UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington, D.C.
20549
 
 FORM
10-K
  ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
 THE
      SECURITIES EXCHANGE ACT OF
1934
 
 For
the fiscal year ended December 31, 2008


CMG HOLDINGS,
INC.
 (Exact
name of registrant as specified in its charter)
 Nevada
                  
                  87-0733770(State
      or other jurisdictionof
      incorporation or organization)
                  
                  (I.R.S.
      Employer Identification No.)
 
 5601 Biscayne
      BoulevardMiami,
      FL
                  
                  33137(Address of
      principal executive offices)
                  
                  (Zip
      Code)
 
 Registrant's telephone
number including area code (305)
751-1667
 
 ___________________________________________(Former
      Name or Former Address, if changed since last
  report)
  Securities
registered pursuant to Section 12(b) of the Exchange Act:
  None
  Securities
registered pursuant to Section 12(g) of the Act:
  Common Stock, $0.001 par
value
  Indicate
by check mark if the registrant is a well-known seasonal issuer, as defined in
Rule 405 of the Securities Act.
 Yes  No x
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
 Yes  No x
  Note -
Checking the box above will not relieve any resistrant required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under
those Sections.
  Indicate
by check mark whether the registrant (1) has filed all reports
required t o be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been
 subject
to such filing requirements for the past 90 days.
 Yes x No

 
 Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K (§229.405
of this chapter) isnot contained herein, and will not be
contained, to the best of the registrant’s knowledge, in definitive proxy
or information statements incorporated by
 reference
in Part III of this Form 10- K or any amendment to this Form
10-K.   x
  Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or small reporting
company.  See the definition of "large accelerated filer," "accelerated
filer" and "small reporting company" in Rule 12b-2 of the Exchange
Act.
  Large
      accelerated filer
                  Accelerated
      filer    
                  Non-accelerated
      filer     
                  Smaller
      reporting company    x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).Yes  
   No  x
  As
      of April 15, 2009, the aggregate market value of the Registrant’s voting
      and none-voting common stock held by non-affiliates of the
      registrant was approximately: $526,200 at $0.03 price per share,
      based on the closing price of on the OTC Bulletin Board.  As of
      April 15, 2009, there were 42,400,000
      common stock of the registrant issued and
  outstanding.
  Documents Incorporated by Reference:  None
 1


CMG
      HOLDINGS, INC.FORM
      10-KTABLE
      OF CONTENTSPart
      IITEM
      1.
              Business
              3ITEM
      1A.
              Risk
      Factors
              6ITEM
      1B.
              Unresolved
      Staff Comments
              9ITEM
      2.
              Properties
              9ITEM
      3.
              Legal
      Proceedings
              9ITEM
      4.
              Submissions
      of Matters to a Vote of Security Holders
              9Part
      IIITEM
      5.
              Market
      for Registrant’s Common Equity, Related Stockholder
Matters
              10and
      Issuer Purchases of Equity SecuritiesITEM
      6.
              Selected
      Financial Data
              11ITEM
      7.
              Management’s
      Discussion and Analysis of Financial Condition
              11and
      Results of OperationsITEM
      8.
              Financial
      Statements and Supplementary Data
              16ITEM
      9.
              Change
      in and Disagreements with Accountants on Accounting
              27and
      Financial DisclosureITEM
      9A.
              Controls
      and Procedures
              27ITEM
      9B.
              Other
      Information
              28Part
      IIIITEM
      10.
              Directors,
      Executive Officers, and Corporate Governance
              28ITEM
      11.
              Executive
      Compensation
              28ITEM
      12.
              Security
      Ownership of Certain Beneficial Owners and Management
              29and
      Related Stockholder MattersITEM
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              30ITEM
      14.
              Principal
      Accountant Fees and Services
              30Part
      IVITEM
      15.
              Exhibits
      and Financial Statement Schedules
              31Signature
              32
  2


FORWARD
LOOKING STATEMENTS
 
 This
annual report on Form 10-K contains forward-looking statements which include,
but are not limited to, statements concerning expectations as to our revenues,
expenses, and net income, our growth strategies and plans, the timely
development and market acceptance of our products and technologies, the
competitive nature of and anticipated growth in our markets, our ability to
achieve cost reductions, the status of evolving technologies and their growth
potential, the adoption of future industry standards, expectations as to our
financing and liquidity requirements and arrangements, the need for additional
capital, and other matters that are not historical facts. These forward-looking
statements are based on our current expectations, estimates, and projections
about our industry, management’s beliefs, and certain assumptions made by it.
Words such as “anticipates”, “appears”, “expects”, “intends”, “plans”,
“believes, “seeks”, “estimates”, “may”, “will” and variations of these words or
similar expressions are intended to identify forward-looking statements. In
addition, any statements that refer to expectations, projections, or other
characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. These statements, which are
included in accordance with the safe harbor provisions of Section 21E of
the Securities Exchange Act of 1934, as amended, are not guarantees of future
performance and are subject to risks, uncertainties, and assumptions that are
difficult to predict. Therefore, actual results could differ materially and
adversely from those results expressed in any forward-looking statements, as a
result of various factors. Readers are cautioned not to place undue reliance on
forward-looking statements, which are based only upon information available as
of the date of this report. We undertake no obligation to revise or update
publicly any forward-looking statements for any reason.  Unless the
context indicates otherwise, the terms “Company”, “Corporate”, “CMGO”, “our”,
and “we” refer to CMG Holdings, Inc. and its subsidiaries.
 
 ITEM
1:                         DESCRIPTION
OF BUSINESS
 
 
 (F)
              THE
      COMPANY
 
 Our
Business
  CMG
Holdings, Inc. was incorporated in Nevada in July 2004 under the name of Pebble
Beach Enterprises, Inc.  The Company has operated under the CMG
Holdings, Inc. name since February 2008.
  Overview
  We are a
marketing, sports, entertainment and management services
company.   Our Company was formed by a core group of principals,
all of whom have held senior level positions with several of the largest and
most successful companies in the sports management and entertainment
industry.  Our Company delivers custom marketing solutions to optimize
profitability by concentrating our resources in those segments of the marketing
communications and entertainment industry. Our Company operates in the sectors
of talent management, event management, and commercial rights.
 
 Talent
Management includes representation of personalities in the entertainment and
arts, athletes, literary industries through a full service representation to
enable our clients realize their utmost potential for endorsements, licensing,
contract negotiations, speaking appearances, literary and television image
marketing.  Our Company represents athletes and sports personalities’
in team and non-team sports in a full-service approach ensuring individualized
attention and commitment to manage our client’s business
opportunities.  Our Company manages broadcasters and actors careers
and assists in engineering business opportunities in film, broadcast and
television and packaging with corporate sponsors. Our literary division provides
full service representation to authors for publishing in traditional houses as
well as electronic media including television, film, radio and after-market
licensing to ensure greatest possible exposure and to increase client
revenues.
 
 Event
Management includes marquis hospitality, sponsorships and licensing, broadcast
production, and implementation of events including hospitality services to the
most discriminating of clients in sports sectors including golf, tennis, equine
and motor sports pairing corporate sponsors and premier events and leveraging
that experience to ensure our clients receive the highest return on their
investment and level of brand exposure. Our Company is dedicated to pursuing
intellectual property rights of sports and entertainment properties and offering
these events through long-term entertainment hospitality packages for corporate
sponsors’ and manage and implement on-site operations and logistical
concerns.  Our broadcast and production division secures, and
negotiates electronic production, broadcast and syndication opportunities for
our clients via network, cable television, radio and digital media.
 
 Commercial
Rights includes branding, consulting, endorsement, licensing and sponsorships
and sales and marketing. Our Company creates branding and distributes image
marketing tools to strategic outlets to generate premier brand recognition for
our clients. Our consulting focuses on developing high-profile programs
utilizing creative solutions to improve cost-efficiency and increase client
revenues. Following the development of the strategy solutions, our Company
oversees implementation of programs to ensure client satisfaction. Our
endorsement, licensing and sponsorships division works with premier corporations
regarding contract negotiations for client endorsements, secure domestic and
international licensing opportunities provide implementation and execution
services for client sponsorships.. Our marketing division positions and
leverages our clients to increase their presence in the global market through
research of business environments and creative solutions to take advantage of
given market conditions. Our sales division includes creating commercial rights
opportunities, identifying sales targets and strategically selling commercial
rights to maximize client revenues.
 
 3
 Our marketing and communications
services for our clients is specific to their unique needs and our solutions
vary from project-based activities to long-term, fully-integrated campaigns on
behalf of our clients in a single region or operating globally across all major
world markets. It is our intention to create a holding company to provide
resources, support and ensure that our operating divisions best meet our
clients’ needs. The company sets company-wide financial objectives and corporate
strategy, directs collaborative inter-agency programs, establishes financial
management and operational controls, guides personnel policy, conducts investor
relations and initiates, manages and approves mergers and
acquisitions.  In addition, we provide limited centralized functional
services that offer operational efficiencies, including accounting and
finance, market information retrieval and analysis, legal services, real estate
expertise, travel services, recruitment aid, employee benefits and executive
compensation management. To keep our Company well-positioned, we support our
initiatives to expand high-growth capabilities and build its offerings in
key developing markets. When appropriate, we also develop relationships with
companies that are building leading-edge marketing tools that complement our
operating subsidiary and the programs they are developing for clients. In
addition, we look for opportunities within our Company to modernize operations
through mergers, strategic alliances and the development of internal programs
that encourage intra-company collaboration.
 
 Market
Strategy
  We have
taken several strategic steps to position us as a premier marketing and
communications company servicing clients in domestic and international markets.
We operate in a marketing landscape that has vastly changed over the last few
years and continues to fragment as clients are presented with complex strategies
to improve brand awareness and increase market share. To achieve our objectives
of providing strategic solutions for our clients, we have invested in talent and
have concentrated in high-growth areas to align our capabilities to meet the
market demands of our clients.  In order to grow with our clients, we
have accelerated our investment in professional talent, training and technology
throughout our Company. Our market strategy and offerings can improve our
organic revenue growth and operating income margin, with our ultimate objective
to be fully competitive with our industry peer groups.  To increase
our revenues and improve our operating margins, we will concentrate on
controlling our staff expenses in non-revenue producing capacities, controlling
real estate expenses such as office rent, reducing the complexity of our
organization and divesting of underperforming business sectors.
 
 Sources
of Revenue
  Our
revenues are generated through the execution of marketing and communications
programs derived primarily across the sectors of event management, talent
management and commercial rights as well as various media, planning and
execution of other sports entertainment and management programs. Majority of our
contracts with our clients are negotiated individually. The terms of the
engagement with our clients and the basis in which we earn fees and commissions
will vary significantly. Contracts with our client are multifaceted arrangements
that may include incentive compensation provisions and may include vendor
credits. Our largest clients are multinational corporations where they may
arrange for our services to be provided via local, regional and global and we
provide services across various sectors and across multiple
divisions.
  Revenues
are determined on a fee based compensation basis and a commission basis for
services for planning, creation, implementation and executions of marketing and
communications programs specific to the sectors of talent management, event
management, and commercial rights. Our fees are calculated to reflect our
expertise based on monthly rates as well as mark-up percentages and the relative
overhead expenses to execute services provided to our clients. Clients may seek
to include incentive compensation components for successful execution as part of
the total compensation.  Commissions earned are based on services
provided and are usually calculated on a percentage over the total revenues
generated for our clients.  Our revenues can also be generated when
clients pay gross rates before we pay reduced rates; the difference is
commissions earned which is either retained in total or shared with the client
depending on the nature of the services agreement. To reduce risks from
non-payments from our clients, we typically pay company generated expenses only
after we have received funds from our clients.
 
 Our
generated revenues are dependent upon the marketing and communications
requirements of our corporate clients and depend on the terms of the client
contract. The revenues for services performed can be recognized as proportional
performance, monthly basis and execution of the completed contracts. Revenues
recognized on a completed contract basis and as customary in the industry, our
contracts generally provide for termination by either party on relatively short
notice, usually 90 days.
  Competition
 
 In the
competitive, highly fragmented marketing and communications industry, the
Company competes for business with large global holding companies such as
International Management Group, Interpublic Group of Companies, Inc., MDC
Partners, Inc. WPP Group plc, and Havas Advertising. These global holding
companies generally have greater resources than those available us, and such
resources may enable them to aggressively compete with the Company’s marketing
communications businesses. We also face competition from numerous independent
agencies that operate in multiple markets. We must compete with these other
companies to maintain existing client relationships and to obtain new clients
and assignments. We compete at this level by providing clients with marketing
ideas and strategies that are focused on increasing clients’ revenues and
profits.
 
 4
 Industry
Trends
 
 Historically,
event management, talent management, and commercial rights have been primary
service provided by global holding companies in the marketing
communications industry. However, as clients aim to establish one-to-one
relationships with customers and more accurately measure the effectiveness of
their marketing expenditures, specialized and digital communications services
are consuming a growing portion of marketing dollars. This is increasing the
demand for a broader range of marketing communications services.
The mass market audience is giving way to life-style segments, social
events/networks, and online/mobile communities, each segment requiring a
different message and/or different, often non-traditional, channels of
communication. Global marketers now seek innovative ideas wherever they can find
them, providing new opportunities for small to mid-sized communications
companies.
 
 Clients
 
 The
Company serves clients in virtually every industry and in many cases the same
clients in various locations. Representation of a client rarely means that the
company handles marketing communications for all brands or product lines of the
client in every geographical location.  We have written contracts with
many of our clients. As is customary in the industry, these contracts provide
for termination by either party on relatively short notice. See “Management’s
Discussion and Analysis — Executive Overview” for a further discussion of our
arrangements with our clients.
 
 Employees
 
 As of
April 13, 2009, the company and its subsidiaries have 5 employees.
 
 See
Management’s Discussion and Analysis for a discussion of the effect of cost of
services sold on the company’s historical results of operations. Because of the
personal service character of the marketing communications businesses, the
quality of personnel is of crucial importance to the company’s continuing
success. MDA considers its relations with employees to be
satisfactory.
 
 Effect
of Environmental Laws
 
 The
company believes it is substantially in compliance with all regulations
concerning the discharge of materials into the environment, and such regulations
have not had a material effect on the capital expenditures or operations of the
company
 
 Company
Organization
  The
principal executive office of the Company is located at 5601 Biscayne Boulevard,
Miami Florida 33137 and our telephone number is
(305) 751-1667.
 
  Available
Information
 
 The
Company is subject to the informational requirements of the Securities Exchange
Act and files reports and other information with the Securities and Exchange
Commission. Such reports and other information filed by the Company may be
inspected and copied at the Securities and Exchange Commission’s Public
Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549, as well as in the Securities and Exchange
Commission’s public reference rooms in New York, New York and Chicago, Illinois.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the operation of the Securities and Exchange Commission’s public
reference rooms. The Securities and Exchange Commission also maintains an
Internet site that contains reports, proxy statements and other information
about issuers, like us, who file electronically with the Securities and Exchange
Commission. The address of the Securities and Exchange Commission’s web site is
http://www.sec.gov. In addition, the Company makes available free of charge
through its Web site, www.ckx.com, its Annual Reports on Form 10-KSB and
Form 10-K, quarterly reports on Form 10-QSB and Form 10-Q,
current reports on Form 8-K and amendments to those reports filed pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended, as soon as reasonably practicable after such documents are
electronically filed with the Securities and Exchange Commission. This reference
to our Internet website does not constitute incorporation by reference in this
report of the information contained on or hyperlinked from our Internet website
and such information should not be considered part of this report.
 5
 ITEM
1A:                    RISK
FACTORS
 
 Risks Related to Our
Business
 
  Current economic conditions and the
global financial crisis may have an impact on our business and financial
condition in ways that we currently cannot predict.
 
 The
global economy is currently experiencing a significant contraction, with an
unprecedented lack of consumer credit and lack of business
availability.  The decrease in the economic activity in the United
States and in the commercial sectors in which we conduct business could
adversely affect our financial condition and results of operations. Continued
volatility, instability and economic weakness and decrease in discretionary
consumer and business spending may result in a reduction in our
revenues.
 
 Competition
for clients in highly competitive industries.
 
 The
Company operates in a highly competitive environment in an industry
characterized by numerous firms of varying sizes, with no single firm or group
of firms having a dominant position in the marketplace. Competitive factors
include creative reputation, management, personal relationships, quality and
reliability of service and expertise in particular niche areas of the
marketplace. In addition, because a firm’s principal asset is its people,
barriers to entry are minimal, and relatively small firms are, on occasion, able
to take all or some portion of a client’s business from a larger
competitor.
 
 While
many of the Company’s client relationships are long-standing, companies put
their marketing services businesses up for competitive review from time to
time, including at times when clients enter into strategic transactions. To the
extent that the Company fails to maintain existing clients or attract new
clients, the Company’s business, financial condition and operating results may
be affected in a materially adverse manner.
 
 Revenues
are susceptible to declines as a result of general adverse economic
developments.
 
 The
marketing communications services industry is cyclical and is subject to the
negative effects of economic downturns. The Company’s marketing services
operations are also exposed to the risk of clients changing their business plans
and/or reducing their marketing budgets. As a result, if the U.S., Canadian and
European economies continue to weaken, our businesses, financial condition and
operating results are likely to be negatively affected.
 
 The
benefits it expects from this acquisition or acquisitions made in the future may
not be realized
 
 The
Company’s business strategy includes ongoing efforts to engage in material
acquisitions of ownership interests in entities in the marketing communications
services industry. The Company intends to finance these acquisitions by using
available cash from operations and through incurrence of debt or bridge
financing, either of which may increase its leverage ratios, or by issuing
equity, which may have a dilutive impact on its existing shareholders. At any
given time the Company may be engaged in a number of discussions that may result
in one or more material acquisitions. These opportunities require
confidentiality and may involve negotiations that require quick responses by the
Company. Although there is uncertainty that any of these discussions will result
in definitive agreements or the completion of any transactions, the announcement
of any such transaction may lead to increased volatility in the trading price of
its securities.
 
 The
success of acquisitions or strategic investments depends on the effective
integration of newly acquired businesses into the Company’s current operations.
Such integration is subject to risks and uncertainties, including realization of
anticipated synergies and cost savings, the ability to retain and attract
personnel and clients, the diversion of management’s attention from other
business concerns, and undisclosed or potential legal liabilities of the
acquired company. The Company may not realize the strategic and financial
benefits that it expects from any of its past acquisitions, or any future
acquisitions.
  Business
could be adversely affected if it loses key clients.
 
 The
Company’s loss of one or more clients could materially affect the results
of the Company as a whole.  Management is very important to the
ongoing results of the Company because, as in any service business, the success
of the Company is dependent upon the leadership of key executives and management
personnel.  If key executives were to leave our operating units, the
relationships that the Company has with its clients could be adversely
affected.
 
 6
 Ability
to generate new business from new and existing clients may be
limited.
 
 To
increase revenues, the Company needs to obtain additional clients or
generate demand for additional services from existing clients. 
The company’s ability to generate demand for its services from new
clients and additional demand from existing clients is subject
to clients’ requirements, pre-existing vendor relationships, financial
condition, strategic plans and internal resources, as well as the quality of the
Company’s employees, services and reputation and the breadth of its services. To
the extent the Company cannot generate new business from new and existing
clients due to these limitations; it will limit the Company’s ability to grow
its business and to increase its revenues.
 
 Business
could be adversely affected if it loses or fails to attract key
employees.
 
 Employees,
including creative, research, media, account and their skills and relationships
with clients, are among the Company’s most important assets. An important aspect
of the Company’s competitiveness is its ability to retain key employee and
management personnel. Compensation for these key employees is an essential
factor in attracting and retaining them, and the Company may not offer a level
of compensation sufficient to attract and retain these key employees. If the
Company fails to hire and retain a sufficient number of these key employees, it
may not be able to compete effectively.
 
 Business
exposed to the risk of client media account defaults.
 
 The
Company often incurs expenses on behalf of its clients in order to secure a
variety of opportunities in exchange for which it receives a
fee. While the Company takes precautions against default on payment for
these services (such as advance billing of clients) and have historically had a
very low incidence of default, the Company is still exposed to the risk of
significant uncollectible receivables from our clients.
 
 The
results of operations are subject to currency fluctuation risks.
 
 Although
the Company’s financial results are reported in U.S. dollars, a portion of its
revenues and operating costs may be denominated in currencies other
than the US dollar. As a result, fluctuations in the exchange rate between the
U.S. dollar and other currencies, may affect the Company’s financial results and
competitive position.
  
 Subject
to regulations that could restrict its activities or negatively impact its
revenues.
 
 Marketing
communications businesses are subject to government regulation, both domestic
and foreign. There has been an increasing tendency in the United States on the
part of advertisers to resort to litigation and self-regulatory bodies to
challenge comparative advertising on the grounds that the advertising is false
and deceptive. Moreover, there has recently been an expansion of specific rules,
prohibitions, media restrictions, labeling disclosures and warning requirements
with respect to advertising for certain products. Representatives within
government bodies, both domestic and foreign, continue to initiate proposals to
ban the advertising of specific products and to impose taxes on or deny
deductions for advertising which, if successful, may have an adverse effect on
advertising expenditures and consequently the Company’s revenues.
 
 The Company’s directors and executive
officers beneficially own a substantial percentage of the Company’s outstanding
common stock, which gives them control over certain major decisions on which the
Company’s stockholders may vote, which may discourage an acquisition of the
Company.
  As a
result of the Reorganization, Alan Morell, the Company’s chairman-of-the-board
and chief executive officer owns, in the aggregate, approximately 23.8% of the
Company’s outstanding common stock and the Company’s directors and executive
officers as a group collectively own approximately 32.1% of the Company’s
outstanding shares. The interests of the Company’s management may differ from
the interests of other stockholders. As a result, the Company’s executive
management will have the right and ability to control virtually all corporate
actions requiring stockholder approval, irrespective of how the Company’s other
stockholders may vote, including the following actions: electing or defeating
the election of directors; amending or preventing amendment of the Company’s
certificate of incorporation or bylaws; effecting or preventing a merger, sale
of assets or other corporate transaction; and controlling the outcome of any
other matter submitted to the stockholders for vote.
  The
Company’s management’s stock ownership may discourage a potential acquirer from
seeking to acquire shares of the Company’s common stock or otherwise attempting
to obtain control of the Company, which in turn could reduce the Company’s stock
price or prevent the Company’s stockholders from realizing a premium over the
Company’s stock price.
  7
 Public company compliance may make it
more difficult to attract and retain officers and directors.
  The
Sarbanes-Oxley Act of 2002 and new rules subsequently implemented by the SEC
have required changes in corporate governance practices of public companies. As
a public entity, the Company expects these new rules and regulations to increase
compliance costs in 2008 and beyond and to make certain activities more time
consuming and costly. As a public entity, the Company also expects that these
new rules and regulations may make it more difficult and expensive for the
Company to obtain director and officer liability insurance in the future and it
may be required to accept reduced policy limits and coverage or incur
substantially higher costs to obtain the same or similar coverage. As a result,
it may be more difficult for the Company to attract and retain qualified persons
to serve as directors or as executive officers.
 
 The Company’s stock price may be
volatile.
  The
market price of the Company’s common stock is likely to be highly volatile and
could fluctuate widely in price in response to various factors, many of which
are beyond the Company’s control, including the following: technological
innovations or new products and services by the Company or its competitors;
additions or departures of key personnel; limited “public float” following the
Reorganization , in the hands of a small number of persons whose sales or lack
of sales could result in positive or negative pricing pressure on the market
price for the common stock; the Company’s ability to execute its business plan;
operating results that fall below expectations; loss of any strategic
relationship; industry developments; economic and other external factors; and
period-to-period fluctuations in the Company’s financial results.
  In
addition, the securities markets have from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. These market fluctuations may also materially and
adversely affect the market price of the Company’s common stock.
  There
is currently no liquid trading market for the Company’s common stock and the
Company cannot ensure that one will ever develop or be sustained.
  The
Company’s common stock is currently approved for quotation on the OTC Bulletin
Board trading under the symbol CMGO.OB.  However, there is limited
trading activity and not currently a liquid trading market.  There is no
assurance as to when or whether a liquid trading market will develop, and if
such a market does develop, there is no assurance that it will be maintained.
 Furthermore, for companies whose securities are quoted on the
Over-The-Counter Bulletin Board maintained by the National Association of
Securities Dealers, Inc. (the “OTCBB”), it is more difficult (1) to obtain
accurate quotations, (2) to obtain coverage for significant news events because
major wire services generally do not publish press releases about such
companies, and (3) to obtain needed capital.  As a result, purchasers of
the Company’s common stock may have difficulty selling their shares in the
public market, and the market price may be subject to significant
volatility.
  Offers or availability for sale of a
substantial number of shares of the Company’s common stock may cause the price
of the Company’s common stock to decline or could affect the Company’s ability
to raise additional working capital.
  If the
Company’s current stockholders seek to sell substantial amounts of common stock
in the public market either upon expiration of any required holding period under
Rule 144 or pursuant to an effective registration statement, it could create a
circumstance commonly referred to as “overhang,” in anticipation of which the
market price of the Company’s common stock could fall
substantially.  The existence of an overhang, whether or not sales
have occurred or are occurring, also could make it more difficult for the
Company to raise additional financing in the future through sale of securities
at a time and price that the Company deems acceptable.
  The Company’s common stock is
currently deemed to be “penny stock”, which makes it more difficult for
investors to sell their shares.
  The
Company’s common stock is currently subject to the “penny stock” rules adopted
under section 15(g) of the Exchange Act. The penny stock rules apply to
companies whose common stock is not listed on the NASDAQ Stock Market or other
national securities exchange and trades at less than $5.00 per share or that
have tangible net worth of less than $5,000,000 ($2,000,000 if the company has
been operating for three or more years). These rules require, among other
things, that brokers who trade penny stock to persons other than “established
customers” complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning trading in
the security, including a risk disclosure document and quote information under
certain circumstances. Many brokers have decided not to trade penny stocks
because of the requirements of the penny stock rules and, as a result, the
number of broker-dealers willing to act as market makers in such securities is
limited. If the Company remains subject to the penny stock rules for any
significant period, it could have an adverse effect on the market, if any, for
the Company’s securities. If the Company’s securities are subject to the penny
stock rules, investors will find it more difficult to dispose of the Company’s
securities.
  8
 The elimination of monetary liability
against the Company’s directors, officers and employees under Nevada law and the
existence of indemnification rights to the Company’s directors, officers and
employees may result in substantial expenditures by the Company and may
discourage lawsuits against the Company’s directors, officers and
employees.
  The
Company’s certificate of incorporation does not contain any specific provisions
that eliminate the liability of directors for monetary damages to the Company
and the Company’s stockholders; however, the Company is prepared to give such
indemnification to its directors and officers to the extent provided by
Nevada law. The Company may also have contractual indemnification obligations
under its employment agreements with its executive officers. The foregoing
indemnification obligations could result in the Company incurring substantial
expenditures to cover the cost of settlement or damage awards against directors
and officers, which the Company may be unable to recoup. These provisions and
resultant costs may also discourage the Company from bringing a lawsuit against
directors and officers for breaches of their fiduciary duties and may similarly
discourage the filing of derivative litigation by the Company’s stockholders
against the Company’s directors and officers even though such actions, if
successful, might otherwise benefit the Company and its
stockholders
 
 ITEM 1B:                      UNRESOLVED
STAFF COMMENTS
  None.
  ITEM
2:                       DESCRIPTION
OF PROPERTY
 
 The
following properties are used in the operation of our business:
 
 Corporate
  Our
principal executive office of the Company is located at 5601 Biscayne Boulevard,
Miami Florida 33137 and our telephone number is (305) 751-1667.
We currently lease office space on a monthly basis, at the location of 590
Madison Avenue, 21st Floor,
New York, NY 10022 (212) 521-4111
 
 ITEM 3.LEGAL PROCEEDINGS
 
 There is no past, pending or, to
the Company’s knowledge, threatened litigation or administrative action which
has or is expected by the Company’s management to have a material effect upon
our Company’s business, financial condition or operations, including any
litigation or action involving our Company’s officers, directors, or other key
personnel.
 
  
 ITEM
4:                       SUBMISSIONS
OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None
 
 9
 PART
II
 
 ITEM
5                       MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERMATTERS, AND ISSUER PURCHASES
OF EQUITY SECURITIES
  Our
common stock has been quoted on the OTC Bulletin Board since October 2007. Our
symbol is “CMGO”. For the periods indicated, the following table sets forth the
high and low bid prices per share of common stock. These prices represent
inter-dealer quotations without retail markup, markdown, or commission and may
not necessarily represent actual transactions.
 
 HIGH
              
              
              LOWFISCAL
      YEAR ENDED DECEMBER 31, 2008First
      Quarter
              
              
              1.00
              
              
              
              0.15Second
      Quarter
              
              
              1.00
              
              
              
              1.00Third
      Quarter
              
              
              1.00
              
              
              
              0.60Fourth
      Quarter
              
              
              0.60
              
              
              
              0.11FISCAL
      YEAR ENDED DECEMBER 31, 2007First
      Quarter
              
              
              0.00
              
              
              
              0.00Second
      Quarter
              
              
              0.00
              
              
              
              0.00Third
      Quarter
              
              
              0.00
              
              
              
              0.00Fourth
      Quarter
              
              
              0.30
              
              
              
              0.15
   Holders
of Shares of Common Stock
 
 The Company has authorized 150,000,000
shares of common stock with a par value of $.001 per share.  As of
December 31, 2008, the Company had 42,400,000 shares of common stock issued and
31,726,518 outstanding.  As of April 15, 2009, there were
approximately 151 stockholders of record of our common stock. This does not
reflect those shares held beneficially or those shares held in “street”
name.
 
 Dividend
Policy
 
 We did not pay cash dividends in the
past, nor do we expect to pay cash dividends for the foreseeable future. We
anticipate that earnings, if any, will be retained for the development of our
business.
 
 Preferred
Stock
 
 The Company has 5,000,000 shares of
preferred stock authorized with a par value of $.001. As of December 31, 2008,
the Company has no shares of preferred stock issued and
outstanding.
 
 Transfer
Agent
 
 The Company’s transfer agent and
registrar of the common stock is Corporate Stock Transfer, Inc. 3200 Cherry
Creek Dr. South Suite 430 Denver, CO 80209
 
 10
 Penny
Stock Considerations
 
 Because our shares trade at less than
$5.00 per share, they are “penny stocks” as that term is generally defined in
the Securities Exchange Act of 1934 to mean equity securities with a price of
less than $5.00. Our shares thus will be subject to rules that impose sales
practice and disclosure requirements on broker-dealers who engage in certain
transactions involving a penny stock. Under the penny stock regulations, a
broker-dealer selling a penny stock to anyone other than an established customer
or accredited investor must make a special suitability determination regarding
the purchaser and must receive the purchaser’s written consent to the
transaction prior to the sale, unless the broker-dealer is otherwise exempt.
Generally, an individual with a net worth in excess of $1,000,000 or annual
income exceeding $100,000 individually or $300,000 together with his or her
spouse is considered an accredited investor. In addition, under the penny stock
regulations the broker-dealer is required to deliver, prior to any transaction
involving a penny stock, a disclosure schedule prepared by the Securities and
Exchange Commission relating to the penny stock market, unless the broker-dealer
or the transaction is otherwise exempt; disclose commissions payable to the
broker-dealer and our registered representatives and current bid and offer
quotations for the securities; Send monthly statements disclosing recent price
information pertaining to the penny stock held in a customer’s account, the
account’s value and information regarding the limited market in penny stocks;
and make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s written agreement to
the transaction, prior to conducting any penny stock transaction in the
customer’s account. Because of these regulations, broker-dealers may encounter
difficulties in their attempt to sell shares of our common stock, which may
affect the ability of selling shareholders or other holders to sell their shares
in the secondary market and have the effect of reducing the level of trading
activity in the secondary market. These additional sales practice and disclosure
requirements could impede the sale of our securities, if our securities become
publicly traded. In addition, the liquidity for our securities may be decreased,
with a corresponding decrease in the price of our securities. Our shares in all
probability will be subject to such penny stock rules and our shareholders will,
in all likelihood, find it difficult to sell their securities.
 
 Unregistered
Sales Of Equity Securities And Use Of Proceeds
  The
following is information for all securities that the Company sold during the
quarter ended December 31, 2008.  Information with respect to
previously reported sales prior to January 1, 2008 may be found in the Company’s
prior filings.  The Registrant sold a total of 1,199,666
shares of common stock for cash of $233,975 to five individuals.
 
 ITEM
6:                       SELECTED FINANCIAL
DATA
 
 As a
smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange
Act of 1934, as amended (the  “Exchange  Act”), we are not
required to provide the information required by this item.
 
 ITEM
7:                      MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
  The
following discussion should be read in conjunction with the financial statements
for the year ended December 31, 2008 included with this Form
10-K.  The following discussion and analysis provides certain
information, which the Company’s management believes is relevant to an
assessment and understanding of the Company’s results of operations and
financial condition for the year ended December 31, 2008. The statements
contained in this section that are not historical facts are forward-looking
statements (as such term is defined in the Private Securities Litigation Reform
Act of 1995) that involve risks and uncertainties.  Such
forward-looking statements may be identified by, among other things, the use of
forward-looking terminology such as  “believes,” “expects,” “may,”
“will,” should” or “anticipates” or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve
risks and uncertainties.  From time to time, we or our representatives
have made or may make forward-looking statements, orally or in
writing.  Such forward-looking statements may be included in our
various filings with the SEC, or press releases or oral statements made by or
with the approval of our authorized executive officers.
 
 These
forward-looking statements, such as statements regarding anticipated future
revenues, capital expenditures and other statements regarding matters that are
not historical facts, involve predictions.  Our actual results,
performance or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements.  We do not
undertake any obligation to publicly release any revisions to these
forward-looking statements or to reflect the occurrence of unanticipated
events.  Many important factors affect our ability to achieve our
objectives, including, among other things, technological and other developments
within a given field, intense and evolving competition, the lack of an
“established trading market” for our shares, and our ability to obtain
additional financing, as well as other risks detailed from time to time in our
public disclosure filings with the SEC.
  Recent
Developments
 
 Material
Definitive Agreement.
  Effective
March 6, 2009, the Company, through a wholly owned subsidiary CMGO Capital,
Inc., a Nevada corporation, completed a Note Purchase Agreement with Bank of
America to purchase the senior secured debt obligations of The Experiential
Agency, Inc. The purchase price of the Note Purchase Agreement with Bank of
America to purchase the senior secured debt obligations of The Experiential
Agency, Inc. was a total of $150,000.
 
 11
 Completion
of Acquisition or Disposition of Assets.
  Effective
March 31, 2009, the Company, through a wholly owned subsidiary CMGO Events
Marketing, Inc., a Nevada corporation, completed the acquisition of the assets
of The Experiential Agency, Inc.
 
 Background
  CMG
Holdings, Inc. was incorporated in Nevada in July 2004 under the name of Pebble
Beach Enterprises, Inc.  The Company has operated under the CMG
Holdings, Inc. name since February 2008.
 
 The
Company was formed in July of 2004 as Pebble Beach Enterprises, Inc. in the
state of Nevada. From the date of incorporation until August of 2004, it was a
wholly-owned subsidiary of Fresh Veg Broker.com, Inc., a Nevada
corporation.  In August of 2004, the company was spun off from Fresh
Veg.  The Company until this Reorganization was a real estate
investment company with three areas of operation: a) real estate acquisition and
re-sale; b) real estate development and re-sale; and c) real estate consulting
and joint ventures. Due to the inability to execute the real estate business
plan and expand the business over the past three years, on February 20, 2008 in
anticipation of this Reorganization, a majority of the existing shares of the
Company were sold by the shareholders who were actively involved in the
Company’s prior real estate business, and as a result, we had a change of
direction and a change of control of our Company.
 
 The
Reorganization
 
 On May
27, 2008, the Company entered into an Agreement and Plan of Reorganization (the
“Reorganization Agreement” with its controlling shareholder, Creative Management
Group, Inc., a privately held Delaware corporation (“Creative Management
Group”).  Upon the closing under the Reorganization Agreement on May
27, 2008, (open to filing date) the eighty shareholders of Creative Management
Group delivered all of their equity interests in Creative Management Group to
the Company in exchange for shares of common stock in the Company owned by
Creative Management Group, as a result of which Creative Management Group became
a wholly-owned subsidiary of the Company (the “Reorganization”).
 
 Pursuant
to the Reorganization Agreement, at closing, the shareholders of Creative
Management Group received one share of the Company’s common stock previously
owned by Creative Management Group for each issued and outstanding common
share owned of Creative Management Group.  As a result, 22,135,148 shares
of the Company that were issued and previously owned by Creative Management
Group,  are now owned directly by its shareholders.  The
22,135,148 of Creative Management Group previously owned by its
shareholders are now owned by the Company, thereby making Creative Management
Group a wholly-owned subsidiary of the Company. The Company did not issue
any new shares as part of the Reorganization. Upon completion of the closing
under the Reorganization Agreement, the Company has a total of 42,400,000 shares
issued and 25,255,148 outstanding of which 20,264,852, or approximately 47.8%
are held by persons who were previously shareholders of the Registrant,
22,135,148 shares, or approximately 52.2% are held by persons who were
previously shareholders of Creative Management Group. Neither the Company nor
Creative Management Group had any options or warrants to purchase shares of
capital stock outstanding immediately prior to or following the
Reorganization.   All the shares of the Company’s common stock issued
in connection with the Reorganization were registered under Section
12(b) or (g) of The Securities Exchange Act of 1934 when the Registrant filed
Form 10-SB/A on June 28, 2006.  All shares issued in connection with
the Reorganization were issued from a “Control Shareholder”, which is a
shareholder that is now or has been within the last 90 days a director
or officer of the Company, or now owns or controls or within the last 90
days has owned or controlled 10% or more of the Company’s outstanding voting
securities and is therefore subject to the restriction in accordance with Rule
144 of the Securities Act of 1934.
 
 Changes
Resulting from the Reorganization.
 
 Creative
Management Group is a business that delivers innovative, value-added
marketing communications and strategic consulting services to its clients.
Creative Management Group strives to be a premier marketing communications
and consulting company whose strategic, creative and innovative
solutions achieve superior results for clients and
shareholders.  Following completion of the Reorganization, the Company
intends to carry on the business of Creative Management Group as its line
of business. The Company has located its executive offices at 5601 Biscayne
Boulevard, Miami, Florida 33137, USA and its telephone number is
1 (305) 751-0588 which is the executive office of Creative Management
Group.
 
 Changes
to the Board of Directors.
 
 In
conjunction with the closing under the terms of the Reorganization Agreement and
the February 20, 2008 acquisition of shares in the Registrant by Creative
Management Group, Alan Morell, James J. Ennis and Michael Vandetty were
appointed to the board of directors and Alan Morell was appointed as Chairman of
the board of directors. All of the Company’s directors will hold this office
until the next annual meeting of the stockholders or until the election and
qualification of their successors. The Company’s officers are elected by the
board of directors and serve at the discretion of the board of
directors.
 
 12
  Executive
Summary
 
 References
in this Current Report on Form 10-K to “CMG Holdings”, “CMG”, the “Company,”
“we,” “us” and “our” for periods prior to the closing of the Reorganization
refer to the Registrant, and for periods subsequent to the closing of the
Reorganization refer to the Registrant and its subsidiaries. The Company reports
its financial results in accordance with generally accepted accounting
principles (“GAAP”) of the United States of America (“US GAAP”).
 
 The
Company’s objective is to create shareholder value by building market-leading
strategies that deliver innovative, value-added marketing communications and
strategic consulting to our clients.  The company manages the business
by monitoring several financial and non-financial performance indicators. The
key indicators that we review focus on the areas of revenues and operating
expenses. Revenue growth is analyzed by reviewing the components and mix of the
growth, including: growth by major geographic location and growth from
acquisitions.
 
 Year
ended December 31, 2008 compared to the year ended December 31,
2007
 
 Liquidity
and capital resources
 
 As of
December 31, 2008 our cash on hand was $13,934.
 
 Revenues
 
 The
Company had revenues of $441,328 in our fiscal year ended December 31, 2008, as
compared to $304,927 in fiscal year ended December 31, 2007 as a result of
additional client base.
   Expenses
  Total
operating expenses in our fiscal year ended December 31, 2008 were $4,111,202
comprising of in administrative expenses  as compared to $566,913 in
fiscal year ended December 31, 2007.
 
 Loss
  The
Company incurred a net loss of $3,707,762 in our fiscal year ended December 31,
2008, as compared to a net loss of $268,943 in fiscal year ended December 31,
2007. We have not attained profitable operations to date. For these reasons our
auditors stated in their report that they have substantial doubt that we will be
able to continue as a going concern.
  13
 Capital
Resources
  At
December 31, 2008, we had assets recorded at $314,984 consisting of cash of
$13,934.
  Liabilities
  Our
liabilities at December 31, 2008 totaled $560,910.
  Critical
Accounting Policies and Estimates
  For all
periods following closing under the Reorganization Agreement, the Company
intends to prepare consolidated financial statements of the Company and its
subsidiaries, which will be prepared in accordance with the generally accepted
accounting principles in the United States. During the preparation of the
financial statements the Company will be required to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, the Company will evaluate its estimates and judgments, including
those related to sales, returns, pricing concessions, bad debts, inventories,
investments, fixed assets, intangible assets, income taxes and other
contingencies. The Company intends to base its estimates on historical
experience and on various other assumptions that it believes are reasonable
under current conditions. Actual results may differ from these estimates under
different assumptions or conditions. In response to the SEC’s Release No.
33-8040, “Cautionary Advice Regarding Disclosure About Critical Accounting
Policy,” the Registrant identified the most critical accounting principals upon
which its financial status depends. The Registrant determined that those
critical accounting principles are related to the use of estimates, inventory
valuation, revenue recognition, income tax and impairment of intangibles and
other long-lived assets. The Company presents these accounting policies in the
relevant sections in this management’s discussion and analysis, including the
Recently Issued Accounting Pronouncements discussed below.
 
 Revenue and Cost
Recognition
 
 In
general, the company recognizes revenues when earned, when the services or
conditions relating to the services have been performed or satisfied by the
entity, and recognizes costs when the expenses are
incurred.  Depending on the terms of the client contract, revenue is
derived from diverse arrangements involving fees for services performed, and
commissions. The company earns consulting fees by providing branding, imaging
marketing and talent placement services, event management including,
implementation, and production management. The company also earns commissions
through contract negotiations in talent representation and endorsement
contracts. A majority of the company’s client contracts are individually
negotiated and accordingly, the terms of client engagements and the bases on
which the company earns commissions and fees may vary
significantly.  For talent representation, the company generally
records revenue net of pass-through charges as the company believes the key
indicators of the business suggest we generally act as an agent on behalf of our
clients.  This is recorded when we receive the gross
payment.  In those businesses where the key indicators suggest the
company acts as principal, the company records the gross amount billed to the
client as revenue and the related costs incurred as operating
expenses.  This is generally recorded as the services are
provided.
 
 Income
Taxes
 
 As a
result of the change in tax status resulting from the change in the company’s
organization as a limited liability company to a corporation, the company is no
longer a pass-through entity for US income tax purposes.  Income tax
expense is based on reported earnings before income taxes.  Deferred
income taxes reflect the impact of temporary differences between assets and
liabilities recognized for financial reporting purposes and such amounts
recognized for tax purposes, and are measured by applying enacted tax rates in
effect in years in which the differences are expected to reverse.
 
 Recently
Issued Accounting Pronouncements
 
 The
following recent pronouncements were issued by the Financial Accounting
Standards Board (“FASB”):
 
  14
  In
December 2007, FASB issued SFAS No. 141R “Business Combination” (“SFAS 141R”).
This revised statement retains some fundamental concepts of the current
standard, including the acquisition method of accounting (known as the “purchase
method” in Statement 141) for all business combinations but SFAS 141R broadens
the definitions of both businesses and business combinations, resulting in the
acquisition method applying to more events and transactions. This statement also
requires the acquirer to recognize the identifiable assets and liabilities, as
well as the noncontrolling interest in, at the full
amounts of their fair values. SFAS 141R will require both acquisition-related
costs and restructuring costs to be recognized separately from the acquisition
and be expensed as incurred. In addition, acquirers will record contingent
consideration at fair value on the acquisition date as either a liability or
equity. Subsequent changes in fair value will be recognized in the income
statement for any contingent consideration recorded as a liability. SFAS 141R is
to be applied prospectively for financial statements issued for fiscal years
beginning on or after December 15, 2008. Early application is prohibited. The
Company is currently evaluating the impact of this new statement on its
financial statements.
 In
December 2007, FASB issued SFAS No. 160 “Non-controlling Interests in
Consolidated Financial Statements” (SFAS 160”). This statement amends ARB No. 51
Consolidated Financial Statements, to now require the classification of
noncontrolling (minority) interests and dispositions of noncontrolling interests
as equity within the consolidated financial statements. The income statement
will now be required to show net income/loss with and without adjustments for
noncontrolling interests. SFAS 160 is to be applied prospectively for financial
statements issued for fiscal years beginning on or after December 15, 2008 and
interim periods within those years. However, this statement requires companies
to apply the presentation and disclosure requirements retrospectively to
comparative financial statements. Early application is prohibited. The Company
is currently evaluating the impact of this new statement on its financial
statements.
 
 In May 2008, the FASB issued FSP APB
14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash
upon Conversion (Including Partial Cash Settlement), which specifies that
issuers of convertible debt instruments that may be settled in cash upon
conversion should separately account for the liability and equity components in
a manner reflecting their nonconvertible debt borrowing rate when interest costs
are recognized in subsequent periods.  FSP APB 14-1 is effective for
interim periods and fiscal years beginning after December 15,
2008.  The Company will adopt FSP APB 14-1 effective January 1,
2009.  We are in the process of assessing the impact of the adoption of FSP
APB 14-1 on our financial statements.
 
 In June 2008, the FASB ratified EITF
Issue 07-5, "Determining Whether an Instrument (or Embedded Feature) Is Indexed
to an Entity's Own Stock" ("EITF 07-5"). Paragraph 11(a) of Statement of
Financial Accounting Standard No 133, Accounting for Derivatives and Hedging
Activities ("SFAS 133") specifies that a contract that would otherwise meet the
definition of a derivative, but is both (a) indexed our own stock and (b)
classified in stockholders' equity in the statement of financial position would
not be considered a derivative financial instrument. EITF 07-5 provides a new
two-step model to be applied in determining whether a financial instrument or an
embedded feature is indexed to an issuer's own stock, including evaluating the
instrument's contingent exercise and settlement provisions, and thus able to
qualify for the SFAS 133 paragraph 11(a) scope exception. It also clarifies the
impact of foreign-currency-denominated strike prices and market-based employee
stock option valuation instruments on the evaluation. EITF 07-5 will be
effective for the first annual reporting period beginning after December 15,
2008, and early adoption is prohibited.
   15
  ITEM
8:                         FINANCIAL
STATEMENTS
  CMG
HOLDINGS, INC.
  FINANCIAL
STATEMENTS
  FOR
THE YEARS ENDED
 DECEMBER
31, 2008 AND 2007
  CONTENTS
  
  PageReport
      of Independent Registered Public Accounting Firm
              F-1Consolidated
      Balance Sheets
              F-2Consolidated
      Statements of Operations
              F-3Consolidated
      Statements of Stockholders’ Deficit
              F-4Consolidated
      Statements of Cash Flows
              F-5Notes
      to Consolidated Financial Statements
              F-6-F-10
  16
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 The Board
of Directors
 CMG
Holdings, Inc.
 Miami,
Florida
 
 We have
audited the accompanying consolidated balance sheets of CMG Holdings, Inc. as of
December 31, 2008 and 2007 and the related consolidated statement of operations,
cash flows and changes in stockholders’ equity for the years ended December 31,
2008 and 2007. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
  We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of CMG Holdings, Inc. as of December
31, 2008 and 2007 and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a stockholders’ deficit. These conditions raise
substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans in regards to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
  /s/
Malone & Bailey, PC
 
 www.malone-bailey.com
 Houston,
Texas
 April 15,
2009
  17
 CMG
HOLDINGS, INC
  CONSOLIDATED
BALANCE SHEETS
  
 December
      31, 2008
              
              
              December
      31, 2007ASSETSCURRENT
      ASSETS:Cash
              
              $
              13,934
              
              
              $
              1,213,035Accounts receivable
              
              
              1,050
              
              
              
              --Prepaid expense
              
              
              --
              
              
              
              17,454Total Current Assets
              
              
              14,984
              
              
              
              1,230,489Deposits related to acquisitions
              
              
              300,000
              
              
              
              -Fixed assets
              
              
              -
              
              
              
              1,159TOTAL
      ASSETS
              
              $
              314,984
              
              
              $
              1,231,648LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIES:Client
      Payable
              
              $
              8,000
              
              
              $
              121,400Line of credit
              
              
              108,231
              
              
              
              132,763Accounts payable
              
              
              419,754
              
              
              
              139,226Consulting Payable
              
              
              24,925
              
              
              
              --Total
      current liabilities
              
              
              560,910
              
              
              
              393,389LONG-TERM
      LIABILITIES:Convertible notes payable
              
              
              --
              
              
              
              1,178,000TOTAL LIABILITIES
              
              
              560,910
              
              
              
              1,571,389STOCKHOLDERS
      DEFICITPreferred stock:5,000,000
      shares authorized par value $0.001 per share; none issued and
      outstandingCommon Stock:150,000,000
      shares authorized par value $0.001 per share; 42,400,000 and 10,000,000
      issued, and  31,726,518 and 10,000,000 shares outstanding
      respectively
              
              
              31,727
              
              
              
              10,000Additional paid-in-capital
              
              
              4,449,863
              
              
              
              680,686Shares
      held in reserve, 10,673,482 and 0 shares held,
respectively
              
              
              10,673
              
              
              
              -Accumulated deficit
              
              
              (4,738,189
              )
              
              
              (1,030,427
              )TOTAL STOCKHOLDERS DEFICIT
              
              
              (245,926
              )
              
              
              (339,741
              )TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
              
              $
              314,984
              
              
              $
              1,231,648
 
 
 
 See
accompanying notes to consolidated financial statements.
  18
 CMG
HOLDINGS, INC
  CONSOLIDATED STATEMENTS OF
OPERATIONS
  2008
              
              
              2007Net
      revenues
              
              $
              441,328
              
              
              $
              304,927Operating
      expenses
              
              
              4,111,202
              
              
              
              566,913Loss
      from operations
              
              
              (3,669,874)
              
              
              
              (261,986
              )Other
      income (expense)Interest
      expense
              
              
              (55,061
              )
              
              
              (19,956)Interest
      income
              
              
              17,173
              
              
              
              12,999Net
      loss
              
              $
              (3,707,762
              )
              
              $
              (268,943
              )Basic
      and diluted net loss per share
              
              $
              (0.16)
              
              
              $
              (0.03)Basic
      and diluted weighted average shares outstanding
              
              
              23,793,819
              
              
              
              10,000,000





See
accompanying notes to consolidated financial statements.





19


CMG
      HOLDINGS, INCCONSOLIDATED
      STATEMENT OF STOCKHOLDERS DEFICITYEARS
      ENDED DECEMBER 31, 2007 AND 2008Additional
            
            
            
            
            
            TotalMembers
            
            
            Shares
      Held in Reserve
            
            
            Common
      Stock
            
            
            Paid
            
            
            Accumulated
            
            
            Shareholders'Equity
            
            
            Shares
            
            
            Par
            
            
            Shares
            
            
            Par
            
            
            in
      Capital
            
            
            Deficit
            
            
            DeficitBalances,
      December 31, 2006
            
            $
            (8,923
            )
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            (8,923
            )Net
      Income  through August 6, 2007
            
            
            761,484
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            761,484Distribution
            
            
            (61,875
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (61,875
            )Change
      in tax status
            
            
            (690,686
            )
            
            
            -
            
            
            
            -
            
            
            
            10,000,000
            
            
            
            10,000
            
            
            
            680,686
            
            
            
            -
            
            
            
            -Net
      loss since August 7, 2007
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,030,427
            )
            
            
            (1,030,427
            )Balances,
      December 31, 2007
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            10,000,000
            
            
            
            10,000
            
            
            
            680,686
            
            
            
            (1,030,427
            )
            
            
            (339,741
            )Shares
      held in reserve
            
            
            -
            
            
            
            14,674,648
            
            
            
            14,675
            
            
            
            -
            
            
            
            -
            
            
            
            (14,675
            )
            
            
            -
            
            
            
            -Shares
      retained by Pebble Beach shareholders in Reverse Merger
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,120,000
            
            
            
            3,120
            
            
            
            (603,120
            )
            
            
            -
            
            
            
            (600,000
            )Capital
      Contribution
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            30,000
            
            
            
            -
            
            
            
            30,000Shares
      issued for salaries
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            7,422,222
            
            
            
            7,422
            
            
            
            1,105,911
            
            
            
            -
            
            
            
            1,113,333Shares
      issued for consulting expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,279,630
            
            
            
            1,280
            
            
            
            190,665
            
            
            
            -
            
            
            
            191,945Shares
      issued for convertible debt
              and
      interest
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            5,737,000
            
            
            
            5,737
            
            
            
            1,548,727
            
            
            
            -
            
            
            
            1,554,464Shares
      Issued for investment adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            166,500
            
            
            
            167
            
            
            
            166,334
            
            
            
            -
            
            
            
            166,500Shares
      issued for cash
            
            
            -
            
            
            
            (1,119,666
            )
            
            
            (1,120
            )
            
            
            1,119,666
            
            
            
            1,120
            
            
            
            233,975
            
            
            
            -
            
            
            
            233,975Shares
      issued for services
            
            
            -
            
            
            
            (2,881,500
            )
            
            
            (2,882
            )
            
            
            2,881,500
            
            
            
            2,882
            
            
            
            1,111,360
            
            
            
            -
            
            
            
            1,111,360Net
      Loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (3,707,762
            )
            
            
            (3,707,762
            )Balances,
      December 31, 2008
            
            $
            -
            
            
            
            10,673,482
            
            
            $
            10,673
            
            
            
            31,726,518
            
            
            $
            31,727
            
            
            $
            4,449,863
            
            
            $
            (4,738,189
            )
            
            $
            (245,926
            )








See
accompanying notes to consolidated financial statements.


20


CMG
HOLDINGS, INC




CONSOLIDATED
STATEMENTS OF CASH FLOWS






Year
      endedDecember
      31,2008
            
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
            
            $
            (3,707,762
            )
            
            $
            (268,943
            )Adjustments
      to reconcile net lossto
      net cash used in operating activities:Stock
      for services
            
            
            2,583,138
            
            
            
            --Depreciation
      expense
            
            
            1,159
            
            
            
            --Stock
      for interest expense
            
            
            37,449
            
            
            
            --Changes
      in:Accounts
      receivable
            
            
            (1,050
            )
            
            
            --Prepaid expense
            
            
            17,454
            
            
            
            (17,454
            )Consulting payable
            
            
            24,925
            
            
            
            --Client
      payable
            
            
            (113,400
            )
            
            
            --Accounts
      payable
            
            
            305,543
            
            
            
            242,073Net
      cash used in operating activities
            
            
            (852,544
            )
            
            
            (44,324
            )CASH FROM
      INVESTING ACTIVITIESCash paid for acquisition of Pebble Beach Enterprises,
Inc.
            
            
            (600,000
            )
            
            
            --Purchase
      of fixed assets
            
            
            -
            
            
            
            (1,159
            )Deposit
      related to acquisition
            
            
            (300,000
            )
            
            
            --Net
      cash used in investing activities:
            
            
            (900,000
            )
            
            
            (1,159
            )FINANCING
      ACTIVITIESDistributions to members
            
            
            --
            
            
            
            (61,875
            )Contributions to capital
            
            
            30,000
            
            
            
            --Stock for cash
            
            
            233,975
            
            
            
            --Net borrowings on line of credit
            
            
            (24,532
            )
            
            
            132,763Borrowing on convertible notes
            
            
            314,000
            
            
            
            1,178,000Net
      cash provided by financing activities
            
            
            553,443
            
            
            
            1,248,888Net
      increase (decrease) in cash
            
            
            (1,199,101
            )
            
            
            1,203,405Cash, beginning
      of period
            
            
            1,213,035
            
            
            
            9,630CASH
      BALANCE AT END OF PERIOD
            
            $
            13,934
            
            
            $
            1,213,035Supplemental
      cash flow information:Income tax paid
            
            $
            --
            
            
            $
            --Interest
      paid
            
            
            17,612
            
            
            
            --Non-Cash
      investing and financing:Conversion
      from LLC to Corporation
            
            
            -
            
            
            
            690,686Stock
      issued for notes payable
            
            
            1,492,000
            
            
            
            --Stock
      issued for accrued interest
            
            
            25,015
            
            
            
            --




21


CMG
HOLDINGS, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS








NOTE
1:               DESCRIPTION
OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Business
Activity





Creative
Management Group, Inc. was formed in Delaware on August 13, 2002 as a limited
liability company named Creative Management Group, LLC, On August 7, 2007 this
entity converted to a corporation and changed its legal name to Creative
Management Group Inc. The company is a sports, entertainment, marketing and
management company that operates around distinct vertical disciplines of talent
management, including personal representation in the fields of sports,
entertainment, personalities and literary; commercial rights, including
marketing and sales, consulting, branding and image marketing and endorsements,
licensing, sponsorships; and event management, including implementation,
sponsorships, licensing and broadcast, production, syndication.





On
February 20, 2008, Creative Management Group, Inc. formed CMG Acquisitions,
Inc., a Delaware company, for the purpose of acquiring companies and expansion
strategies.





On
February 20, 2008, Creative Management Group, Inc. acquired 92.6% of Pebble
Beach Enterprises, Inc. (a publicly traded company) and changed the name to CMG
Holdings, Inc. The purpose of the acquisition was to effect a reverse merger
with Pebble Beach Enterprises, Inc. at a later date.





On May
27, 2008, Pebble Beach entered into an Agreement and Plan of Reorganization with
its controlling shareholder, Creative Management Group, Inc., a privately held
Delaware corporation. Upon the closing the eighty shareholders of Creative
Management Group delivered all of their equity interests in Creative Management
Group to Pebble Beach in exchange for shares of common stock in Pebble Beach
owned by Creative Management Group, as a result of which Creative Management
Group became a wholly-owned subsidiary of Pebble Beach.





The
shareholders of Creative Management Group received one share of Pebble Beach’s
common stock previously owned by Creative Management Group for each issued and
outstanding common share owned of Creative Management Group. As a result, the
22,135,148 shares of Pebble Beach that were issued and previously owned by
Creative Management Group, are now owned directly by its shareholders. The
22,135,148 of Creative Management Group previously owned by its shareholders are
now owned by Pebble Beach, thereby making Creative Management Group a
wholly-owned subsidiary of Pebble Beach. Pebble Beach did not issue any new
shares as part of the Reorganization.





Upon
completion, Pebble Beach had 42,400,000 shares issued and outstanding of which
3,120,000 were held by the former shareholders of Pebble Beach, 22,135,148
shares, or approximately 52.21% were held by persons who were previously
shareholders of Creative Management Group and 14,674,648 shares were held by CMG
Acquisitions, Inc., the wholly owned subsidiary of Creative Management Group as
shares held in reserve.





The
transaction was accounted for as a reverse merger and recapitalization whereby
Creative Management Group is the accounting acquirer. Pebble Beach was renamed
CMG Holdings, Inc.





Principles of
Consolidation





The
consolidated financial statements included the accounts of CMG Holding, Inc.,
Creative Management Group and CMG Acquisition, Inc. All significant intercompany
balances and transactions were eliminated.








Use of
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the period reported. Estimates are
used when accounting for allowance for doubtful accounts, depreciation, and
contingencies. Actual results could differ from those estimates.





22


Concentrations of
Risk





The
company maintains its cash balances at two financial institutions where they are
insured by the Federal Deposit Insurance Corporation up to $250,000
each.  At December 31, 2007, neither of these accounts were in excess
of the limit. The company also maintains a money market investment account at
one securities firm where the account is insured by the Securities Investor
Protection Corporation up to $500,000 for the bankruptcy, etc., of the
securities firm. At December 31, 2008, the account had no balance in excess of
the limit.





Revenue and Cost
Recognition





In
general, the company recognizes revenues when earned, when the services or
conditions relating to the services have been performed or satisfied by the
entity, and recognizes costs when the expenses are
incurred.  Depending on the terms of the client contract, revenue is
derived from diverse arrangements involving fees for services performed, and
commissions. The company earns consulting fees by providing branding, imaging
marketing and talent placement services, event management including,
implementation, and production management. The company also earns commissions
through contract negotiations in talent representation and endorsement
contracts. A majority of the company’s client contracts are individually
negotiated and accordingly, the terms of client engagements and the bases on
which the company earns commissions and fees may vary
significantly.  For talent representation, the company generally
records revenue net of pass-through charges as the company believes the key
indicators of the business suggest we generally act as an agent on behalf of our
clients.  This is recorded when we receive the gross
payment.  In those businesses where the key indicators suggest the
company acts as principal, the company records the gross amount billed to the
client as revenue and the related costs incurred as operating
expenses.  This is generally recorded as the services are
provided.





Accounts receivable and
allowance for doubtful accounts





Accounts
receivable are amounts due on sales, are unsecured and are carried at their
estimated collectible amounts. Credit is generally extended on a short-term
basis; thus accounts receivable do not bear interest although a finance charge
may be applied to such receivables that are more than thirty days past due.
Accounts receivable are periodically evaluated for collectability based on past
credit history with clients. Provisions for losses on accounts receivable are
determined on the basis of loss experience, known and inherent risk in the
account balance and current economic conditions.




Stock-based
compensation




Financial
Accounting Standard No. 123, “Accounting for Stock-Based Compensation"
established financial accounting and reporting standards for stock-based
employee compensation plans. It defines a fair value based method of accounting
for an employee stock option or similar equity instrument. CMG Holdings, Inc.
accounts for compensation cost for stock option plans in accordance with SFAS
No. 123R.




CMG
Holdings, Inc. accounts for share based payments to non-employees in accordance
with EITF 96-18 “Accounting for Equity Instruments Issued to Non-Employees for
Acquiring, or in Conjunction with Selling, Goods or
Services”.




Cash and
Equivalents





For
purposes of the statement of cash flows, the company considers all short-term
debt securities purchased with maturity of three months or less to be cash
equivalents.




Income
Taxes





As a
result of the change in tax status resulting from the change in the company’s
organization as a limited liability company to a corporation, the company is no
longer a pass-through entity for US income tax purposes.  Income tax
expense is based on reported earnings before income taxes.  Deferred
income taxes reflect the impact of temporary differences between assets and
liabilities recognized for financial reporting purposes and such amounts
recognized for tax purposes, and are measured by applying enacted tax rates in
effect in years in which the differences are expected to reverse.





23


Basic and Diluted Net Loss
per Share





Basic
loss per share is computed using the weighted average number of shares of common
stock outstanding during each period. Diluted loss per share includes the
dilutive effects of common stock equivalents on an “as if converted” basis.
For  2008 there were no potential dilutive securities outstanding and
for 2007, potential dilutive securities had an anti-dilutive effect and were not
included in the calculation of diluted net loss per common share.





Recently Issued Accounting
Pronouncements





In May
2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement),
which specifies that issuers of convertible debt instruments that may be settled
in cash upon conversion should separately account for the liability and equity
components in a manner reflecting their nonconvertible debt borrowing rate when
interest costs are recognized in subsequent periods.  FSP APB 14-1 is
effective for interim periods and fiscal years beginning after December 15,
2008.  The Company will adopt FSP APB 14-1 effective January 1,
2009.  As of December 31, 2008 we have no convertible instruments
outstanding and therefore this pronouncement has no immediate impact on our
company.





In June
2008, the FASB ratified EITF Issue 07-5, "Determining Whether an Instrument (or
Embedded Feature) Is Indexed to an Entity's Own Stock" ("EITF 07-5"). Paragraph
11(a) of Statement of Financial Accounting Standard No 133, Accounting for
Derivatives and Hedging Activities ("SFAS 133") specifies that a contract that
would otherwise meet the definition of a derivative, but is both (a) indexed our
own stock and (b) classified in stockholders' equity in the statement of
financial position would not be considered a derivative financial instrument.
EITF 07-5 provides a new two-step model to be applied in determining whether a
financial instrument or an embedded feature is indexed to an issuer's own stock,
including evaluating the instrument's contingent exercise and settlement
provisions, and thus able to qualify for the SFAS 133 paragraph 11(a) scope
exception. It also clarifies the impact of foreign-currency-denominated strike
prices and market-based employee stock option valuation instruments on the
evaluation. EITF 07-5 will be effective for the first annual reporting period
beginning after December 15, 2008, and early adoption is
prohibited.  As of December 31, 2008 we have no instruments
outstanding within the scope of this pronouncement and therefore this
pronouncement has no immediate impact on our company.





The
Company does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on our
accompanying financial statements.








NOTE
2:                 GOING
CONCERN





As shown
in the accompanying financial statements, the Company has incurred net losses
for the years ended December 31, 2008 and 2007. In addition, the Company has an
accumulated deficit and a working capital deficit as of December 31, 2008. These
conditions raise substantial doubt as to our ability to continue as a going
concern. In response to these conditions, the Company may raise additional
capital through the sale of equity securities, through an offering of debt
securities or through borrowings from financial institutions or individuals. The
financial statements do not include any adjustments that might be necessary if
we are unable to continue as a going concern.








NOTE
3:                 DEPOSIT
RELATED TO ACQUISITION





In May
2008, Creative Management Group, Inc. entered into a letter of intent with Maya
Marketing, Inc., a Connecticut Corporation, to acquire Maya and it’s
subsidiaries. As part of this letter of intent, Creative Management Group paid
$300,000 to secure a contract between Maya and another company. This has been
accounted for as a deposit related to the potential acquisition of
Maya.








NOTE
4:                 RELATED
PARTY TRANSACTIONS





During
2007, the company shared an office space with a law firm whose owners are the
principal owners of the company. The company paid the law firm for the expenses
incurred by the company. The former members of the predecessor LLC and
shareholders of the company were principal lenders of the convertible notes and
now have increased ownership due to conversion of their convertible
notes.





24





NOTE
5:                  LINE
OF CREDIT





The
company obtained a credit line from Smith Barney that is secured by the cash in
the company’s Smith Barney money market account.  The loan balance as
of December 31, 2008 and 2007 was $108,231 and $132,763,
respectively.  The credit line carries an annual interest rate of the
bank’s prime rate.








NOTE
6:                 LONG-TERM
DEBT





During
the period between August 14, 2007 and May 20, 2008, the company borrowed
$1,492,000 under 39 convertible note agreements. Interest on these convertible
notes was due and payable at 6% per annum. The maturity date was March 30, 2010
and the notes were unsecured.  $105,500 of the total notes were from
relatives of one of the company’s officers. As part of the reorganization
agreement, these notes were converted into common shares at a fixed conversion
price of $0.27 per share after the common stock traded on the open market for a
period of twenty consecutive trading days at a price at or above
$.324.





The
Company analyzed these convertible notes for derivative accounting consideration
under SFAS 133 and EITF 00-19, and determined that derivative accounting is not
applicable for these notes. The Company also analyzed these convertible notes
under the guidance of EITF 98-5 and EITF 00-27 and concluded there were no
beneficial conversion features on these convertible notes on the date of
issuance.





As of
December 31, 2008, these notes were all converted to the Company’s common shares
at $0.27 per share. 5,737,000 shares were issued to the convertible note holders
for principal and interest totaling $1,554,464 as the result of the
conversion.








NOTE
7:                 INCOME
TAX





For
periods prior to August 6, 2007, the predecessor LLC was treated as a
partnership for income tax purposes. As a result, income and losses were
allocated to the members on their ownership and contributions. From August 6,
2007, the company uses the liability method, where deferred tax assets and
liabilities are determined based on the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities for
financial and income tax reporting purposes. Under the liability method, the
deferred tax assets and liabilities are determined based on the expected future
tax consequences of temporary differences between the carrying amounts of assets
and liabilities for financial and income tax reporting purposes. During 2008 and
2007, the company incurred net losses and, therefore, has no tax liability. The
net deferred tax asset generated by the loss carry-forward has been fully
reserved. The cumulative net operating loss carry-forward was approximately
$2,100,000 at December 31, 2008, and will expire in the years 2027 to
2028.





At
December 31, 2008 and 2007, deferred tax assets consisted of the
following:













2008                                                2007


-------------------                                   ---------------


Deferred
tax
assets                                                       $         740,000                                  $     350,000


Valuation
allowance                                                               (740,000)                                      (350,000)


-------------------                                   ---------------


Net
deferred tax
assets                                                $                    -                                  $                 -


===========                                 =========





25





NOTE
8:                  EQUITY





On
February 20, 2008, Creative Management Group, Inc. acquired 92.6% of Pebble
Beach Enterprises, Inc. (a publicly traded company) for $600,000
cash.  Because the purpose of the acquisition was to recapitalize
Creative Management Group, Inc. through an eventual reverse merger with Pebble
Beach Enterprises, Inc., the $600,000 has been accounted for as a
recapitalization cost and a reduction to additional paid in
capital.





During
the year ended December 31, 2008:





-
            A
      shareholder contributed $30,000 of cash to the
  Company.





-
            7,422,222
      shares valued at $1,113,333 were issued to officers for their
      services.





-
            1,279,630
      shares valued at $191,945 were issued for consultants for their services.





-
            5,737,000
      shares were issued for the conversion of outstanding notes payable
      principal and interest totaling
$1,554,464.





-
            166,500
      shares valued at $166,500 were issued to five investors for an adjustment
      to their initial investments and accounted for as additional
      expense.





-
            1,119,666
      shares were issued from the shares held in reserve held by CMG
      Acquisition, Inc. for cash. The Company received
  $233,975.





-
            2,881,500
      shares were issued from the shares held in reserve held by CMG
      Acquisition, Inc. for services provided by third parties valued at
      $1,111,360.








NOTE
9:                 COMMITMENTS





The
company entered into five employment agreements in 2008, all effective January
1, 2008, four agreements end in 2010 and one, the CEO's ends in
2012.  These agreements require the Company to issue shares of common
stock at signing and annual cash compensation.





The
company entered into a three year consulting agreement in 2008, effective
January 1, 2008.  This three year agreement requires the Company to
issue 300,000 shares of common stock at signing and a minimum guarantee of
$22,500 of cash payments for the first two years of the agreement.





In 2008,
the Company entered into a three-month lease to operate an additional office at
590 Madison Avenue New York, NY 10022. Monthly payment on this lease was $400
per month, as well as office space at 5601 Biscayne Boulevard, Miami, FL, that
is used for lead general counsel and is rent free.








NOTE
10                SUBSEQENT
EVENTS





On March
6, 2009, the Company, through a newly formed wholly owned subsidiary CMGO
Capital, Inc., a Nevada corporation, completed a Note Purchase Agreement with
Bank of America to purchase the senior secured debt obligations of The
Experiential Agency, Inc. The purchase price of the Note Purchase Agreement with
Bank of America to purchase the senior secured debt obligations of The
Experiential Agency, Inc. was a total of $150,000.  Effective March
31, 2009, the Company, through a newly formed wholly owned subsidiary CMGO
Events Marketing, Inc., a Nevada corporation, completed the acquisition of the
assets of The Experiential Agency, Inc.








26





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




None


.




ITEM 9A.                      CONTROLS AND
PROCEDURES









Evaluation of Disclosure
Controls and Procedures





The
Company’s Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2008.
Based upon such evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that, as of December 31, 2008, the Company’s disclosure
controls and procedures were not effective due to the identification of a
material weakness in our internal control over financial reporting which is
identified below, which we view as an integral part of our disclosure controls
and procedures.. This conclusion by the Company’s Chief Executive Officer and
Chief Financial Officer does not relate to reporting periods after December 31,
2008.





Management’s Report on
Internal Control Over Financial
Reporting





Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December
31, 2008 based on the framework stated by the Committee of Sponsoring
Organizations of the Treadway Commission. Furthermore, due to our financial
situation, the Company will be implementing further internal controls as the
Company becomes operative so as to fully comply with the standards set by the
Committee of Sponsoring Organizations of the Treadway Commission.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act. Our internal control system was designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes, in accordance
with generally accepted accounting principles. Because of inherent limitations,
a system of internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate due to
change in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.





Based on
its evaluation as of December 31, 2008, our management concluded that our
internal controls over financial reporting were  not effective as of
December 31, 2008 due to the identification of a material weakness. A material
weakness is a deficiency, or a combination of control deficiencies, in internal
control over financial reporting such that there is a reasonable possibility
that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis.





The
material weakness relates to the monitoring and review of work performed by our
Chief Financial Officer and lack of segregation of duties. In the preparation of
audited financial statements, footnotes and financial data all of our financial
reporting is carried out by our Chief Financial Officer, and we do not have an
audit committee to monitor or review the work performed. The lack of segregation
of duties results from lack of accounting staff with accounting technical
expertise necessary for an effective system of internal control. In order to
mitigate this material weakness to the fullest extent possible, all financial
reports are reviewed by the Chief Executive Officer. All unexpected results are
investigated. At any time, if it appears that any control can be implemented to
continue to mitigate such weaknesses, it is immediately implemented. As soon as
our finances allow, we will hire sufficient accounting staff and implement
appropriate procedures for monitoring and review of work performed by our Chief
Financial Officer.





This
annual report does not include an attestation report of the Company s registered
public accounting firm regarding internal control over financial reporting.
Management s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management’s report in this Annual Report on Form 10-K.





Changes in Internal Control
Over Financial Reporting





No change
in the Company’s internal control over financial reporting occurred during the
quarter ended December 31, 2008, that materially affected, or is reasonably
likely to materially affect, the Company s internal control over financial
reporting.








27




ITEM 9B.
            OTHER
      INFORMATION




None.


PART III


ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT





The
directors and officers of our Company are set forth below. The directors held
office for their respective term and until their successors were duly elected
and qualified. the officers serve at the will of the Board of
Directors.





Name
            
            Age
            
            With
      Company Since
            
            Director/PositionAlan
      Morell
            
            61
            
            01/2008
            
            CEO,
      Chairman of the Board, DirectorJames
      Ennis
            
            40
            
            01/2008
            
            Chief
      Financial Officer, DirectorMichael
      Vandetty
            
            53
            
            01/2008
            
            Chief
      Legal Counsel, Director





Alan Morell.  Mr.
Morell has 30 years of global experience in the successful development and
management of talent, high growth properties, commercial rights, live events and
intellectual property (IP) rights. Mr. Morell began his career with
International Management Group (IMG), where he served in a variety of executive
offices, including Corporate Vice President. He has created and/or managed
campaigns for talent and events globally within the disciplines of Sports and
Entertainment. Prior to becoming an officer of Creative Management Group Agency,
Mr. Morell was a Director and Chief Executive Officer of CatalystOne, Inc. Mr.
Morell is a graduate of the University of Florida.





James Ennis.  Mr.
Ennis has over 15 years of experience in financial management, strategic
planning and corporate development. Prior to joining Creative Management Group,
Mr. Ennis served as a Financial Advisor in the global private client group of
premier wealth management and investment advisory firms of Smith Barney and
Merrill Lynch from 2004 to 2007. From 1997 to 2003, Mr. Ennis served as Director
of Finance for Octagon Worldwide, Inc., one of the world’s largest sports and
entertainment marketing and consulting firms, where his responsibilities
included mergers and acquisitions, business development and financial reporting.
Mr. Ennis is a graduate of Mount Saint Vincent College.





Michael
Vandetty.  Mr. Vandetty’s areas of practice include limited
partnership and securities offerings, as well as securities
litigation.  Mr. Vandetty has extensive transactional experience,
including both domestic and international transactions in real estate,
entertainment and hospitality, manufacturing and pharmaceutical sales. He also
has significant experience in sports and entertainment law, mergers and
acquisitions and in contract negotiations in the insurance and intellectual
property arenas.  Mr. Vandetty is a former prosecutor in both the Dade
County State Attorney’s Office and the Florida Attorney General’s Office. He
received a Bachelor of Arts from Rutgers University in 1977 and a Juris
Doctorate from the University of Miami Law School in 1980.





ITEM 11.  EXECUTIVE COMPENSATION





Compensation
for our executive officers is determined by our board of directors where our
philosophy is to provide a compensation package that attracts and retains
executive talent.  We strive to provide our named executive officers,
who are the officers listed in the summary compensation table, with a
competitive base salary that is in line with their roles and responsibilities
when compared to peer companies of comparable size in similar locations.  Although
the principal method of providing compensation to our executive officers is a
salary, we intend to adopt a stock option plan for all employees, which permits
the grant of stock options, stock grants and other forms of equity-based
compensation.  Our executive officers are eligible for grants pursuant to
the plan. Although the principal compensation of our executive officers
will be salary, we may provide officers with equity-based
incentives.  The base salary level and the nature and amount of
equity-based incentives is established and reviewed by the compensation
committee based on the level of responsibilities, the experience and tenure of
the individual and the current and potential contributions of the individual. In
determining base salary, we give consideration to persons holding similar
positions within comparable peer companies and consideration is given to the
executive’s relative experience in his or her position.  Base salaries are
reviewed periodically and at the time of promotion or other changes in
responsibilities.




The
following table provides summary information for the years 2008 and 2007
concerning cash and non-cash compensation paid or accrued by us to or on behalf
of the president and the only other employee(s) to receive compensation in
excess of $100,000.








28





Name
      & Principal Position
            Year
            
            Salary
      ($)
            
            
            Bonus
      ($)
            
            
            Stock
      Awards($)
            
            
            Option
      Awards ($)
            
            
            Non-Equity
      Incentive Plan Compensation ($)
            
            
            Pension
      Value and Non-Qualified Deferred Compensation Earning ($)
            
            
            All
      Other Compensation ($)
            
            
            Total
      ($)Alan
      Morell CEO and Chairman
            2008
            
            
            0
            
            
            
            0
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            0
            
            
            
            02007
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            0
            
            
            
            0James
      Ennis CFO, COO   Director
            2008
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            0
            
            
            
            02007
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0
            
            
            
            0Michael
      Vandetty Chief Legal Counsel
            2008
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            --
            
            
            
            -
            
            
            
            -
            
            
            
            0
            
            
            
            02007
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            0
            
            
            
            0







No other
annual compensation, including a bonus or other form of compensation; and no
long-term compensation, including restricted stock awards, securities underlying
options, LTIP payouts, or other form of compensation, were paid to these
individuals during this period.


COMPENSATION
AGREEMENTS





The
Company has entered into an employment contract with Alan Morell, CEO, James
Ennis, CFO and Michael Vandetty, Chief General Counsel that detailed in the 8-K
filed on May 20, 2008.








BOARD
COMPENSATION





Members
of our Board of Directors do not normally receive cash compensation for their
services as Directors, although some Directors are reimbursed for reasonable
expenses incurred in attending Board or committee meetings. All corporate
actions are conducted by unanimous written consent of the Board of Directors.








ITEM
12.          SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
following table sets forth as of April 14, 2009, information with respect to the
beneficial ownership of the Company’s Common Stock by (i) each person known by
the Company to own beneficially 5% or more of such stock, (ii) each Director of
the Company who owns any Common Stock, and (iii) all Directors and Officers as a
group, together with their percentage of beneficial holdings of the outstanding
shares. The information presented below regarding beneficial ownership of our
voting securities has been presented in accordance with the rules of the
Securities and Exchange Commission and is not necessarily indicative of
ownership for any other purpose. Under these rules, a person is deemed to be a
"beneficial owner" of a security if that person has or shares the power to vote
or direct the voting of the security or the power to dispose or direct the
disposition of the security. A person is deemed to own beneficially any security
as to which such person has the right to acquire sole or shared voting or
investment power within 60 days through the conversion or exercise of any
convertible security, warrant, option or other right. More than one person may
be deemed to be a beneficial owner of the same securities. The percentage of
beneficial ownership by any person as of a particular date is calculated by
dividing the number of shares beneficially owned by such person, which includes
the number of shares as to which such person has the right to acquire voting or
investment power within 60 days, by the sum of the number of shares outstanding
as of such date plus the number of shares as to which such person has the right
to acquire voting or investment power within 60 days. Consequently, the
denominator used for calculating such percentage may be different for each
beneficial owner. Except as otherwise indicated below and under applicable
community property laws, we believe that the beneficial owners of our common
stock listed below have sole voting and investment power with respect to the
shares shown.




29


SECURITY OWNERSHIP OF BENEFICIAL
OWNERS:





None




SECURITY OWNERSHIP OF
MANAGEMENT:





Title
      of Class
            Name
            
            Shares
            
            
            PercentCommon
      Stock
            Alan
      Morell
            
            
            10,667,000
            
            
            
            25.16
            %Common
      Stock
            James
      J. Ennis
            
            
            2,500,000
            
            
            
            5.90
            %Common
      Stock
            Michael
      Vandetty
            
            
            1,000,000
            
            
            
            2.36
            %All
      Directors and Executive Officers as a group (6 persons)
            
            
            14,167,000
            
            
            
            33.41
            %





These
tables are based upon 42,400,000 shares outstanding as of April 15, 2009
and information derived from our stock records. Unless otherwise indicated in
the footnotes to these tables and subject to community property laws where
applicable, we believe unless otherwise noted that each of the shareholders
named in this table has sole or shared voting and investment power with respect
to the shares indicated as beneficially owned.





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
  No
director, executive officer or nominee for election as a director of our
company, and no owner of five percent or more of our outstanding shares or any
member of their immediate family has entered into or proposed any transaction in
which the amount involved exceeds $60,000.
  Our
management is involved in other business activities and may, in the future
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between our business and their other business interests. We have not and do not
intend in the future to formulate a policy for the resolution of such
conflicts.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND
SERVICES





The
following table sets forth fees billed to us by our auditors during the fiscal
years ended December 31, 2008 and December 31, 2007 for: (i) services rendered
for the audit of our annual financial statements and the review of our quarterly
financial statements, (ii) services by our auditor that are reasonably related
to the performance of the audit or review of our financial statements and that
are not reported as Audit Fees, (iii) services rendered in connection with tax
compliance, tax advice and tax planning, and (iv) all other fees for services
rendered. (i) Audit Fees





FIRM
            
            FISCAL
      YEAR 2008
            
            
            FISCAL
      YEAR 2007Malone
      & Bailey – audit and audit related
            
            $
            59,000
            
            
            $
            56,000Malone
      & Baiely – other fees
            
            
            6,000
            
            
            
            -







30


PART IV
   ITEM 15.  EXHIBITS AND REPORTS
ON FORM 8-K
   1.   
Financial Statements
  The financial statements along with the report from Malone &
Bailey, PC dated April 15, 2009, appear in Part II, Item 8.
   2.    Financial Statement
Schedules
  The financial statement Schedules along with the report from Malone &
Bailey, PC dated April 15, 2009, appear in Part II, Item 8.
   3.    Exhibits
 Exhibit
      No.
              Description2.1
              Agreement and Plan of Reorganization (the“Agreement”), dated as
      of the 27th day of May 2008, by and between CMG holdings, Inc., a Nevada
      corporation (“CMG”), and
      Creative Management Group, Inc., a Delaware corporation. 
      (incorporated by reference to Form 8-k filed on May 30,
      2008).3.1
              Certificate
      of Incorporation of Pebble Beach Enterprises, Inc. dated July 26, 2004
      (incorporated by reference to Form 10-SB-12G filed on February 1,
      2006).3.2
              Amended
      Certificate of Incorporation of CMG Holdings, Inc. dated February 20, 2008
      (incorporated by reference to Form 8-k Current Report filed on February
      20, 2008).3.3
              Bylaws
      of. CMG Holdings, Inc. dated February 20, 2008 (incorporated by reference
      to Form 8-k Current Report filed on February 20, 2008).10.1
              Employment Agreement by and between the Company
      and Alan Morell. (incorporated by reference to Form 8-k filed on May 30,
      2008).10.2
              Employment Agreement by and between the Company
      and James J. Ennis. (incorporated by reference to Form 8-k filed on May
      30, 2008).10.3
              Employment Agreement by and between the Company
      and Michael Vandetty. (incorporated by reference to Form 8-k filed on May
      30, 2008).21.1
              Subsidiariesof the Company31.1
              Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
      of the Securities Exchange Act, as amended.31.2
              Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
      of the Securities Exchange Act, as amended.32.1
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
      adoptedPursuant to Section 906 of the Sarbanes Oxley Act of
2002.32.2
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
      adoptedPursuant to Section 906 of the Sarbanes Oxley Act of
2002.
  
 4 .    Reports on Form
8-K:
  31


SIGNATURE









CMG HOLDINGS, INC.(Registrant)Date: April
      15, 2009
            By:
      /s/ ALAN MORELLAlan
      MorellChief
      Executive Officer(Duly
      Authorized Officer)Date: April
      15, 2009
            By:
      /s/ JAMES J. ENNISJames
      J. EnnisChief
      Financial Officer(Principal
      Financialand
      Accounting Officer)







32