the Company issued to certain
shareholders 63,651,741 common shares in exchange for satisfaction of the loans
from shareholders for the principles of $596,999 and accrued interest of
$39,518, at conversion prices of $0.01 per share.
 
 In
January 2009 the Company sold 7,700,000 of its $.001 par value common shares to
unrelated investors at $0.01 per share for proceeds of $77,000.
 
 On
January 16, 2009, the Company issued 8,901,182 shares at $0.01 per share to
satisfy its rent obligations for a total of $89,012.
  NOTE
10 – EQUIPMENT LOANS PAYABLE
  January
      31,
                    2009
                  
                  
                  January
      31,
                    2008Equipment
      loans consist of the following:Raritan
      Bay FCU ("RBFCU")
                  
                  $
                  -
                  
                  
                  $
                  -Chrysler
      Credit ("CC")
                  
                  
                  10,015
                  
                  
                  
                  13,07110,015
                  
                  
                  
                  13,071Less
      current portion
                  
                  
                  7,248
                  
                  
                  
                  8,304$
                  2,767
                  
                  
                  $
                  4,767
  The
loan from RBFCU is payable in 72 monthly loan payments of $899 that include
principal and interest at 6.75% per annum and matures on September 1,
2011.  The loan is secured by the vehicle purchased. The August 2007
loan was terminated and vehicle was returned to the lender.
 
 The
loan payable to CC is payable in 60 monthly payments of $782 which includes
principal and interest at 6.75% per annum and matures on July 9,
2010.  The loan is secured by the truck purchased.
   -26-
  NOTE
11 - COMMITMENTS AND CONTINGENCIES
 
 Airtime Agreement
(Lease)
 
 The
Company has an agreement (the "Agreement") with Island Broadcasting Company (the
"Licensee") for airtime.  Pursuant to the Agreement the Company has
purchased airtime for the period November 1, 2005 to July 1,
2010.  However, after July 1, 2006 the Licensee may terminate the
Agreement upon 90 days notice to the Company.  Per the Agreement the
airtime is paid monthly.
 
 On
November 9, 2007, Echo Broadcasting Group, Inc. ("Echo Broadcasting "), a
subsidiary of the Company, amended its Time Brokerage Agreement, originally
dated November 1, 2005, with Island Broadcasting Company. In particular, Echo
extended the term of the Time Brokerage Agreement through December 31, 2012 at
12:00 a.m. EST, modified the events of defaults for both Echo and Island
Broadcasting Company, and converted the $170,000 escrow amount currently being
held by Island Broadcasting Company into a payment from Echo to Island
Broadcasting Company. Additionally, Company issued to Island Broadcasting
Company 3,000,000 restricted shares of common stock, at the price of $0.30 per
share.
 
 Finally,
the amended Time Brokerage Agreement now requires Echo to pay Island
Broadcasting Company five percent of the gross receipts received by or credited
to Echo and derived from advertising payments, sponsorships and other sources
relating to the Station's activities. Echo must make such payments within sixty
days following the close of each of Echo's full fiscal quarter from October 1,
2008 through December 31, 2012.
 
 During
the year ended January 31, 2008, the Company paid $2,853,775 for
airtime.
 
 On
April 28, 2008 Echo Broadcasting made a payment postponement agreement with
Island Broadcasting Company. According to this provision, Echo Broadcasting will
pay an annual interest rate charge of 8% on all outstanding monthly balances. In
addition Echo Broadcasting will pay a fee of 200,000 restricted shares of the
Company’s common stock per month for each month for which payment is not made.
All shares are due to be issued on July 1, 2008. Accordingly, on July 1, 2008
the Company issued 1,000,000 of its $.001 par value common shares to Island
Broadcasting. Market value of the common stock at the time when additional
provision to the Time Brokerage Agreement was adopted was $0.11 per
share.
 
 On
January 9, 2009, Echo Broadcasting amended its Time Brokerage Agreement (the
"Amendment Agreement"), originally dated November 1, 2005 and amended November
7, 2007, with Island Broadcasting Company ("Island"). Pursuant to the Amendment
Agreement, Echo shall make payments of $150,000 to Island on the following
dates: February 1, March 1, April 1 and May 1, 2009. In addition, the amount
that was due on December 31, 2008 which is approximately $1,640,000 shall be
reduced by half, and paid $500,000 on March 1, 2009 and $320,000 on May 15,
2009. The $250,000 that was due on January 1, 2009, and the additional $100,000
due on February 1, March 1, April 1 and May 1, 2009 shall be waived. Payments of
$250,000 per month, per the November 7, 2007 agreement, as disclosed in our Form
8-K on November 15, 2008, will commence on June 1, 2009 and continue thereafter.
Additionally, the revenue sharing fees of the November 7, 2007 agreement shall
be waived up to June 1, 2009 and continue thereafter. Effective June1, 2009,
Echo will adhere to the original agreement and its amendment date November 7,
2007.
 
 Both
parties also agreed that the Amendment Agreement will be terminated at 5PM on
the above due dates if any of the amounts stated above are not paid to Island on
or before the due dates
 
 During
the year ended January 31, 2009 and 2008, the Company paid $1,635,910 and
$2,853,775 for airtime, respectively.
 
 Remaining
commitments under the Agreement are as follows:
  Year Ending January
    31,2010
                    
                    2,700,0002011
                    
                    
                    3,410,0002012
                    
                    
                    3,751,0002013
                    
                    
                    4,006,1002014
                    
                    
                    2,688,200$
                    16,555,300
  -27-
  Premises and
Equipment
 
 The
Company has entered into lease agreements for office space and equipment, which
expire at various times through April 2009. During the years ended January 31,
2009 and 2008 the Company paid $156,140 and $152,249 in rent expense
respectfully.
 
 Remaining
commitments under the operating leases mature as follows:
  Year Ending January
    31,2010
                    
                    
                    15,105$
                    15,105
  On May
1, 2006 the Company has entered into a new lease agreement for office space,
which was originally expected to expire on April 30, 2011.
 
 On May
1, 2007 the Company and the lessor of the premises, mutually terminated a lease
agreement for office space, which was originally due to expire on April 30,
2011. All prior commitments under the original lease are terminated. The Company
continued to rent the office space on the month-to-month basis. During the year
ended January 31, 2008 the Company paid $72,400 in rent expense. As of February
1, 2008 the Company vacated the premises.
 
 Capital
Lease
 
 On
October 4, 2006 the Company entered into a lease agreement for equipment, which
expires on April 30, 2011. During the years ended January 31, 2009 and 2008 the
Company paid $17,820 and $19,440 in lieu of the lease respectfully. The
commitments under the lease agreement mature as follows:
  Year Ending January
    31,2010
                    
                    
                    19,4402011
                    
                    
                    12,960$
                    32,400
 
 Legal
Contingencies
  On
October 7, 2008, the Company and our CEO Aleksandr Shvarts (collectively, the
"Defendants") were served with a summons and complaint filed by AJW Partners,
LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC, and New Millennium Capital
Partners II, LLC (collectively, the "Plaintiffs"). The complaint alleged that
the Company has failed to make payments due on a series of notes from 2004 to
2006 issued by the Company, and failed to make payments of interest due on these
notes, and other unlawful conducts by the Company. The case was filed in the
Supreme Court of the State of New York, County of New York. The plaintiffs seek
all sums due from the notes and other agreements, prejudgment interest,
compensatory damages, punitive damages, and attorneys' fees to be in excess of
$650,000.
  The
Company and Mr. Shvarts ("we") deny the allegations made in the complaint and
intend to vigorously contest the allegations. We believe that we did not enter
into any of the above referenced notes with the Plaintiffs and none of the notes
or related legal documents were signed or executed on behalf of the Company or
our CEO. We are in the process of retaining counsel to represent us in this
matter and to file a counterclaim for damages based on breach of contract by the
Plaintiffs.
 
 -28-
  NOTE
12 - STOCK-BASED COMPENSATION
 
 The
Company accounts for its employee stock-based compensation for all such
compensation awarded beginning February 1, 2006 under FASB Statement No. 123R,
Accounting for Stock-Based Compensation. For employee stock-based compensation
awarded prior to January 1, 2006, the Company accounted for such
compensation under Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees.
 
 In
February 2007, the Company canceled 1,175,000 preferred shares, $.001 par value,
with a market value of $1,175 that were priorly awarded to employees and were
part of deferred compensation in the equity section.
 
 Also,
In February 2007, the Company has issued 1,100,000, $.001 par value, preferred
shares for past and future services performed by its officers, directors,
employees and consultants. The preferred stock is convertible into common shares
in 18 months after the issuance based upon a 2 to 1 conversion ratio. The shares
of preferred stock have preferential treatment in case of liquidation. Each
share of the preferred stock has 5 voting rights. Out of 1,100,000 preferred
shares, 1,000,000 shares, with market value of $1,000, are fully vested and
expensed under selling, general and administrative expenses. 100,000 of
preferred shares, with market value of $100 are included in deferred
compensation in the equity section of the balance sheets at January 31,
2008.
 
 On
November 23, 2007, the Company has issued 3,000,000, $.001 par value, common
shares for future consulting services performed by Ronn Torrosian over a period
two years. Market value of the stock at the time of agreement was $0.16 per
share for a total cost of $480,000. At January 31, 2009, Ronn Torrosian earned
consulting fees in the amount of $285,636. The remaining value of the Ronn
Torrosian’s future services in the amount of $194,681 are included in deferred
compensation in the equity section of the balance sheets at January 31,
2009.
 
 NOTE
13 – REVERSED MERGER
 
 On
June 20, 2007, the company entered into a Stock Purchase and Share Exchange
Agreement (the “Exchange Agreement”) Family Healthcare Solutions, Inc., a Nevada
Corporation (“FHCS”), pursuant to which FHCS acquired 100% of the issued
and outstanding capital stock of the company and wholly owned subsidiaries,
making the company a wholly owned subsidiary of FHCS, and convert into equity
$877,000 in convertible debentures from the company. Note Holders, in exchange
for the issuance by FHCS to the company Shareholders and the company Note
Holders of 49,990,406 shares of FHCS common stock, par value $0.001 per share,
which constituted 68.50% of the company’s issued and outstanding fully diluted
common stock after the transaction is closed. As additional consideration, the
FHCS’s Shareholders agreed to cancel 13,161,033 shares of common
stock.  The FHCS’s stockholders own 28.50% of the issued and
outstanding fully diluted common stock of the company after the transaction was
closed.
  NOTE
14 - PAYROLL TAXES
 
 The
Company has outstanding payroll taxes payable as of January 31, 2009 and January
31, 2008. As of January 31, 2009, the Company has recorded an estimate for
interest and penalties that are due to the company’s failure to timely pay
payroll taxes for prior periods. The outstanding payroll tax liability is as
following:
  January
      31,
                  
                  
                  January
      31,2009
                  
                  
                  2008Payroll
      taxes payable
                  
                  $
                  997,152
                  
                  
                  $
                  728,350Penalties
      and
      interest
                  
                  
                  115,814
                  
                  
                  
                  -Accrued
      payroll and payroll taxes
                  
                  $
                  1,112,966
                  
                  
                  $
                  728,350
  The
Company implemented a payment plan with Internal Revenue
Service.
 
 -29-
  NOTE
15 – SETTLEMENT PAYABLE
 
 On
April 18, 2008, the Company entered into a Securities Purchase Agreement with
Golden Gate Investors, Inc. The aggregate purchase price was $1,500,000 for the
initial tranche and the investment was as follows:
 
 The
Securities Purchase Agreement includes two tranches. The initial tranche
consists of a 7.00% convertible debenture (the "Debenture") issued by the
Company, in exchange for $100,000 in cash and a 7.25% Secured Promissory
Note  for $1,400,000 issued by the Golden Gate Investors, Inc which
matures on May 31, 2012. The Promissory Note contains a prepayment provision
which requires the Golden Gate Investors, Inc to make prepayments of interest
and principal of $200,000 monthly upon satisfaction of certain conditions. One
of the conditions to prepayment is that shares of the Company's common stock
issued pursuant to the conversion rights under the debenture must be freely
tradable under Rule 144 of the Securities Act of 1933, as amended. Pursuant to
the terms of the debenture, the Golden Gate Investors, Inc shall have the right
from time to time, and at any time on or prior to maturity to convert all or any
part of the outstanding and unpaid principal amount of this debenture into fully
paid and non-assessable shares of the Company's Common Stock, $.001 par value
per share. The number of shares of Common Stock to be issued upon each
conversion of the debenture shall be determined by dividing the amount of
principal and accrued interest to be converted ("Conversion Amount") by the
applicable conversion price then in effect on the date specified in the notice
of conversion, as set forth in Exhibit A to the Debenture (the "Notice of
Conversion"). The conversion price shall be equal to the lesser of: (i) $0.50 or
(ii) the average of the lowest three (3) volume weighted average prices of the
Company's Common Stock as reported on the OTC Bulletin Board (the "Volume
Weighted Average Price") during the twenty (20) trading days prior to the date
of the Conversion Notice (the "Conversion Date") multiplied by .75. As described
in the respective instruments, the Debenture provides for an upward adjustment
of the interest rate under certain circumstances and the Promissory Note
provides for a downward adjustment of the interest rate under certain
circumstances. In addition the Golden Gate Investors, Inc is required to prepay
$250,000 of the Promissory Note issued on April 18, 2008 on the five month
anniversary of the purchase of the Debenture that occurred on April 18, 2008,
provided that certain conditions set forth in the Securities Purchase Agreement
are satisfied.
 
 Provided
that no event of default exists, as defined in the Debenture, the second tranche
of the financing consists of the Company selling and the Golden Gate Investors,
Inc purchasing a Debenture in the principal amount of $1,500,000 in exchange for
a purchase price of $1,500,000 (the "Second Debenture"), with such purchase
price paid via a cash payment of $250,000 and the issuance of a promissory note
in the principal amount of $1,250,000 (the "Second Promissory Note"), with the
form of and terms of the Second Debenture and the Second Promissory Note and
payment of the purchase price subject to the same terms and conditions of the
Securities Purchase Agreement, the Debenture and the Promissory Note, provided
that the Discount Multiplier (as defined in the Second Debenture) for the Second
Debenture shall be 90%, and when the Second Debenture is issued, the term
"Debenture" as used in the Securities Purchase Agreement shall be deemed to
include the Second Debenture in all respects and when the Second Promissory Note
is issued, the term "Promissory Note" as used in the Securities Purchase
Agreement shall be deemed to include the Second Promissory Note in all respects.
Pursuant to the Securities Purchase Agreement, the Golden Gate Investors, Inc
may eliminate the requirement to purchase the Second Debenture by a payment to
the Company of $25,000, which payment shall be reduced under certain conditions
to $5,000 or $0. As also set forth in the Securities Purchase Agreement, the
Company has the right, during a specified ten trading day period prior to the
Golden Gate Investors, Inc's purchase of the Second Debenture, subject to the
satisfaction of certain conditions set forth in the Securities Purchase
Agreement, to terminate the right of the Golden Gate Investors, Inc to purchase
the Second Debenture.
 
 If the
Golden Gate Investors, Inc elects to convert a portion of the Debenture and, on
the day that the election is made, the Volume Weighted Average Price per share
of the Company's Common Stock is below $0.04 per share, the Company shall have
the right to prepay that portion of the Debenture that the Golden Gate
Investors, Inc elected to convert, plus any accrued and unpaid interest, at 125%
of such amount. In the event that the Company elects to prepay that portion of
the Debenture, the Golden Gate Investors, Inc shall have the right to withdraw
its Conversion Notice. Pursuant to its terms, the Golden Gate Investors, Inc may
not convert the principal amount of the Debenture to the extent that, following
such conversion, the Golden Gate Investors, Inc would beneficially own in excess
of 4.99% of the Company's outstanding Common Stock, which cap may be increased
to 9.99% or entirely removed by the Investor on not less than 61 days' prior
notice.
 
 -30-
  Finally,
in the event that the Company obtains a commitment for any other financing
(either debt, equity, or a combination thereof) which is to close during the
term of the Debenture, Golden Gate Investors shall be entitled to a right of
first refusal to enable it to, at Golden Gate Investors, Inc’s option, either:
(i) match the terms of the other financing, or (ii) add additional principal to
the Debenture, in the amount of such other financing, on the same terms and
conditions as the Debenture.
  Pursuant
to the terms of the Securities Purchase Agreement, the Golden Gate Investors,
Inc does not have any registration rights.
  Other
than their relationship as a result of the Securities Purchase Agreement, there
is no material relationship between the Company and the Golden Gate Investors,
Inc.
 
 The
Company recognizes beneficial conversion features in accordance with the FASB
Emerging Issues Task Force Issue 98-5. Accordingly, the company fully amortized
the discount through the interest expense in the amount of $285,715 at the date
of issuance of the loan.
 
 The
Company’s common stock as of August 15, 2008 had traded on the Trading Market
(as defined in the Debenture) for ten consecutive days at a price per share that
was less than 0.039. Therefore, the interest rate was increased to 9.75 % as of
August 15, 2008. In addition, under the terms of the Note, the interest rate
applicable to the Note was decreased to 4.75 % effective as of August 15,
2008.
 
 On
October 13, 2008, the Company issued to Golden Gate Investors, Inc 131,579
common shares in exchange for partial satisfaction of the Loan Agreement dated
April 18, 2008, for the principal of $1,000, at conversion price 0.0076 per
share.
 
 On May
13, 2009, the Company and Golden State Equity Investors, Inc., f/k/a Golden Gate
Investors, Inc.(“GSEI”) entered into a Settlement Agreement and Mutual General
Release (the “Settlement Agreement”) to settle that certain lawsuit filed by
GSEI against the Company on March 16, 2009 in the Superior Court of the State of
California, County of San Diego.  Under the Settlement Agreement, the
Company agreed to pay GSEI an aggregate of $250,000 in installments from
June 1, 2009 to November 1, 2010 (the “Settlement Amount”), and in return GSEI
has agreed to dismiss the lawsuit.
 
 However,
in the event that (i) the Company has satisfied all of the payments through
February 1, 2010, for an aggregate payment amount of $125,000, on or prior to
February 1, 2010, and (ii) an Event of Default has not occurred under the
Settlement Agreement on or prior to February 1, 2010, then the Settlement Amount
shall be deemed paid in full. Should any payment described above not be timely
received by GSEI, such that an Event of Default exists under the Settlement
Agreement, the outstanding Settlement Amount shall accrue interest from the date
hereof at a rate of 9.75% per annum
  Note
      payable – Golden Gate Investors, Inc.
                      
                      $
                      1,497,000Less:
      Note receivable
                      
                      
                      1,400,000Remaining
      payable
                      
                      
                      97,000Additional
      settlement adjustment
                      
                      
                      28,000Settlement
      payable
                      
                      $
                      125,000
 
 NOTE
16 – SALE OF INTANGIBLE ASSETS
  On
July 14, 2008 the Company entered into an asset purchase agreement with Dr. Lev
Paukman, a director of the Company (the "Buyer").
 
 Pursuant
to the terms of the agreement, the Company sold certain business assets of its
wholly-owned subsidiary, VSE Magazine, to the Buyer. The Buyer will assume an
advertising credit of $109,832 owed to KSP. The Buyer will also assume
advertising credits in the magazine from clients that the Company or Echo
Broadcasting Group, a wholly-owned subsidiary of the Company, might direct up to
the amount of $50,000. In the event there are no advertising client credits then
the buyer will pay the seller $10,000 cash.
  VSE
Magazine, Inc. is a Russian language publication currently operating under the
trade name "METPO" that is distributed in the greater New York metro
area.
 
 As a
result of the above-mentioned assets and share purchase agreement, the Company
incurred losses from the proceeds of the sale of the assets in the amount of
$40,168.
  -31-
  NOTE
17 – JUDGMENT PAYABLE
 
 On
September 3, 2008, the Company was served with a Notice of Motion for
Summary Judgment in Lieu of Complaint filed by David Kokakis (the
“Plaintiff”).  In this Motion, filed in Supreme Court of the State of
New York on September 3, 2008, David Kokakis alleged that the Company has filed
to make payments due on a series of notes issued by the Company, and filed to
make payments of interest due on these notes.  David Kokakis asked the
court to enter judgment in his favor in the total amount of $329,500 allegedly
due under the notes, plus accrued interest.
  On
November 11, 2008, the Company settled this litigation and entered into a
settlement agreement (the "Stipulation of Settlement") with Plaintiff. The
Company signed two (2) confessions of judgment (the "Confession of Judgment")
which is in favor of Plaintiff. Pursuant to the first Confession of Judgment, in
the event of default of the Stipulation of Settlement, the Company agrees to pay
Plaintiff a total of $388,810, consisting of a principal amount of $329,500 plus
accrued interests of $59,310. Pursuant to the second Confession of Judgment, in
the event of default of the Stipulation of Settlement , the Company agreed to
pay Plaintiff deferred compensation in the sum of $125,962. The second claim
would be the basis of a second action brought by Plaintiff against the Company,
which Plaintiff was about to commence.
  Both
Confessions of Judgment will be held in escrow by Plaintiff's counsel pending
the Company's compliance with its agreement pursuant to the schedule detailed in
the Stipulation of Settlement. The payments have a maximum of a five (5) day
grace period, that is, they must be in Plaintiff's attorney's possession by no
later than the 6th day of the month.
  If the
Company makes all of the payments, which is $316,955 in total, pursuant to the
payment schedule, the two (2) Confessions of Judgment will not be filed and will
be waived and returned to the Company's attorney. Failing to make the payments,
or failing to pay on time, as a fore described, will be deemed a default and
permit Plaintiff's counsel to file both Confessions of Judgment and Affidavits
of Confession of Judgments with the Clerk of the Court without further
notice.
 
 Initial
      judgment payable
                    
                    $
                    316,955Less:
      payments to date
                    
                    
                    20,000$
                    296,955
 
 NOTE
18 - SEGMENT DATA
 
 Currently
the Company has three reportable segments, which it believes best reflects how
the Company is currently managed – radio broadcasting, recorded music and
corporate divisions. The category “other” includes audio & video recording
studios, METRO magazine and other general support services and initiatives.
Revenue and expenses earned and charged between segments are recorded at fair
value and eliminated in consolidation.
  Year Ended
      January 31, 2008Radio
      VSE
                  
                  
                  Recorded
      Music
                  
                  
                  Corporate
                  
                  
                  Metro
                  
                  
                  Other
                  
                  
                  TotalRevenue
                  
                  $
                  4,227,882
                  
                  
                  $
                  70,000
                  
                  
                  $
                  38,345
                  
                  
                  $
                  155,806
                  
                  
                  $
                  43,421
                  
                  
                  $
                  43,421Direct
      operating expenses
                  
                  
                  3,605,862
                  
                  
                  
                  70,838
                  
                  
                  
                  150
                  
                  
                  
                  227,888
                  
                  
                  
                  12,170
                  
                  
                  
                  3,916,908Selling,
      general and administrative expenses
                  
                  
                  1,579,994
                  
                  
                  
                  504,223
                  
                  
                  
                  1,027,644
                  
                  
                  
                  44,305
                  
                  
                  
                  31,988
                  
                  
                  
                  3,188,154Depreciation
      and amortization
                  
                  
                  52,077
                  
                  
                  
                  205,962
                  
                  
                  
                  108,525
                  
                  
                  
                  23,333
                  
                  
                  
                  363
                  
                  
                  
                  390,260Loss
      on disposal of fixed assets
                  
                  
                  (4,960
                  )
                  
                  
                  64,985
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  60,025Stock
      compensation expense
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  308,333
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  308,333Gain
      on extinguishment of debt
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (403,400
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (403,400
                  )Interest
      expenses
                  
                  
                  64,019
                  
                  
                  
                  -
                  
                  
                  
                  66,617
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  130,636Beneficial
      Conversion
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  51,810
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  51,810Net
      (loss) before tax benefit
                  
                  $
                  (1,069,109
                  )
                  
                  $
                  (776,008
                  )
                  
                  $
                  (1,069,524
                  )
                  
                  $
                  (139,720
                  )
                  
                  $
                  (1,100
                  )
                  
                  $
                  (3,055,461
                  )
   -32-
  Year
Ended January 31, 2009
  RecordedRadio
                  
                  
                  Music
                  
                  
                  Corporate
                  
                  
                  Metro
                  
                  
                  Other
                  
                  
                  TotalRevenue
                  
                  $
                  1,314,528
                  
                  
                  $
                  3,213
                  
                  
                  $
                  7,786
                  
                  
                  $
                  101,338
                  
                  
                  $
                  -
                  
                  
                  $
                  1,426,865Direct
      operating expenses
                  
                  
                  1,838,048
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  131,530
                  
                  
                  
                  -
                  
                  
                  
                  1,969,577Selling,
      general andadministrative
      expenses
                  
                  
                  1,769,631
                  
                  
                  
                  417
                  
                  
                  
                  995,630
                  
                  
                  
                  31,479
                  
                  
                  
                  837
                  
                  
                  
                  2,797,995Depreciation
      and amortization
                  
                  
                  64,317
                  
                  
                  
                  134,560
                  
                  
                  
                  104,315
                  
                  
                  
                  16,667
                  
                  
                  
                  363
                  
                  
                  
                  320,222Loss
      on sale of intangible assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  40,168
                  
                  
                  
                  -
                  
                  
                  
                  40,168Interest
      expense
                  
                  
                  95,893
                  
                  
                  
                  -
                  
                  
                  
                  212,213
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  308,106Beneficial
      Conversion
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  728,642
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  728,642Net
      (loss) before tax benefit
                  
                  $
                  (2,453,361
                  )
                  
                  $
                  (131,764
                  )
                  
                  $
                  (2,033,014)
                  
                  
                  $
                  (118,506
                  )
                  
                  $
                  (1,200
                  )
                  
                  $
                  (4,737,845)
  NOTE
19 – INCOME TAXES
 
 Due to
the Company’s net loss, there was no provision for income taxes.  The
Company has net operating loss carry forwards for income tax purposes of
approximately $8,200,000 at January 31, 2009, and $6,100,000 at January 31,
2008.  These carry forward losses are available to offset future
taxable income, if any, and expire starting in the year 2026.  The
Company’s utilization of this carry forward against future taxable income may
become subject to an annual limitation due to a cumulative change in ownership
of the Company of more than 50 percent.
 
 The
      components of the Company’s Tax provision were as
    follows:
                  
                  January
      31,
                  
                  
                  January
      31,2009
                  
                  
                  2008Current
      income tax (benefit) expense
                  
                  $
                  (2,080,000
                  )
                  
                  $
                  (1,375,000
                  )Deferred
      income tax expense (benefit)
                  
                  
                  2,080,000
                  
                  
                  
                  1,375,000$
                  -
                  
                  
                  $
                  -
 
 The
reconciliation of the income tax computed at the U.S. Federal statutory rate to
income tax expense for the periods ended January 31, 2009 and
2008:
 
 January
      31,
                    
                    
                    January
      31,2009
                    
                    
                    2008Tax
      expense (benefit) at Federal rate (34%)
                    
                    $
                    (1,610,000
                    )
                    
                    $
                    (1,088,000
                    )State
      and local income tax, net of Federal benefit
                    
                    
                    (548,000
                    )
                    
                    
                    (331,000
                    )Effect
      of nondeductible expenses
                    
                    
                    78,000
                    
                    
                    
                    44,000Change
      in valuation allowance
                    
                    
                    2,080,000
                    
                    
                    
                    1,375,000Net
      income tax (benefit) allowance
                    
                    $
                    -
                    
                    
                    $
                    -
 
 Deferred
income taxes reflect the net income tax effect of temporary differences between
the carrying amounts of the assets and liabilities for financial reporting
purposes and amounts used for income taxes.  The Company’s deferred
income tax assets and liabilities consist of the following:
 
 Deferred
      tax asset:
                  
                  January
      31,
                  
                  
                  January
      31,2009
                  
                  
                  2008Net
      operating loss carry forward
                  
                  $
                  4,655,000
                  
                  
                  $
                  2,575,000Valuation
      allowance
                  
                  
                  (4,655,000
                  )
                  
                  
                  (2,575,000
                  )Net
      deferred tax assets
                  
                  $
                  -
                  
                  
                  $
                  -
   -33-
 
 The
Company recognized no income tax benefit for the losses generated for the
periods through January 31, 2009.
 
 SFAS
No. 109 requires that a valuation allowance be provided if it is more likely
than not that some portion or all of a deferred tax asset will not be
realized.  The Company’s ability to realize the benefit of its
deferred tax asset will depend on the generation of future taxable
income.  Because the Company has yet to recognize significant revenue
from the sale of its products, it believes that the full valuation allowance
should be provided.
  NOTE
20 – SUBSEQUENT EVENTS
 
 On
February 10, 2009, the Company entered into a share purchase agreement ("Share
Purchase Agreement") with Robert Catell (the "Buyer"), pursuant to
which the Company issued to the Buyer 7,000,000 shares of our common
stock for a total of $70,000 at the closing of the transaction. The closing date
is February 10, 2009.
 
 On
February 27, 2009, the Company and Aleksandr Shvarts, President and CEO of the
Company (collectively, the "Third-Party Defendants"), were served with a
third-party summons and counterclaim filed by Eric Schwartz, the original
defendant (the "Third-Party Plaintiff"). The counterclaim is grounded in the
Third-Party Defendants' failure to repay certain loan agreement. The Third-Party
Plaintiff alleged: (i) fraudulent representations against the Third-Party
Defendants stemming from alleged representations that common stock of the
Company will be issued to plaintiff when the Company becomes a public company
and said shares of common stock will satisfy the amount owed under the loan
agreement, and (ii) that the Company has been unjustly enriched in the amount of
not less than $425,000 by virtue of its receipt of $425,000 from plaintiff. The
case was filed in the Supreme Court of the State of New York, County of New
York. The Third-Party Plaintiff seeks indemnification of not less than
$1,000,000 from the fraudulent representations and not less than $425,000 plus
accrued interest because of unjustified enrichment, all in the sum of not less
than $1,425,000. The Company and Mr. Shvarts deny the allegations made in the
counterclaim and intend to vigorously contest the allegations. The Company has
retained Nesenoff & Miltenberg, LLP as our legal counsel in this
matter.
 
 On
April 27, 2009, Echo Broadcasting Group, Inc., a subsidiary of the Company,
entered into certain amended time brokerage agreement (the "Amended and Restated
TBA"), originally dated November 1, 2005, as amended November 7, 2007, and
further amended January 9, 2009 (collectively, the "Original TBA"), with Island
Broadcasting Company ("Island"), pursuant to which the Company issued
25,279,614 shares of our common stock to Island to satisfy unpaid fees of
$1,090,000 under the Original TBA owned by Echo on April 27, 2009. Both parties
agreed that the Amended and Restated TBA shall satisfy the obligation of Echo
and Island shall have no obligation to provide any other consideration for the
shares issued above. There are 295,753,677 shares of our common stock
outstanding as of to date. Upon issuance of 25,279,614 shares of common stock,
Island holds a total of 29,279,614 shares, which represent 9.9% of the Company's
common stock.
 
 From
April 27, 2009 to April 30, 2009, the Company entered into 9% convertible
promissory notes (the "Notes") with certain investors (the "Holders") for an
aggregate of $193,000. The maturity date of these Notes is October 1, 2009.
Pursuant to the terms of the Notes, the Holders shall have the right from time
to time, and at any time on or prior to maturity to convert all or any part of
the outstanding and unpaid principal amount of these Notes into fully paid and
non-assessable shares of Common Stock, $.001 par value per share. The number of
shares of Common Stock to be issued upon each conversion of these Notes shall be
determined by dividing the amount of principal and accrued interest to be
converted ("Conversion Amount") by the applicable Conversion Price then in
effect on the date specified in the notice of conversion, in the form attached
hereto as Exhibit A (the "Notice of Conversion"). The Conversion Price shall be
equal to the average closing bid price of the Common Stock (as reported by
Bloomberg L.P.) on the OTC Bulletin Board for the ten (10) trading days prior to
the date of the Conversion Notice (the "Conversion Date") multiplied by .80
provided that the Notice of Conversion is submitted by to our company before
6:00 p.m., New York, New York time on such Conversion Date. However, the
Conversion Price shall not exceed $0.05.
 
 On May
15, 2009, the Company entered into a Time Brokerage Agreement (the “TBA”)
with Signal Above, LLC, a Virginia limited liability company (“Signal Above”).
Signal Above is the holder of the license issued by the Federal Communications
Commission for analog Low Power Television Station WDCN-LP.  The
effective date of the TBA is June 1, 2009.  The station is currently
licensed to operate on channel 6 and is currently operating with an analog
signal. Under the TBA, the Company will supply music-oriented,
predominantly English audio programming to the audio service until May 31, 2014.
On the same day, the Company entered into an amendment to TBA with Signal
Above pursuant to which the Company will pay $50,000 to Signal Above and
7,000,000 shares of common stock of the Company, which is equal to $100,000, as
license fee on or before May 19, 2009.


-34-





ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.




None.




ITEM 9A. CONTROLS AND PROCEDURES.




Evaluation
of Disclosure Controls and Procedures





Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.





Management's
Annual Report on Internal Control Over Financial Reporting.





The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the
Company.  Our internal control system was designed to, in general,
provide reasonable assurance to the Company’s management and board regarding the
preparation and fair presentation of published financial statements, but because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





Our
management assessed the effectiveness of the Company’s internal control over
financial reporting as of January 31, 2009, despite the restatement of our
financial statement for the year ended January 31, 2009 in this Form 10-K,
because the error in interest expense was based on the incorrect calculation of
interest expense on notes issued after January 31, 2009.  The
framework used by management in making that assessment was the criteria set
forth in the document entitled “ Internal Control – Integrated Framework” issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on that assessment, our management has determined that as of January 31, 2009,
the Company’s internal control over financial reporting was effective for the
purposes for which it is intended.


This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.




Changes
in Internal Control over Financial Reporting





No change
in our system of internal control over financial reporting occurred during the
period covered by this report, fourth quarter of the fiscal year ended January
31, 2009 that has materially affected, or is reasonably likely to materially
affect our internal control over financial reporting.





ITEM 9B. OTHER INFORMATION.





None.





PART III





ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE
REGISTRANT.




The
following table sets forth the name and age of our directors and
officers.





Name
                        
                        Age
                        
                        Position
                        
                        Date
      of AppointmentAlex
      Shvarts
                        
                        40
                        
                        Chief
      Executive Officer, Director
                        
                        InceptionDr.
      Elan Kaufman
                        
                        34
                        
                        Director
                        
                        InceptionDr.
      Lev Paukman
                        
                        67
                        
                        Director
                        
                        InceptionKurt
      Dalmata *
                        
                        59
                        
                        Director
                        
                        June
      2007Gennady
      Pomeranets
                        
                        38
                        
                        Chief
      Financial Officer
                        
                        January
      2005






-35-





* As
disclosed on our Form 8-K, on December 31, 2008, Kurt Dalmata submitted a letter
of resignation notifying us that he resigned from the Board of Directors of Mega
Media Group, Inc. (the “Company”), effective December 31, 2008. Mr. Dalmata’s
resignation was due to personal reasons, and not the result of any disagreement
with the Company or any officers or directors of the Company. The Board of
Directors of the Company has not yet appointed a director to fill the vacancy
created by Mr. Dalmata’s resignation.




Set forth
below is a brief description of the background and business experience of our
directors and officers.





ALEX SHVARTS, Chief Executive
Officer





Mr.
Shvarts has served as the CEO of Mega Media Group, Inc.,   since
2004 and is responsible for the overall direction of the company. He launched
the company’s Russian-language radio programming (Radio VSE), its
Russian-language magazine (Metpo Magazine), online Ticket site ConcertRU.com and
has organizing live radio broadcasts and company-sponsored community events in
New York City and Brooklyn, and overseeing the operations of the company’s other
divisions.  Mr. Shvarts also oversees the general operations of the
company and has implemented the marketing and growth strategies for the company.
He is responsible for implementing the forthcoming format change for the
company’s radio station to mainstream, English-language
programming.  Mr. Shvarts has more than fifteen years of experience in
the financial community.  From 1987 to 1999 Mr. Shvarts worked as an
account executive and managed Broker/Dealers, doing corporate finance, M/A and
underwritings. Mr. Shvarts consulted for various international trading companies
based in Russia and Ukraine. Outside of the financial world, Mr. Shvarts has
been involved in numerous entertainment activities, including live concerts
promotions, video production and recording artist development.  Mr.
Shvarts has received various acknowledgements from organizations in New York. In
2006 he was named Businessman of The Year , for his work with Elite High School,
a non- profit school for underprivileged children. He has been awarded various
recognition awards by city councilmen Nelson, State Senator Kruger, Borough
President Markowitz and the office of Mayor Michael Bloomberg for his ongoing
work in the community. Mr. Shvarts was voted Mass Media person of the year for
2006 by the users of Rambler.ru in the United States.





GENNADY POMERANETS, CPAChief
Financial Officer





Mr.
Pomeranets is a certified public accountant with years of experience in fashion,
entertainment, audio recording and video production industries. He is a graduate
of Brooklyn College and practiced accounting at various local accounting
firms, and is both a member of the American Institute of Certified Public
Accountants and the New York State Society of Certified Public Accountants. He
is a managing director of a local New York public accounting firm with
diversified clientele serving varieties of industries and communities. Mr.
Pomeranets has extensive experience in entertainment industry and is currently
serving as a director of several local not-for-profit charitable
organizations.





DR. LEV PAUKMAN,Director





Dr.
Paukman has served as a Director of Mega Media since February 1,
2006.  Dr. Paukman is one of the most distinguished members of the
Russian-speaking Community of New York. Since the late 70s Dr. Paukman has
practiced medicine in prestigious NY City hospitals like NY Methodist, Mt Sinai,
Victory Memorial Medical Center, just to name a few. His medical research has
been published in major medical journals. Despite the demanding schedule imposed
by his private practice, Dr. Paukman is a committed public servant, who works
tirelessly on behalf of the Ethnic Russian Community.





He is an
active Board Member of the United Jewish Appeal, Council of Jewish Immigrant
Community Organization, Bnei Zion, and other Charitable and Civic organizations.
Renown for his personal generosity and compassion to those less fortunate has
received numerous awards for his relentless philanthropic activities and
communal involvement. He has been an active political liaison to the Russian
Community. Recently he has begun an active campaign to educate Russian community
against the addictions of drugs in teenagers. In 2003 Dr. Paukman implemented
his vision of creating a vehicle that would unite the Ethnic Russians of New
York, be one source of information and entertainment and be a bridge between the
mainstream and ethnic New Yorkers. The vision was Radio VSE.





DR. ELAN KAUFMAN,Director





Dr.
Kaufman has served as a Director of Mega Media since April 2007.  Dr.
Kaufman is one of the founders of Radio VSE, one of our
subsidiaries.  He is one of a select few professionals in New York who
holds the honor of being a Diplomate of the American Board of Pediatric
Dentistry.  He is the Chief of Pediatric Dentistry at both St.
Luke’s-Roosevelt Hospital Center, NYC, and Coney Island Hospital,
Brooklyn.  In addition to his work in the hospitals, he owns and
operates a pediatric and orthodontic group practice in Brooklyn that employs
over thirty professionals.  He serves as an Assistant Clinical
Professor of Dentistry at both Columbia University School of Dental Medicine and
Mt. Sinai School of Medicine and is a member of the American Academy of
Pediatric Dentistry and of the American Dental Association.  He is a
graduate of Tufts University School of Dental Medicine and completed his
pediatric dental residency at Brookdale University Hospital, in affiliation with
NYU College of Dentistry.  Dr. Kaufman is the pediatric dental liaison
to the American Academy of Pediatrics, Chapter II and is involved in several
charities benefiting children.  In addition to his professional dental
activities, Dr. Kaufman owns and operates a real estate holding company based in
Manhattan.






-36-





KURT DALMATA,Director





Mr.
Dalmata is representing First Capital Investment Corp.’s interests in the
issuer.  In 2004 Mr. Dalmata was appointed to the position of Chief
Financial Officer and Director of Wysak Petroleum.  As former
Associate Director of UBS Securities in London, Mr. Dalmata over saw equity
placements and M & A transactions.  In addition, his corporate
history includes an executive position with the Bank of America's offices in
Munich, London and Vienna. Among Mr. Dalmata's educational achievements are a
degree in Law and an MBA from INSEAD. Mr. Dalmata is a resident of Zurich,
Switzerland and is currently active in advising private clients regarding
mergers and acquisitions, corporate finance, strategic and financial advisory
services.





JOEL SALKOWITZ,Program
Director





Mr.
Salkowitz is a veteran major market programming and operations
executive.  He was most recently Vice President of Music Programming
and Content at Sirius Satellite Radio where he was responsible for overseeing
the programming for the premiere satellite radio providers 65 music stations and
managing the staff of program directors, producers and on-air
talent.  Prior to joining Sirius, Salkowitz was with Clear Channel
Communications as a Format Director and Brand Manager overseeing the launch and
programming for 10 major market stations, as well as serving as Program Director
for JAMMIN 105 – New York (WTJM-FM).  His past experience also
includes management, production and programming positions at Fox Television, EMI
Records, Westwood One, ABC Radio, NBC Radio and Emmis
Communications.





As
Regional VP of Programming at Emmis’ HOT97 (WQHT) in New York, he helped develop
the Rhythm Top 40 format that dominated contemporary radio during the late 1980s
and early 1990s and was also responsible for overseeing programming at Emmis’
WAVA (Washington DC) and WLOL (Minneapolis).  During his tenure, HOT
97 was the most listened to Rhythm Top 40 station in the country.  At
Westwood One, Salkowitz developed two nationally syndicated
programs.  He has also consulted for numerous clients including Saga
Communications, MJI Broadcasting and J-Wave Radio in Japan and since 2004,
Salkowitz has operated his own company, Sound Ideas Programming Consultants LLC
and continues to work with radio stations and content providers on all areas of
operations, programming and marketing.  He recently launched and
currently operates an Internet radio station, “Original HOT 97.COM”, which has
quickly become the #1 Dance/Pop station on Live 365.





A
graduate of The University of Hartford in West Hartford CT with a BA in Mass
Communications, Salkowitz is also an experienced audio engineer with more than
10 years of live television production experience for clients including Fox
Sports and News, ESPN, MSG Network, CBS and HD Net.   He has been
nominated as Major Market Program Director of The Year by Billboard Magazine and
won the award for Major Market Station/Operations Manager of the Year from
The Pop Music Survey.  He is the recipient of the New York Metro
A.I.R. Award for Best One Time Programming Feature.





RICK
HERNANDEZ, General Sales Manager





A Twenty
year veteran of Media sales and Marketing. Rick Hernandez began his career as a
retail account executive for 770 WABC-AM Radio in New York. Rick moved quickly
into Management as the National Sales Manager for one of Infinity Broadcasting’s
Top billing Radio Stations; KLSX-FM in Los Angeles. Overseeing National Sales,
Rick’s team increased revenue by double digits from Year to Year. After a
successful six years as National Sales Manager, Rick moved back to New York as
General Sales Manager for Univision Radio in New York overseeing the sales
growth of WADO-AM, the Nations largest and most listened to Spanish Language
Radio Station and Latino Mix 105.9. His achievements at Univision included
double digit sales growth and implementation of strategic marketing initiatives
for Fortune 500 companies such as Pepsi, Diagio, BMW, General Motors, Citigroup
and Pfizer.





After
more than Fourteen Years in broadcast media, Rick successfully transitioned to
the Out Of home industry with OOH Vision Networks; a start up digital signage
network in Quick Serve Restaurants in the Northeast. In the role as Director of
Sales, Rick developed and recruited a regional account team responsible for the
development and generation of revenue in excess of 2MM in less than nine months.
His success in the regional market leads to a role as the Director of Regional
Account Sales for the Captivate Network and subsequently the Director of Eastern
Region Sales for the Brite Media Group, A Lifestyle Media Company.





In
Addition to Rick’s proven abilities in the Industry; He is also a strong member
of the business community. Rick is a member of the Westchester Chamber of
Commerce, A Founding member and Chair of the Bronx Hispanic Chamber of Commerce
and a Member of the Statewide Hispanic Chamber of Commerce of New
Jersey.





VALIA
PORTELA, Promotions Director





Valia
Portela has had extensive Marketing, Promotional and Special Events
experience.  Starting her career in retail advertising followed by a
brief assignment at the prestigious advertising agency, Ogilvy and Mather, her
passion for the music and entertainment industry led her to pursue a career in
radio.





During
her time at Spanish Broadcasting System, the nation’s largest Hispanic-owned
radio network, she became an integral member of the executive team that
catapulted the New York station, Mega 97.9’s morning show to the #1
Arbitron-rated position, beating out Howard Stern. After producing and executing
an impressive array of promotional campaigns and events, she joined Univision
Radio, the largest Spanish language radio network in the nation.






-37-





The
responsibilities as Operations/Promotions Director allowed her to create
targeted and flawless special events as well as successful station and client
based promotional campaigns. Her strategies and execution were influential as
substantiated by the stations’ Arbitron ratings increase into the top 10
positions.





Family
Relationships




No family
relationships exist among our directors or executive officers.





Involvement in Certain Legal
Proceedings




Except as
disclosed in Item 3 Legal Proceedings, to our knowledge, during the past five
years, none of our directors, executive officers, promoters, control persons, or
nominees has been:




·
            the
      subject of any bankruptcy petition filed by or against any business of
      which such person was a general partner or executive officer either at the
      time of the bankruptcy or within two years prior to that
    time;





·
            convicted
      in a criminal proceeding or is subject to a pending criminal proceeding
      (excluding traffic violations and other minor
  offenses);





·
            subject
      to any order, judgment, or decree, not subsequently reversed, suspended or
      vacated, of any court of competent jurisdiction, permanently or
      temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      or





·
            found
      by a court of competent jurisdiction (in a civil action), the Commission
      or the Commodity Futures Trading Commission to have violated a federal or
      state securities or commodities
law.




Code ofEthics




We have
adopted a Code of Ethics applicable to our Chief Executive Officer and Chief
Financial Officer.





Compliance with Section
16(a) of the Exchange Act




Section
16(a) of the Securities Exchange Act of 1934 requires the Company's officers and
directors, and persons who own more than ten (10%) percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (SEC). Officers,
directors, and greater than 10 percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.




To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company, all reports under Section 16(a) required to be filed
by its officers and directors and greater than ten percent beneficial owners
were timely filed as of the date of this filing.




ITEM 11. EXECUTIVE COMPENSATION.




Compensation of Executive
Officers




The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officers paid by us during the fiscal
years ended January 31, 2009 in all capacities for the accounts of our
executives, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO):






-38-





SUMMARY
COMPENSATION TABLE





Name
      and
                                      Principal
      Position
                                    Year
                                    
                                    Salary
                                      ($)
                                    
                                    
                                    Bonus
                                      ($)
                                    
                                    
                                    Stock
      Awards
                                      ($)
                                    
                                    
                                    Option
      Awards
                                      ($)
                                    
                                    
                                    Non-Equity
      Incentive Plan Compensation ($)
                                    
                                    
                                    Non-Qualified
      Deferred Compensation Earnings
                                      ($)
                                    
                                    
                                    All
      Other Compensation
                                      ($)
                                    
                                    
                                    Totals
                                      ($)Aleksandr
      Shvarts,
                                    2008
                                    
                                    $
                                    180,000
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    1,680
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    181,680CEO
      & Director
                                    2007
                                    
                                    $
                                    180,000
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    $
                                    180,000Gennady
      Pomeranets,
                                    2008
                                    
                                    $
                                    60,000
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    1,680
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    61,680CFO
                                    2007
                                    
                                    $
                                    60,000
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    $
                                    60,000Dr.
      Elan Kaufman,
                                    2008
                                    
                                    $
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    1,680
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    1,680Director
                                    2007
                                    
                                    $
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    $
                                    0Dr.
      Lev Paukman,
                                    2008
                                    
                                    $
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    1,680
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    1,680Director
                                    2007
                                    
                                    $
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    $
                                    0Kurt
      Dalmata,
                                    2008
                                    
                                    $
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    $
                                    0Director
      (1)
                                    2007
                                    
                                    $
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    $
                                    0Ronn
      Torossian,
                                    2008
                                    
                                    $
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    240,328
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    $
                                    240,328Executive
      Director of Marketing
                                    2007
                                    
                                    $
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    45,308
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    
                                    
                                    $
                                    45,308




(1) Kurt Dalmata was
Director until December 31, 2008.





Employment
Agreements




We do not
have any employment agreements in place with our directors and
officers.





Compensation of
Directors





We have
no arrangements for the remuneration of officers and directors, except that they
will be entitled to receive reimbursement for actual, demonstrable out-of-pocket
expenses, including travel expenses, if any, made on our behalf in the
investigation of business opportunities. Other than as reflected in the table
above, no remuneration has been paid to our officers or directors. There are no
agreements or understandings with respect to the amount or remuneration those
officers and directors are expected to receive in the future. As of the date of
this Annual Report, no stock options have been issued to our officers or
directors.





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.




The
following table sets forth certain information regarding the ownership of our
capital stock, as of May 15, 2009, for: (i) each director; (ii) each person who
is known to us to be the beneficial owner of more than 5%of our outstanding
common stock; (iii) each of our executive officers named in the Summary
Compensation Table; and (iv) all of our current executive officers and directors
of as a group. Except as otherwise indicated in the footnotes, all information
with respect to share ownership and voting and investment power has been
furnished to us by the persons listed. Except as otherwise indicated in the
footnotes, each person listed has sole voting power with respect to the shares
shown as beneficially owned.






-39-




Title
      of Class
                Name
      and Address
                  of
      Beneficial Owner
                Amount
      and Nature
                  of
      Beneficial Owner
                Percent
                  of
      Class (1)Common
      Stock
                Aleksandr
      Shvarts
                9,091,168
      (2)
                2.98%Common
      Stock
                Dr.
      Elan Kaufman
                15,341,356
                5.03%Common
      Stock
                Dr.
      Lev Paukman
                23,186,701
                7.61%Common
      Stock
                Anna
      Paukman (2)
                634,667
                0.21%Common
      Stock
                Gennady
      Pomeranets
                2,265,935
                0.74%Common
      Stock
                Robert
      Catell
                32,335,616
                10.61%Common
      Stock
                Island
      Broadcasting
                29,279,614
                9.61Common
      Stock
                Eugene
      Khavinson
                21,512,266
                7.06%Common
      Stock
                Steven
      Fruman (3)
                22,257,470
                7.30%Common
      Stock
                Michal
      Jaworek (4)
                15,605,097
                5.12%Common Stock
                All
      executive officers and directors as a group (5)
                50,519,827
                16.58%




(1) The
percent of class is based on 304,753,677 shares of common stock issued and
outstanding as of May 15, 2009.


(2) Anna
Paukman, wife of Dr. Paukman, owns 634,667 common stocks, which is 0.21% of all
the outstanding shares as of May 15, 2009.


(3)
Including 10,465,939 shares of common stock owned by Mr. Fruman directly and
11,791,531 shares of common stock owned through FD Import Export.


(4)
Including 450,000 shares of common stock owned by Mr. Jaworek directly and
15,155,097 shares of common stock owned through Jaworek Capital
LLC.


(5)
Common stock of all executive officers and directors as a group includes the
shares of Anna Paukman as described in Note (2).




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.




In June
2007, we entered into debt conversion agreements with the Company’s
shareholders according to which loans from shareholders and certain loans due to
related party in the amount of $877,000 were converted into shares of common
stock at the conversion prices of $0.30 and $0.25 per share. These conversion
agreements were part of the reverse merger agreement between the Company and
Family Healthcare Solutions, Inc., a Nevada Corporation.
 
 In
January 2008, we borrowed two loans of $100,000 each from the shareholders. Each
loan has a beneficial conversion clause providing the option that the loan can
be converted into our common shares at a discount of 20% to market value, with a
conversion price limit not to exceed $.40 per share.
 
 At
January 31, 2008 total loans payable to shareholders of $239,148 and due to
related party of $398,783 mature in various amounts from July 11, 2008 to
January 24, 2009 and have a stated interest rate of 9%.
 
 On April
21, 2008, the Company paid $12,500 on related party note payable.
 
 During
the year ended January 31, 2009, the Company borrowed from its shareholders five
loans of $50,000, $50,000, $75,000 ($5,000 was repaid), $50,000 and $150,000 a
total of $375,000.
 
 On
January 16, 2009 the Company issued to certain shareholders 63,651,741 common
shares in exchange for satisfaction of the loans from shareholders for the
principles of $596,999 and accrued interest of $39,518.41, at conversion prices
of $0.01 per share.
 
 At
January 31, 2009 total loans payable to shareholders of $12,148 and due to
related party of $69,328.
 
 Certain
founding shareholders of Echo Broadcasting Group Inc. have received free
advertising time on Radio VSE. The fair market value of these services was $0
and $176,130 at January 31, 2009 and January 31, 2008 respectively.
  On July
14, 2008 the Company entered into an asset purchase agreement with Dr. Lev
Paukman, a director of the Company (the “Buyer”). Pursuant to the terms of
the agreement, the Company sold certain business assets of its wholly-owned
subsidiary, VSE Magazine, to the Buyer. The Buyer will assume an advertising
credit of $109,832 owed to KSP. The Buyer will also assume advertising credits
in the magazine from clients that the Company or Echo Broadcasting Group, a
wholly-owned subsidiary of the Company, might direct up to the amount of
$50,000. In the event there are no advertising client credits then the buyer
will pay the seller $10,000 cash. VSE Magazine, Inc. is a Russian language
publication currently operating under the trade name “METPO” that is distributed
in the greater New York metro area. As a result of the above-mentioned
assets and share purchase agreement, the Company incurred losses from the
proceeds of the sale of the assets in the amount of
$40,168.




-40-




ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.





(1)
Audit Fees





The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for our audit of annual financial
statements and review of financial statements included in our Form 10-K or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years
was:




2008
              
              $
              72,500
              
              Kempisty
      & Company2007
              
              $
              76,300
              
              Kempisty
      & Company




Audit Related
Fees





There
were no fees for audit related services for the years ended January 31, 2009 and
2008.




Tax Fees




For the
Company’s fiscal years ended January 31, 2009 and 2008, we were not billed for
professional services rendered for tax compliance, tax advice, and tax
planning.




All Other
Fees




The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal years ended January 31, 2009 and
2008.




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.





Effective
May 6, 2003, the Securities and Exchange Commission adopted rules that require
that before our auditor is engaged by us to render any auditing or permitted
non-audit related service, the engagement be:





-
            approved
      by our audit committee; or





-
            entered
      into pursuant to pre-approval policies and procedures established by the
      audit committee, provided the policies and procedures are detailed as to
      the particular  service,  the  audit
      committee is informed of each service, and such policies and procedures do
      not include delegation of the audit committee's responsibilities to
      management.





We do not
have an audit committee.  Our entire board of directors pre-approves
all services provided by our independent auditors. The pre-approval process has
just been implemented in response to the new rules. Therefore, our board of
directors does  not have  records of  what
percentage of the above fees were pre-approved.  However, all of the
above services and fees were reviewed and approved by the entire board of
directors either before or after the respective services were
rendered.




-41-









PART IV





ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.





a)
Documents filed as part of this Annual Report




1.
Financial Statements




2.
Financial Statement Schedules




3.
Exhibits




Exhibit No.
            
            Title
      of Document
            
            Location3.1
            
            Articles
      of Incorporation
            
            Incorporated
      by reference to Amendments to Articles of Incorporation or Bylaws on June
      26, 20073.2
            
            Bylaws
            
            Incorporated
      by reference to Amendments to Articles of Incorporation or Bylaws on June
      26, 200714
            
            Code
      of Ethics
            
            Incorporated
      by reference to Form 10-KSB/A filed on May 20, 200831.1
            
            Certification
      of Chief Executive Officer Pursuant to Rule 13a-14(a) of the
      Securities Exchange Act of 1934
            
            Filed
      herewith32.1
            
            Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
            
            Filed
      herewith31.2
            
            Certification
      of Chief Financial Officer Pursuant to Rule 13a-14(a) of the
      Securities Exchange Act of 1934
            
            Filed
      herewith32.2
            
            Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
            
            Filed
      herewith






-42-






SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




MEGA
      MEDIA GROUP, INC.Date:
      May 21 , 2009
                By:
                /s/ Alex
      ShvartsAlex
      ShvartsChief
      Executive Officer and
Director




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 and on the dates indicated.




Name
                      
                      Title
                      Date/s/ Alex
      Shvarts
                      
                      Chief
      Executive Officer and Director
                      May
      21 , 2009Alex
      Shvarts/s/Gennady
      Pomeranets
                      
                      Chief
      Financial Officer
                      May
      21 , 2009Gennady
      Pomeranets/s/
      Elan Kaufman
                      
                      Director
                      May
      21 , 2009Elan
      Kaufman/s/
      Lev Paukman
                      
                      Director
                      May
      21 , 2009Lev
      Paukman









-43-