UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  FORM
10-Q
 (Mark
One)
 
 x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
quarterly period ended  September 30,
2009
 
 
 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:0-52408
 
 EMERGING MEDIA HOLDINGS,
    INC.(Exact
      Name of Registrant as Specified in Its
Charter)
 
 NEVADA
              [New EIN Applied For](State
      of other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)
 
 1809 E. BROADWAY ST., SUITE 175, OVIEDA,
      FLORIDA
              32765(Address
      of principal executive offices)
              (Zip
      Code)
 
 (407) 620-1063(Registrant's
      Telephone Number, Including Area
Code)
 
 (Former
      name, former address and former fiscal year, if changed since last
      report)
 
 Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90
days.       Yes  x  
 No  o
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).    Yes o    No o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company.  (Check
One):
 
 Large
      accelerated filer  o
              Accelerated
      filer  oNon-accelerated
      filer   o
              Smaller
      reporting company  x
 (Do not
check if a smaller reporting company)
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).     Yes  o      No 
x
 
 As of
November 1, 2009, there were 16,303,000 shares of Common Stock, $0.001 par
value, outstanding.








Emerging
      Media Holdings, Inc. and SubsidiariesIndexPagePART
      I.
            FINANCIAL
      INFORMATIONItem
      1.
            Financial
      Statements
            
            1Consolidated
      Balance Sheets as of September 30, 2009and
      December 31, 2008  (unaudited)
            
            2Consolidated
      Statements of Operations for theNine
      Months Ended September 30, 2009 and 2008 (Unaudited)
            
            3Consolidated
      Statements of Comprehensive Income for the Nine Months ended September 30,
      2009 and 2008 (unaudited)
            
            4Consolidated
      Statement of Stockholders' Equity for the Period Ended September 30, 2009
      (Unaudited)
            
            5Statement
      of Cash Flows for the Nine Months
              Ended
      September 30, 2009 and 2008 (Unaudited)
            
            6-7Notes
      to Unaudited Financial Statements
            
            8-20Item
      2.
            Management's
      Discussion and Analysis of Financial
            
            21Condition
      and Results of OperationsItem
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            
            27Item
      4.
            Controls
      and Procedures
            
            28PART
      II.
            OTHER
      INFORMATIONItem
      6.
            Exhibits.
            
            28Signatures
            
            29










PART
I—FINANCIAL INFORMATION





Item
1.  Financial Statements.





Certain information and footnote
disclosures required under accounting principles generally accepted in the
United States of America have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission.  It is suggested that the
following consolidated financial statements be read in conjunction with the
year-end consolidated financial statements and notes thereto included in the
Company's Form 10-K for the year ending December 31, 2008.





The results of operations for the nine
months ended September 30, 2009 and 2008 are not necessarily indicative of the
results for the entire fiscal year or for any other period.











1




EMERGING
      MEDIA HOLDINGS INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETS(Unaudited)ASSETSSeptember
      30,
              
              
              December
      31,2009
              
              
              2008CURRENT
      ASSETS:Cash
              
              $
              565,555
              
              
              $
              1,334,738Marketable
      securities
              
              
              330,066
              
              
              
              250,000Notes
      receivable
              
              
              4,759,919
              
              
              
              3,840,000Accounts
      receivable - net of allowance
              
              
              365,849
              
              
              
              262,889Inventories
              
              
              5,570
              
              
              
              5,728Employee
      receivables and other current assets
              
              
              125,693
              
              
              
              458,024Total
      Current Assets
              
              
              6,152,652
              
              
              
              6,151,379Property,
      plant and equipment, net
              
              
              134,608
              
              
              
              109,026Intangible
      assets - net
              
              
              272,245
              
              
              
              314,857Goodwill
              
              
              3,639,645
              
              
              
              3,639,645TOTAL
      ASSETS
              
              $
              10,199,150
              
              
              $
              10,214,907LIABILITIES
      AND EQUITYCURRENT
      LIABILITIES:Accounts
      payable
              
              $
              112,219
              
              
              $
              87,958Accrued
      expenses
              
              
              179,019
              
              
              
              179,893Current
      portion of capital lease obligation
              
              
              2,967
              
              
              
              2,967Notes
      payable - related parties
              
              
              -
              
              
              
              47,123Total
      Current Liabilities
              
              
              294,205
              
              
              
              317,941LONG-TERM
      LIABILITIES:Capital
      lease obligation - less current portion
              
              
              2,428
              
              
              
              6,357Total
      Liabilities
              
              
              296,633
              
              
              
              324,298Commitments
      and Contingencies
              
              
              -
              
              
              
              -EQUITY:Emerging
      Media Holdings Inc. and Subsidiaries Stockholders' Equity:Preferred
      stock, no par value, 1,000,000 shares to bedesignated
      at September 30, 2009 - at stated value
              
              
              4,000,000
              
              
              
              4,000,000Common
      stock, $.001 par value, 100,000,000 sharesauthorized;
      16,303,000 and 16,303,000 shares issuedat
      September 30, 2009 and December 31, 2008
              
              
              16,303
              
              
              
              16,303Additional
      paid-in-capital
              
              
              5,027,003
              
              
              
              5,027,003Retained
      earnings
              
              
              802,615
              
              
              
              693,547Cumulative
      other comprehensive income (loss)
              
              
              65,833
              
              
              
              162,993Less:
      Cost of common stock in treasury, 9,800 shares
              
              
              (9,237
              )
              
              
              (9,237
              )Total
      Emerging Media Holdings Inc. and Subsidiaries Stockholders'
      Equity:
              
              
              9,902,517
              
              
              
              9,890,609Noncontrolling
      interest
              
              
              -
              
              
              
              -Total
      Equity
              
              
              9,902,517
              
              
              
              9,890,609TOTAL
      LIABILITIES AND EQUITY
              
              $
              10,199,150
              
              
              $
              10,214,907
 
 See Notes
to Unaudited Consolidated Financial Statements


2




EMERGING MEDIA HOLDINGS INC. AND
      SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS(Unaudited)For
      the Nine Months Ended
              
              
              For
      the Three Months EndedSeptember
      30,
              
              
              September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Sales
              
              $
              1,745,928
              
              
              $
              1,407,114
              
              
              $
              527,723
              
              
              $
              761,725Costs
      and expenses:Cost
      of sales
              
              
              1,058,680
              
              
              
              852,794
              
              
              
              406,269
              
              
              
              479,258Selling
      and marketing expenses
              
              
              133,810
              
              
              
              87,397
              
              
              
              42,279
              
              
              
              42,864General
      and administrative expenses
              
              
              551,524
              
              
              
              367,052
              
              
              
              146,568
              
              
              
              207,224Other
      operating expenses
              
              
              85,505
              
              
              
              44,376
              
              
              
              32,330
              
              
              
              12,2291,829,519
              
              
              
              1,351,619
              
              
              
              627,446
              
              
              
              741,575Income
      (loss) from operations
              
              
              (83,591
              )
              
              
              55,495
              
              
              
              (99,723
              )
              
              
              20,150Other
      income (expense):Interest
      expense
              
              
              (1,969
              )
              
              
              (3,706
              )
              
              
              (1,125
              )
              
              
              1,275Interest
      income
              
              
              194,627
              
              
              
              39,178
              
              
              
              83,058
              
              
              
              6,894Loss
      on sale of fixed assets
              
              
              -
              
              
              
              (14,465
              )
              
              
              -
              
              
              
              (323
              )192,658
              
              
              
              21,007
              
              
              
              81,933
              
              
              
              7,846Earnings
      before provision for income taxes
              
              
              109,067
              
              
              
              76,502
              
              
              
              (17,790
              )
              
              
              27,996Provision
      for income taxes
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      earnings (loss)
              
              
              109,067
              
              
              
              76,502
              
              
              
              (17,790
              )
              
              
              27,996Less:
      Net income attributable to thenoncontrolling
      ineterest
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      earnings attributable to Emerging Media Inc.and
      Subsidiaries
              
              $
              109,067
              
              
              $
              76,502
              
              
              $
              (17,790
              )
              
              $
              27,996Earnings
      per common share:Earnings
      per common share attributable toEmerging
      Media Inc. and Subsidiariescommon
      shareholders - basic
              
              $
              0.01
              
              
              $
              0.01
              
              
              $
              0.00
              
              
              $
              0.00Earnings
      per common share attributable toEmerging
      Media Inc. and Subsidiariescommon
      shareholders - diluted
              
              $
              0.01
              
              
              $
              0.01
              
              
              $
              0.00
              
              
              $
              0.00Weighted
      average common shares - basic
              
              
              16,303,000
              
              
              
              15,654,914
              
              
              
              16,303,000
              
              
              
              16,302,178Weighted
      average common shares - diluted
              
              
              17,303,000
              
              
              
              16,654,914
              
              
              
              16,303,000
              
              
              
              17,302,178Amounts
      attributable to Emerging Media Inc.and
      Subsidiaries common shareholders:Net
      earnings
              
              $
              109,067
              
              
              $
              76,502
              
              
              $
              (17,790
              )
              
              $
              27,996
  See Notes
to Unaudited Consolidated Financial Statements
 3
  EMERGING
      MEDIA HOLDINGS INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENT OF COMPREHENSIVE INCOMEFOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008(Unaudited)Nine
      Months EndedSeptember
      30,2009
                
                
                2008Net
      income
                
                $
                109,067
                
                
                $
                76,502Other
      comprehensive income (loss) - net of tax:Currency
      translation adjustment
                
                
                (97,160
                )
                
                
                53,092Comprehensive
      income
                
                
                11,907
                
                
                
                129,594Comprehensive
      income attributable to noncontrollinginterest
                
                
                -
                
                
                
                -Comprehensive
      income attributable to EmergingMedia
      Inc. and Subsidiaries
                
                $
                11,907
                
                
                $
                129,594


See Notes
to Unaudited Consolidated Financial Statements


4




EMERGING
      MEDIA HOLDINGS INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITYSeptember
      30, 2009(Unaudited)Preferred Stock
              
              Common Stock
              
              
              
              
              
              CumulativeComprehensive
              
              Number
      of
              
              
              
              Number
      of
              
              
              
              Additional
      Paid
              
              Retained
              
              Other
                Comprehensive
              
              Treasury
              
              NoncontrollingTotal
              
              Income
              
              Shares
              
              Amount
              
              Shares
              
              Amount
              
              In Capital
              
              Earnings
              
              Income
              
              Stock
              
              InterestBalance,
      January 1, 2008
              $     801,361
              
              
              
              -
              
              $           -
              
              15,053,000
              
              $     15,053
              
              $         28,253
              
              $     642,823
              
              $       115,232
              
              $           -
              
              $              -Sale
      of common stock
              5,000,000
              
              
              
              
              
              
              
              1,250,000
              
              1,250
              
              4,998,750Issuance
      of preferred stock
              4,000,000
              
              
              
              1,000,000
              
              4,000,000Purchase
      of 9,800 shares oftreasury
      stock
              (9,237)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (9,237)Contribution
      from noncontrollinginterest
              260
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              260Net
      income year endedDecember
      31, 2008
              50,464
              
              $          50,464
              
              
              
              
              
              
              
              
              
              
              
              50,724
              
              
              
              
              
              -260Currency
      translation
              47,761
              
              47,761
              
              
              
              
              
              
              
              
              
              
              
              
              
              47,761Comprehensive
      income
              
              
              $          98,225Balance,
      December 31, 2008
              9,890,609
              
              
              
              1,000,000
              
              4,000,000
              
              16,303,000
              
              16,303
              
              5,027,003
              
              693,547
              
              162,993
              
              (9,237)
              
              -Net
      income
              109,067
              
              $        109,067
              
              
              
              
              
              
              
              
              
              
              
              109,067Currency
      translation
              (97,160)
              
              (97,160)
              
              
              
              
              
              
              
              
              
              
              
              
              
              (97,160)Comprehensive
      income (loss)
              
              
              $          11,907Balance,
      September 30, 2009
              $  9,902,516
              
              
              
              1,000,000
              
              $4,000,000
              
              16,303,000
              
              $     16,303
              
              $    5,027,003
              
              $     802,614
              
              $         65,833
              
              $     (9,237)
              
              $              -
 
 See Notes
to Unaudited Consolidated Financial Statements


5




EMERGING
      MEDIA HOLDINGS INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS(Unaudited)For
      the Nine Months EndedSeptember
      30,2009
              
              
              2008Cash
      flows from operating activities:Net
      earnings
              
              $
              109,067
              
              
              $
              76,502Adjustments
      to reconcile net earnings to net cashprovided
      by operating activities:Depreciation
      and amortization
              
              
              86,645
              
              
              
              69,757(Loss)
      gain on disposition of fixed assets
              
              
              -
              
              
              
              (14,465
              )Changes
      in operating assets and liabilities:(Increase)
      decrease in trade receivables
              
              
              (181,072
              )
              
              
              37,906(Increase)
      decrease in inventories
              
              
              158
              
              
              
              44(Increase)
      in employee receivables and othercurrent
      assets
              
              
              (68,285
              )
              
              
              (121,965
              )Increase
      in accounts payable,accrued
      liabilities and income taxes payable
              
              
              23,387
              
              
              
              168,899Net
      Cash Provided by (Used In) OperatingActivities
              
              
              (30,100
              )
              
              
              216,678Cash
      flows from investing activities:Deposit
      on acquisition
              
              
              -
              
              
              
              (253,790
              )Purchase
      of property, plant and equipment
              
              
              (84,042
              )
              
              
              (28,252
              )Proceeds
      from sale of marketable securities
              
              
              -
              
              
              
              (8,166
              )Purchase
      of marketable securities
              
              
              (80,066
              )
              
              
              -Proceeds
      from sale of land
              
              
              -
              
              
              
              419Repayment
      of loans by employees
              
              
              9,755
              
              
              
              -Advances
      on note receivable
              
              
              (500,000
              )
              
              
              -Net
      Cash Used In Investing Activities
              
              
              (654,353
              )
              
              
              (289,789
              )Cash
      flows from financing activities:Proceeds
      from sale of common stock
              
              
              -
              
              
              
              5,000,000Repayment
      of debt - related parties
              
              
              (48,123
              )
              
              
              (84,902
              )Repayment
      of debt
              
              
              (3,929
              )
              
              
              -Proceeds
      from loans - related parties
              
              
              1,000
              
              
              
              1,607Cash
      received upon acquisition
              
              
              -
              
              
              
              11,662Net
      Cash Provided by (Used In) Financing Activities
              
              
              (51,052
              )
              
              
              4,928,367Effect
      of exchange rate changes on cash
              
              
              (33,678
              )
              
              
              (14,492
              )Net
      Increase (decrease) in cash
              
              
              (769,183
              )
              
              
              4,840,764Cash
      - Beginning of period
              
              
              1,334,738
              
              
              
              179,813Cash
      - End of period
              
              $
              565,555
              
              
              $
              5,020,577





See Notes
to Unaudited Consolidated Financial Statements
 6
  EMERGING
      MEDIA HOLDINGS INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS (continued)(Unaudited)For
      the Nine Months EndedSeptember
      30,2009
              
              
              2008Supplemental
      disclosure cash flow information:Cash
      paid for interest
              
              $
              1,969
              
              
              $
              3,706Cash
      paid for income taxes
              
              $
              -
              
              
              $
              -Supplementary
      information:Non-cash
      transactions during the period for:Assumption
      of deposit receivablefrom
      terminated acquisition bynoteholder
              
              $
              253,740




7




EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009




1. DESCRIPTION
OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
consolidated balance sheet as of September 30, 2009 and the consolidated
statements of operations, stockholders’ equity and cash flows for the periods
presented herein have been prepared by Emerging Media Holdings, Inc. (the
“Company” or “EMH”) and are unaudited.  In the opinion of management,
all adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the financial position, results of operations, changes in
stockholders’ equity and cash flows for all periods presented has been
made.  The information for the consolidated balance sheet as of
December 31, 2008 was derived from audited financial statements.





Organization





EMH was
incorporated in the State of Nevada on September 3, 2003.  The Company
directs its operations through its subsidiaries, Media Alianta S.R.L. (“Media
Alianta”), formerly Cabavarum S.R.L., Analytic Media Group, S.A. ("AMG"), Media
Top Prim S.R.L (LLC) (“Media Top Prim”) and Alkasar Media Services
S.R.L.  All the subsidiaries' operations and assets are located in the
Republic of Moldova.  Through its subsidiaries, the Company's primary
activities are in radio and television broadcasting.  The Company was
granted a broadcasting license in 2005 which extends through
2011.  The Company earns its revenue primarily through advertisement
sales.




Basis
of Presentation





In July
2006, EMH entered into a share exchange agreement with Cabavarum S.R.L.
("Cabavarum"), a Moldavia company, with primary activities in radio and
television broadcasting and earns its revenue primarily through advertisement
sales.  In connection with the share exchange, the Company acquired
the assets and assumed the liabilities of Cabavarum.  For accounting
purposes, the share exchange has been treated as a recapitalization of
Cabavarum.





As
provided for in the share exchange agreement, the stockholders of Cabavarum
received 5,251,000 shares of newly issued EMH common stock in exchange for the
outstanding shares of Cabavarum they held, which was accounted for as a
recapitalization.  The financial statements prior to July 2006, are
those of Cabavarum and reflect the asset and liabilities of Cabavarum and AMG at
historical carrying amounts.  In addition, certain shareholders of EMH
transferred 6,726,400 shares to associates of Cabavarum.  The
associates provided consulting services to the shareholders of Cabavarum in
connection with the merger with EMH, marketing activities, relations within the
Russian media market, computer programming and acquisitions.





Immediately
following the share exchange, EMH had a total of 15,053,000 common shares issued
and outstanding, of which the shareholders and associates of Cabavarum
controlled 80% of the outstanding common stock.







Significant
Accounting Policies




Principles of
Consolidation





The
consolidated financial statements of the Company include the Company and its
wholly-owned and majority-owned subsidiaries.  All material
intercompany balances and transactions have been eliminated.  For
those consolidated subsidiaries in which the Company's ownership is less than
100 percent (100%), the outside stockholders' interests are shown as
noncontrolling interest.  The noncontrolling interest of the Company's
earnings or loss is classified as net income attributable to noncontrolling
interest in the consolidated statement of operations.





8





EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009


Economic and Political
Risks




The
Company  faces a number of risks and challenges since its operations
are  in the
Republic  of  Moldova  and  its  primary  market  is
in Moldova.  The financial statements have been prepared assuming the
Company will continue as a going concern.  100% of the consolidated
revenue is earned in Moldova.  Management cannot presently predict
what future impact the political risk will have on the Company, if any, or how
the political climate in Moldova will affect the Company’s
operations.  Accordingly, events resulting from any change in the
political climate could have a material effect on the Company.





Cash
Equivalents





Cash
equivalents include short-term investments in money market funds with an
original maturity of three months or less when purchased.  At
September 30, 2009 and December 31, 2008, cash equivalents approximated $208,000
and $815,000, respectively.





Marketable
Securities





The
Company classifies its fixed income securities as “held-to-maturity”, and
accordingly, are carried at cost, which approximates market value.  In
accordance with Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification ("ASC") 320, "Investments-Debt and Equity Securities"
("ASC 320"), the Company periodically reviews its marketable securities and
determines whether the investments are other-than-temporarily
impaired.  If the investments are deemed to be other-than-temporarily
impaired, the investments are written down to their then current fair market
value.  See Note 5 for further discussion regarding these impairment
charges.  Realized gains or losses from the sale of marketable
securities are based on the specific identification method.





Inventories




Inventories
are stated at the lower of cost or market on average cost basis, and includes
petrol and cosmetic products.





Employee
Receivables





The
Company advances loans to certain employees.  The loans are interest
free.  Receivables from employees at September 30, 2009 and December
31, 2008 amounted to $75,249 and $93,559, respectively, and are included in
employee receivables and other current assets on the Company’s consolidated
balance sheet.





Depreciation




Property,
plant and equipment are carried at cost less accumulated
depreciation.  The cost of repairs and maintenance is expensed as
incurred; major replacements and improvements are capitalized.  When
assets are retired or disposed of, the cost and accumulated depreciation are
removed from the accounts, and any resulting gains or losses are included in
income in the year of disposition.





Depreciation
is provided using the straight-line method over the estimated useful lives of
the assets.  The lives applied are as follows:






Office
      equipment
            3-5 YearsVehicles
            7 YearsManufacturing
      equipment
            5-10 Years





Foreign Currency
Translation




The
functional currency for foreign operations is the Moldova lei
("MDL$").  Assets and liabilities of foreign operations are translated
at exchange rates as of the balance sheet date and income, expense and cash flow
items are translated at the average exchange rate for the applicable
period.  Translation adjustments are recorded in Cumulative Other
Comprehensive Income (Loss).




9


EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009
  Conversion
of assets and liabilities from MDL$ into US$ has been made at the rate of
exchange on September 30, 2009 and December 31, 2008: at US$1.00: MDL 11.50: and
US$1.00: MDL 10.40.





Use of
Estimates





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





Revenue
Recognition





The
Company recognizes revenue in accordance with the guidance contained in FASB ASC
605, (Revenue Recognition) ("ASC 605").





Revenue
from advertisement sales is recognized on a contract basis and is earned over
the life of the contract as the services for advertising are
performed.





The
Company provides allowances for expected doubtful accounts based upon historical
bad debt experience and periodic evaluations of specific customer
accounts.





Goodwill





The
Company tested goodwill for impairment during the fourth quarter of 2008
following its recent acquisition, using a fair value approach at the reporting
unit level.  The Company will test for impairment annually during the
fourth quarter.  A reporting unit is an operating segment or one level
below an operating segment for which discreet financial information is available
and reviewed by management.  Assets and liabilities of the Company
have been assigned to the reporting units to the extent that they are employed
in or are considered a liability related to the operations of the reporting unit
and were considered in determining the fair value of the reporting
unit.





Evaluation of Long-lived
Assets





The
Company reviews property and equipment for impairment whenever events or changes
in circumstances indicate the carrying value may not be recoverable in
accordance with guidance in FASB ASC 360-15-35, “Impairment or Disposal of
Long-Lived Assets” ("ASC 360-15-35").  If the carrying value of the
long-lived assets exceeds the present value of the related estimated future cash
flows, the asset would be adjusted to its fair value and an impairment loss
would be charged to operations in the period identified.





Income
Taxes




Taxes are
calculated in accordance with taxation principles currently effective in the
Republic of Moldova and the United States of America.





The
Company accounts for income taxes using the asset and liability approach under
which deferred income taxes are recognized by applying enacted tax rates
applicable to future years to the differences between the financial statement
carrying amounts and the tax basis of reported assets and
liabilities.





For that
portion of foreign earnings that have not been repatriated, an income tax
provision has not been recorded for U.S. federal income taxes on undistributed
earnings of foreign subsidiaries as such earnings are intended to be permanently
reinvested in these operations.  Such earnings would become taxable
upon the sale or liquidation of these foreign subsidiaries or upon repatriation
of earnings.





Effective
January 1, 2007, uncertain tax positions are accounted for in accordance with
FASB ASC 740  "Income Taxes” ("ASC 740").  See Note 12 for
further discussion.




10




EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009





Concentration of Credit
Risk





Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash and accounts receivable.





The
Company's cash and cash equivalents are concentrated primarily in four banks in
Moldova.  At times, such deposits could be in excess of insured
limits.  Management believes that the financial institutions that hold
the Company’s financial instruments are financially sound and, accordingly,
minimal credit risk is believed to exist with respect to these financial
instruments.





Accounts
receivable are reviewed daily and credit is given after the review of the
Company’s credit policies.  Exposure to losses on receivables is
principally dependent on each customer’s financial condition.





Retransmission
Rights





The
Company enters into agreements for the right to retransmit programs from other
television networks.  The terms of the agreements are on an annual
basis and the costs are expensed as a part of cost of sales over the life of the
agreements.





Earnings Per
Share





Basic
earnings per common share are computed by dividing net earnings by the weighted
average number of common shares outstanding during the
period.  Diluted earnings per common share are computed by dividing
net earnings by the weighted average number of common shares and potential
common shares outstanding during the period.  Potential common shares
used in computing diluted earnings per share relate to preferred stock which if
exercised would have a dilutive effect on earnings per share.  For the
nine and three months ended September 30, 2009 and 2008, there were 1,000,000
potential common shares outstanding.





The
weighted average shares outstanding used in the computation of basic and diluted
earnings per share are as follows:





September
      30,2009
              
              
              2008Basic
              
              
              16,303,000
              
              
              
              15,654,914Potential
      shares
              
              
              1,000,000
              
              
              
              1,000,000Fully
      diluted
              
              
              17,303,000
              
              
              
              16,654,914





Fair Value of Financial
Instruments





The
Company adopted FASB ASC 820, Fair Value Measurements and Disclosures (“ASC
820”) on January 1, 2008, for all financial assets and liabilities that are
recognized or disclosed at fair value in the condensed consolidated financial
statements on a recurring basis or on a nonrecurring basis during the reporting
period. While the Company adopted the provisions of ASC 820 for nonfinancial
assets and liabilities that are recognized or disclosed at fair value in the
financial statements on a recurring basis, no such assets or liabilities existed
at the balance sheet date. As permitted by ASC 820, the Company delayed
implementation of this standard for all nonfinancial assets and liabilities
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis and adopted these provisions effective January 1,
2009.





The fair
value is an exit price, representing the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.  The Company utilizes market
data or assumptions that market participants would use in pricing the asset or
liability.  ASC 820 establishes a three-tierfair
value hierarchy, which prioritizes the inputs used in measuring fair
value.  These tiers include:  Level 1, defined as observable
inputs such as quoted market prices in active markets; Level 2, defined as
inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs about which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.




11




EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009
 As of
September 30, 2009, the Company held certain financial assets that are measured
at fair value on a recurring basis.  These consisted of cash and cash
equivalents and investments in marketable securities.  The fair values
of the cash and cash equivalents is determined based on quoted market prices in
public markets and is categorized as Level 1.  The investment in
marketable securities is determined by the Company based on market prices other
than quoted prices in active markets and is categorized as Level
2.  These are also categorized as held-to-maturity
securities.  The Company does not have any financial assets measured
at fair value on a recurring basis as Level 3 and there were no transfers in or
out of Level 2 or Level 3 during the nine months ended September 30,
2009.





The
following table sets forth by level, within the fair value hierarchy, the
Company’s financial assets accounted for at fair value on a recurring basis as
of September 30, 2009..




Assets
      at Fair Value as of September 30, 2009 UsingTotal
                
                
                Quoted
      Prices in Active Markets for Identical Assets (Level
    1)
                
                
                Significant
      Other Observable Inputs (Level 2)
                
                
                Significant
      Unobservable Inputs (Level 3)Cash
      and cash equivalents
                
                $
                565,555
                
                
                $
                565,555
                
                
                $
                -
                
                
                $
                -Held-to-maturity
      securities
                
                
                330,066
                
                
                
                -
                
                
                
                330,066
                
                
                
                -Total
                
                $
                895,621
                
                
                $
                565,555
                
                
                $
                330,066
                
                
                $
                -





The
Company had no financial assets accounted for on a non-recurring basis as of
September 30, 2009.





There
were no changes to the Company’s valuation techniques used to measure asset fair
values on a recurring or nonrecurring basis during the nine months ended
September 30, 2009 and the Company did not have any financial liabilities as of
September 30, 2009.





The
Company has other financial instruments, such as receivables, accounts payable
and other liabilities which have been excluded from the tables
above.  Due to the short-term nature of these instruments, the
carrying value of receivables, accounts payable and other liabilities
approximate their fair values.


Reclassification





Effective
January 1, 2009, the Company completed its implementation of FASB ASC 810
"Consolidation" ("ASC 810"),.  As a result of adopting ASC 810, prior
years balances were reclassified to confirm to current
presentation.





New Financial Accounting
Standards




Updates to the FASB
Codification Applicable to the Company


During
the second quarter of 2009, the Company implemented additional interim
disclosures about fair value of financial instruments, as required by FASB ASC
Paragraph 825-10-65-1.  Prior to implementation, disclosures about
fair values of financial instruments were only required to be disclosed
annually.  As the required modifications only related to additional
disclosures of fair values of financial instruments in interim financial
statements, the adoption did not affect the Company’s financial position or
results of operations.





Beginning
in the second quarter of 2009, the Company must disclose the date through which
subsequent events have been evaluated, in accordance with the requirements in
FASB ASC Paragraph 855-10-50-1.  With regards to the condensed
consolidated financial statements and notes to those financial statements
contained in this Form 10-Q, the Company has evaluated all subsequent events
through November 9, 2009 (the date the Company’s financial statement are
issued).





12




EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009




In
September 2009, the FASB implemented certain modifications to FASB ASC Topic
860, Transfers and Servicing, as a means to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets, the effects of a transfer on its financial position, financial
performance, and cash flows, and a transferor’s continuing involvement, if any,
in transferred financial assets. These modifications must be applied as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009. The Company does not expect the adoption of this
standard to have an impact on the Company’s results of operations, financial
condition or cash flows.





During
the third quarter of 2009, the Company adopted the FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles in
accordance with FASB ASC Topic 105, “Generally Accepted Accounting Principles”
(the “Codification”).  The Codification has become the source of
authoritative U.S. generally accepted accounting principles (GAAP) recognized by
the FASB to be applied by nongovernmental entities. Rules and interpretive
releases of the Securitiesand Exchange Commission
(SEC) under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. Effective with the Company’s adoption on
July 1, 2009, the Codification has superseded all prior non-SEC accounting and
reporting standards. All other non-grandfathered non-SEC accounting literature
not included in the Codification has become non-authoritative. As the adoption
of the Codification only affected how specific references to GAAP literature
have been disclosed in the notes to the Company’s condensed consolidated
financial statements, it did not result in any impact on the Company’s results
of operations, financial condition or cash flows.





The FASB
has published FASB Accounting Standards Update No. 2009-12, Fair Value Measurements and
Disclosures (Topic 820)—Investments in Certain Entities That Calculate Net Asset
Value per Share (or Its Equivalent). This Update amends Subtopic 820-10,
Fair Value Measurements and
Disclosures—Overall, to permit a reporting entity to measure the fair
value of certain investments on the basis of the net asset value per share of
the investment (or its equivalent). This Update also requires new disclosures,
by major category of investments, about the attributes of investments included
within the scope of this amendment to the Codification. The guidance in this
Update is effective for interim and annual periods ending after December 15,
2009. The Company does not expect the adoption of this standard to have an
impact on the Company’s results of operations, financial condition or cash
flows.





2.
ACQUISITIONS





On May 2,
2008, the Company acquired the common stock of Media Top Prim S.R.L. (LLC)
(“Media Top Prim”), located in Moldova, for 1 million shares of the Company’s
preferred stock of a class and series to be authorized, valued at $4.0
million.  The preferred shares are convertible into common shares on a
1:1 basis after a holding period of one year on the condition the Company’s
stock price will not be less than $4 per share.  Media Top Prim’s
primary activities are in radio and television broadcasting.  Media
Top Prim earns its revenues primarily through advertisement
sales.  Media Top Prim was granted a broadcasting license on April 24,
2007 which extends to April 24, 2013.  The purchase price was
allocated to both tangible and intangible assets and liabilities based on
estimated fair values after considering an independent formal
appraisal.





The
acquisition has been accounted for using the purchase method of accounting, and
accordingly, the results of operations of Media Top Prim are included in the
Company’s consolidated financial statements from May 2, 2008.





The
following unaudited proforma summary of results of operations assume Media Top
Prim had been acquired as of January 1, 2008:





Nine
      Months EndedSeptember 30, 2008Net
      sales
              
              $
              1,509,114Net
      earnings
              
              
              88,220Earnings
      per share -diluted
              
              $
              0.01


13




EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009





The
information above is not necessarily indicative of the results of operations
that would have occurred if the acquisition had been consummated as of January
1, 2008.  Such information should not be construed as a representation
of the future results of operations of the Company.




3. JOINT
VENTURE





In August
2008, the Company announced the creation of a new advertising company, Alkasar
Media Services S.R.L.  The Company and Alkasar Region LLC have agreed
to become partners to promote new advertising technologies in Republic of
Moldova in the media buying business, each owning a 50% interest in the joint
venture.





The joint
venture has been funded through the initial share capital from each of the
investors.  If additional capital is needed, the joint venture will
raise the additional capital from contributions in share capital or loans from
the shareholders.  If one shareholder does not want to fund the joint
venture, it is not obligated to invest the money.





The joint
venture shall make annual distributions to the joint venture
partners.  The distribution is up to the discretion of the general
manager of the joint venture within 30 days following the end of the fiscal
year.  The general manager is not allowed to make distributions if it
is for the full payment of the share capital or if the result of the
distribution the assets would be less than the amount of the share
capital.  For the six months ended June 30, 2009, no distributions
were made.




Alkasar
Region LLC is affiliated with Gazprom - Media JSC advertising agency, selling
advertising in more then 80 of the largest Russian cities, such as Moscow, St.
Petersburg and others.





4.
GOODWILL AND INTANGIBLES





Goodwill
represents the excess of the purchase price and related acquisition costs over
the value assigned to the net intangible and other intangible assets with finite
lives acquired in a business acquisition.  Effective January 1, 2009,
acquisition related costs will be recognized separately from the acquisition in
accordance with FASB ASC 805 "Business Combination" ("FASB ASC
805").





Other
intangibles include the value assigned to the license purchased as part of the
acquisition. Amounts assigned to these intangibles were determined by
management.  Management considered a number of factors in determining
the allocations, including valuations and independent
appraisals.  Other intangibles are being amortized over 7 years, the
life of the license.  Amortization expense was $42,612 and $-0-, for
the nine months ended September 30, 2009 and 2008, respectively.




14




EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009









TotalBalance,
      December 31, 2008
              
              $
              3,639,645Adjustments
              
              
              -Balance,
      September 30, 2009
              
              $
              3,639,645


Nonfinancial
assets and liabilities, such as goodwill and long-lived assets, are accounted
for at fair value on a non recurring basis.  These items are tested
for impairment upon the occurrence of a triggering event or in the case of
goodwill, on at least an annual basis.





For the
annual goodwill impairment assessment performed in 2008, the Company’s fair
value analysis was supported by a weighting of two generally accepted valuation
approaches, including the income approach and the market approach, as further
described below.  These approaches include numerous assumptions with
respect to future circumstances, such as industry and/or local market conditions
that might directly impact operations in the future, and are therefore
uncertain.  These approaches are utilized to develop a range of fair
values and a weighted average of these approaches is utilized to determine the
best fair value estimate within that range.





The
income approach is based on a projection of discounted cash flows prepared by
Company management.  The following range of assumptions was utilized
in calculating the Company’s future cash flow projection:





·
            Revenue
      growth rates from 0% to 25%


·
            Weighted
      average cost of capital of 11.0% to
13.3%





The
market approach applies multiples of guideline companies to certain of the
Company’s value measures (earnings before interest and taxes and debt-free cash
flow, for example).  A control premium ranging from 27.5% - 31.7% was
factored into the calculation.





Once the
fair value was determined under each valuation method, the Company established
the weight of each valuation method.  As management’s projections
provided for the discounted cash flow analysis are believed to be more
indicative of the Company’s future performance, the income approach was weighted
at 75%.  The guideline company approach relies on the market and given
the present state of the economy with significant market fluctuations, the
Company believes the discounted cash flow projections are a more reliable
base.  As a result, the market approach was weighted at
25%.





The
annual impairment test related to the Company's goodwill was performed during
the fourth quarter of 2008.





The
components of intangible assets other than goodwill are as follows:





September
      30, 2009
              
              
              December
      31, 2008Gross
      Carrying
              
              
              Accumulated
              
              
              Gross
      Carrying
              
              
              AccumulatedAmount
              
              
              Amortization
              
              
              Amount
              
              
              AmortizationLicense
      agreements
              
              $
              348,000
              
              
              $
              75,755
              
              
              $
              348,000
              
              
              $
              33,143
 
 During
the year ended December 31, 2008, the Company acquired intangible assets related
to a licensing agreement in the amount of $348,000.  At the time of
acquisition, these intangible assets had a weighted average estimated life of 7
years.




15




EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009


Estimated
amortization expense for intangible assets for the next five years is as
follows:




Year
      Ending
              
              AmortizationDecember
      31,
              
              Expense2009
              
              $
              11,5412010
              
              
              49,7142011
              
              
              49,7142012
              
              
              49,7142013
              
              
              49,714





5.
MARKETABLE SECURITIES





At
September 30, 2009 and December 31, 2008, marketable securities have a cost and
estimated fair value of $330,066 and $250,000, respectively.  The
market value of the marketable securities did not change as the securities were
fixed yield bonds with a fixed price and fixed interest rate.  The
investments are held-to-maturity and are recorded at cost, which approximates
market value.  The bonds mature in March 2010.




6. NOTES
RECEIVABLE





On
November 7, 2008, the Company entered into a loan agreement with IPA
International Project Establishment, a Lichtenstein corporation
(“IPA”).  The Company advanced IPA $3,840,000.  In June
2009, IPA assumed the debt owed by a Romanian entity to the Company in the
amount of $253,740 in connection with a terminated acquisition
agreement.  See Note 15 for further information.  As of
September 30, 2009, IPA owed the Company $4,093,740 plus interest of
$146,757.  The term of the loan was originally for six months with
interest at a rate of 5% per anum payable at maturity.  The loan has
been extended to October 2009.  On October 1, 2009, the Company closed
an acquisition of 60% of the outstanding shares of SC Genesis International S.A.
owned by IPA.  The outstanding note receivable was applied against the
purchase price.  See Note 16 for further information.  For
the nine months ended September 30, 2009, the Company recorded interest income
of $153,000.





In June
2009, the Company entered into a loan agreement with Genesis International
SA.  The Company advanced Genesis International SA
$500,000.  The loan is due upon demand with interest at 5% per
anum.  For the nine months ended September 30, 2009, the Company
received interest income of $19,422.  The note was repaid in full in
October 2009.





7.
INVENTORIES





Inventories
are summarized as follows:








September
      30,
              
              
              December
      31,2009
              
              
              2008Cosmetics
              
              $
              888
              
              
              $
              1,354Petrol
              
              
              4,771
              
              
              
              4,374$
              5,659
              
              
              $
              5,728
   16
  EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009
 8.
PROPERTY, PLANT AND EQUIPMENT





Property,
plant and equipment, which includes amounts recorded under capital leases,
consisted of the following:





September
      30,
              
              
              December
      31,2009
              
              
              2008Machinery
      and equipment
              
              $
              783,068
              
              
              $
              776,979Less
      accumulated depreciation
              
              
              (648,460
              )
              
              
              (667,953
              )$
              134,608
              
              
              $
              109,026




Depreciation
expense for the nine months ended September 30, 2009 and 2008 totalled $44,033
and $69,757, respectively.




9.
NOTES PAYABLE – RELATED PARTIES





a)
            In
      November 2007, the Company received an advance of $5,000 from a company in
      which a related party has an equity interest.  The advance was
      repaid in January 2009.  Interest is 10% per annum and for the
      nine months ended September 30, 2009 and 2008, interest amounted to $-0-
      and $331, respectively.  The balance due was -0- and $5,000 as
      of September 30, 2009 and December 31, 2008,
  respectively.




b)
            During
      2008, a related party advanced $42,123 to the Company’s Media Top Prim
      subsidiary. The note is interest free and due upon demand.  The
      note was repaid in full during 2009.  As of September 30, 2009
      and December 31, 2008, the amount due the related party was $-0- and
      $42,123, respectively.





10.
CAPITAL LEASES





Capital
lease obligations consisted of the following:





September 30, 2009
              
              
              December 31, 2008Equipment
              
              $
              5,395
              
              
              $
              9,324Current
      portion
              
              
              2,967
              
              
              
              2,967Capital
      lease obligations,less
      current portion
              
              $
              2,428
              
              
              $
              6,357


Interest
expense for the nine months ended September 30, 2009 and 2008 was $1,969 and
$-0-, respectively.





The
following is a schedule of minimum future lease payments required as of
September 30, 2009, under capital leases which have an initial or remaining
non-cancellable lease term in excess of one year:





Capital
      Leases:
              
              Principal
              
              
              Interest
              
              
              TotalFiscal
      year ending:2009
              
              $
              649
              
              
              $
              233
              
              
              $
              8822010
              
              
              2,988
              
              
              
              650
              
              
              
              3,6382011
              
              
              1,758
              
              
              
              166
              
              
              
              1,924Total
      minimum lease payments
              
              $
              5,395
              
              
              $
              1,049
              
              
              $
              6,444
  17
 
  EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009


11.
NONCONTROLLING INTEREST





Effective
January 1, 2009, the Company completed its implementation of FASB ASC
810.





The
following table sets forth the noncontrolling interest balance and the changes
to this balance attributable to the third-party interests in Alkasar Media
Services S.R.L.





September
      30,
              
              
              December
      31,2009
              
              
              2008Balance
      at beginning of period
              
              $
              -
              
              
              $
              -Capital
      contributions
              
              
              -
              
              
              
              260Noncontrolling
      interest share of loss
              
              
              -
              
              
              
              (260
              )Balance
      at end of period
              
              $
              -
              
              
              $
              -
   The loss
for 2008 exceeds the capital of the third party.  Losses are only
allocable to the extent of capital.  Any excess losses are absorbed by
the Company.  In future periods, net income will be allocated to
previous unallocated losses before being allocated to third party
interests.





12.
INCOME TAXES





The
Company adopted the provisions of ASC 740 on January 1, 2007.  As a
result of the implementation of ASC 740, the Company recognized no adjustment in
the net liability for unrecognized income tax benefits.  The Company
believes there are no potential uncertain tax positions and all tax returns are
correct as filed.  Should the Company recognize a liability for
uncertain tax positions, the Company will separately recognize the liability for
uncertain tax positions on its balance sheet.  Included in any
liability for uncertain tax positions, the Company will also setup a liability
for interest and penalties.  The Company’s policy is to recognize
interest and penalties related to uncertain tax positions as a component of the
current provision for income taxes.





The
nominal statutory corporate rate in the Republic of Moldova is 0% for 2009 and
2008.   Taxes are calculated in accordance with Moldovan
regulations and are paid annually.   Taxes are calculated on a
separate entity basis since consolidation for tax purposes is not permitted in
Moldova.  There is no U.S. tax provision due to losses during both
2009 and 2008.  Deferred income taxes are provided for the temporary
differences between the financial reporting and tax basis of the Company's
assets and liabilities. The principal item giving rise to deferred taxes is the
net operating loss carryforward in the U.S.  Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.  The Company has set up a valuation allowance for
losses for certain carryforwards that it believes may not be
realized.





13.
STOCKHOLDERS' EQUITY





Common
Stock





On May 2,
2008, the Company entered into a subscription agreement with a private investor
for an equity investment of $5,000,000 in the Company through the purchase by
the investor of 1,250,000 shares of the Company’s common stock.





The net
proceeds of the private placement was primarily used to fund the Company’s
operations.





Preferred
Stock





The
Company has authorized 1,000,000 shares of preferred stock to be designated for
issuance in connection with the acquisition of Media Top Prim.  The
preferred shares are convertible into common shares on a 1:1 basis on the
condition the Company’s stock price will not be less than $4 per
share.  The Company and the preferred shareholders are currently in
negotiations as the common share price is less than $4.




18




EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009
  Treasury
Stock





On
September 22, 2008, the Board of Directors authorized the Company to purchase
shares of the Company's common stock in the open market.  As of
September 30, 2009, the Company repurchased 9,800 shares in the amount of
$9,237.  No shares have been repurchased subsequent to September 30,
2009.




14.
SEGMENT INFORMATION





The
Company operates in one industry with two geographic segments.  The
primary criteria by which financial performance is evaluated and resources are
allocated are revenues and operating income.  The following is a
summary of key financial data:





Nine
      Months Ended
              
              
              Three
      Months EndedSeptember
      30,
              
              
              September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Net
      sales:United
      States
              
              $
              1,745,978
              
              
              $
              140,714
              
              
              $
              52,772
              
              
              $
              761,725Moldova
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -$
              1,745,978
              
              
              $
              140,714
              
              
              $
              52,772
              
              
              $
              761,725Income
      (loss) from operations:United
      States
              
              $
              (165,984
              )
              
              $
              (74,711
              )
              
              $
              (60,579
              )
              
              $
              (74,711
              )Moldova
              
              
              82,393
              
              
              
              130,206
              
              
              
              (39,144
              )
              
              
              94,861$
              (83,591
              )
              
              $
              55,495
              
              
              $
              (99,723
              )
              
              $
              20,150
  
 September
      30,
              
              
              December
      31,2009
              
              
              2008Total
      Assets:United
      States
              
              $
              8,867,950
              
              
              $
              8,868,283Moldova
              
              
              1,331,200
              
              
              
              1,346,624Total
      Assets
              
              $
              10,199,150
              
              
              $
              10,214,907
   19
  EMERGING
MEDIA HOLDINGS INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2009


15.
COMMITMENTS AND CONTINGENCIES





a) The
Company entered into a retransmission rights agreement with Russian Broadcasting
Channels JSC “NTV” and JSC “NTV-Mir” owned by Gazprom Media, a wholly-owned
subsidiary of the GazProm Corporation (a related party to Alkasar Region LLC, a
50% investor in Alkasar Media Services S.R.L.), to retransmit programs from
these television networks. The contract is on a long term basis through 2010 and
the Company will pay $229,333 per year. For the nine months ended September 30,
2009 and 2008, the Company expensed $138,667 and $172,000,
respectively.





b) The
Company entered into a retransmission rights agreement with Russian Broadcasting
Channel JSC “TNT-Teleset” owned by Gazprom Media, a wholly-owned subsidiary of
GazProm Corporation (a related party to Alkasar Region LLC, a 50% investor in
Alkasar Media Services S.R.L.) to retransmit programs from this television
network. The contract is on a long term basis through 2012 and the Company will
pay $142,400 per year. For the nine months ended September 30, 2009 and 2008,
the Company expensed $118,667 and $106,800, respectively.





c) On
June 17, 2008, the Company entered into an agreement to acquire Way Media, LTD
(“Way Media”), a Romanian company.  Way Media is one of the top five
Romanian outdoor advertising companies with a developed network in more than 22
cities.  Way Media offers the planning and production of high quality
outdoor advertising strategies, as well as installation and maintenance
throughout the country of Romania.





The
Company paid a deposit against the purchase price of approximately
$254,000.  The acquisition was terminated during 2008 due to the
recent global financial crisis that has affected the outdoor advertising market
in Romania.  The Company transferred the deposit to IPA and released
the Romanian company from the obligation.  See Note 6 for further
information.








16.
SUBSEQUENT EVENT





On
October 1, 2009, the Company closed an acquisition of 60% of the outstanding
shares of SC Genesis International S.A. ("Genesis") owned by IPA International
Project Establishment.  The consideration paid by the Company for the
acquisition of Genesis was $4,800,000.





Genesis,
a joint stock company incorporated under the laws of Romania, has as its
principal business, the construction of roads and highways.  Other
secondary activities include surface and underground railway construction, other
special construction projects, relocation services and merchandise
transportation.





The fair
value of the identifiable assets acquired, liabilities assumed, and any
noncontrolling interests in Genesis will be measured as of the date of
acquisition.  The measurement period is the period after the
acquisition date during which time the Company may adjust the provisional
amounts recognized for the business combination.  Goodwill will be
recognized as the excess of the fair value of the consideration transferred over
the fair value of the identifiable assets acquired and the liabilities
assumed.  The Company will account for acquisition-related costs as
expenses in the periods in which the costs are incurred and the services are
received.





20




ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.





The
following discussion of our financial condition and results of operations should
be read in conjunction with the financial statements and notes thereto and the
other financial information included elsewhere in this
report.  Certain statements contained in this report, including,
without limitation, statements containing the words “believes,” “anticipates,”
“expects” and words of similar import, constitute “forward looking statements”
within the meaning of the Private Securities Litigation Reform Act of
1995.  Such forward-looking statements involve known and unknown risks
and uncertainties.  Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including our ability to create, sustain, manage or forecast our
growth; our ability to attract and retain key personnel; changes in our business
strategy or development plans; competition; business disruptions; adverse
publicity; and international, national and local general economic and market
conditions.





General





Organization





Emerging
Media Holdings, Inc was incorporated in the State of Nevada on September 3,
2003. The Company directs its operations through its subsidiaries, Media Alianta
(formerly Cabavarum S.R.L), Analytic Media Group, S.A. ("AMG") and Media Top
Prim S.R.L. Our subsidiaries' operations and assets are located in the Republic
of Moldova. Through its subsidiaries, the Company's primary activities are in
radio and television broadcasting. The Company earns its revenue primarily
through advertisement sales.





Throughout
this Form 10-Q, the terms "we," "us," "our," "EMH" and "Company" refer to
Emerging Media Holdings, Inc., a Nevada corporation, and, unless the context
indicates otherwise, includes our subsidiaries.





Recent
Developments





On
October 1, 2009, Emerging Media Holdings, Inc. (“we”, “us”, “EMH” or the
“Company”) closed an acquisition of 60% of the outstanding shares of SC Genesis
International S.A., a joint stock company incorporated under the laws of Romania
(“Genesis”) from IPA International Project Establishment, a Lichtenstein
corporation (“IPA”), pursuant to a Share Purchase Agreement (the “Agreement”),
executed as of June 10, 2009, by and between the Company and
Genesis.  On November 7, 2008, the Company had entered into a loan
agreement with IPA, and the Company had advanced IPA $3,840,000.  In
June 2009, IPA assumed the debt owed by a Romanian entity to the Company in the
amount of $253,740 in connection with a terminated acquisition agreement. As of
September 30, 2009, IPA owed the Company $4,093,740 plus interest of
$146,757.  On October 1, 2009, the Company closed an acquisition of
60% of the outstanding shares of SC Genesis International S.A. owned by IPA for
$4,800,000, and the outstanding note receivable was applied against the purchase
price.





Genesis
was founded with private capital as a joint stock company under the laws of
Romania in 1994 and has, as its principal business, the construction of roads
and highways.  Other secondary activities include surface and
underground railway construction, other special construction projects,
relocation services and merchandise transportation. Genesis has approximately
120 employees. Genesis’ principal
offices are located at192
Calea, 13 Septembrie 192 Street, District 5, Bucharest,
Romania.





21




Critical
Accounting Policies and Estimates





Our
significant accounting policies are more fully described in Note 1 of Notes to
the Consolidated Financial Statements.  However, certain accounting
policies and estimates are particularly important to the understanding of the
our financial position and results of operations and require the application of
significant judgment by our management or can be materially affected by changes
from period to period in economic factors or conditions that are outside the
control of management.  As a result they are subject to an inherent
degree of uncertainty. In applying these policies, our management uses their
judgment to determine the appropriate assumptions to be used in the
determination of certain estimates. Those estimates are based on our historical
operations, our future business plans and projected financial results, the terms
of existing contracts, our observance of trends in the industry, information
provided by our customers and information available from other outside sources,
as appropriate.





The
Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements.




Allowance
for Doubtful Accounts





The
Company maintains allowances for doubtful accounts for estimated losses from the
inability of its customers to make required payments.  The Company
determines its reserves by both specific identification of customer accounts
where appropriate and the application of historical loss experience to
non-specific accounts.  If the financial condition of the Company’s
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances could possibly be required.





Revenue
Recognition





The
Company recognizes revenue in accordance with the guidance in FASB ASC 605,
“Revenue Recognition”. Revenue from advertisement sales is recognized on a
contract basis and is earned over the life of the contract as the services for
advertising are performed.





Income
Taxes





Income
taxes are accounted for under FASB ASC 740, “Income
Taxes”.  In accordance with FASB ASC 740, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, as measured by enacted tax rates
that are expected to be in effect in the periods when the deferred tax assets
and liabilities are expected to be settled or realized.  Significant
judgment is required in determining the worldwide provisions for income
taxes.  In the ordinary course of a global business, the ultimate tax
outcome is uncertain for many transactions.  It is the Company’s
policy to establish provisions for taxes that may become payable in future years
as a result of an examination by tax authorities.  The Company
establishes the provisions based upon management’s assessment of exposure
associated with permanent tax differences and tax credits applied to temporary
difference adjustments.  The tax provisions are analyzed periodically
(at least quarterly) and adjustments are made as events occur that warrant
adjustments to those provisions.





Foreign currency
accounting





The
financial position and results of operations of our foreign subsidiaries in the
Republic of Moldova are measured using the foreign subsidiaries’ local currency,
the Moldovan lei, as the functional currency since that is the currency of the
primary environment in which those companies generate their revenues and
expenses.  Revenues and expenses of such subsidiaries are translated
into U.S. dollars at average exchange rates prevailing during the period. Assets
and liabilities are translated at the rates of exchange on the balance sheet
date. The resulting translation gain and loss adjustments are recorded directly
as a separate component of shareholders’ equity. The amount of future
translation gains or losses will be affected by any changes in the exchange rate
between the lei and the U.S. dollar.




22




Although
our Moldovan subsidiaries incur most of their expenses in the lei, many of their
sales are to customers outside of Moldova and are therefore denominated in
currencies other than the lei (principally the U.S.
dollar).  Additionally, our Moldova subsidiaries have certain bank
loans that are denominated in U.S. dollars, and make certain purchases that are
denominated in U.S. dollars.  As required by FASB ASC 830, “Foreign
Currency Matters”, at the time of such a U.S dollar denominated transaction the
subsidiary records the revenue and related receivable, or the bank debt or other
liability, in lei on the basis of the exchange rate in effect on the date of the
transaction.  However, if the exchange rate between the lei and the
currency in which the transaction is denominated changes between the date of the
original transaction and the date the resulting receivable is collected or
liability is paid, the amount received or paid, when converted to lei, will be
different than the receivable or liability originally recorded, resulting in a
foreign currency transaction gain or loss which is recorded in the results of
operations.  Additionally, at the end of each reporting period the lei
amounts for the receivables, bank debts and accounts payable of our Moldova
subsidiaries that are denominated in U.S. dollars are adjusted to reflect the
amount in lei expected to be received or paid when the receivable is collected
or the liability settled on the basis of the exchange rate at the end of the
period. These adjustments also produce foreign currency transaction gains or
losses which are recorded in the results of operations.





As a
result, in periods in which the value of the lei increases against the value of
the U.S. dollar, we will recognize a net foreign currency transaction gain if
our Moldova subsidiaries have U.S. dollar denominated liabilities that exceed
their U.S. dollar denominated receivables, or we will incur a net foreign
currency transaction loss if our Moldova subsidiaries have U.S. dollar
denominated receivables that exceed their U.S. dollar denominated liabilities.
Conversely, in periods in which the value of the lei declines against the value
of the U.S. dollar, we will incur a net foreign currency transaction loss if our
Moldova subsidiaries have U.S. dollar denominated liabilities that exceed their
U.S. dollar denominated receivables, or we will recognize a net foreign currency
transaction gain if our Moldova subsidiaries have U.S. dollar denominated
receivables that exceed their U.S. dollar denominated liabilities.





The
amount of these gains or losses will depend on the amount, if any, by which the
U.S. dollar denominated receivables of our Moldova subsidiaries exceed their
U.S. dollar denominated liabilities, or vice versa, and the amount, if any, by
which the value of the lei changes against the value of the U.S. dollar. We
cannot predict the amount, if any, by which the lei will increase or decrease in
value against the U.S. dollar. Additionally, the amount of the U.S. dollar
denominated receivables and liabilities of our Moldova subsidiaries will vary
from period to period.





Results
of Operations





In 2008,
the growth in the commercial market share was a result of the acquisition of the
TNT channel and updated marketing strategies. TV7(NTV) and TNT channels together
represented a commercial market share of 28.5% for the capital of Moldova and
25.6% of the commercial quota for the Republic of Moldova as a
whole.





Nine
Months ended September 30, 2009 compared to the Nine Months ended September 30,
2008.





23




REVENUES.
Revenues for the nine month period ended September 30, 2009, increased by
$338,814 or 24.08% to $1,745,928 as compared to $1,407,114 during the comparable
period of 2008. Overall growth was a result of the acquisition of the Media Top
Prim group of companies and creation of a new joint venture, Alkasar Media
Services advertising agency.




COST OF
SALES. Cost of sales increased by $205,886 or 24,14% to $1,058,680 for the nine
month period ending September 30, 2009, from $852,794 for the comparable period
in 2008. This increase was primarily due to increased sales in 2009. The Company
also incurred increased payroll costs at TV7 and an increase in retransmission
fees related to TNT television channel.





SELLING
AND ADMINISTRATIVE EXPENSES.  Selling and administrative expenses
increased by $230,885 or 33.69% to $685,334 for the nine month period ending
September 30, 2009 from $454,449 for the comparable period in
2008.  This increase was due to the significant increase in payroll
expenses, and initial and marketing expenses for the newly acquired TV channel
and newly created advertising agency.





OTHER
ITEMS. Other income increased by $171,651,comparing to $192,658 for the nine
month period ended September 30, 2009 to $21,007 for the comparable period in
2008, primarily due to an increase in interest income.





Other
operating expenses increased by $41,129, or 92.68%, comparing to
$85,505     for the nine month period ended September
30, 2009 to $44,376 for the comparable period in 2008, primarily due to an
increase in rent expenses for new offices.





INCOME
TAXES. Income taxes were not provided for the periods ended September 30, 2009
and September 30, 2008 as the Moldovan tax rate was 0% for the two
periods.




Three
Months ended September 30, 2009 compared to the Three Months ended September 30,
2008.





REVENUES.
Revenues for the three month period ended September 30, 2009, decreased by
$234,002 or 30.72 % to $527,723 as compared to $761,725 during the comparable
period of 2008. The decrease was a result of the seasonable low advertising
sales period and world media market crisis affected the Moldavian
market.




COST OF
SALES. Cost of sales decreased by $72,989 or 15.23% to $406,269 for the three
month period ending September 30, 2009, from $479,258 for the comparable period
in 2008. This decrease was primarily due to decreased sales in
2009.





SELLING
AND ADMINISTRATIVE EXPENSES.  Selling and administrative expenses
decreased by $61,241 or 24.49% to $188,847 for the three month period ending
September 30, 2009 from $250,088 for the comparable period in
2008.  This decrease was due to the significant decrease in payroll
expenses and marketing expenses.





OTHER
ITEMS. Other income increased by $74,087, comparing $81,933 for the three month
period ended September 30, 2009 to $7,846 for the comparable period in 2008,
primarily due to an increase in interest income.





Other
operating expenses increased by $20,101, comparing $32,330 for the three month
period ended September 30, 2009 to $12,229 for the comparable period in 2008,
primarily due to an increase in rent expenses for new offices.





INCOME
TAXES. Income taxes were not provided for the periods ended September 30, 2009
and September 30, 2008 as the Moldovan tax rate was 0% for the two
periods.





24




LIQUIDITY
AND CAPITAL RESOURCES




During
2009, the Company’s main strategic goal is to expand the business in neighboring
East European countries, primarily Romania, Ukraine and Russia.





The
Company can grow using its internally-generated funds, and it is anticipated
that the current projections can be achieved without any external capital
infusion.  However, since Moldovan as well as Ukrainian and Romanian
Television markets are still in their development stages with the overall growth
rate well above comparable growth rates in the “matured” markets, there are
small/medium-sized companies that are severely undercapitalized, and thus
operate with a high degree of inefficiency.  With the additional
capital, the Company can implement two core strategies:





-
            Increase
      shareholders’ value by capitalizing on private-to-public arbitrage
      opportunities and purchasing “revenues” via acquisitions of private
      undercapitalized businesses and applying economies of
    scale.





-
            Increase
      Shareholders’ value by growing the Company’s core business internally by
      investing in its own equipment and production, thus increasing production
      capacity and competitiveness.





We
believe that both strategies could significantly accelerate the Company’s
internal growth, while improving its operating cash flow.  We intend
to purchase operating businesses by spending on average $1 of capital for $1 of
revenues of acquired operating business, thus, in effect purchasing operating
business (after the application of the economies of scale arbitrage) at an
approximate P/E ratio of 4.  There is no assurance that we will be
able successfully to make any such acquisition or acquisitions.





A portion
of the existing long-term and short-term investments will be used to fund
operations over the next six months. The balance of any excess cash balances
will be reinvested on a short-term basis. The market value of long-term
investments did not change as the investments were fixed yield bonds with a
fixed price and fixed interest rate. There is no secondary market for the fixed
yield bonds in the Republic of Moldova, thus the face value of the investments
must match the market value at all times.





The
Company plans to acquire equipment to produce the broadcast programs (for
studios, for breaking news mobile systems, etc); as such, this acquisition and
the uplink services might present significant impact on our liquidity and
capital resources of the company. The Company believes the cash flows from
operations will be sufficient to fund the purchases of this
equipment.





On May 2,
2008, the Company acquired the common stock of “TNT-Bravo” channel (Media Top
Prim S.R.L.), the exclusive operator in Moldova of Russian channel TNT programs
owned by Gazprom Media, a wholly-owned subsidiary of the GazProm
Corporation.  The acquisition was agreed to be made in the Company’s
preferred stock, of a class and series to be authorized, valued at $4.0
million.  The preferred shares
issuable would convertible into common shares on a 1:1 basis after a holding
period of one year on the condition the Company’s stock price was not be less
than $4 per share.  The Company and the preferred shareholders are
currently in negotiations as the common share price is less than
$4.The acquisition has been accounted for using the purchase
method of accounting, and accordingly, the results of operations of Media Top
Prim S.R.L. are included in the Company’s consolidated financial statements from
May 2, 2008.





On May 2,
2008, the Company entered into a subscription agreement with a private investor
for an equity investment of $5,000,000 in the Company through the purchase by
the investor of 1,250,000 shares of the Company’s common stock.  The
net proceeds of the private placement were primarily used to fund the
Company’s operations, including the acquisition of Genesis.




25




In
November 2008, the Company loaned IPA International Project Establishment, a
Lichtenstein Corporation (“IPA”). The Company advanced IPA
$3,840,000.  The loan has been extended to October 2009 with interest
of 5% annum payable at maturity.





In June
2009, the Company entered into a loan agreement with Genesis International
SA.  The Company advanced Genesis International SA
$500,000.  The loan was due upon demand with interest at 5% per annum,
and was paid back in connection with the Company’s acquisition of Genesis on
October 1, 2009.  For the nine months ended September 30, 2009, the
Company received interest income of approximately $19,000.




During
the first nine months of 2009, the Company has funded its capital requirements
primarily through operating activities.  As of September 30, 2009 the
Company had a cash balance of $565,555. This compares with a cash balance of
$1,334,738 at December 31, 2008. The Company expects cash flow from operations
to fund the Company’s operating activities for the next twelve
months.  The proceeds of $5 million from the 2008 private placement
will enable the Company to expand its present activities.





The
Company had a working capital surplus of approximately $5.9 million and a
stockholders’ equity of approximately $9.9 million as of September 30,
2009.  Cash and cash equivalents decreased approximately $769,000 for
the nine months ended September 30, 2009.  The decrease is primarily
attributable to the purchase of property, plant and equipment of $84,000,
purchase of marketable securities of $80,000, the repayment of a related party
loan of $47,000 and an advance on a note receivable of $500,000.





Accounts
receivable, net of allowances, were $366,000 at September 30, 2009, as compared
to $263,000 at December 31, 2008.  The increase is primarily due to
increased sales during the nine months ended September 30,
2009.  Property, plant and equipment, net, were $135,000 at September
30, 2009, as compared to $109,000 at December 31, 2008, principally due to the
purchase of $84,000 of property, plant and equipment during the nine months
ended September 30, 2009.  Accounts payable were $291,000 at September
30, 2009, as compared to $268,000 at December 31, 2008.  The increase
is primarily due to additional expenses  during the nine months ended
September 30, 2009.





Off
Balance Sheet Arrangements





We do not
currently have any off balance sheet arrangements falling within the definition
of Item 303(a) of Regulation S-K.





Inflation





To date
inflation has not had a material impact on our operations.





New
Financial Accounting Standards





During
the second quarter of 2009, the Company implemented additional interim
disclosures about fair value of financial instruments, as required by FASB ASC
Paragraph 825-10-65-1.  Prior to implementation, disclosures about
fair values of financial instruments were only required to be disclosed
annually.  As the required modifications only related to additional
disclosures of fair values of financial instruments in interim financial
statements, the adoption did not affect the Company’s financial position or
results of operations.





Beginning
in the second quarter of 2009, the Company must disclose the date through which
subsequent events have been evaluated, in accordance with the requirements in
FASB ASC Paragraph 855-10-50-1.  With regards to the condensed
consolidated financial statements and notes to those financial statements
contained in this Form 10-Q, the Company has evaluated all subsequent events
through November 9, 2009 (the date the Company’s financial statement are
issued).





26




In
September 2009, the FASB implemented certain modifications to FASB ASC Topic
860, Transfers and Servicing, as a means to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets, the effects of a transfer on its financial position, financial
performance, and cash flows, and a transferor’s continuing involvement, if any,
in transferred financial assets. These modifications must be applied as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009. The Company does not expect the adoption of this
standard to have an impact on the Company’s results of operations, financial
condition or cash flows.





During
the third quarter of 2009, the Company adopted the FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles in
accordance with FASB ASC Topic 105, “Generally Accepted Accounting Principles”
(the “Codification”).  The Codification has become the source of
authoritative U.S. generally accepted accounting principles (GAAP) recognized by
the FASB to be applied by nongovernmental entities. Rules and interpretive
releases of the Securitiesand Exchange Commission
(SEC) under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. Effective with the Company’s adoption on
July 1, 2009, the Codification has superseded all prior non-SEC accounting and
reporting standards. All other non-grandfathered non-SEC accounting literature
not included in the Codification has become non-authoritative. As the adoption
of the Codification only affected how specific references to GAAP literature
have been disclosed in the notes to the Company’s condensed consolidated
financial statements, it did not result in any impact on the Company’s results
of operations, financial condition or cash flows.




The FASB
has published FASB Accounting Standards Update No. 2009-12, Fair Value Measurements and
Disclosures (Topic 820)—Investments in Certain Entities That Calculate Net Asset
Value per Share (or Its Equivalent). This Update amends Subtopic 820-10,
Fair Value Measurements and
Disclosures—Overall, to permit a reporting entity to measure the fair
value of certain investments on the basis of the net asset value per share of
the investment (or its equivalent). This Update also requires new disclosures,
by major category of investments, about the attributes of investments included
within the scope of this amendment to the Codification. The guidance in this
Update is effective for interim and annual periods ending after December 15,
2009. The Company does not expect the adoption of this standard to have an
impact on the Company’s results of operations, financial condition or cash
flows.








ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Foreign
Currency Risk - The financial position and results of operations of our foreign
subsidiaries in the Republic of Moldova are measured using the foreign
subsidiaries’ local currency, the Moldovan lei, as the functional currency since
that is the currency of the primary environment in which those companies
generate their revenues and expenses.  Revenues and expenses of such
subsidiaries are translated into U.S. dollars at average exchange rates
prevailing during the period. Assets and liabilities are translated at the rates
of exchange on the balance sheet date. The amount of future translation gains or
losses will be affected by any changes in the exchange rate between the lei and
the U.S. dollar. At the end of each reporting period the lei amounts for the
receivables, bank debts and accounts payable of our Moldova subsidiaries that
are denominated in U.S. dollars are adjusted to reflect the amount in lei
expected to be received or paid when the receivable is collected or the
liability settled on the basis of the exchange rate at the end of the period.
These adjustments also produce foreign currency transaction gains or losses
which are recorded in the results of operations.




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As a
result, in periods in which the value of the lei increases against the value of
the U.S. dollar, we will recognize a net foreign currency transaction gain if
our Moldova subsidiaries have U.S. dollar denominated liabilities that exceed
their U.S. dollar denominated receivables, or we will incur a net foreign
currency transaction loss if our Moldova subsidiaries have U.S. dollar
denominated receivables that exceed their U.S. dollar denominated liabilities.
Conversely, in periods in which the value of the lei declines against the value
of the U.S. dollar, we will incur a net foreign currency transaction loss if our
Moldova subsidiaries have U.S. dollar denominated liabilities that exceed their
U.S. dollar denominated receivables, or we will recognize a net foreign currency
transaction gain if our Moldova subsidiaries have U.S. dollar denominated
receivables that exceed their U.S. dollar denominated liabilities.





Credit
Risk - Our accounts receivables are subject, in the normal course of business,
to collection risks. We regularly assess these risks and have established
policies and business practices to protect against the adverse effects of
collection risks. As a result we do not anticipate any material losses in this
area.





ITEM
4T. CONTROLS AND PROCEDURES





As of
September 30, 2009, the end of the period covered by this quarterly report, the
Chief Executive and Chief Financial Officer of the Company (the “Certifying
Officer”) conducted an evaluation of the Company’s disclosure controls and
procedures.  As defined under Sections 13a-15(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term
“disclosure controls and procedures” means controls and other procedures of an
issuer that are designed to ensure that information required to be disclosed by
the issuer in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the issuer’s
management, including the Certifying Officer, to allow timely decisions
regarding required disclosure. Based on this evaluation, the Certifying Officer
has concluded that the Company’s disclosure controls and procedures were
effective to ensure that material information is recorded, processed, summarized
and reported by management of the Company on a timely basis in order to comply
with the Company’s disclosure obligations under the Exchange Act, and the rules
and regulations promulgated there under.





Further,
there were no changes in the Company’s internal control over financial reporting
during the second fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.








PART
II





Other
Information





Item 6.
Exhibits





31
            Certification
      of Chief Executive Officer and Principal Financial
  Officerpursuant
      to Rule 13a-14(a)32
            Certification
      of Chief Executive Officer and Principal Financial
  Officerpursuant
      to 18 U.S.C. Section 1350





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SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





EMERGING
      MEDIA HOLDINGS, INC
              (Registrant)Date:
      November 10, 2009
            
            By:
            
            /s/
      Iurie BordianIurie
      Bordian, Chief Executive Officer and
              Chief
      Financial Officer















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