UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-KSB /A


1st
Amendment





x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE


ACT OF 1934





For the
fiscal year ended June 30, 2007





or





o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE ACT OF
1934





For the
transition period from __________ to __________





Commission file number:
001-10196





STUDIO ONE MEDIA, INC.


(Name of
Small Business Issuer as specific in its Charter)





DELAWARE
            
            23-2517953(State
      or other jurisdiction of
            
            (IRS
      EmployerIncorporation
      or organization)
            
            Identification
      No.)








7650 East
Evans Road, Suite C


Scottsdale,
Arizona 85260


(Address
of Principal Executive Offices) (Zip Code)





(480)
556-9303


(Registrant’s
telephone number, including area code)





Securities registered pursuant to
Section 12(b) of the Act: None





Securities registered pursuant to
Section 12(g) of the Act:





Common Stock, $.001 par value


(Title of
Class)





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





1





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained herein, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. Yes x No o





For the
fiscal year ended June 30, 2007, the Company had no revenue.





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





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or average bid and asked price of such common equity, as of the last
business day of the registrant’s most recently completed second fiscal quarter.
As of June 30, 2007 the aggregate market value of the registrant’s common stock
held by non-affiliates of the registrant was approximately $24,021,023 million
based on the average bid and asked price of such common stock as reported on the
NASD Bulletin Board system.  Shares of common stock held by each
officer and director and each person, to Registrant’s knowledge, who owns more
than 5% or more of the Registrant’s outstanding common stock have been excluded
because these persons may be deemed to be affiliates. The determination of
affiliate status for purpose of this calculation is not necessarily a conclusive
determination for other purposes.





As of
June 30, 2007, the number of shares of Registrant’s Common Stock outstanding was
11,362,739.




EXPLANATORY
NOTE
 
 Studio
One Media, Inc., (the “Company”) is filing this Amendment No. 1 on Form 10-KSB/A
(the “Amendment”) to its Annual Report on Form 10-KSB for the fiscal
year ended June 30, 2007, which was originally filed on September 28, 2007
(the “Original Filing”), to correct the disclosure contained on the cover sheet
of the Original Filing, to include the event with respect to Shell Company
Status set forth in “Item 8B. Other Information”, to clarify dates of original
filing in the Exhibit List, and to relocate the Financial Information to the end
of the Report.
 
 The
Company incorrectly checked the box on the cover page of the Original Filing
indicating that it was a shell company when it was not.
 
 Other
than these changes, this Amendment does not amend, update or change any other
disclosures contained in the Original Filing.  This Amendment has no
effect on our financial statements and accompanying
notes.








DOCUMENTS INCORPORATED BY
REFERENCE








None











2






TABLE OF
      CONTENTS
            PAGE
    NUMBERItem
      1.
            DESCRIPTION
      OF BUSINESS
            4General
            4Company
      History
            5Fiscal
      Years 1988-1994
            5Fiscal
      Years 1995-1997
            5Fiscal
      Years 1998-2007
            5Patents,
      Trademarks and Proprietary Protection
            8Employees
            9Selected
      Financial Data
            17ITEM
      2
            DESCRIPTION
      OF PROPERTY
            17ITEM
      3
            LEGAL
      PROCEEDINGS
            17ITEM
      4
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
            17ITEM
      5
            MARKET
      FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTTERS
            18Market
      Information
            18Per
      Share Common stock bid price by quarter
            18Holders
            18Dividends
            18ITEM
      6
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            19Fiscal
      Years 2007 and 2006
            19Results
      of Operations
            19Liquidity
      and Capital Resources
            20ITEM
      7
            FINANCIAL
      STATEMENTS
            21ITEM
      8
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON  ACCOUNTING AND
      FINANCIAL DISCLOSURE
            21ITEM
      8A.
            CONTROLS
      AND PROCEDURES
            22ITEM
      8B.
            OTHER
      INFORMATION
            22ITEM 9
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL  PERSONS; COMPLIANCE
      WITH SECTION 16(A) OF THE EXCHANGE ACT
            23Indemnification
      of Directors and Officers
            24Compliance
      with Section 16(A) of the Exchange Act
            24Code
      of Ethics
            25Audit
      Committee
            25ITEM
      10
            EXECUTIVE
      COMPENSATION
            25Summary
      Compensation Table
            25Equity
      Compensation Plans
            261999
      Stock Option Plan
            262004
      Stock Incentive Plan
            262006
      Employee Stock Incentive Plan
            262007
      Non-Executive Employee Stock Option Plan
            26ITEM
      11
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            27ITEM
      12
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
            28ITEM
      13
            EXHIBITS
            29ITEM
      14
            PRINCIPAL
      ACCOUNTING FEES AND SERVICES
            30SIGNATURES
            
            31


3
  FORWARD-LOOKING AND CAUTIONARY
STATEMENTS





This Annual Report includes
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended,
and as contemplated under the Private Securities Litigation Reform Act of
1995.  These forward-looking statements may relate to such matters
as  the Company's (and its subsidiaries) business strategies,
continued growth in the Company's markets, projections, and anticipated trends
in the Company's business and the industry in which it operates anticipated
financial performance, future revenues or earnings, business prospects,
projected ventures, new products and services, anticipated market performance
and similar matters.  All statements herein contained in this Report,
other than statements of historical fact, are forward-looking
statements.





When used in this report, the words
"may," "will," "expect," "anticipate," "continue," "estimate," "project,"
"intend," “budget,” “budgeted,” "believe," “will,” "intends," “seeks,” “goals,”
"forecast," and similar words and expressions are intended to identify
forward-looking statements regarding events, conditions, and financial trends
that may affect our future plans of operations, business strategy, operating
results, and financial position. These forward-looking statements are based
largely on the Company's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control.  We
caution our readers that a variety of factors could cause our actual results to
differ materially from the anticipated results or other matters expressed in the
forward looking statements, including those factors described under "Risk
Factors" and elsewhere herein.  In light of these risks and
uncertainties, there can be no assurance that the forward-looking information
contained in this Report will in fact transpire or prove to be
accurate.  These risks and uncertainties, many of which are beyond our
control, include:




·
            the sufficiency of existing
      capital resources and our ability to raise additional capital to fund cash
      requirements for future
operations;




·
            uncertainties involved in the
      rate of growth of our business and acceptance of any products or
      services;




·
            volatility of the stock
      market, particularly within the technology sector;
    and




·
            general economic
      conditions.




Although we believe the expectations
reflected in these forward-looking statements are reasonable, such expectations
cannot guarantee future results, levels of activity, performance or
achievements.  We urge you not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Annual
Report.








PART  I





ITEM 1.
DESCRIPTION OF BUSINESS.





GENERAL





CORPORATE
BACKGROUND





Studio
One Media, Inc., (the “Company” or “SOMD”) was originally organized in Delaware
on May 12, 1988, as Dimensional Visions Group, Ltd.  On March 28,
2006, the Company changed its name to Studio One Media, Inc., pursuant to an
agreement the Company entered into to purchase 100% of Studio One Entertainment,
Inc., (“SO Entertainment”) of Scottsdale, Arizona, in a one-for-one,
stock-for-stock transaction dated March 29, 2006.  SO Entertainment
owns proprietary audio/video recording technology, patent and trademark
applications, studio design, methods and related concepts for
MyStudioTM.  MyStudioTM is a self contained interactive video recording
studio designed for installation in shopping malls and other pedestrian high
traffic public areas.  The studios will enable the public, for a fee,
to record their video and voice images in a stand alone, state-of-the-art
recording studio and enter their MyStudioTM performances in music, modeling and
other talent related contests.  In addition, MyStudioTM can be used to
record video resumes, dating profiles and personal messages.  The
Company believes MyStudioTM methods, processes and business model are proprietary
and a unique opportunity in the entertainment industry.




The
acquisition of SO Entertainment was completed on April 17, 2007, with the
exchange of 7 million shares of the Company’s Common Stock for an equal number
of shares of SO Entertainment common stock constituting 100% of the issued and
outstanding shares of SO Entertainment.  SO Entertainment operates as
a wholly-owned subsidiary.
 
 The
Company's office and principal place of business is located at 7650 E. Evans
Rd., Suite C, Scottsdale, Arizona 85260, and its telephone number is (480)
556-9303.





4





ITEM 1.
DESCRIPTION OF BUSINESS.- continued




COMPANY HISTORY





FISCAL YEARS
1988-1994





In 1988,
Dimensional Visions Group, Ltd. was incorporated in the State of Delaware and
headquartered in Philadelphia, Pennsylvania.  From inception through
1994, the Company was engaged in the development of a three-dimensional
lithographic printing process using robotic photographic
equipment.  The Company was unable to refine the technology and ceased
development operations in 1994.





FISCAL YEARS
1995-1997





In 1995,
the Company acquired InfoPak, Inc. of Phoenix, Arizona
("InfoPak").  InfoPak manufactured and marketed a hardware/software
package called the "InfoPakSystem".  The system converted databases
for use on a palm-top computer manufactured by InfoPak.  From 1995 to
1997, the Company utilized the software development resources of InfoPak to
develop the patent-pending software and systematic digital process for its
Living ImageTM Solutions. InfoPak discontinued operations in 1997.





FISCAL YEARS
1998-2002





In
January 1998, a new executive management team was appointed and the Company was
restructured including a 1 for 25 reverse stock split, a name change to
Dimensional Visions Incorporated (from Dimensional Visions Group, Ltd.) and
stock trading symbol change from DVGL to DVUI.  The Company developed
a new patented process for printing 3D graphics for products, packaging and
marketing communications.  By late 2002, the Company discontinued all
operations.





FISCAL YEARS
2003-2007





On
September 8, 2003, Mr. Preston J. Shea was elected as a director, President and
Secretary of the company to evaluate new opportunities for the Company, such as
a sale, merger, or other type of business combination.  On September
9, 2003, all directors except Preston Shea resigned, leaving him as the sole
officer and director of the Company.  On May 6, 2004, the Company was
restructured and affected a 1 for 60 reverse stock split.  On May 18,
2004, the Company changed its trading symbol from DVUI to DVSO.





On March
29, 2006, the Company entered into an agreement to purchase 100% of Studio One
Entertainment, Inc. (“SO Entertainment”) of Scottsdale, Arizona, in a
one-for-one, stock-for-stock transaction.  The acquisition of SO
Entertainment was completed on April 17, 2007 with the issuance of 7 million
shares of the Company’s Common Stock to the shareholders of SO
Entertainment.  SO Entertainment is a Scottsdale, Arizona based
company that is engaged in the development of MyStudioTM a self- contained
interactive video recording studio designed for installation in shopping malls
and other high traffic public areas.  The Company believes MyStudioTM
to be a proprietary and unique opportunity in the entertainment and
communications industries.  MyStudioTM will enable the public, for a
fee, to record their video and voice images in a self contained state-of-the-art
recording studio environment and enter their performances in music, modeling and
other talent related contests.





On March
31, 2006, Barry M. Goldwater, Jr., joined the board, as chairman and Kenneth
Pinckard became a director and Vice President.





In the
past two years the Company took steps to dramatically reduce its outstanding
debt.  In its fiscal year ended June 30, 2006, the Company wrote off
$373,416 in uncollectible debt that arose out of the operations that were
discontinued in 2002 and earlier.  On October 13, 2006, the Company
issued 137,500 shares of restricted common stock to extinguish $874,584 in debt
($579,253 in short term debt and $295,331 in accrued interest) from loans made
to the Company (then Dimensional Visions) in 2001. The debt was converted to
equity at a per share conversion price of $6.36.  On April 26, 2007,
the Company issued 25,328 shares of restricted common stock to extinguish
$33,433 in debt ($20,000 in short term debt and $13,433 in accrued interest)
from loans made to the Company in 2001.  The net effect of these
actions was to reduce the Company’s overall debt by approximately $1.28
million.





5





ITEM 1.
DESCRIPTION OF BUSINESS.- continued




COMPANY OVERVIEW





The
recent phenomena of reality shows such as American Idol, Americas Next Top Model
and Last Comic Standing has demonstrated that millions of Americans not only
believe that they have talent, but they also want an opportunity to showcase
their talents, ultimately hoping they might be "discovered."  However,
these shows only audition a small fraction of those who want to try out and
offer only one contest per year, per show.  Millions of would be
artists in music, modeling, acting and comedy are left frustrated and unseen
with no mainstream venue to demonstrate their talents.  At the same
time, virtually every segment of the entertainment industry is constantly
searching for the next meteoric talent.  Studio One's MyStudioTM was
created to serve as the nexus between the needs of talent, on the one hand, and
the entertainment industry, on the other.





MyStudioTM
is a proprietary, self contained, state-of-the-art interactive audio/video
recording studio designed for installation in shopping malls and other
pedestrian high traffic public areas.  The studio will allow the
public, for a fee, to step into a state-of-the-art, sound proof recording studio
and record a 3 minute video in a private, user friendly
environment.  MyStudioTM utilizes state of the art Green screen
technology which allows users to choose a background environment in which to
appear to record their performance in from an enormous library of visual
backgrounds – from a sunny beach to a concert stage and hundreds
more.  A DVD is burned for each session onsite and the user’s video,
if he or she so elects, will be posted online at the company's website within
minutes of their performance.  Users can then enter their performance
online from the MyStudioTM website in music, modeling and other talent related
contests.  Contests will be sponsored by different entertainment
companies every month, so users will have the opportunity to enter numerous
contests every year.  In addition, MyStudioTM can be used to record
video resumes, dating profiles and personal messages.  MyStudioTM and
related concepts have been under development for more than 4 years, at a cost
exceeding $5 million.





MyStudioTM
has two distinct but complementary components - the website and the recording
studios.





MyStudioTM
Video Recording Studio Development (2007).





·
            In
      late 2006, a prototype model for audio and video testing was
      constructed.





·
            In
      May, 2007, American Integration Technologies, LLC ("AIT") of Chandler,
      Arizona was engaged to build a final manufacturing prototype (less
      electronic hardware).





·
            Final
      hardware component selection and testing was completed in August,
      2007.





·
            Fabrication
      of the manufacturing prototype was completed by AIT in September,
      2007.





·
            Testing
      of key operational software began in September,
  2007.





The cost
of each MyStudioTM including fabrication, assembly and hardware is expected to be
approximately $200,000, for the first 50 units.  Manufacturing costs
will reduce significantly with volume.  The Company expects to
manufacture and install its first 50 units within 60 to 90 days of the closing
of a planned $10,000,000 convertible debenture financing.





6




ITEM 1.
DESCRIPTION OF BUSINESS.- continued
  COMPANY OVERVIEW- continued




MyStudioTM
Website Development.
 
 ·
              In
      October 2006, the Company engaged Epsilonium Systems, Inc., to develop its
      website.





·
            The
      MyStudioTM website incorporates the best features of YouTube, MySpace and
      Facebook including social networking functionality, daily video postings
      in a variety of categories, monthly contests and member profile
      pages.





·
            All
      online related operations including web hosting, data storage, and backup
      will be outsourced.





The
Company plans to launch its website in October, 2007, followed by the
installation of MyStudiosTM nationally in the coming months.  Each
MyStudioTM is expected to generate revenue of $25,000 to $50,000 per month and
the Company expects to generate its first revenue in the fourth quarter of 2007
or the first quarter of 2008.





RECENT DEVELOPMENTS IN
2007





·
            On
      September 17, 2007, the Company announced it has retained New York based
      PR and marketing communications firm, Lexicomm Group to plan and implement
      the roll out of its website and recording studios.  The Company
      expects to launch its website in October followed by installation of
      studios in malls in the coming
months.





·
            On
      August 1, 2007, the Company appointed internationally renowned modeling
      agent (Naomi Campbell, Nicky Hilton) Paul Fisher to the position of Vice
      President of Marketing of the "modeling division" of Studio
      One.  Mr. Fisher will be responsible for interacting with
      modeling agencies to host monthly competitions for users of Studio One's
      interactive recoding studios.





·
            On
      June 27, 2007, highly acclaimed music video director, Lionel C. Martin,
      has joined Studio One Media, Inc. as Director of Video
      Production.  Mr. Martin will oversee the direction and creation
      of the "virtual video environments" that Studio One will offer users in
      its interactive high definition audio/video recording
      studios.  Labeled "The Godfather of Music Videos" by Sean
      "Diddy" Combs, Lionel has dominated the music video industry for over 20
      years. In one year alone, he directed 24 of America's top 50 music
      videos.





·
            On
      May 17, 2007, Studio One Media, Inc. announced it has contracted with
      American Integration Technologies, LLC ("AIT") of Chandler, Arizona, to
      manufacture the first Studio One interactive recording studio. AIT has the
      capacity to manufacture up to 60 studios per month. American Integration
      Technologies, LLC is a manufacturer and integrator of precision equipment
      for several industries, including the semiconductor, industrial, consumer,
      aerospace and medical industries.  AIT specializes in
      sophisticated engineering and integration of leading edge systems and
      equipment, precision sheet metal fabrication, tubular frame welding and
      machining.  AIT employs more than 250 highly skilled and trained
      personnel in a state of the art seven building campus comprising more than
      130,000 sq. ft.





·
            On
      April 17, 2007, the Company announced that it had finalized the
      acquisition of Studio One Entertainment, Inc., a private Arizona company,
      through an all-stock transaction.  The purchase is pursuant to
      an agreement entered into by the companies dated March 29,
      2006.  The purchase includes the exchange of 7,000,000
      restricted common shares of Studio One Media, Inc. for 100% of the issued
      and outstanding shares of Studio One Entertainment, Inc.  The
      purchase includes all right, title and interest to Studio One
      Entertainment's proprietary interactive recording studios, business plan
      and intellectual property, including pending patents, foreign and domestic
      and federal trademark applications.





·
            On
      March 15, 2007, Studio One Media, Inc. appointed Emmy award winner, Mr.
      Matthew Long, Vice President, Production.  Mr. Long has enjoyed
      an extensive career as a producer, director, editor, director of
      photography and writer for television, feature film and video
      productions.  Mr. Long will be responsible for producing and
      managing the video content for Studio One's interactive studios and
      related television production.





·
            On
      October 29, 2006, Studio One Media, Inc, entered into a Strategic Alliance
      and Purchase Agreement with Provision Interactive Technologies, Inc., of
      Chatsworth, California.  The agreement provides SOMD the right
      to
      purchase Provision HoloVisionTM Systems in
      return for exclusivity in shopping malls and airports
      internationally.  The patented Provision HoloVisionTM system
      provides a lifelike three dimensional holographic image from a single
      video screen source.  Studio One intends to install one or more such
      systems on its proprietary interactive MyStudioTM video recording Studios
      for advertising and product
  identification.




·
              On
      August 22, 2006, Shelly Yakus, Studio One Media, Inc. appointed Shelly
      Yakus as Vice President, audio engineering. Shelly Yakus is a renowned
      audio engineer/mixer and recording studio designer.  Shelly has
      engineered/mixed recordings for some of the world’s best known artists
      including John Lennon, Stevie Nicks, Alice Cooper, Van Morrison, Tom
      Petty, Dire Straits, Blue Oyster Cult, Bob Seger, Amy Grant, Don Henley,
      U2 and Madonna.  Mr. Yakus is responsible for overseeing the
      final parameters of the acoustical integrity and audio recording/mixing
      technologies utilized in MyStudiosTM proprietary interactive recording
      studios.


7




ITEM 1.
DESCRIPTION OF BUSINESS.-continued




COMPETITIVE
ADVANTAGES





The
Company knows of no competitors.  The Company believes that it will be
the first to market with a recording studio with its functionality and quality
combined with a groundbreaking website.  It would require a competitor
significant time and capital to design, develop and manufacture a recording
studio with similar functionality and features, giving the Company valuable time
to gain consumer recognition and a foothold in the market. While the technology
surrounding MyStudioTM is cutting edge and unique, the Company believes there are
other factors that will separate the Company from competitors.  The
Company has embarked on an aggressive intellectual property protection program
which it believes will be a significant barrier to market entry to potential
competitors.  In addition, the Company employs individuals who have
long standing relationships and expertise in various segments of the
entertainment and communications industries, which it expects will help
facilitate the negotiation of favorable partnerships, sponsorships and industry
support for MyStudioTM.





TECHNOLOGICAL
ADVANTAGES





Studio
One’s recording studio is based upon proprietary technology and other
intellectual property which is the subject of 17 pending patents and 7 trademark
applications (for which we have received 4 Notices of Allowance from the USPTO).
The Company believes that its multi-year product development and engineering
efforts have resulted in a multitude of technological advantages over any other
stand alone video recording studio in operation.  The use of high
definition recording, keying and audio processing ensures the finest quality
audio and video available today and in the near future.





Color
adjustable and dimmable LED lights provide lighting that adjusts for skin tone
and the background environment chosen by the user.  Air is circulated
and filtered every 90 seconds in the sound proof and sealed
studio.  Multiple exterior monitors are used for advertising and
studio information and examples of videos.  MyStudioTM is comprised of
9 major components consisting of a floor, ceiling, door, 4 wall pieces and 2 pay
stations which are easily transportable and assembled onsite within
hours.





FINANCIAL IMPACT





Each
studio is expected to generate between $300,000 - $600,000 in revenue annually
and the company hopes to have several hundred such machines in operation in
2008.  If the initial launch is successful, the Company expects
revenue will continue to escalate in following years as people become more
familiar with the product and it becomes available in more locations, including
internationally.  There are multiple potential revenue streams for the
company in addition to the revenue generated from the studios, including
revenues for advertising on its website.





PATENTS, TRADEMARKS AND PROPRIETARY
PROTECTION





We rely
on a combination of patent, trademark, copyright and trade secret laws in the
U.S. and other jurisdictions as well as confidentiality procedures and
contractual provisions to protect our proprietary technology and our
brand.  We also enter into confidentiality and invention assignment
agreements with our employees and consultants and confidentiality agreements
with third parties, and we rigorously control access to proprietary
technology.




The
Company has embarked on an aggressive intellectual property program including
the filing of 17 patent applications and 7 trademark applications (for which we
have received 4 Notices of Allowance) with the U.S. Patent and Trademark Office
all designed to protect what the Company believes is innovative and proprietary
technology and applications derived from the extensive research and development
program undertaken by its subsidiary, SO Entertainment.  All persons
who were or could be deemed inventors have assigned all rights under these
patent applications to SO Entertainment.
 
 Historically,
when the Company engages in business transactions involving its technology, it
enters into confidentiality agreements with all persons and entities who or
which may have access to our technology.  However, no assurance can be
given that such agreements, the pending patents, or any patents that may be
issued to the Company will prevent third parties from developing similar or
competitive technology.





8





ITEM 1.
DESCRIPTION OF BUSINESS.-continued




EMPLOYEES





As of the
end of our fiscal year on June 30, 2007, we employed ten full-time employees
consisting of three executives, six technical persons and one
clerical/administrative person.  We expect to seek additional
employees in the next year to handle anticipated potential growth.





We
believe that our relationship with our employees is good.  None of our
employees are members of any union, nor have they entered into any collective
bargaining agreements.





FACILITIES





Pursuant
to a lease originally dated January, 2006, we currently occupy approximately
5,400 square feet of office space located at 7650 E. Evans Rd., Suite C,
Scottsdale, Arizona 75260. The lease was extended for an additional year ending
January 31, 2007.  The lease expense is $6,400 per month.





In
anticipation of implementation of our business plan, subsequent to the end of
our fiscal year, June 30, 2007, we have begun negotiations to lease
approximately 10,000 additional square feet of office space, but no lease has
yet been signed.





RISK
FACTORS





You should carefully consider the
risks and other uncertainties described below and other information in this
report.  If any of the following risks or uncertainties actually
occur, our business, financial condition and operating results, would likely
suffer.  Additional risks and uncertainties, including those that are
not yet identified or that we currently believe are immaterial, may also
adversely affect our business, financial condition or operating
results.





Operations and Dependence on Future
Developments.





The
Company has a history of losses and will likely realize future
losses.  MyStudioTM has not yet been implemented in the market and is
not presently generating revenues.





Pending
the implementation of its business plan, the Company is dependent upon its
management, certain shareholders and investors for its
fundraising.  The Company expects additional operating losses will
occur until revenue is sufficient to offset the level of costs to be incurred
for marketing, sales, general and administrative and product and services
development.  The Company is subject to all of the risks inherent in
establishing a new start-up business enterprise.  Since the Company
has no significant operations, there can be no assurance that its business plan,
if executed at all, will be successful.  The potential for success of
the Company must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered with the start-up of new
businesses and the competitive environment in which the Company will
operate.  A prospective investor should be aware that if the Company
is not successful in achieving its goals and achieving profitability, any money
invested in the Company will likely be lost.  The Company’s management
team believes that its potential near-term success depends on the Company’s
success in completing product development, manufacturing, marketing and selling
its products and services.




We cannot
be certain that if we create an executable business strategy that it will be
executed at all, or if executed in full or in part that it will be
successful.  As an early stage company we will be particularly
susceptible to the risks and uncertainties described herein and we will be more
likely to incur the expenses associated with addressing them.  Our
business and prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in early stages of
development.  These risks are particularly severe among companies in
new markets, such as those markets in which we expect we will
operate.  Accordingly, shareholders will bear the risk of loss of
their entire investment in the Company's shares.


9




ITEM 1.
DESCRIPTION OF BUSINESS.-continued




RISK
FACTORS -
continued





Limited Capital and Need for
Additional Financing.





The funds
currently available to the Company will be inadequate to implement the business
plan of the Company.  Until the Company has achieved a sales level
sufficient to break even, it will not be self-sustaining or be competitive in
the areas in which it intends to operate.  The Company will require
additional funding for continued operations and will therefore be dependent upon
its ability to raise additional funds through bank borrowing, equity or debt
financing, or asset sales.  We expect to need to access the public and
private equity or debt markets periodically to obtain the funds we need to
support our operations and continued growth.  There is no assurance
that the Company will be able to obtain additional funding when needed, or that
such funding, if available, can be obtained on terms acceptable to the Company.
 If we require, but are unable to obtain, additional financing in the
future on acceptable terms, or at all, we will not be able to continue our
business strategy, respond to changing business or economic conditions,
withstand adverse operating results or compete effectively.  If the
Company cannot obtain needed funds, the Company may be forced to curtail, in
whole or in part, or cease its activities altogether.  When additional
shares are issued to obtain financing, current shareholders will suffer a
dilutive effect on their percentage of stock ownership in the Company.





The
Company requires substantial capital to manufacture its recording
studios.  Although the Company intends to engage in subsequent debt
and equity offerings of its securities to raise additional working capital for
operations and studio manufacturing, the Company has no firm commitments for any
additional funding, either debt or equity, at the present
time.  Insufficient financial resources may require the Company to
delay or eliminate all or some of its development, marketing and sales plans,
which could have a material adverse effect on the Company's business, financial
condition and results of operations.  There is no certainty that the
expenditures to be made by the Company will result in a profitable business
proposed by the Company.





Lack of
Diversification.





The size
of the Company makes it unlikely that the Company will be able to commit its
funds to diversify the business until it has a proven track record, and the
Company may not be able to achieve the same level of diversification as larger
entities engaged in this type of business.





Competition.





Many
potential competitors have greater name recognition, industry contacts and more
extensive customer bases that could be leveraged to accelerate their competitive
activity.  Moreover, potential competitors may establish future
cooperative relationships among themselves and with third parties to enhance
their products and services in this market space in which the Company proposes
to operate.  Consequently, competitors or alliances may emerge and
rapidly acquire significant market share.  We cannot assure you that
we will be able to compete effectively with any competitor should they arise or
that the competitive pressures faced by us will not harm our business. Such
intense competition will limit our opportunities and have a materially adverse
effect on the Company’s profitability or viability.





Performance - Market
Acceptance.





The
quality of the Company’s products, services, its marketing and sales ability,
and the quality and abilities of its personnel are among the operational keys to
the Company’s success.  The Company is heavily dependant upon
successfully completing its product development, gaining market acceptance and
subsequently recruiting and training a successful sales and marketing
force.  There can be no assurance that, even if the Company
successfully completes its product development initiative, it will be successful
in attracting, training or retaining the key personnel required to execute the
business plan.  Also, there can be no assurance that the Company can
complete development of new technology so that other companies possessing
greater resources will not surpass it.  There can be no assurance that
the Company can achieve its planned levels of performance.  If the
Company is unsuccessful in these areas, it could have a material adverse effect
on the Company's business, results of operations, financial condition and
forecasted financial results.  The entertainment industry may resist
the Company's business plan and refuse to participate in contests and other
sponsorship events.  In that case the Company would be forced to fund
and sponsor its own contests which would affect operating capital, liquidity and
revenues.





10


ITEM 1. DESCRIPTION OF
BUSINESS.  -continued
  RISK
FACTORS -
continued




Dependence on Intellectual Property
- Design and Proprietary Rights.





Our
success and ability to compete depends to a degree on our intellectual
property.  We will rely on copyright and trademark law, patent filings
as well as confidentiality arrangements, to protect our intellectual property
locally and internationally.  Studio One Entertainment, Inc., has
filed 17 patent applications relating to MyStudioTM and related technologies and
processes, and while the Company believes the technologies, methods and
processes merit patent protection, there is no assurance that any patent will be
issued.  If circumstances make it impossible to try to adequately
protect our intellectual property that intellectual property could be used by
others without our consent and there could be material adverse consequences to
the Company.





We have
filed 7 trademark applications and have received Notices of Allowance on 4 of
those applications.  Effective protection may not be available for our
service marks.  Although we plan to continue to register our service
marks in the United States and in countries in which we do business or expect to
do business, we cannot assure you that we will be able to secure significant
protection for these marks.  Our competitors, if any exist, or others
may adopt product or service names similar to those used by the Company, thereby
impeding our ability to build brand identity and possibly leading to client
confusion.  If circumstances make it impossible to adequately protect
the name and brand, that result could seriously harm our business.





Policing
unauthorized use of our intellectual property is made especially difficult by
the global nature of the high technology industry and difficulty in controlling
hardware and software.  The laws of other countries may afford us
little or no effective protection for our intellectual property.  We
cannot assure you that the steps we take will prevent misappropriation of our
intellectual property or that agreements entered into for that purpose will be
enforceable. In addition, litigation may be necessary in the future to enforce
our intellectual property rights; determine the validity and scope of the
proprietary rights of others; or defend against claims of infringement or
invalidity.  Such litigation, whether successful or unsuccessful,
could result in substantial costs and diversions of resources, either of which
could seriously harm our business.  There can be no assurance that
competitors of the Company, some of which have substantially greater resources,
will not obtain patents or other intellectual property protection that will
restrict the Company’s ability to make and sell its products.  If the
Company were unsuccessful in protection of proprietary and intellectual property
rights to the MyStudioTM,
related business methods, and websites, it could have a material adverse effect
on the Company's business, results of operations, financial condition and value,
and forecasted financial results.





Economic
Downturn.





The
Company is susceptible to adverse impacts caused by economic downturns locally
and in the markets in which it proposes to operate, as well as broader economic
downturns affecting a region, or the particular industry sector in which the
Company proposes to operate.  There can be no assurance that the
Company will survive any such economic downturn, or if the Company does survive,
that it will be capable of executing or furthering, to any meaningful degree,
the originally conceived business plan.




Some of Our Markets are
Cyclical.




Some of
our markets are cyclical, and a decline in any of these markets could have a
material adverse effect on our operating performance.   Our
business is cyclical and dependent on consumer spending and is therefore
impacted by the strength of the economy generally, interest rates, and other
factors, including national, regional and local slowdowns in economic activity
and job markets, which can result in a general decrease in product demand from
professional contractors and specialty distributors.  For example, a
slowdown in economic activity that results in less discretionary income for
entertainment can have an adverse effect on the demand for some of our
products.  In addition, unforeseen events, such as terrorist attacks
or armed hostilities, could negatively affect our industry or the industries in
which our customers operate, resulting in a material adverse effect on our
business, results of operations and financial condition.







11




ITEM 1. DESCRIPTION OF
BUSINESS. - continued




RISK
FACTORS -
continued




Disaster.




A
disaster that disables the Company’s operations will negatively impact the
Company’s ability to perform for a period of time.




Dependency on Foreign Components for
our Products.




We expect
to source components for our products outside the United States, which may
present additional risks to our business.  International sourcing of
components subject to various risks, including political, religious and economic
instability, local labor market conditions, the imposition of foreign tariffs
and other trade restrictions, the impact of foreign government regulations, and
the effects of income and withholding tax, governmental expropriation, and
differences in business practices.  We may incur increased costs and
experience delays or disruptions in product deliveries and payments in
connection with international manufacturing and sales that could cause loss of
revenue. Unfavorable changes in the political, regulatory, and business climate
could have a material adverse effect on our financial condition, results of
operations, and cash flows.




Exposure to Product Liability
Lawsuits.




Our
results of operations may be negatively impacted by product liability
lawsuits.While we
expect to maintain what we believe to be suitable product liability insurance
once we have commenced operations of services with the general public, we cannot
assure you that we will be able to maintain this insurance on acceptable terms
or that this insurance will provide adequate protection against potential
liabilities.  A series of successful claims against us could
materially and adversely affect our reputation and our financial condition,
results of operations, and cash flows.




Dependency on Key Suppliers and
Product Availability.




Loss of
key suppliers, lack of product availability or loss of delivery sources could
delay product development, manufacturing and decrease sales and
earnings.  Our ability to manufacture is dependent upon our ability to
obtain adequate product supply from manufacturers or other suppliers. While in
many instances we have agreements, including supply agreements, with our
suppliers, these agreements are generally terminable by either party on limited
notice.  The loss of, or a substantial decrease in the availability
of, products from certain of our suppliers, or the loss of key supplier
agreements, could have a material adverse effect on our business, results of
operations and financial condition.  In addition, supply interruptions
could arise from shortages of raw materials, labor disputes or weather
conditions affecting products or shipments, transportation disruptions or other
factors beyond our control.




Dependency on Long Supply
Chains.




In some
cases we are dependent on long supply chains, which may subject us to
interruptions in the supply of many of the products used in the manufacture of
My Studio’sTM.The
length and complexity of these supply chains make them vulnerable to numerous
risks, many of which are beyond our control, which could cause significant
interruptions or delays in delivery of our products.  Factors such as
labor disputes, changes in tariff or import policies, severe weather or
terrorist attacks or armed hostilities may disrupt these supply
chains.  A significant interruption in our supply chains caused by any
of the above factors could result in increased costs or delivery delays and have
a material adverse effect on our business, results of operations and financial
condition.




Fluctuations in Cost of Raw
Materials.




Our
results of operations could be adversely affected by fluctuations in the cost of
raw materials.As a
manufacturer we are subject to world commodity pricing for some of the raw
materials used in the manufacture of our Kiosks.  Such raw materials
are often subject to price fluctuations, frequently due to factors beyond our
control, including changes in supply and demand, general U.S. and international
economic conditions, labor costs, competition, and government regulation.
Inflationary and other increases in the costs of raw materials have occurred in
the past and may recur in the future.  Any significant increase in the
cost of raw materials could reduce our profitability and have a material adverse
effect on our business, results of operations and financial
condition.







12





ITEM 1. DESCRIPTION OF
BUSINESS. - continued




RISK
FACTORS -
continued




Regulatory
Factors.





Our
business model includes a component involving the internet.  As such,
we are subject to a number of foreign and domestic laws and regulations that
effect business on the internet.  We must contend with laws and
regulations relating to user privacy, freedom of expression, content,
advertising, information security and intellectual property rights of
others.  Possible future consumer legislation, regulations and actions
could cause additional expense, capital expenditures, restrictions and delays in
the activities undertaken in connection with our business, the extent of which
cannot be predicted.  The exact affect of such legislation cannot be
predicted until it is proposed.





Terms of Subsequent
Financing.





Terms of
subsequent financings may adversely impact your investment.  We will
engage in common equity, debt, or preferred stock financings in the
future.  Your rights and the value of your investment in the common
stock could be reduced. Interest on debt securities could increase costs and
negatively impacts operating results.  Shares of our preferred stock
may be issued in series from time to time with such designations, rights,
preferences, and limitations as needed to raise capital.  The terms of
preferred stock could be more advantageous to those investors than to the
holders of common stock.  In addition, if we need to raise more equity
capital from sale of common stock, institutional or other investors may
negotiate terms at least as, and possibly more, favorable than the terms of your
investment.  Shares of common stock which we sell could be sold into
the market, which could adversely affect market price.





Rapid Technological
Change.





The
industry in which we operate is characterized by rapid technological change that
requires us to implement new technologies on an ongoing basis.  Our future will
depend upon our ability to successfully implement new technologies in a rapidly
changing technological environment.  We will likely require additional
capital to develop new technologies to meet changing customer
demands.  Moreover, expenditures for technology and product
development are generally made before the commercial viability for such
developments can be assured.  As a result, we cannot assure that we
will successfully implement new technologies, that any implementations will be
well received by customers, or that we will realize a return on the capital
expended to develop such technology.





Effect of Fluctuations in Operations
on Price of Common Stock.





Our
future operating results may fluctuate and cause the price of our common stock
to decline, which could result in substantial losses for investors.Our limited operating
history and the lack of an established product make it difficult to predict
accurately our future operations.  We expect that our operating
results will fluctuate significantly from quarter to quarter, due to a variety
of factors, many of which are beyond our control. If our operating results fall
below the expectations of investors or securities analysts, the price of our
common stock could decline significantly.  The factors that could
cause our operating results to fluctuate include, but are not limited
to:





·
            ability
      to commercialize MyStudioTM;


·
            changes
      in entertainment technology;


·
            price
      and availability of alternative entertainment available to the
      public;


·
            availability
      and cost of technology and marketing
personnel;


·
            our
      ability to establish and maintain key relationships with industry
      partners;


·
            the
      amount and timing of operating costs and capital expenditures relating to
      maintaining our business, operations, and
  infrastructure;


·
            general
      economic conditions and economic conditions specific to the entertainment
      industry; and


·
            the
      ability to maintain a product margin on sales, given the early stage of
      our market for our products.





These and
other external factors have caused and may continue to cause the market price
and demand for our common stock to fluctuate substantially, which may limit or
prevent investors from readily selling their shares of common stock and may
otherwise negatively affect the liquidity of our common stock. In the past,
securities class action litigation has often been brought against companies
following periods of volatility in the market price of their
securities.  If securities class action litigation were to be brought
against us it could result in substantial costs and a diversion of our
management’s attention and resources, which could hurt our
business.





13


ITEM 1. DESCRIPTION OF
BUSINESS. - continued




RISK
FACTORS -
continued




Our Common Stock is Subject to Penny
Stock Regulations.





Our
common stock is subject to regulations of the Securities and Exchange Commission
relating to the market for penny stocks.  These regulations generally
require that a disclosure schedule explaining the penny stock market and the
risks associated therewith be delivered to purchasers of penny stocks and impose
various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited
investors.  The regulations applicable to penny stocks may severely
affect the market liquidity for our common stock and could limit your ability to
sell your securities in the secondary market.





Uncertainty as a Going
Concern.





Our
future existence remains uncertain and the report of our auditors on our June
30, 2007 financial statements contains a “going concern”
qualification.  The report of the independent auditors on our
financial statements for the year ended June 30, 2007, includes an explanatory
paragraph relating to our ability to continue as a going concern.  We
have suffered substantial losses from operations, require additional financing,
and have not yet brought MyStudioTM to market.  Ultimately we need to
generate additional revenues and attain profitable operations.  These
factors raise substantial doubt about our ability to continue as a going
concern.  There can be no assurance that we will be able to develop
commercially viable products or an effective marketing system.  Even
if we are able to develop commercially viable products, there is no assurance
that we will be able to attain profitable operations.





Dilution; Dilutive Effect of Future
Transactions.





The
Company currently has 11,362,739 shares of common stock, $0.001 par value,
issued and outstanding.  The Company contemplates issuing a maximum of
1,000,000 shares of common stock pursuant to a Non-Executive Employee Stock
Incentive Plan approved by the Board on August 28, 2007, and further shares to
certain of its management, directors, officers, employees and consultants in the
immediate future.  The Company also has 524,044 shares of various
classes of Convertible Preferred Stock outstanding, which can be converted to
14,814 shares of common stock.  In addition, the Company has warrants
outstanding that would permit, if exercised, the issuance of 925,847 additional
shares of common stock at an average exercise price of $3.59.  The
issuance of additional shares by the Company will result in a further dilution
of the Company, which could be significant; meaning your percentage ownership of
any such merged entity will be significantly less than your percentage ownership
of the Company.  If the Company issues additional shares either
outright or through any future options or warrants programs or requires
additional financing, further dilution in value and in the percentage ownership
represented by the purchaser’s Investment Units will occur.





Future
equity transactions, including exercise of options or warrants, could result in
dilution.From time
to time, we sell restricted stock, warrants, and convertible debt to investors
in other private placements.  Because the stock is restricted, the
stock is sold at a greater discount to market prices compared to a public stock
offering, and the exercise price of the warrants sometimes is at or even lower
than market prices.  These transactions cause dilution to existing
stockholders.  Also, from time to time, options are issued to
officers, directors, or employees, with exercise prices equal to
market.  Exercise of in-the-money options and warrants will result in
dilution to existing stockholders.  The amount of dilution will depend
on the spread between the market and exercise price, and the number of shares
involved but this dilution could be significant.





Restrictions on Transfer - No Public
Market for Restricted Shares.





The
shares of common stock of the Company are traded on the National Association of
Securities Dealers’ (NASD) Over-the-Counter Bulletin Board (OTCBB) under the
ticker symbol SOMD.  However, for shares that have been issued and are
restricted pursuant to SEC Rule 144 of the Securities Act of 1933 (the “Act”)
there is presently no public or private market for such Shares.  Such
Shares may only be offered or sold pursuant to registration under or an
exemption from the Act and have not been registered under the Act, as amended,
or any State securities laws and are being issued under Section 4(2) of the Act
and Rule 506 of Regulation D promulgated under the Act.





14




ITEM 1. DESCRIPTION OF
BUSINESS. - continued




RISK
FACTORS -
continued




Expect to Incur Losses for the
Foreseeable Future.





We expect
to incur losses for the foreseeable futureand we may never become
profitable.  Although our current revenue model contemplates revenues
from MyStudioTM sufficient to break-even within six to nine months, there is no
assurance that these revenues will occur.  In addition, we expect our
expenses to increase significantly as we develop the infrastructure necessary to
implement our business strategy.  Our expenses will continue to
increase as we: hire additional employees; pursue research and development;
expand our information technology systems; and lease and purchase more space to
accommodate our operations.





Costs
associated with designing, developing, manufacturing, marketing and developing
the infrastructure we will need to support our customers will depend upon many
factors, including the number of MyStudioTM locations.  Therefore, we
cannot now determine the amount by which our expenses will increase as we
grow.





Possible Claims That the Company Has
Violated Intellectual Property Rights of Others.





The
Company is not subject to any dispute, claim or lawsuit or threatened lawsuit
alleging the violation of intellectual property rights of a third
party.  The Company believes MyStudioTM is not in violation of any
patents claimed by others. To the extent that the Company is ever alleged to
have violated a patent or other intellectual property right of a third party, it
may be prevented from operating its business as planned, and it may be required
to pay damages, to obtain a license, if available, to use the patent or other
right or to use a non-infringing method, if possible, to accomplish its
objectives.  Any of these claims, with or without merit, could subject
the Company to costly litigation and the diversion of their technical and
management personnel.  If the Company incurs costly litigation and its
personnel are not effectively deployed, the expenses and losses incurred by them
will increase, and their profits, if any, will decrease.





Business Plans and Operational
Structure May Change.





We will
continually analyze our business plans and internal operations in light of
market developments.  As a result of this ongoing analysis, we may
decide to make substantial changes in our business plan and
organization.  In the future, as we continue our internal analysis and
as market conditions and our available capital change, we may decide to make
organizational changes and/or alter some or all of our overall business
plans.





Reliance on
Management.





The
Company believes that its present management has the experience and ability to
successfully implement its business plan for the foreseeable
future.  However, it is likely that the Company will continue to add
to its management and therefore will recruit additional persons to key
management positions in the future.  Should the Company be
unsuccessful in recruiting persons to fill the key positions or in the event any
of these individuals should cease to be affiliated with the Company for any
reason before qualified replacements can be found, there could be material
adverse effects on the Company's business and prospects.  Each new
officer, director, and other key personnel, will have an employment agreement
with the Company which will contain provisions dealing with confidentiality of
trade secrets, ownership of patents, copyrights and other work product, and
non-competition.  Nonetheless, there can be no assurance that these
personnel will remain employed for the entire duration of the respective terms
of such agreements or that any employee will not breach covenants and
obligations owed to the Company.





In
addition, all decisions with respect to the management of the Company will be
made exclusively by the officers and directors of the Company and its
subsidiaries.  Investors will only have rights associated with
minority ownership interest rights to make decisions that affect the
Company.  The success of the Company, to a large extent, will depend
on the quality of the directors, officers and senior management of the Company
and subsidiaries.





Inability to Attract and Retain
Qualified Personnel.





The
future success of the Company depends in significant part on its ability to
attract and retain key management, technical and marketing
personnel.  Competition for highly qualified professional, technical,
business development, and management and marketing personnel is
intense.  We may experience difficulty in attracting new personnel,
may not be able to hire the necessary personnel to implement our business
strategy, or we may need to pay higher compensation for employees than we
currently expect.  A shortage in the availability of required
personnel could limit the ability of the Company to grow.  We cannot
assure you that we will succeed in attracting and retaining the personnel we
need to grow.





15





ITEM 1. DESCRIPTION OF
BUSINESS.-continued




RISK
FACTORS-
continued





Inability to Manage Rapid
Growth.





The
Company expects to grow very rapidly.  Rapid growth often places
considerable operational, managerial and financial strain on a
business.  To successfully manage rapid growth, the Company must
accurately project its rate of growth and:





·
            rapidly
      improve, upgrade and expand its business
  infrastructures;


·
            deliver
      its product and services on a timely
basis;


·
            maintain
      levels of service expected by clients and
  customers;


·
            maintain
      appropriate levels of staffing;


·
            maintain
      adequate levels of liquidity; and


·
            expand
      and upgrade its technology, transaction processing systems and network
      hardware or software or find third parties to provide these
      services.





Our
business will suffer if the Company is unable to successfully manage its
growth





Effects of Amortization
Charges.





Our
losses will be increased, or our earnings, if we have them in the future, will
be reduced, by charges associated if the Company issues
options.  Subsequent to June 30, 2007, we have adopted a stock
incentive plan for the benefit of our directors, officers, employees and
consultants.  The total unearned stock-based compensation will be
amortized as a stock-based compensation expense in our consolidated financial
statements over the vesting period of the applicable options or shares,
generally three years in the case of options granted to employees, officers and
directors and one year in the case of options granted to non-employee directors,
consultants and third parties.  These types of charges may increase in
the future.  The future value of these potential charges cannot be
estimated at this time because the charges will be based on the future value of
our stock.





Dividend
Policy





There can
be no assurance that the proposed operations of the Company will result in
significant revenues or any level of profitability.  We do not
anticipate paying cash dividends on our capital stock in the foreseeable
future.  We plan to retain all future earnings, if any, to finance our
operations and for general corporate purposes.  Any future
determination as to the payment of dividends will be at our Board of Directors’
discretion and will depend on our financial condition, operating results,
current and anticipated cash needs, plans for expansion and other factors that
our Board of Directors considers relevant.  No dividends have been
declared or paid by the Company, and the Company does not contemplate paying
dividends in the foreseeable future.





Conflicts of
Interest.





Existing
and future officers and directors may have other interests to which they devote
time, either individually or through partnerships and corporations in which they
have an interest, hold an office, or serve on boards of directors, and each may
continue to do so.  As a result, certain conflicts of interest may
exist between the Company and its officers and/or directors that may not be
susceptible to resolution.  All potential conflicts of interest will
be resolved only through exercise by the directors of such judgment as is
consistent with their fiduciary duties to the Company and it is the intention of
management to minimize any potential conflicts of interest.





Voting
Control.





As a
result of the acquisition of SO Entertainment, certain persons, either
individually or acting together, are able to elect a majority of Directors or to
authorize or defeat any proposal presented to the stockholders for
action.








16





ITEM 1. DESCRIPTION OF
BUSINESS.-continued




SELECTED FINANCIAL
DATA





Set forth
below is selected financial data derived from the Company's Financial
Statements, some of which appear elsewhere in this Report.  This data
should be read in conjunction with the Financial Statements, included elsewhere
in this Report.








Year
      Ended
              June
      30,
              2007
            
            
            Year
      Ended
              June
      30, 2006
            
            
            Year
      Ended
              June
      30, 2005
            
            
            Year
      Ended
              June
      30,
              2004
            
            
            Year
      Ended
              June
      30,
              2003Cash
            
            $
            417,236
            
            
            $
            207
            
            
            $
            ---
            
            
            $
            ---
            
            
            $
            ---Operating
      Revenue
            
            $
            ---
            
            
            $
            ---
            
            
            $
            ---
            
            
            $
            ---
            
            
            $
            ---Net
      Loss
            
            $
            (5,630,587
            )
            
            $
            (107,973
            )
            
            $
            (106,677
            )
            
            $
            (107,613
            )
            
            $
            (118,808
            )Net
      Loss per share of Common Stock
            
            $
            (0.80
            )
            
            $
            (0.08
            )
            
            $
            (0.10
            )
            
            $
            (0.10
            )
            
            $
            (0.11
            )Working
      Capital (deficit)
            
            $
            259,310
            
            
            $
            (496,520
            )
            
            $
            (1,322,130
            )
            
            $
            (1,264,203
            )
            
            $
            (1,178,340
            )Total
      Assets
            
            $
            1,759,007
            
            
            $
            588,306
            
            
            $
            ---
            
            
            $
            ---
            
            
            $
            ---Total
      Liabilities
            
            $
            385,477
            
            
            $
            1,078,526
            
            
            $
            1,322,130
            
            
            $
            1,264,203
            
            
            $
            1,178,340Stockholder’s
      Equity (deficit)
            
            $
            1,373,530
            
            
            $
            (490,490
            )
            
            $
            (1,322,130
            )
            
            $
            (1,264,203
            )
            
            $
            (1,178,340
            )







ITEM 2.
DESCRIPTION OF PROPERTY.





In
January 2006, the Company entered into a one-year lease for approximately 5,400
square feet of office space located at 7650 E. Evans Rd., Suite C, Scottsdale,
Arizona 75260.  The lease was extended for an additional year ending
January 31, 2007.  The lease expense is $6,400 per month.







ITEM 3. LEGAL PROCEEDINGS.





To the best knowledge of our management,
there are no material litigation matters pending or threatened against
us.







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





On April
16, 2007, a majority of the shareholders of the Company and a majority of the
shareholders of SO Entertainment approved the acquisition of SO Entertainment by
the Company.  No further matters were submitted to a vote of our
securities holders during the fiscal year ended June 30, 2007.





17





PART II





ITEM 5. MARKET FOR
THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.





MARKET
INFORMATION





Studio
One’s common stock has been traded on the Over the Counter Bulletin Board (the
OTC Bulletin Board”) under the following various symbols:




DVGL
            -
            Prior
      to January 12, 1998DVUI
            -
            January
      12, 1998 to May 18, 2004DVSO
            -
            May
      18, 2004 to April 20, 2006SOMD
            -
            From
      April 20, 2006





The
following table sets forth the range of high and low bid quotations for each
fiscal quarter for the last two fiscal years.  These quotations
reflect inter-dealer prices without retail mark-up, markdown, or commissions and
may not necessarily represent actual transactions.




PER
SHARE COMMON STOCK BID PRICE BY QUARTER





For the Fiscal Year Ending
      on June 30, 2007
            
            
            High
            
            
            LowQuarter Ended June 30,
      2007
            
            
            6.80
            
            
            4.20Quarter Ended March 31,
      2007
            
            
            6.95
            
            
            5.44Quarter Ended December 31,
      2006
            
            
            6.90
            
            
            3.75Quarter Ended September 30,
      2006
            
            
            4.05
            
            
            2.00





For the Fiscal Year Ending
      on June 30, 2006
            
            
            High
            
            
            LowQuarter Ended June 30,
      2006
            
            
            4.00
            
            
            0.60Quarter Ended March 31,
      2006
            
            
            3.00
            
            
            0.30Quarter Ended December 31,
      2005
            
            
            4.50
            
            
            1.45Quarter Ended September 30,
      2005
            
            
            4.90
            
            
            1.98





HOLDERS





As of
June 30, 2007, the number of stockholders of record according to the Company’s
transfer agent, not including beneficial owners whose shares are held by banks,
brokers and other nominees, was approximately 325.  Because many of our
shares are held by brokers and other institutions on behalf of shareholders, we
are unable to estimate the total number of stockholders represented by these
record holders.  Consequently, the actual number of stockholders of
record as of the date of this Report was not available. The Company believes,
however, that it has approximately 1,250 stockholders in total.





DIVIDENDS





The
Company has paid no dividends on its Common Stock since its inception and does
not anticipate or contemplate paying cash dividends in the foreseeable
future.




Pursuant to the terms of the Company's Series A
Convertible Preferred Stock, a 5% annual dividend is due and owing. Pursuant to
the terms of the Company Series B Convertible Preferred stock, an 8% annual
dividend is due and owing. As of June 30, 2007, the Company has not declared
dividends on Series A or B preferred stock. The unpaid cumulative dividends
totaled approximately $148,075.  See Note 6 of Notes to Financial
Statements.





18





ITEM 5. MARKET
FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. - continued





SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES FOR FISCAL YEARS 2007 AND
2006





FISCAL YEAR 2007





During
fiscal year ended June 30, 2007, the Company accepted subscriptions for
1,001,835 shares of unregistered restricted shares of common stock at an average
price per share of $1.90 for a total of $1,899,500 and agreed to issue 847,163
shares pursuant to warrants granted in connection with such
placements.  The warrants may be exercised at any time within a
two-year period beginning on the date of the respective investments at an
average exercise price of $3.19.  In addition, the Company issued
456,752 shares of common stock for consulting, legal and other services valued
at $2,224,147 and 162,828 shares to retire $925,710 in debt and associated
interest.  On April 17, 2007, the Company issued 7,000,000 shares in
exchange for the shares of Studio One Entertainment, Inc., completing its
acquisition of 100% of the issued and outstanding shares of SO
Entertainment.





FISCAL YEAR 2006





During
fiscal year ended June 30, 2006, the Company issued 478,571 unregistered
restricted shares of common stock at a price per share of $0.42 for a total of
$199,000; 839,227 shares of restricted common stock in purchase of three
promissory notes made by SO Entertainment in 2004 and 2005 with total principal
of $275,000 and accrued interest receivable of $38,360 for a total of $313,360;
50,000 shares restricted common stock of the Company in purchase of 50,000
shares of SO Entertainment common stock; and 300,000 shares of the Company's
common stock to consultants for services rendered valued at
$332,200.






ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





FISCAL YEARS 2007 AND
2006





RESULTS OF OPERATIONS





The
Company had no operating revenue in either fiscal year 2007 or
2006.





The net
loss for the fiscal year ended June 30, 2007, was $5,630,587 compared with a net
loss of $107,973 for the fiscal year ended June 30, 2006.  As a result
of the intensive research and development program embarked upon at the end of
fiscal year 2006, Research & Development costs increased from zero in fiscal
year 2006 to $457,670 in fiscal year 2007.  These costs included
persons engaged on a contractual basis to develop MyStudioTM and its intellectual
components, as well as outside expenses incurred to construct a working
prototype and the first production model and the hardware and software necessary
to make the studio fully operational.





General
and Administrative costs for fiscal year 2007 increased by approximately $4.75
million over fiscal year 2006 which included a one-time charge in fiscal year
2007 in the amount of $2,322,269 for Stock Warrants issued to various investors
in connection with equity raises during the year.  This increase is
attributable to several events.  First, the active pursuit of the new
business concept offered in connection with the then pending acquisition of
Studio One Entertainment, Inc., was accompanied by expenses directly associated
with the undertaking.  Additional personnel, such as software
developers, design engineers, administrative staff and others were hired,
increasing expenses substantially.  The largest increases in general
and administrative expenses came, however, in the form of outside services
secured by the Company without, for the most part, the outlay of
cash.  These included: financial advisory services ($1,017,500), legal
and professional services ($335,973), and technical and other services
($470,200).  For these services, the Company issued shares of common
stock valued, for financial statement purposes, at the average between the high
and low prices of the Company’s Common Stock on the date of grant.  In
addition, the Company incurred a one-time charge in fiscal year 2007 in the
amount of $2,322,269 for Stock Warrants issued to various investors in
connection with equity raises
during the year.  We elected to use the Black-Scholes option-pricing
model to determine the fair value of stock option based awards under SFAS 123R,
consistent with that used for pro-forma disclosures under SFAS No. 123, Accounting for Stock-Based
Compensation.





19




ITEM 6. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. continued




RESULTS OF
OPERATIONS continued





In
contrast to increases in general and administrative expenses, interest expense
declined from $67,405 in fiscal year 2006 to $22,844 in fiscal year
2007.  This decline is attributed to the reduction in outstanding
short-term debt in the form of extinguishment and conversion as discussed below
and elsewhere in this Report.





For the
fiscal years 2007 and 2006 the Company did recognize other income of $8,267 and
$374,416, respectively, in the form of a gain on the extinguishment of
indebtedness barred by the statute of limitations. The extinguishments of these
various debts were non-cash transactions and did not result in an inflow of cash
to the Company.





By virtue
of the conversion of approximately $925,000 in debt to equity, the
extinguishment of some $385,000 in indebtedness barred by the statute of
limitations, and the infusion of new capital, the Company has improved its
liquidity substantially.  At June 30, 2005, the Company had a Working
Capital deficit of
$1,322,130.  By the end of fiscal year 2007, the Company had a Working
Capital surplus of
$259,310.





NET OPERATING
LOSSES




We have
accumulated approximately $30 million of net operating loss carryforwards as of
June 30, 2007, which the Company believes may be offset against future taxable
income through 2026.  The use of these losses to reduce future income
taxes will depend on several factors including the generation of sufficient
taxable income prior to the expiration of the net operating loss
carryforwards.  In the event of certain changes in control, there will
be an annual limitation on the amount of net operating loss carryforwards which
can be used.  No tax benefit has been reported in the financial
statements for the year ended June 30, 2007 because the potential tax benefits
of the loss carryforward is offset by valuation allowance of the same
amount.





LIQUIDITY AND CAPITAL
RESOURCES





The
Company had no revenue collections during the fiscal year ended June 30,
2007.





Subsequent
to 2002, when its then operations as Dimensional Visions Incorporated were
discontinued, the Company has met its financial needs through debt financing and
through the sales and issuances of its securities.  During the fiscal
year ended June 30, 2007, the Company has undertaken several sales of
non-registered securities in a series of private transactions.  The
Company issued 1,001,835 unregistered restricted shares at an average price of
$1.90 per share for a total of $1,899,500 and granted warrants to these security
holders to acquire an additional 847,163 shares at an average exercise price of
$3.19 at any time within two years after the dates of their respective
investments.  All shares issued were subject to the restrictions set
forth in Section 144 of the Securities Exchange Act of 1933.  The
securities were sold only to persons who met the Accredited Investor
requirements and other requirements set forth in the offering
memoranda.





Based on
the Company’s current plans, management has determined that the funds currently
available to the Company will be inadequate to implement the business plan of
the Company.  In addition, the Company is unable to provide assurance
that its planned levels of revenue, costs and expenses will be
achieved.  Until the Company has achieved a sales level sufficient to
break even, it will not be self-sustaining or be competitive in the areas in
which it intends to operate.  The Company will require additional funding
for continued operations and will therefore be dependent upon its ability to
raise additional funds through bank borrowing, equity or debt financing, or
asset sales. We expect to need to access the public and private equity or debt
markets periodically to obtain the funds we need to support our operations and
continued growth.  There is no assurance that the Company will be able
to obtain additional funding when needed, or that such funding, if available,
can be obtained on terms acceptable to the Company.  If we require, but are
unable to obtain, additional financing in the future on acceptable terms, or at
all, we will not be able to continue our business strategy, respond to changing
business or economic conditions, withstand adverse operating results or compete
effectively.  If the Company cannot obtain needed funds, the Company
may be forced to curtail, in whole or in part, or cease its activities
altogether.  If additional shares are issued to obtain financing, current
shareholders will suffer a dilutive effect on their percentage of stock
ownership in the Company.





20




ITEM 6. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. continued


LIQUIDITY AND CAPITAL
RESOURCES - continued




Although
the Company intends to engage in a subsequent equity offering of its securities
to raise additional working capital for operations, the Company has no firm
commitments for any additional funding, either debt or equity,  at the
present time.  Insufficient financial resources may require the
Company to delay or eliminate all or some of its development, marketing and
sales plans, which could have a material adverse effect on the Company's
business, financial condition and results of operations. There is no certainty
that the expenditures to be made by the Company will result in a profitable
business proposed by the Company.




RECENT ACCOUNTING
PRONOUNCEMENTS.




In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, "Fair Value Measurements" which defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements.  Where applicable, SFAS No. 157 simplifies and codifies
related guidance within GAAP and does not require any new fair value
measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. Earlier adoption is encouraged.  The Company does not
expect the adoption of SFAS No. 157 to have a significant effect on its
financial position or results of operation.




In June
2006, the Financial Accounting Standards Board issued FASB Interpretation No.
48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109", which prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return.  FIN 48 also
provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. FIN 48 is effective
for fiscal years beginning after December 15, 2006.  The Company does
not expect the adoption of FIN 48 to have a material impact on its financial
reporting, and the Company is currently evaluating the impact, if any, the
adoption of FIN 48 will have on its disclosure requirements.






ITEM 7. FINANCIAL STATEMENTS.




Our
financial statements as of and for the fiscal years ended June 30, 2007 and 2006
have been examined to the extent indicated in their report by Moore &
Associates, Chartered, independent certified public accountants, and have been
prepared in accordance with generally accepted accounting principles and
pursuant to Regulation S-B as promulgated by the SEC.  The
aforementioned financial statements are included herein starting with page
F-1.






ITEM 8. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.


The
auditor for the Company is the firm of Moore & Associates, Chartered, 2675
S. Jones Blvd., Suite 109, Las Vegas, NV 89146, who were engaged on May 18,
2006.
 
 The audit
reports of Moore & Associates on the financial statements for the year ended
June 30, 2006 contained a separate paragraph stating:  "The Company
has incurred losses since inception of $30,475,960 and has no revenues which
raises substantial doubt about its ability to continue as a going
concern.  The future of the Company as an operating business will
depend on its ability to (1) obtain sufficient capital contributions and/or
financing as may be required to sustain its operations and (2) ultimately
achieve revenues from its personal recording studio kiosk business. Management's
plan to address these issues includes, (a) continued exercise of tight cost
controls to conserve cash, (b) obtaining additional financing, and (c) place in
service its personal recording kiosks.  The financial statements have
been prepared on a going concern basis, which contemplates the realization and
settlement of liabilities and commitments in the normal course of
business.  The available funds at June 30, 2007, are not sufficient to
satisfy the present cost structure. Management recognizes that the Company must
obtain additional funding to enable it to continue operations.  Unless
the Company is able to merge with or acquire another operating entity or other
business combination it may not be able to continue as a going
concern.”
 
 There
were no other adverse opinions, disclaimers of opinions, or qualifications or
modifications as to uncertainty, audit scope, or accounting
principles.
  During
the two most recent fiscal years, there were no disagreements with Moore &
Associates on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
the satisfaction of Moore & Associates, would have caused it to make
reference to the subject matter of the disagreement in connection with its
report.  The registrant has requested Moore & Associates to
furnish it a letter addressed to the Commission stating whether it agrees with
the above statements.
  There
were no other "reportable events" as that term is described in Item
304(a)(1)(iv) of Regulation S-B occurring within the registrant's two most
recent fiscal years.
  During
the registrant's two most recent fiscal years and May 18, 2006, the date prior
to the engagement of Moore & Associates, Chartered, neither the registrant
nor anyone on its behalf consulted Moore & Associates, Chartered, regarding
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the registrant's financial statements.
 
 21
 
 ITEM 8A. CONTROLS AND
PROCEDURES.
 
 Evaluation of disclosure controls and
procedures
 
 Our Chief
Executive Officer, President, and Chief Financial Officer (the "Certifying
Officers") are responsible for establishing and maintaining disclosure controls
and procedures for the Company.  The Certifying Officers have designed
such disclosure controls and procedures to ensure that material information is
made known to them, particularly during the period in which this report was
prepared.
 
 The
Certifying Officers have evaluated the effectiveness of the Company's
“disclosure controls and procedures” (as defined in the Exchange Act, Rules
13a-15(e) and 15-d-15(e)) as of the end of each of the periods covered by this
report (the “Evaluation Date”).  Based upon that evaluation, the
Certifying Officers concluded that, as of June 30, 2007 and June 30, 2006, our
disclosure controls and procedures were effective to ensure that the information
we were required to disclose in reports that we file or submit under the
Securities and Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.  The Certifying Officers based their conclusion on
the fact that the Company had suspended operations in 2002 and had not
recommenced operations, and that the activities requiring disclosure were de
minimis, all of which were the subject of review by the Company’s outside
auditors.  There have been no significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
 
 Internal Control over Financial
Reporting
 
 Management
is responsible for establishing and maintaining adequate internal control over
financial reporting for the Company.  Management used the framework of
conducting an extensive review of existing documentation and transactions to
make that evaluation.  As of June 30, 2007, the Company had a
deficiency in internal controls. This deficiency is attributed to the fact that
the Company has an inadequate number of persons knowledgeable about US GAAP
principles among whom it can segregate accounting tasks within the company so as
to ensure the separation of duties between those persons who approve and issue
payment from those persons who are responsible to record and reconcile such
transactions within the Company’s accounting system.  This control
deficiency will be monitored and attention will be given to the matter as the
Company begins operations as an active business entity. Management has concluded
that this control deficiency constituted a material weakness that continued
throughout fiscal year 2007.  There were no significant changes in our
internal control over financial reporting or in other factors that occurred
during our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, internal control over financial
reporting.
 
 The
Company’s management is reviewing the Company’s internal controls over financial
reporting to determine the most suitable recognized control
framework.  The Company will give great weight and deference to the
product of the discussions of the SEC’s Advisory Committee on Smaller Public
Companies (the “Advisory Committee”) and the Committee of Sponsoring
Organizations’ task force entitled Implementing the COSO Control Framework in
Smaller Businesses (the “Task Force”).  Both the Advisory Committee
and the Task Force are expected to provide practical, needed guidance regarding
the applicability of Section 404 of the Sarbanes-Oxley Act to small business
issuers.  The Company’s management intends to perform the evaluation
required by Section 404 of the Sarbanes-Oxley Act at such time as the Company
adopts a framework.  For the same reason, the Company’s independent
registered public accounting firm has not issued an “attestation report” on the
Company management’s assessment of internal controls.
  ITEM
8B.  OTHER INFORMATION.
  Shell
Company Status
  When
Studio One’s predecessor company, Dimensional Visions Incorporated, ceased
operations in 2002, the Company reverted to what is known as a shell
company.  The SEC has recently amended the provisions of Rule 144,
effective February 2008 relating to shell companies.  Those changes
provide, among other things, that the provisions of Rule 144 concerning the
resale of restricted or non-restricted securities are not available to
shareholders of an issuer that had been a shell company (as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended) until it ceases to
be a shell company and one year has elapsed from the date that the issuer filed
“Form 10 information” with the Commission.
  Studio
One Media, Inc. (the “Company”) ceased being a shell company on April 17,
2007, when it finalized the purchase of Studio One Entertainment,
Inc.  Form 10-KSB filed by Studio One Media, Inc. (the “Company”) for
the year ended June 30, 2007, and the Company’s Form 10-QSB for the
quarterly periods ended September 30, 2007 and December 31, 2007
incorrectly indicated that the Company remained a shell
company.
  On
September 28, 2007, upon filing of its Form 10-KSB for the fiscal year ended
June 30, 2007, the Company filed all of its “Form 10 Information” with the
Securities and Exchange Commission.  The disclosure made under the
above mentioned Form 10-KSB is incorporated by reference
herein.   On May 12, 2008, the Company filed a Form 8-K providing
information with respect to the change in its status as a shell company,
incorporating by reference the exhibits set forth in the Form 10-KSB for
the fiscal year ended June 30, 2007.
 22
 
 PART III
 
 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
 
 The
directors and executive officers of the Company are as follows:
 
 Name
                Age
                PositionPreston
      J. Shea
                59
                Director,
      President, CEO, SecretaryKenneth
      R. Pinckard
                61
                Director,
      Vice President, CFOBarry
      M. Goldwater, Jr.
                69
                Director,
      ChairmanShelly
      Yakus
                61
                Vice
      PresidentMatthew
      Long
                41
                Vice
      President
 
 The
directors and officers of wholly owned operating subsidiary, Studio One
Entertainment, Inc., are:
 
 Name
                Age
                PositionLawrence
      G. Ryckman
                48
                Director,
      President, CEO, Secretary
 
 Preston J. Shea, President,
Secretary, and Director was the sole officer and director of the Company from
September 2003 to March 2006.  He is licensed as an attorney in the
State of Arizona and as a Barrister and Solicitor by the Law Society of Upper
Canada in Ontario. From 1999 to present, he has been vice president and general
counsel for an international business organization with offices in Canada and
the United States and representative offices in Russian, China, Austria and
Mexico. From 1990 to 1999, he practiced international immigration law and
business law in Ontario, Canada, Detroit, Michigan and Phoenix, Arizona, with an
emphasis on the North American Free Trade Agreement. Prior to that, from 1986 to
1990, he was employed by the government of Canada in various positions including
Chief of Staff for the Federal Minister of the Environment, Special Assistant to
the Federal Minister of International Trade, and as a Senior Investment Advisor
in the Los Angeles offices of the Canadian Consulate. Prior to his tenure with
the Canadian government, he was actively engaged in various legal and business
positions in the private sector.
 
 Kenneth Pinckard is a member
of the State Bar of Arizona with extensive experience in startup ventures,
investments, corporate acquisitions and mergers, turn-arounds and
reorganizations, corporate finance, tax, bankruptcy matters, and commercial real
estate development, construction, management and leasing.   Mr. Pinckard
holds a B.B.A., Accounting from the University of Texas at Austin and a Juris
Doctorate from the University of Houston.
 
 Barry M. Goldwater, Jr.,
served as a U.S. Congressman for 14 years, representing a district in northern
Los Angeles County.  Prior to that he was a stockbroker and partner in
the Los Angeles securities firm of Noble Cook, Inc. (now Wedbush Securities)
where he developed an institutional customer base and traded securities on all
stock exchanges.  While in Congress, he served on a number of
committees, including Committee on Science and Technology and the Joint
Committee on Energy.  He authored the Privacy Act of
1974.  Since retiring from Congress in 1984, Barry has been actively
involved in private business activities and has held a number of responsible
positions involving finance and management.  He is presently on the
Boards of two companies in addition to Studio One.  Mr. Goldwater
holds a degree in Marketing from Arizona State University.
 
 Shelly Yakus is a renowned
music producer, audio engineer/mixer and recording studio designer. Shelly has
engineered/mixed recordings for some of the world’s best known artists including
John Lennon, Stevie Nicks, Alice Cooper, Van Morrison, Tom Petty, Dire Straits,
Blue Oyster Cult, Bob Seger, Amy Grant, Don Henley, U2 and Madonna. Known as
“Golden Ears,” he is also widely respected for his expertise in recording studio
design and acoustics. Mr. Yakus co-designed, equipped and supervised
construction of the industry leading A&M music recording studios in Los
Angeles and served as vice-president of A&M studios from 1985-1995. He was
previously vice President of the Record Plant recording studios in New York and
a partner at Tongue and Groove Studios in Philadelphia. The music that Mr. Yakus
has engineered, produced or mixed has grossed over a billion dollars in sales
and in 1999 he was nominated for induction into the Rock and Roll Hall of Fame.
Mr. Yakus’ career and accomplishments are widely covered in publications such as
Rolling Stone, Mix Magazine, Audio Engineer and Spin.
 
 23
 
 ITEM 9. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT.- continued
 
 Mr. Matthew Long,anEmmy Award winner, has
enjoyed an extensive career as a producer, director, editor, director of
photography and writer for television, feature film and video
productions.  Mr. Long is responsible for producing and managing the
video content for Studio One’s interactive studios and related television
production.
 
 Larry Ryckman is an award
winning entrepreneur and businessman with notable achievements in the
Entertainment, High Technology and Sports industries.  Larry
previously co-founded and served as president and CEO of
entertainment/technology company, QSound, Ltd., which develops proprietary sound
technologies for the entertainment, computer, cell phone and video game
industries. During his tenure as president, QSound grew from a start-up to a
NASDAQ listed, internationally recognized player in the industry and secured
over a dozen patents.  Larry completed licensing and joint venture
agreements with multi-national corporations such as Polygram, Nintendo, JVC,
Coca Cola, and NEC.
 
 Directors
serve until the next annual meeting or until their successors are qualified and
elected. Officers serve at the discretion of the Board of
Directors.
 
 INDEMNIFICATION OF DIRECTORS AND
OFFICERS
 
 The
Certificate of Incorporation and Bylaws of the Company provide that the Company
will indemnify and advance expenses, to the fullest extent permitted by the
Delaware General Corporation Law, to each person who is or was a director,
officer or agent of the Company, or who serves or served any other enterprise or
organization at the request of the Company (an "Indemnitee").  Under
Delaware law, to the extent that an Indemnitee is successful on the merits of a
suit or proceeding brought against him or her by reason of the fact that he or
she was a director, officer or agent of the Company, or serves or served any
other enterprise or organization at the request of the Company, the Company will
indemnify him or her against expenses (including attorneys' fees) actually and
reasonably incurred in connection with such action.  If unsuccessful
in defense of a third-party civil suit or a criminal suit, or if such a suit is
settled, an Indemnitee may be indemnified under Delaware law against both (i)
expenses, including attorneys' fees, and (ii) judgments, fines and amounts paid
in settlement if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
Company, and, with respect to any criminal action, had no reasonable cause to
believe his other conduct was unlawful.  If unsuccessful in defense of
a suit brought by or in the right of the Company, where the suit is settled, an
Indemnitee may be indemnified under Delaware law only against expenses
(including attorneys' fees) actually and reasonably incurred in the defense or
settlement of the suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests of the
Company except that if the Indemnitee is adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the Company, he or she
cannot be made whole even for expenses unless a court determines that he or she
is fully and reasonably entitled to indemnification for such
expenses.  Also under Delaware law, expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Company in advance of the final disposition of the suit, action or proceeding upon receipt
of an undertaking by or on behalf of the officer or director to repay such
amount if it is ultimately determined that he or she is not entitled to be
indemnified by the Company.  The Company may also advance expenses
incurred by other employees and agents of the Company upon such terms and
conditions, if any, that the Board of Directors of the Company deems
appropriate.  Insofar as indemnification for liabilities arising under
the Act may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, in the opinion of the Commission,
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
 
 COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT
 
 Section
16(a) of the Securities Exchange Act of 1934 requires executive officers and
directors, and persons who beneficially own more than 10% of any class of the
Registrant’s equity securities (“Reporting Persons”) to file initial reports of
ownership and reports of changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (“SEC”).  Executive officers,
directors and beneficial owners of more than 5% of any class of the Registrant’s
equity securities are required by SEC regulations to furnish the Registrant with
copies of all Section 16(a) forms they file.
 
 24
 
 ITEM 9. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT.- continued
  COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT -continued
  Based
solely on a review of the copies of such forms furnished to the Registrant
during or with respect to fiscal 2007, and certain written representations from
executive officers and directors, the Registrant is aware that the Directors and
certain officers have inadvertently failed to file a Form 3 at the time of their
respective election to the Board.  Except as stated in the preceding
sentence, the Company believes that all Reporting Persons have complied on a
timely basis with all filing requirements applicable to them.
 
 CODE OF ETHICS
 
 The
Company maintains a Code of Ethics that was filed As Exhibit 14 with its Annual
Report on Form 10-KSB for 2004 filed on November 15, 2004.  That code
applies to the chief executive, financial and accounting officers, controller
and persons performing similar functions.  If the Company amends the
code or grants a waiver from the code with respect to the foregoing persons, it
will post that amendment or waiver on its website.
 
 AUDIT COMMITTEE
 
 The
Company’s Audit Committee consists of Messrs. Pinckard and
Shea.  Neither of those members has been designated by the Board or
the Audit Committee as an “audit committee financial expert.”  The
Board is seeking to fill a board seat with a member that would fulfill that
qualification.
 
 
 ITEM 10.
EXECUTIVE COMPENSATION.
 
 SUMMARY COMPENSATION TABLE
 
 The
following table sets forth the total compensation earned by or paid to the
Company's Officers for the last two fiscal years.  No officer of the
Company earned more than $100,000 in the last three fiscal years.
 
 Long Term
      CompensationAnnual
      Compensation
                Awards
                PayoutsName and Principal
      Position
                Fiscal
                    Year
                Salary
      ($)
                Bonus
      ($)
                Other Annual Compensation
      ($)
                Restricted Stock Award(s)($)
                Securities Underlying
      Options/
                    SARs
      (#)
                LTIP
                    Payout($)
                All Other Compensation
      ($)Preston
      J. Shea  President,
                2007
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $53,500Secretary
                2006
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $ 
          -0-Kenneth R. Pinckard, Vice
                2007
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $59,800President,
      Treasurer
                2006
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $     
      -0-Shelly
      Yakus, Vice
                2007
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $
      6,000President
                2006
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $  
        -0-Matthew Long, Vice
                2007
                30,940
                -0-
                -0-
                -0-
                -0-
                -0-
                $   
        -0-President
                2006
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $      -0-Lawrence
      E. Meyers, Vice
                2007
                67,500
                -0-
                -0-
                -0-
                -0-
                -0-
                $ 6,000President
                2006
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $    
       -0-Lawrence
      G. Ryckman,
                2007
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $
      6,000President
      of Studio One
                2006
                -0-
                -0-
                -0-
                -0-
                -0-
                -0-
                $   
        -0-Entertainment,
      Inc.
 
 
 25
 
 ITEM 10.
EXECUTIVE COMPENSATION.-continued
  EMPLOYMENT AND RELATED
AGREEMENTS
 
 The
Company has no employment agreements with any of its current management.
 
 EQUITY COMPENSATION
PLANS
 
 As of
June 30, 2007 our equity compensation plans were as follows:
 
 1999 Stock Option
Plan
 
 On
November 15, 1999, the Board of Directors adopted the 1999 Stock Option Plan
(the "1999 Plan").  This plan was approved by a majority of our
stockholders on January 28, 2000.  The purpose of the 1999 Plan is to
advance the interests of the Company by encouraging and enabling acquisition of
a financial interest in the Company by its officers and other key
individuals.  The 1999 Plan is intended to aid the Company in
attracting and retaining key employees, to stimulate the efforts of such
individuals and to strengthen their desire to remain with the
Company.  A maximum of 1,500,000 shares of the Company's common stock
is reserved for issuance under stock options to be issued under the 1999
Plan.  The option exercise price will be 100% of the fair market value
of the Company's common stock on the date the option is granted and will be
exercisable for a period not to exceed 10 years from the date of grant. As of
the date hereof, no options have been issued pursuant to this plan.
 
 2004 Stock Incentive
Plan
 
 On
February 28, 2004, the Board of Directors adopted the 2004 Stock Incentive Plan
(the "2004 Plan").  The purpose of the 2004 Plan is to advance the
interests of the Company by encouraging and enabling acquisition of a financial
interest in the Company by its officers and other key
individuals.  The 2004 Plan is intended to aid the Company in
attracting and retaining key employees, to stimulate the efforts of such
individuals and to strengthen their desire to remain with the
Company.  A maximum of 100,000 shares of the Company's common stock is
reserved for issuance under stock options to be issued under the 2004
Plan.  On May 24, 2004, the Company filed a Registration on Form S-8
with the Securities Exchange Commission covering the 100,000 shares provided by
this plan, at a maximum offering price of $1.00 per share.  As of June
30, 2007, the Company has issued all of the shares covered by the 2004
Plan.
 
 2006 Employee Stock Incentive
Plan
 
 On
October 13, 2006, the Board of Directors adopted the 2006 Employee Stock
Incentive Plan (the "2006 Plan"). The purpose of the 2006 Plan is to advance the
interests of the Company by encouraging and enabling acquisition of a financial
interest in the Company by its officers and other key
individuals.  The 2006 Plan is intended to aid the Company in
attracting and retaining key employees, to stimulate the efforts of such
individuals and to strengthen their desire to remain with the
Company.  A maximum of 100,000 shares of the Company's common stock is
reserved for issuance under stock options to be issued under the 2006
Plan.  On October 13, 2006, the Company filed a Registration on Form
S-8 with the Securities Exchange Commission covering the 100,000 shares provided
by this plan, at a maximum offering price of $1.00 per share.  As of
June 30, 2007, the Company has issued 62,718 shares covered by the 2006
Plan.
 
 2007 Non-Executive Employee Stock
Option Plan
 
 Subsequent
to June 30, 2007, the Board of Directors on August 28, 2007, approved the
Non-Executive Employee Stock Option Plan.  The purpose of the Employee
Stock Option Plan is to advance the interests of the Company by encouraging and
enabling acquisition of a financial interest in the Company by employees and
other key individuals.  The Employee Stock Option Plan is intended to
aid the Company in attracting and retaining key employees, to stimulate the
efforts of such individuals and to strengthen their desire to remain with the
Company.  A maximum of 1,000,000 shares of the Company's common stock
is reserved for issuance under stock options to be issued under the Employee
Stock Option Plan.  The option exercise price will be 100% of the fair
market value of the Company's common stock on the date the option is granted and
will be exercisable for a period not to exceed 2 years from the date of
grant.  The Employee Stock Option Plan is administered by the Board of
Directors or, at its direction, the Compensation Committee comprised of officers
of the Company.
 
 26
 
 ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
 The
following table sets forth certain information, as of June 30, 2007, concerning
shares of the Company’s common stock, the only class of securities that are
issued and outstanding, held by (1) each stockholder known to own beneficially
more than five percent of the common stock as of June 30, 2007 with the number
of outstanding shares at 11,362,739, (2) each of the directors, (3) each of the
executive officers, and (4) all of the directors and executive officers as a
group:
 
 Name and Address
      of
                  Beneficial Owner
      (1)
                Amount and Nature of Beneficial
      Ownership
                Percent of Class
      (2)Preston
      J. Shea
                  1
      Yonge Street, Suite 1801
                  Toronto,
      ON  M5E 1W7
                60,000
      Direct
                  (4)
                0.52%Barry
      M. Goldwater, Jr.
                  3104
      E. Camelback Rd., #274
                  Phoenix,
      AZ  85016
                50,000
      Direct
                  (4)
                0.44%Kenneth
      R. Pinckard
                  3104
      E. Camelback Rd. #245
                  Phoenix,
      AZ  85016
                None
                0.00%Lawrence
      G. Ryckman
                  13470
      N. 85th
      Place
                  Scottsdale,
      AZ  85260
                5,129,500
      Indirect
                  (3)
                44.65%Paul
      D. Fisher
                  8956
      Wonderland Ave
                  Los
      Angeles, CA  90046
                100,000
      Direct
                0.87%Shelly
      Yakus
                  1778
      Lantana Drive
                  Minden,
      NV  89423
                50,000
      Direct
                0.44%Matthew
      Long
                  17197
      N. 54th
      Avenue
                  Glendale,
      AZ  85308
                25,000
      Direct
                  (5)
                0.22%Andrea
      Dworshak
                  20701
      N. Scottsdale Rd., #107-235
                  Scottsdale,
      AZ  85255
                700,000
      Indirect
                  (6)
                6.09%Perry
      D. Logan
                  420
      Saint Andrews Court
                  Las
      Vegas, NV  89144
                1,376,438
      Direct
                11.98%
 
 
 Officers and Directors as a
      group (7 persons)
                5,414,500
                46.70%
 
 
 27
  ITEM 11. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. - continued
 
  (1)
                Except
      as otherwise indicated, we believe that the beneficial owners of Common
      Stock listed above, based on information furnished by such owners, have
      sole investment and voting power with respect to such shares, subject to
      community property laws where applicable.  Beneficial ownership
      is determined in accordance with the rules of the SEC and generally
      includes voting or investment power with respect to
      securities.
 
 (2)
                This
      table is based on 11,362,739 shares of Common Stock outstanding as of June
      30, 2007 plus options to purchase 125,000 shares granted to two directors
      and on officer after the date of this Report.  Shares of Common
      Stock subject to options or warrants currently exercisable, or exercisable
      within 90 days, are deemed outstanding for purposes of computing the
      percentage of the person holding such options or warrants, but are not
      deemed outstanding for purposes of computing the percentage of any other
      person.
 
 (3)
                The
      shares indirectly attributed to Lawrence Ryckman are held by
      affiliated entities.
 
 (4)
                Includes
      Option to purchase 50,000 shares of Common Shares at $4.09 per share that
      have been approved by the Board as of the date of filing of this
      Report.
 
 (5)
                Includes
      Option to purchase 25,000 shares of Common Shares at $4.09 per share that
      have been approved by the Board as of the date of filing of this
      Report.
 
 (6)
                The
      shares beneficially owned by Andrea Dworshak are held through Digital
      Crossings, LLC, an entity in which she is the sole member and
      manager.
 
  ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
 Other
than as disclosed below, none of the Company’s present directors, officers or
principal shareholders, nor any family member of the foregoing, nor, to the best
of the Company’s information and belief, any of its former directors, senior
officers or principal shareholders, nor any family member of such former
directors, officers or principal shareholders, has or had any material interest,
direct or indirect, in any transaction, or in any proposed transaction which has
materially affected or will materially affect the Company.
  During
the year ended June 30, 2006, Lawrence Ryckman, President of Studio One
Entertainment, Inc., either directly or through affiliated entities, loaned the
Company $93,948; during the year ended June 30, 2007, these same persons loaned
an additional $43,400 to the Company.  These funds were advance to
further the Research and Development Program of the Company.  During
the year ended June 30, 2007, the Company repaid $40,566 of these
loans.  At June 30, 2007, the amount owed Mr. Ryckman and his
affiliated entities was $96,782.  These loans are demand notes, to be
repaid at ten percent interest.
 
 On March
29, 2006, the Company entered into an agreement to acquire 100% of the issued
and outstanding shares of Studio One Entertainment, Inc., on a one-for-one,
stock-for-stock basis.  The purchase of SO Entertainment was
consummated on April 16, 2007.  At the date of the original agreement
and the date of the exchange, Lawrence Ryckman, Paul Fisher and Digital Crossing
owned or controlled directly or indirectly 6,387,500 of the 7 million shares of
SO Entertainment exchanged for Common Shares of the Company.
 
 Future
Transactions
 
 All
future affiliated transactions are expected to be made or entered into on terms
that are no less favorable to the Company than those that can be obtained from
any unaffiliated third party. A majority of the independent, disinterested
members of the Company’s Board of Directors are asked to approve future
affiliated transactions. The Company believes that of the transactions described
above have been on terms as favorable to it as could have been obtained from
unaffiliated third parties as a result of arm’s length
negotiations.
 
 Conflicts of
Interest
 
 In
accordance with the laws applicable to the Company, its directors are required
to act honestly and in good faith with a view to the Company’s best interests.
In the event that a conflict of interest arises at a meeting of the Board of
Directors, a director who has such a conflict is expected to disclose the nature
and extent of his interest to those present at the meeting and to abstain from
voting for or against the approval of the matter in which he has a
conflict.
 
 28
 
  ITEM 13. EXHIBITS
 
 The
following Exhibits are incorporated by reference:
 
 3.1
                Articles of
      Incorporation, dated May 12, 1988
  (a)
 3.1
                Certificate of
      Amendment of Articles of Incorporation of Dimensional Visions Incorporated
      dated January 16, 2006, attached as Exhibit to Form 10-KSB for FYE
      6-30-06. (f)
 3.2
                Certificate of
      Amendment of Articles of Incorporation of Elevation Media, Inc., dated
      March 24, 2006. (f)
 3.2
                Bylaws
      (a)
 3.3
                Certificate
      of Amendment of Certificate of Incorporation of Dimensional Visions
      Incorporated dated January 22, 2004.
    (f)
 4.1
                Certificate
      of Designation of Series A Convertible Preferred Stock, dated December 12,
      1992. (a)
 4.2
                Certificate
      of Designation of Series B Convertible Preferred Stock, dated December 22,
      1993. (a)
 4.3
                Certificate
      of Designation of Series P Convertible Preferred Stock, dated September
      11, 1995. (a)
 4.4
                Certificate
      of Designation of Series S Convertible Preferred Stock, dated
      August 28, 1995.
(a)
 4.5
                Certificate
      of Designation of Series C Convertible Preferred Stock, dated November 2,
      1995. (a)
 4.6
                Certificate of
      Designation of Series D and Series E Convertible Preferred Stock dated
      August 25, 1999.
(a)
 4.7
                Form of Warrant
      Agreement to debt holders, dated January 15, 1998.
      (a)
 4.8
                Form of Warrant
      Agreement to debt holders, dated April 8, 1998.
      (a)
 4.9
                Form of Warrant
      Agreement to participants in Private Placement dated April 8, 1998.
      (a)
 4.10
                Pledge Agreement
      dated January 11, 2001 with Dale Riker and Russ Ritchie.
      (b)
 4.11
                Investment Agreement
      dated December 13, 2000, with Swartz Private Equity, LLC.
      (b)
 4.12
                Merrill Lynch
      Portfolio Reserve Loan and Collateral Account Agreement, dated January 12,
      2002. (b)
 10.1
                1996 Equity
      Incentive Plan.
(a)
 10.2
                1999 Stock Option
      Plan. (a)
 10.3
                Employment Agreement
      dated January 1, 2001, with John D. McPhilimy.
      (c)
 10.4
                Employment Agreement
      dated July 1, 2001, with Bruce D. Sandig.
      (c)
 10.5
                Settlement Agreement
      and Release dated April 30, 2003, between the Company and Russell H.
      Ritchie, Dale E. Riker, Suntine Enterprises, LLC, and Cornerstone Wireless
      Communications, LLC.
(d)
 14(e)
                Dimensional Visions,
      Inc. Code of Ethics.
(e)
  (a)
                  Incorporated
      by reference from the Company’s registration Statement on Form SB-2 dated
      June 19, 2000 (Registration No.
333-30368).
 (b)
                  Incorporated
      by reference from the Company’s registration Statement on Form SB-2 dated
      July 10, 2001 (Registration No.
333-56804).
 (c)
                  Incorporated
      by reference from the Company’s Amendment No. 1 to Annual Report on Form
      10-KSB, dated February 22,
2002.
 (d)
                  Incorporated
      by reference from the Company’s Annual Report, Form 10-KSB for fiscal year
      ended June 30, 2003, filed October 15,
2003.
 (e)
                  Incorporated
      by reference from the Company’s Annual Report, Form 10-KSB for fiscal year
      ended June 30, 2004, filed November 15,
  2004.
 (f)
                  Incorporated
      by reference from the Company’s Annual Report, Form 10-KSB for fiscal year
      ended June 30, 2006, filed September 29,
  2006.
  
 The
following Exhibits are filed herewith:
  4.1
                    Form
      of Warrant issued to participants in 2007 Private
    Placements.10.1
                    Stock
      Purchase Agreement, dated March 29, 2006, between the Studio One
      Entertainment, Inc. and Dimensional Visions
  Incorporated.10.2
                    Exchange
      Agreement between Studio One Media, Inc., and Studio One Entertainment,
      Inc., dated April 16, 2007.
 10.3
                    Accord
      and Satisfaction, dated October 11, 2006, , between the Company and
      Russell H. Ritchie, Dale E. Riker, Suntine Enterprises, LLC, and
      Cornerstone Wireless Communications,
LLC.
 21.1
                    Subsidiaries
      of the Registrant
 23.1
                    Consent
      of Moore & Associates,
Chartered
 31.1
                    Certification
      of Chief Executive Officer pursuant to the Securities Exchange Act of
      1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
                    Certification
      of Chief Financial Officer pursuant to the Securities Exchange Act of
      1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.
 32.1
                    Certification
      of Chief Executive Officer pursuant to the Securities Exchange Act of
      1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
                    Certification
      of Chief Financial Officer pursuant to the Securities Exchange Act of
      1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
 
 29
  ITEM 14 PRINCIPAL
ACCOUNTING FEES AND SERVICES.
  The
following is a summary of the aggregate fees billed to Registrant by its
principal accountant(s) for professional services rendered for the fiscal years
ended June 30, 2007 and 2006.
 
 Fee
      Category
                
                Fiscal
      2007 Fees
                
                Fiscal
      2006 FeesAudit Fees
      (1)
                
                
                17,000
                
                
                18,000Audit-Related Fees
      (2)
                
                
                0
                
                
                0Tax Fees
      (3)
                
                
                0
                
                
                0All Other Fees
      (4)
                
                
                0
                
                
                0Total
      Fees
                
                
                17,000
                
                
                18,000
  1. Audit
Fees.  Consists of fees billed for professional services rendered for
the audits of Registrant's financial statements for the fiscal years ended June
30, 2007 and 2006, and for review of the financial statements included in
Registrant's Quarterly Reports on Form 10-QSB for those fiscal
years.
 
 2.
Audit-Related Fees.  Consists of fees billed for services rendered to
Registrant for audit-related services, which generally include fees for audit
and review services in connection with a proposed spin-off transaction, separate
audits of employee benefit and pension plans, and ad hoc fees for consultation
on financial accounting and reporting standards.
 
 3. Tax
Fees.  Consists of fees billed for services rendered to Registrant for
tax services, which generally include fees for corporate tax planning,
consultation and compliance.
 
 4. All
Other Fees.  Consists of fees billed for all other services rendered
to Registrant, which generally include fees for consultation regarding computer
system controls and human capital consultations.  No services were
performed related to financial information systems design and implementation for
the fiscal years ended June 30, 2007 and 2006.
 
 None of
the "audit-related," "tax" and "all other" services in 2007, as defined above,
were approved by the Audit Committee in reliance on the de minimus exception to
the preapproval requirements under federal securities laws and
regulations.
 
 Pre-Approval of Services of Principal
Accounting Firm
 
 The Audit
Committee's written policy is to pre-approve all audit and permissible non-audit
services provided by Registrant's principal accounting firm (independent
auditor).  These services may include audit services, audit-related
services, tax services and other permissible non-audit services.  Any
service incorporated within the independent auditor's engagement letter, which
is approved by the Audit Committee, is deemed pre-approved.  Any
service identified as to type and estimated fee in the independent auditor's
written annual service plan, which is approved by the Audit Committee, is deemed
pre-approved up to the dollar amount provided in such annual service
plan.
 
 During
the year, the principal accounting firm may also provide additional accounting
research and consultation services required by, and incident to, the audit of
Registrant's financial statements and related reporting compliance. These
additional audit-related services are pre-approved up to the amount approved in
the annual service plan approved by the Audit Committee.  The Audit
Committee may also pre-approve services on a case-by-case basis during the
year.
 
 The Audit
Committee's approval of proposed services and fees are noted in the meeting
minutes of the Audit Committee and/or by signature of the Audit Committee on the
engagement letter.  The principal accounting firm of Registrant and
management are periodically requested to summarize the principal accounting firm
services and fees paid to date, and management is required to report whether the
principal accounting firm's services and fees have been pre-approved in
accordance with the required pre-approval process of the Audit
Committee.
 
 Non-Audit
Services
  The Audit
Committee of the Board of Directors has considered whether the provision of
non-audit services by the Registrant's principal accountants is compatible with
maintaining auditor independence.
  30
 
 SIGNATURES
 
 In accordance with Section 13 or
15(d) of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
 
 
 STUDIO ONE MEDIA,
      INC.Date:  May
      27, 2008
                By:
                /s/ Preston
      J. Shea,Preston
      J. Shea,Title  
      President
 
 
 In accordance with the Exchange Act,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
 
 STUDIO ONE MEDIA,
      INC.Date:  May
      27, 2008
                By:
                /s/ Preston
      J. Shea,Preston
      J. Shea,Title:
       Director, President,
Secretary
  STUDIO ONE MEDIA,
      INC.Date:  May
      27, 2008
                By:
                /s/ Kenneth R. PinckardKenneth R. PinckardTitle:  Director, Vice
      President, Chief Accounting Officer
  
 31
  STUDIO
ONE MEDIA, INC.
  YEARS
ENDED JUNE 30, 2007 AND 2006
  INDEX TO THE FINANCIAL
      STATEMENTS
                  PAGE
                    NUMBERIndependent
      Auditor's Report
                  F-2Financial
      StatementsConsolidated
      Balance Sheets
                  F-3Consolidated
      Statements of Operations
                  F-4Consolidated
      Statements of Stockholders' Equity
                  F-5Consolidated
      Statements of Cash Flows
                  F-6Notes
      to Financial Statements
                  F-7
      - F-14
 
 
 F-1
  MOORE & ASSOCIATES,
CHARTERED
 ACCOUNTANTS AND
ADVISORS
 PCAOB REGISTERED
 
 
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the
Board of Directors
 Studio
One Media, Inc.
 Scottsdale,
Arizona
 
 We have
audited the accompanying balance sheet of Studio One Media, Inc. as of June 30,
2007 and 2006, and the related statements of operations, stockholders’ equity
and cash flows for June 30, 2007 and 2006 and from Inception July 1, 2002
through June 30, 2007 for the period then ended.  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 audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  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 Studio One Media, Inc. as of June
30, 2006 and the results of its operations and its cash flows June 30, 2007 and
2006 and from Inception July 1, 2002 through June 30, 2007 for the period then
ended, in conformity with accounting principles generally accepted in the United
States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 1 to the
financial statements, the Company’s incurred losses of $30,475,960 and has no
revenues as of June 30, 2007 which raises substantial doubt about its ability to
continue as a going concern.  Management’s plans concerning these
matters are also described in Note 1.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
 
 
 /s/ Moore & Associates,
Chartered
 
 Moore
& Associates Chartered
 Las
Vegas, Nevada
 September
27, 2007
 
 
 
 2675 S. Jones Blvd. Suite
109, Las Vegas, NV 89146 (702) 253-7499 Fax (702)
253-7501
  F-2
  STUDIO ONE MEDIA,
INC.
 (A Development Stage
Company)
  CONSOLIDATED BALANCE SHEETS
  June
      30,
                    
                    
                    June
      30,2007
                    
                    
                    2006ASSETSCurrent
      AssetsCash
                    
                    $
                    417,236
                    
                    
                    $
                    207Accrued
      Interest Receivable
                    
                    
                    -
                    
                    
                    
                    57,295Prepaid
      Expenses
                    
                    
                    26,888
                    
                    
                    
                    -Notes
      Receivable-Current
                    
                    
                    200,663
                    
                    
                    
                    430,404Investments
      - Securities
                    
                    
                    -
                    
                    
                    
                    94,000Total
      Current Assets
                    
                    
                    644,787
                    
                    
                    
                    581,906Property
      and Equipment, Net
                    
                    
                    156,956
                    
                    
                    
                    -Total
      Property and Equipment
                    
                    
                    156,956
                    
                    
                    
                    -Other
      AssetsDeposits
                    
                    
                    6,400
                    
                    
                    
                    6,400Goodwill
                    
                    
                    950,864
                    
                    
                    
                    -Total
      Other Assets
                    
                    
                    957,264
                    
                    
                    
                    6,400Total
      Assets
                    
                    $
                    1,759,007
                    
                    
                    $
                    588,306LIABILITIES AND
      STOCKHOLDERS' EQUITY (DEFICIT)Current
      LiabilitiesAccounts
      Payable and Accrued Expenses
                    
                    $
                    255,975
                    
                    
                    $
                    352,058Notes
      Payable - Current
                    
                    
                    129,502
                    
                    
                    
                    726,468Total
      Current Liabilities
                    
                    
                    385,477
                    
                    
                    
                    1,078,526Long-Term
      Liabilities
                    
                    
                    -
                    
                    
                    
                    -Total
      Liabilities
                    
                    
                    385,477
                    
                    
                    
                    1,078,526Stockholders'
      Equity (Deficit)Preferred
      Stock, authorized 10,000,000 shares, par value $0.001;issued
      and oustanding are 524,044 shares at June 30, 2007and
      June 30, 2006, respectively
                    
                    
                    524
                    
                    
                    
                    524Common
      Stock, authorized 100,000,000 shares, par value $0.001;issued
      and outstanding are 11,362,739 and 2,791,324 shares atJune
      30, 2007 and June 30, 2006, respectively
                    
                    
                    11,363
                    
                    
                    
                    2,792Additional
      Paid in Capital
                    
                    
                    31,837,603
                    
                    
                    
                    24,351,567Accumulated
      Deficit - Pre Development Stage
                    
                    
                    (24,404,302
                    )
                    
                    
                    (24,404,302
                    )Accumulated
      Deficit - Development Stage
                    
                    
                    (6,071,658
                    )
                    
                    
                    (441,071
                    )Total
      Stockholders' Equity (Deficit)
                    
                    
                    1,373,530
                    
                    
                    
                    (490,490
                    )Total
      Liabilities and Stockholders' Equity (Deficit)
                    
                    $
                    1,759,007
                    
                    
                    $
                    588,036
  The
accompanying notes are an integral part of these financial
statements.
  F-3
  STUDIO ONE MEDIA,
INC.
 (A Development Stage
Company)
  CONSOLIDATED STATEMENTS OF OPERATIONS
  CumulativeJuly
      1, 2002Year
      Ended
                      
                      
                      Year
      Ended
                      
                      
                      throughJune
      30, 2007
                      
                      
                      June
      30, 2006
                      
                      
                      June
      30,2007RevenuesSales
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Cost
      of Sales
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Gross
      Profit
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Operating
      ExpensesGeneral
      and Administrative Expenses
                      
                      
                      5,158,340
                      
                      
                      
                      413,984
                      
                      
                      
                      5,697,424Research
      and Development
                      
                      
                      457,670
                      
                      
                      
                      -
                      
                      
                      
                      457,670Total
      Operating Expenses
                      
                      
                      5,616,010
                      
                      
                      
                      413,984
                      
                      
                      
                      6,155,094Loss
      from Operations
                      
                      
                      (5,616,010
                      )
                      
                      
                      (413,984
                      )
                      
                      
                      (6,155,094
                      )Other
      Income (Expense)Interest
      Expense
                      
                      
                      (22,844
                      )
                      
                      
                      (67,405
                      )
                      
                      
                      (298,247
                      )Gain
      on Extinguishment of Indebtedness
                      
                      
                      8,267
                      
                      
                      
                      373,416
                      
                      
                      
                      381,683Total
      Other Income (Expense)
                      
                      
                      (14,577
                      )
                      
                      
                      306,011
                      
                      
                      
                      83,436Net
      Loss
                      
                      $
                      (5,630,587
                      )
                      
                      $
                      (107,973
                      )
                      
                      $
                      (6,071,658
                      )Basic
      Loss Per Share of Common Stock
                      
                      $
                      (0.80
                      )
                      
                      $
                      (0.08
                      )Weighted
      Average Number of Shares
                      
                      
                      7,077,032
                      
                      
                      
                      1,404,455
 The accompanying notes are an integral part of these
financial statements.
 
 F-4
 
 STUDIO ONE MEDIA,
INC.
 (A Development Stage
Company)
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
  Accumulated
                      
                      
                      AccumulatedDeficit
                      
                      
                      DeficitPreferred
      Stock
                      
                      
                      Common
      Stock
                      
                      
                      Paid
      In
                      
                      
                      Pre-Development
                      
                      
                      Development
                      
                      
                      TotalShares
                      
                      
                      Amount
                      
                      
                      Shares
                      
                      
                      Amount
                      
                      
                      Capital
                      
                      
                      Stage
                      
                      
                      Stage
                      
                      
                      EquityBalance,
      June 30, 2002
                      
                      
                      524,044
                      
                      
                      $
                      524
                      
                      
                      
                      1,065,984
                      
                      
                      $
                      1,066
                      
                      
                      $
                      23,343,180
                      
                      
                      $
                      (24,404,302
                      )
                      
                      $
                      -
                      
                      
                      $
                      (1,059,532
                      )Common
      Shares surrenderedand
      cancelled
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (36,458
                      )
                      
                      
                      (36
                      )
                      
                      
                      36
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Net
      Loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (118,808
                      )
                      
                      
                      (118,808
                      )Balance,
      June 30, 2003
                      
                      
                      524,044
                      
                      
                      
                      524
                      
                      
                      
                      1,029,526
                      
                      
                      
                      1,030
                      
                      
                      
                      23,343,216
                      
                      
                      
                      (24,404,302
                      )
                      
                      
                      (118,808
                      )
                      
                      
                      (1,178,340
                      )Common
      Shares issuedfor
      services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      29,000
                      
                      
                      
                      29
                      
                      
                      
                      21,721
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      21,750Net
      Loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (107,613
                      )
                      
                      
                      (107,613
                      )Balance,
      June 30, 2004
                      
                      
                      524,044
                      
                      
                      
                      524
                      
                      
                      
                      1,058,526
                      
                      
                      
                      1,059
                      
                      
                      
                      23,364,937
                      
                      
                      
                      (24,404,302
                      )
                      
                      
                      (226,421
                      )
                      
                      
                      (1,264,203
                      )Common
      Shares issuedfor
      services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      65,000
                      
                      
                      
                      65
                      
                      
                      
                      48,685
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      48,750Net
      Loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (106,677
                      )
                      
                      
                      (106,677
                      )Balance,
      June 30, 2005
                      
                      
                      524,044
                      
                      
                      
                      524
                      
                      
                      
                      1,123,526
                      
                      
                      
                      1,124
                      
                      
                      
                      23,413,622
                      
                      
                      
                      (24,404,302
                      )
                      
                      
                      (333,098
                      )
                      
                      
                      (1,322,130
                      )Common
      Shares issuedfor
      services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      300,000
                      
                      
                      
                      300
                      
                      
                      
                      332,200
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      332,500Common
      Shares issued inpurchase
      of promissory notes
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      839,227
                      
                      
                      
                      839
                      
                      
                      
                      313,274
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      314,113Common
      Shares issued inpurchase
      of securities
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      50,000
                      
                      
                      
                      50
                      
                      
                      
                      93,950
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      94,000Common
      Shares issued for cash
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      478,571
                      
                      
                      
                      479
                      
                      
                      
                      198,521
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      199,000Net
      Loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (107,973
                      )
                      
                      
                      (107,973
                      )Balance,
      June 30, 2006
                      
                      
                      524,044
                      
                      
                      
                      524
                      
                      
                      
                      2,791,324
                      
                      
                      
                      2,792
                      
                      
                      
                      24,351,567
                      
                      
                      
                      (24,404,302
                      )
                      
                      
                      (441,071
                      )
                      
                      
                      (490,490
                      )Common
      Shares issuedfor
      services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      456,752
                      
                      
                      
                      457
                      
                      
                      
                      2,223,690
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,224,147Common
      Shares issued for cash
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,001,835
                      
                      
                      
                      1,002
                      
                      
                      
                      1,898,498
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,899,500Common
      Shares for assets
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      6,950,000
                      
                      
                      
                      6,950
                      
                      
                      
                      116,031
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      122,981Fair
      value of warrants granted
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,322,269
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,322,269Common
      Shares issued insatisfaction
      of debt
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      162,828
                      
                      
                      
                      162
                      
                      
                      
                      925,548
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      925,710Net
      Loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (5,630,587
                      )
                      
                      
                      (5,630,587
                      )Balance,
      June 30, 2007
                      
                      
                      524,044
                      
                      
                      $
                      524
                      
                      
                      
                      11,362,739
                      
                      
                      $
                      11,363
                      
                      
                      $
                      31,837,603
                      
                      
                      $
                      (24,404,302
                      )
                      
                      $
                      (6,071,658
                      )
                      
                      $
                      1,373,530
 The accompanying notes are an integral part of these
financial statements.
 
 F-5
  STUDIO ONE MEDIA,
INC.
 (A Development Stage
Company)
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  CumulativeYear
      Ended
                    
                    
                    Year
      Ended
                    
                    
                    July
      1, 2002 throughJune
      30, 2007
                    
                    
                    June
      30, 2006
                    
                    
                    June
      30, 2007Cash
      Flows From Operating ActivitiesNet
      Loss
                    
                    $
                    (5,630,587
                    )
                    
                    $
                    (107,973
                    )
                    
                    $
                    (6,071,658
                    )Adjustments
      to reconcile to cash fromoperating
      activities:Depreciation
                    
                    
                    8,968
                    
                    
                    
                    -
                    
                    
                    
                    8,968Common
      stock issued for services
                    
                    
                    2,224,147
                    
                    
                    
                    -
                    
                    
                    
                    2,245,897Fair
      value of warrants granted
                    
                    
                    2,322,269
                    
                    
                    
                    -
                    
                    
                    
                    2,322,269Changes
      in Operating Assets & Liabilities:Accrued
      Interest Receivable
                    
                    
                    57,295
                    
                    
                    
                    (57,295
                    )
                    
                    
                    -Notes
      Receivable
                    
                    
                    229,741
                    
                    
                    
                    (430,404
                    )
                    
                    
                    (200,663
                    )Prepaid
      Expenses
                    
                    
                    (26,888
                    )
                    
                    
                    -
                    
                    
                    
                    (26,888
                    )Investments
      - Securities
                    
                    
                    94,000
                    
                    
                    
                    (94,000
                    )
                    
                    
                    -Deposits
                    
                    
                    -
                    
                    
                    
                    (6,400
                    )
                    
                    
                    (6,400
                    )Accounts
      Payable
                    
                    
                    (96,353
                    )
                    
                    
                    (337,552
                    )
                    
                    
                    (171,525
                    )Net
      Cash Used in Operating Activities
                    
                    
                    (817,408
                    )
                    
                    
                    (1,033,624
                    )
                    
                    
                    (1,900,000
                    )Cash
      Flows from Investing ActivitiesPurchase
      of Property and Equipment
                    
                    
                    (165,924
                    )
                    
                    
                    -
                    
                    
                    
                    (165,924
                    )Purchase
      of Other Assets
                    
                    
                    (827,883
                    )
                    
                    
                    -
                    
                    
                    
                    (827,883
                    )Net
      Cash Used in Investing Activities
                    
                    
                    (993,807
                    )
                    
                    
                    -
                    
                    
                    
                    (993,807
                    )Cash
      Flows from Financing ActivitiesIssuance
      of Common Stock
                    
                    
                    1,899,500
                    
                    
                    
                    939,883
                    
                    
                    
                    2,888,133Issuance
      of Notes Payable
                    
                    
                    328,744
                    
                    
                    
                    93,948
                    
                    
                    
                    422,892Net
      Cash from Financing Activities
                    
                    
                    2,228,244
                    
                    
                    
                    1,033,831
                    
                    
                    
                    3,311,025Net
      Increase (Decrease) in Cash
                    
                    
                    417,029
                    
                    
                    
                    207
                    
                    
                    
                    417,218Cash,
      Beginning of Period
                    
                    
                    207
                    
                    
                    
                    -
                    
                    
                    
                    18Cash,
      End of Period
                    
                    $
                    417,236
                    
                    
                    $
                    207
                    
                    
                    $
                    417,236Supplemental
      Cash Flow Disclosure:Cash
      Paid For:Interest
      Expense
                    
                    $
                    -
                    
                    
                    $
                    67,405
                    
                    
                    $
                    230,842Income
      Taxes
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Non
      Cash Financing Activities:Common
      stock issued for assets
                    
                    $
                    122,981
                    
                    
                    $
                    -
                    
                    
                    $
                    122,981
  
 F-6
 
 STUDIO ONE MEDIA, INC.
 NOTES TO FINANCIAL
STATEMENTS
 JUNE 30, 2007 AND
2006
 Note 1: Summary of Significant
Accounting Policies
 
 DESCRIPTION OF BUSINESS, FINANCING
AND BASIS OF FINANCIAL STATEMENT
PRESENTATION
 Studio
One Media, Inc., (the “Company” or “SOMD”) was originally organized in Delaware
on May 12, 1988, as Dimensional Visions Group, Ltd. The name was changed on
January 15, 1998 to Dimensional Visions Incorporated. On February 8, 2006, it
changed its name to Elevation Media, Inc., and on March 28, 2006 the Company’s
name was changed to Studio One Media, Inc., as part of its overall plan to
implement its revised business plan.
 
 Historically,
the Company produced and marketed lithographically printed stereoscopic and
animation print products. The Company, through its wholly owned subsidiary,
InfoPak, Inc., developed a data delivery system that provides end users with
specific industry printed materials by way of a portable hand-held reader. Data
is acquired electronically from the data provided by mainframe systems and
distributed through a computer network to all subscribers. InfoPak has ceased to
operate and its corporate charter has been administratively
terminated.
 
 Since
becoming a Development Stage Company in 2002, the Company has financed its
operations primarily through the sale of its securities. The Company has had no
sales during the year ended June 30, 2007, or the years ended June 30, 2006,
2005, 2004 and 2003. The volume of business was not sufficient to support the
Company's cost structure. Accordingly during April 2002 the Company ceased its
prior operations and was reclassified as a development stage
company.
 
 Effective
May 6, 2004, the Company's stockholders approved a one for sixty Reverse Split
of its common stock ("The Reverse Split"). The effect of the Reverse Split has
been retroactively reflected as of July 1, 2002 in the financial statements. All
references to number of shares issued conversions to common stock, per share
amounts and stock option data have been restated to reflect the effect of the
Reverse Split for the period presented.
 
 In April
2006, the Company entered into an agreement to purchase Studio One
Entertainment, Inc., a private Scottsdale, Arizona based company that is engaged
in the design and manufacturing of a proprietary (patents pending), self
contained interactive audio/video recording and conferencing studio designed for
installation in shopping malls and other high traffic public areas (the “Studio
One Entertainment Agreement”). The Studio OneTM Kiosk will enable the public, for
a fee, to record their video and voice images in a portable state-of-the-art
recording studio environment and enter their performances in music, modeling and
other talent related contests.
 
 On April
17, 2007, the Company announced that it had finalized the purchase of Studio One
Entertainment, Inc., (SOEI) through an all-stock transaction. The purchase is
pursuant to an agreement entered into by the companies dated March 29, 2006. The
purchase includes the exchange of 7,000,000 restricted common shares of Studio
One Media, Inc. for 100% of the issued and outstanding shares of Studio One
Entertainment, Inc.   The purchase includes all right, title and
interest to Studio One Entertainment's proprietary interactive recording
studios, business plan and intellectual property, including pending patents,
foreign patent rights and federal trademark applications.  Studio One
Entertainment, Inc. will operate as a wholly owned subsidiary of Studio One
Media, Inc. Accordingly, the financial statements present on a consolidated
basis the operations of SOMD and SOEI.
 F-7
 STUDIO ONE MEDIA, INC.
 NOTES TO FINANCIAL
STATEMENTS
 JUNE 30, 2007 AND
2006
  Note 1: Summary of Significant
Accounting Policies-
continued
  GOING
CONCERN
 
 The
Company has incurred losses since inception of $30,475,960 and has no revenues
which raises substantial doubt about its ability to continue as a going concern.
The future of the Company as an operating business will depend on its ability to
(1) obtain sufficient capital contributions and/or financing as may be required
to sustain its operations and (2) ultimately achieve revenues from its personal
recording studio kiosk business. Management's plan to address these issues
includes, (a) continued exercise of tight cost controls to conserve cash, (b)
obtaining additional financing, and (c) place in service its personal recording
kiosks.
 
 The
financial statements have been prepared on a going concern basis, which
contemplates the realization and settlement of liabilities and commitments in
the normal course of business. The available funds at June 30, 2007, are not
sufficient to satisfy the present cost structure. Management recognizes that the
Company must obtain additional funding to enable it to continue operations.
Unless the Company is able to merge with or acquire another operating entity or
other business combination it may not be able to continue as a going
concern.
 
 Further,
there can be no assurances, that the Company will achieve a sale, merger, or
other business combination with another entity. In the event the Company is not
able to accomplish a sale, merger, or other business combination with another
entity, it may cease its operations and/or seek protection under the bankruptcy
laws.
 
 INCOME
TAXES
 
 The
Company accounts for income taxes under the liability method. Deferred tax
assets and liabilities are determined based on differences between the financial
reporting and tax bases of assets and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to
reverse.
 
 LOSS
PER SHARE
 
 Basic and
diluted loss per common share is calculated using the weighted average number of
common shares outstanding during the period. There are no dilutive effects from
outstanding options, warrants and convertible securities on the weighted average
number of common shares outstanding.
 
 USE
OF ESTIMATES
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles 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 dates of the financial statements and
the reported amounts of revenue and expenses during the reporting periods.
Actual results could differ from those estimates.
 
 STOCK-BASED
COMPENSATION
 
 In
December 2004, the FASB issued FAS No. 123R, “Share-Based Payment.”
This statement is a revision to FAS No. 123, “Accounting for Stock-Based
Compensation,” and it supersedes APB Opinion No. 25, “Accounting for Stock
Issued to Employees,” and amends FAS No. 95, “Statement of Cash Flows.” FAS
No. 123R requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the income statement based on
their fair values.  The Company uses the Black-Scholes pricing model
for determining the fair value of stock based compensation.
 
 Equity
instruments issued to non-employees for goods or services are accounted for at
fair value and are marked to market until service is complete or a performance
commitment date is reached.
 
 Impairment
of Long-Lived Assets
 
 The
Company continually monitors events and changes in circumstances that could
indicate carrying amounts of long-lived assets may not be recoverable. When such
events or changes in circumstances are present, the Company assesses the
recoverability of long-lived assets by determining whether the carrying value of
such assets will be recovered through undiscounted expected future cash flows.
If the total of the future cash flows is less than the carrying amount of those
assets, the Company recognizes an impairment loss based on the excess of the
carrying amount over the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or the fair value less costs to
sell.
 
 F-8
 
 STUDIO ONE MEDIA, INC.
 NOTES TO FINANCIAL
STATEMENTS
 JUNE 30, 2007 AND
2006
 
 Note 2: Accounts Payable, Accrued
Expenses
 
 During
July and August of 2001 the Company borrowed $45,000 and issued a 14%
convertible debenture for $25,000 due in October 2001 and issued a 12%
convertible debenture for $20,000 due in February 2002. Both debentures were in
default under the terms of the debenture agreement. The $20,000 debenture,
together with all accrued interest thereon, was converted to equity in the year
ended June 30, 2007.  The Company continues to accrue interest on the
remaining obligation. The debenture is convertible into 6,000 shares of the
Company's common stock at $7.50 per share after given effect for the 1 to 60
share reverse split.
 
 During
September and October 2001 the Company borrowed $180,000 from Suntine
Enterprises, LLC, a limited liability company, and signed a 12% secured note
that pledged the assets of the Company as collateral for the loan. The note was
originally due on October 2, 2004 along with all unpaid accrued interest. Under
the terms of the secured note the obligation was declared in default as a result
of its insolvency. The Company continued to accrue interest under this
obligation thru October 13, 2006, at which time it was extinguished by the
issuance of shares of restricted common stock of the Registrant (see Note
3).
 
 On
January 29, 2002, an investor group (comprised of Russell H. Ritchie, Dale
Riker, Cornerstone Wireless Communications, LLC), as the guarantor on the
Company’s secured line of credit with Merrill Lynch, paid off this obligation
after the loan was declared in default. The Company continued to accrue interest
under this obligation thru October 13, 2006, at which time it was extinguished
by the issuance of shares of restricted common stock of the
Company.
 
 A summary
of Accounts Payable and Accrued Expenses Follows:
 
 6-30-07
                  
                  
                  
                  6-30-06Accounts Payable
                  
                  $
                  220,090
                  
                  
                  $
                  45,253Accrued Interest
                  
                  
                  35,885
                  
                  
                  
                  306,805Salaries
                  
                  
                  0
                  
                  
                  
                  0Total
                  
                  $
                  255,975
                  
                  
                  $
                  352,058
  Note
3: Short-Term Borrowings
 
 During
July and August of 2001 the Company borrowed $45,000 and issued a 14%
convertible debenture for $25,000 due in October 2001 and issued a 12%
convertible debenture for $20,000 due in February 2002. Both debentures were in
default under the terms of the debenture agreement. The $20,000 debenture,
together with all accrued interest thereon, was converted to equity in the year
ended June 30, 2007.  The Company continues to accrue interest on the
remaining obligation. The debenture is convertible into 6,000 shares of the
Company's common stock at $7.50 per share after given effect for the 1 to 60
share reverse split.
 
 During
September and October 2001 the Company borrowed $180,000 from a limited
liability company and signed a 12% secured note that pledged the assets of the
Company as collateral for the loan. The note was originally due on October 2,
2004 along with all unpaid accrued interest. Under the terms of the secured note
the obligation was declared in default as a result of its insolvency. In
addition, on January 29, 2002, an investor group, as the guarantor on the
secured line of credit with Merrill Lynch, paid off this obligation after the
loan was declared in default. The debt holders under these two obligations were
comprised of Russell H. Ritchie, Dale Riker, Cornerstone Wireless
Communications, LLC, and Suntine Enterprises, LLC (the “debt holder
group”).
 
 On April
30, 2003, the Company entered into a settlement agreement and release with "the
debt holder group," which includes the investor group representing $399,253 of
short term debt, the limited liability company of $180,000 of short term debt
and an entity owned by the investor group which made disbursements of
approximately $ 53,208 for the benefit of the Company through June 30, 2004,
which was included in accounts payable. The agreement called for all of debt
holder group liabilities to be paid in full by issuing $50,000 in post
reorganization unrestricted Company Common Stock and issuing $200,000 in post
reorganization restricted Company Common Stock.
 
 F-9
 
 STUDIO ONE MEDIA, INC.
 NOTES TO FINANCIAL
STATEMENTS
 JUNE 30, 2007 AND
2006
 
 Note 3: Short-Term Borrowings
- continued
  The
agreement required the Company's common stock to be issued within 10 days of the
completion of the reorganization of the Company. At the time the stock is
issued, interest accrued on the motes would be cancelled. The debt holder group
would be permitted to liquidate up to $10,000 worth of the unrestricted common
stock each month for five months commencing 10 days after receipt of the
Company's Common Stock. The debt holder group might receive additional
unrestricted stock if the Company's stock falls below $50,000 upon liquidation
and additional shares of restricted stock if the price of the restricted shares
fall below $200,000 one year after first receipt.
 
 On
October 13, 2006, the Company entered into another agreement with the debt
holder group pursuant to which it issued 137,500 shares of restricted common
stock of the Registrant in extinguishment of $579,253 in short term debt and
$313,024 in accrued interest. The debt was converted to equity at a per share
conversion price of $6.49. This agreement, combined with the write-off of
$373,416 in payables in June 2006, reduced the Company’s debt by $1,265,693. The
October 13, 2006 agreement between the Company and the debt holder group
supersedes the April 30, 2003 agreement and constitutes an accord and
satisfaction of all liabilities and obligations owing by the Company to the debt
holder group. A copy of the agreement between Studio One and the debt holder
group is attached as Exhibit 10.1 to our Form 10-QSB for the period ended
September 30, 2006.
 
 A summary
of Short Term Borrowings Follows:
  Rates
                  
                  
                  
                  6-30-07
                  
                  
                  
                  6-30-06Investor Group
                  
                  
                  10%
                  
                  
                  $
                  0
                  
                  
                  $
                  493,201Convertible Debentures
                  
                  
                  14%
                  
                  
                  
                  25,000
                  
                  
                  
                  45,000Secured Note
                  
                  
                  12%
                  
                  
                  
                  0
                  
                  
                  
                  180,000Individual
                  
                  
                  
                  
                  
                  
                  104,502
                  
                  
                  
                  8,267Total
                  
                  
                  
                  
                  
                  $
                  129,502
                  
                  
                  $
                  726,468
 
 Note
4: Commitments and Contingencies
 
 There are
no legal proceedings, which the Company believes will have a material adverse
effect on its financial position.
 
 The
Company has not declared dividends on Series A or B Convertible Preferred Stock.
The cumulative dividends in arrears through June 30, 2007 was approximately
$137,525.
 
 The
Company leases certain office facilities pursuant to a one-year lease that
commenced February 2006. The lease expense is $6,720 per month. The Company has
extended the term of the lease for one additional year to January 31,
2008.
 
 Note
5: Common Stock
 
 As of
June 30, 2007, there are outstanding 558,678 non-public warrants and options to
purchase the Company's common stock at prices ranging from $2.50 to $9.00 with a
weighted average price of $3.56 per share.
 
 As of
June 30, 2007, there were 524,044 shares of various classes of Convertible
Preferred Stock outstanding, which can be converted to 14,814 shares of common
stock (see Note 6).
 
 As of
June 30, 2007, there are convertible debentures outstanding that can be
converted to 6,000 shares of common Stock (see Note 3).
 
 F-10
 
 STUDIO ONE MEDIA, INC.
 NOTES TO FINANCIAL
STATEMENTS
 JUNE 30, 2007 AND
2006
 
 Note 5: Common Stock - continued
  During
the year ended June 30, 2007, the Company issued 1,001,835 shares for $1,899,500
in cash, 456,752 shares of the Company’s common stock for consulting services
rendered to the Company valued at $2,224,146. The Company also issued 
6,950,000 shares for its wholly owned subsidiary valued at $116,031, and 162,828
shares in conversion of debt in the amount of $925,548.
 
 The total
number of shares of the Company's common stock that would have been issued upon
conversion of the outstanding warrants, options, preferred stock and loans
converted equaled 579,492 shares as of June 30, 2007, and would be in addition
to the 11,362,739 shares of common stock outstanding as of June 30,
2007.
  Note
6: Preferred Stock
 
 The
Company has authorized 10,000,000 shares of $.001 par value per share Preferred
Stock, of which the following were issued outstanding:
 
 Allocated
                  
                  
                  OutstandingSeries
      A Preferred
                  
                  
                  100,000
                  
                  
                  
                  15,500Series
      B Preferred
                  
                  
                  200,000
                  
                  
                  
                  3,500Series
      C Preferred
                  
                  
                  1,000,000
                  
                  
                  
                  13,404Series
      D Preferred
                  
                  
                  375,000
                  
                  
                  
                  130,000Series
      E Preferred
                  
                  
                  375,000
                  
                  
                  
                  275,000Series
      P Preferred
                  
                  
                  600,000
                  
                  
                  
                  86,640Total
      Preferred Stock
                  
                  
                  2,650,000
                  
                  
                  
                  524,044
 
 The
Company's Series A Convertible 5% Preferred Stock ("Series A Preferred"),
100,000 shares authorized, is convertible into common stock at the rate of .027
share of common stock for each share of the Series A Preferred. Dividends from
date of issue, are payable from retained earnings, and have been accumulated on
June 30 each year, but have not been declared or paid (see Note 4).
 
 The
Company's Series B Convertible 8% Preferred Stock ("Series B Preferred") is
convertible at the rate of .067 share of common stock for each share of Series B
Preferred. Dividends from date of issue are payable on June 30 from retained
earnings at the rate of 8% per annum and have not been declared or paid (see
Note 4).
 
 The
Company's Series C Convertible Preferred Stock ("Series C Preferred") is
convertible at a rate of .007 share of common stock per share of Series C
Preferred.
 
 The
Company's Series D Convertible Preferred Stock ("Series D Preferred") is
convertible at a rate of .034 share of Common stock per share of Series D
Preferred.
 
 The
Company's Series E Convertible Preferred Stock ("Series E Preferred") is
convertible at a rate of .034 share of Common stock per share of Series E
Preferred.
 
 The
Company's Series P Convertible Preferred Stock ("Series P Preferred") is
convertible at a rate of .007 share of common stock for each share of Series P
Preferred.
 
 The
Company's Series A Preferred, Series B Preferred, Series D Preferred and Series
E Preferred were issued for the purpose of raising operating funds. The Series C
Preferred was issued to certain holders of the Company's 10% Secured Notes in
lieu of accrued interest and also will be held for future investment
purposes.
 
 The
Series P Preferred was issued to InfoPak shareholders in exchange for (1) all of
the outstanding capital stock of InfoPak, (2) as signing bonuses for certain
employees and a consultant of InfoPak, and (3) to satisfy InfoPak's outstanding
debt obligations to certain shareholders.
  
 F-11
 
 STUDIO ONE MEDIA, INC.
 NOTES TO FINANCIAL
STATEMENTS
 JUNE 30, 2007 AND
2006
 
 Note 7: Stock Option Plan and Equity
Incentive Plan
 
 On
November 15, 1999, the Board of Directors of the Company adopted the 1999 Stock
Option Plan (the "1999 Plan"). This plan was approved by a majority of our
stockholders at our January 28, 2000, stockholders' meeting. The purpose of the
1999 Plan is to advance the interests of the Company by encouraging and enabling
acquisition of a financial interest in the Company by its officers and other key
individuals. The 1999 Plan is intended to aid the Company in attracting and
retaining key employees, to stimulate the efforts of such individuals and to
strengthen their desire to remain with the Company. A maximum of 1,500,000
shares of the Company's common stock are available to be issued under the 1999
Plan. The option exercise price will be 100% of the fair market value of the
Company's common stock on the date the option is granted and will be exercisable
for a period not to exceed 10 years from the date of grant.
 
 As of
June 30, 2007, no stock options have been granted under this plan.
 
 The
Company on June 13, 1996 adopted the 1996 Equity Incentive Plan (the "Plan")
covering 10,000,000 shares of the Company's common stock $.001 par value,
pursuant to which officers, directors, key employees and consultants of the
Company are eligible to receive incentive, as well as non-qualified stock
options, SAR's, and Restricted Stock and Deferred Stock. The Compensation
Committee of the Board of Directors will administer the Plan, which expires in
June 2006. Incentive stock options granted under the Plan are exercisable for a
period of up to 10 years from the date of grant at an exercise price, which is
not less than the fair market value of the common stock on the date of the
grant, except that the terms of an incentive stock option granted under the Plan
to a stockholder owning more than 10% of the outstanding common stock may not
exceed five years and the exercise price of an incentive stock option granted to
such a stockholder may not be less than 110% of the fair market value of common
stock on the date of the grant. Non-qualified stock options may be granted on
terms determined by the Compensation Committee of the Board of Directors. SAR’s,
which give the holder the privilege of surrendering such rights for the
appreciation in the Company's common stock between the time of grant and the
surrender, may be granted on any terms determined by the Compensation Committee
of the Board of Directors.
 
 Restricted
stock awards entitle the recipient to acquire shares for no cash consideration
or for consideration determined by the Compensation Committee. The award may be
subject to restrictions, conditions and forfeiture as the Committee may
determine. Deferred stock award entitles recipient to receive shares in the
future. Since inception of this plan in 1996 through June 30, 2000, 5,102,978
shares of common stock have been issued. As of June 30, 2007 and 2006, no
options or SAR's have been granted. The Plan has now expired.
 
 On May
17, 2004, the Company adopted an employee stock incentive plan setting aside
100,000 shares of the Company’s common stock for issuance to officers,
employees, directors and consultants for services rendered or to be rendered. A
compensation committee appointed by the Board of Directors who shall have the
right to grant awards or stock options administers the plan. On May 24, 2004,
the Company filed a Registration on Form S-8 with the Securities Exchange
Commission covering the 100,000 shares provided by this plan, at a maximum
offering price of $1.00 per share. As of June 30, 2007, the Company has issued
all shares covered by the 2004 Stock Incentive Plan adopted by the Company on
May 17, 2004.
 
 On
October 13, 2006 the Company adopted an employee stock incentive plan setting
aside 100,000 shares of the Company’s common stock for issuance to officers,
employees, directors and consultants for services rendered or to be rendered.
The proposed maximum offering price of such shares is $1.00 per share.  A
compensation committee appointed by the Board of Directors who shall have the
right to grant awards or stock options administers the plan. On October 13,
2006, the Company filed a Registration on Form S-8 with the Securities Exchange
Commission covering the 100,000 shares provided by this plan, at a maximum
offering price of $1.00 per share. As of June 30, 2007, the Company has issued
47,282 shares covered by the 2006 Stock Incentive Plan adopted by the Company on
October 13, 2006, at a total amount of $282,380. As of June 30, 2007, 52,718
remain unissued under this Plan. The value of shares issued pursuant to this
Plan are based on the fair value of shares as prescribed by FAS No.
123R.
 
 F-12
 
 STUDIO ONE MEDIA, INC.
 NOTES TO FINANCIAL
STATEMENTS
 JUNE 30, 2007 AND
2006
 
 Note 8: Income Taxes
  SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. In the Company’s
opinion, it is uncertain whether they will generate sufficient taxable income in
the future to fully utilize the net deferred tax asset. Accordingly, a valuation
allowance equal to the deferred tax asset has been recorded. The total deferred
tax asset is calculated by multiplying a 35% estimated tax rate by the
cumulative NOL of $22,890,000. The total valuation allowance is equal to the
total deferred tax asset.
 
 The tax
effects of significant items comprising the Company's net deferred taxes as of
June 30, 2007 were as follows:
  Deferred tax
    assets:Goodwill
                  
                  $
                  332,802Net operating loss carry
forwards
                  
                  
                  8,011,5008,344,302Net deferred tax asset
                  
                  
                  8,344,302Valuation allowance
                  
                  
                  (8,344,302
                  )Net
      deferred tax asset reported
                  
                  $
                  --
  The
change in valuation allowance for the nine months ended June 30, 2007 was
increased by approximately $129,628.
 
 There was
no provision for current income taxes for the years ended June 30, 2007 and
2006.
 
 The
federal net operating loss carry forwards of approximately $22,890,000 expire in
various years through 2027. In addition the Company has state carry forwards of
approximately $8,011,000.
 
 The
Company has had numerous transactions in its common stock.  Such
transactions may have resulted in a change in the Company's ownership, as
defined in the Internal Revenue Code Section 382.  Such change may result
in an annual limitation on the amount of the Company's taxable income that may
be offset with its net operating loss carry forwards.  The Company has not
evaluated the impact of Section 382, if any, on its ability to utilize its net
operating loss carry forwards in future years.
 
 Note
 9.  The Effect of Recent Account Standards
 
 In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, “Fair Value Measurements” which defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. Where applicable, SFAS No. 157 simplifies and codifies
related guidance within GAAP and does not require any new fair value
measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. Earlier adoption is encouraged. The Company does
not expect the adoption of SFAS No. 157 to have a significant effect on its
financial position or results of operation.
 
 In June
2006, the Financial Accounting Standards Board  issued FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an
interpretation of FASB Statement No. 109”, which prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax
return.  FIN 48 also provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006.  The Company does not expect the adoption of FIN 48
to have a material impact on its financial reporting, and the Company is
currently evaluating the impact, if any, the adoption of FIN 48 will have on its
disclosure requirements.
 
 F-13
 
 STUDIO ONE MEDIA, INC.
 NOTES TO FINANCIAL
STATEMENTS
 JUNE 30, 2007 AND
2006
 
 Note  9.  The Effect of
Recent Account Standards - continued
  In March
2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 156, “Accounting for Servicing of Financial Assets—an
amendment of FASB Statement No. 140.” This statement requires an entity to
recognize a servicing asset or servicing liability each time it undertakes an
obligation to service a financial asset by entering into a servicing contract in
any of the following situations: a transfer of the servicer’s financial assets
that meets the requirements for sale accounting; a transfer of the servicer’s
financial assets to a qualifying special-purpose entity in a guaranteed mortgage
securitization in which the transferor retains all of the resulting securities
and classifies them as either available-for-sale securities or trading
securities; or an acquisition or assumption of an obligation to service a
financial asset that does not relate to financial assets of the servicer or its
consolidated affiliates. The statement also requires all separately recognized
servicing assets and servicing liabilities to be initially measured at fair
value, if practicable, and permits an entity to choose either the amortization
or fair value method for subsequent measurement of each class of servicing
assets and liabilities. The statement further permits, at its initial adoption,
a one-time reclassification of available for sale securities to trading
securities by entities with recognized servicing rights, without calling into
question the treatment of other available for sale securities under Statement
115, provided that the available for sale securities are identified in some
manner as offsetting the entity’s exposure to changes in fair value of servicing
assets or servicing liabilities that a servicer elects to subsequently measure
at fair value and requires separate presentation of servicing assets and
servicing liabilities subsequently measured at fair value in the statement of
financial position and additional disclosures for all separately recognized
servicing assets and servicing liabilities. This statement is effective for
fiscal years beginning after September 15, 2006, with early adoption permitted
as of the beginning of an entity’s fiscal year. Management believes the adoption
of this statement will have no immediate impact on the Company’s financial
condition or results of operations.
 F-14