UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 (Mark
One)
 x  QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the
Quarterly period ended February 28, 2009
  
 o TRANSITIONAL
REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the
transitional period from ______ to ______
 
 Commission File No.0-32923
 
 (Exact
name of registrant as specified in its charter)
 
 Nevada
              
              33-0198542(State
      or other jurisdiction
                of
      incorporation of organization)
              
              (I.R.S.
      Employer
                Identification
      Number)
 
 18952 MacArthur Blvd, Suite
210, Irvine, CA 92612
 (Address
of principal executive office) (zip code)
 
 (949)
486-3990
 (Registrant’s
telephone number, including area code)
 
 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 x No o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated filer”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
  Large
      accelerated filer o
              Accelerated
      filer oNon-accelerated
      filer o
              Smaller
      reporting company x(Do
      not check if a smaller reporting company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
  As of
April 17, 2009, there were 78,401,846 shares of registrant’s common stock
outstanding.
  1
  FINANCIAL MEDIA GROUP, INC.
 
 TABLE
OF CONTENTS
 
 Report on
Form 10-Q
 For the
quarter ended February 28, 2009
 
 
 PagePART
      I FINANCIAL INFORMATIONItem
      1. Financial Statements
              3Unaudited
      Consolidated Balance Sheets at February 28, 2009 and August 31,
      2008
              3Unaudited
      Consolidated Statements of Operations for the Three Month Periods and Six
      Month Periods ended February 28, 2009 and 2008
              4Unaudited
      Consolidated Statements of Cash Flows for the Six Month Periods endedFebruary
      28, 2009 and 2008
              5Notes
      to the unaudited Consolidated Financial Statements
              6 –
      18Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
              19Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
              25Item
      4T. Controls and Procedures
              25PART
      II OTHER INFORMATIONItem
      1. Legal Proceedings
              26Item
      1A. Fisk Factors
              26Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              27Item
      3. Defaults upon Senior Securities
              27Item
      4. Submission of Matters to Vote of Security Holders
              27Item
      5. Other Information
              27Item
      6. Exhibits
              27Signatures
              28
 
 2
  PART
I – FINANCIAL INFORMATION
 
 Item
1. Consolidated Financial Statements
 
 
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 (UNAUDITED)
   February
      28, 2009
              
              
              August
      31,
                2008ASSETSCURRENT
      ASSETS:Cash
      & cash equivalents
              
              $
              13,788
              
              
              $
              73,312Accounts
      receivable, net
              
              
              43,065
              
              
              
              53,718Marketable
      securities
              
              
              1,149,733
              
              
              
              2,217,852Other
      current assets
              
              
              8,039
              
              
              
              1,793Total
      current assets
              
              
              1,214,625
              
              
              
              2,346,675PROPERTY
      & EQUIPMENT, Net
              
              
              52,296
              
              
              
              82,566DEPOSIT
              
              
              4,152
              
              
              
              34,671Total
      assets
              
              $
              1,271,073
              
              
              $
              2,463,912LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIES:Accounts
      payable
              
              $
              861,820
              
              
              $
              613,929Accrued
      expenses
              
              
              846,885
              
              
              
              806,639Deferred
      revenue
              
              
              106,900
              
              
              
              424,832Due
      to related parties
              
              
              1,043,418
              
              
              
              820,729Notes
      payable
              
              
              550,000
              
              
              
              650,000Total
      current liabilities
              
              
              3,409,023
              
              
              
              3,316,129Commitment
      & contingenciesSTOCKHOLDERS'
      DEFICIT:Common
      stock, $0.001 par value, 300,000,000 shares authorized,78,401,846
      and 65,726,873 shares issued and outstanding atFebruary
      28, 2009 and August 31, 2008, respectively
              
              
              78,402
              
              
              
              65,727Paid
      in capital
              
              
              12,034,574
              
              
              
              11,339,465Unrealized
      gain on marketable securities
              
              
              415,431
              
              
              
              279,130Accumulated
      deficit
              
              
              (14,666,357
              )
              
              
              (12,536,538
              )Total
      stockholders' deficit
              
              
              (2,137,950
              )
              
              
              (852,216
              )Total
      liabilities and stockholders' deficit
              
              $
              1,271,073
              
              
              $
              2,463,912
   The accompanying notes are an integral part of these
unaudited consolidated financial statements.
  3
 
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (UNAUDITED)
   For
      the three months periods ended
              
              
              For
      the six months periods endedFebruary
      28, 2009
              
              
              February
      29, 2008
              
              
              February
      28, 2009
              
              
              February
      29, 2008RevenuesRevenue
      in the form of cash
              
              $
              44,205
              
              
              $
              171,755
              
              
              $
              116,660
              
              
              $
              738,495Revenue
      in the form of marketable securities
              
              
              197,600
              
              
              
              1,996,992
              
              
              
              959,932
              
              
              
              3,309,145241,805
              
              
              
              2,168,747
              
              
              
              1,076,592
              
              
              
              4,047,640Operating
      expensesSelling,
      general & administrative
              
              
              622,821
              
              
              
              1,410,640
              
              
              
              1,633,299
              
              
              
              2,994,270Depreciation
              
              
              15,136
              
              
              
              13,298
              
              
              
              30,271
              
              
              
              23,914Impairments
              
              
              460,544
              
              
              
              1,469,547
              
              
              
              1,089,789
              
              
              
              2,331,450Total
      operating expenses
              
              
              1,098,501
              
              
              
              2,893,485
              
              
              
              2,753,359
              
              
              
              5,349,634Loss
      from operations
              
              
              (856,696
              )
              
              
              (724,738
              )
              
              
              (1,676,767
              )
              
              
              (1,301,994
              )Non-Operating
      Income (Expense):Interest
      expense
              
              
              (2,288
              )
              
              
              (17,720
              )
              
              
              (9,749
              )
              
              
              (65,260
              )Loss
      on sale of marketable securities
              
              
              (220,265
              )
              
              
              (323,921
              )
              
              
              (438,503
              )
              
              
              (323,645
              )Total
      non-operating expense
              
              
              (222,553
              )
              
              
              (341,641
              )
              
              
              (448,252
              )
              
              
              (390,905
              )Loss
      from operations before income taxes
              
              
              (1,079,249
              )
              
              
              (1,066,379
              )
              
              
              (2,125,019
              )
              
              
              (1,692,899
              )Provision
      for income tax
              
              
              -
              
              
              
              -
              
              
              
              4,800
              
              
              
              4,800Net
      Loss
              
              
              (1,079,249
              )
              
              
              (1,066,379
              )
              
              
              (2,129,819
              )
              
              
              (1,697,699
              )Other
      comprehensive gain (loss):Unrealized
      gain on marketable securities
              
              
              1,445,436
              
              
              
              1,630,904
              
              
              
              929,586
              
              
              
              1,567,380Reclassification
      Adjustment
              
              
              (996,860
              )
              
              
              186,850
              
              
              
              (793,285
              )
              
              
              161,647Comprehensive
      gain (loss)
              
              $
              (630,673
              )
              
              $
              751,375
              
              
              $
              (1,993,518
              )
              
              $
              31,328Basic
      & diluted net loss per share
              
              $
              (0.02
              )
              
              $
              (0.02
              )
              
              $
              (0.03
              )
              
              $
              (0.04
              )Weighted
      average shares of share capital outstanding*-
      basic& diluted
              
              
              70,165,497
              
              
              
              48,732,916
              
              
              
              68,120,692
              
              
              
              41,892,727
 
 *
Weighted average number of shares used to compute basic and diluted loss per
share for the three months and six months periods ended February 28, 2009 and
2008 are the same since the effect of dilutive securities is
anti-dilutive.
 
 
 The
accompanying notes are an integral part of these unaudited consolidated
financial statements.
  4
 
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
   For
      the six months period ended
                February
      28,2009
              
              
              2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (2,129,819
              )
              
              $
              (1,697,699
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Bad
      debts
              
              
              1,088
              
              
              
              51,710Depreciation
      and amortization
              
              
              30,271
              
              
              
              23,914Revenues
      in form of marketable securities
              
              
              (959,932
              )
              
              
              (3,309,145
              )Impairment
      of marketable securities
              
              
              1,089,789
              
              
              
              2,331,450Loss
      on sale of marketable securities
              
              
              438,503
              
              
              
              325,645Issuance
      of common stock/warrants/options for services
              
              
              265,322
              
              
              
              64,591Issuance
      of shares for settlement of debt
              
              
              139,998
              
              
              
              -(Increase)
      decrease in current assets:Receivables
              
              
              9,565
              
              
              
              (8,813
              )Other
      current assets and deposits
              
              
              24,274
              
              
              
              (7,932
              )Increase
      (decrease) in current liabilities:Accounts
      payable
              
              
              247,891
              
              
              
              182,751Accrued
      expenses and other liabilities
              
              
              162,935
              
              
              
              201,379Deferred
      revenues
              
              
              12,059
              
              
              
              (179,785
              )Net
      cash used in operating activities
              
              
              (668,058
              )
              
              
              (2,021,934
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of property & equipment
              
              
              -
              
              
              
              (49,629
              )Cash
      received from disposal (acquisition) of marketable
      securities-net
              
              
              306,070
              
              
              
              817,213Net
      cash provided by investing activities
              
              
              306,070
              
              
              
              767,584CASH
      FLOWS FROM FINANCING ACTIVITIES:Payment
      of note payable to officer
              
              
              -
              
              
              
              (7,500
              )Cash
      received from the shares to be issued
              
              
              -
              
              
              
              14,957Proceeds
      from sale of common stock
              
              
              302,464
              
              
              
              1,147,814Net
      cash provided by financing activities
              
              
              302,464
              
              
              
              1,155,271NET
      DECREASE IN CASH & CASH EQUIVALENTS
              
              
              (59,524
              )
              
              
              (99,079
              )CASH
      & CASH EQUIVALENTS, BEGINNING BALANCE
              
              
              73,312
              
              
              
              172,013CASH
      & CASH EQUIVALENTS, ENDING BALANCE
              
              $
              13,788
              
              
              $
              72,934
 
 The
accompanying notes are an integral part of these unaudited consolidated
financial statements.
  5
 
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 
 NOTE 1NATURE OF BUSINESS AND BASIS
OF PRESENTATION
 
 Financial
Media Group, Inc. (the “Company,” "We," or "FMG") is a full service financial
media company focused on developing tools and  applications that
enable retail investors  to collaborate directly with publicly traded
companies. The Company provides Internet based media and advertising services
through its network of financial websites.
 
 WallStreet
Direct, Inc. (“WallStreet”), a wholly-owned subsidiary of Financial Media Group,
Inc. was incorporated in the State of Nevada on January 5, 2005 as a financial
holding company specializing as a provider of financial news, tools and content
for the global investment community. On January 15, 2005, WallStreet acquired
100% of the assets and outstanding shares of Digital WallStreet, Inc. which was
100% owned by the majority shareholder (86%) of the Company, in exchange for two
promissory notes of $1,500,000 each, carrying interest at 6% per annum, due and
payable on January 31, 2007 and January 31, 2010. As this merger is between
entities under the common control, the issuance of the promissory notes to the
majority shareholder has been recorded as a distribution to the majority
shareholder. The merger has been accounted for on historical cost basis. The
Company provides Internet based media and advertising services through its
network of financial websites.  The Company provides full array of
customized investor awareness programs such senior management interviews, text
and display advertising, press releases, conferences and seminars, and email
marketing.
 
 Digital
WallStreet, Inc. was incorporated in Nevada on June 12, 2002, and commenced its
operations during the first quarter of 2003. WallStreet is a full service
financial media company focused on applications that enable investors to
collaborate directly with publicly traded companies. The company provides
internet media and advertising services through its network of financial
websites.
 
 On
January 6, 2006, Financial Media Group, Inc. acquired 100% of the equity in
WallStreet pursuant to an Agreement and Plan of Reorganization dated September
19, 2005 by and between WallStreet and the Company. Financial Media Group, Inc.,
formerly known as Giant Jr. Investments Corp., was incorporated in Nevada in
1984 as Business Development Company, Inc. Pursuant to the acquisition of
WallStreet, it became the wholly-owned subsidiary of Financial Media Group, Inc.
The former shareholders of WallStreet received 19,998,707 shares or 82% of the
issued and outstanding shares of the Company’s common stock in exchange for all
the issued and outstanding shares of WallStreet.
 
 The
acquisition of WallStreet is accounted for as a reverse acquisition under the
purchase method of accounting since the shareholders of WallStreet obtained
control of the consolidated entity. Accordingly, the reorganization of the
two companies is recorded as a recapitalization of WallStreet, with WallStreet
being treated as the continuing operating entity. The historical financial
statements presented herein will be those of WallStreet. The continuing entity
retained August 31 as its fiscal year end.
 
 On
February 10, 2006, Financial Media Group, Inc. established a 100% wholly owned
subsidiary Financial Filings Corp. This business unit focuses on providing
edgarization and newswire services to small and mid-sized public companies.
These compliance services provide formatting of pertinent SEC filings and
distribution of news in more than 30 languages to media outlets in more than 135
countries.
 
 On June
13, 2006, Financial Media Group, Inc. established a wholly-owned subsidiary My
WallStreet, Inc. and launched in January 2007, http://my.wallst.net, an online
community for investors. The website offers free membership and provides social
networking applications including messaging, blogs, message boards, video and
audio uploads, and personal profile pages. In addition, members of MyWallSt can
participate in the “Rookie Challenge,” a proprietary virtual stock trading
simulator that allows members to compete against each other for a weekly cash
prize. Members can also communicate with another, rate individual stocks, post
comments on individual stocks, and compile their own Watch list of stocks, which
can be viewed and commented on by other members of the online community. Unlike
other social network services including MySpace and Face Book, MyWallSt
members have one interest in common: they want to become better investors.
MyWallSt also provides a venue for investors to interact with public company
executives, many of whom have active profiles on the website.
  6
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 In
January 2007, the Company acquired the trade name “The Wealth Expo” and formed a
wholly owned subsidiary The Wealth Expo Inc. on June 12, 2007. The Wealth Expo
provides a broad range of information on investing techniques, and tools to
investors through workshops and exhibits held throughout the United
States.
 
 In May
2008, the Company launched WallStTV and offer free access to its original video
programming including the 3-Minute Press Show, Sweet Picks, the Analyst’s
Review, and WallSt.net News Magazine (“WSNM”). WSNM half-hour program is run
weekly and distributed through television via the Fox Business
Network.
 
 NOTE 2SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
 
 Basis
of Presentation
 
 The
accompanying unaudited consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission for the presentation of interim financial information, but do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. The audited financial
statements for the year ended August 31, 2008 were filed on December 12, 2008
with the Securities and Exchange Commission and is hereby incorporated by
reference. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Operating results for the six months
period ended February 28, 2009 are not necessarily indicative of the results
that may be expected for the year ended August 31, 2009.
 
 Principles
of Consolidation
 
 The
consolidated financial statements include the accounts of the Company, its
wholly-owned subsidiaries WallStreet Direct, Inc., Digital Wall Street, Inc.,
Financial Filings, Corp., My WallStreet, Inc. and Wealth Expo Inc. All
significant inter-company accounts and transactions have been
eliminated.
 
 Use
of Estimates
 
 In
preparation of financial statements in conformity with generally accepted
accounting principles management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual results could differ
from those estimates.
 
 Cash
and Cash Equivalents
 
 The
Company considers all liquid investments with a maturity of three months or less
from the date of purchase that are readily convertible into cash to be cash
equivalents.
 
 Accounts
Receivable
 
 The
Company maintains reserves for potential credit losses on accounts receivable.
Management reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer credit worthiness,
current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves. Reserves are recorded primarily on a specific
identification basis. Allowance for doubtful debts amounted to $201,872 as of
February 28, 2009 and August 31, 2008, respectively.
 
 Marketable
Securities
 
 The
Company’s investments in securities are classified as available-for-sale and, as
such, are carried at fair value based on quoted market prices. Securities
classified as available-for-sale may be sold in response to changes in interest
rates, liquidity needs, and for other purposes.
  7
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
   Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholder’s equity. Realized
and unrealized gains and losses for securities classified as available-for-sale
are included in the statement of operations and comprehensive gain,
respectively.
 Property
and Equipment
 
 Property
and equipment are carried at cost less accumulated depreciation. Depreciation is
provided using the straight-line method over the estimated useful life of the
assets from three to five years. Expenditures for maintenance and repairs are
charged to expense as incurred.
 
 Revenue
Recognition Policy
 
 The
Company’s primary source of revenue is generated from providing Internet based
media and advertising services and a full array of customized investor awareness
programs to small and medium sized companies through its financial websites
www.wallst.net and my.wallst.net. The services include audio and video
production of senior management interviews, newsletters and editorials, small
cap companies’ conferences and seminars, e-mail mailings and forums, media and
advertising. These services are provided by the Company’s subsidiaries
WallStreet Direct, Inc. and Digital WallStreet, Inc. Revenues from Internet
based media and advertising services are recognized and recorded when the
performance of such services are completed. The Company adheres to the
guidelines established under Staff Accounting Bulletin 104 whereby, the Company
executes a contractual agreement with the client for a fixed fee to perform
services, delivery of services has occurred when the Company performed the
contracted services, and collectability of the fees has occurred when the
Company receives cash and/or marketable securities in satisfaction for services
provided.
 
 The
Company provides news wire and compliance services to small and medium size
publicly traded companies including preparation of registration statements,
electronic filings and reporting of SEC documents (EDGAR), preparation of proxy
materials and news distribution. Such services are provided by the Company’s
subsidiary Financial Filings Corp. Revenues are recognized and recorded when the
performances of such services are completed. The Company adheres to the
guidelines established under Staff Accounting Bulletin 104 whereby, the Company
executes a contractual agreement with the client for a fixed fee to perform
services, delivery of services has occurred when the Company completed the
performed the contracted services, and collectability of the fees has occurred
when the Company receives cash and/or marketable securities in satisfaction of
services provided.
 
 The
Company provides a broad range of information on investing techniques and
education tools to investors through workshops and exhibits. The Company’s
subsidiary Wealth Expo provides revenue streams for the Company through
exhibition sales, speaking presentation sales, collateral material sales and
advertising sales. Revenues from Wealth Expo services is recognized and recorded
when the performance of such services are completed. The Company adheres to the
guidelines established under Staff Accounting Bulletin 104 whereby, the Company
executes a contractual agreement with the client for a fixed fee to perform
services, delivery of services has occurred when the Company completed the
performed the contracted services, and collectability of the fees has occurred
when the Company receives cash and/or marketable securities in satisfaction of
services provided.
 
 The
Company records revenues on the basis of services provided to its clients for a
fixed determinable fee pursuant to a contractual agreement. In lieu of providing
services, the Company receives from its clients’ cash and/or securities, as
compensation for providing such services. Payments received in advance of
services provided, are recorded as deferred revenue.
 
 Fair
Value of Financial Instruments
 
 Statement
of financial accounting standard No. 107, Disclosures about fair value of
financial instruments, requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for assets and liabilities qualifying, as financial
instruments are a reasonable estimate of fair value.
  8
  FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 Concentration
of Credit Risk
 
 Financial
instruments which potentially subject the Company to concentrations of credit
risk are cash, accounts receivable and marketable securities. The Company places
its cash with financial institutions deemed by management to be of high credit
quality. The amount on deposit in any one institution that exceeds federally
insured limits is subject to credit risk. All of the Company’s investment in
marketable securities are considered “available-for-sale” and are carried at
their fair value, with unrealized gains and losses (net of income taxes) that
are temporary in nature recorded in accumulated other comprehensive income
(loss) in the accompanying balance sheets. The fair values of the Company’s
investments in marketable securities are determined based on market quotations.
Exposure to losses on receivables is principally dependent on each customer's
financial condition. The Company monitors its exposure for credit losses and
maintains allowances for anticipated losses, as required.
 
 Reporting
Segments
 
 Statement
of financial accounting standards No.131, Disclosures about segments of an
enterprise and related information (SFAS No. 131), which superseded statement of
financial accounting standards No. 14, Financial reporting for segments of a
business enterprise, establishes standards for the way that public enterprises
report information about operating segments in annual financial statements and
requires reporting of selected information about operating segments in interim
financial statements regarding products and services, geographic areas and major
customers. SFAS No. 131 defines operating segments as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performances.
 
 The
Company offers a broad range of services to its clients and its primary source
of revenue is generated from providing Internet based media and advertising
services and a full array of customized investor awareness programs to small and
medium sized companies through its financial websites http://www.wallst.net,
http://my.wallst.net and http://tv.wallst.net. The Company also provides news
wire and compliance services including preparation of registration statements,
electronic filings and reporting of SEC documents (EDGAR), preparation of proxy
materials and news distribution to the same types of clients whom the Company
provides Internet based media and advertising services. The Company started to
offer a broad range of information on investing techniques and education tools
to investors through workshops, exhibition sales, speaking presentation sales,
collateral material sales and advertising sales.
 
 However,
the revenue generated, assets and net loss from the two sources, i.e. news wire
and compliance services, and investing techniques and education tools services,
is less than 10% of the total revenue, total assets and total net loss,
respectively. Hence, SFAS 131 has no effect on the Company's financial
statements as substantially all of the Company's operations are conducted in one
primary industry segment i.e. providing Internet based media and advertising
services and a full array of customized investor awareness programs to small and
medium sized companies.
 
 Stock-Based
Compensation
 
 The
Company adopted SFAS No. 123 (Revised 2004), Share Based Payment(“SFAS
No. 123R”), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of
employee services received in exchange for an award of equity instruments based
on the grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation,for all share-based payments granted prior to and not yet
vested as of January 1, 2006 and share-based compensation based on the
grant-date fair-value determined in accordance with SFAS No. 123R for all
share-based payments granted after January 1, 2006. SFAS No. 123R
eliminates the ability to account for the award of these instruments under the
intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion
No. 25, Accounting for Stock
Issued to Employees, and allowed under the original provisions of SFAS
No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted for our
stock option plans using the intrinsic value method in accordance with the
provisions of APB Opinion No. 25 and related interpretations.
  9
  FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 Issuance
of Shares for Services
 
 The
Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.
 
 Comprehensive
Income
 
 Statement
of financial accounting standards No. 130, Reporting comprehensive income (SFAS
No. 130), establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity, except those resulting from investments by
owners and distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in
financial statements that are displayed with the same prominence as other
financial statements.
 
 Recent
Accounting Pronouncements
 
 In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations”. The
objective of this statement will significantly change the accounting for
business combinations. Under Statement 141R, an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition date fair value with limited exceptions.
Statement 141 applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The Company does not expect the
adoption of SFAS No. 141R to have a material impact on the consolidated
financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements-An Amendment of ARB No. 51".The
objective of this statement is to establish new accounting and reporting
standards for the Noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary.. Statement 160 is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008. The Company does not expect the adoption of SFAS No. 160 to have a
material impact on the consolidated financial statements.
 
 In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
161, Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No.133,which requires additional disclosures about the objectives of the
derivative instruments and hedging activities, the method of accounting for such
instruments under SFAS No. 133 and its related interpretations, and a tabular
disclosure of the effects of such instruments and related hedged items on our
financial position, financial performance, and cash flows. The Company does not
expect the adoption of SFAS No. 161 to have a material impact on the
consolidated financial statements.
 
 In May
2008, FASB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting
Principles”. The pronouncement mandates the GAAP hierarchy reside in the
accounting literature as opposed to the audit literature. This has the practical
impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP
hierarchy. This pronouncement will become effective 60 days following SEC
approval. The Company does not believe this pronouncement will impact its
financial statements.
 
 In May
2008, FASB issued SFASB No. 163, “Accounting for Financial Guarantee Insurance
Contracts-an interpretation of FASB Statement No. 60”. The scope of the
statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. The Company does not believe this pronouncement will impact
its financial statements.
 
 Reclassifications
 
 Certain
comparative amounts have been reclassified to conform to the current period’s
presentation.
  10
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 NOTE 3MARKETABLE
SECURITIES
 
 The
Company receives cash and/or securities of client companies as payment in full
for services rendered. The numbers of shares the Company receives for services
is based on contract amount, and the number of shares is determined based on the
bid price at the time of signing the agreement. The securities received from
clients are classified as available-for-sale and, as such, are carried at fair
value based on the quoted market prices. The securities comprised of shares of
common stock of third party customers and securities purchased. Securities
classified as available-for-sale may be sold in response to changes in interest
rates, liquidity needs, and for other purposes. The Company does not currently
have any held-to-maturity or trading securities.
 
 Marketable
securities classified as available for sale consisted of the following as of
February 28, 2009 (Unaudited):
  Equity
      Securities Name and Symbol
              
              No.
      of Shares
                Held
      at
                February
      28, 2009
              
              
              Cost
              
              
              Market
                Value
      at February 28, 2009
              
              
              Accumulated
      Unrealized
                Loss
              
              
              Accumulated
      Unrealized
                Gain
              
              Traded
      on Pink Sheets (PK) or Bulletin Board (BB)CEO
      America, Inc. (CEOA)
              
              
              1,000,000
              
              
              $
              9,000
              
              
              $
              15,000
              
              
              $
              -
              
              
              $
              6,000
              
              PKCytoDyn,
      Inc. (CYDY)
              
              
              142,857
              
              
              
              8,571
              
              
              
              52,857
              
              
              
              -
              
              
              
              44,286
              
              PKFIMA,
      Inc (FIMA)
              
              
              357,000
              
              
              
              14,994
              
              
              
              14,280
              
              
              
              (714
              )
              
              
              -
              
              PKGENCO
      Corp (GNCC)
              
              
              294,118
              
              
              
              17,647
              
              
              
              11,765
              
              
              
              (5,882
              )
              
              
              -
              
              PKGeneThera
      Inc (GTHR)
              
              
              261,000
              
              
              
              65,250
              
              
              
              65,250
              
              
              
              -
              
              
              
              -
              
              PKIfinix
      Corp (INIX)
              
              
              30,000,000
              
              
              
              120,000
              
              
              
              120,000
              
              
              
              -
              
              
              
              -
              
              PKNexplore
      Corp. (NXPC)
              
              
              200,000
              
              
              
              108,000
              
              
              
              130,000
              
              
              
              -
              
              
              
              22,000
              
              PKOneScreen
      Inc. (OSCN)
              
              
              147,052
              
              
              
              102,936
              
              
              
              108,818
              
              
              
              -
              
              
              
              5,882
              
              PKPSM
      Holdings, Inc.
      (PSMH)
              
              
              157,895
              
              
              
              63,158
              
              
              
              252,632
              
              
              
              -
              
              
              
              189,474
              
              PKRaven
      Moon Entertainment, Inc. (RVENE)
              
              
              2,500,624,843
              
              
              
              128,444
              
              
              
              128,506
              
              
              
              -
              
              
              
              62
              
              PKSunrise
      Consulting Group (SNRS)
              
              
              515,000,000
              
              
              
              51,500
              
              
              
              51,500
              
              
              
              -
              
              
              
              -
              
              PKVOIP
      PAL.com, Inc. (VPLM)
              
              
              2,500,000
              
              
              
              15,000
              
              
              
              32,500
              
              
              
              -
              
              
              
              17,500
              
              PKOthers
      - Less than $10,000 Cost
              
              
              
              
              
              
              29,800
              
              
              
              166,625
              
              
              
              -
              
              
              
              136,824Total
              
              
              
              
              
              $
              734,301
              
              
              $
              1,149,733
              
              
              $
              (6,596
              )
              
              $
              422,027
 
 As of
February 28, 2009, the Company evaluated its marketable securities holdings by
valuing the securities according to the quoted price of the securities on the
stock exchange.
 
 It is the
Company’s policy to assess its marketable securities for impairment on a
quarterly basis, or more frequently if warranted by circumstances. The Company
recognized an impairment loss on the marketable securities of $460,544 and
$1,089,789 for the three months and six month periods ended February 28,2009
compared to $1,469,547 and $2,331,450 for the same periods in 2008.
 
 The
Company reviews, on a quarterly basis or more frequently if warranted by
circumstances, the carrying value of the marketable securities it receives from
its customers for providing services. The Company records impairment expense
each quarter when the market value of the securities received show a consistent
decline over 90 to 180 days, and the carrying amount of the marketable
securities exceeds its fair value by 50% or more, and is deemed not recoverable.
As such, the Company records on a quarterly basis in its financial statements
the impairment loss for the difference between the carrying amount of the
marketable securities and their fair value.
 
 To
safeguard the Company with impairments of marketable securities, the Company has
revised its contractual terms on its agreements with its clients which provides
that, in the event during the term of the agreement, the share bid price
declines by more than ten per cent (10%) of the share bid price on the date of
execution of the agreement, the Client would agree to issue additional shares of
their common stock to the Company in order to make up the deficiency caused by
the reduction in the value of their stock.
 
 Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholder’s equity. Realized
gains and losses for securities classified as available-for-sale are reported in
the statement of operations and comprehensive gain.
  11
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 The
Company sold marketable securities during the three months and six months
periods ended February 28, 2009and recorded a realized loss of $220,265 and
$438,503 compared to a realized loss of $323,921 and $325,645 during the same
periods ended February 29, 2008, respectively.
 
 NOTE 4PROPERTY AND
EQUIPMENT
 
 Property
and equipment consist of the following:
 
 February
      28,
                2009
              
              
              August
      31,
                2008Office
      and computer equipment
              
              $
              191,653
              
              
              $
              191,652Less
      accumulated depreciation:
              
              
              (139,357
              )
              
              
              (109,086
              )$
              52,296
              
              
              $
              82,566
 
 Depreciation
expense for the three months and six months periods ended February 28, 2009 was
$15,136 and $30,271 compared to $13,298 and $23,914 for the same periods ended
February 29, 2008, respectively.
 
 NOTE 5OTHER
ASSETS
 
 Other
assets consist of the following:
 
 February
      28,
                2009
              
              
              August
      31,
                2008Other
      Current Assets:Employee
      advances
              
              $
              5,836
              
              
              $
              -Advances
      to third parties
              
              
              -
              
              
              
              1,550Prepaid
      expenses
              
              
              2,203
              
              
              
              243Total
      Other Current Assets
              
              $
              8,039
              
              
              $
              1,793Other
      Assets:Rent
      deposit
              
              $
              4,152
              
              
              $
              34,671Total
      Other Assets
              
              $
              4,152
              
              
              $
              34,671
 
 NOTE 6DEFERRED
REVENUES
 
 The
Company receives marketable securities and cash for services to be provided in
future periods. The Company recognizes revenue on a pro-rata basis over the term
of the agreement. The Company recorded $106,900and $424,832 in deferred revenues
at February 28, 2009 and at August 31, 2008, respectively, which will be
recognized over the next 12 months.
 
 NOTE 7ACCRUED
EXPENSES
 
 Accrued
expenses consist of the following:
 
 February
      28, 2009
              
              
              August
      31,
                2008Accrued
      legal &consulting fees
              
              $
              135,449
              
              
              $
              98,649Accrued
      interest
              
              
              -
              
              
              
              36,457Accrued
      salaries and payroll taxes
              
              
              502,736
              
              
              
              376,038Advances
      from third parties
              
              
              208,700
              
              
              
              295,495$
              846,885
              
              
              $
              806,639
  12
  FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 NOTE 8DUE TO RELATED
PARTIES
 
 Due to
officers and an entity owned by an officer, consist of the
following:
 
 February
      28, 2009
              
              
              August
      31,
                2008Accrued
      officer’s compensation
              
              $
              762,663
              
              
              $
              539,974Accrued
      consulting fees
              
              
              32,382
              
              
              
              32,382Accrued
      interest
              
              
              248,373
              
              
              
              248,373$
              1,043,418
              
              
              $
              820,729
 
 The
Company recorded an expense of $92,188 and $184,376 for the three months and six
months periods ended February 28, 2009 and 2008, respectively, for compensation
and benefits provided to the Chief Executive Officer of the Company. Due to
related parties are due on demand, interest free.
 
 NOTE 9NOTE
PAYABLE
 
 In August
2004, the Company executed a promissory note of $100,000 from a third party,
unsecured, interest at 9% per annum and due on demand. On January 23, 2009, the
Company agreed to convert the promissory note of $100,000 and accrued interest
of $39,998 by issuance of 10,639,998 shares of common stock valued at $139,998
as payment in full and final settlement of the promissory note including
interest.
 
 On July
20, 2008, the Company executed a promissory note of $550,000 to a third party,
unsecured, non-interest bearing and due January 20, 2009. The promissory note
originated as a result of conversion of consulting expenses payable to a third
party into a promissory note.
  NOTE 10EQUITY
TRANSACTIONS
 
 Common
Stock
 
 Through a
private placement on January 25, 2006 and after the acquisition of WallStreet,
the Company sold 8 units to eight accredited investors for cash consideration of
$120,000. Each unit sold consists of 15,000 common shares, a redeemable Class C
Warrant (the “Class C Warrant”), a redeemable Class D Warrant (the “Class D
Warrant”), and a redeemable Class E Warrant (the “Class E Warrant”) of Financial
Media Group, Inc. Each Class C Warrant entitles the registered holder thereof to
purchase, at any time until the first anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $1.50 per share, subject
to adjustment. Each Class D Warrant entitles the registered holder thereof to
purchase, at any time until the second anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $2.25 per share, subject
to adjustment. Each Class E Warrant entitles the registered holder thereof to
purchase, at any time until the third anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $3.75 per share, subject
to adjustment. The Class C Warrants, the Class D Warrants and the Class E
Warrants (collectively, the “Warrants”) are redeemable by the Company, at a
redemption price of $0.05 per share, upon at least 30 days prior written notice.
Commencing 12 months from the date of the private placement or upon an effective
Registration Statement, whichever is earlier, at the price of $0.05 per Warrant,
upon not less than 30 days notice to the holders of the Warrants called for
redemption, provided that the average closing bid price of the Common Stock
exceeds $2.50 for Class C Warrants, $4.50 for the Class D Warrants and $7.50 for
the Class E Warrants for 20 trading days. The holders of the Warrants called for
redemption shall have exercise rights until the close of business on the date
fixed for redemption. Class C Warrants expired on January 25, 2007, Class D
Warrants expired on January 25, 2008, and Class E Warrants expired on January
25, 2009, respectively.
 
 On June
28, 2007, the Company entered into a Stock Purchase Agreement with an investor
for private placement of shares under Regulation S as promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
During the six months ended February 28, 2009, the Company sold 335,533 shares
of common stock to the investors and received cash proceeds of $42,464. As of
February 28, 2009, the Company has sold 15,483,322 shares of its common stock
under Regulation S to the investors and received cash proceeds of $1,466,228
which amounted to approximately 34% of the total proceeds from such sale of its
shares. These shares were sold at a price equal to the previous day's last bid
price as traded on the Over the Counter Bulletin Board.
  13
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 On June
12, 2008, the Company initiated a Private Placement Memorandum offering to sell
250 units for a total cash consideration of $5,000,000. Each Unit consisted of
40,000 shares of Common Stock, par value $0.001 per share and 40,000 Class A
Common Stock Purchase Warrants, 40,000 Class B Common Stock Purchase Warrants
and 40,000 Class C Common Stock Purchase Warrants. The offering entitles the
registered investor redeemable Class A Warrants, redeemable Class B Warrants and
redeemable Class C Warrants to purchase, at any time until the 9-month, 12-month
and 18-month anniversary of the date of purchase of shares, at an exercise price
of $0.75, $1.50 and $3.00, respectively, subject to adjustment. The Class A,
Class B and Class C Warrants (collectively, the “Warrants”) are redeemable by
the Company, at a redemption price of $0.05 per share, upon at least 30 days’
prior written notice, commencing on the effective date of a registration
statement registering the common stock underlying the Warrants (the “Warrant
Shares”) for resale or 12 months after the date of issuance of the Warrant,
whichever is earlier, if the market price per share of the common stock for any
five consecutive trading days prior to a notice of redemption shall exceed $1.50
per share for Class A Warrants, $3.00 per share for the Class B Warrants and
$5.00 per share for Class C Warrants. During the six months ended February 28,
2009, the Company sold 13 units to investors for a cash consideration of
$260,000. As of February 28, 2009, the Company sold 44 units to investors and
raised $880,000 pursuant to the June 12, 2008 Private Placement. Pursuant to the
terms of financing, the 44 units sold consisted of an aggregate of1,760,000
shares of common stock and 5,280,000 warrants exercisable into 5,280,000 shares
of common stock. The fair market value of 1,760,000 Class A warrants, 1,760,000
Class B warrants and 1,760,000 Class C warrants was $ 643,568, $541,990 and
$544,238 respectively, calculated using the Black-Scholes option pricing model
using the assumptions of risk free interest rate of 3.5%, volatility of 160%,
term ranging from nine months to 18 months, and dividend yield of
0%.
 
 During
the six months ended February 28, 2009, the Company issued 673,249 shares to
consultants valued at $42,485in full settlement of their services,10,639,998
shares to a third party in settlement of a promissory note and accrued interest
valued at $139,998, 71,500 shares to an employee valued at $25,000 in full
settlement of his services, and 434,731 shares to directors valued at $53,333
for their services. The shares were valued at their fair value on the date of
issuance.
 
 Outstanding
Warrants:
 
 Following
is a summary of the various classes of warrants outstanding at February 28,
2009:
 
 Description
                of
      Warrants
              
              Exercise
                Price
              
              Expiration
                Date
              
              Warrants
      Outstanding at August 31,
                2008
              
              
              Warrants
                Issued
                Duringthe
                Period
              
              
              Warrants
      Exercised
                During
      the
                Period
              
              
              Warrants
                Expired
                During
      the
                Period
              
              
              Warrants
      Outstanding at February 28,
                2009Class
      E
              
              $
              3.75
              
              1/25/2009
              
              
              165,000
              
              
              
              -
              
              
              
              -
              
              
              
              (165,000)
              
              
              
              -Class
      A2
              
              $
              3.50
              
              9/1/1008
              
              
              244,667
              
              
              
              -
              
              
              
              -
              
              
              
              (244,667)
              
              
              
              -Class
      A
              
              $
              0.75
              
              3/16/2009
      to 7/28/2009
              
              
              -
              
              
              
              1,760,000
              
              
              
              -
              
              
              
              -
              
              
              
              1,760,000Class
      B
              
              $
              1.50
              
              6/16/2009
      to 10/28/2009
              
              
              -
              
              
              
              1,760,000
              
              
              
              -
              
              
              
              -
              
              
              
              1,760,000Class
      C
              
              $
              3.00
              
              12/16/2009
      to 4/28/2010
              
              
              -
              
              
              
              1,760,000
              
              
              
              -
              
              
              
              -
              
              
              
              1,760,000409,667
              
              
              
              5,280,000
              
              
              
              -
              
              
              
              (409,667)
              
              
              
              5,280,000
 
 14
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 The
number and weighted average exercise prices of warrants granted by the Company
are as follows:
 
 Number
      of Warrants
              
              
              Weighted
      Average Exercise Price
              
              
              Aggregate
      Intrinsic
                ValueOutstanding
      - August 31, 2008
              
              
              409,667
              
              
              $
              3.60
              
              
              
              -Issued
      during the period
              
              
              5,280,000
              
              
              $
              1.75
              
              
              
              -Expired
              
              
              (409,667
              )
              
              $
              3.60
              
              
              
              -Exercised
              
              
              -
              
              
              
              -
              
              
              
              -Outstanding
      - February 28, 2009
              
              
              5,280,000
              
              
              $
              1.75
              
              
              
              -
 
 Following
is the summary of the status of warrants outstanding at February 28,
2009:
 
 Range
      of
                Exercise
                Prices
              
              
              Total
                Warrants
                Outstanding
              
              
              Weighted
                Average
      Remaining
                Life
      (Years)
              
              
              Weighted
                Average
      Exercise
                Price
              
              
              Warrants
                Exercisable
              
              
              Weighted
      average Exercise Price of Exercisable Warrants$
              0.75
      - $3.00
              
              
              
              5,280,000
              
              
              
              0.52
              
              
              $
              1.75
              
              
              
              5,280,000
              
              
              $
              1.75
 
 Outstanding Stock
Options:
 
 2007 Non-Qualified Stock
Option Plan (“2007 Non-Qualified Plan”):
 
 On
January 5, 2007, the Company adopted the 2007 Non-Qualified Plan and reserved a
maximum of 3,000,000 shares of common stock as Options to grant to employees,
non-employee directors, consultants and advisors. The stock subject to Options
granted under the Non-Qualified Plan shall be shares of the Company’s Common
Stock, par value $0.001 per share. The 2007 Non-Qualified Plan shall terminate
within ten (10) years from the date of adoption by the Board of Directors or
sooner, and no Options shall be granted after termination of the plan. The
Options have been granted to certain employees and consultants to purchase
Common Shares at prices equal to fair market value on the date of
grant.
 
 The
number and weighted average exercise prices of options granted by the Company at
February 28, 2009 are as follows:
 
 Options
                Outstanding
              
              
              Weighted
      Average
                Exercise
      Price
              
              
              Aggregate
                Intrinsic
      ValueOutstanding
      - August 31, 2008
              
              
              2,235,000
              
              
              $
              0.23
              
              
              $
              -Granted
              
              
              -
              
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -
              
              
              
              -Expired/forfeited
              
              
              (235,000
              )
              
              
              (0.30
              )
              
              
              -Outstanding
      – February 28, 2009
              
              
              2,000,000
              
              
              $
              0.16
              
              
              $
              -
  15
  FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 Following
is a summary of the status of stock options outstanding at February 28,
2009:
 
 Range
      of
                Exercise
                Prices
              
              
              Total
                Options
                Outstanding
              
              
              Weighted
                Average
      Remaining
                Life
      (Years)
              
              
              Total
      Weighted
                Average
      Exercise
                Price
              
              
              Options
                Exercisable
              
              
              Weighted
                Average
      Exercise
                Price$
              0.10
      - $0.30
              
              
              
              2,000,000
              
              
              
              8.81
              
              
              $
              0.15
              
              
              
              634,444
              
              
              $
              0.162,000,000
              
              
              
              8.81
              
              
              $
              0.15
              
              
              
              634,444
              
              
              $
              0.16
 
 The
Company issued 2,000,000 options to officers and consultants at the exercise
prices ranging from $0.10 to $0.30 with the fair value of the options valued at
$370,091 calculated using the Black-Scholes option pricing model using the
assumptions of risk free interest rate of 3.50%, volatility of 148%, ten (10)
years term, and dividend yield of 0%.
 
 The stock
option expense for the three months and six months periods ended February 28,
2009 was $33,763 and $67,526 compared to $3,192 and $3,192 for the same periods
in 2008, respectively.
 
 2008 Non-Qualified Stock
Option Plan (“2008 Non-Qualified Plan”):
 
 On July
2, 2008, the Company adopted the 2008 Non-Qualified Plan and the Board of
Directors approved the reservation of 2,000,000 shares of the Company’s
authorized but unissued common stock for issuance under the plan. As of February
28, 2009, no options have been granted under the 2008 Non-Qualified
Plan.
 
 2007 Equity Incentive Plan
(“2007 Equity Plan”):
 
 On
February 6, 2007, the Company adopted the 2007 Equity Plan which was approved by
the shareholders on April 11, 2007, and reserved 3,000,000 shares of the
Company’s authorized common stock as Options to grant to employees, directors
and officers. On August 28, 2008, the shareholders approved reserving an
additional 4,000,000 common shares for issuance under the 2007 Equity Plan for a
total of 7,000,000 common shares. The stock subject to Options granted under the
2007 Equity Plan shall be the Common Shares of the Company’s common stock, par
value $0.001 per share. The 2007 Equity Plan shall become effective and shall
remain in effect until all Common Shares subject to the 2007 Equity Plan have
been purchased or acquired according to the terms of the 2007 Equity Plan or the
2007 Equity Plan is terminated by the Board or January 4, 2017, whichever is
earlier. No stock Options shall be granted after termination of the plan. The
Options have been granted to certain employees to purchase Common Shares at
prices equal to fair market value on the date of grant.
 
 The
number and weighted average exercise prices of stock Options granted by the
Company at February 28, 2009 are as follows:
  Options
      Outstanding
              
              
              Weighted
      Average Exercise Price
              
              
              Aggregate
      Intrinsic
                ValueOutstanding
      - August 31, 2008
              
              
              2,375,000
              
              
              $
              0.30
              
              
              $
              -Granted
              
              
              5,534,000
              
              
              
              0.015
              
              
              
              -Exercised
              
              
              -
              
              
              
              -
              
              
              
              -Expired/forfeited
              
              
              (1,734,000
              )
              
              
              0.30
              
              
              
              -Outstanding
      – February 28, 2009
              
              
              6,175,000
              
              
              $
              0.07
              
              
              $
              -
  16
  FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 Following
is a summary of the status of stock Options outstanding at February 28,
2009:
 
 Range
      of
                Exercise
                Prices
              
              
              Total
                Options
                Outstanding
              
              
              Weighted
                Average
      Remaining
                Life
      (Years)
              
              
              Total
      Weighted
                Average
      Exercise
                Price
              
              
              Options
                Exercisable
              
              
              Weighted
                Average
      Exercise
                Price$
              0.015
      - $0.30
              
              
              
              6,175,000
              
              
              
              8.14
              
              
              $
              0.07
              
              
              
              746,882
              
              
              $
              0.196,175,000
              
              
              
              8.14
              
              
              $
              0.07
              
              
              
              746,882
              
              
              $
              0.19
  During
the six months period ended February 28, 2009, the Company granted 5,534,000
stock options to employees to purchase common shares of the Company at an
exercise price of $0.015 per share with the fair value of the options valued at
$371,464 calculated using the Black-Scholes option pricing model using the
assumptions of risk free interest rate of 3.75%, volatility of 264%, ten (10)
years term, and dividend yield of 0%.
 
 The stock
option expense for the three months and six months periods ended February 28,
2009 was $50,633 and $75,622 compared to $47,725 and $47, 725 for the same
periods in 2008, respectively.
 
 NOTE 11BASIC AND DILUTED NET LOSS
PER SHARE
 
 Net loss
per share is calculated in accordance with the Statement of financial accounting
standards No. 128 (SFAS No. 128), “Earnings per share.” SFAS No. 128 superseded
Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all
periods presented has been restated to reflect the adoption of SFAS No. 128.
Basic net loss per share is based upon the weighted average number of common
shares outstanding. Diluted net loss per share is based on the assumption that
all dilutive convertible shares and stock options were converted or exercised.
Dilution is computed by applying the treasury stock method. Under this method,
options and warrants are assumed to be exercised at the beginning of the period
(or at the time of issuance, if later), and as if funds obtained thereby were
used to purchase common stock at the average market price during the
period.
 
 Weighted
average number of shares used to compute basic and diluted loss per share is the
same since the effect of dilutive securities is anti-dilutive.
 
 NOTE 12SUPPLEMENTAL DISCLOSURES OF
CASH FLOWS
 
 The
Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95. The Company paid $5,005
for interest and $0 for income taxes during the six months ended February 28,
2009. The Company paid $140 for interest and $0 for income taxes during the six
months ended February 28, 2009.
 
 NOTE 13COMMITMENTS
 
 Operating
Lease
 
 The
Company leases its corporate office facilities in California from a third party
under an operating lease that terminates on February 28, 2010. Rent expense
under the operating lease for the three months and six months ended February 28,
2009 was $118,182 and $222,140 compared to $115,104 and $237,209 for the same
periods in 2008, respectively. The Company has future minimum lease obligations
as follows:
 
 Twelve
      months ending
                February
      28,
              
              Amount2010
              
              $
              318,256$
              318,256
 
 Employment
Agreement
 
 On
January 26, 2007, the Company entered into an employment agreement with its
Chief Financial Officer for a three year period, to provide salary, bonuses, and
other fringe benefits. The Company recorded a compensation expense of $54,677and
$97,802in general and administrative expenses for the three months and six
months ended February
28, 2009 compared to $41,250 and $78,750 for the same periods in 2008,
respectively.
  17
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
   Twelve
      months ending
                February
      28,
              
              Amount2010
              
              $
              187,643$
              187,643
 
 Contingencies
 
 From time
to time, the Company may be involved in various claims, lawsuits, and disputes
with third parties, actions involving allegations of discrimination or breach of
contract actions incidental to the normal operations of the business. The
Company is currently in discussions in negotiating the claims and settling the
judgments with the parties.
 
 On
January 22, 2008, litigation claiming $20,250 from the Company was commenced for
providing space rental and management services. On September 10, 2008, a
judgment was entered against the Company in the amount of $14,371.87. An order
to appear for examination is set forth for May 7, 2009. The Company has accrued
the expense of $14,371.87 in the accompanying financial statements as of
February 28, 2009.
 
 On March
27, 2008, a Stipulation of Settlement was entered between a third party vendor
and the Company for a sum of $16,800. A default judgment in the amount of
$17,794.85 was entered against the Company on October 16, 2008. The Company has
not paid the judgment as of February 28, 2009. The Company has accrued the
expense of $17,794.85 in the accompanying financial statements as of February
28, 2009.
 
 On
September 30, 2008, a complaint for a breach of contract was filed against the
Company for failing to pay $42,000 in licensing fees for using the vendor’s
financial information and analytical tools relating to securities pursuant to an
agreement. On March 4, 2009, a judgment for $47,399.45 was awarded in favor of
the vendor, and the amount remains unpaid as of February 28, 2009. The Company
has accrued the expense of $47,399.45 in the accompanying financial statements
as of February 28, 2009
 
 On
November 26, 2008, a complaint was filed by two consultants against the Company
for unpaid compensation for consulting services provided to in the amount of
$66,239. Company is reviewing the allegations and plans to vigorously contest
the claims.
 
 On June
20, 2008, a judgment of $19,290.95 was awarded in the favor of a former employee
for compensation of services of which the $9,290.95 remains unpaid. The Company
has accrued the expense of $9,290.95 in the accompanying financial statements as
of February 28, 2009.
 
 On
February 18, 2009, litigation against the Company and its subsidiaries to pay
$74,194.60 for newswire services was filed by a third party vendor. The Company
is reviewing the allegations and plans to contest the claim. The Company has
accrued the expense of $74,194.60 in the accompanying financial statements as of
February 28, 2009.
 
 NOTE 14GOING
CONCERN
 
 The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. This basis of accounting contemplates the recovery
of the Company's assets and the satisfaction of its liabilities in the normal
course of business. The Company had an accumulated deficit of $14,666,357 as of
February 28, 2009 and has incurred net loss of $2,129,819 for the six months
ended February 28, 2009.In view of the matters described in the preceding
paragraph, recoverability of a major portion of the recorded asset amounts shown
in the accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to raise
additional capital, obtain financing and to succeed in its future operations.
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. Management devoted considerable effort
during the period ended February 28, 2009 towards (i) obtaining additional
equity financing, (ii) evaluation of its distribution and marketing methods, and
(iii) further streamlining and reducing costs.
  18
 
 Item
2. Management’s Discussion and Analysis of Financial Condition
 
 This
Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements that reflect
Management's current views with respect to future events and financial
performance. You can identify these statements by forward-looking words such as
“may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or
similar words. Those statements include statements regarding the intent, belief
or current expectations of us and members of its management team as well as the
assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risk and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking
statements.
 
 Readers
are urged to carefully review and consider the various disclosures made by us in
this report and in our other reports filed with the Securities and Exchange
Commission. Important factors currently known to Management could cause actual
results to differ materially from those in forward-looking statements. We
undertake no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
in the future operating results over time. We believe that our assumptions are
based upon reasonable data derived from and known about our business and
operations. No assurances are made that actual results of operations or the
results of our future activities will not differ materially from its
assumptions. Factors that could cause differences include, but are not limited
to, expected market demand for our services, fluctuations in pricing for
materials, and competition.
 
 Overview
 
 Our
current operations consist of the operations of Forwant.com, a FREE online
classified website launched by us on February 20, 2009, that enables users to
search for a variety of items and specializes in the categories of Jobs,
Housing, For Sale, Personals and Services internationally. The property also has
paid premium component.
 
 WallStreet,
a financial media and advertising company that provides various financial
Internet solutions, tools, content and services to individual investors, media,
corporate, and financial services companies. WallStreet also provides
Internet-based media and advertising services through its financial Web site
www.wallst.net. Advertising on WallSt.net consists of continuous or rotating
client profiles on various Web pages within WallSt.net. Delivery of these
profiles is based on a certain number of impressions on WallSt.net depending on
our client agreements. An impression is defined as a single instance of an
advertisement being displayed. Furthermore, WallStreet provides E-mail services
to its clients, which are mailings sent to a targeted list of e-mail addresses,
with delivery consisting solely of transmitting the mailing to the e-mail
targets. E-mail services may be purchased on a per-transmittal basis, for which
revenue is recorded when the transmittal occurs, or on a fixed-fee basis in
which the client receives access to a fixed number of transmittals per-month. We
record the revenue on the fixed-fee basis pro-rated over the term of the client
agreement.
 
 We
established our Financial Filings Corp. subsidiary to leverage WallStreet
Direct, Inc.’s existing client base, by offering Edgarization services to small
and mid-sized public companies. Financial Filings is a provider of news wire and
compliance services to small and mid-sized publicly traded companies worldwide
including preparation of registration statements, electronic filings for SEC
documents (EDGAR), preparation of proxy materials, and news distribution in more
than 30 languages to media outlets in more than 135 countries.
 
 In
January 2007, we acquired the trade name “The Wealth Expo” and formed a wholly
owned subsidiary The Wealth Expo Inc. on June 12, 2007. The Wealth Expo is
designed to provide a broad range of information on investing techniques, and
tools to investors through workshops and exhibits held throughout the United
States. Exhibitors at the Wealth Expo include public and private companies,
franchises, financial newsletter publishers, investor education providers, and
real estate companies. The Wealth Expo provides us several new revenue streams
through exhibition sales, speaking presentation sales, collateral material
sales, and advertising sales. Since its inception, The Wealth Expo has attracted
hundreds of exhibitors and thousands of attendees from around the
world.
  19
 
 WallStTV
was launched in May 2008 and offers free access to our original video
programming including the 3-Minute Press Show, Sweet Picks, the Analyst’s
Review, and WSNM. WSNM is also distributed through television via as a paid
advertisement on the Fox Business Network. More than 15 episodes of WSNM have
aired since March 2008. Our
half-hour television program at Fox Business Network is also syndicated on our
Web properties, allowing visitors to watch the show on the Web as well as on
television. Revenue from the television program is derived from the sale of
interviews to paid clients, and the sale of segments of the show where our
clients’ press releases are summarized. We incur production costs related to
booking talent, renting studio time, and members of our production
crew.
 
 Results
of Operations
 
 Our
consolidated results of operations for the three months and six months periods
ended February 28, 2009 and 2008 include our wholly-owned subsidiaries
WallStreet, Financial Filings, Corp., My WallStreet, Inc., and The Wealth Expo
Inc.
 
 We
reported a net loss of $1,079,249 and $2,129,819 for the three months and six
months periods ended February 28, 2009, respectively, compared to a loss of
$1,066,379 and $1,697,699 for the same periods ended February 29, 2008,
respectively. The increase in loss was principally attributable to the
significant reduction in sales due to current economic downturn and increase in
loss realized on sale of marketable securities in our portfolio, as more fully
explained in "Operating Expenses" below.
 
 Revenues
 
 Revenues
for the three months and six months periods ended February 28, 2009 were
$241,805 and $1,076,592, respectively, compared to $2,168,747 and $4,047,640 for
the same periods in 2008, respectively. Revenues decreased by $1,926,942 (89%)
and $2,971,048 (137%) during the three months and six months periods ended
February 28, 2009 and 2008, respectively, due to significant decrease in
advertisements on our website from the  current economic conditions
and recent downturn in financial markets, resulting in clients not spending
money on advertising.
 
 Operating
Expenses
 
 Selling,
general, and administrative expenses (S,G&A) for the three months and six
months periods ended February 28, 2009 were $622,821 and $1,633,299,
respectively, compared to $1,410,640 and $2,994,270 for the same periods in
2008, respectively. S,G&A expenses decreased by $787,819 (56%) and
$1,360,971 (45%), respectively, during the three months and six months periods
ended February 28, 2009 as compared to the same periods in 2008, primarily due
to reduction in payroll costs, reduction in costs due to closure of our office
in New York City, reduction in overall administrative, sales and marketing
personnel due to right sizing the Company as a result of reduction in revenues,
and reduction in legal costs.
 
 Impairment
of marketable securities for the three months and six months periods ended
February 28, 2009 were $460,544 and $1,089,789, respectively, compared to
$1,469,547 and $2,331,450 for the same periods ended in 2008, respectively.
Impairment expense was recorded because the market value of the securities we
received as compensation for services declined in excess of 50% of their market
value. This reduction in our judgment appeared to be other than temporary
reduction in the fair value of the marketable securities. Therefore, we took a
conservative approach of recording the impairment expense. Furthermore, to
safeguard us with impairments of marketable securities, we have revised our
contractual terms on agreements with our clients which provides that, in the
event during the term of the agreement, the share bid price of client securities
decline by more than 10% of the share bid price on the date of execution of the
agreement, the client agrees to issue additional shares of their common stock to
us in order to make up the deficiency caused by the reduction in the value of
their stock. Implementation of this policy further helped us reduce our
impairment expense during the three months and six months periods ended February
28, 2009.
 
 Depreciation
expense for the three months and six months periods ended February 28, 2009 was
$15,136 and $30,271, respectively, compared to $13,298 and $23,914 for the same
periods in 2008, respectively.
  20
 
 Interest
expense for the three months and six months periods ended February 28, 2009 was
$2,292 and $9,803, respectively, compared to $17,720 and $$65,260 for the same
periods in 2008, respectively. Interest expense decreased by $15,428 (87%) and
$55,457 (357%) for the three months and six months periods ended February 28, 2009
resulting from the conversion in January 2008 of the $3,000,000 promissory notes
due to an officer into 15,000,000 shares of common stock. Interest was charged
on the $3,000,000 promissory notes we executed in January 2005 due and payable
in January 2010.
 
 Realized
loss on sale of marketable securities for the three months and six months
periods ended February 28, 2009 was $220,265 and $438,503, respectively,
compared to $323,921 and $325,645 for the same periods in 2008, respectively. We
sold marketable securities held in our possession and realized losses on their
sale to fund our operating costs. Unrealized gain for the six months period
ended February 28, 2009 was $929,586 compared to $1,567,320 for the same period
in 2008. Unrealized gain resulted from the increase in market value of the
marketable securities held at February 28, 2009 and August 31, 2008,
respectively.
 
 Liquidity
and Capital Resources
 
 Cash and
cash equivalents were $13,788 at February 28, 2009 compared to $72,934 at
February 29, 2008. As shown in the accompanying consolidated financial
statements, we recorded a loss of $2,129,819 for the six months period ended
February 28, 2009 compared to a loss of $1,697,699 for the same period in 2008.
Our current liabilities exceeded our current assets by $2,164,398 at February
28, 2009 and net cash used in operating activities for the six months ended
February 28, 2009 was $668,058. These factors and our ability to meet our debt
obligations from current operations, and the need to raise additional capital to
accomplish our objectives raises doubt about our ability to continue as a going
concern.
 
 We expect
significant capital expenditures during the next 12 months, contingent upon
raising capital. These anticipated expenditures are for software development,
assets additions, administrative overheads and working capital requirements. We
do not have sufficient funds to conduct our operations for more than a month and
we will need an additional $2,000,000 to fund our anticipated operations for the
next 12 months, depending on revenues from operations. We have no contracts or
commitments for additional funds and there can be no assurance that financing
will be available in amounts or on terms acceptable to us, if at
all.
 
 We
presently do not have any available credit, bank financing or other external
sources of liquidity. Due to our historical operating losses, our operations
have not been a source of liquidity. We will need to obtain additional capital
in order to expand operations and become profitable. In order to obtain capital,
we may need to sell additional shares of our common stock or borrow funds from
private lenders. There can be no assurance that we will be successful in
obtaining additional funding.
 
 To the
extent that we raise additional capital through the sale of equity or
convertible debt securities, the issuance of such securities may result in
dilution to existing stockholders. If additional funds are raised through the
issuance of debt securities, these securities may have rights, preferences and
privileges senior to holders of common stock and the terms of such debt could
impose restrictions on our operations. Regardless of whether our cash assets
prove to be inadequate to meet our operational needs, we may seek to compensate
providers of services by issuance of stock in lieu of cash, which may also
result in dilution to existing shareholders. Even if we are able to raise the
funds required, it is possible that we could incur unexpected costs and
expenses, fail to collect significant amounts owed to us, or experience
unexpected cash requirements that would force us to seek alternative
financing.
 
 Whereas
we have been successful in the past in raising capital, no assurance can be
given that these sources of financing will continue to be available to us and/or
that demand for our equity/debt instruments will be sufficient to meet our
capital needs, or that financing will be available on terms favorable to us. If
funding is insufficient at any time in the future, we may not be able to take
advantage of business opportunities or respond to competitive pressures, or may
be required to reduce the scope of our planned service development and marketing
efforts, any of which could have a negative impact on our business and operating
results. In addition, insufficient funding may have a material adverse effect on
our financial condition, which could require us to:
 
 -
              curtail
      operations significantly;-
              sell
      significant assets;-
              seek
      arrangements with strategic partners or other parties that may require the
      company to relinquish significant rights to products, technologies or
      markets; or-
              explore
      other strategic alternatives including a merger or sale of our
      company.
 
 21
  We have
been able to meet our obligations through liquidation of our “Market Securities”
portfolio; however, we have missed opportunities to maximize our value, due to
the untimely demands for cash not matching with the highest market value. The
components of the current liabilities specifically the “Deferred Revenue”
classification, reflects a more informative view. As we enter into sundry
contracts for services with our customers, contractually the revenue is earned
upon execution of the agreement. We are in compliance with GAAP and amortize
this revenue stream over the life of the contract, resulting in a non-cash
reduction of this liability.
 
 Operating
Activities
 
 Net cash
used in operating activities for the six months period ended February 28, 2009
was $668,058 resulted due to decrease in receivables of $9,565, decrease in
other current assets and deposits of $24,274, increase in accounts payable of
$247,891, increase in accrued expenses and other liabilities of $162,935, and
increase in deferred revenues of $12,059.
 
 Investing
Activities
 
 Net cash
provided by investing activities for the six months period ended February 28,
2009 was $306,070 from sale of marketable securities.
 
 Financing
Activities
 
 Net cash
provided by financing activities for the six months period ended February 28,
2009 was $302,464 from the sale of common stock amounting to
$302,464.
 
 As a
result of the above activities, we experienced a net decrease in cash of $59,524
for the six months period ended February 28, 2009. Our ability to continue as a
going concern is still dependent on our success in obtaining additional
financing from investors through the sale of our securities.
 
 Application
of Critical Accounting Policies
 
 Marketable
Securities and Impairments
 
 Our
investments in securities are classified as available-for-sale and, as such, are
carried at fair value based on quoted market prices. Securities classified as
available-for-sale may be sold in response to changes in interest rates,
liquidity needs, and for other purposes.
 
 Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholder’s equity. Realized
and unrealized gains and losses for securities classified as available-for-sale
are included in the statement of operations and comprehensive gain,
respectively.
 
 We
review, on a quarterly basis or more frequently if warranted by circumstances,
the carrying value of the marketable securities we receive from our customers
for providing services. We record impairment expense each quarter when the
market value of the securities received show a consistent decline over 90 to 180
days, and the carrying amount of the marketable securities exceeds its fair
value by 50% or more, and is deemed not recoverable. As such, we record on a
quarterly basis in our financial statements the impairment loss for the
difference between the carrying amount of the marketable securities and their
fair value.
 
 At the
end of each quarter, we evaluate the marketable securities that show a
consistent decline in market value than the cost over a period of 90 to 180 days
for any possible impairment. We evaluate various factors relating to the
securities one of which is the length of the time and the extent to which the
market value has been less than cost. Our accounting policy is consistent with
SFAS 115 and SAB Topic 5M, whereby we record impairment expense each quarter
when the market value of the securities show a consistent decline over 90 to 180
days, and the cost of the marketable securities exceeds its fair value by a
material amount (50% or more), and is deemed not recoverable. In those instances
where impairment charges have been taken, the cost of the marketable securities
on a quarterly basis is brought down to the market value of securities in our
financial statements. The marketable securities are written down to zero only if
the marketable securities are either de-listed or not traded. However, after an impairment
for certain securities is recorded in a period, further impairment is recorded
if the fair value of the securities in future period falls substantially (more
than 50%) below the cost (after impairment adjustment) and if the decline in
market value is consistent for a period of time. Accordingly, after the first
impairment, we may record an unrealized loss for some period till we are
convinced that there is further impairment in the marketable
securities.
  22
 
 Revenue
Recognition
 
 We record
revenues on the basis of services provided to our client for a fixed
determinable fee pursuant to a contractual agreement. In lieu of providing
services, we receive from our clients’ cash and/or securities, as compensation
for providing such services.
 
 Our
primary source of revenue is generated from providing Internet based media and
advertising services and a full array of customized investor awareness programs
to small and medium sized companies through its financial websites
www.wallst.net and my.wallst.net. The services include audio and video
production of senior management interviews, text and display advertising, press
releases, e-mail marketing, and promotion across our network of web sites. These
services are provided by our subsidiaries WallStreet Direct, Inc. and Digital
WallStreet, Inc. Revenues from Internet based media and advertising services are
recognized and recorded when the performance of such services are completed. We
adhere to the guidelines established under Staff Accounting Bulletin 104
whereby, we execute a contractual agreement with the client for a fixed fee to
perform services, delivery of services has occurred when we performed the
contracted services, and collectability of the fees has occurred when we receive
cash and/or marketable securities in satisfaction for services
provided.
 
 We
provide news wire and compliance services to small and medium size publicly
traded companies including preparation of registration statements, electronic
filings and reporting of SEC documents (EDGAR), preparation of proxy materials
and news distribution. Such services are provided by our subsidiary Financial
Filings Corp. Revenues are recognized and recorded when the performances of such
services are completed. We adhere to the guidelines established under Staff
Accounting Bulletin 104 whereby, we execute a contractual agreement with the
client for a fixed fee to perform services, delivery of services has occurred
when we completed the performed the contracted services, and collectability of
the fees has occurred when we receive cash and/or marketable securities in
satisfaction of services provided.
 
 We
provide a broad range of information on investing techniques and education tools
to investors through workshops and exhibits. Our subsidiary, The Wealth Expo,
provides us revenue streams through exhibition sales, speaking presentation
sales, collateral material sales and advertising sales. Revenues from Wealth
Expo services is recognized and recorded when the performance of such services
are completed. We adhere to the guidelines established under Staff Accounting
Bulletin 104 whereby, we execute a contractual agreement with the client for a
fixed fee to perform services, delivery of services has occurred when we
completed the performed the contracted services, and collectability of the fees
has occurred when we receive cash and/or marketable securities in satisfaction
of services provided.
 
 Payments
received in advance of services provided, are recorded as deferred
revenue.
 
 Stock-Based
Compensation
 
 We
adopted SFAS No. 123 (Revised 2004), Share Based Payment(“SFAS
No. 123R”), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of employee
services received in exchange for an award of equity instruments based on the
grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation,for all share-based payments granted prior to and not yet
vested as of January 1, 2006 and share-based compensation based on the
grant-date fair-value determined in accordance with SFAS No. 123R for all
share-based payments granted after January 1, 2006. SFAS No. 123R
eliminates the ability to account for the award of these instruments under the
intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion
No. 25, Accounting for Stock
Issued to Employees, and allowed under the original provisions of SFAS
No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted
for our stock option plans using the intrinsic value method in accordance with
the provisions of APB Opinion No. 25 and related interpretations.
  23
 
 Issuance
of Shares for Service
 
 We
account for the issuance of equity instruments to acquire goods and services
based on the fair value of the goods and services or the fair value of the
equity instrument at the time of issuance, whichever is more reliably
measurable.
 
 Recent
Accounting Pronouncements
 
 In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements”. This Statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
non-controlling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for our fiscal year beginning
October 1, 2009. Management is currently evaluating the effect of this
pronouncement on financial statements.
 
 In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141(R) will apply prospectively to business combinations for which the
acquisition date is on or after our fiscal year beginning October 1, 2009. While
we have not yet evaluated this statement for the impact, if any, that SFAS No.
141(R) will have on our consolidated financial statements, we will be required
to expense costs related to any acquisitions after September 30,
2009.
 
 FASB
Staff Position on FAS No.115-1 and FAS No. 124-1 (“the FSP”), “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments,” was
issued in November 2005 and addresses the determination of when an investment is
considered impaired, whether the impairment on an investment is
other-than-temporary and how to measure an impairment loss. The FSP also
addresses accounting considerations subsequent to the recognition of
other-than-temporary impairments on a debt security, and requires certain
disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. The FSP replaces the impairment guidance on
Emerging Issues Task Force (EITF) Issue No. 03-1 with references to
existing authoritative literature concerning other-than-temporary
determinations. Under the FSP, losses arising from impairment deemed to be
other-than-temporary, must be recognized in earnings at an amount equal to the
entire difference between the securities cost and its fair value at the
financial statement date, without considering partial recoveries subsequent to
that date. The FSP also required that an investor recognize other-than-temporary
impairment losses when a decision to sell a security has been made and the
investor does not expect the fair value of the security to fully recover prior
to the expected time of sale. The FSP is effective for reporting periods
beginning after December 15, 2005. The adoption of this statement will not have
a material impact on our consolidated financial statements.
 
 In March
2008, the FASB issued FASB Statement No. 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 new standard also improves transparency about the location and
amounts of derivative instruments in an entity’s financial statements; how
derivative instruments and related hedged items are accounted for under
Statement 133; and how derivative instruments and related hedged items affect
its financial position, financial performance, and cash flows. FASB Statement
No. 161 achieves these improvements by requiring disclosure of the fair values
of derivative instruments and their gains and losses in a tabular format. It
also provides more information about an entity’s liquidity
by requiring disclosure of derivative features that are credit risk–related.
Finally, it requires cross-referencing within footnotes to enable financial
statement users to locate important. Based on current conditions, we do not
expect the adoption of SFAS 161 to have a significant impact on our results of
operations or financial position.
  24
 
 In May of
2008, FSAB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting
Principles”. The pronouncement mandates the GAAP hierarchy reside in the
accounting literature as opposed to the audit literature. This has the practical
impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP
hierarchy. This pronouncement will become effective 60 days following SEC
approval. We do not believe this pronouncement will impact our financial
statements.
 
 In May of
2008, FASB issued SFASB No. 163, “Accounting for Financial Guarantee Insurance
Contracts-an interpretation of FASB Statement No. 60”. The scope of the
statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. We not believe this pronouncement will impact our financial
statements.
 
 Item
3.Quantitative and Qualitative Disclosures about Market Risk
 
 Not
required under Regulation S-K for “smaller reporting companies.”
 
 Item
4T. Controls and Procedures
 
 (a)
Evaluation of disclosure controls and procedures.
 
 Our
management, with the participation of our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as
of February 28, 2009. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives. In addition, the design of disclosure
controls and procedures must reflect the fact that there are resource
constraints and that management is required to apply its judgment in evaluating
the benefits of possible controls and procedures relative to their
costs.
 
 Based on
our evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are designed at a
reasonable assurance level and are effective to provide reasonable assurance
that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our chief executive officer and chief financial officer,
as appropriate, to allow timely decisions regarding required
disclosure.
 
 (b) Changes in internal control over financial
reporting.
 
 We
regularly review our system of internal control over financial reporting and
make changes to our processes and systems to improve controls and increase
efficiency, while ensuring that we maintain an effective internal control
environment. Changes may include such activities as implementing new, more
efficient systems, consolidating activities, and migrating processes. There were
no changes in our internal control over financial reporting that occurred during
the period covered by this Quarterly Report on Form 10-Q that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
  25
 
 PART
II - OTHER INFORMATION
 
 Item
1. Legal Proceedings
 
 Renaissance
Hotel management Company, LLC vs. Financial Media Group, Inc., Cook County
Court, Illinois, First Municipal District, Case No. 08M1104953
 
 On
January 22, 2008, litigation claiming $20,250 from Financial Media Group, Inc.
was commenced under the above-entitled action. On September 10, 2008, a judgment
was entered against us in the amount of $14,371.87.
 
 CBS
Outdoors, Inc. vs. Financial Media Group, Inc., New York City Civil Court Index
No. CV-003947-08/NY
 
 On March
27, 2008, a Stipulation of Settlement was entered between CBS Outdoors and us
for a sum of $16,800. A default judgment in the amount of $17,794.85 was entered
against us on October 16, 2008. We have not paid the judgment.
  Matthew
Turner vs. Financial Media Group, Inc., Superior Court of California, County of
Orange, Case No. 18-69884 KV
 
 On June
20, 2008, a judgment of $19,290.95 was awarded by the Labor Commissioner,
Department of Industrial Relations, in favor of Plaintiff, of which the
$9,290.95 remains unpaid.
 
 Dow
Jones & Company, Inc. DBA Dow Jones Marketwatch as successor in interest to
Marketwatch, Inc. vs. Financial Media Group, Inc. Et. Al., Superior Court of
California, County of Orange, Case No. 30-2208 00112726
 
 On
September 30, 2008, Dow Jones filed a complaint for a breach of contract against
us for failing to pay $42,000 in licensing fees for using Marketwatch’s
financial information and analytical tools relating to securities pursuant to
the terms as required by the License and Service Agreement. On March 4, 2009, a
judgment for $47,399.45 was awarded in favor of Dow Jones, and the said amount
remains unpaid.
 
 Matthew
Turner, Dutch Dewaard vs. Financial Media Group, Inc., Digital WallStreet, Inc.,
WallStreet Direct, Inc. and Albert Aimers, Superior Court of the State of
California, Orange County, Case No. 00115406
 
 On
November 26, 2008, a complaint was filed against us for the unpaid compensation
for consulting services provided to us in the amount of $66,239. The complaint
alleges that we entered into an oral agreement with the Plaintiffs on or about
August 2006, whereby Plaintiffs provided consulting and sales services to us for
compensation and $66,239 of the compensation remains due to the Plaintiffs. Our
counsel believes that the merits of the claims are baseless and unsupportable,
and we plan to vigorously contest the allegations. Additionally, we intend to
file a cross complaint for breach of contract and performance, malicious
prosecution from unrelated entities and for damages.
 
 PR
Newswire Association, Inc. vs. Financial Filings Corporation, Digital Wall
Street, Inc. and WallStreet Direct, Inc., Superior Court of New Jersey, Hudson
County, Civil Division #5, Docket No. L-878-09
 
 On
February 18, 2009, PR Newswire filed litigation against the Company and its
subsidiaries to pay $74,194.60 for services provided by PR Newswire. We are
reviewing the allegations and plan to contest the claims.
 
 Item
1A. Risk Factors
 
 Not
required under Regulation S-K for “smaller reporting companies.”
  26
 
 Item
2. Changes in Securities
 
 During
the three months ended February 28, 2009, we sold 34,928 shares of restricted
common stock to an investor pursuant to an exemption from registration under
Regulation S. The shares were sold to the investor at a price of $0.09 per share
for total proceeds of $3,046after issuing expenses.
 
 Item 3. Defaults Upon Senior
Securities
 
 None.
 
 Item 4. Submission of Matters to a Vote of
Securities Holders
 
 None.
 
 Item 5. Other Information
 
 None.
 
 Item
6. Exhibits
 
 31.1
              
              Certification
      of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended31.2
              
              Certification
      of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended32.1
              
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002
  27
  SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 FINANCIAL
      MEDIA GROUP, INC.Date:
      April 17, 2009
                By:
                /s/ ALBERT AIMERSAlbert
      Aimers
                  Chief
      Executive Officer