UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549








FORM
10-Q






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




For
the Quarterly period ended November 30,
2008




o  
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 registrant as specified in its charter)







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







18952 MacArthur Blvd, Suite
210, Irvine, CA 92612


(Address
of principal executive office) (Zip code)







(949)
486-3990


(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes  
No  





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated filer”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):




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





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes o    
No x





As of
January 13, 2009, there were 67,043,794 shares of registrant’s common stock
outstanding.





FINANCIAL MEDIA GROUP, INC.





TABLE
OF CONTENTS





Report on
Form 10-Q


for the
quarter ended November 30, 2008








PagePART
      I FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets at November 30, 2008 (Unaudited) and August
      31, 2008
                  3Consolidated Statements of Operations for the Three Month Periods
      ended
                    November 30, 2008 and 2007 (Unaudited)
                  4Consolidated Statements of Cash Flows for the Three Month Periods
      ended
                    November 30, 2008 and 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. Quantitative and Qualitative Disclosures About Market
      Risk
                  22Item 4T. Controls and Procedures
                  22PART
      II OTHER INFORMATIONItem 1. Legal Proceedings
                  22Item 1A. Fisk Factors
                  23Item 2. Unregistered Sales of Equity Securities and Use of
      Proceeds
                  23Item 3. Defaults upon Senior Securities
                  23Item 4. Submission of Matters to Vote of Security Holders
                  23Item 5. Other Information
                  23Item 6. Exhibits
                  23Signatures
                  23








- 2
-


PART
I – FINANCIAL INFORMATION





Item
1. Consolidated Financial Statements





FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





November
      30,
                          2008
                        
                        
                        August
      31,
                          2008(Unaudited)ASSETSCURRENT
      ASSETS:Cash
      & cash equivalents
                        
                        $
                        4,994
                        
                        
                        $
                        73,312Accounts
      receivable, net
                        
                        
                        55,577
                        
                        
                        
                        53,718Marketable
      securities
                        
                        
                        1,538,841
                        
                        
                        
                        2,217,852Other
      current assets
                        
                        
                        2,543
                        
                        
                        
                        1,793Total
      current assets
                        
                        
                        1,601,955
                        
                        
                        
                        2,346,675PROPERTY
      & EQUIPMENT, Net
                        
                        
                        67,431
                        
                        
                        
                        82,566DEPOSIT
                        
                        
                        28,521
                        
                        
                        
                        34,671Total
      assets
                        
                        $
                        1,697,907
                        
                        
                        $
                        2,463,912LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIES:Accounts
      payable
                        
                        $
                        746,667
                        
                        
                        $
                        613,929Accrued
      expenses
                        
                        
                        830,905
                        
                        
                        
                        806,639Deferred
      revenue
                        
                        
                        304,500
                        
                        
                        
                        424,832Due
      to officers
                        
                        
                        922,929
                        
                        
                        
                        820,729Notes
      payable
                        
                        
                        650,000
                        
                        
                        
                        650,000Total
      current liabilities
                        
                        
                        3,455,001
                        
                        
                        
                        3,316,129Commitment
      & contingencies
                        
                        
                        -
                        
                        
                        
                        -STOCKHOLDERS'
      DEFICIT:Common
      stock, $0.001 par value, 300,000,000 shares authorized,
                          66,758,866
      and 65,726,873 shares issued and outstanding at
                          November
      30, 2008 and August 31, 2008, respectively
                        
                        
                        66,759
                        
                        
                        
                        65,727Paid
      in capital
                        
                        
                        11,796,400
                        
                        
                        
                        11,339,465Unrealized
      loss on marketable securities
                        
                        
                        (33,145
                        )
                        
                        
                        279,130Accumulated
      deficit
                        
                        
                        (13,587,106
                        )
                        
                        
                        (12,536,538
                        )Total
      stockholders' deficit
                        
                        
                        (1,757,092
                        )
                        
                        
                        (852,216
                        )Total
      liabilities and stockholders' deficit
                        
                        $
                        1,697,907
                        
                        
                        $
                        2,463,912





The
accompanying notes are an integral part of these unaudited consolidated
financial statements.


- 3
-




FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(UNAUDITED)





For
      the three month periods endedNovember
      30,2008
                                                                  
                                                                  
                                                                  2007Net
      revenues
                                                                  
                                                                  $
                                                                  834,787
                                                                  
                                                                  
                                                                  $
                                                                  1,878,893Operating
      expensesSelling,
      general & administrative
                                                                  
                                                                  
                                                                  1,010,478
                                                                  
                                                                  
                                                                  
                                                                  1,583,629Depreciation
                                                                  
                                                                  
                                                                  15,135
                                                                  
                                                                  
                                                                  
                                                                  10,616Impairments
                                                                  
                                                                  
                                                                  629,245
                                                                  
                                                                  
                                                                  
                                                                  861,903Total
      operating expenses
                                                                  
                                                                  
                                                                  1,654,858
                                                                  
                                                                  
                                                                  
                                                                  2,456,148Loss
      from operations
                                                                  
                                                                  
                                                                  (820,071
                                                                  )
                                                                  
                                                                  
                                                                  (577,255
                                                                  )Non-Operating
      Income (Expense):Interest
      expense
                                                                  
                                                                  
                                                                  (7,511
                                                                  )
                                                                  
                                                                  
                                                                  (47,540
                                                                  )Interest
      income
                                                                  
                                                                  
                                                                  50
                                                                  
                                                                  
                                                                  
                                                                  -Loss
      on sale of marketable securities
                                                                  
                                                                  
                                                                  (218,238
                                                                  )
                                                                  
                                                                  
                                                                  (1,724
                                                                  )Total
      non-operating expense
                                                                  
                                                                  
                                                                  (225,699
                                                                  )
                                                                  
                                                                  
                                                                  (49,264
                                                                  )Loss
      from operations before income taxes
                                                                  
                                                                  
                                                                  (1,045,770
                                                                  )
                                                                  
                                                                  
                                                                  (626,519
                                                                  )Provision
      for income tax
                                                                  
                                                                  
                                                                  4,800
                                                                  
                                                                  
                                                                  
                                                                  4,800Net
      Loss
                                                                  
                                                                  
                                                                  (1,050,570
                                                                  )
                                                                  
                                                                  
                                                                  (631,319
                                                                  )Other
      comprehensive gain (loss):Unrealized
      gain (loss) on marketable securities
                                                                  
                                                                  
                                                                  (515,850
                                                                  )
                                                                  
                                                                  
                                                                  (63,523
                                                                  )Reclassification
      Adjustment
                                                                  
                                                                  
                                                                  203,575
                                                                  
                                                                  
                                                                  
                                                                  (25,203
                                                                  )Comprehensive
      loss
                                                                  
                                                                  $
                                                                  (1,362,845
                                                                  )
                                                                  
                                                                  $
                                                                  (720,045
                                                                  )Basic
      & diluted net loss per share
                                                                  
                                                                  $
                                                                  (0.02
                                                                  )
                                                                  
                                                                  $
                                                                  (0.02
                                                                  )*Weighted
      average shares of share capital outstanding-
      basic & diluted
                                                                  
                                                                  
                                                                  66,098,358
                                                                  
                                                                  
                                                                  
                                                                  35,052,538









*
Weighted average diluted number of shares are considered the same as basic
weighted average number of shares as the effect of diluted securities is
anti-dilutive.





The
accompanying notes are an integral part of these unaudited consolidated
financial statements.


- 4
-




FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(UNAUDITED)





For
      the three month periods ended
                                                        November
      30,2008
                                                      
                                                      
                                                      2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                                      
                                                      $
                                                      (1,050,570
                                                      )
                                                      
                                                      $
                                                      (631,319
                                                      )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Bad
      debts
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      35,215Depreciation
      and amortization
                                                      
                                                      
                                                      15,135
                                                      
                                                      
                                                      
                                                      10,616Revenues
      in form of marketable securities
                                                      
                                                      
                                                      (762,332
                                                      )
                                                      
                                                      
                                                      (1,312,153
                                                      )Impairment
      of marketable securities
                                                      
                                                      
                                                      629,245
                                                      
                                                      
                                                      
                                                      861,903Loss
      on sale of marketable securities
                                                      
                                                      
                                                      218,238
                                                      
                                                      
                                                      
                                                      1,724Issuance
      of common stock for services
                                                      
                                                      
                                                      74,152
                                                      
                                                      
                                                      
                                                      -Issuance
      of options for services
                                                      
                                                      
                                                      84,397
                                                      
                                                      
                                                      
                                                      -Issuance
      of warrants for services
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      13,675(Increase)
      decrease in current assets:Receivables
                                                      
                                                      
                                                      (1,859
                                                      )
                                                      
                                                      
                                                      (17,335
                                                      )Other
      current assets
                                                      
                                                      
                                                      5,400
                                                      
                                                      
                                                      
                                                      (200,185
                                                      )Increase
      (decrease) in current liabilities:Accounts
      payable
                                                      
                                                      
                                                      132,738
                                                      
                                                      
                                                      
                                                      73,417Accrued
      expenses and other liabilities
                                                      
                                                      
                                                      126,466
                                                      
                                                      
                                                      
                                                      194,330Deferred
      revenues
                                                      
                                                      
                                                      2,040
                                                      
                                                      
                                                      
                                                      (200,586
                                                      )Net
      cash used in operating activities
                                                      
                                                      
                                                      (526,951
                                                      )
                                                      
                                                      
                                                      (1,170,699
                                                      )CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of property & equipment
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (17,977
                                                      )Cash
      received from disposal (acquisition) of marketable
      securities-net
                                                      
                                                      
                                                      159,215
                                                      
                                                      
                                                      
                                                      537,750Net
      cash provided by investing activities
                                                      
                                                      
                                                      159,215
                                                      
                                                      
                                                      
                                                      519,773CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from sale of common stock
                                                      
                                                      
                                                      299,418
                                                      
                                                      
                                                      
                                                      640,261Net cash provided by
      financing activities
                                                      
                                                      
                                                      299,418
                                                      
                                                      
                                                      
                                                      640,261NET
      DECREASE IN CASH & CASH EQUIVALENTS
                                                      
                                                      
                                                      (68,318
                                                      )
                                                      
                                                      
                                                      (10,665
                                                      )CASH
      & CASH EQUIVALENTS, BEGINNING BALANCE
                                                      
                                                      
                                                      73,312
                                                      
                                                      
                                                      
                                                      172,013CASH
      & CASH EQUIVALENTS, ENDING BALANCE
                                                      
                                                      $
                                                      4,994
                                                      
                                                      
                                                      $
                                                      161,348








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 developing tools and  applications that
enable retail investors  to collaborate directly with publicly traded
companies. The Company provides Internet based media and advertising services
through its network of financial websites.  The Company provides full
array of customized investor awareness programs such senior management
interviews, text and display advertising, press releases, conferences and
seminars, and email marketing.





WallStreet
Direct, Inc. (“WallStreet”), a wholly-owned subsidiary of Financial Media Group,
Inc. was incorporated in the State of Nevada on January 5, 2005 as a financial
holding company specializing as a provider of financial news, tools and content
for the global investment community. On January 15, 2005, WallStreet acquired
100% of the assets and outstanding shares of Digital WallStreet, Inc. which was
100% owned by the majority shareholder (86%) of the Company, in exchange for two
promissory notes of $1,500,000 each, carrying interest at 6% per annum, due and
payable on January 31, 2007 and January 31, 2010. As this merger is between
entities under the common control, the issuance of the promissory notes to the
majority shareholder has been recorded as a distribution to the majority
shareholder. The merger has been accounted for on historical cost
basis.





Digital
WallStreet, Inc. was incorporated in Nevada on June 12, 2002, and commenced its
operations during the first quarter of 2003. WallStreet is a full service
financial media company focused on applications that enable investors to
collaborate directly with publicly traded companies. The company provides
internet media and advertising services through its network of financial
websites.





On
January 6, 2006, Financial Media Group, Inc. acquired 100% of the equity in
WallStreet pursuant to an Agreement and Plan of Reorganization dated September
19, 2005 by and between WallStreet and the Company. Financial Media Group, Inc.,
formerly known as Giant Jr. Investments Corp., was incorporated in Nevada in
1984 as Business Development Company, Inc. Pursuant to the acquisition of
WallStreet, it became the wholly-owned subsidiary of Financial Media Group, Inc.
The former shareholders of WallStreet received 19,998,707 shares or 82% of the
issued and outstanding shares of the Company’s common stock in exchange for all
the issued and outstanding shares of WallStreet.





The
acquisition of WallStreet is accounted for as a reverse acquisition under the
purchase method of accounting since the shareholders of WallStreet obtained
control of the consolidated entity. Accordingly, the reorganization of the
two companies is recorded as a recapitalization of WallStreet, with WallStreet
being treated as the continuing operating entity. The historical financial
statements presented herein will be those of WallStreet. The continuing entity
retained August 31 as its fiscal year end.





On
February 10, 2006, Financial Media Group, Inc. established a 100% wholly owned
subsidiary Financial Filings Corp. This business unit focuses on providing
edgarization and newswire services to small and mid-sized public companies.
These compliance services provide formatting of pertinent SEC filings and
distribution of news in more than 30 languages to media outlets in more than 135
countries.





On June
13, 2006, Financial Media Group, Inc. established a wholly-owned subsidiary My
WallStreet, Inc. and launched in January 2007, http://my.wallst.net, an online
community for investors. The website offers free membership and provides social
networking applications including messaging, blogs, message boards, video and
audio uploads, and personal profile pages. In addition, members of MyWallSt can
participate in the “Rookie Challenge,” a proprietary virtual stock trading
simulator that allows members to compete against each other for a weekly cash
prize. Members can also communicate with another, rate individual stocks, post
comments on individual stocks, and compile their own Watchlist of stocks, which
can be viewed and commented on by other members of the online community. Unlike
other social network services including MySpace and FaceBook, MyWallSt members
have one interest in common: they want to become better investors. MyWallSt also
provides a venue for investors to interact with public company executives, many
of whom have active profiles on the website.





In
January 2007, the Company acquired the trade name “The Wealth Expo” and formed a
wholly owned subsidiary The Wealth Expo Inc. on June 12, 2007. The Wealth Expo
provides a broad range of information on investing techniques, and tools to
investors through workshops and exhibits held throughout the United
States.





In May
2008, the Company launched WallStTV and offer free access to its original video
programming including the 3-Minute Press Show, Sweet Picks, the Analyst’s
Review, and WallSt.net News Magazine (“WSNM”). WSNM half-hour program is run
weekly and distributed through television via the Fox Business
Network.




- 6
-




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







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, 2008 were filed on December 12, 2008
with the Securities and Exchange Commission and is hereby incorporated by
reference. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Operating results for the three
months period ended November 30, 2008 are not necessarily indicative of the
results that may be expected for the year ended August 31, 2009.





Principles
of Consolidation





The
consolidated financial statements include the accounts of the Company, its
wholly-owned subsidiaries WallStreet Direct, Inc., Digital Wall Street, Inc.,
Financial Filings, Corp., My WallStreet, Inc. and Wealth Expo Inc. All
significant inter-company accounts and transactions have been
eliminated.





Use
of Estimates





In
preparation of financial statements in conformity with generally accepted
accounting principles management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual results could differ
from those estimates.





Cash
and Cash Equivalents





The
Company considers all liquid investments with a maturity of three months or less
from the date of purchase that are readily convertible into cash to be cash
equivalents.





Accounts
Receivable





The
Company maintains reserves for potential credit losses on accounts receivable.
Management reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer credit worthiness,
current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves. Reserves are recorded primarily on a specific
identification basis. Allowance for doubtful debts amounted to $201,872 as of
November 30, 2008 and August 31, 2008.





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 stockholder’s equity. Realized
and unrealized gains and losses for securities classified as available-for-sale
are included in the statement of operations and comprehensive gain,
respectively.





Property
and Equipment





Property
and equipment are carried at cost less accumulated depreciation. Depreciation is
provided using the straight-line method over the estimated useful life of the
assets from three to five years. Expenditures for maintenance and repairs are
charged to expense as incurred.




- 7
-




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







NOTE
2     SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT.)




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.





The
Company records revenues on the basis of services provided to its clients for a
fixed determinable fee pursuant to a contractual agreement. In lieu of providing
services, the Company receives from its clients’ cash and/or securities, as
compensation for providing such services. Payments received in advance of
services provided, are recorded as deferred revenue.





Fair
Value of Financial Instruments





Statement
of financial accounting standard No. 107, Disclosures about fair value of
financial instruments, requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for assets and liabilities qualifying, as financial
instruments are a reasonable estimate of fair value.





Concentration
of Credit Risk





Financial
instruments which potentially subject the Company to concentrations of credit
risk are cash, accounts receivable and marketable securities. The Company places
its cash with financial institutions deemed by management to be of high credit
quality. The amount on deposit in any one institution that exceeds federally
insured limits is subject to credit risk. All of the Company’s investment in
marketable securities are considered “available-for-sale” and are carried at
their fair value, with unrealized gains and losses (net of income taxes) that
are temporary in nature recorded in accumulated other comprehensive income
(loss) in the accompanying balance sheets. The fair values of the Company’s
investments in marketable securities are determined based on market quotations.
Exposure to losses on receivables is principally dependent on each customer's
financial condition. The Company monitors its exposure for credit losses and
maintains allowances for anticipated losses, as required.





Reporting
Segments





Statement
of financial accounting standards No. 131, Disclosures about segments of an
enterprise and related information (SFAS No. 131), which superseded statement of
financial accounting standards No. 14, Financial reporting for segments of a
business enterprise, establishes standards for the way that public enterprises
report information about operating segments in annual financial statements and
requires reporting of selected information about operating segments in interim
financial statements regarding products and services, geographic areas and major
customers. SFAS No. 131 defines operating segments as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performances.




- 8
-


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




Reporting
Segments (cont.)





The
Company offers a broad range of services to its clients and its primary source
of revenue is generated from providing Internet based media and advertising
services and a full array of customized investor awareness programs to small and
medium sized companies through its financial websites http://www.wallst.net,
http://my.wallst.net and http://tv.wallst.net. The Company also provides news
wire and compliance services including preparation of registration statements,
electronic filings and reporting of SEC documents (EDGAR), preparation of proxy
materials and news distribution to the same types of clients whom the Company
provides Internet based media and advertising services. The Company started to
offer a broad range of information on investing techniques and education tools
to investors through workshops, exhibition sales, speaking presentation sales,
collateral material sales and advertising sales.





However,
the revenue generated, assets and net loss from the two sources, i.e. news wire
and compliance services, and investing techniques and education tools services,
is less than 10% of the total revenue, total assets and total net loss,
respectively. Hence, SFAS 131 has no effect on the Company's financial
statements as substantially all of the Company's operations are conducted in one
primary industry segment i.e. providing Internet based media and advertising
services and a full array of customized investor awareness programs to small and
medium sized companies.





Stock-Based
Compensation





The
Company adopted SFAS No. 123 (Revised 2004), Share Based Payment(“SFAS
No. 123R”), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of
employee services received in exchange for an award of equity instruments based
on the grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation,for all share-based payments granted prior to and not yet
vested as of January 1, 2006 and share-based compensation based on the
grant-date fair-value determined in accordance with SFAS No. 123R for all
share-based payments granted after January 1, 2006. SFAS No. 123R
eliminates the ability to account for the award of these instruments under the
intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion
No. 25, Accounting for Stock
Issued to Employees, and allowed under the original provisions of SFAS
No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted for our
stock option plans using the intrinsic value method in accordance with the
provisions of APB Opinion No. 25 and related interpretations.





Issuance
of Shares for Services





The
Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.





Comprehensive
Income





Statement
of financial accounting standards No. 130, Reporting comprehensive income (SFAS
No. 130), establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity, except those resulting from investments by
owners and distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in
financial statements that are displayed with the same prominence as other
financial statements.





Recent
Accounting Pronouncements





In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations”.The
objective of this statement will significantly change the accounting for
business combinations. Under Statement 141R, an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition date fair value with limited exceptions.
Statement 141 applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The Company does not expect the
adoption of SFAS No. 141R to have a material impact on the consolidated
financial statements.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements-An Amendment of ARB No. 51".The
objective of this statement is to establish new accounting and reporting
standards for the Noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary.. Statement 160 is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008. The Company does not expect the adoption of SFAS No. 160 to have a
material impact on the consolidated financial statements.




- 9
-




FINANCIAL MEDIA
GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)







NOTE
2     SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES




Recent Accounting
Pronouncements (cont.)




In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
161, Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133,which requires additional disclosures about the objectives of
the derivative instruments and hedging activities, the method of accounting for
such instruments under SFAS No. 133 and its related interpretations, and a
tabular disclosure of the effects of such instruments and related hedged items
on our financial position, financial performance, and cash flows. The Company
does not expect the adoption of SFAS No. 161 to have a material impact on the
consolidated financial statements.





In May
2008, FASB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting
Principles”. The pronouncement mandates the GAAP hierarchy reside in the
accounting literature as opposed to the audit literature. This has the practical
impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP
hierarchy. This pronouncement will become effective 60 days following SEC
approval. The Company does not believe this pronouncement will impact its
financial statements.





In May
2008, FASB issued SFASB No. 163, “Accounting for Financial Guarantee Insurance
Contracts-an interpretation of FASB Statement No. 60”. The scope of the
statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. The Company does not believe this pronouncement will impact
its financial statements.





Reclassifications





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





NOTE
3     MARKETABLE
SECURITIES





The
Company receives cash and/or securities of client companies as payment in full
for services rendered. The numbers of shares the Company receives for services
is based on contract amount, and the number of shares is determined based on the
bid price at the time of signing the agreement. The securities received from
clients are classified as available-for-sale and, as such, are carried at fair
value based on the quoted market prices. The securities comprised of shares of
common stock of third party customers and securities purchased. Securities
classified as available-for-sale may be sold in response to changes in interest
rates, liquidity needs, and for other purposes. The Company does not currently
have any held-to-maturity or trading securities.





Marketable
securities classified as available for sale consisted of the following as of
November 30, 2008 (Unaudited):





Equity Securities Name and Symbol
                                        
                                        No.
      Shares
                                          Held
      at November 30, 2008
                                        
                                        Cost
                                        
                                        Market
      Value at November 30, 2008
                                        
                                        Accumulated
      Unrealized
                                          Loss
                                        
                                        
                                        Accumulated
      Unrealized Gain
                                        
                                        Traded
      on
                                          Pink
      Sheets (PK) or Bulletin Board (BB)CEO
      America, Inc. (CEOA)
                                        
                                        1,000,000
                                        
                                        $
                                        9,000
                                        
                                        $
                                        15,000
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        6,000
                                        
                                        PKCytoDyn,
      Inc. (CYDY)
                                        
                                        142,857
                                        
                                        
                                        8,571
                                        
                                        
                                        57,143
                                        
                                        
                                        -
                                        
                                        
                                        
                                        48,571
                                        
                                        PKExousia
      Advanced Mat (EXOU)
                                        
                                        401,538
                                        
                                        
                                        261,000
                                        
                                        
                                        172,661
                                        
                                        
                                        88,339
                                        
                                        
                                        
                                        -
                                        
                                        PKFIMA,
      Inc (FIMA)
                                        
                                        357,000
                                        
                                        
                                        14,994
                                        
                                        
                                        18,921
                                        
                                        
                                        -
                                        
                                        
                                        
                                        3,927
                                        
                                        PKGENCO
      Corp (GNCC)
                                        
                                        294,118
                                        
                                        
                                        17,647
                                        
                                        
                                        17,647
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        PKGeneThera
      Inc (GTHR)
                                        
                                        50,000
                                        
                                        
                                        139,661
                                        
                                        
                                        12,500
                                        
                                        
                                        127,161
                                        
                                        
                                        
                                        -
                                        
                                        PKIfinix
      Corp (INIX)
                                        
                                        34,500,000
                                        
                                        
                                        315,000
                                        
                                        
                                        276,000
                                        
                                        
                                        39,000
                                        
                                        
                                        
                                        
                                        
                                        BBInternational
      Food Products Group, Inc. (IFDG)
                                        
                                        4,000,000
                                        
                                        
                                        22,000
                                        
                                        
                                        17,600
                                        
                                        
                                        4,400
                                        
                                        
                                        
                                        -
                                        
                                        BBNexplore
      Corp. (NXPC)
                                        
                                        200,000
                                        
                                        
                                        108,000
                                        
                                        
                                        254,000
                                        
                                        
                                        -
                                        
                                        
                                        
                                        146,000
                                        
                                        PKNutriPure
      Beverages, Inc. (NUBV)
                                        
                                        250,033,333
                                        
                                        
                                        10,000
                                        
                                        
                                        25,003
                                        
                                        
                                        -
                                        
                                        
                                        
                                        15,003
                                        
                                        PKPPJ
      Enterprise Inc (PPJE)
                                        
                                        3,810,000
                                        
                                        
                                        70,980
                                        
                                        
                                        70,980
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        PKPSM
      Holdings, Inc. (PSMH)
                                        
                                        157,895
                                        
                                        
                                        63,158
                                        
                                        
                                        63,158
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        PKRaven
      Moon Entertainment, Inc. (RVENE)
                                        
                                        2,500,624,843
                                        
                                        
                                        250,000
                                        
                                        
                                        250,062
                                        
                                        
                                        -
                                        
                                        
                                        
                                        62
                                        
                                        BBSignature
      Devices, Inc. (SDVI)
                                        
                                        2,400,000
                                        
                                        
                                        21,120
                                        
                                        
                                        12,000
                                        
                                        
                                        9,120
                                        
                                        
                                        
                                        -
                                        
                                        PKSunrise
      Consulting Group (SNRS)
                                        
                                        1,015,000,000
                                        
                                        
                                        101,500
                                        
                                        
                                        101,500
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        PKVidShadow
      Inc (VSHD)
                                        
                                        147,052
                                        
                                        
                                        102,936
                                        
                                        
                                        102,936
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        PKVOIP
      PAL.com, Inc. (VPLM)
                                        
                                        2,500,000
                                        
                                        
                                        15,000
                                        
                                        
                                        37,500
                                        
                                        
                                        -
                                        
                                        
                                        
                                        22,500
                                        
                                        PKWayPoint
      Biomedical Holdings, Inc. (WYPH)
                                        
                                        715,000
                                        
                                        
                                        10,725
                                        
                                        
                                        7,150
                                        
                                        
                                        3,575
                                        
                                        
                                        
                                        -
                                        
                                        PKOthers
      - Less than $10,000 Cost
                                        
                                        79,774,669
                                        
                                        
                                        30,695
                                        
                                        
                                        27,080
                                        
                                        
                                        8,145
                                        
                                        
                                        
                                        4,530
                                        
                                        PKTotal
                                        
                                        
                                        
                                        $
                                        1,571,987
                                        
                                        $
                                        1,538,842
                                        
                                        $
                                        (279,739
                                        )
                                        
                                        $
                                        246,594




- 10
-




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


NOTE 3     MARKETABLE SECURITIES
(CONT.)




As of
November 30, 2008, the Company evaluated its marketable securities holdings by
valuing the securities according to the quoted price of the securities on the
stock exchange.





It is the
Company’s policy to assess its marketable securities for impairment on a
quarterly basis, or more frequently if warranted by circumstances. The Company
recognized an impairment loss on the marketable securities of $629,245 for the
three months ended November 30, 2008 compared to $861,903 for the same period in
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.





To
safeguard the Company with impairments of marketable securities, the Company has
revised its contractual terms on its agreements with its clients which provides
that, in the event during the term of the agreement, the share bid price
declines by more than ten per cent (10%) of the share bid price on the date of
execution of the agreement, the Client would agree to issue additional shares of
their common stock to the Company in order to make up the deficiency caused by
the reduction in the value of their stock.





Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholder’s equity. Realized
gains and losses for securities classified as available-for-sale are reported in
the statement of operations and comprehensive gain.





The
Company sold marketable securities during the three months ended November 30,
2008 and 2007 and recorded a realized loss of $218,238 and $1,724,
respectively.





NOTE
4    PROPERTY AND
EQUIPMENT





Property
and equipment consist of the following:





November
      30,
                                              2008
                                            
                                            
                                            August
      31,
                                              2008(Unaudited)Office
      and computer equipment
                                            
                                            $
                                            191,652
                                            
                                            
                                            $
                                            191,652Less
      accumulated depreciation:
                                            
                                            
                                            (124,221
                                            )
                                            
                                            
                                            (109,086
                                            )$
                                            67,431
                                            
                                            
                                            $
                                            82,566





Depreciation
expense for the three months ended November 30, 2008 and 2007 was $15,135 and
$10,616, respectively.





NOTE
5     OTHER
ASSETS





Other
assets consist of the following:





November
      30,
                                        2008
                                      
                                      
                                      August
      31,
                                        2008(Unaudited)Other
      Current Assets:Employee
      advances
                                      
                                      $
                                      2,300
                                      
                                      
                                      $
                                      -Advances
      to third parties
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,550Prepaid
      expenses
                                      
                                      
                                      243
                                      
                                      
                                      
                                      243Total
      Other Current Assets
                                      
                                      $
                                      2,543
                                      
                                      
                                      $
                                      1,793Other
      Assets:Rent
      deposit
                                      
                                      $
                                      28,521
                                      
                                      
                                      $
                                      34,671Total
      Other Assets
                                      
                                      $
                                      28,521
                                      
                                      
                                      $
                                      34,671




- 11
-




FINANCIAL MEDIA
GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





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 $304,500 and $424,832 in deferred
revenues at November 30, 2008 and at August 31, 2008, respectively, which will
be recognized over the next 12 months.





NOTE
7    ACCRUED
EXPENSES





Accrued
expenses consist of the following:





November
      30,
                          2008
                        
                        
                        August
      31,
                          2008(Unaudited)Accrued
      consulting fees
                        
                        $
                        87,982
                        
                        
                        $
                        98,649Accrued
      interest
                        
                        
                        38,707
                        
                        
                        
                        36,457Accrued
      salaries and payroll taxes
                        
                        
                        489,716
                        
                        
                        
                        376,038Advances
      from third parties
                        
                        
                        214,500
                        
                        
                        
                        295,495$
                        830,905
                        
                        
                        $
                        806,639





NOTE
8    DUE TO
OFFICERS





Due to
officers consist of the following at November 30, 2008:





November
      30,
                        2008
                      
                      
                      August
      31,
                        2008(Unaudited)Accrued
      officer’s compensation
                      
                      $
                      642,174
                      
                      
                      $
                      539,974Accrued
      consulting fees
                      
                      
                      32,382
                      
                      
                      
                      32,382Accrued
      interest
                      
                      
                      248,373
                      
                      
                      
                      248,373$
                      922,929
                      
                      
                      $
                      820,729





The
Company recorded an expense of $92,188 and $92,188 for the three months ended
November 30, 2008 and 2007 for compensation and benefits provided to the Chief
Executive Officer of the Company.





NOTE
9    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 $2,250 in the accompanying financial statements
for the three months ended November 30, 2008 and 2007,
respectively.





On July
20, 2008, the Company executed a promissory note of $550,000 to a third party,
unsecured, non-interest bearing and due January 20, 2009. The promissory note
originated as a result of conversion of consulting expenses payable to a third
party into a promissory note.




- 12
-




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






NOTE
10     EQUITY
TRANSACTIONS





Common
Stock





Through a
private placement on January 25, 2006 and after the acquisition of WallStreet,
the Company sold 8 units to eight accredited investors for cash consideration of
$120,000. Each unit sold consists of 15,000 common shares, a redeemable Class C
Warrant (the “Class C Warrant”), a redeemable Class D Warrant (the “Class D
Warrant”), and a redeemable Class E Warrant (the “Class E Warrant”) of Financial
Media Group, Inc. Each Class C Warrant entitles the registered holder thereof to
purchase, at any time until the first anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $1.50 per share, subject
to adjustment. Each Class D Warrant entitles the registered holder thereof to
purchase, at any time until the second anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $2.25 per share, subject
to adjustment. Each Class E Warrant entitles the registered holder thereof to
purchase, at any time until the third anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $3.75 per share, subject
to adjustment. The Class C Warrants, the Class D Warrants and the Class E
Warrants (collectively, the “Warrants”) are redeemable by the Company, at a
redemption price of $0.05 per share, upon at least 30 days prior written notice.
Commencing 12 months from the date of the private placement or upon an effective
Registration Statement, whichever is earlier, at the price of $0.05 per Warrant,
upon not less than 30 days notice to the holders of the Warrants called for
redemption, provided that the average closing bid price of the Common Stock
exceeds $2.50 for Class C Warrants, $4.50 for the Class D Warrants and $7.50 for
the Class E Warrants for 20 trading days. The holders of the Warrants called for
redemption shall have exercise rights until the close of business on the date
fixed for redemption. Class C Warrants expired on January 25, 2007, Class D
Warrants expired on January 25, 2008, and Class E Warrants expire on January 25,
2009, respectively.





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 Warrant entitles the registered
holder thereof to purchase, at any time until 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. No other classes of
warrant holders exercised their warrants. Class A1 Warrants expired
on September 1, 2007 and Class A2 Warrants expired on September 1, 2008,
respectively.





On June
28, 2007, the Company entered into a Stock Purchase Agreement with an investor
for private placement of shares under Regulation S as promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
During the three months ended November 30, 2008, the Company sold 300,785 shares
of common stock to the investors and received cash proceeds of $28,830. As of
November 30, 2008, the Company sold 15,448,394 shares of its common stock under
Regulation S to the investors and received cash proceeds of $1,463,182 which
amounted to approximately 34% of the total proceeds from such sale of its
shares. These shares were sold at a price equal to the previous day's last bid
price as traded on the Over the Counter Bulletin Board.





On June
12, 2008, the Company initiated a Private Placement Memorandum offering to sell
250 units for a total cash consideration of $5,000,000. Each Unit consisted of
40,000 shares of Common Stock, par value $0.001 per share and 40,000 Class A
Common Stock Purchase Warrants, 40,000 Class B Common Stock Purchase Warrants
and 40,000 Class C Common Stock Purchase Warrants. The offering entitles the
registered investor redeemable Class A Warrants, redeemable Class B Warrants and
redeemable Class C Warrants to purchase, at any time until the 9-month, 12-month
and 18-month anniversary of the date of purchase of shares, at an exercise price
of $0.75, $1.50 and $3.00, respectively, subject to adjustment. The Class A,
Class B and Class C Warrants (collectively, the “Warrants”) are redeemable by
the Company, at a redemption price of $0.05 per share, upon at least 30 days’
prior written notice, commencing on the effective date of a registration
statement registering the common stock underlying the Warrants (the “Warrant
Shares”) for resale or 12 months after the date of issuance of the Warrant,
whichever is earlier, if the market price per share of the common stock for any
five consecutive trading days prior to a notice of redemption shall exceed $1.50
per share for Class A Warrants, $3.00 per share for the Class B Warrants and
$5.00 per share for Class C Warrants. During the three months ended November,
30, 2008, the Company sold 13 units to investors for a cash consideration of
$260,000. As of November 30, 2008, the Company sold 44 units to investors and
raised $880,000 pursuant to the June 12, 2008 Private Placement.





During
the three months ended November 30, 2008, the Company issued 73,249 shares to
consultants valued at $12,485 in full settlement of their services, 71,500
shares to an employee valued at $12,500 in full settlement of their services,
and  66,677 shares to directors valued at $36,667 for their services.
The shares were valued at their fair value on the date of issuance.




- 13
-




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






Outstanding
Warrants:





Following
is a summary of the various classes of warrants outstanding at November 30,
2008:





Description
      of Warrants
                                  
                                  Exercise
                                    Price
                                  
                                  Expiration
                                    Date
                                  
                                  Warrants
      Outstanding at August 31, 2008
                                  
                                  
                                  Warrants
      Issued during the period
                                  
                                  Warrants
      Exercised during the period
                                  
                                  Warrants
      Expired during the period
                                  
                                  
                                  Warrants
      Outstanding at August 31, 2008Class
      E Warrant
                                  
                                  $3.75
                                  
                                  01/25/2009
                                  
                                  165,000
                                  
                                  
                                  -
                                  
                                  -
                                  
                                  -
                                  
                                  
                                  165,000Class
      A2 Warrant
                                  
                                  $3.50
                                  
                                  09/01/2008
                                  
                                  244,667
                                  
                                  
                                  -
                                  
                                  -
                                  
                                  (244,667
                                  )
                                  
                                  -409,667
                                  
                                  
                                  -
                                  
                                  -
                                  
                                  (244,667
                                  
                                  
                                  165,000





The
number and weighted average exercise prices of warrants granted by the Company
are as follows:





Number
      of Warrants
                  
                  
                  Weighted
      Average Exercise Price
                  
                  
                  Aggregate
      Intrinsic ValueOutstanding
      August 31, 2008
                  
                  
                  409,667
                  
                  
                  $
                  3.60
                  
                  
                  $
                  -Issued
      during the period
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Expired
                  
                  
                  (244,667
                  )
                  
                  
                  -
                  
                  
                  
                  -Exercised
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Outstanding
      November 30, 2008
                  
                  
                  165,000
                  
                  
                  $
                  3.75
                  
                  
                  $
                  -





Following
is a summary of the status of warrants outstanding at November 30,
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$3.75
                                        
                                        165,000
                                        
                                        0.15
                                        
                                        $3.75
                                        
                                        165,000
                                        
                                        $3.75165,000
                                        
                                        0.15
                                        
                                        $3.75
                                        
                                        165,000
                                        
                                        $3.75





Outstanding Stock
Options:





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





On
January 5, 2007, the Company adopted the 2007 Non-Qualified Plan and reserved a
maximum of 3,000,000 shares of common stock as Options to grant to employees,
non-employee directors, consultants and advisors. The stock subject to Options
granted under the Non-Qualified Plan shall be shares of the Company’s Common
Stock, par value $0.001 per share. The 2007 Non-Qualified Plan shall terminate
within ten (10) years from the date of adoption by the Board of Directors or
sooner, and no Options shall be granted after termination of the plan. The
Options have been granted to certain employees and consultants to purchase
Common Shares at prices equal to fair market value on the date of
grant.





- 14
-




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






The
number and weighted average exercise prices of options granted by the Company at
November 30, 2008 are as follows:





Options
      Outstanding
                    
                    
                    Weighted
      Average Exercise Price
                    
                    
                    Aggregate
      Intrinsic ValueOutstanding
      August 31, 2008
                    
                    
                    2,235,000
                    
                    
                    $
                    0.23
                    
                    
                    $
                    -Granted
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Expired/forfeited
                    
                    
                    (235,000
                    )
                    
                    
                    (0.30
                    )
                    
                    
                    -Outstanding
      November 30, 2008
                    
                    
                    1,925,000
                    
                    
                    $
                    0.21
                    
                    
                    $
                    -





Following
is a summary of the status of stock options outstanding at November 30,
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
                
                2,000,000
                
                9.06
                
                $0.15
                
                134,444
                
                $0.212,000,000
                
                9.06
                
                $0.15
                
                134,444
                
                $0.21





The
Company issued 2,000,000 options to officers and consultants at the exercise
prices ranging from $0.10 to $0.30 with the fair value of the options valued at
$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 three months ended
November 30, 2008 and November 30, 2007 was $33,763 and $0,
respectively.





2008 Non-Qualified Stock
Option Plan (“2008 Non-Qualified Plan”):





On July
2, 2008, the Company adopted the 2008 Non-Qualified Plan and the Board of
Directors approved the reservation of 2,000,000 shares of the Company’s
authorized but unissued common stock for issuance under the plan. As of November
30, 2008, no options have been granted under the 2008 Non-Qualified
Plan.





2007 Equity Incentive Plan
(“2007 Equity Plan”):





On
February 6, 2007, the Company adopted the 2007 Equity Plan which was approved by
the shareholders on April 11, 2007, and reserved 3,000,000 shares of the
Company’s authorized common stock as Options to grant to employees, directors
and officers. On August 28, 2008, the shareholders approved reserving an
additional 4,000,000 common shares for issuance under the 2007 Equity Plan for a
total of 7,000,000 common shares. The stock subject to Options granted under the
2007 Equity Plan shall be the Common Shares of the Company’s common stock, par
value $0.001 per share. The 2007 Equity Plan shall become effective and shall
remain in effect until all Common Shares subject to the 2007 Equity Plan have
been purchased or acquired according to the terms of the 2007 Equity Plan or the
2007 Equity Plan is terminated by the Board or January 4, 2017, whichever is
earlier. No stock Options shall be granted after termination of the plan. The
Options have been granted to certain employees to purchase Common Shares at
prices equal to fair market value on the date of grant.




- 15
-




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







The
number and weighted average exercise prices of stock Options granted by the
Company at November 30, 2008 are as follows:





Options
      Outstanding
                  
                  
                  Weighted
      Average Exercise Price
                  
                  
                  Aggregate
      Intrinsic ValueOutstanding
      August 31, 2008
                  
                  
                  2,375,000
                  
                  
                  $
                  0.30
                  
                  
                  $
                  -Granted
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Exercised
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Expired/forfeited
                  
                  
                  (450,000
                  )
                  
                  
                  0.30
                  
                  
                  
                  -Outstanding
      November 30, 2008
                  
                  
                  1,925,000
                  
                  
                  $
                  0.30
                  
                  
                  $
                  -





Following
is a summary of the status of stock Options outstanding at November 30,
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
                
                1,925,000
                
                9.06
                
                $0.30
                
                285,007
                
                $0.301,925,000
                
                9.06
                
                $0.30
                
                285,007
                
                $0.30








The
Company has issued 1,925,000 stock options to employees at the exercise prices
of $0.30 with the fair value of the options of $472,577 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 three months ended November 30, 2008 and
November 30, 2007 was $50,633 and $0, respectively.





NOTE
11    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.





Weighted
average number of shares used to compute basic and diluted loss per share is the
same since the effect of dilutive securities is anti-dilutive.





NOTE
12    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 $5,005
for interest and $0 for income taxes during the three months ended November 30,
2008. The Company paid $140 for interest and $0 for income taxes during the
three months ended November 30, 2007.




- 16
-


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







NOTE
13    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. Rent expense
under the operating lease for the three months ended November 30, 2008 and 2007
was $103,958 and $122,105, respectively. The Company has future minimum lease
obligations as follows:





Twelve
      months ending
                    November
      30,
                  
                  Amount2009
                  
                  $
                  316,5262010
                  
                  
                  79,564$
                  396,090





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 $37,500 in general and administrative expenses for the three months
ended November 30, 2008 and 2007, respectively. The Company has future minimum
salary commitments as follows:





Twelve
      months ending
                    November
      30,
                  
                  Amount2009
                  
                  $
                  194,0632010
                  
                  
                  33,063$
                  227,126





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 14GOING
CONCERN





The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. This basis of accounting contemplates the recovery
of the Company's assets and the satisfaction of its liabilities in the normal
course of business. The Company had an accumulated deficit of $13,587,106
as of November 30, 2008 and has incurred net loss of $1,050,570 for the three
months ended November 30, 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 August 31, 2007 towards (i) obtaining additional equity
financing, (ii) evaluation of its distribution and marketing methods, and (iii)
further streamlining and reducing costs.


- 17
-




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





This
Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements that reflect
Management's current views with respect to future events and financial
performance. You can identify these statements by forward-looking words such as
“may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or
similar words. Those statements include statements regarding the intent, belief
or current expectations of us and members of its management team as well as the
assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risk and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking
statements.





Readers
are urged to carefully review and consider the various disclosures made by us in
this report and in our other reports filed with the Securities and Exchange
Commission. Important factors currently known to Management could cause actual
results to differ materially from those in forward-looking statements. We
undertake no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
in the future operating results over time. We believe that our assumptions are
based upon reasonable data derived from and known about our business and
operations. No assurances are made that actual results of operations or the
results of our future activities will not differ materially from its
assumptions. Factors that could cause differences include, but are not limited
to, expected market demand for our services, fluctuations in pricing for
materials, and competition.





Overview





Our
current operations consist of the operations of WallStreet, a financial media
and advertising company that provides various financial Internet solutions,
tools, content and services to individual investors, media, corporate, and
financial services companies. WallStreet also provides Internet-based media and
advertising services through its financial Web site www.wallst.net. Advertising
on WallSt.net consists of continuous or rotating client profiles on various Web
pages within WallSt.net. Delivery of these profiles is based on a certain number
of impressions on WallSt.net depending on our client agreements. An impression
is defined as a single instance of an advertisement being displayed.
Furthermore, WallStreet provides E-mail services to its clients, which are
mailings sent to a targeted list of e-mail addresses, with delivery consisting
solely of transmitting the mailing to the e-mail targets. E-mail services may be
purchased on a per-transmittal basis, for which revenue is recorded when the
transmittal occurs, or on a fixed-fee basis in which the client receives access
to a fixed number of transmittals per-month. We record the revenue on the
fixed-fee basis pro-rated over the term of the client agreement.





We
established our Financial Filings Corp. subsidiary to leverage WallStreet
Direct, Inc.’s existing client base, by offering Edgarization services to small
and mid-sized public companies. Financial Filings is a provider of news wire and
compliance services to small and mid-sized publicly traded companies worldwide
including preparation of registration statements, electronic filings for SEC
documents (EDGAR), preparation of proxy materials, and news distribution in more
than 30 languages to media outlets in more than 135 countries.





In
January 2007, we acquired the trade name “The Wealth Expo” and formed a wholly
owned subsidiary The Wealth Expo Inc. on June 12, 2007. The Wealth Expo is
designed to provide a broad range of information on investing techniques, and
tools to investors through workshops and exhibits held throughout the United
States. Exhibitors at the Wealth Expo include public and private companies,
franchises, financial newsletter publishers, investor education providers, and
real estate companies. The Wealth Expo provides us several new revenue streams
through exhibition sales, speaking presentation sales, collateral material
sales, and advertising sales. Since its inception, The Wealth Expo has attracted
hundreds of exhibitors and thousands of attendees from around the
world.





WallStTV
was launched in May 2008 and offers free access to our original video
programming including the 3-Minute Press Show, Sweet Picks, the Analyst’s
Review, and WSNM. WSNM is also distributed through television via as a paid
advertisement on the Fox Business Network. More than 15 episodes of WSNM have
aired since March 2008. Our half-hour television program at Fox Business Network
is also syndicated on our Web properties, allowing visitors to watch the show on
the Web as well as on television. Revenue from the television program is derived
from the sale of interviews to paid clients, and the sale of segments of the
show where our clients’ press releases are summarized. We incur production costs
related to booking talent, renting studio time, and members of our production
crew.





Results
of Operations





Our
consolidated results of operations for the three months ended November 30, 2008
and 2007 include our wholly-owned subsidiaries WallStreet, Financial Filings,
Corp., My WallStreet, Inc., and The Wealth Expo Inc.





We
reported a net loss of $1,050,570 for the three months ended November 30, 2008
compared to a loss of $631,319 for the same period ended November 30, 2007. The
increase in loss was principally attributable to the reduced valuation of market
securities in our portfolio and increase in selling, general &
administrative expenses, as more fully explained in "Operating Expenses"
below.





Revenues





Revenues
for the three months period ended November 30, 2008 were $834,787 compared to
$1,878,893 for the same period in 2007. Revenues decreased by $1,044,106 (56%)
during the three months period due to decrease in advertisements on our website
due to current economic conditions and recent downturn in financial markets,
resulting in clients not spending on advertising dollars.




- 18
-




Impairment
of marketable securities for the three months period ended November 30, 2008 was
$629,245 compared to $861,903 for the same period ended in 2008. Impairment
expense was recorded because the market value of the securities we received as
compensation for services declined in excess of 50% of their market value. This
reduction in our judgment appeared to be other than temporary reduction in the
fair value of the marketable securities. Therefore, we took a conservative
approach of recording the impairment expense. Furthermore, to safeguard us with
impairments of marketable securities, we have revised our contractual terms on
agreements with our clients which provides that, in the event during the term of
the agreement, the share bid price of client securities decline by more than 10%
of the share bid price on the date of execution of the agreement, the client
agrees to issue additional shares of their common stock to us in order to make
up the deficiency caused by the reduction in the value of their stock.
Implementation of this policy further helped us reduce our impairment expense
during the three months period ended November 30, 2008.





Depreciation
expense for the three months period ended November 30, 2008 was $15,135 compared
to $10,616 for the same period in 2007.





Interest
expense for the three months period ended November 30, 2008 was $7,511 compared
to $47,540 for the same period in 2007. Interest expense decreased by $40,029
(84%) resulting from the conversion in January 2008 of the $3,000,000 promissory
notes due to an officer into 15,000,000 shares of common stock. Interest is
charged on the $3,000,000 promissory notes we executed in January 2005 due and
payable in January 2010.





Realized
loss on sale of marketable securities for the three months period ended November
30, 2008 was $218,238 compared to $1,724 for the same period in 2007. We sold
non-performing marketable securities held in our possession and realized losses
on their sale to better manage our portfolio. Unrealized loss for the three
months ended November 30, 2008 was $515,850 compared to unrealized loss of
$63,523 for the same period in 2007. Unrealized loss resulted due to the
decrease in market value of the marketable securities held at November 30, 2008
and 2007, respectively.





Liquidity
and Capital Resources





Cash and
cash equivalents were $4,994 at November 30, 2008. As shown in the accompanying
consolidated financial statements, we recorded a loss of $1,050,570 for the
three months period ended November 30, 2008 compared to loss of $631,319 for the
same period in 2007. Our current liabilities exceeded our current assets by
$1,853,046 at November 30, 2008 and net cash used in operating activities for
the three months ended November 30, 2008 was $526,951. These factors and our
ability to meet our debt obligations from current operations, and the need to
raise additional capital to accomplish our objectives raises doubt about our
ability to continue as a going concern.





We expect
significant capital expenditures during the next 12 months, contingent upon
raising capital. These anticipated expenditures are for software development,
assets additions, administrative overheads and working capital requirements. We
have sufficient funds to conduct our operations for a few months, but not for 12
months or more. We anticipate that we will need an additional $2,000,000 to fund
our anticipated operations for the next 12 months, depending on revenues from
operations. We have no contracts or commitments for additional funds and there
can be no assurance that financing will be available in amounts or on terms
acceptable to us, if at all.





We
presently do not have any available credit, bank financing or other external
sources of liquidity. Due to our historical operating losses, our operations
have not been a source of liquidity. We will need to obtain additional capital
in order to expand operations and become profitable. In order to obtain capital,
we may need to sell additional shares of our common stock or borrow funds from
private lenders. There can be no assurance that we will be successful in
obtaining additional funding.





To the
extent that we raise additional capital through the sale of equity or
convertible debt securities, the issuance of such securities may result in
dilution to existing stockholders. If additional funds are raised through the
issuance of debt securities, these securities may have rights, preferences and
privileges senior to holders of common stock and the terms of such debt could
impose restrictions on our operations. Regardless of whether our cash assets
prove to be inadequate to meet our operational needs, we may seek to compensate
providers of services by issuance of stock in lieu of cash, which may also
result in dilution to existing shareholders. Even if we are able to raise the
funds required, it is possible that we could incur unexpected costs and
expenses, fail to collect significant amounts owed to us, or experience
unexpected cash requirements that would force us to seek alternative
financing.





Whereas
we have been successful in the past in raising capital, no assurance can be
given that these sources of financing will continue to be available to us and/or
that demand for our equity/debt instruments will be sufficient to meet our
capital needs, or that financing will be available on terms favorable to us. If
funding is insufficient at any time in the future, we may not be able to take
advantage of business opportunities or respond to competitive pressures, or may
be required to reduce the scope of our planned service development and marketing
efforts, any of which could have a negative impact on our business and operating
results. In addition, insufficient funding may have a material adverse effect on
our financial condition, which could require us to:





-
            curtail
      operations significantly;-
            sell
      significant assets;-
            seek
      arrangements with strategic partners or other parties that may require the
      company to relinquish significant rights to products, technologies or
      markets; or-
            explore
      other strategic alternatives including a merger or sale of our
      company.




- 19
-








Operating
Activities





Net cash
used in operating activities for the three months period ended November 30, 2008
was $526,951 resulted due to an increase in receivables of $1,859, decrease in
other current assets and deposits of $5,400, increase in accounts payable of
$132,738, increase in accrued expenses and other liabilities of $126,466, and
increase in deferred revenues of $2,040.





Investing
Activities





Net cash
provided by investing activities for the three months period ended November 30,
2008 was $159,215. We received $159,215 in net cash proceeds from sale and
purchase of marketable securities.





Financing
Activities





Net cash
provided by financing activities for the three months period ended November 30,
2008 was $299,418 due to cash received from sale of securities amounting to
$299,418.





As a
result of the above activities, we experienced a net decrease in cash of $68,318
for the three months period ended November 30, 2008. Our ability to continue as
a going concern is still dependent on our success in obtaining additional
financing from investors through the sale of our securities.





Application
of Critical Accounting Policies





Marketable
Securities and Impairments





Our
investments in securities are classified as available-for-sale and, as such, are
carried at fair value based on quoted market prices. Securities classified as
available-for-sale may be sold in response to changes in interest rates,
liquidity needs, and for other purposes.





Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholder’s equity. Realized
and unrealized gains and losses for securities classified as available-for-sale
are included in the statement of operations and comprehensive gain,
respectively.





We
review, on a quarterly basis or more frequently if warranted by circumstances,
the carrying value of the marketable securities we receive from our customers
for providing services. We record impairment expense each quarter when the
market value of the securities received show a consistent decline over 90 to 180
days, and the carrying amount of the marketable securities exceeds its fair
value by 50% or more, and is deemed not recoverable. As such, we record on a
quarterly basis in our financial statements the impairment loss for the
difference between the carrying amount of the marketable securities and their
fair value.





At the
end of each quarter, we evaluate the marketable securities that show a
consistent decline in market value than the cost over a period of 90 to 180 days
for any possible impairment. We evaluate various factors relating to the
securities one of which is the length of the time and the extent to which the
market value has been less than cost. Our accounting policy is consistent with
SFAS 115 and SAB Topic 5M, whereby we record impairment expense each quarter
when the market value of the securities show a consistent decline over 90 to 180
days, and the cost of the marketable securities exceeds its fair value by a
material amount (50% or more), and is deemed not recoverable. In those instances
where impairment charges have been taken, the cost of the marketable securities
on a quarterly basis is brought down to the market value of securities in our
financial statements. The marketable securities are written down to zero only if
the marketable securities are either de-listed or not traded. However, after an
impairment for certain securities is recorded in a period, further impairment is
recorded if the fair value of the securities in future period falls
substantially (more than 50%) below the cost (after impairment adjustment) and
if the decline in market value is consistent for a period of time. Accordingly,
after the first impairment, we may record an unrealized loss for some period
till we are convinced that there is further impairment in the marketable
securities.





Revenue
Recognition





We record
revenues on the basis of services provided to our client for a fixed
determinable fee pursuant to a contractual agreement. In lieu of providing
services, we receive from our clients’ cash and/or securities, as compensation
for providing such services.





Our
primary source of revenue is generated from providing Internet based media and
advertising services and a full array of customized investor awareness programs
to small and medium sized companies through its financial websites
www.wallst.net and my.wallst.net. The services include audio and video
production of senior management interviews, text and display advertising, press
releases, e-mail marketing, and promotion across our network of web sites. These
services are provided by our subsidiaries WallStreet Direct, Inc. and Digital
WallStreet, Inc. Revenues from Internet based media and advertising services are
recognized and recorded when the performance of such services are completed. We
adhere to the guidelines established under Staff Accounting Bulletin 104
whereby, we execute a contractual agreement with the client for a fixed fee to
perform services, delivery of services has occurred when we performed the
contracted services, and collectibility of the fees has occurred when we receive
cash and/or marketable securities in satisfaction for services
provided.





- 20
-




We
provide news wire and compliance services to small and medium size publicly
traded companies including preparation of registration statements, electronic
filings and reporting of SEC documents (EDGAR), preparation of proxy materials
and news distribution. Such services are provided by our subsidiary Financial
Filings Corp. Revenues are recognized and recorded when the performances of such
services are completed. We adhere to the guidelines established under Staff
Accounting Bulletin 104 whereby, we execute a contractual agreement with the
client for a fixed fee to perform services, delivery of services has occurred
when we completed the performed the contracted services, and collectibility of
the fees has occurred when we receive cash and/or marketable securities in
satisfaction of services provided.





We
provide a broad range of information on investing techniques and education tools
to investors through workshops and exhibits. Our subsidiary, The Wealth Expo,
provides us revenue streams through exhibition sales, speaking presentation
sales, collateral material sales and advertising sales. Revenues from Wealth
Expo services is recognized and recorded when the performance of such services
are completed. We adhere to the guidelines established under Staff Accounting
Bulletin 104 whereby, we execute a contractual agreement with the client for a
fixed fee to perform services, delivery of services has occurred when we
completed the performed the contracted services, and collectibility of the fees
has occurred when we receive cash and/or marketable securities in satisfaction
of services provided.





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





Stock-Based
Compensation





We
adopted SFAS No. 123 (Revised 2004), Share Based Payment(“SFAS
No. 123R”), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of employee
services received in exchange for an award of equity instruments based on the
grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation,for all share-based payments granted prior to and not yet
vested as of January 1, 2006 and share-based compensation based on the
grant-date fair-value determined in accordance with SFAS No. 123R for all
share-based payments granted after January 1, 2006. SFAS No. 123R
eliminates the ability to account for the award of these instruments under the
intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion
No. 25, Accounting for Stock
Issued to Employees, and allowed under the original provisions of SFAS
No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted for our
stock option plans using the intrinsic value method in accordance with the
provisions of APB Opinion No. 25 and related interpretations.





Issuance
of Shares for Service





We
account for the issuance of equity instruments to acquire goods and services
based on the fair value of the goods and services or the fair value of the
equity instrument at the time of issuance, whichever is more reliably
measurable.





Recent
Accounting Pronouncements





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements”. This Statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
non-controlling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for our fiscal year beginning
October 1, 2009. Management is currently evaluating the effect of this
pronouncement on financial statements.





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141(R) will apply prospectively to business combinations for which the
acquisition date is on or after our fiscal year beginning October 1, 2009. While
we have not yet evaluated this statement for the impact, if any, that SFAS No.
141(R) will have on our consolidated financial statements, we will be required
to expense costs related to any acquisitions after September 30,
2009.





FASB
Staff Position on FAS No. 115-1 and FAS No. 124-1 (“the FSP”), “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments,” was
issued in November 2005 and addresses the determination of when an investment is
considered impaired, whether the impairment on an investment is
other-than-temporary and how to measure an impairment loss. The FSP also
addresses accounting considerations subsequent to the recognition of
other-than-temporary impairments on a debt security, and requires certain
disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. The FSP replaces the impairment guidance on
Emerging Issues Task Force (EITF) Issue No. 03-1 with references to
existing authoritative literature concerning other-than-temporary
determinations. Under the FSP, losses arising from impairment deemed to be
other-than-temporary, must be recognized in earnings at an amount equal to the
entire difference between the securities cost and its fair value at the
financial statement date, without considering partial recoveries subsequent to
that date. The FSP also required that an investor recognize other-than-temporary
impairment losses when a decision to sell a security has been made and the
investor does not expect the fair value of the security to fully recover prior
to the expected time of sale. The FSP is effective for reporting periods
beginning after December 15, 2005. The adoption of this statement will not have
a material impact on our consolidated financial statements.





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In March
2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The new standard also improves transparency about the location and
amounts of derivative instruments in an entity’s financial statements; how
derivative instruments and related hedged items are accounted for under
Statement 133; and how derivative instruments and related hedged items affect
its financial position, financial performance, and cash flows. FASB Statement
No. 161 achieves these improvements by requiring disclosure of the fair values
of derivative instruments and their gains and losses in a tabular format. It
also provides more information about an entity’s liquidity by requiring
disclosure of derivative features that are credit risk–related. Finally, it
requires cross-referencing within footnotes to enable financial statement users
to locate important. Based on current conditions, we do not expect the adoption
of SFAS 161 to have a significant impact on our results of operations or
financial position.





In May of
2008, FSAB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting
Principles”. The pronouncement mandates the GAAP hierarchy reside in the
accounting literature as opposed to the audit literature. This has the practical
impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP
hierarchy. This pronouncement will become effective 60 days following SEC
approval. We do not believe this pronouncement will impact our financial
statements.





In May of
2008, FASB issued SFASB No. 163, “Accounting for Financial Guarantee Insurance
Contracts-an interpretation of FASB Statement No. 60”. The scope of the
statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. We not believe this pronouncement will impact our financial
statements.





Item
3. Quantitative and Qualitative Disclosures about Market Risk





Not
required under Regulation S-K for “smaller reporting companies.”





Item
4T. Controls and Procedures





(a)
Evaluation of disclosure controls and procedures.





Our
management, with the participation of our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as
of November 30, 2008. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives. In addition, the design of disclosure
controls and procedures must reflect the fact that there are resource
constraints and that management is required to apply its judgment in evaluating
the benefits of possible controls and procedures relative to their
costs.





Based on
our evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are designed at a
reasonable assurance level and are effective to provide reasonable assurance
that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our chief executive officer and chief financial officer,
as appropriate, to allow timely decisions regarding required
disclosure.





(b) Changes in internal control over financial
reporting.





We regularly
review our system of internal control over financial reporting and make changes
to our processes and systems to improve controls and increase efficiency, while
ensuring that we maintain an effective internal control environment. Changes may
include such activities as implementing new, more efficient systems,
consolidating activities, and migrating processes. There were no changes in our
internal control over financial reporting that occurred during the period
covered by this Quarterly Report on Form 10-Q that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.





PART
II - OTHER INFORMATION





Item 1. Legal Proceedings





Matthew
Turner, Dutch Dewaard vs. Financial Media Group, Inc., Digital WallStreet, Inc.,
WallStreet Direct, Inc. and Albert Aimers, Superior Court of the State of
California, Orange County, Case No. 00115406





On
November 26, 2008, a complaint was filed against us for the unpaid compensation
for consulting services provided to us in the amount of $66,239.24. The
complaint alleges that we entered into an oral agreement with the Plaintiffs on
or about August 2006, whereby Plaintiffs provided consulting and sales services
to us for compensation and $66,239.24 of the compensation remains due to the
Plaintiffs. We have filed an answer to the complaint and no discovery has
commenced as of date. We intend to vigorously defend this action.





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Item
1A. Risk Factors





Not
required under Regulation S-K for “smaller reporting companies.”





Item 2. Changes in Securities





During
the three months ended November 30, 2008, the Company sold 820,605 shares of
restricted common stock to investors pursuant to an exemption from registration
under Regulation S and Private Placement Memorandum dated June 12, 2008. The
shares were sold to investors at a price ranging from $0.03 to $0.50 per share
for total proceeds of $299,418 after issuing expenses.





Item 3. Defaults Upon Senior
Securities





None.





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





None.





Item 5. Other Information





None.





Item 6. Exhibits





31.1
              
              Certification
      of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended31.2
              
              Certification
      of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended32.1
              
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002









SIGNATURES







In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.








FINANCIAL
      MEDIA GROUP, INC.Date:  January
      16, 2009
              By:/s/ ALBERT
      AIMERSAlbert
      AimersChief
      Executive Officer







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