UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549








FORM
10-QSB








x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
Quarterly period ended May 31, 2008








 ̈ TRANSITIONAL REPORT
UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
REQUIRED)





For the
transitional period from ______ to ______








Commission File No.0-32923








(Exact
Name of Small Business Issuer in its Charter)







NEVADA
            
            33-0198542(State
      or other jurisdiction of incorporation of organization)
            
            (I.R.S.
      Employer Identification Number)







2355 Main Street, Suite 120,
Irvine, CA 92614


(Address
of principal executive office)







(949)
486-3990


(Issuer's
telephone number)








Check
whether the issuer has (1) filed all reports required by Section 12 or 5(d) of
the Exchange Act during the past 12 months, and (2) been subject to such filing
requirements for the past ninety (90) days.   Yesx   No
 ̈








As of
July 14, 2008, the Company had 64,159,389 shares of Common Stock issued and
outstanding.








FINANCIAL MEDIA GROUP, INC.





TABLE
OF CONTENTS





Report on
Form 10-QSB


for the
quarter ended May 31, 2008








PagePART
      I FINANCIAL INFORMATIONItem
      1. Financial StatementsConsolidated Balance Sheet at May 31, 2008 (Unaudited)
            3Consolidated Statements of Operations for the Three Month Periods and Nine
      Month Periods
              ended May 31, 2008 and May 31, 2007 (Unaudited)
            4Consolidated Statements of Cash Flows for the Three Month Periods and Nine
      Month Periods
              ended May 31, 2008 and May 31, 2007 (Unaudited)
            5Notes to the Consolidated Financial Statements (Unaudited)
            6 –
      17Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
            18Item
      3. Controls and Procedures
            23PART
      II OTHER INFORMATIONItem
      1. Legal Proceedings
            23Item
      2. Changes in Securities
            23Item
      3. Defaults upon Senior Securities
            23Item
      4. Submission of Matters to Vote of Security Holders
            23Item
      5. Other Information
            24Item
      6. Exhibits and Reports on Form 8-K
            24Signatures and Certifications
            24





- 2
-


PART
I





Item
1. Consolidated Financial Statements





FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEET


MAY 31,
2008


(UNAUDITED)





ASSETSCURRENT
      ASSETS:Cash
      & cash equivalents
            
            $
            36,678Accounts
      receivable, net
            
            
            468,828Marketable
      securities
            
            
            4,020,009Other
      current assets
            
            
            10,343Total
      current assets
            
            
            4,535,058PROPERTY
      & EQUIPMENT, Net
            
            
            93,382DEPOSIT
            
            
            28,521Total
      assets
            
            $
            4,656,961LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payable
            
            $
            534,077Accrued
      expenses
            
            
            1,299,538Deferred
      revenue
            
            
            1,419,221Loan
      payable to third party
            
            
            88,000Due
      to officers
            
            
            810,339Notes
      payable
            
            
            100,000Shares
      to be issued
            
            
            83,000Total
      current liabilities
            
            
            4,334,174Commitment
      & contingencies
            
            
            -STOCKHOLDERS'
      EQUITY:Common
      stock, $0.001 par value, 300,000,000 shares
      authorized,63,746,057 shares issued and
      outstanding
            
            
            63,746Additional
      paid in capital
            
            
            10,491,623Unrealized
      gain on marketable securities
            
            
            901,917Accumulated
      deficit
            
            
            (11,134,500
            )Total
      stockholders' equity
            
            
            322,787Total
      liabilities and stockholders' equity
            
            $
            4,656,961







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 month periods ended
            
            
            For
      the nine month periods endedMay
      31, 2008
            
            
            May
      31, 2007
            
            
            May
      31, 2008
            
            
            May
      31, 2007RevenuesRevenues
      in the form of cash
            
            $
            367,743
            
            
            $
            469,804
            
            
            $
            1,106,238
            
            
            $
            770,866Revenues
      in the form of marketable securities
            
            
            2,027,844
            
            
            
            1,654,514
            
            
            
            5,336,989
            
            
            
            4,522,231Net
      revenues
            
            
            2,395,587
            
            
            
            2,124,318
            
            
            
            6,443,227
            
            
            
            5,293,097Operating
      expensesSelling,
      general & administrative
            
            
            1,349,942
            
            
            
            1,551,714
            
            
            
            4,344,213
            
            
            
            4,233,004Depreciation
            
            
            15,024
            
            
            
            9,384
            
            
            
            38,938
            
            
            
            27,167Impairments
            
            
            697,266
            
            
            
            681,044
            
            
            
            3,028,716
            
            
            
            3,605,865Total
      operating expenses
            
            
            2,062,232
            
            
            
            2,242,142
            
            
            
            7,411,866
            
            
            
            7,862,786Income
      (loss) from operations
            
            
            333,356
            
            
            
            (117,824
            )
            
            
            (968,639
            )
            
            
            (2,572,938
            )Non-Operating
      Income (Expense):Interest
      expense
            
            
            (2,667
            )
            
            
            (52,246
            )
            
            
            (67,927
            )
            
            
            (149,422
            )Interest
      income
            
            
            -
            
            
            
            7
            
            
            
            -
            
            
            
            14Loss
      on sale of marketable securities
            
            
            (95,411
            )
            
            
            (103,932
            )
            
            
            (421,056
            )
            
            
            (202,548
            )Total
      non-operating expense
            
            
            (98,078
            )
            
            
            (156,171
            )
            
            
            (488,983
            )
            
            
            (351,956
            )Income
      (loss) before income taxes
            
            
            235,277
            
            
            
            (273,996
            )
            
            
            (1,457,623
            )
            
            
            (2,924,895
            )Provision
      for income tax
            
            
            4,800
            
            
            
            919
            
            
            
            4,800
            
            
            
            13,443Net
      income (loss)
            
            
            230,477
            
            
            
            (274,915
            )
            
            
            (1,462,423
            )
            
            
            (2,938,338
            )Other
      comprehensive gain (loss):Unrealized
      gain on marketable securities
            
            
            (1,042,372
            )
            
            
            (1,000,904
            )
            
            
            525,008
            
            
            
            (894,437
            )Reclassification
      Adjustment
            
            
            (39,659
            )
            
            
            214,985
            
            
            
            121,988
            
            
            
            47,655Comprehensive
      gain (loss)
            
            $
            (851,552
            )
            
            $
            (1,060,835
            )
            
            $
            (815,427
            )
            
            $
            (3,785,120
            )Basic
      net earnings (loss) per share
            
            $
            0.004
            
            
            $
            (0.01
            )
            
            $
            (0.03
            )
            
            $
            (0.11
            )Diluted
      net earnings (loss) per share
            
            $
            0.004
            
            
            $
            (0.01
            )
            
            $
            (0.03
            )
            
            $
            (0.11
            )Weighted
      average shares of common stock outstanding-
      basic
            
            
            61,362,532
            
            
            
            28,074,080
            
            
            
            48,430,034
            
            
            
            26,748,484-
      diluted
            
            
            61,800,532
            
            
            
            28,074,080
            
            
            
            48,430,034
            
            
            
            26,748,484







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 Nine month periods endedMay
      31, 2008
            
            
            May
      31, 2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net loss
            
            $
            (1,462,423
            )
            
            $
            (2,938,338
            )Adjustments
      to reconcile net loss to net cashused in operating
      activities:Bad debts
            
            
            86,714
            
            
            
            47,863Depreciation
            
            
            38,938
            
            
            
            27,167Revenues
      in form of marketable securities
            
            
            (5,336,989
            )
            
            
            (4,522,231
            )Impairment
      of marketable securities
            
            
            3,028,716
            
            
            
            3,605,865Loss
      on sale of marketable securities
            
            
            421,056
            
            
            
            202,548Issuance
      of options and warrants for services
            
            
            140,636
            
            
            
            246,565Issuance
      of shares for services
            
            
            33,000
            
            
            
            545,094(Increase)
      decrease in current assets:Receivables
            
            
            (484,558
            )
            
            
            (173,298
            )Other
      current assets
            
            
            55,068
            
            
            
            (270,657
            )Increase
      (decrease) in current liabilities:Deposits
            
            
            
            
            
            
            (11,272
            )Accounts
      payable
            
            
            207,536
            
            
            
            117,432Accrued expenses and other liabilities
            
            
            291,420
            
            
            
            448,311Deferred
      revenue
            
            
            207,703
            
            
            
            113,185Net
      cash used in operating activities
            
            
            (2,773,184
            )
            
            
            (2,561,766
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of property & equipment
            
            
            (53,583
            )
            
            
            (18,873
            )Cash
      received from sale marketable securities
            
            
            1,164,119
            
            
            
            686,104Net
      cash provided by investing activities
            
            
            1,110,536
            
            
            
            667,231CASH
      FLOWS FROM FINANCING ACTIVITIES:Payment
      of note payable to officer
            
            
            (7,500
            )
            
            
            -Cash
      received from loan from related parties
            
            
            -
            
            
            
            (222,872
            )Cash
      received from loan from third party
            
            
            88,000
            
            
            
            -Cash
      received from sale of common stock
            
            
            1,446,812
            
            
            
            2,504,047Net
      cash provided by financing activities
            
            
            1,527,312
            
            
            
            2,281,175NET
      INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
            
            
            (135,335
            )
            
            
            386,640CASH
      & CASH EQUIVALENTS, BEGINNING BALANCE
            
            
            172,013
            
            
            
            56,830CASH
      & CASH EQUIVALENTS, ENDING BALANCE
            
            $
            36,678
            
            
            $
            443,470








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
1     NATURE OF BUSINESS AND BASIS
OF PRESENTATION





Financial
Media Group, Inc. (the “Company,” "We," or "FMG") is a full service financial
media company focused on applications that enables the retail investment and
financial communities to collaborate directly with publicly traded companies.
The Company provides Internet based media and advertising services through its
financial website and the Company’s newspaper “WallSt.net Digest.” The Company
provides full array of customized investor awareness programs such as audio and
video of senior management interviews, press releases, newsletter and
editorials, small cap conferences and seminars, email mailings and
forums.





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. On December 11, 2006, the
Company and the majority shareholder agreed to extend the payment due date of
the promissory note due January 31, 2007 to January 31, 2010. On January 4,
2008, the Company agreed to issue to the majority shareholder 15,000,000 shares
of its common stock in exchange for cancellation of two promissory notes of
$1,500,000 each, due on January 31, 2010. As this merger was between entities
under the common control, the issuance of the promissory notes to the majority
shareholder had been recorded as a distribution to the majority shareholder. The
merger has been accounted for on historical cost basis.





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 enables the retail
investors and financial communities to collaborate directly with publicly traded
companies. The company provides internet based media and advertising services
through its financial website “Wallst.net” and the through its business
newspaper “WallSt.net Digest.”





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 another wholly-owned
subsidiary MyWallStreet, Inc. MyWallStreet, Inc. is presently in the development
stage and will offer a social networking platform that allows members to
collaborate with one another, build personalized web-pages, exchange ideas,
access financial content, and build social networks comprised of other
members, targeted to the financial community.





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.





NOTE
2     SUMMARY 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, 2007 were filed on December 7, 2007
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 nine
months period ended May 31, 2008 are not necessarily indicative of the results
that may be expected for the year ended August 31, 2008.





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.


- 6
-
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)




NOTE
2     SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)




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.





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.





Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholders’ 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. On May 31, 2008, marketable securities have been recorded at
$4,020,009 based upon the fair value of the marketable securities as of that
date.





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 collectibility 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 collectibility 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 collectibility of the fees has occurred
when the Company receives cash and/or marketable securities in satisfaction of
services provided.





Payments
received in advance of services provided, are recorded as deferred revenue. As
of May 31, 2008, the deferred revenue was $1,419,221.





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.


- 7
-
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  NOTE
2     SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)




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 www.wallst.net and
www.mywallst.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 revenues generated, assets and net loss from 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.





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.





Reclassifications





Certain
comparative amounts have been reclassified to conform to the current period’s
presentation.




- 8
-
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  NOTE
2     SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





Recent
Accounting Pronouncements





In
September 2006, FASB issued SFAS 157 ‘Fair Value Measurements.’ This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Management is currently
evaluating the effect of this pronouncement on financial
statements.





In
September 2006, FASB issued SFAS 158 “Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans” - an amendment of FASB Statements No.
87, 88, 106, and 132(R)’ This Statement improves financial reporting by
requiring an employer to recognize the over funded or under funded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. An employer with publicly traded equity securities is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without publicly traded equity securities
is required to recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:





a)
            A
      brief description of the provisions of this Statementb)
            The
      date that adoption is requiredc)
            The
      date the employer plans to adopt the recognition provisions of this
      Statement, if earlier.





The
requirement to measure plan assets and benefit obligations as of the date of the
employer’s fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. Management is currently evaluating
the effect of this pronouncement on financial statements.





In
February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FASB 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FASB 159 for their first quarter 2007 financial
statements.





The new
Statement allows entities to choose, at specified election dates, to measure
eligible financial assets and liabilities at fair value that are not otherwise
required to be measured at fair value. If a company elects the fair value option
for an eligible item, changes in that item's fair value in subsequent reporting
periods must be recognized in current earnings. FASB 159 also establishes
presentation and disclosure requirements designed to draw comparison between
entities that elect different measurement attributes for similar assets and
liabilities. Management is currently evaluating the effect of this pronouncement
on financial statements.





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 the Company’s 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 Company’s fiscal year beginning October 1, 2009.
While the Company has not yet evaluated this statement for the impact, if any,
that SFAS No. 141(R) will have on its consolidated financial statements, the
Company will be required to expense costs related to any acquisitions after
September 30, 2009.


- 9
-
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  NOTE
2     SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





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, the Company does not expect
the adoption of SFAS 161 to have a significant impact on its results of
operations or financial position.





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. The Company does not believe this pronouncement will impact its
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. The Company does not believe this pronouncement will impact
its financial statements.





NOTE
3     MARKETABLE
SECURITIES





In most
of the revenue contracts, the Company receives securities of client companies as
payment in full for services rendered. The number of shares the Company receives
is based on the contract and the value is determined based on the market price
at the time of signing the agreement. The Company’s securities are classified as
available-for-sale and, as such, are carried at fair value. 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.





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
earnings based upon the adjusted cost of the specific security
sold.





The
Company sold marketable securities during the three months and nine months ended
May 31, 2008 and recorded realized losses of $95,411 and $421,056 compared to
the realized losses of $103,932 and $202,548 during the same periods ended as of
May 31, 2007.





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. The Company recognized an
impairment expense on the marketable securities of $697,266 and $3,028,716
during the three months and nine months periods ended May 31, 2008 compared to
$681,044 and $3,605,865 during the same periods ended May 31, 2007,
respectively.




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.




- 10
-
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)






NOTE
3     MARKETABLE SECURITIES
(CONTINUED)




Marketable
securities classified as available for sale consisted of the following as of May
31, 2008:





Equity
      Securities Name and Symbol
            
            Number
      of shares held at May 31, 2008
            
            
            Cost
            
            
            Market
      Value
            
            
            Accumulated
      Unrealized Gain
            
            
            Accumulated
      Unrealized Loss
            
            Traded
      on Pink Sheets (PK) or Bulletin Board (BB)Axial
      Vector Engine Corp. (AXVC)
            
            
            410,958
            
            
            $
            287,671
            
            
            $
            164,383
            
            
            $
            -
            
            
            $
            (123,287
            )
            PKBio-Clean
      International, Inc. (BCLE)
            
            
            2,500,000
            
            
            
            261,000
            
            
            
            250,000
            
            
            
            
            
            
            
            (11,000
            )
            PKChina
      YouTV Corp
            
            
            1,400,000
            
            
            
            134,500
            
            
            
            68,600
            
            
            
            -
            
            
            
            (65,900
            )
            BBeWorld
      Companies, Inc. (EWRL)
            
            
            11,667
            
            
            
            28,000
            
            
            
            37,333
            
            
            
            9,333
            
            
            
            -
            
            PKeWorld
      Companies, Inc. (EWRL) - for FFC
            
            
            15,000,000
            
            
            
            30,000
            
            
            
            435,000
            
            
            
            405,000
            
            
            
            -
            
            PKEXOBOX
      Technologies (EXBX)
            
            
            2,125,000
            
            
            
            59,500
            
            
            
            531,250
            
            
            
            471,750
            
            
            
            -
            
            PKFIMA,
      Inc (FIMA)
            
            
            357,000
            
            
            
            261,000
            
            
            
            292,740
            
            
            
            31,740
            
            
            
            -
            
            PKGlobal
      8 Environmental Technologies, Inc. (GBLE)
            
            
            1,401,000
            
            
            
            434,063
            
            
            
            567,405
            
            
            
            133,342
            
            
            
            -
            
            BBIfinix
      Corp. (INIX)
            
            
            4,500,000
            
            
            
            225,000
            
            
            
            67,500
            
            
            
            
            
            
            
            (157,500
            )
            PKInternational
      Food Products Group, Inc. (IFDG)
            
            
            4,000,000
            
            
            
            129,500
            
            
            
            96,000
            
            
            
            -
            
            
            
            (33,500
            )
            BBMagplane
      Technology, Inc. (MAGP)
            
            
            1,010,000
            
            
            
            20,200
            
            
            
            18,180
            
            
            
            -
            
            
            
            (2,020
            )
            PKNexplore
      Corp. (NXPC)
            
            
            200,000
            
            
            
            250,000
            
            
            
            190,000
            
            
            
            -
            
            
            
            (60,000
            )
            PKPSM
      Holdings, Inc. (PSMH)
            
            
            157,895
            
            
            
            142,106
            
            
            
            142,106
            
            
            
            -
            
            
            
            -
            
            PKRaven
      Moon Entertainment (RAEM)
            
            
            2,500,624,843
            
            
            
            250,000
            
            
            
            250,062
            
            
            
            62
            
            
            
            -
            
            BBSebastian
      River Holdings, Inc. (SBRH)
            
            
            75,000
            
            
            
            100,000
            
            
            
            112,500
            
            
            
            12,500
            
            
            
            -
            
            PKSignature
      Devices, Inc. (SDVI)
            
            
            3,880,000
            
            
            
            39,480
            
            
            
            58,200
            
            
            
            18,720
            
            
            
            -
            
            PKSunrise
      Consulting Group (SNRS)
            
            
            1,015,000,000
            
            
            
            101,500
            
            
            
            101,500
            
            
            
            -
            
            
            
            -
            
            PKVidShadow
      Inc. (VSHD)
            
            
            147,052
            
            
            
            217,165
            
            
            
            367,630
            
            
            
            150,465
            
            
            
            -
            
            PKXTend
      Medical Corp. (XMDC)
            
            
            1,250,000
            
            
            
            25,000
            
            
            
            25,000
            
            
            
            -
            
            
            
            -
            
            PKOthers
            
            
            
            
            
            
            122,408
            
            
            
            244,620
            
            
            
            123,568
            
            
            
            (1,356
            )$
            3,118,092
            
            
            $
            4,020,009
            
            
            $
            1,356,481
            
            
            $
            (454,563
            )




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.





As of May
31, 2008, the Company evaluated its marketable securities holdings by valuing
the securities according to the quoted price of the securities on the stock
exchange.





NOTE
4    PROPERTY AND
EQUIPMENT





Property
and equipment at May 31, 2008 consist of the following:





Office
      and computer equipment
            
            $
            191,653Less
      accumulated depreciation:
            
            
            (98,271
            )$
            93,382





Depreciation
expense for the three months and nine months periods ended May 31, 2008 was
$15,024 and $38,938 compared to $9,384 and $27,167 for the same periods ended
May 31, 2007, respectively.


- 11
-
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)







NOTE
5     OTHER
ASSETS





Other
assets as of May 31, 2008 comprise of the following:





Other
      Current Assets:Rent
      deposit
            
            $
            9,000Prepaid
      expenses
            
            
            243Employee
      advances
            
            
            1,100Total
      Other Current Assets
            
            $
            10,343Other
      Assets:Rent
      deposit
            
            $
            28,521Total
      Other Assets
            
            $
            28,521





NOTE
6    DEFERRED
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 $1,419,221 in deferred revenues at May
31, 2008 which will be recognized over the next nine (6) to twelve (12)
months.




NOTE
7    ACCRUED
EXPENSES




Accrued
expenses consist of the following at May 31, 2008:





Accrued
      consulting fees
            
            $
            631,404Accrued
      interest
            
            
            15,000Accrued
      salaries and payroll taxes
            
            
            653,134$
            1,299,538







NOTE
8    LOAN FROM THIRD
PARTY





On May
30, 2008, the Company received a short tem loan of $88,000 from a third party.
The loan is unsecured, non-interest bearing and payable on demand.




NOTE
9    DUE TO
OFFICERS





Due to
officers consist of the following at May 31, 2008:





Accrued
      officer’s compensation
            
            $
            512,610Accrued
      consulting fees
            
            
            30,149Accrued
      interest
            
            
            267,580$
            810,339




The
Company recorded an expense of $276,563 and $276,563 for the nine months ended
May 31, 2008 and 2007 for compensation and benefits provided to the Chief
Executive Officer of the Company.


- 12
-
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)







NOTE
10    NOTE
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. The Company recorded an
interest expense of $2,250 and $6,750 in the accompanying financial statements
for the three months and nine months periods ended May 31, 2008, respectively
and $2,250 and $6,750 for the same periods ending May 31, 2007.





NOTE
11    RELATED PARTY
TRANSACTIONS





In
September, 2005, the Company executed a promissory note of $7,500 with an
officer, unsecured, interest at 8% per annum and due on demand. As of May 31,
2008, the Company paid $9,600 to settle the payment of the promissory note in
full, including accrued interest of $2,100 as of May 31, 2008.





On
January 15, 2005, the Company acquired 100% of the assets and outstanding shares
of Digital WallStreet, Inc. which is 100% owned by the majority shareholder
(86%) of the Company in exchange for two $1,500,000 promissory notes, carrying
interest at 6% per annum, notes are due and payable on January 31, 2010. As this
merger is between entities under the common control, the issuance of the two
$1,500,000 promissory notes to the majority shareholder has been recorded as a
distribution to the majority shareholder. On January 4, 2008, the Company issued
to the officer 15,000,000 shares of its common stock in exchange for settlement
of the two promissory notes of $1,500,000 each, due on January 31,
2010.





The
Company recorded an interest expense of $0 and $62,235 on the above notes to the
officers for the three months and nine months ended May 31, 2008 compared to
$45,150 and $135,450 for the same periods ended as of May 31, 2007,
respectively.





NOTE
12     EQUITY
TRANSACTIONS





Common
Stock





The
Company initiated a private placement on September 1, 2006, offering 335 units
to accredited investors through its placement agent, Westcap Securities, Inc., a
NASD member. The minimum subscription was $15,000 for each unit. Each unit
consisted of 10,000 shares of Common Stock, par value $0.001 per share, 5,000
redeemable Class A1 Warrant and 5,000 redeemable Class A2 Warrant of the
Company's common stock. Class A1 and A2 Warrants entitles the registered
holder thereof to purchase, at any time until the September 1, 2007 and
September 1, 2008 respectively, shares of Common Stock at an exercise price of
$2.50 and $3.50, respectively, subject to adjustment. The Class A1 and A2
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 completion
of an effective Registration Statement of the said securities or after September
1, 2007, whichever is earlier, if the average of the closing bid price of the
common stock, for 20 consecutive business days exceeds $3.50 per share for the
Class A1Warrants, and $4.50 per share for the Class A2 Warrants. The exercise
prices and the number of shares issuable upon the exercise of Warrants are
subject to adjustment in certain circumstances.  The Company closed
the private placement on February 23, 2007. During the year ended August 31,
2007, the Company received a cash consideration of $648,500 from the sale of
432,333 shares of Common Stock under this private placement. Class A1 Warrants
expired on August 31, 2007 and Class A2 Warrants expire on August 31, 2008,
respectively. Class A2 warrant holders did not exercise any warrants during the
nine months period ended May 31, 2008.





Through a
private placement memorandum of My WallStreet dated March 20, 2007, MyWallStreet
offered to sell to accredited investors 6,400,000 units at $0.25 per unit, with
each unit consisting of one share of Common Stock, par value $0.001 per share
and a redeemable Class A Warrant of My WallStreet, Inc. Each Class A Warrant
entitles the registered holder to purchase, at any time until the second
anniversary of the date of this memorandum, one share of Common Stock at an
exercise price of $0.25. As of May 31, 2008, the Company received $50,000 under
this private placement and has not issued the 200,000 shares of Common Stock of
My WallStreet, Inc. Class A warrant holders did not exercise their warrants as
of May 31, 2008.





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.
As of May 31, 2008, the Company sold 14,846,831 shares of its common stock under
Regulation S to the investors and received cash proceeds of $1,386,178 which
amounted to approximately 35% 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.





On June
29, 2007, the Company entered into a Regulation S Distribution Agreement to sell
up to $3,000,000 worth of common shares through private placement of shares
under Regulation S as promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended. The term of the Distribution
Agreement expired on November 29, 2007. As of May 31, 2008, the Company has
issued 906,080 shares of its common stock under Regulation S Distribution
Agreement to the investors and received cash proceeds of $141,320 which amounted
to approximately 33.5% of the total proceeds from the 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)




NOTE
12     EQUITY
TRANSACTIONS (CONTINUED)
 
 Common
Stock (continued )


On March
1, 2008, the Company entered into a consulting agreement with an investor
relations firm to provide services for a period of three months ending May 31,
2008. The terms of the agreement provided for the Company to issue 100,000
shares of common stock valued at $17,000. The Company has not issued the 100,000
shares of common stock to the consultant as of May 31, 2008.





On April
1, 2008, the Company entered into a consulting agreement with an investor
relations firm to provide marketing, promotional and investor relations services
for a period of two months ending May 31, 2008. The terms of the agreement
provided for the Company to issue 100,000 shares of common stock valued at
$16,000. The Company has not issued the 100,000 shares of common stock to the
consultant as of May 31, 2008.




Outstanding
Warrants:





Following
is a summary of the various classes of warrants outstanding at May 31,
2008:





Description
      of Warrants
            
            Exercise
      Price
            
            Expiration
              Date
            
            Warrants
      Outstanding at August 31, 2007
            
            
            Warrants
      Issued during the period
            
            
            Warrants
      Exercised during the period
            
            
            Warrants
      Expired during the period
            
            
            Warrants
      Outstanding at May 31, 2008Class
      D Warrant
            
            $
            2.25
            
            01/25/2008
            
            
            165,000
            
            
            
            -
            
            
            
            -
            
            
            
            (165,000
            )
            
            
            -Class
      E Warrant
            
            $
            3.75
            
            01/25/2009
            
            
            165,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            165,000Class
      A2 Warrant
            
            $
            3.50
            
            09/01/2008
            
            
            244,667
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            244,667Class
      A - MWS
            
            $
            1.00
            
            03/20/2009
            
            
            200,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            200,000774,667
            
            
            
            -
            
            
            
            -
            
            
            
            (165,000
            )
            
            
            609,667





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, 2007
            
            
            774,667
            
            
            $
            2.64
            
            
            $
            -Issued
      during the period
            
            
            -
            
            
            
            -Expired
            
            
            (165,000
            )
            
            
            -Exercised
            
            
            -
            
            
            
            -Outstanding
      May 31, 2008
            
            
            609,667
            
            
            $
            2.75
            
            
            $
            -





Following
is a summary of the status of warrants outstanding at May 31, 2008:





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$1.00
      - $3.75
            
            
            
            609,667
            
            
            
            0.54
            
            
            $
            2.75
            
            
            
            609,667
            
            
            $
            2.75774,667
            
            
            
            0.54
            
            
            $
            2.75
            
            
            
            609,,667
            
            
            $
            2.75






- 14
-


FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)






Outstanding Stock
Options:





2007 Non-Qualified Stock
Option Plan (“Non-Qualified Plan”):





On
January 5, 2007, the Company adopted the 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 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
are as follows:





Options Outstanding
            
            Weighted
      Average Exercise Price
            
            Aggregate
      Intrinsic ValueOutstanding
      August 31, 2007
            
            750,000
            
            $
            1.05
            
            $
            -Granted
            
            2,235,000
            
            
            0.23
            
            
            -Exercised
            
            -
            
            
            -
            
            
            -Expired/forfeited
            
            (750,000)
            
            
            (1.05)
            
            
            -Outstanding
      May 31, 2008
            
            2,235,000
            
            $
            0.23
            
            $
            -





Following
is a summary of the status of stock options outstanding at May 31,
2008:





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
            
            
            2,235,000
            
            
            9.56
            
            $
            0.17
            
            
            169,238
            
            $
            0.232,235,000
            
            
            9.56
            
            $
            0.17
            
            
            600,000
            
            $
            0.23





The
Company issued 2,235,000 options to officers and a consultant at the exercise
prices ranging from $0.10 to $0.30 with the fair value of the options valued at
$0 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 nine months periods
ended May 31, 2008 and May 31, 2007 was $42,588 and $0,
respectively.





2007 Incentive Stock Option
Plan (“Incentive Plan”):





On
January 5, 2007, the Company adopted the Incentive Plan and reserved a maximum
of 3,000,000 shares of common stock as Options to grant to employees, directors
and consultants. The stock subject to Options granted under the Incentive Plan
shall be the Common Shares of the Company’s common stock, par value $0.001 per
share. Only employees of the Company shall be eligible to receive an Incentive
Stock Option. The Incentive Plan shall become effective and shall remain in
effect until all Common Shares subject to the Incentive Plan have been purchased
or acquired according to the terms of the Incentive Plan or the Incentive 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 are as follows:





Options Outstanding
            
            
            Weighted
      Average Exercise Price
            
            
            Aggregate
      Intrinsic ValueOutstanding
      August 31, 2007
            
            
            -
            
            
            $
            -
            
            
            $
            -Granted
            
            
            2,990,000
            
            
            
            0.30
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -Expired/forfeited
            
            
            (495,000
            )
            
            
            0.30
            
            
            
            -Outstanding
      May 31, 2008
            
            
            2,495,000
            
            
            $
            0.30
            
            
            $
            -






- 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 May 31,
2008:





Range of
              Exercise
      Prices
            
            Total
      Options
              Outstanding
            
            Weighted
      Average Remaining Life (Years)
            
            Total
      Weighted Average Exercise Price
            
            Options
              Exercisable
            
            Weighted
      Average
              Exercise
      Price$0.01
      - $0.30
            
            
            2,495,000
            
            
            9.56
            
            $
            0.30
            
            
            369,399
            
            $
            0.302,495,000
            
            
            9.56
            
            $
            0.30
            
            
            369,399
            
            $
            0.30




The
Company issued 2,495,000 stock options to employees at the exercise prices of
$0.30 with the fair value of the options of $612,509 calculated using the
Black-Scholes option pricing model using the assumptions of risk free interest
rate of 3.5%, volatility of 148%, ten (10) years term, and dividend yield of 0%.
The stock option expense for the nine months periods ended May 31, 2008 and May
31, 2007 was $98,048 and $0, respectively.





NOTE
13    BASIC 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. As
of May 31, 2008, the Company did not have any potentially dilutive shares. The
following is a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations:




For the nine months ended May 31,
      2008
              
              Net Income (Loss)
              
              
              Shares
              
              
              Per ShareBasic
      earnings per share:
              
              $
              (1,462,923
              )
              
              
              48,430,034
              
              
              $
              (0.03
              )Effect
      of dilutive securities*Stock
      optionsWarrantsConvertible
      Preferred SharesDiluted
      earnings per share
              
              $
              (1,462,923
              )
              
              
              48,430,034
              
              
              $
              (0.03
              )For the nine months ended May 31,
      2007
              
              Net Income
              
              
              Shares
              
              
              Per ShareBasic
      earnings per share:
              
              $
              (2,938,338
              )
              
              
              26,748,484
              
              
              $
              (0.11
              )Effect
      of dilutive securities*Stock
      options
              
              
              
              
              
              
              -Warrants
              
              
              
              
              
              
              -Diluted
      earnings per share
              
              $
              (2,938,338
              )
              
              
              26,748,484
              
              
              $
              (0.11
              )


NOTE
14    SUPPLEMENTAL 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 $2,100
for interest for the nine months periods ended May 31, 2008 compared to $0 for
the same periods ended May 31, 2007. The Company paid $4,800 for income taxes
for the nine months periods ended May 31, 2008 compared to $0 for the same
periods ended May 31, 2007.  During the nine months period ended May
31, 2008, the Company issued 15,000,000 shares of common stock with fair value
of $3 million to settle notes payable to an officer of $3,000,000.





NOTE
15    COMMITMENTS





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. The office
facility in New York is leased on a month-to-month basis starting June 1, 2007.
Rent expense under the operating lease for the three months and nine months
ended May 31, 2008 was $90,834 and $328,043 compared to $100,622 and $266,937
for the same periods ended May 31, 2007, respectively. The Company has future
minimum lease obligations as follows:





Twelve
      months ending May 31,
            
            Amount2009
            
            $
            313,0672010
            
            
            265,213$
            578,280




- 16
-
 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





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
$43,125 and $121,875 in general and administrative expenses for the three months
and nine months periods ended May 31, 2008 compared to $37,500 and $62,500 for
the same periods ended May 31, 2007. The Company has future minimum salary
commitments as follows:





Twelve
      months ending May 31,
            
            Amount2009
            
            $
            183,2812010
            
            
            115,719$
            299,000





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. Other than
as disclosed herein, the Company is not currently involved in any litigation
which it believes could have a material adverse effect on its financial position
or results of operations.





NOTE 16GOING
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 $11,134,500
as of May 31, 2008 and has incurred net loss of $1,462,423 for the nine months
ended May 31, 2008. 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 May 31, 2008 towards (i) obtaining additional equity
financing, (ii) evaluation of its distribution and marketing methods, and (iii)
further streamlining and reducing costs.





NOTE
17    SUBSEQUENT
EVENTS





On June
18, 2008, the Company negotiated with the five (5) accredited investors who made
a total investment of $50,000 under the private placement of MyWallStreet, Inc.
dated March 20, 2007, and issued 200,000 shares of Common Stock in exchange for
cancellation of 200,000 shares of MyWallStreet, Inc.’s common stock and Class A
Warrants.





Subsequent
to May 31, 2008, the Company received a cash consideration of $22,703 from sale
of 138,792 shares of common stock under the June 28, 2007 private placement of
shares under Regulation S as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended. The Company has issued
13,332 shares of its common stock as of July 14, 2008 and 125,460 common shares
remain unissued as of date.





On June
27, 2008, the Company issued 200,000 shares of its common stock valued at
$33,000 to two consultants for providing investor relations services during the
period ended May 31, 2008.





As of
July 14, 2008, the Company received cash consideration of $480,000 from the sale
of 960,000 shares of common stock to accredited investors under the June 8, 2008
private placement. The Company has not issued the 960,000 shares of common stock
as of July 14, 2008.





- 17
-






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





Description
of Business





Financial
Media Group, Inc. is a full service financial media company focused on
applications that enables the retail investment and financial communities to
collaborate directly with publicly traded companies. The Company provides
Internet based media and advertising services through its financial website and
the Company’s newspaper “WallSt.net Digest.” The Company provides full array of
customized investor awareness programs such as audio and video of senior
management interviews; press releases; newsletter and editorials; small cap
conferences and seminars; email mailings and forums.





WallStreet
Direct, Inc. (“WallStreet”), a wholly-owned subsidiary of Financial Media Group,
Inc. (the “Company”), was incorporated in the State of Nevada on January 5, 2005
as a financial holding company specializing in a premier 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. 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. On January 4, 2008, the Company agreed to issue to the
majority shareholder 15,000,000 shares of its common stock in exchange for
cancellation of two promissory notes of $1,500,000 each, due on January 31,
2010. As this merger is between entities under the common control, the issuance
of the promissory notes to the majority shareholder had been recorded as a
distribution to the majority shareholder. The merger has been accounted for on
historical cost basis.





Digital
WallStreet, Inc. was incorporated in Nevada on June 12, 2002 and commenced its
operations during the first quarter of 2003. The company is a full service
financial media company focused on applications that enables the retail
investors and financial communities to collaborate directly with publicly traded
companies. The company provides internet based media and advertising services
through its financial website “Wallst.net” and the company’s business newspaper
“WallSt.net Digest.”





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 Southern Development Company, Inc. Pursuant to the acquisition of WallStreet,
WallStreet became the wholly owned subsidiary of Financial Media Group, Inc. and
both entities continued as the surviving companies. 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 merger 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 another wholly owned
subsidiary MyWallStreet, Inc. MyWallst.net is presently in the development stage
and will offer a social networking platform that allows members to collaborate
with one another, build personalized WebPages, exchange ideas, access premium
content, and build social networks comprised of other members, targeted to the
financial community.





On
January 30, 2007, Financial Media Group, Inc. completed the acquisition of the
brand “Wealth Expo” from a third party for a consideration valued at $139,000.
The acquisition included rights to the web site and series of investor
expositions which are designed to provide information on investing techniques
and tools to investors, through workshops and exhibits throughout the United
States. Wealth Expo has provided a broad range of information to thousands of
individual investors on various types of investments, trading, portfolio
management, retirement planning and personal finance.





Corporate
History





The
Company was incorporated in Nevada in 1984 as Southern Development Company, Inc.
("SDC"). In December 1994, SDC merged with Integrated Communications Access
Network, Inc. ("ICAN"). In March 1996, the Company was renamed SDC, and in
September 1998, the Company changed its name to EssxSport Corp. At that time,
the Company had no assets and no liabilities. From September 1998 until August
31, 2004, the Company was primarily engaged in the manufacture and distribution
of athletic equipment, primarily for pole vaulting and other track and field
activities. The Company sold, transferred and delivered all of its assets
relating to its pole vault and sports business to its former President and
director. The assets sold included names, logos, trademarks, and endorsements
relating to name "EssxSport," all the equipment, tools, inventory at the Texas
location and 100% ownership stock certificates for Eonlinesports.com,
Inc.





On May
20, 2004, the Company's shareholders approved amending the Articles of
Incorporation to change name to "Giant Jr. Investments Corp."





On June
30, 2004, the Company filed with the Securities and Exchange Commission ("SEC")
to become a Business Development Company (BDC) under the 1940 Act and on
September 1, 2004 it began its BDC operations.





- 18
-






On April
11, 2005, the Company entered into a share exchange agreement, to acquire 16
million shares of WallStreet representing approximately 40% of the issued and
outstanding common shares of WallStreet, in exchange for 7 million common shares
of the Company. On May 25, 2005, the Company and WallStreet mutually agreed to
terminate the agreement citing the timing of merger was not right for both the
companies.





On June
1, 2005, the Company’s Board of Directors and the shareholders owning
approximately 52% of the Company’s common stock consented in writing and
terminated the Company’s status as a Business Development Company. After the
termination, the Company is governed by the rules and regulations promulgated
under the Securities Act of 1933 and the Securities and Exchange Act of
1934.





On
September 19, 2005, the Company entered into an Agreement and Plan of
Reorganization, as amended on September 21, 2005 (the “Agreement”), pursuant to
which the Company agreed to acquire all of the issued and outstanding common
stock of WallStreet in exchange for up to 20,000,000 shares of the Company’s
common stock.





On
January 6, 2006, the acquisition of WallStreet transaction was completed and
WallStreet became a wholly-owned subsidiary of the Company. The current Company
shareholders owned 4,394,530 shares or 18% of the issued and outstanding shares
of the Company’s common stock, and the former shareholders of WallStreet owned
19,998,707 shares or 82% of the issued and outstanding shares of the Company’s
common stock.





Plan
of Operations





Since the
termination of its BDC status in June 2005, the Company's objective has been to
acquire business entities that will have experienced management and
opportunities for growth in exchange for its securities. The Company completed
its acquisition of WallStreet in January 2006 and WallStreet became a
wholly-owned subsidiary of the Company.





The
Company’s current operations consist of the operations of 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, Financial Filings Corp., a news
distribution and financial documents preparer and filing entity, and Wealth
Expo, an entity holding investors conference and exhibits across North
America.





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. WallStreet
also 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. The Company records the revenue on the
fixed-fee basis pro rated over the term of the client agreement.





The
Company’s primary source of revenue is generated by its wholly owned subsidiary
WallStreet Direct, Inc. which provides 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
www.mywallst.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.





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
Company executes a contractual agreement with the client for a fixed fee,
delivery of the services has occurred and collectibility of the fees is
reasonably assured. The Company recorded revenues of $471,990 or 7.3% of its
total revenues from the services provided by Financial Filing Corp. for the nine
months ended May 31, 2008.





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 Company executes a contractual agreement with the client for a fixed
fee for such services performed, delivery of such services has occurred, and
collectibility of the fees is reasonably assured.





Results
of Operations





The
consolidated results of operations of the Company for the three months and nine
months ended May 31, 2008  consisted of the operations of the Company,
its wholly-owned subsidiary WallStreet Direct, Inc., its wholly-owned subsidiary
Financial Filings Corp., its wholly-owned subsidiary My WallStreet, Inc. and its
wholly-owned subsidiary Wealth Expo Inc., compared to the consolidated results
of operations of the Company, its wholly-owned subsidiary WallStreet Direct,
Inc., its wholly-owned subsidiary Financial Filings Corp., and its wholly-owned
subsidiary My WallStreet, Inc. for the same periods in 2007. 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 merger of the two companies is recorded as
a recapitalization of WallStreet, with WallStreet being treated as the
continuing entity. The historical financial statements to be presented will be
those of WallStreet.





The
Company reported a net income of $230,477 and a net loss of $1,462,423 for the
three months and nine months ended May 31, 2008 compared to net losses of
$274,915 and $2,938,338 for the same periods in 2007.





- 19
-




Revenues





Revenues
for the three months and nine months periods ended May 31, 2008 were $2,395,587
and $6,443,227 compared to $2,124,318 and $5,293,097 for the same periods in
2007. Revenues increased by $271,269 (13%) and $1,150,130 (22%) during the three
months and nine months ended May 31, 2008 when compared to the same periods in
2007 due to the Company’s expanded effort in marketing its Internet advertising
and media services and gaining new clients.





Operating
Expenses





Selling,
general and administrative expenses (S,G&A) for the three months and nine
months ended May 31, 2008 were $1,349,942 and $4,344,213 compared to $1,551,714
and $4,233,004 for the same period in 2007. S,G&A expenses decreased by
$201,772 (13%) during the three months ended May 31, 2008 and increased by
$111,209 (2.6%) during the nine months ended May 31, 2008 as compared to the
same period in 2007, primarily due to overall reduction in payroll costs of
sales and marketing personnel offset by the increase in administrative, sales
and marketing costs due to Company’s expanded efforts in gaining new
clients.





Impairment
includes the write down of marketable securities and write-off of advances from
third parties. Impairment for the three months and nine months ended May 31,
2008 was $697,266 and $3,028,716 compared to $681,044 and $3,605,865 for the
same periods in 2007. Impairment expense was recorded because the market value
of certain securities received by the Company as compensation for services
declined more than 50% of their market value. The Company took a conservative
approach of recording the increased impairment expense. The Company recorded an
impairment of $25,000 in write-off of loans advanced to third parties during the
nine months ended May 31, 2008, whereas, no such loans were impaired during the
comparable periods in 2007. Depreciation expense for the three months and nine
months ended May 31, 2008 was $15,024 and $38,938 compared to $9,384 and $27,167
for the same periods in 2007.





Interest
expense for the three months and nine months ended May 31, 2008 was $2,667 and
$67,927 compared to $52,246 and $149,422 for the same periods in 2007. Interest
expense decreased during the three months and nine months period ended May 31,
2008 as compared to the same periods in 2007 due to the conversion of the $3.0
million promissory notes to equity on January 4, 2008. Realized loss on sale of
marketable securities for the three months and nine months ended May 31, 2008
was $95,411 and $421,056 as compared to $103,932 and $202,548 for the same
periods in 2007. The Company sold a significant number of non-performing
marketable securities held in its possession during the three months ended May
31, 2008 compared to the same periods in 2007 and to better manage its portfolio
as of May 31, 2008. Unrealized loss on marketable securities for the three
months ended May 31, 2008 and 2007 was $1,042,372 and $1,000,904, respectively. Unrealized
gain on marketable securities for the nine months ended May 31, 2008 was
$525,008 compared to the unrealized loss of $894,437 for the same period in
2007. Unrealized gain or loss resulted due to the increase or decrease in market
value of the marketable securities held at May 31, 2008 and May 31, 2007,
respectively.





Liquidity
and Capital Resources





Cash and
cash equivalents at May 31, 2008 were $36,678 compared to $443,470 at May 31,
2007. No assurance can be made that the Company will have access to the capital
markets in future, or that financing will be available on acceptable terms to
satisfy the Company’s cash requirements needed to implement its business
strategies. The Company’s inability to access the capital markets or obtain
acceptable financing could have a material adverse affect on its results of
operations and financial condition, and could severely threaten the Company’s
ability as a going concern.





As shown
in the accompanying consolidated financial statements, the Company recorded a
loss of $1,462,423 for the nine months ended May 31, 2008 compared to a loss of
$2,938,338 for the same period in 2007. Although the Company’s current assets
exceeded its current liabilities by $200,884 at May 31, 2008, and net cash used
in operating activities for the nine months ended May 31, 2008 was $2,773,184.
These factors and the Company’s ability to meet its debt obligations from
current operations, and the need to raise additional capital to accomplish its
objectives create a substantial doubt about the Company’s ability to continue as
a going concern.





Operating
Activities





Net cash
used in operating activities for the nine months ended May 31, 2008 was
$2,773,184. The increase in net cash used in operating activities resulted due
to an increase in receivables of $485,358, decrease in other current assets of
$55,068, an increase in accounts payable of $207,535, an increase in accrued
expenses and other liabilities of $291,420, and increase in deferred revenues of
$207,703.





Investing
Activities





Net cash
provided by investing activities for the nine months ended May 31, 2008 was
$1,110,537. The Company received $1,164,119 in cash proceeds from sale of
marketable securities. The Company expended cash of $53,583 for purchase of
property and equipment.





Financing
Activities





Net cash
provided by financing activities for the nine months ended May 31, 2008 was
$1,527,312 due to cash received from sale of common stock amounting to
$1,446,812, payment of note payable to an officer of $7,500, and cash received
from loan from third party of $88,000 as of May 31, 2008.





As a
result of the above activities, the Company experienced a net decrease in cash
of $135,335 for the nine months ended May 31, 2008. The ability of the Company
to continue as a going concern is still dependent on its success in obtaining
additional financing from investors through the sale of its
securities.





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Application
of Critical Accounting Policies and Estimates





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.





Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholders’ 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.





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.





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.





Revenue
Recognition





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 collectibility 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 collectibility 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 collectibility of the fees has occurred
when the Company receives cash and/or marketable securities in satisfaction of
services provided.





Payments
received in advance of services provided, are recorded as deferred
revenue.





Impact
of Accounting Pronouncements





In
September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The management is currently
evaluating the effect of this pronouncement on financial
statements.





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In
September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
employer to recognize the over funded or under funded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset or
liability in its statement of financial position and to recognize changes in
that funded status in the year in which the changes occur through comprehensive
income of a business entity or changes in unrestricted net assets of a
not-for-profit organization. This Statement also improves financial reporting by
requiring an employer to measure the funded status of a plan as of the date of
its year-end statement of financial position, with limited exceptions. An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and to
provide the required disclosures as of the end of the fiscal year ending after
December 15, 2006. An employer without publicly traded equity securities is
required to recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:





a)
            A
      brief description of the provisions of this Statementb)
            The
      date that adoption is requiredc)
            The
      date the employer plans to adopt the recognition provisions of this
      Statement, if earlier.





The
requirement to measure plan assets and benefit obligations as of the date of the
employer’s fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. The management is currently
evaluating the effect of this pronouncement on financial
statements.





In
February 2007, FASB issued FASB Statement No. 159 “The Fair Value Option for
Financial Assets and Financial Liabilities”. FASB 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FASB 159 for their first quarter 2007 financial
statements.





The new
Statement allows entities to choose, at specified election dates, to measure
eligible financial assets and liabilities at fair value that are not otherwise
required to be measured at fair value. If a company elects the fair value option
for an eligible item, changes in that item's fair value in subsequent reporting
periods must be recognized in current earnings. FASB 159 also establishes
presentation and disclosure requirements designed to draw comparison between
entities that elect different measurement attributes for similar assets and
liabilities.





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 the Company’s 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 Company’s fiscal year beginning October 1, 2009.
While the Company has not yet evaluated this statement for the impact, if any,
that SFAS No. 141(R) will have on its consolidated financial statements, the
Company 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, the Company does not expect
the adoption of SFAS 161 to have a significant impact on its results of
operations or financial position.





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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. The Company does not believe this pronouncement will impact its
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. The Company does not believe this pronouncement will impact
its financial statements.





Caution
Regarding Forward-Looking Statements





The
Company occasionally makes forward-looking statements concerning its plans,
goals, product and service offerings, and anticipated financial performance.
These forward-looking statements may generally be identified by introductions
such as "outlook" for an upcoming period of time, or words and phrases such as
"should," "expect," "hope," "plans," "projected," "believes," "forward-looking"
(or variants of those words and phrases) or similar language indicating the
expression of an opinion or view concerning the future.





These
forward-looking statements are subject to risks and uncertainties based on a
number of factors and actual results or events may differ materially from those
anticipated by such forward-looking statements. These factors include, but are
not limited to: the growth rate of the Company's revenue and market share; the
consummation of new, and the non-termination of, existing contracts; new
competitors entering the Company's business, the Company's ability to
effectively manage its business functions while growing its business in a
rapidly changing environment; the Company's ability to adapt and expand its
services in such an environment; the Company's ability to successfully refinance
or extend its line of credit or obtain alternative sources of financing; the
effective and efficient management of the Company's inventory levels and
processing of sales orders; the quality of the Company's plans and strategies;
and the Company's ability to execute such plans and strategies.





In
addition, forward-looking statements concerning the Company's expected revenue
or earnings levels are subject to many additional uncertainties applicable to
competitors generally and to general economic conditions over which the Company
has no control. The Company does not plan to generally publicly update prior
forward-looking statements for unanticipated events or otherwise and,
accordingly, prior forward-looking statements should not be considered to be
"fresh" simply because the Company has not made additional comments on those
forward-looking statements.





Item
3. Controls and Procedures





Evaluation
of disclosure controls and procedures: The Company maintains controls and
procedures designed to ensure that information required to be disclosed in this
report is recorded, processed, accumulated and communicated to our management,
including our chief executive officer and principal accounting officer, to allow
timely decisions regarding the required disclosure. Within the 90 days prior to
the filing date of this report, our management, with the participation of our
chief executive officer and principal accounting officer, carried out an
evaluation of the effectiveness of the design and operation of these disclosure
controls and procedures. Our chief executive officer and principal accounting
officer concluded, as of fifteen days prior to the filing date of this report,
that these disclosure controls and procedures are effective.





Changes
in internal controls: Subsequent to the date of the above evaluation, the
Company made no significant changes in its internal controls or in other factors
that could significantly affect these controls, nor did it take any corrective
action, as the evaluation revealed no significant deficiencies or material
weaknesses.





PART
II - OTHER INFORMATION





Item 1. Legal Proceedings





None.





Item 2. Changes in Securities





During
the three months ended May 31, 2008, the Company sold 5,131,593 shares of
restricted common stock to investors pursuant to an exemption from registration
under Regulation S. The shares were sold to investors at a price ranging from
$0.04 to $0.07 per share for total proceeds of $284,041 after issuing
expenses.





Item 3. Defaults Upon Senior
Securities





None.





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





None.





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-






Item 5. Other Information





None.





Item 6. Exhibits and Reports on Form
8-K





a)
            Form
      8-K – None





b)
            Exhibits





Exhibit
      Number
            
            Description31.1
            
            Section
      302 Certification31.2
            
            Section
      302 Certification32.1
            
            Section
      906 Certification








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.








Dated:
      July 14, 2008
            Financial
      Media Group, Inc.By:
      /s/ Albert AimersAlbert
      AimersChief
      Executive Officer





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