**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB/A**


**(Amendment
      No. 1)**





(Mark
      one)





x
            ANNUAL
                REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                OF
                1934





For
      the
      fiscal year ended December 31, 2005





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                OF
                1934





For
      the
      transition period from ________ to ________





**Commission
      file number:** **005-79752**





**The
                Tube Media Corp.****(Name
                of small business issuer in its
                charter)**





**Delaware**
            **84-1557072****(State
                or other jurisdiction of**
              **Incorporation
                or organization)**
            **(IRS
                Employer Identification**





**1451
                West Cypress Creek Road,**
              **Ft.
                Lauderdale, FL**
            **33309****(Address
                of principal executive offices)**
            **(Zip
                Code)****(954)
                714-8100****(Issuer's
                telephone number)**





Securities
      registered under Section 12(g) of the Exchange Act:


Common
      stock, par value $0.0001 per share


(Title
      of
      class)





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o




Check
      whether the issuer (1) 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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. o





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





The
      Company’s revenues for the year ended December 31, 2005 were
      $360,503.





As
      of
      March 31, 2006, the aggregate market value of the registrant’s common stock held
      by non-affiliates of the registrant was approximately $54,208,040 based on
      the
      average of the high and low sales price as reported on the Over-The-Counter
      Bulletin Board.





The
      number of shares of the registrant's common stock, par value $0.0001 per share,
      outstanding as of May 5, 2006 was 27,292,841.





Transitional
      Small Business Disclosure Format (check one): Yes o No x





**Explanatory
      Note**





In
      review
      of our annual report on Form 10-KSB for the year ended December 31, 2005, we
      determined that we needed to restate Form 10-KSB for the year ended December
      31,
      2005 and our quarterly financials for the quarterly reports on Form 10-QSB
      for
      the quarter ended March 31, 2006 and for the quarter ended June 30, 2006 to
      reflect a liability in connection with convertible promissory note and a warrant
      that contain an embedded derivative as of December 31, 2005.





This
      Amendment No. 1 to our Form 10-KSB for the year ended December 31, 2005,
      initially filed with the Securities and Exchange Commission on May 11, 2006
      (the
“Initial Filing”), is being filed to reflect the restatement of our consolidated
      balance sheet at December 31, 2005 and our consolidated statements of
      operations, consolidated statements of changes in stockholders’ equity
      (deficiency) and consolidated statements of cash flows for the year ended
      December 31, 2005 and the notes related thereto, as well as corresponding
      changes to the discussion of the results of operations for the year ended
      December 31, 2005 compared to the year ended December 31, 2004, and Liquidity
      and Capital Resources contained in Management’s Discussion and Analysis of
      Financial Conditions and Results of Operations. Section 8A, Controls and
      Procedures was also revised. For a more detailed description of this
      restatement, see Note 1, “Nature of Operations and Basis of Presentation -
      Restatement” and Note 14, “Embedded Derivative” to the accompanying consolidated
      financial statements and the section entitled “Restatement of 2005 Financial
      Statements” in Management’s Discussion and Analysis of Financial Condition and
      Results of Operations contained in this Form 10-KSB/A. This Form 10-KSB/A only
      amends and restates Items 6, 7 and 8A of Part ll and 13 of Part I of the Initial
      Filing and no other material information in the Initial Filing is amended
      hereby. The foregoing items have not been updated to reflect other events
      concerning our business or financial condition occurring after the Initial
      Filing or to modify or update those disclosures affected by subsequent events
      except that we updated the information contained in such sections to include
      recent accounting pronouncements.





We
      also
      corrected typographical errors. In addition, pursuant to the rules of the SEC,
      Item13 of Part Ill to the Initial Filing has been amended to contain currently
      dated certifications from our Principal Executive Officer and Principal
      Financial Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley
      Act
      of 2002. The certifications of our Principal Executive Officer and Principal
      Financial Officer are attached to this Form 10-QSB/A as Exhibits 31.1, 31.2
      and
      32.1, respectively.







**THE
      TUBE MEDIA CORP.**


**(Formerly
      AGU Entertainment Corp.)**





**FORM
      10-KSB**





**INDEX**


**PAGE**PART
                    I
                
                5Item
                    1.
                DESCRIPTION
                    OF THE BUSINESS
                5Item
                    2.
                DESCRIPTION
                    OF PROPERTY
                20Item
                    3.
                LEGAL
                    PROCEEDINGS
                21Item
                    4.
                SUBMISSION
                    OF MATTERS TO A VOTE OF SECURITY HOLDERS
                22PART
                    II
                
                22Item
                    5.
                MARKET
                    FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                22Item
                    6.
                MANAGEMENT'S
                    DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
                29Item
                    7.
                FINANCIAL
                    STATEMENTS
                39Item
                    8.
                CHANGES
                    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                    DISCLOSURE
                73Item
                    8A.
                CONTROLS
                    AND PROCEDURES
                73Item
                    8B.
                OTHER
                    INFORMATION
                74PART
                    III
                
                75Item
                    9.
                DIRECTORS,
                    EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
                    WITH SECTION
                    16(A) OF THE EXCHANGE ACT
                75Item
                    10.
                SUMMARY
                    COMPENSATION TABLE
                77Item
                    11.
                SECURITY
                    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                    STOCKHOLDER MATTERS
                80Item
                    12.
                CERTAIN
                    RELATIONSHIPS AND RELATED TRANSACTIONS
                82Item
                    13.
                EXHIBITS
                84Item
                    14.
                PRINCIPAL
                    ACCOUNTANT FEES AND SERVICES
                93





**Page
      number s to change**





3





**FORWARD-LOOKING
      INFORMATION**





**Cautionary
      Statement Pursuant to Safe Harbor Provisions of the**


**Private
      Securities Litigation Reform Act of 1995**





This
      report may include a number of “forward-looking statements” as that term is
      defined in Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. These statements reflect
      management’s current views with respect to future events and financial
      performance and include statements regarding management’s intent, belief or
      current expectations, which are based upon assumptions about future conditions
      that may prove to be inaccurate. Prospective investors are cautioned that any
      such forward-looking statements are not guarantees of future performance,
      involve risk and uncertainties, and that as a result, actual results may differ
      materially from those contemplated by such forward-looking statements. Such
      risks include, among other things; the volatile and competitive markets in
      which
      we operate, our limited operating history, our limited financial resources,
      our
      ability to manage our growth and the lack of an established trading market
      for
      our securities. When considering forward-looking statements, readers are urged
      to carefully review and consider the various disclosures, including risk factors
      and their cautionary statements, made by us in this report and in our other
      reports filed with the Securities and Exchange Commission (“SEC”).





Unless
      the context indicates otherwise, all references to “we,” “our,” “us” or the
“Company” refer, on a consolidated basis, to The Tube Media Corp., a Delaware
      corporation .





4




**PART
      I.**




**Item
              1.**
            **DESCRIPTION
                OF THE BUSINESS**




**History
      and Background**




We
      were
      initially incorporated as Lexington Barron Technologies, Inc. in the State
      of
      Colorado on August 23, 2000 for the purpose of addressing the specific needs
      of
      small businesses and start-up organizations by providing a broad range of
      consulting and advisory services ranging from market research and analysis
      to
      business plans and systems development to financial consulting. In early 2004,
      our former management determined that their business model was not progressing
      and that we should either merge with or acquire an operating company with an
      operating history and assets.




Effective
      April 1, 2004, we entered into a share exchange agreement with Pyramid Music
      Corp., a Florida corporation (“PMC”). Under the terms of the share exchange
      agreement, we acquired 100% of the outstanding common stock of PMC in exchange
      for 16,922,464 shares of our common stock. On March 26, 2004, in anticipation
      of
      the completion of the share exchange, we changed our name to AGU Entertainment
      Corp. As of April 1, 2004, upon completion of the share exchange, the former
      shareholders of PMC owned, on a fully diluted basis, approximately 80% of the
      outstanding common stock of AGU Entertainment Corp., which resulted in a change
      in control. The transaction was accounted for as a reverse merger and
      recapitalization whereby PMC, which became a wholly-owned subsidiary of AGU
      Entertainment Corp., was deemed to be the acquirer for accounting purposes.
      In
      addition, as of April 1, 2004, AGU Entertainment Corp. had no identifiable
      assets and liabilities. As a result, PMC is deemed to be the surviving
      accounting and reporting entity, and all of the historical financial information
      presented in this Form 10-KSB, including the consolidated financial statements
      and Management’s Discussion and Analysis or Plan of Operations, reflect the
      assets, liabilities, results of operations and cash flows of PMC and its
      subsidiaries, The Tube Music Network, Inc., a Florida corporation (“The Tube”)
      and Pyramid Records International, Inc., a Florida corporation
      (“PRI”).




In
      July
      of 2004, we dissolved PMC, and as a result The Tube and PRI became direct,
      wholly-owned subsidiaries of AGU Entertainment Corp.(the “Company”) On October
      20, 2004, the Company’s shareholders approved the reincorporation of the Company
      in the State of Delaware through a merger of the Company into a wholly-owned
      subsidiary corporation incorporated in the State of Delaware. The
      reincorporation resulted in the Company becoming a Delaware corporation,
      effective as of October 21, 2004, and did not result in any change in the
      Company’s name, headquarters, business, jobs, management, location or any of the
      Company’s offices or facilities, number of employees, taxes payable to the State
      of Colorado, assets, liabilities or net worth.




In
      February of 2005, we formed two new subsidiaries, AGU Studios, Inc. (“AGU
      Studios”), a Florida corporation, and 3200 Oakland Park Boulevard, Inc., a
      Florida corporation (“3200 Oakland Park”). Liquidity issues and the sale of the
      property located in Lauderdale Lakes, Florida, the operations of AGU Studios
      and
      3200 Oakland Park have been discontinued. See “Item 2. Description of Property”
for additional information regarding the sale of the property in Lauderdale
      Lakes, Florida.




In
      March
      2005, we changed the name of PRI to AGU Music, Inc. (“AGU Music”).




**Recent
      Developments**




On
      February 26, 2006, the Company changed its name to The Tube Media Corp. The
      name
      change was effected pursuant to Section 253 of the General Corporation Law
      of
      the State of Delaware by the merger of a wholly-owned subsidiary of the Company
      into the Company. The Company was the surviving corporation and, in connection
      with the merger, the Company amended its Certificate of Incorporation to change
      its name pursuant to the Certificate of Ownership and Merger filed with the
      Secretary of State of the State of Delaware.




5




On
      March
      6, 2006, The Tube entered into a charter affiliation agreement with Tribune
      Broadcasting Company (“Tribune”). The charter affiliation agreement provides
      that Tribune will have the exclusive right and obligation to transmit The Tube’s
      music network via broadcast television from Tribune’s existing and acquired
      stations in the designated markets specified in the charter affiliation
      agreement. Tribune, a division of Tribune Company, one of the country's leading
      broadcast television companies, operates, as of March 6, 2006, 26 television
      stations in 22 markets, including New York, Los Angeles, Chicago, Philadelphia,
      Boston and Miami. Tribune is well established in the industry with stations
      in
      nine of the country's top 10 markets, and 18 of the top 30.




The
      charter affiliation agreement provides the terms and conditions of broadcasting,
      as well as the obligations of each of the parties. Pursuant to the terms of
      the
      charter affiliation agreement, The Tube will pay a portion of its advertising
      revenue and a portion of the revenue that it receives from the sale of products
      on The Tube’s music network to Tribune as compensation, and other compensation
      as described in the Tribune Letter Agreement (as defined below).




The
      charter affiliation agreement has an initial term that commences on the
      effective date of the charter affiliation agreement and expires on March 31,
      2011. The initial term automatically renews for an additional four years if
      Tribune fails to notify The Tube of its desire to terminate the charter
      affiliation agreement at least six months prior to the scheduled expiration
      date. Tribune may terminate the charter affiliation agreement upon at least
      45
      days prior written notice to The Tube if The Tube’s music network is being
      distributed to less than a specified percentage of television households or
      cable households. In connection with the charter affiliation agreement, the
      parties also entered into a letter agreement, dated March 6, 2006 (the “Tribune
      Letter Agreement”), pursuant to which the Company agreed to issue to Tribune (i)
      within 10 days after the execution of the charter affiliation agreement, a
      common stock purchase warrant to purchase shares of the Company’s common stock,
      par value $0.0001 per share (the “common stock”), at an exercise price of $2.25
      per share, and shares of common stock; (ii) upon Tribune’s transmission of The
      Tube’s music network to television stations in markets that represent 75% of all
      television households in the markets where Tribune owns and/or operates
      broadcast television stations, a common stock purchase warrant to purchase
      shares of common stock at an exercise price of $2.50 per share; and (iii) a
      specified number of shares of common stock for each 11,000,000 television
      households (or pro rata if less than 11,000,000) that first receive The Tube’s
      music network as a result of a launch of The Tube’s music network on a Tribune
      television station; provided, however, that television households that receive
      The Tube’s music network in markets with less than 100,000 television households
      will not be included in the calculation of television households. The Company
      granted “piggyback” registration rights with respect to all of the securities to
      be issued under the Tribune Letter Agreement. Each common stock purchase warrant
      entitles its holder to purchase one share of common stock for either $2.25
      or
      $2.50 per share, subject to adjustments for stock splits, reverse splits and
      stock dividends. In addition, if the Company issues or sells shares of common
      stock in certain subsequent issuances for a price per share that is less than
      the applicable exercise price of the common stock purchase warrant, the exercise
      price will be reduced. The exercise price of the common stock purchase warrants
      will also be adjusted if the Company issues, sells or grants options, warrants
      or other securities or rights to subscribe to or exercisable for common stock
      in
      an issuance not specifically exempt by the terms of the common stock purchase
      warrants. The common stock purchase warrants may be exercised at any time prior
      to the earlier of the tenth anniversary of the issuance of the common stock
      purchase warrant or the termination or expiration of the charter affiliation
      agreement.




Pursuant
      to the terms of the Tribune Letter Agreement, The Tube agreed that if, in
      relation to any third party that owns or operates broadcast television stations
      and distributes The Tube’s music network, The Tube or the Company provide to
      such third party (i) a greater percentage of the advertising revenue or revenue
      that it receives from the sale of products on The Tube’s music network than that
      provided to Tribune or (ii) equity securities at a ratio more favorable than
      that provided to Tribune for each 11,000,000 television households, The Tube
      will offer such greater percentage or more favorable ratio to Tribune. If the
      granting of such greater percentage or more favorable ratio requires such third
      party to perform any material obligation not being performed by Tribune, then
      Tribune must perform such material obligation in order to receive the greater
      percentage or more favorable ratio.




6




The
      Tribune Letter Agreement grants Tribune the right to attend all meetings of
      the
      board of directors and committees of the board of directors of the Company
      and
      The Tube, and to receive any information given to the members of the board
      of
      directors of the Company and The Tube. The Company also agreed not to issue
      any
      equity in The Tube (or securities convertible into or exchangeable for equity
      in
      the Tube) during the term of the charter affiliation agreement.




On
      March
      22, 2006, The Tube also entered into a charter affiliation agreement with
      Sinclair Television Group, Inc. (“Sinclair”). The charter affiliation agreement
      provides that Sinclair will have the exclusive right and obligation to transmit
      The Tube’s music network from Sinclair’s existing and acquired stations in the
      designated markets specified in the charter affiliation agreement. As of March
      22, 2006, Sinclair owns and operates programs or provides sales and services
      to
      58 television stations in 36 markets, including Pittsburgh, St. Louis,
      Minneapolis, Tampa, Las Vegas, Baltimore, Nashville, Columbus, Cincinnati and
      Syracuse.




The
      charter affiliation agreement provides the terms and conditions of broadcasting,
      as well as the obligations of each of the parties.




Pursuant
      to the terms of the charter affiliation agreement, The Tube will pay a portion
      of its advertising revenue and a portion of the revenue that it receives from
      the sale of products on The Tube’s music network to Sinclair as compensation,
      and other compensation as described in the Sinclair Letter Agreement (as defined
      below). The charter affiliation agreement has an initial term of five years
      that
      commences on the earlier of (i) the date on which The Tube’s music network is
      initially transmitted by Sinclair’s first station; or (ii) March 31, 2006.
      Sinclair may renew the charter affiliation agreement for two successive terms
      of
      five years each upon written notice to The Tube no later than 120 days prior
      to
      the expiration of the initial term or the first renewal term, as applicable.
      Sinclair may terminate the charter affiliation agreement as of March 31, 2007
      with no liability upon written notice to The Tube no later than December 31,
      2006. If at least 60 days prior to the end of the fourth year of the initial
      term, The Tube notifies Sinclair that it does not intend to pay the compensation
      specified in the Sinclair Letter Agreement (as defined below), Sinclair may
      terminate the charter affiliation agreement upon at least 45 days prior written
      notice to The Tube.




In
      connection with the charter affiliation agreement, the parties also entered
      into
      a letter agreement, dated March 22, 2006 (the “Sinclair Letter Agreement”),
      pursuant to which the Company agreed to issue to Sinclair (i) within 20 days
      after execution of the affiliation agreement, a common stock purchase warrant
      to
      purchase shares of common stock at an exercise price of $2.25 per share and
      shares of common stock; (ii) upon Sinclair’s transmission of The Tube’s music
      network to television stations in markets that represent 50% of the designated
      markets where Sinclair owns and/or operates broadcast television stations,
      shares of common stock; and (iii) on or after April 1, 2007 and upon Sinclair’s
      transmission of The Tube’s music network to television stations in markets that
      represent 75% of the designated markets where Sinclair owns and/or operates
      broadcast television stations, a common stock purchase warrant to purchase
      shares of common stock at an exercise price of $2.50 per share and shares of
      common stock.




Each
      common stock purchase warrant entitles its holder to purchase one share of
      common stock for either $2.25 or $2.50 per share, subject to adjustments for
      stock splits, reverse splits, stock dividends, reorganizations, consolidations
      and mergers. The common stock purchase warrants may be exercised at any time
      prior to the earlier of the tenth anniversary of the issuance of the common
      stock purchase warrant.




Pursuant
      to the terms of the Sinclair Letter Agreement, The Tube agreed that the Company
      may issue shares of common stock (i) as payment for services when the aggregate
      amount of all such issuances does not exceed 10% of the total number of shares
      of common stock outstanding as of the date of such issuance and so long as
      each
      share is issued at fair market value; (ii) to other distributors of The Tube’s
      music network when the aggregate amount of all such issuances does not exceed
      a
      specified number of shares of common stock; (iii) to satisfy existing
      obligations of the Company to issue equity, which obligations are specified
      in
      the Sinclair Letter Agreement; (iv) pursuant to the Company’s 2004 Stock Option
      and Stock Incentive Plan or any other equity incentive plan approved by the
      Company’s stockholders; provided, that the maximum number of shares issuable
      under such plans does not exceed 10% of the total number of shares of common
      stock outstanding as of the date such plan is approved by the Company’s
      stockholders; and (v) in connection with a purchase, merger or consolidation
      where the Company is the surviving corporation or an acquisition of the assets
      of a third party by the Company.




7




The
      Sinclair Letter Agreement provides Sinclair with a seat on the board of
      directors of The Tube, which shall be composed of no less than three and no
      more
      than ten members.




On
      March
      31, 2006, the Company entered into agreements with two individuals (the
“Lenders”) pursuant to which the Lenders agreed to loan an aggregate amount of
      $800,000 (the “Bridge Loan”) to the Company. In connection with the Bridge Loan,
      the Company issued two promissory notes (the “Bridge Notes”), in the aggregate
      principal amount of $800,000, to the Lenders, both of whom are accredited
      investors. Pursuant to the terms of the Bridge Notes, the Bridge Loan will
      accrue interest at the rate of four percent per year, and the principal and
      interest on the Bridge Notes will be due on March 31, 2007. The payments due
      under the Bridge Notes will be accelerated as follows: (i) in the event the
      Company closes a round of financing of not less than $2.0 million and not more
      than $2.49 million prior to March 31, 2007, the Company will pay each Lender
      an
      amount equal to $320,000; and (ii) in the event the Company closes a round
      of
      financing equal to or greater than $2.5 million prior to March 31, 2007, the
      Company will pay each Lender the total amount due under each Bridge Note. Upon
      the occurrence of an event of default under the Bridge Notes, (i) the entire
      unpaid balance of the principal and any interest on the Bridge Notes will bear
      interest at the rate of 12% per year; and (ii) the holders of the Bridge Notes
      may, without notice and at their option, accelerate the maturity of the Bridge
      Notes and cause the entire unpaid balance and any interest on the Bridge Notes
      to be immediately due and payable. An event of default under the Notes occurs
      upon (i) the Company’s failure to timely pay any amount due under the Bridge
      Notes; (ii) the institution of any bankruptcy, reorganization, insolvency,
      liquidation or other proceeding for relief by or against the Company, and if
      instituted against the Company, the Company consents to any such proceeding
      or
      such proceeding is not dismissed within 90 calendar days; and (iii) any breach
      by the Company of the terms of the Bridge Notes that remains uncured for more
      than five days after receipt of written notice of such breach.




On
      April
      21, 2006, the Company completed a private placement (the “Private Placement”) of
      $2.45 million of securities to accredited investors (the “Investors”). In
      connection with the Private Placement, the Company and the Investors entered
      into a purchase agreement (the “Purchase Agreement”) and a registration rights
      agreement (the “Registration Rights Agreement”), each of which is dated as of
      April 21, 2006. Pursuant to the terms of the Purchase Agreement, the Company
      sold 7% secured convertible notes in the aggregate principal amount of $2.45
      million (the “7% Notes”) and issued common stock purchase warrants to purchase
      an aggregate of 1,088,889 shares of the common stock at an exercise price of
      $2.25 per share (the “Warrants”) to the Investors.




Pursuant
      to the terms of the 7% Notes, the Company is required to make equal monthly
      principal payments of $136,111 commencing on November 21, 2006 and continuing,
      on the first business day of each month, until the aggregate principal amount
      has been paid in full. Interest on the 7% Notes accrues quarterly and is payable
      on the last day of March, June, September and December of each year, commencing
      on September 30, 2006. At the option of the Company and subject to certain
      conditions, principal and interest payments due under the 7% Notes may be paid
      in cash or shares of common stock.




The
      7%
      Notes are convertible in shares of common stock at a conversion price of $2.25
      per share, subject to adjustments for stock splits, stock dividends, mergers
      and
      reorganizations. In addition, if the Company issues or sells any shares of
      common stock for a price per share that is less than the applicable conversion
      price of the 7% Notes, the conversion price of the 7% Notes will be reduced.
      The
      conversion price of the 7% Notes will also be adjusted if the Company issues,
      sells or grants any stock or other securities convertible into or exchangeable
      for common stock in an issuance that is not specifically exempt by the terms
      of
      the 7% Notes. The number of shares that may be acquired by any holder of the
      7%
      Notes upon any conversion of the 7% Notes or issuance of shares of common stock
      as principal or interest payments shall be limited to the extent to insure
      that
      the total number of shares of common stock beneficially owned by any holder
      does
      not exceed 4.99% of the total number of issued and outstanding shares of common
      stock.




8




Upon
      the
      occurrence of an event of default, the 7% Notes will bear interest at the rate
      of 12% per annum and all unpaid principal and interest accrued under the 7%
      Notes shall become (1) immediately due and payable upon the election of the
      holder, with respect to the events in (i) through (iv) and (vi) through (vii)
      below; and (2) automatically due and payable, with respect to the event in
      (v)
      below. An event of default under the 7% Notes occurs upon (i) the Company’s
      failure to timely pay principal due under the 7% Notes; (ii) the Company’s
      failure to timely pay interest due under the 7% Notes and such failure continues
      for more than five days; (iii) the Company and its subsidiaries failure to
      make
      a required payment or payments of indebtedness of $500,000 or more in aggregate
      principal amount and such failure continues for more than 20 days; (iv) an
      acceleration of the stated maturity date of any indebtedness of the Company
      or
      its subsidiaries of $500,000 or more in aggregate principal amount, which
      acceleration is not rescinded within 20 days; (v) the Company’s assignment for
      the benefit of creditors or admission in writing of its inability to pay its
      debts generally as they become due, or the voluntary or involuntary bankruptcy
      of the Company; (vi) the rendering of a final judgment that exceeds $500,000
      in
      the aggregate against the Company or its subsidiaries, which is not discharged
      within 60 days; (vii) proof that any representation of material fact made in
      any
      of the transaction documents or furnished to the holder by the Company was
      false
      in any material respect; and (viii) the Company’s failure to observe or perform
      in any material respect certain covenants in the transaction
      documents.




The
      7%
      Notes are secured by shares of common stock pledged by David Levy, President
      of
      the Company, pursuant to the terms of a pledge and security
      agreement.




The
      Warrants may be exercised for common stock on or before April 21, 2011. The
      Warrants are exercisable for shares of common stock at an exercise price of
      $2.25 per share, subject to adjustments for stock splits, stock dividends,
      mergers and reorganizations, or through a “cashless exercise” provision
      contained in the Warrants. In addition, if the Company issues or sells any
      shares of common stock for a price per share that is less than the applicable
      exercise price of the Warrants, the exercise price of the Warrants will be
      reduced. The exercise price of the Warrants will also be adjusted if the Company
      issues, sells or grants any stock or other securities convertible into or
      exchangeable for common stock in an issuance that is not specifically exempt
      by
      the terms of the Warrants.




Under
      the
      Registration Rights Agreement, on or prior to the 60 th calendar
      day after the closing of the Private Placement, the Company is obligated to
      file
      with the Securities and Exchange Commission (the “SEC”) a registration statement
      covering the resale of the registrable securities, which includes (i) 150%
      of
      the shares of common stock issuable upon the conversion of the 7% Notes; (ii)
      150% of the shares of common stock issuable as payment of interest on the 7%
      Notes; (iii) 150% of the shares of common stock issuable upon the exercise
      of
      the Warrants. The Company will use reasonable efforts to cause the registration
      statement to be declared effective by the SEC the earlier of (i) the
      120 th day
      following the closing of the Private Placement and (ii) the fifth trading day
      following the date on which the Company is notified by the SEC that the
      registration statement will not be reviewed or is no longer subject to further
      review. The Company is also obligated to use commercially reasonable efforts
      to
      keep such registration statement continuously effective until all registrable
      securities covered by such registration statement have been sold or may be
      sold
      pursuant to Rule 144(k) under the Securities Act of 1933, as amended. If (i)
      the
      registration statement is not filed by the required filing date; (ii) the
      registration statement is not declared effective by the SEC by the required
      effectiveness date; or (iii) after its effective date, the registration
      statement ceases for any reason to be effective or available to holders of
      all
      registrable securities for more than 20 consecutive trading days or an aggregate
      of 50 trading days (each, an “Event”), then (i) on the date of such Event, the
      Company shall pay each holder an amount in cash equal to 1.0% of the aggregate
      subscription amount paid by such holder in the Private Placement; and (ii)
      on
      each monthly anniversary of such an Event, until the Event is cured, the Company
      shall pay each holder an amount in cash equal to 1.0% of the aggregate
      subscription amount paid by such holder in the Private Placement. If the Company
      fails to pay any damages pursuant to an Event in full within ten days after
      its
      due date, the Company will pay interest thereon equal to 10% per annum. The
      maximum amount payable to any holder shall not exceed 12% of the aggregate
      subscription amount paid by such holder in the Private Placement.




9




The
      Company has used a portion of the proceeds from the Private Placement to repay
      the Bridge Loan obtained by the Company on March 31, 2006.




Our
      corporate headquarters are located at 1451 West Cypress Creek Road, Fort
      Lauderdale, Florida and our telephone number is (954) 714-8100.




**Description
      of Business**




Since
      the
      inception of our current business operations through the third quarter of 2004,
      we were a development stage company. We commenced significant operations by
      the
      end of 2004, and by the end of 2006, we expect to be operating and generating
      revenues in two lines of business: The Tube and AGU Music. The Tube airs
      traditional music videos and live concerts of contemporary music material that
      is derived from archived video and music collection libraries. AGU Music is
      a
      record company engaged in the release of recorded music materials acquired
      through artist signings and acquisitions.




**The
      Tube** - Our
      business plan provides for The Tube to deliver free-to-the-consumer advertiser
      supported music video programming 24 hours per day, seven days a week. We
      anticipate penetration into approximately 23 million homes by the end of 2006.
      The Tube will be the only all-music multicast network on television and will
      not
      air any game shows, awards shows, reality shows or news shows. In addition
      to
      revenue generated from national advertising, it is intended that The Tube will
      also have a local component offering radio tie-ins, local marketing, promotions
      and local advertising. See “Risk Factors - Our failure to develop advertising
      revenues could adversely impact our business.” In addition, our business plan
      also contemplates that The Tube will feature a direct e-commerce component
      that
      will enable the audience to purchase the music they see and hear immediately
      by
      telephone or online. All facets of The Tube, from programming, to advertising
      to
      marketing and promotion will remain true to its vision, which is to deliver
      pure
      music and entertainment content to an audience that we believe craves quality
      music.




The
      Tube
      is designed to appeal to the economically powerful 35 and over age group. In
      a
      departure from the way music has traditionally been presented on television,
      the
      goal of The Tube is to invigorate music enthusiasts with a bold fusion of music
      that crosses multiple formats and spans every decade since the introduction
      of
      The Beatles. We draw from music video archives from classic video artists such
      as U2, Duran Duran and the Eurhythmics and feature them alongside new tracks
      by
      heritage artists and rare concert clips from acts such as The Eagles, Aerosmith,
      Sting, Eric Clapton and The Rolling Stones. See “Risk Factors - We may not be
      able to purchase and/or license assets that are critical to our
      business.”




Les
      Garland, who co-founded music television stations MTV, VH1 and The Box, serves
      as the chief executive officer of The Tube. Mr. Garland oversees programming
      content, distribution, branding, marketing, promotions, public relations and
      advertising, and also serves as our senior executive vice president and a member
      of our board of directors.




We
      anticipate that The Tube will be the first music network to be distributed
      using
      the digital, over-the-air signal of broadcast television stations. In the late
      1990’s, broadcasters throughout the country were granted portions of the
      airwaves at no cost with the understanding that they would provide free digital
      signals as part of the U.S. government’s desire for high definition television.
      However, due to improvements in digital signal compression, the bandwidth
      required to broadcast digital television was substantially reduced, leaving
      broadcasters with excess bandwidth to use at their discretion. As a result,
      there are currently a number of media companies that have the ability to offer
      a
      digital quality picture over the air directly to consumers and indirectly
      through the cable and satellite operators’ digital box using surplus bandwidth
      from local broadcasters. Our business plan assumes that The Tube will achieve
      its national distribution targets in three steps: (1) create a revenue
      opportunity for broadcasters that carry The Tube, (2) negotiate distribution
      agreements with major broadcast groups that own stations in multiple markets,
      and (3) facilitate “retransmission consent” agreements between broadcast groups
      and cable multiple systems operators, which will carry The Tube as a digital
      channel on these cable systems.




In
      April
      2005, AGU Music entered into a charter affiliate affiliation agreement with
      Raycom Media, Inc. (“Raycom”). The charter affiliation agreement provides that
      Raycom will broadcast The Tube via a new broadcasting concept referred to as
      “multicasting,” which enables consumers in Raycom markets to receive The Tube
      with digital cable service or with television sets that are enabled with digital
      tuners. Raycom owns and operates 39 television stations in 20 states. In March
      of 2006, the Company entered similar charter affiliate affiliation agreements
      with Tribune and Sinclair pursuant to which Raycom, Tribune and Sinclair will
      transmit The Tube in 71 of the top 100 television markets in which their
      affiliates own and/or operate television stations.




10




In
      April
      2005, The Tube entered into a technical services agreement, dated as of December
      1, 2004 with Skyport Services, Inc. (“Skyport”), a subsidiary of Equity
      Broadcasting Corporation. Equity Broadcasting Corporation is a stockholder
      of
      the Company and has provided contract services to the Company since January
      1,
      2004. The technical services agreement provided that Skyport would broadcast
      The
      Tube and provide The Tube with origination services, transmission and
      compression services, post-production services, and satellite reception
      authorization services. The technical services agreement was terminated on
      November 30, 2005.




In
      August
      2005, The Tube entered into a second technical services agreement with Crawford
      Communications, Inc. (“Crawford”), replacing the Skyport services agreement,
      which also provides origination services, library/storage services, uplink
      services, satellite space, security, monitoring services, performance, and
      operational support services with respect to The Tube’s program material,
      twenty-four (24) hours per day, seven (7) days per week during the Term. The
      Crawford agreement is a three year agreement.




We
      expect
      to launch The Tube beginning in the second quarter of 2006, with a much broader
      launch in the third quarter of 2006, with a national media campaign utilizing
      marketing, promotions and public relations to reach every relevant audience
      for
      the network. The campaign will be designed to heighten awareness of the network,
      stimulate demand for it across the country and cultivate its image as the only
      network that delivers quality music and entertainment content. There can be
      no
      assurances that we will be able to launch The Tube or reach the distribution
      targets anticipated in our business plan. See “Risk Factors - We may be unable
      to implement our business and growth strategy” and “We intend to launch new
      products in a volatile market and we may be unsuccessful.”




**AGU
      Music** - AGU
      Music executes the marketing, promotion and distribution of high quality music
      recordings through distribution agreements with ARK 21 Records, L.P., an
      affiliate of Universal Music Group, and Sony BMG, via its affiliate Sanctuary
      Music. We pursue a mixture of marquee and classic recording artists with a
      history of success as well as fresh innovative talent. See “Risk Factors - We
      may not be able to maintain our client relationships that we have
      developed.”




We
      do not
      target the youth pop music market, which is generally associated with large
      marketing budgets and significant financial risk. AGU Music projects are
      targeted to reach the 25-54 year old demographic, which we believe is associated
      with a greater amount of consumer spending than any other segment of the
      population. We intend to integrate AGU Music with The Tube to provide a unique
      marketing advantage for our record label by directly selling music to the
      consumer through The Tube and also making music available to the consumer
      through traditional retail channels via AGU Music’s distribution
      system.




**Trademarks**




We
      have twelve applications pending with the United States Patent and
      Trademark Office, including multiple applications for each of the
      following:  THE TUBE (logo); THE TUBE MUSIC NETWORK (words and logo); ONLY
      MUSIC ALL MUSIC; THINK OF IT AS MUSIC ONLY WITH MUSIC; and SEE IT HEAR IT BUY
      IT.




On
      October 13, 2004, The Tube received notification from a television channel
      featuring music related programming that the circle logo used by The Tube is
      "confusingly similar" to the circle logo used by that television channel,
      supporting claims of trademark infringement and unfair competition. On November
      3, 2004, we responded to the October 13 letter stating that we do not believe
      the logos are confusingly similar or that any trademark infringement has
      occurred. We intend to vigorously defend any challenge to our use of our logo.
      We have not received a response to our November 3, 2004 letter.




11




**Competition**




The
      Tube
      and AGU Music operate in industries that are highly competitive, with many
      national and international firms competing in the areas served by us. Many
      of
      these competitor firms are well established in these markets and many have
      greater financial resources and managerial capabilities than us. We expect
      to
      encounter substantial competition in our efforts to grow our business. See
“Risk
      Factors - We may encounter intense competition from substantially larger and
      better financed companies.”




**Employees**




As
      of
      December 31, 2005, we had 23 full time employees.




**Available
      Information**




We
      currently do not have any of our SEC filings available on our website, as it
      is
      currently under construction. Our website address is www.tubemediacorp.com .
      By June
      30, 2006, we expect to make available free of charge through the investor
      relations section of our website, our Annual Report on Form 10-KSB,
      Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K, and any
      amendments to those reports filed or furnished pursuant to Section 13(a) or
      15(d) of the Securities Exchange Act of 1934, as amended. The information on
      our
      website will not be and should not be considered part of this document and
      is
      not incorporated into this document by reference. The website is only intended
      to be an active textual reference. This information is currently available
      through the website of the SEC, www.sec.gov, and can also be obtained by
      directly contacting the Company’s corporate headquarters.




**Risk
      Factors**




Investing
      in our securities involves risk. You should carefully consider all of the
      information contained in or incorporated by reference into this report and,
      in
      particular, the risks described below before investing in our securities. If
      any
      of the following risks actually occur, our business, financial condition or
      results of operations could be materially harmed and you may lose part or all
      of
      your investment.




***Risks
      Inherent to this Company*** *:*




**Because
      of losses incurred by us to date and our general financial condition, we
      received a going concern qualification in the audit report from our Independent
      Registered Public Accounting Firm for the most recent fiscal year that raises
      substantial doubt about our ability to continue to operate as a going
      concern.**




We
      had a
      net loss of approximately $21.8 million for the fiscal year ended December
      31,
      2005 and a working capital deficiency of approximately $11.9 million as of
      December 31, 2005. These matters raise substantial doubt about our ability
      to
      continue as a going concern. Our existence is dependent upon management’s
      ability to develop profitable operations and resolve our liquidity problems.
      We
      anticipate that we will attain profitable status and improve our liquidity
      through the continued development of our television network and recorded music
      business. If we are not able to continue as a going concern, we may cease to
      operate and our investors will lose some or all of their
      investment.




**We
      have a limited operating history and we anticipate that we will have operating
      losses in the foreseeable future.**




As
      a
      company that has recently emerged from the development stage, we have no
      existing income and very limited operating history from which to evaluate our
      business prospects. We cannot assure you that we will ever achieve profitable
      operations or generate significant revenues. Our future operating results depend
      on many factors, including demand for our products, the level of competition,
      and the ability of our officers to manage our business and growth. As a result
      of our limited operating history and the emerging nature of the market in which
      we will compete, we anticipate that we will have operating losses until such
      time as we can develop a substantial and stable revenue base.




12




**We
      will need additional capital, which may not be available on commercially
      acceptable terms, if at all.**




We
      have
      very limited financial resources. We currently have a monthly cash requirement
      of approximately $350,000, exclusive of capital expenditures. We will need
      to
      raise substantial additional capital to continue the national launch of The
      Tube
      beyond the third quarter of 2006 and provide substantial working capital for
      the
      development of national advertising relationships, increases in operating costs
      resulting from additional staff and office space until such time as we begin
      to
      generate revenues sufficient to fund ongoing operations. We believe that in
      the
      aggregate, we will need as much as approximately $15 million to $20 million
      to
      complete the launch of The Tube, repay debt obligations, provide capital
      expenditures for additional equipment, payment obligations under charter
      affiliation agreements, office space and systems for managing the business,
      and
      cover other operating costs until advertising and e-commerce revenues begin
      to
      offset our operating costs. Our failure to obtain additional capital to finance
      our working capital needs on acceptable terms, or at all, will negatively impact
      our business, financial condition and liquidity. In addition, as of December
      31,
      2005 we had $3.1 million of principal debt outstanding that will become due
      at
      various dates during 2006. We currently do not have the resources to satisfy
      these obligations, and our inability to do so could have a material adverse
      effect on our business and ability to continue as a going concern. If we are
      unable to repay our debt when due, we may be forced to refinance the debt on
      terms less favorable to us, seek protection under the federal bankruptcy laws
      or
      be forced into an involuntary bankruptcy filing.




**If
      we continue to experience liquidity issues and are unable to generate revenue,
      we may be unable to repay our outstanding debt when due and may be forced to
      seek protection under the federal bankruptcy laws.**




We
      have
      experienced liquidity issues since our inception due to, among other reasons,
      our limited ability to raise adequate capital on acceptable terms. We have
      historically relied upon the issuance of promissory notes that are convertible
      into shares of our common stock to fund our operations and currently anticipate
      that we will need to continue to issue promissory notes to fund our operations
      and repay our outstanding debt for the foreseeable future. At December 31,
      2005,
      we had $5.9 million of debt outstanding, including $4.5 million of promissory
      notes and convertible notes outstanding .
      If we
      are unable to issue additional promissory notes or secure other forms of
      financing, we will have to evaluate alternative actions to reduce our operating
      expenses and conserve cash.




Moreover,
      as a result of our liquidity issues, we have experienced delays in the repayment
      of promissory notes upon maturity and the payment of trade receivables to
      vendors and others when due. As a result of our delayed payments to vendors
      and
      others, two of our vendors initiated litigation against us and we are engaged
      in
      a dispute regarding interest charges on a warehouse lease. Our failure to pay
      vendors and others may continue to result in litigation, as well as interest
      and
      late charges, which will increase our cost of operations. If in the future,
      holders of promissory notes demand repayment of principal and accrued interest
      instead of electing to convert to common stock and we are unable to repay our
      debt when due or resolve issues with existing promissory note holders, we may
      be
      forced to refinance these notes on terms less favorable to us than the existing
      notes, seek protection under the federal bankruptcy laws or be forced into
      an
      involuntary bankruptcy filing.




**Our
      business** **revenue** **generation model is unproven and could fail.**




Our
      revenue model is new and evolving, and we cannot be certain that it will be
      successful. The potential profitability of this business model is unproven
      and
      there can be no assurance that we can achieve profitable operations. Our ability
      to generate revenues depends, among other things, on our ability to launch
      our
      television network and sign recording artists. Accordingly, we cannot assure
      you
      that our business model will be successful or that we can sustain revenue
      growth, or achieve or sustain profitability.




13




**Our
      success is dependent upon our senior management team and our ability to hire
      and
      retain qualified** **employees** **.**




We
      believe that our success is substantially dependent upon: (1) our ability to
      retain and motivate our senior management team and other key employees; and
      (2)
      our ability to identify, attract, hire, train, retain and motivate other
      qualified personnel. The
      development of our business and operations is dependent upon the efforts and
      talents of our executive officers, whose extensive experience and contacts
      within the industries in which we wish to compete are a critical component
      of
      our business strategy. We
      cannot
      assure you that we will be successful in retaining the services of any of the
      members of our senior management team or other key personnel, or in hiring
      qualified technical, managerial, marketing and administrative personnel. We
      do
      not have "key person" life insurance policies on any of our key personnel,
      so in
      the event of a tragic incident we would find ourselves in a very precarious
      position without the financial ability or management skill to overcome it.
      If we
      do not succeed in retaining our employees and in attracting new employees,
      our
      business could suffer significantly.




**We
      may be unable to implement our business and growth
      strategy.**




Our
      growth strategy and ability to generate revenues and profits is dependent upon
      our ability to :
      (1)
      develop and provide new
      services and products; ( 2 )
      establish and maintain sales and distribution channels, including the launch
      of
      our television network ;
      (3)
      develop new
      business opportunities; ( 4 )
      maintain our existing clients and develop the organization and systems to
      support these clients; ( 5)
      establish financial and management systems; ( 6) attract,
      retain and hire highly skilled management and consultants ;
      (7)
      obtain  adequate financing on acceptable terms to fund our growth strategy; ( 8)
      develop and expand our
      client and customer bases; and
      (9)
      negotiate agreements on terms that will permit
      us to
      generate adequate profit margins. Our failure with respect to any or all of
      these factors could impair our ability to successfully implement our growth
      strategy, which could have a material adverse effect on our results of
      operations and financial condition.




**We
      intend to launch new products in a volatile market and we may be
      unsuccessful.**





We ****** intend
      to
      launch new products, which include a television network featuring classic rock
      music and video focused on the 35 and over market and the national distribution
      of CDs and DVDs. The consumer retail market and the television industry are
      volatile marketplaces and we may not be able to successfully penetrate and
      develop either sector. We cannot assure you that we will be able to maintain
      the
      airwave space necessary to carry and successfully launch a new television
      network. We will be successful only if consumers establish a loyalty to our
      network and purchase the products advertised on the network, including those
      products offered by our subsidiary, AGU Music. We will have no control over
      consumer reaction to our network or product offerings. If we are not successful
      in building a strong and loyal consumer following, we may not be able to
      generate sufficient sales to achieve profitability.





**We
      do not have the ability to control the volatility of sales.**





Our
      business is dependent on selling our products in a volatile consumer-oriented
      marketplace. The retail consumer industry, by its nature, is very volatile
      and
      sensitive to numerous economic factors, including competition, market conditions
      and general economic conditions. None of these conditions are within our
      control. There can be no assurance that we will have stable or growing sales
      of
      our record company  products
      and advertising space on our television network, and maintain profitability
      in
      the volatile consumer marketplace.





**We
      may not be able to purchase and/or license assets that are critical to our
      business.**





We
      intend
      to purchase and/or license archived video and music collection libraries to
      fulfill the programming needs of The Tube. The acquisition or licensure of
      these
      assets is critical to accomplishing our business plan. We cannot assure you
      that
      we will be successful in obtaining these assets or that if we do acquire them,
      that we will be able to do so at a reasonable cost. Our failure to purchase
      and/or license these libraries at a reasonable cost would have a material
      adverse effect on our business, results of operations and financial
      condition.





14




**We
      enter into charter affiliation agreements with companies that will broadcast
      The
      Tube. If we do not maintain good working relationships with these companies,
      or
      perform as required under these agreements, it could adversely affect our
      business.**





The
      charter affiliation agreements establish complex relationships between these
      companies and us. We intend to spend a significant amount of time and effort
      to
      maintain our relationships with these companies and address the issues that
      from
      time to time may arise from these complex relationships. These companies could
      decide not to renew their agreements at the end of their respective terms.
      Additionally, if we do not perform as required under these agreements or if
      we
      breach these agreements, these companies could seek to terminate their
      agreements prior to the end of their respective terms or seek damages from
      us.
      Loss of these existing charter affiliation agreements, would adversely affect
      our ability to launch The Tube as well as our ability to implement our business
      plan.





Additionally,
      the companies that we have charter affiliation agreements are subject to FCC
      jurisdiction under the Communications Act of 1934, as amended. FCC rules, among
      other things, govern the term, renewal and transfer of radio and television
      broadcasting licenses and limit concentrations of broadcasting control
      inconsistent with the public interest. If these companies do not maintain their
      radio and television broadcasting licenses, our business could be substantially
      harmed.





**Our
      failure to develop advertising revenues could adversely impact our business.**





We
      intend
      to generate a significant portion of our revenue from our television network,
      The Tube, through sales of advertising time. We may not be able to obtain
      long-term commitments from advertisers due to the start-up nature of our
      business. Advertisers generally may cancel, reduce or postpone orders without
      penalty. Cancellations, reductions or delays in purchases of advertising could
      occur as a result of a strike, or a general economic downturn in one or more
      industries or in one or more geographic areas. If we are unable to generate
      significant revenue from advertising, it will have a material adverse effect
      on
      our business, financial condition and results of operations.





**We
      may not be able to maintain our client relationships that we have
      developed.**





AGU
      Music’s clients are, and will be, comprised primarily of artists and
      celebrities. This clientele is fragmented and requires a great deal of servicing
      to maintain strong relationships. Our ability to maintain client loyalty will
      be
      dependent upon our ability to successfully market and distribute their products.
      We cannot assure you that we will be successful in maintaining relationships
      with our artists. Our inability to maintain these relationships could have
      a
      material adverse effect on our business, results of operations and financial
      condition.





**Our
      music business is subject to digital piracy, and this risk grows more acute
      as
      new technologies develop.**





In
      our
      music business, technological developments have created new risks with respect
      to our ability to protect our intellectual property. Advances in technology
      that
      enable the transfer and downloading of digital music files from the Internet
      without authorization from the owners of rights to such content have threatened
      the conventional copyright-based business model by making it easier to create
      and redistribute unauthorized music files. Such unauthorized distribution may
      adversely affect sales of our recorded music and our operating results. As
      a
      result, we may need to incur expenses to develop new services for the authorized
      digital distribution of music and to combat unauthorized digital distribution
      of
      our intellectual property. These initiatives, if we choose to undertake them,
      would result in increased expenses and may not achieve their intended result.





15




**We
      may encounter intense competition from substantially larger and better financed
      companies.**





Our
      success will depend upon our ability to penetrate the consumer market for media
      oriented products and establish a television network with sufficient ratings
      to
      cover the costs associated with operating the network and provide a return
      to
      our investors. Our television network and record company will compete with
      more
      established entities with greater financial resources, longer operating
      histories and more recognition in the market place than we do. It is also
      possible that previously unidentified competitors may enter the market place
      and
      decrease our chance of acquiring the requisite market share. Our future success
      will depend upon our ability to penetrate the market quickly and efficiently.
      Our ability to respond to competitive product offerings and the evolving demands
      of the marketplace will play a key role in our success. Our failure to develop,
      maintain and continually improve our distribution process could prevent us
      from
      attaining sufficient market share. If we are unable to respond and compete
      in
      these markets, it will have a material adverse effect on our business, results
      of operations and financial condition.





**We
      may not be able to adequately manage future growth.**





If
      we are
      successful in developing our business plan, the anticipated future growth of
      the
      business could place a significant strain on our managerial, operational and
      financial resources. We cannot assure you that management would effectively
      manage significant growth in our business. If we are successful in executing
      our
      business plan and achieve our
      anticipated growth, such success will place significant demands on our
      management, as well as on our administrative, operational and financial
      resources. For us to manage our growth and satisfy the greater financial,
      disclosure and internal control requirements that arise with exiting the
      development stage and becoming fully operational, we must:





·
            upgrade
                our operational, financial, accounting and management information
                systems,
                which would include the purchase of new accounting and human resources
                software;


·
            identify
                and hire an adequate number of operating, accounting and administrative
                personnel and other qualified employees;


·
            manage
                new employees and integrate them into our
                culture;


·
            incorporate
                effectively the components of any businesses or assets that we may
                acquire
                in our effort to achieve or support growth;


·
            closely
                monitor the actions of our music company distributors and broadcast
                entities which air The Tube and manage the contractual relationships
                we
                have with them; and


·
            develop
                and improve financial and disclosure processes to satisfy the reporting
                requirements of the SEC, including Section 404 of the Sarbanes-Oxley
                Act
                of 2002, and the National Association of Securities Dealers,
                Inc.





The
      failure to adequately manage any growth would adversely affect our business
      operations and financial results.





**We
      may be unable to adequately react to market changes.**





Our
      success is partially dependent upon our ability to develop our market and change
      our business model as may be necessary to react to changing market conditions.
      Our ability to modify or change our business model to fit the needs of a
      changing market place is critical to our success, and our inability to do so
      could have a material adverse effect on our business, liquidity and financial
      condition.





**If
      we fail to maintain an effective system of internal controls, we may not be
      able
      to detect fraud or report our financial results accurately, which could harm
      our
      business and we could be subject to regulatory scrutiny.**





Pursuant
      to Section 404 of the Sarbanes-Oxley Act of 2002, referred to as Section 404,
      we
      will be required, beginning in our fiscal year 2007, to perform an evaluation
      of
      our internal controls over financial reporting and have our independent
      registered public accounting firm test and evaluate the design and operating
      effectiveness of such internal controls and publicly attest to such evaluation.
      We are in the process of preparing an internal plan of action for compliance
      with the requirements of Section 404, which includes a timeline and scheduled
      activities, although as of the date of this filing we have not yet completed
      our
      effectiveness evaluation. As a result, we cannot guarantee that we will not
      have
      any material weaknesses reported by our independent registered public accounting
      firm. Compliance with the requirements of Section 404 is expected to be
      expensive and time-consuming. If we fail to complete this evaluation in a timely
      manner, or if our independent registered public accounting firm cannot timely
      attest to our evaluation, we could be subject to regulatory scrutiny and a
      loss
      of public confidence in our internal controls. In addition, any failure to
      implement required new or improved controls, or difficulties encountered in
      their implementation, could harm our operating results, cause us to fail to
      meet
      our reporting obligations, and cause potential stockholders and clients to
      lose
      confidence in our financial reporting, which could harm our business and the
      value of our common stock.




16




**Copyright
      laws may negatively affect the value of certain of our
      assets.**





Under
      existing United States copyright law, sound recordings may be protected. United
      States copyright law, however, also gives individual authors the inalienable
      right to recapture the rights to their copyrighted material by terminating
      any
      transfer of interest in their copyright. For example, for transfers given on
      or
      after January 1, 1978, the author may terminate the transfer after 35 years,
      or
      perhaps earlier if the performer has shorter reversion provisions within their
      agreements. A more complex timeline applies to termination of transfers conveyed
      on or before December 31, 1977. Strict rules of notice (i.e., a notice of intent
      to terminate given from the author to the publisher) must be followed by the
      author to validate the termination. As a result, certain of our assets may
      be
      lost if challenged by authors seeking to recapture their copyrighted material,
      thereby potentially negatively affecting our results of operations and financial
      condition and our future prospects.




See
      “Legal Proceedings” for further discussion of this and other
      disputes.




**There
      are potential conflicts of interests and agreements that** **are
      not** **subject to arm’s length negotiations.**





Since
      our
      inception, several of
      our
      stockholders have
      provided bridge financing for start-up costs and working capital. During the
      fiscal year ended December 31, 2005,
      these stockholders advanced a total of $1,459,828, of which $679,025 of these
      bridge loans were repaid
      from the proceeds of other debt
      offerings and $ 780,803 remains outstanding as of
      December 31, 2005 .
      Additionally, several of our
      stockholders are
      affiliated with entities that may receive consulting fees and other compensation
      related to the performance of services for us. See  “Certain
      Relationships and  Related
      Transactions ”
and
      “Legal Proceedings ”
for
      further discussion of these transactions.




***Risks
      Related to Investment in Our Securities***





**There
      is not presently an active market for shares of our common stock, and therefore,
      you may be unable to sell any shares of common stock in the event that you
      need
      a source of liquidity.**





Although
      our common stock is quoted on the Over-The-Counter Bulletin Board, the trading
      market in our common stock has substantially less liquidity than the trading
      in
      stock on other markets or stock of other companies quoted on the
      Over-The-Counter Bulletin Board. A public trading market in our common stock
      having the desired characteristics of depth, liquidity and orderliness depends
      on the presence in the market of willing buyers and sellers of our common stock
      at any time. This presence depends on the individual decisions of investors
      and
      general economic and market conditions over which we have no control. In the
      event an active market does not develop, you may be unable to sell your shares
      of common stock at or above the price you paid for them or at any
      price.





**The
      issuance of shares of common stock upon the conversion of our convertible
      securities and exercise of the outstanding warrants may cause immediate and
      substantial dilution to our existing stockholders.**





17




As
      of
      December 31, 2005, we had outstanding warrants to purchase 8,370,911 shares
      of
      our common stock, and promissory notes and other convertible securities
      convertible into 3,298,334 shares of our common stock, excluding issuances
      that
      occurred subsequent to year end. The issuance of shares of common stock upon
      the
      exercise of warrants and/or conversion of convertible debt may result in
      substantial dilution to the interests of other stockholders since the holders
      of
      such convertible securities may ultimately sell the full amount issuable upon
      any exercises or conversions.




On
      April
      21, 2006, we completed a private placement of $2.45 million of securities to
      accredited investors. In connection with this private placement, we sold 7%
      secured convertible notes in the aggregate principal amount of $2.45 million,
      referred to as the 7% Notes, which are convertible into shares of common stock
      at a conversion price of $2.25 per share, and issued warrants to purchase an
      aggregate of 1,088,889 shares of the common stock at an exercise price of $2.25
      per share, referred to as the warrants. At our option and subject to certain
      conditions, principal and interest payments due under the 7% Notes may be paid
      in cash or shares of common stock. In addition, if we issue or sell any shares
      of common stock for a price per share that is less than the applicable
      conversion price of the 7% Notes, the conversion price of the 7% Notes will
      be
      reduced. The conversion price of the 7% Notes will also be adjusted if we issue,
      sell or grant any stock or other securities convertible into or exchangeable
      for
      common stock in an issuance that is not specifically exempt by the terms of
      the
      7% Notes. The number of shares that may be acquired by any holder of the 7%
      Notes upon any conversion of the 7% Notes or issuance of shares of common stock
      as principal or interest payments shall be limited to the extent to insure
      that
      the total number of shares of common stock beneficially owned by any holder
      does
      not exceed 4.99% of the total number of issued and outstanding shares of common
      stock.





The
      warrants may be exercised for common stock on or before April 21, 2011. The
      Warrants are exercisable for shares of common stock at an exercise price of
      $2.25 per share, subject to adjustments for stock splits, stock dividends,
      mergers and reorganizations, or through a “cashless exercise” provision
      contained in the warrants. In addition, if we issue or sell any shares of common
      stock for a price per share that is less than the applicable exercise price
      of
      the warrants, the exercise price of the warrants will be reduced. The exercise
      price of the warrants will also be adjusted if we issue, sell or grant any
      stock
      or other securities convertible into or exchangeable for common stock in an
      issuance that is not specifically exempt by the terms of the
      warrants.





We
      also
      entered a registration rights agreement that requires, on or prior to the
      60 th calendar
      day after the closing of the private placement, we file with the Securities
      and
      Exchange Commission a registration statement covering the resale of the
      registrable securities issued on April 21, 2005.




In
      connection with the charter affiliation agreement with Tribune, we entered
      into
      a letter agreement, dated March 6, 2006, pursuant to which we agreed to issue
      to
      Tribune (i) within 10 days after the execution of the charter affiliation
      agreement, a warrant to purchase shares of our common stock, at an exercise
      price of $2.25 per share, and shares of common stock; (ii) upon Tribune’s
      transmission of The Tube’s music network to television stations in markets that
      represent 75% of all television households in the markets where Tribune owns
      and/or operates broadcast television stations, a warrant to purchase shares
      of
      common stock at an exercise price of $2.50 per share; and (iii) a specified
      number of shares of common stock for each 11,000,000 television households
      (or
      pro rata if less than 11,000,000) that first receive The Tube’s music network as
      a result of a launch of The Tube’s music network on a Tribune television
      station. We also granted Tribune “piggyback” registration rights with respect to
      all of the securities to be issued under the letter agreement.




In
      connection with the charter affiliation agreement
      with Sinclair, we also entered into a letter agreement, dated March 22, 2006,
      pursuant to which we agreed to issue to Sinclair (i) within 20 days after the
      execution of the affiliation agreement, a warrant to purchase shares of the
      common stock, at an exercise price of $2.25 per share, and shares of common
      stock; (ii) upon Sinclair’s transmission of The Tube’s music network to
      television stations in markets that represent 50% of the designated markets
      where Sinclair owns and/or operates broadcast television stations, shares of
      common stock; and (iii) on or after April 1, 2007 and upon Sinclair’s
      transmission of The Tube’s music network to television stations in markets that
      represent 75% of the designated markets where Sinclair owns and/or operates
      broadcast television stations, a warrant to purchase shares of our common stock
      at an exercise price of $2.50 per share and shares of our common
      stock.




18




**Existing
      stockholders** **may suffer substantial dilution with future issuances of our common
      stock.**




We
      anticipate issuing a substantial amount of common stock within the next several
      years, either in connection with our equity
      incentive plan for directors, officers, key employees and consultants, or in
      private or public offerings to meet our working capital requirements. Any grants
      or sales of additional shares of our common stock will have a dilutive effect
      on
      the existing stockholders ,
      which
      could adversely affect the value of our common stock. In addition, we have
      $2.57
      million of outstanding indebtedness that is
      convertible into shares of our common stock at the sole option of the holder,
      as
      well as warrants to purchase 8,370,911 shares of our common stock that were
      outstanding as of December 31, 2005, exclusive of securities issued
      subsequent to year end. Pursuant to its note issued in December 2004, Mitchell
      Entertainment Company has the right and option until the maturity date to
      purchase shares of common stock upon the terms and conditions set forth in
      the
      note with an aggregate purchase price equal to the principal amount prepaid.
      Since January 1, 2006, we issued approximately $2.96 million of indebtedness
      that is convertible into shares of our common stock at the sole option of the
      holder, as well as warrants to purchase 2,622,889 shares of common stock. A
      portion of this indebtedness and certain of these warrants offer certain
      anti-dilution protections to the holders.




**Our
      management, through its significant ownership of our common stock, has
      substantial control over our operations.**





Our
      management owns a significant portion of the total outstanding shares of our
      common stock. These officers
      and employees have been and will continue to be able to significantly influence
      all matters requiring approval by our stockholders ,
      including the election of directors and the approval of mergers or other
      business combination transactions.




**We
      have never paid dividends and do not anticipate paying any in the foreseeable
      future.**





We
      have
      never declared or paid a cash dividend and we do not expect to have any cash
      with which to pay cash dividends in the foreseeable future. If we do have
      available cash, we intend to use it to grow our business.




**Our
      incorporation documents and Delaware law may inhibit a takeover that
      stockholders consider favorable and could also limit the market price of your
      shares of common stock, which may inhibit an attempt by our stockholders to
      change our direction or management.**





Delaware
      law and our amended and restated certificate of incorporation contain provisions
      that could delay or prevent a change in control of our company. Some of these
      provisions include the following:




(a)
            authorize
                our board of directors to determine the rights, preferences, privileges
                and restrictions granted to, or imposed upon, the preferred stock
                and to
                fix the number of shares constituting any series and the designation
                of
                such series without further action by our stockholders;
                and




(b)
            prohibit
                cumulative voting in the election of directors, which would otherwise
                allow less than a majority of stockholders to elect director
                candidates.




These
      and
      other provisions in our amended and restated certificate of incorporation and
      under Delaware law could reduce the price that investors might be willing to
      pay
      for shares of our common stock in the future and result in the market price
      being lower than it would be without these provisions.




19


**We
      adopted provisions in our amended and restated certificate of
      incorporation** **limiting the liability of management to** **stockholders.**





We
      have
      adopted provisions, and will maintain provisions, to our amended
      and restated certificate
      of incorporation that
      limit the liability of our
      directors ,
      and
      provide for indemnification by us
      of our
      directors and  officers
      to the fullest extent permitted by Delaware law. Our amended and restated
      certificate of incorporation and Delaware law provide that directors have no personal liability to corporations
      or their stockholders for
      monetary damages for actions
      taken as a director, except for breach of duty of
      loyalty, acts or omissions not in good faith involving intentional misconduct or knowing violation of law, unlawful payment of
      dividends or unlawful stock repurchases,
      or transactions from which the director derived improper
      personal benefit. Such provisions limit
      the
      stockholders’ ability to hold directors liable for breaches of fiduciary duty and
      reduce the likelihood of derivative litigation against directors and
      officers.




**We
      are subject to the penny stock rules, which may adversely affect trading in
      our
      common stock.**





Currently
      our common stock is a “low-priced” security under the “penny stock” rules
      promulgated under the Securities Exchange Act of 1934, as amended. In accordance
      with these rules, broker-dealers participating in transactions in low-priced
      securities must first deliver a risk disclosure document that describes the
      risks associated with such stocks, the broker-dealer's duties in selling the
      stock, the customer's rights and remedies and certain market and other
      information. Furthermore, the broker-dealer must make a suitability
      determination approving the customer for low-priced stock transactions based
      on
      the customer's financial situation, investment experience and objectives.
      Broker-dealers must also disclose these restrictions in writing to the customer,
      obtain specific written consent from the customer, and provide monthly account
      statements to the customer. The effect of these restrictions will probably
      decrease the willingness of broker-dealers to make a market in our common stock,
      decrease liquidity of our common stock and increase transaction costs for sales
      and purchases of our common stock as compared to other securities. Our
      management is aware of the abuses that have occurred historically in the penny
      stock market. Although we do not expect to be in a position to dictate the
      behavior of the market or of broker-dealers who participate in the market,
      management will strive within the confines of practical limitations to prevent
      abuses normally associated with “low-priced” securities from being established
      with respect to our securities.




**Item
              2.**
            **DESCRIPTION
                OF PROPERTY**




We
      lease
      approximately 700 square feet of space at 1451 West Cypress Creek Road, Fort
      Lauderdale, Florida, the location of our principal executive offices. The
      current term of the lease is scheduled to expire on May 31, 2005. We have a
      monthly rent expense of approximately $5,000. We believe that this space is
      adequate for our immediate needs.





We
      also
      lease approximately 750 square feet of space at 2040 Sherman Street, Hollywood,
      Florida, the location of The Tube’s principal operations center. The current
      term of the lease is month to month. We have a monthly rent expense of
      approximately $4,300. We believe that this space is adequate for our immediate
      needs, while we look for a longer term location for The Tube
      operations.





We
      entered into a lease to rent an approximate 2,600 square foot warehouse facility
      located in North Miami, Florida on November 1, 2003. The term of the lease
      is
      from November 1, 2003 to October 31, 2006. Currently, the monthly rent expense
      is approximately $1,419. In July 2005, we stopped payment on this lease. We
      are
      in dispute with the landlord as to the amount we owe under the
      lease.





On
      December 22, 2004, we purchased a 162,000 square foot building situated on
      approximately 23 acres of land in Lauderdale Lakes, Florida (the “Lauderdale
      Property”), which formerly comprised our sole principal property. On December
      28, 2005, we sold the Lauderdale Property and
      any
      damage sustained by the building during the hurricane was covered by property
      insurance.




20
 
 **Item
                  3.**
                **LEGAL
                    PROCEEDINGS**


On
      January 27, 2005, the Company was served with a summons with notice (the
      "Summons") by Jarred Weisfeld and Cherry Jones, individually and doing business
      as JarredCherry Productions LLC (the "Plaintiffs"), which indicates that the
      Plaintiffs commenced an action against the Company in the state court located
      in
      New York City, New York. The Plaintiffs alleged, among other things, breach
      of
      contract, breach of implied covenant of good faith and fair dealing, unfair
      competition, tortuous misappropriation of goodwill, and deceptive acts and
      practices pursuant to Section 349 of the New York General Business Law. This
      dispute stems from an alleged agreement between the Plaintiffs and the Company
      related to the works of the late Mr. Russell Jones, who was the son of Ms.
      Jones
      and the management client of Mr. Weisfeld. Although the Plaintiffs, through
      the
      Summons, were seeking compensatory and punitive damages of no less than
      approximately $1.8 million, the Plaintiffs did not filed an actual Complaint
      to
      state their actual legal case against the Company. Although the Company
      expressly denies any allegation of wrongdoing on its part, a settlement
      agreement was reached between the Company and the Plaintiffs on December 12,
      2005 in the amount of $73,808.94, which was paid in full.





On
      May 5,
      2005, the Company entered into a settlement and mutual release agreement,
      effective as of April 15, 2005 (the “Initial Settlement Agreement”), with Ned
      Siegel, Neil Strum and Strum Brothers Investment, LLC (the "Settlement
      Parties"). The Company guaranteed the repayment of the notes AGU Music assumed
      on March 3, 2004 to repay $350,000 to Ned Siegel and Neil Strum (the “Notes”) in
      connection with the assumption of a distribution agreement. Pursuant to the
      Initial Settlement Agreement, the Notes were cancelled and replaced with new
      notes having a principal beginning balance of $345,806 (the "New Notes"). The
      Company did not make any of the required payments under the New Notes and/or
      Initial Settlement Agreement.





On
      February 1, 2006, the Company entered into a settlement and mutual release
      agreement, effective January 16, 2006 (the “Final Settlement Agreement”), with
      the Settlement Parties. Pursuant to the terms of the Final Settlement Agreement,
      the Company (i) was required to pay the Settlement Parties the sum of $175,000
      upon the execution of the Final Settlement Agreement and (ii) was required
      to
      pay the Settlement Parties the sum of $125,000 on a date no later than February
      15, 2006. On February 15, 2006, the Company made all of the required payments
      under the Final Settlement Agreement. In connection with the Final Settlement
      Agreement, the Settlement Parties agreed to dismiss, with prejudice, the
      litigation they filed against the Company on September 1, 2005 in the Superior
      Court of the State of California for the County of Los Angeles in connection
      with (i) the Company’s failure to make the required payments due under the New
      Notes and (ii) other disputes between the Company and Neil Strum. In addition,
      the Settlement Parties and the Company released each other from all past claims
      the parties have or may have against each other in connection such litigation.
      Simultaneously with the execution of the Final Settlement Agreement, David
      Levy,
      Chief Executive Officer of the Company, and Donna Levy, his wife, executed
      personal guaranty agreements in the amount of $125,000 in favor of the
      Settlement Parties.





On
      November 21, 2005, in the Circuit Court, in the Seventeenth Judicial Circuit,
      in
      and for Broward County, Florida, The Recovar Group, L.L.C., as assignee of
      United Parcel Service, a judgment was entered against the Company for unpaid
      invoices for a total sum of $10,411 that bears interest at the rate of 7%.




MICHAEL
      JAY SOLOMON v. AGU ENTERTAINMENT CORP. ,
      UNITED
      STATES DISTRICT COURT, SOUTHERN DISTRICT OF FLORIDA, MIAMI DIVISION, CASE NO.:
      05-61829 CIV-ALTONAGA/TURNOFF - This is an action initiated by Michael Jay
      Solomon, our former Chairman, against the Company for breach of contract on
      December 12, 2005. Solomon asserts that we failed to pay him approximately
      $100,000 in connection with his resignation from the Company, $50,000 of which
      was alleged to be an agreed upon sum plus $50,000 for asserted reimbursements.
      We are aggressively defending this action. The parties have begun the discovery
      stage of the action wherein each party will seek documents and other evidence
      from the other to support their positions.




On
      February 21, 2006, Federal Express Corporation filed a complaint against the
      Company, in the Circuit Court of the Seventeenth Judicial Circuit in and for
      Broward County, Florida, for breach of contract and unjust enrichment claims
      and
      is seeking the sum of $23,205.24 plus interest and costs.




21




LALAH
      HATHAWAY v. AGU MUSIC, ET AL. SUPERIOR
      COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES, CASE NO. BC
      342263 - This is an action initiated by Lalah Hathaway, one of our former
      artists, against MB Recordings, Inc. d/b/a Mesa Blue Moon on February 28, 2006.
      AGU Music has been named as a defendant in the action as a result of an alleged
      agreement between MB Recordings and AGU Music, for which Hathaway asserts AGU
      Music, is liable for her damages caused by MB Recordings. This action is still
      in the pleading stage and AGU Music has not yet been required to file a response
      to the action. The plaintiff did not plead any specific damages to date. We
      are
      moving for a dismissal of the complaint.




MB
      Recordings, Inc. has also filed a cross-claim against AGU Music and the Company
      in connection with an alleged agreement between the Company and MB Recordings.
      We have not yet been served with the cross-complaint and have not yet been
      required to file a response to said cross-complaint.




The
      Company is subject to claims and legal actions that arise in the ordinary course
      of its business. The Company believes that the ultimate liability, if any,
      with
      respect to these claims and legal actions, will not have a material effect
      on
      the financial position or results of operations of the Company.




**Item
              4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**




None.





**PART
      II.**




**Item
              5.**
            **MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS**




Our
      common stock is quoted on the Over-The-Counter Bulletin Board under the symbol
      “TUBM.” The following table sets forth the range of the high and low bid
      information for our common stock for each quarter since our common stock began
      quotation on the Over-The-Counter Bulletin Board in July of 2005. The quotations
      reflect inter-dealer prices, without retail mark-up, mark-down or commission
      and
      may not represent actual transactions.




**Fiscal
                  2005**
              
              **High**
              
              **Low**Quarter
                  ended September 30, 2005
              
              $
              6.00
              
              $
              4.25Quarter
                  ended December 31, 2005
              
              $
              5.00
              
              $
              1.25





We
      did
      not repurchase any of our common stock in the fourth quarter of fiscal year
      2005.




As
      of
      March 31, 2006, there were 27,292,841 shares of common stock outstanding held
      by
      approximately 170 stockholders of record. This number does not include
      beneficial owners of common stock whose shares are held in the names of various
      dealers, clearing agencies, banks, brokers and other fiduciaries.




We
      have
      never paid a dividend on our common stock and anticipate that we will retain
      future earnings, if any, to fund the development and growth of our business.
      Consequently, we do not anticipate paying cash dividends on our common stock
      in
      the foreseeable future. In addition, we are restricted under the terms of our
      convertible notes and debentures from paying dividends or making distributions
      and repurchasing, redeeming or otherwise acquiring any shares of common stock
      except under certain circumstances.




As
      a
      Delaware corporation, we may not declare and pay dividends on capital stock
      if
      the amount paid exceeds an amount equal to the surplus, which represents the
      excess of our net assets over paid-in-capital or, if there is no surplus, our
      net profits for the current and/or immediately preceding fiscal year. To the
      extent we pay dividends and we are deemed insolvent or inadequately capitalized,
      a bankruptcy court could direct the return of any dividends.




22




**Issuances
      of Unregistered Securities**




In
      January 2005, the Company issued convertible promissory notes to three
      accredited investors in the aggregate net principal amount of $150,000. The
      $150,000 of convertible promissory notes are due on the second anniversary
      of
      their issuance date and are convertible into shares of the Company’s common
      stock at the option of each holder at a conversion price of $3.00 per share.
      In
      connection with the issuance of the convertible notes, the Company issued to
      the
      holders warrants to purchase 49,999 shares of the Company’s common stock. The
      warrants have a two year term and an exercise price of $3.00 per share. No
      underwriters or brokers were employed in the transaction. The securities were
      deemed restricted securities for the purposes of the Securities Act. The Company
      maintains that the issuance of these securities was exempt from registration
      under the Securities Act of 1933, as amended (the “Securities Act"), in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




In
      January 2005, the Company issued to an accredited investor warrants to purchase
      2,553,575 shares of the Company’s common stock. The warrants have a two year
      term and an exercise price of $3.00 per share. No underwriters or brokers were
      employed in the transaction. The securities were deemed restricted securities
      for the purposes of the Securities Act. The Company maintains that the issuance
      of these securities was exempt from registration under the Securities Act,
      in
      reliance upon Regulation D promulgated thereunder as transactions by an issuer
      not involving a public offering.




In
      early
      2005, the Company issued 95,540 shares of common stock to several employees.
      No
      underwriters or brokers were employed in the transaction. The securities were
      deemed restricted securities for the purposes of the Securities Act. The Company
      maintains that the issuance of these securities was exempt from registration
      under the Securities Act, in reliance upon Regulation D promulgated thereunder
      as transactions by an issuer not involving a public offering.




In
      February 2005, the Company issued 449,000 shares of common stock to three
      directors of the Company. No underwriters or brokers were employed in the
      transaction. The securities were deemed restricted securities for the purposes
      of the Securities Act. The Company maintains that the issuance of these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




In
      February 2005, the Company issued 283,245 shares of common stock to several
      investors in exchange for services valued at $750,592 performed on behalf of
      the
      Company. No underwriters or brokers were employed in the transaction. The
      securities were deemed restricted securities for the purposes of the Securities
      Act. The Company maintains that the issuance of these securities was exempt
      from
      registration under the Securities Act, in reliance upon Regulation D promulgated
      thereunder as transactions by an issuer not involving a public offering.




In
      March
      2005, the Company issued convertible promissory notes to two accredited
      investors in the aggregate net principal amount of $120,000. The $120,000 of
      convertible promissory notes are due on the second anniversary of their issuance
      date and are convertible into shares of the Company’s common stock at the option
      of each holder at a conversion price of $3.00 per share. In connection with
      the
      issuance of the convertible notes, the Company issued to the holders warrants
      to
      purchase 40,000 shares of the Company’s common stock. The warrants have a two
      year term and an exercise price of $3.00 per share. No underwriters or brokers
      were employed in the transaction. The securities were deemed restricted
      securities for the purposes of the Securities Act. The Company maintains that
      the issuance of these securities was exempt from registration under the
      Securities Act, in reliance upon Regulation D promulgated thereunder as
      transactions by an issuer not involving a public offering.




In
      April
      2005, the Company issued 200,000 shares of common stock to an accredited
      investor in connection with an agreement between the investor and the Company.
      No underwriters or brokers were employed in the transaction. The securities
      were
      deemed restricted securities for the purposes of the Securities Act. The Company
      maintains that the issuance of these securities was exempt from registration
      under the Securities Act, in reliance upon Regulation D promulgated thereunder
      as transactions by an issuer not involving a public offering.




23


In
      April
      2005, the Company issued 111,566 shares of common stock to a trust owned by
      a
      director of the Company. No underwriters or brokers were employed in the
      transaction. The securities were deemed restricted securities for the purposes
      of the Securities Act. The Company maintains that the issuance of these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




In
      April
      2005, 563,575 shares of common stock to four accredited investors as
      consideration for the Company’s failure to pay principal and/or interest on
      loans payable to such investors. No underwriters or brokers were employed in
      the
      transaction. The securities were deemed restricted securities for the purposes
      of the Securities Act. The Company maintains that the issuance of these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




In
      April
      2005, the Company issued a convertible promissory note to an accredited investor
      in the principal amount of $20,000. The convertible promissory note is due
      on
      the second anniversary of its issuance date and is convertible into shares
      of
      the Company’s common stock at the option of the holder at a conversion price of
      $3.00 per share. In connection with the issuance of the convertible note, the
      Company issued to the holder warrants to purchase 6,667 shares of the Company’s
      common stock. The warrants have a two year term and an exercise price of $3.00
      per share. No underwriters or brokers were employed in the transaction. The
      securities were deemed restricted securities for the purposes of the Securities
      Act. The Company maintains that the issuance of these securities was exempt
      from
      registration under the Securities Act, in reliance upon Regulation D promulgated
      thereunder as transactions by an issuer not involving a public
      offering.




In
      April
      2005, the Company issued to Mitchell Entertainment Company warrants to purchase
      an aggregate of 150,000 shares of the Company’s common stock in connection with
      a loan for $245,000 that Mitchell Entertainment Company made to the Company.
      The
      warrants expire on the later of five years from the date of issuance or the
      maturity date of the Mitchell Note and have an exercise price of $1.50 per
      share. The terms of the warrants are the same as those provided under the
      warrants issued simultaneously with the Mitchell Note. No underwriters or
      brokers were employed in the transaction. The securities were deemed restricted
      securities for the purposes of the Securities Act. The Company maintains that
      the issuance of these securities was exempt from registration under the
      Securities Act, in reliance upon Regulation D promulgated thereunder as
      transactions by an issuer not involving a public offering.




In
      May
      2005, the Company issued 11,667 shares of common stock to two accredited
      investors in exchange for services valued at $27,534 provided to the Company.
      No
      underwriters or brokers were employed in the transaction. The securities were
      deemed restricted securities for the purposes of the Securities Act. The Company
      maintains that the issuance of these securities was exempt from registration
      under the Securities Act, in reliance upon Regulation D promulgated thereunder
      as transactions by an issuer not involving a public offering.




In
      May
      2005, the Company issued convertible promissory notes to six accredited
      investors in the aggregate net principal amount of $275,000. The $275,000 of
      convertible promissory notes are due on the second anniversary of their issuance
      date and are convertible into shares of the Company’s common stock at the option
      of each holder at a conversion price of $3.00 per share. In connection with
      the
      issuance of the convertible notes, the Company issued to the holders warrants
      to
      purchase 91,667 shares of the Company’s common stock. The warrants have a two
      year term and an exercise price of $3.00 per share. No underwriters or brokers
      were employed in the transaction. The securities were deemed restricted
      securities for the purposes of the Securities Act. The Company maintains that
      the issuance of these securities was exempt from registration under the
      Securities Act, in reliance upon Regulation D promulgated thereunder as
      transactions by an issuer not involving a public offering.




24


In
      June
      2005, the Company issued 27,750 shares of common stock to two accredited
      investors in exchange for services valued at $1,970 provided to the Company.
      No
      underwriters or brokers were employed in the transaction. The securities were
      deemed restricted securities for the purposes of the Securities Act. The Company
      maintains that the issuance of these securities was exempt from registration
      under the Securities Act, in reliance upon Regulation D promulgated thereunder
      as transactions by an issuer not involving a public offering.




In
      June
      2005, the Company issued convertible promissory notes to an accredited investor
      in the aggregate net principal amount of $100,000. The $100,000 convertible
      promissory note is due on the second anniversary of its issuance date and is
      convertible into shares of the Company’s common stock at the option of each
      holder at a conversion price of $3.00 per share. In connection with the issuance
      of the convertible note, the Company issued to the holder warrants to purchase
      33,333 shares of the Company’s common stock. The warrants have a two year term
      and an exercise price of $3.00 per share. No underwriters or brokers were
      employed in the transaction. The securities were deemed restricted securities
      for the purposes of the Securities Act. The Company maintains that the issuance
      of these securities was exempt from registration under the Securities Act,
      in
      reliance upon Regulation D promulgated thereunder as transactions by an issuer
      not involving a public offering.




In
      June
      2005, the Company issued to two accredited investors warrants to purchase 50,000
      shares of the Company’s common stock in exchange for a loan in the amount of
      $150,000. The warrants have a two year term and an exercise price of $3.00
      per
      share. No underwriters or brokers were employed in the transaction. The
      securities were deemed restricted securities for the purposes of the Securities
      Act. The Company maintains that the issuance of these securities was exempt
      from
      registration under the Securities Act, in reliance upon Regulation D promulgated
      thereunder as transactions by an issuer not involving a public offering.




In
      July
      2005, the Company issued to an accredited investor warrants to purchase 250,000
      shares of the Company’s common stock in exchange for a loan in the amount of
      $400,000. The warrants have a five year term and an exercise price of $2.00
      per
      share. No underwriters or brokers were employed in the transaction. The
      securities were deemed restricted securities for the purposes of the Securities
      Act. The Company maintains that the issuance of these securities was exempt
      from
      registration under the Securities Act, in reliance upon Regulation D promulgated
      thereunder as transactions by an issuer not involving a public
      offering.




In
      July
      2005, the Company issued a convertible promissory note to an accredited investor
      in the aggregate net principal amount of $500,000. The $500,000 convertible
      promissory note is due on January 1, 2007 and is convertible into shares of
      the
      Company’s common stock at the option of the holder at a conversion price of
      $2.00 per share. In connection with the issuance of the convertible note, the
      Company issued to the holder warrants to purchase 400,000 shares of the
      Company’s common stock. The warrants have a two year term and an exercise price
      of $3.00 per share. No underwriters or brokers were employed in the transaction.
      The securities were deemed restricted securities for the purposes of the
      Securities Act. The Company maintains that the issuance of these securities
      was
      exempt from registration under the Securities Act, in reliance upon Regulation
      D
      promulgated thereunder as transactions by an issuer not involving a public
      offering.




In
      August
      2005, the Company issued to two accredited investors warrants to purchase
      400,000 shares of the Company’s common stock. The warrants have a five year term
      and an exercise price of $2.00 per share. No underwriters or brokers were
      employed in the transaction. The securities were deemed restricted securities
      for the purposes of the Securities Act. The Company maintains that the issuance
      of these securities was exempt from registration under the Securities Act,
      in
      reliance upon Regulation D promulgated thereunder as transactions by an issuer
      not involving a public offering.




In
      August
      2005, the Company issued to an accredited investor warrants to purchase 25,000
      shares of the Company’s common stock. The warrants have a two year term and an
      exercise price of $2.00 per share. No underwriters or brokers were employed
      in
      the transaction. The securities were deemed restricted securities for the
      purposes of the Securities Act. The Company maintains that the issuance of
      these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




25
 
  In
          August
          2005, the Company issued to an accredited investor warrants to purchase
          10,000
          shares of the Company’s common stock. The warrants have a two year term and an
          exercise price of $3.00 per share. No underwriters or brokers were employed
          in
          the transaction. The securities were deemed restricted securities for the
          purposes of the Securities Act. The Company maintains that the issuance
          of these
          securities was exempt from registration under the Securities Act, in reliance
          upon Regulation D promulgated thereunder as transactions by an issuer not
          involving a public offering.


In
      August
      2005, the Company issued a convertible promissory note to an accredited investor
      in the principal amount of $50,000. The $50,000 convertible promissory note
      is
      due on the second anniversary of its issuance date and is convertible into
      shares of the Company’s common stock at the option of the holder at a conversion
      price of $3.00 per share. In connection with the issuance of the convertible
      note, the Company issued to the holder warrants to purchase 16,667 shares of
      the
      Company’s common stock. The warrants have a two year term and an exercise price
      of $3.00 per share. No underwriters or brokers were employed in the transaction.
      The securities were deemed restricted securities for the purposes of the
      Securities Act. The Company maintains that the issuance of these securities
      was
      exempt from registration under the Securities Act, in reliance upon Regulation
      D
      promulgated thereunder as transactions by an issuer not involving a public
      offering.




In
      August
      2005, the Company issued a convertible promissory note to an accredited investor
      in the principal amount of $50,000. The $50,000 convertible promissory note
      is
      due on the second anniversary of its issuance date and is convertible into
      shares of the Company’s common stock at the option of the holder at a conversion
      price of $2.00 per share. In connection with the issuance of the convertible
      notes, the Company issued to the holder warrants to purchase 21,667 shares
      of
      the Company’s common stock. The warrants have a two year term and an exercise
      price of $2.00 per share. No underwriters or brokers were employed in the
      transaction. The securities were deemed restricted securities for the purposes
      of the Securities Act. The Company maintains that the issuance of these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




In
      August
      2005, the Company issued 27,696 shares of common stock to three accredited
      investors in exchange for services valued at $78,380 performed for the Company.
      No underwriters or brokers were employed in the transaction. The securities
      were
      deemed restricted securities for the purposes of the Securities Act. The Company
      maintains that the issuance of these securities was exempt from registration
      under the Securities Act, in reliance upon Regulation D promulgated thereunder
      as transactions by an issuer not involving a public offering.




In
      August
      2005, the Company issued 405,000 shares of common stock to an accredited
      investor in exchange for an adjustment to existing debt owed by the Company
      to
      the investor. No underwriters or brokers were employed in the transaction.
      The
      securities were deemed restricted securities for the purposes of the Securities
      Act. The Company maintains that the issuance of these securities was exempt
      from
      registration under the Securities Act, in reliance upon Regulation D promulgated
      thereunder as transactions by an issuer not involving a public
      offering.




In
      August
      2005, the Company issued 15,000 shares of common stock to two directors of
      the
      Company. No underwriters or brokers were employed in the transaction. The
      securities were deemed restricted securities for the purposes of the Securities
      Act. The Company maintains that the issuance of these securities was exempt
      from
      registration under the Securities Act, in reliance upon Regulation D promulgated
      thereunder as transactions by an issuer not involving a public
      offering.




In
      September 2005, the Company issued to an accredited investor warrants to
      purchase an aggregate of 550,000 shares of common stock in exchange for a loan
      in the amount of $500,000. Two of the warrants, one to purchase 100,000 shares
      of common stock and the other to purchase 200,000 shares of common stock, have
      a
      one year term and an exercise price of $2.00 and $3.00 per share, respectively.
      The other two warrants, one to purchase 100,000 shares of common stock and
      the
      other to purchase 150,000 shares of common stock, have a two year term and
      an
      exercise price of $4.00 and $5.00 per share, respectively. No underwriters
      or
      brokers were employed in the transaction. The securities were deemed restricted
      securities for the purposes of the Securities Act. The Company maintains that
      the issuance of these securities was exempt from registration under the
      Securities Act, in reliance upon Regulation D promulgated thereunder as
      transactions by an issuer not involving a public offering.




26


In
      September 2005, the Company issued to an accredited investor warrants to
      purchase 200,000 shares of common stock in exchange for a loan in the amount
      of
      $200,000. The warrants have a two year term and an exercise price of $2.00
      per
      share. No underwriters or brokers were employed in the transaction. The
      securities were deemed restricted securities for the purposes of the Securities
      Act. The Company maintains that the issuance of these securities was exempt
      from
      registration under the Securities Act, in reliance upon Regulation D promulgated
      thereunder as transactions by an issuer not involving a public
      offering.




In
      September 2005, the Company issued to Mitchell Entertainment Company warrants
      to
      purchase an aggregate of 150,000 shares of the Company’s common stock. The
      warrants expire on the later of five years from the date of issuance or the
      maturity date of the Mitchell Note and have an exercise price of $1.50 per
      share. The terms of the warrants are the same as those provided under the
      warrants issued simultaneously with the Mitchell Note. No underwriters or
      brokers were employed in the transaction. The securities were deemed restricted
      securities for the purposes of the Securities Act. The Company maintains that
      the issuance of these securities was exempt from registration under the
      Securities Act, in reliance upon Regulation D promulgated thereunder as
      transactions by an issuer not involving a public offering.




In
      September 2005, the Company issued to an accredited investor warrants to
      purchase 150,000 shares of the Company’s common stock in exchange for an advance
      to the Company of $13,000. The warrants have a five year term and an exercise
      price of $2.00 per share. No underwriters or brokers were employed in the
      transaction. The securities were deemed restricted securities for the purposes
      of the Securities Act. The Company maintains that the issuance of these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




In
      September 2005, the Company issued 23,000 shares of common stock to two
      accredited investors in exchange for services valued at $65,090. No underwriters
      or brokers were employed in the transaction. The securities were deemed
      restricted securities for the purposes of the Securities Act. The Company
      maintains that the issuance of these securities was exempt from registration
      under the Securities Act, in reliance upon Regulation D promulgated thereunder
      as transactions by an issuer not involving a public offering.




In
      October 2005, the Company issued a convertible promissory note to an accredited
      investor in the principal amount of $30,000. The $30,000 convertible promissory
      note is due on the second anniversary of its issuance date and is convertible
      into shares of the Company’s common stock at the option of the holder at a
      conversion price of $3.00 per share. In connection with the issuance of the
      convertible notes, the Company issued to the holder warrants to purchase 10,000
      shares of the Company’s common stock. The warrant has a two year term and an
      exercise price of $3.00 per share. No underwriters or brokers were employed
      in
      the transaction. The securities were deemed restricted securities for the
      purposes of the Securities Act. The Company maintains that the issuance of
      these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




In
      November 2005, the Company issued 25,000 shares of common stock to an employee
      as compensation. The securities were deemed restricted securities for the
      purposes of the Securities Act. The Company maintains that the issuance of
      these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




27


In
      November 2005, the Company issued 115,000 shares of common stock to three
      accredited investors in exchange for services valued at $155,250 performed
      for
      the Company. No underwriters or brokers were employed in the transaction. The
      securities were deemed restricted securities for the purposes of the Securities
      Act. The Company maintains that the issuance of these securities was exempt
      from
      registration under the Securities Act, in reliance upon Regulation D promulgated
      thereunder as transactions by an issuer not involving a public offering.




In
      November 2005, the Company issued 301,096 shares of common stock to four
      accredited investors as consideration relating to outstanding debt of the
      Company held by the investors. No underwriters or brokers were employed in
      the
      transaction. The securities were deemed restricted securities for the purposes
      of the Securities Act. The Company maintains that the issuance of these
      securities was exempt from registration under the Securities Act, in reliance
      upon Regulation D promulgated thereunder as transactions by an issuer not
      involving a public offering.




In
      December 2005, the Company issued warrants to purchase 30,000 shares of the
      Company’s common stock to an accredited investor. The warrant has a two year
      term and an exercise price of $2.00 per share. No underwriters or brokers were
      employed in the transaction. The securities were deemed restricted securities
      for the purposes of the Securities Act. The Company maintains that the issuance
      of these securities was exempt from registration under the Securities Act,
      in
      reliance upon Regulation D promulgated thereunder as transactions by an issuer
      not involving a public offering. In addition, in December 2005, the Company
      issued to two accredited investors warrants to purchase 500,000 shares of the
      Company’s common stock. The warrants have a five year term and an exercise price
      of $2.00 per share. No underwriters or brokers were employed in the transaction.
      The securities were deemed restricted securities for the purposes of the
      Securities Act. The Company maintains that the issuance of these securities
      was
      exempt from registration under the Securities Act, in reliance upon Regulation
      D
      promulgated thereunder as transactions by an issuer not involving a public
      offering.




**2006
      Annual Meeting of Stockholders**




Our
      2006
      Annual Meeting of Stockholders (the “2006 Annual Meeting”) will be held on July
      11, 2006. Pursuant to the proxy rules promulgated by the Securities and Exchange
      Commission under the Exchange Act, we notify our stockholders that stockholder
      proposals for our 2006 Annual Meeting must be submitted to us by May 22, 2006
      to
      receive consideration for inclusion in our proxy statement relating to the
      2006
      Annual Meeting. Any such proposal must also comply with the proxy rules under
      the Exchange Act, including Rule 14a-8.




In
      addition, stockholders are notified that the deadline for providing us timely
      notice of any shareholder proposal to be submitted outside of the Rule 14a-8
      process for consideration at our 2006 Annual Meeting is May 22, 2006. As to
      all
      such matters which we do not have notice on or prior to May 22, 2006,
      discretionary authority shall be granted to the persons designated in our proxy
      statement related to our 2006 Annual Meeting to vote on such
      matters.




Stockholder
      proposals must be in writing, include the information required by our bylaws
      and
      be sent either by personal delivery, nationally-recognized express mail or
      United States mail, postage prepaid to The Tube Media Corp., 1451 West Cypress
      Creek Road, Fort Lauderdale, Florida 33309, Attn: Corporate Secretary. All
      late
      or nonconforming proposals will be rejected. Our bylaws are available, at no
      cost, at the SEC’s website, www.sec.gov, as an exhibit to our Form 8-K filed on
      March 2, 2006 or upon the stockholder’s written request to the Corporate
      Secretary, Tube Media Corp., 1451 West Cypress Creek Road, Fort Lauderdale,
      Florida 33309.




See
      Item
      11. - Security Ownership of Certain Beneficial Owners and Management for
      information on our Equity Compensation Plan Information.




28


**Item
                6.**
              **MANAGEMENT'S
                  DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATIONS**


**Overview**




We
      were
      initially known as Lexington Barron Technologies, Inc. and were incorporated
      in
      the State of Colorado on August 23, 2000 for the purpose of addressing the
      specific needs of small businesses and start-up organizations by providing
      a
      broad range of consulting and advisory services, ranging from market research
      and analysis to business plan and systems development to financial consulting.
      In early 2004, our former management determined that their business model was
      not progressing and that we should either merge with or acquire an operating
      company with an operating history and assets.




Effective
      April 1, 2004, we completed a share exchange agreement with Pyramid Music Corp.,
      a Florida corporation (“PMC”). Under the terms of the Share Exchange Agreement,
      we acquired 100% of the outstanding common stock of PMC in exchange for
      16,922,464 shares of our common stock. On March 26, 2004, in anticipation of
      the
      completion of the share exchange, we changed our name to AGU Entertainment
      Corp.
      Upon completion of this transaction, the former shareholders of PMC owned,
      on a
      fully diluted basis, approximately eighty percent of the outstanding common
      stock of AGU Entertainment Corp. as of April 1, 2004, resulting in a change
      in
      control. The transaction was accounted for as a reverse merger and
      recapitalization whereby PMC, which became a wholly owned subsidiary of AGU
      Entertainment Corp., is deemed to be the acquirer for accounting purposes.
      In
      addition, we had no identifiable assets and liabilities as of April 1, 2004.
      As
      a result, PMC is deemed to be the surviving accounting and reporting entity,
      and
      all of the historical financial information presented in this Form 10-KSB,
      including the consolidated financial statements and this Management’s Discussion
      and Analysis or Plan of Operations, reflect the assets, liabilities, results
      of
      operations and cash flows of PMC and its subsidiaries, The Tube Music Network,
      Inc., a Florida corporation (“The Tube”), and Pyramid Records International,
      inc., a Florida corporation (“PRI”).




As
      a
      result of the share exchange, AGU became the parent company of PMC, which was
      a
      development stage company with an inception date of May 20, 2003 and two
      wholly-owned operating subsidiaries that are engaged in the following services:
      (i) the formation and operation of a television network, The Tube, which airs
      traditional music videos and live concerts of contemporary music material that
      is derived from archived video and music collection libraries, and (ii) a
      production, marketing and distribution record company, PRI. PMC was dissolved
      in
      July of 2004 and at that time The Tube and PRI became wholly-owned subsidiaries
      of AGU Entertainment Corp. In February 2005, PRI officially changed its name
      to
      AGU Music, Inc. (“AGU Music”).




In
      the
      third quarter of 2004, our board of directors decided to purchase and develop
      a
      facility that would serve as a comprehensive media entertainment recording
      and
      production facility that would encompass film, television and musical projects.
      On December 22, 2004, we closed on the purchase of a 162,000 square foot
      facility situated on 23 acres of land in Lauderdale Lakes, Florida (the
“Lauderdale Property”). The Company expected to generate revenue by offering
      technical and production services in the areas of film, television and music
      production, and through the rental of office and studio space. A limited amount
      of production activity did take place on the Lauderdale Property in 2004, and
      in
      February 2005 we formed a separate subsidiary, AGU Studios, Inc., a Florida
      Corporation, under which our studio development and production activities were
      to have taken place. During 2005, the board of directors and management
      determined that it was in the best interest of the stockholders to abandon
      the
      AGU Studios concept and use the proceeds from the sale of the Lauderdale
      Property to alleviate the Company’s liquidity issues, retire currently maturing
      debt, and provide additional funds for working capital. On September 1, 2005,
      we
      entered into an agreement for purchase and sale, dated as of August 29, 2005,
      with Tarragon South Development Corp. (“Tarragon”) pursuant to which the Company
      agreed to sell and Tarragon agreed to buy the Lauderdale Property. The proceeds
      from the sale of the property, which took place on December 28, 2005, were
      used
      to pay debt, provide working capital and provide a positive effect on our
      ability to obtain favorable financing for future growth. Proceeds from the
      sale
      totaled approximately $15 million, of which $10.25 million was used to repay
      the
      convertible promissory note payable to Mitchell Entertainment Company issued
      on
      December 22, 2004, the convertible promissory note payable to Elizabeth Buntrock
      issued on December 22, 2004, the promissory note payable to Elizabeth Buntrock
      issued on October 1, 2005 and the balance was used for working capital. As
      a
      result, our attention is on the growth of The Tube and particularly expanding
      the reach of The Tube into additional U.S. households and major markets
      throughout the United States.




29


The
      Tube
      is a 24-hour per day broadcast digital television network that will deliver
      high
      quality music video, audio, pay-per-view options and commerce to digital viewers
      nationally. Its national launch expected to take place in the fourth quarter
      of
      2006. The Tube is currently available in approximately 2.9 million households
      in
      various parts of the United States.




In
      the
      late 1990’s, broadcasters throughout the country were granted portions of the
      airwaves at no cost with the understanding that they would provide free digital
      signals as part of the U.S. government’s desire for high definition television.
      However, due to improvements in digital signal compression, the bandwidth
      required to broadcast digital television was substantially reduced, leaving
      broadcasters with excess bandwidth to use at their discretion. As a result,
      there are currently a number of media companies that have the ability to offer
      a
      digital quality picture over the air directly to consumers and indirectly
      through the cable and satellite operators’ digital box using surplus bandwidth
      from local broadcasters. These media outlets can offer additional channels
      to
      broadcast local news, sports, weather or other specialty services like The
      Tube.




AGU
      Music
      will produce both studio albums and DVD concerts. It entered into several
      agreements for distribution and released three albums to the public in 2004.
      Our
      ability to produce new albums and DVD concerts in 2006 will be dependent on
      the
      amount of working capital available to us (see Liquidity and Capital Resources)
      for the required marketing, promotional and other operating expenses necessary
      to produce recorded music projects. We have already cancelled plans for one
      significant music project due to a lack of available working
      capital.




On
      March
      6, 2006, The Tube entered into a charter affiliation agreement with Tribune
      Broadcasting Company (“Tribune”). The charter affiliation agreement provides
      Tribune the exclusive right and obligation to transmit The Tube’s music network
      via broadcast television from Tribune’s existing and acquired stations in 22 new
      markets specified in the charter affiliation agreement. On March 22, 2006,
      The
      Tube entered into a charter affiliation agreement with Sinclair Television
      Group, Inc. (“Sinclair”). The charter affiliation agreement provides Sinclair
      the exclusive right and obligation to transmit The Tube’s music network from
      Sinclair’s existing and acquired stations in 36 new markets specified in the
      charter affiliation agreement. These charter affiliation agreements provide
      the
      terms and conditions of broadcasting, as well as certain guaranteed obligations
      of each of the parties. The Tube also has a charter affiliation agreement with
      Raycom Media Inc. ("Raycom"), wherein Raycom broadcasts The Tube music network
      on 13 stations in their markets. The combined agreements will put The Tube
      music
      network in 9 of the top 10 and 71 of the top 100 market areas in the United
      States by the end of 2006.




The
      Company's business plan has The Tube delivering free-to-the-consumer, advertiser
      supported, music video programming 24 hours per day, seven days a week. The
      Company anticipates that it will be in approximately 23 million homes by the
      end
      of 2006. The Tube will be the only all-music multicast network on television
      and
      will not air any game shows, awards shows, reality shows or news shows. In
      addition to revenue generated from national advertising, it is intended that
      The
      Tube will also have a local component offering radio tie-ins, local marketing,
      promotions and local advertising. In addition, The Tube will feature a direct
      e-commerce component that will enable the audience to purchase the music they
      see and hear immediately by telephone or online.




The
      Company anticipates that The Tube will be the first music network to be
      distributed using the digital, over-the-air signal of broadcast television
      stations and will achieve its national distribution targets by creating revenue
      opportunities for broadcasters that carry The Tube. The Company expects to
      launch The Tube beginning in the second quarter of 2006, and a much broader
      launch in the third quarter of 2006, with a national media campaign utilizing
      marketing, promotions and public relations to reach every relevant audience
      for
      the network. The campaign will be designed to heighten awareness of the network,
      stimulate demand for it across the country and cultivate its image as the only
      network that delivers quality music and entertainment content.




30


The
      Company believes that it will be able to generate advertising and e-commerce
      revenues from The Tube music network, however, its revenue model is new and
      evolving, and it cannot be certain that it will be successful. The potential
      profitability of The Tube’s business model is unproven and there can be no
      assurance that it can achieve profitable operations. The Company’s ability to
      generate revenues depends, among other things, on its ability to launch its
      television network and sustain advertising and e-commerce revenues. See "Risk
      Factors - Our business revenue generation model is unproven and could
      fail.”




**Restatement
      of 2005 Financial Statements**





The
      Company has restated its previously issued, December 31, 2005 audited
      consolidated financial statements to reflect a liability in connection with
      a
      convertible promissory note and a warrant that contains an embedded derivative
      as of December 31, 2005.




The
      Company concluded that the Mitchell Note contained an embedded derivative due
      to
      the registration rights and liquidated damages provisions contained in the
      surviving provision of the note which provides Mitchell the right to repurchase
      the shares of the Company’s common stock into which the note was convertible for
      a period of one year. In addition there is a requirement that the shares
      underlying the note and a warrant issued to Mitchell, be registered by June
      30,
      2005 (which requirement the Company did not satisfy within the required
      timeframe) in order to avoid liquidated damages of .5% per month. The Mitchell
      Note also included a provision, which provides that in the event the Company’s
      EBITDA for the calendar quarter ending September 30, 2006 did not equal at
      least
      $5,000,000, the holder of the Mitchell Note has the right to extend the option
      to purchase shares of Common Stock to March 31, 2007. If the Maturity Date
      is so
      extended and the Company’s EBITDA does not equal $5,000,000 for the calendar
      quarter ending December 31, 2006 then Mitchell has the right to extend the
      option to purchase shares of Common Stock for an additional calendar quarter.
      The holder of the Mitchell Note has the right to extend the option to purchase
      shares of Common Stock for an indefinite number of additional calendar quarters
      until the Company’s EBITDA equals $5,000,000 for the calendar quarter which
      immediately preceding the calendar quarter ending on the then applicable
      Maturity Date.




**Results
      of Operations for the Year Ended December 31, 2005 Compared to the Year Ended
      December 31, 2004**





Revenues
      for the year ended December 31, 2005 were $361,000 compared with $907,000 for
      the same period in 2004. Revenues in both periods relate to AGU Music and the
      decrease in revenues is a result of the decline in records released during
      2005
      compared with 2004, primarily due to the Company’s liquidity issues. Gross
      profit for AGU Music was $330,000 in 2005 compared with $799,000 in
      2004.




Operating
      expenses for the year ended December 31, 2005 were $8.6 million compared with
      $6.2 million for the same period in 2004. Operating expenses in 2005 related
      primarily to development and production of The Tube, and included general and
      administrative costs of $6.4 million, which includes liquidated
      damages of $90,000 due
      to the
      requirement to register the shares subject to warrants issued to Mitchell by
      June 30, 2005,which requirement the Company did not satisfy within the required
      time frame, legal
      expenses of $1,039,000, and auditing expenses of $128,000. Operating expenses
      in
      2004 related primarily to development and production of The Tube, and included
      general and administrative costs of $4.1 million, legal expenses of $503,000
      and
      auditing expenses of $80,000. Promotion and advertising expense in 2005 was
      $300,000 compared with $1.3 million in 2004, a decrease of $1 million, which
      is
      principally related to the decline in records released during 2005 compared
      with
      2004.




Interest
      expense for the year ended December 31, 2005 was $6.6 million, which included
      $3.4 million related to amortization of debt discounts, compared with interest
      expense of $304,000, which included $123,000 related to amortization of debt
      discounts, in the same period in 2004. This increase was primarily due to the
      increase in the Company’s notes payable.




Embedded
      derivative expenses in connection with the perpetual option to acquire shares
      on
      terms provided in the Mitchell Note of $5 million and the embedded derivative
      in
      the Mitchell Warrant of $2.5 million, resulted in total embedded derivative
      expense of $7.5 million. There were no embedded derivative expenses in
      2004.





31


Settlement
      expenses in 2005 were $1.3 million and relate to the settlement of a legal
      dispute and a settlement with two co founders of the Company, also relating
      to a
      dispute. There were no settlement expenses in 2004




Discontinued
      operations for the year ended December 31, 2005, which is principally related
      to
      the sale of the Lauderdale Property, included a loss from discontinued
      operations of $3.4 million and a gain from disposal of discontinued operations
      of $5.2 million. During 2004, the loss from the discontinued operations was
      $219,000 and was also principally related to the Lauderdale
      Property.




We
      did
      not record a tax benefit during this period as we determined that it was more
      likely than not that we would not be able to generate sufficient taxable income
      to use any net deferred tax assets. As such, we recorded a valuation allowance
      equal to the net deferred tax asset that existed at December 31, 2004 and
      increased our valuation allowance so that no net tax benefit was recorded in
      2005.





Our
      accumulated deficit as of December 31, 2005 was $28.5 million of which $21.8
      million was attributable to fiscal 2005.





We
      have
      entered into several charter affiliate agreements with television broadcasters,
      which we believe will allow The Tube to be seen in approximately 23 million
      homes by the end of 2006. While we expect this market penetration to generate
      a
      substantial increase in marketing, promotion and other expenses at The Tube,
      we
      also expect that our revenues will increase sufficiently enough to cover these
      increases. Thus, our results of operations in fiscal 2005 are not indicative
      of
      our projected results of operations in fiscal 2006 and beyond.




**Liquidity
      and Capital Resources**





The
      growth and development of our business will require a significant amount of
      additional working capital. We currently have limited financial resources and
      based on our current operating plan, we will need to raise additional capital
      in
      order to continue as a going concern. We currently do not have adequate cash
      to
      meet our short or long term objectives. In the event additional capital is
      raised, it may have a dilutive effect on our existing stockholders.




As
      a
      company that has recently emerged from the development phase with a limited
      operating history, we are subject to all the substantial risks inherent in
      the
      development of a new business enterprise within an extremely competitive
      industry. We cannot assure you that the business will continue as a going
      concern or ever achieve profitability. Due to the absence of an operating
      history and the emerging nature of the markets in which we compete, we
      anticipate operating losses until such time as we can successfully implement
      our
      business strategy, which includes the national launch of The Tube. In the year
      ended December 31, 2005 and 2004, we had revenues of $361,000 and $907,000,
      respectively, and incurred a net loss of approximately $21.8 million and $5.9
      million, respectively. Our financial condition and operating results,
      specifically a working capital deficiency of approximately $11.9 million, an
      accumulated deficit of approximately $28.5 million, and net cash used in
      operations of approximately $5.5 million during 2005, raise substantial doubt
      about our ability to continue to operate as a going concern. Because of losses
      incurred by us to date and our general financial condition, our independent
      registered public accounting firm inserted a going concern qualification in
      their audit report for the most recent fiscal year that raises substantial
      doubt
      about our ability to continue as a going concern. See “Risk Factors - Because of
      losses incurred by us to date and our general financial condition, we received
      a
      going concern qualification in the audit report from our auditors for the most
      recent fiscal year that raises substantial doubt about our ability to continue
      to operate as a going concern.”




Since
      May
      20, 2003, our inception, we have financed our operations through numerous debt
      and equity issuances. In addition to the convertible notes discussed below,
      during 2003, 2004 and 2005, we issued an aggregate principal amount of
      approximately $4.8 million of promissory notes, convertible notes or debentures,
      approximately $3.3 million of which plus accrued interest, were subsequently
      converted into 1,173,540 shares of common stock of the Company and $75,000
      was
      repaid in 2005. Approximately $1.3 million of the remaining convertible
      promissory notes mature in the fourth quarter of 2006 and a $150,000 promissory
      note matured on June 30, 2005. The June 30, 2005 note remains unpaid as of
      December 31, 2005. On April 12, 2006 the due date of this note was extended
      until such time the Company raises an additional $2 million of equity or equity
      related securities in addition to the $2.45 million raised on April 21, 2006.
      Interest on the convertible and promissory notes are payable quarterly at a
      rate
      of 10%, other than the convertible notes issued on April 21, 2006. As of
      December 31, 2005, all accrued interest on the notes has been paid. While these
      notes are convertible into shares of our common stock at a conversion price
      between $2.00 and $3.00 per share, there can be no assurances that these notes
      will be converted prior to their becoming due. We currently do not have the
      financial resources to repay these promissory notes without additional
      financing.




32


In
      June
      of 2004, we entered into an agreement with Radical Media Inc. (“Radical”)
      whereby Radical will design and develop network logos, graphic templates, and
      on-air interstitials for The Tube. In accordance with the terms of the
      agreement, as amended, we were required to pay $200,000, all of which has been
      paid, and were required to issue 150,000 shares of our common stock, all of
      which were issued.




On
      September 15, 2004, we issued a $500,000 convertible promissory note payable
      to
      Galt Financial Corporation (the “Galt Note”). The Galt Note pays interest
      quarterly at an annual rate of 10%, and matures on September 13, 2006. As of
      December 31, 2005, the accrued interest balance on the note amounts to $25,205.
      In accordance with the terms of the Galt Note, the lender may convert all or
      any
      portion of the outstanding principal into common stock of the Company at a
      conversion price of $1.00 per share. In connection with this transaction, we
      issued warrants to the lender with a five-year term to purchase a total of
      500,000 shares of the Company’s common stock at a price of $1.00 per share,
      subject to certain adjustments. We also issued 500,000 shares of our common
      stock to a principal of the lender as part of this transaction. On April 27,
      2006, we paid $37,534 in interest on the Galt Note.




On
      May 5,
      2005, the Company entered into a settlement and mutual release agreement,
      effective as of April 15, 2005 (the “Initial Settlement Agreement”), with Ned
      Siegel, Neil Strum and Strum Brothers Investment, LLC (the "Settlement
      Parties"). The Company guaranteed the repayment of the notes AGU Music assumed
      on March 3, 2004 to repay $350,000 to Ned Siegel and Neil Strum (the “Notes”) in
      connection with the assumption of a distribution agreement. Pursuant to the
      Initial Settlement Agreement, the Notes were cancelled and replaced with new
      notes having a principal beginning balance of $345,806 (the "New Notes"). The
      Company did not make any of the required payments under the New Notes and/or
      Initial Settlement Agreement.




On
      February 1, 2006, the Company entered into a settlement and mutual release
      agreement, effective January 16, 2006 (the “Final Settlement Agreement”), with
      the Settlement Parties. Pursuant to the terms of the Final Settlement Agreement,
      the Company (i) was required to pay the Settlement Parties the sum of $175,000
      upon the execution of the Final Settlement Agreement and (ii) was required
      to
      pay the Settlement Parties the sum of $125,000 on a date no later than February
      15, 2006. On February 15, 2006, the Company made all of the required payments
      under the Final Settlement Agreement.





At
      December 31, 2005, payments required under our known contractual obligations
      over the next three years are as follows:


**2006**
              
              **2007**
              
              **2008**
              
              **Total**Principal
                  on notes payable
              
              $
              3,073,828
              
              $
              1,445,000
              
              $
              —
              
              $
              4,518,828Operating
                  leases
              
              
              14,190
              
              
              —
              
              
              —
              
              
              14,190Capital
                  leases
              
              
              11,278
              
              
              1,636
              
              
              —
              
              
              12,914Equipment
                  note
              
              
              12,986
              
              
              12,986
              
              
              10,696
              
              
              36,668Total
                  contractual obligations
              
              $
              3,112,282
              
              $
              1,459,622
              
              $
              10,696
              
              $
              4,582,600


33


In
      the
      fourth quarter of 2004, we purchased the Lauderdale Property and sold the
      Lauderdale Property on December 28, 2005. The proceeds from the sale of the
      Lauderdale Property were used to pay debt and provide working capital and
      provide a positive effect on our ability to obtain favorable financing for
      future growth. Proceeds from the sale totaled approximately $15 million, of
      which $10.25 million was used to repay (i) the convertible promissory note
      payable to Mitchell Entertainment Company issued on December 22, 2004, (ii)
      the
      convertible promissory note payable to Elizabeth Buntrock issued on December
      22,
      2004, and (iii) the promissory note payable to Elizabeth Buntrock issued on
      October 1, 2005 and the balance was used for working capital.





On
      March
      31, 2006, we entered into agreements with two individuals (the “Lenders”),
      pursuant to which the Lenders agreed to loan an aggregate amount of $800,000
      (the “Bridge Loan”) to us. In connection with the Bridge Loan, the Company
      issued two promissory Bridge Notes (the “Bridge Notes”), in the aggregate
      principal amount of $800,000, to the Lenders, both of whom are accredited
      investors. Pursuant to the terms of the Bridge Notes, the Bridge Loan will
      accrue interest at the rate of four percent per year, and the principal and
      interest on the Bridge Notes will be due on March 31, 2007. The payments due
      under the Bridge Notes will be accelerated as follows: (i) in the event the
      Company closes a round of financing of not less than $2.0 million and not more
      than $2.49 million prior to March 31, 2007, the Company will pay each Lender
      an
      amount equal to $320,000; and (ii) in the event the Company closes a round
      of
      financing equal to or greater than $2.5 million prior to March 31, 2007, the
      Company will pay each Lender the total amount due under each Note. Upon the
      occurrence of an event of default under the Bridge Notes, (i) the entire unpaid
      balance of the principal and any interest on the Bridge Notes will bear interest
      at the rate of 12% per year; and (ii) the holders of the Bridge Notes may,
      without notice and at their option, accelerate the maturity of the Bridge Notes
      and cause the entire unpaid balance and any interest on the Bridge Notes to
      be
      immediately due and payable. An event of default under the Bridge Notes occurs
      upon (i) the Company’s failure to timely pay any amount due under the Bridge
      Notes; (ii) the institution of any bankruptcy, reorganization, insolvency,
      liquidation or other proceeding for relief by or against the Company, and if
      instituted against the Company, the Company consents to any such proceeding
      or
      such proceeding is not dismissed within 90 calendar days; and (iii) any breach
      by the Company of the terms of the Bridge Notes that remains uncured for more
      than five days after receipt of written notice of such breach. The Bridge Loan
      was repaid with the proceeds of the sale of securities on April 21, 2006 as
      described below.





On
      April
      21, 2006, we completed a private placement (the “Private Placement”) of $2.45
      million of securities. In connection with the Private Placement, the Company
      and
      the Investors entered into a purchase agreement (the “Purchase Agreement”) dated
      as of April 21, 2006. Pursuant to the terms of the Purchase Agreement, the
      Company sold 7% secured convertible notes in the aggregate principal amount
      of
      $2.45 million (the “7% Notes”) and issued common stock purchase warrants to
      purchase an aggregate of 1,088,889 shares of the Common stock at an exercise
      price of $2.25 per share to the Investors. The proceeds of this offering will
      be
      used to repay debt and provide additional working capital that will be necessary
      to help launch The Tube during the second and third quarters of 2006. Although,
      there can be no assurances that we will be successful in raising the additional
      capital to implement our business plan.





Pursuant
      to the terms of the 7% Notes, the Company is required to make equal monthly
      principal payments of $136,111 commencing on November 21, 2006 and continuing,
      on the first business day of each month, until the aggregate principal amount
      has been paid in full. Interest on the 7% Notes accrues quarterly and is payable
      on the last day of March, June, September and December of each year, commencing
      on September 30, 2006. At the option of the Company and subject to certain
      conditions, principal and interest payments due under the 7% Notes may be paid
      in cash or shares of common stock.




On
      April
      27, 2006, we repaid $182,818 on promissory notes payable to one of our
      stockholders and the principal of Galt Financial Services, plus $56,752 in
      interest on such notes. In addition, we paid $37,534 in interest payable on
      the
      Galt Note.




Cash
      used
      in operations for the year ended December 31, 2005 was $5.5 million, which
      was
      primarily the result of our accumulated deficit of $28.5 million as of December
      31, 2005, partially offset by increases to accounts payable and accrued
      expenses, non cash expenses and the issuance of common stock in exchange for
      services. We expect to continue to generate negative cash flows from operations
      until such time as we can complete a substantial debt or equity offering and
      launch The Tube nationally, which we currently expect will be the third quarter
      of 2006. There can be no assurances that we will be successful in launching
      The
      Tube in this timeframe.





34


Cash
      provided by investing activities for the year ended December 31, 2005 amounted
      to $14.4 million and is attributable primarily to the sale of the Lauderdale
      Property. Cash used in investing activities from inception through December
      31,
      2004 amounted to $1.5 million consisting primarily of $1.1 million for the
      purchase of, and capital improvements to, the Lauderdale Property and $150,000
      spent under the agreement with Radical. Capital expenditures in 2006 will depend
      largely upon our ability to raise additional capital; however, our business
      plan
      currently assumes approximately $2.5 million of capital expenditures over the
      balance of fiscal 2006.





We
      received cash used in financing activities during 2005 in the amount of $9.3
      million which was mainly comprised of the aggregate principal payment amount
      of
      $10.2 million of convertible notes issued as described above.





During
      2004 and 2005, we did not remit our payroll taxes timely due to liquidity
      issues. We have recorded a liability for the 2004 unpaid payroll taxes in the
      amount of $45,147 and the expected interest and penalties for 2004 in the amount
      of $26,920. In 2005 all of the payroll taxes have been paid with the exception
      of $157,936. We have recorded this amount as a liability in 2005, and an
      estimate of the expected interest and penalties in respect of the late taxes
      for
      2005, in the amount of $123,469. We believe the amounts reserved are adequate
      in
      all material respects.





The
      Company paid its payroll taxes for the first quarter of 2006 late, and will
      similarly record an
      estimate of the expected interest and penalties in respect of the late taxes
      for
      2006.





We
      have
      experienced liquidity issues since our inception due primarily to our limited
      ability, to date, to raise adequate capital on acceptable terms. We have
      historically relied upon the issuance of promissory notes that are convertible
      into shares of our common stock to fund our operations and currently anticipate
      that we will need to continue to issue promissory Notes to fund our operations
      and repay our outstanding debt for the foreseeable future .
      At
      December 31, 2005, we had $ 4.5 million
      of promissory notes and convertible notes outstanding. If we are unable to
      issue
      additional promissory notes or secure other forms of financing, we will have
      to
      evaluate alternative actions to reduce our operating expenses and conserve
      cash.




The
      Company's financial condition and operating results, specifically a working
      capital deficit of approximately $4.3 million, an accumulated deficit of
      approximately $28.5 million, a net loss in fiscal year 2005 of approximately
      $21.8 million and net cash used in operations of approximately $5.5 million,
      raise substantial doubt about its ability to continue as a going
      concern . See
“Risk
      Factors - Because of losses incurred by us to date and our general financial
      condition, we received a going concern qualification in the audit report from
      our Independent
      Registered Public Accounting Firm for the
      most recent fiscal year that raises substantial doubt about our ability to
      continue to operate as a going concern.”




As
      a
      result of our liquidity issues, we have experienced delays in the repayment
      of
      certain promissory notes upon maturity and payments to vendors and others.
      However, certain holders of our promissory notes agreed in 2005 to extend the
      due dates on their promissory notes. If in the future, the holders of our
      promissory notes may demand repayment of principal and accrued interest instead
      of electing to extend the due date and if we are unable to repay our debt when
      due because of our liquidity issues, we may be forced to refinance these notes
      on terms less favorable to us than the existing notes, seek protection under
      the
      federal bankruptcy laws or be forced into an involuntary bankruptcy filing.
      See
“Risk Factors - If we continue to experience liquidity issues and are unable
      to
      generate revenue, we may be unable to repay our outstanding debt when due and
      may be forced to seek protection under the federal bankruptcy
      laws.”




On
      April
      21, 2006, the Company completed a private placement of 7% secured convertible
      notes in the aggregate amount of $2.45 million, convertible into shares of
      common stock at $2.25 per share and issued  warrants to purchase 1,088,889
      shares of common stock  at $2.25 per share. The proceeds, part of which was
      used to repay the Bridge Loan entered into on March 31, 2006, are being used
      for
      working capital and capital expenditures in connection with the national launch
      of The Tube beginning in the second and third quartet of 2006. The Company
      will,
      however, need to raise substantial additional capital to continue the national
      launch of The Tube beyond the third quarter of 2006 and provide substantial
      working capital for the development of national advertising relationships,
      increases in operating costs resulting from additional staff and office space
      until such time as the Company begins to generate revenues sufficient to fund
      ongoing operations. The Company believes that in the aggregate, it will need
      as
      much as approximately $15 million to $20 million to complete the launch of
      The
      Tube, repay debt obligations, provide capital expenditures for additional
      equipment, payment obligations under charter affiliation agreements, office
      space and systems for managing the business, and cover other operating costs
      until advertising and e-commerce revenues begin to offset our operating costs.
      There can be no assurances that the Company will be successful in raising the
      required capital to complete this portion of its business plan.





35


**Critical
      Accounting Policies and Estimates**





We
      have
      identified the policies outlined below as critical to our business operations
      and an understanding of our results of operations. The listing is not intended
      to be a comprehensive list of all of our accounting policies. In many cases,
      the
      accounting treatment of a particular transaction is specifically dictated by
      accounting principles generally accepted in the United States, with less need
      for management's judgment in their application. The impact and associated risks
      related to these policies on our business operations are discussed throughout
      this “Management's Discussion and Analysis or Plan of Operations” where such
      policies affect our reported and expected financial results. For a detailed
      discussion on the application of these and other accounting policies, see Note
      1
      in the Notes to the Consolidated Financial Statements in Item 7. Note that
      our
      preparation of this Form 10-KSB requires us to make estimates and assumptions
      that affect the reported amount of assets and liabilities, disclosure of
      contingent assets and liabilities at the date of our financial statements,
      and
      the reported amounts of revenue and expenses during the reporting period. There
      can be no assurance that actual results will not differ from those
      estimates.





*Revenue
      Recognition and Accounts Receivable*





With
      respect to the sales of recorded music, we recognize revenue when products
      are
      shipped to retail music outlets. Revenue is recorded net of distribution fees
      and an allowance for anticipated returns in accordance with the terms of our
      distribution agreements and established industry practice. Other revenues are
      recognized as services are provided to the customer and collectibility is
      reasonably assured. AGU Music records accounts receivable based on amounts
      due
      from our distributors of recorded music in accordance with the net revenue
      earned, less production, marketing and promotional expenses incurred by the
      distributors on AGU Music’s behalf. At December 31, 2005, we had an allowance
      for doubtful accounts in the amount of $195,703.





*Intangibles*





We
      continually evaluate whether events and changes in circumstances warrant revised
      estimates of useful lives or recognition of an impairment loss of our
      intangibles, which as of December 31, 2005, consist mainly of network logos,
      graphic templates and on-air interstitials developed for The Tube, and
      contractual rights under a recorded music distribution agreement. The conditions
      that would trigger an impairment assessment of our intangible assets include
      a
      significant, sustained negative trend in our operating results or cash flows,
      a
      decrease in demand for our products, a change in the competitive environment
      and
      other industry and economic factors. We measure impairment of our intangibles
      utilizing the undiscounted cash flow method. If the estimated undiscounted
      cash
      flows do not exceed the value of the related intangible, we then compare the
      carrying amount of the asset to its fair value based on estimated discounted
      cash flows. If the unamortized balance of the intangible asset exceeds its
      fair
      value as measured by the discounted cash flows, an impairment charge is recorded
      to write the value of the intangible asset down to its fair value. We did not
      record any impairment for intangibles for the years ended December 31, 2005
      and
      2004.





36


*Accounting
      for Income Taxes*





As
      part
      of the process of preparing our consolidated financial statements, we are
      required to estimate our income taxes. This process involves estimating our
      actual current tax exposure together with assessing temporary differences
      resulting from differing treatment of items for tax and accounting purposes.
      These differences result in deferred tax assets and liabilities, which are
      included within our consolidated balance sheet. We must then assess the
      likelihood that our deferred tax assets will be recovered from future taxable
      income and to the extent we believe that recovery is not likely, we must
      establish a valuation allowance. To the extent we establish a valuation
      allowance or increase this allowance in a period, we must include an expense
      within the tax provision in the consolidated statement of operations.





Significant
      management judgment is required in determining our provision for income taxes,
      our deferred tax assets and liabilities and any valuation allowance recorded
      against our net deferred tax assets. We have recorded a valuation allowance
      of
      $6,189,960 as of December 31, 2005, due to uncertainties related to our ability
      to utilize some of our deferred tax assets, primarily consisting of certain
      net
      operating losses carried forward before they expire and certain accrued
      expenses, which are deferred for income tax purposes until paid. The valuation
      allowance is based on our estimates of taxable income and the period over which
      our deferred tax assets will be recoverable. The net deferred tax asset as
      of
      December 31, 2005 was $0, net of the valuation allowance.





*Issuances
      of Common Stock*





Because
      of the significant liquidity issues we have faced since our inception, we have
      been required to issue common stock to third party vendors and others in order
      to pay for services rendered. Such issuances are recorded as an expense in
      the
      period in which the services are performed. At the time such services were
      performed there was no trading market for our common stock and the value of
      our
      stock was not readily determinable. During 2005, we issued an aggregate of
      300,475 shares of common stock to third parties in exchange for services
      performed. These services were valued at $719,146 for fiscal year ended December
      31, 2005. We issued 646,106 shares of common stock to employees and directors
      in
      2005, and recorded compensation expense of $1,519,123. We issued 200,000 shares
      of common stock pursuant to a charter affiliation agreement. The charter
      affiliation agreement provides distribution services for five years, which
      were
      valued at $472,000 for fiscal year ended December 31, 2005. We issued 135,083
      shares of common stock to settle certain liabilities of $370,713. We issued
      500,000 shares of common stock to two co-founders of the Company as settlement
      of a dispute. We also issued 397,800 shares of common stock in connection with
      certain equipment purchases. These purchases were valued at $799,540 for fiscal
      year ended December 31, 2005. Also, we issued 60,000 shares in connection with
      amending the terms of certain notes payable and recorded $138,006 in interest
      expense and 4,671 shares of common stock for payment of interest expense in
      lieu
      of cash and recorded $9,178 in interest expense. The amount of expense recorded
      in connection with these issuances of common stock required significant
      management judgment. Factors considered by management in determining these
      valuations included management’s assessment as to the value of the services
      performed and assets acquired.





37


**Recent
      Accounting Pronouncement**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards No. 123, *Share-Based
      Payments (revised 2004)* ,
      (“SFAS
      No. 123R”). This statement eliminates the option to apply the intrinsic value
      measurement provisions of Accounting Principles Board (“APB”) Opinion No. 25,
      Accounting for Stock Issued to Employees, to stock based compensation issued
      to
      employees. The Statement requires companies to measure the cost of employee
      services received in exchange for an award of equity instruments based on the
      fair value of the award at the date of grant, and recognize that cost over
      the
      period during which an employee is required to provide services in exchange
      for
      the award. SFAS No. 123R is effective as of the first annual reporting period
      that begins after December 15, 2005. As of January 1, 2005, SFAS No. 123R
      applies to the Company. Adoption of SFAS No. 123R will not have a material
      effect on the Company’s results of operations.




38




**Item
                7.**
              **FINANCIAL
                  STATEMENTS**




**Index
      to Consolidated Financial Statements**





PageReport
                of Independent Registered Public Accounting Firm
            
            
            40Consolidated
                Balance Sheets as of December 31, 2005 and 2004
            
            
            41Consolidated
                Statements of Operations for the years ended December 31, 2005 and
                2004
            
            
            42Consolidated
                Statement of Changes in Shareholders' Equity (Deficiency) for the
                years
                ended December 31, 2005 and 2004
            
            
            43Consolidated
                Statements of Cash Flows for the year ended December 31, 2005 and
                2004
            
            
            44Notes
                to Consolidated Financial Statements as of December 31, 2005 and
                2004
            
            
            45




39


**Report
      of Independent Registered Public Accounting Firm**




The
      Board
      of Directors and shareholders


The
      Tube
      Media Corp.


(formerly
      AGU Entertainment Corp.):




We
      have
      audited the accompanying consolidated balance sheets of The Tube Media Corp.
      (formerly known as AGU Entertainment Corp.) and Subsidiaries (the "Company"),
      as
      of December 31, 2005 and 2004 and the related consolidated statements of
      operations, changes in shareholders' equity (deficiency) and cash flows for
      the
      years ended December 31, 2005 and 2004. These consolidated financial statements
      are the responsibility of the Company's management. Our responsibility is to
      express an opinion on these consolidated financial statements based on our
      audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatements. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly
      in all material respects, the financial position of The TUBE Media Corp. and
      Subsidiaries as of December 31, 2005 and 2004, and the results of their
      operations and their cash flows for the years ended December 31, 2005 and 2004,
      in conformity with accounting principles generally accepted in the United States
      of America.





As
      more
      fully described in Note 1 to the consolidated financial statements, errors
      were
      discovered by management during 2006 relating to the accounting for Embedded
      Derivatives as of and for the year ended December 31, 2005. Accordingly, the
      consolidated balance sheet as of December 31, 2005 and the Statement of
      Operations, Shareholders Equity (Deficiency) and Cash Flows for the year then
      ended have been restated to reflect corrections to previously reported
      amounts.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 12 to the
      consolidated financial statements, the Company's working capital deficiency
      of
      approximately $11.9 million, shareholder’s deficiency of approximately $10.7
      million, net loss from operations of approximately $21.8 million and net cash
      used in operations of approximately $5.5 million raise substantial doubt about
      its ability to continue as a going concern. Management's plan in regards to
      these matters is also described in Note 12. These financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.




/s/
      Weinberg & Company, P.A.




Boca
      Raton, Florida


May
      1,
      2006, except for Notes 1 (Restatement), 9, 12 and 14, as to which the date
      is
      December 1, 2006


40


**THE
      TUBE MEDIA CORP.**


**(Formerly
      AGU Entertainment Corp.)**


**AND
      SUBSIDIARIES**


**Consolidated
      Balance Sheets**


**As
      of December 31, 2005 and 2004**


**2005**
              
              **2004****(Restated)****Assets**Current
                  Assets:Cash
              
              $
              346,998
              
              $
              771,533Accounts
                  receivable, net of allowance for doubtfulaccounts
                  of $195,703 and $ 0, respectively
              
              
              408,822
              
              
              507,482Prepaid
                  expenses
              
              
              367,264
              
              
              225,037Total
                  current assets
              
              
              1,123,084
              
              
              1,504,052Property
                  and equipment, net of accumulateddepreciation
                  of $296,876 and $103,442, respectively
              
              
              437,853
              
              
              246,144Property
                  and equipment from discontinued operationsnet
                  of accumulated depreciation of $7,900 and $19,818,
                  respectively
              
              
              28,100
              
              
              8,864,229Intangibles,
                  net
              
              
              1,077,161
              
              
              913,735Other
                  assets
              
              
              50,480
              
              
              164,737Total
                  assets
              
              $
              2,716,678
              
              $
              11,692,897**Liabilities
                  and Shareholders’ Equity (Deficiency)**Current
                  Liabilities:Accounts
                  payable
              
              $
              794,336
              
              $
              501,514Accounts
                  payable - related parties
              
              
              154,708
              
              
              169,258Notes
                  payable, related parties
              
              
              1,241,010
              
              
              445,642Convertible
                  notes payable
              
              
              1,832,818
              
              
              150,000Convertible
                  notes payable from discontinued operations
              
              
              —
              
              
              7,000,000Equipment
                  note
              
              
              12,986
              
              
              12,140Capital
                  leases payable
              
              
              11,278
              
              
              13,881Accrued
                  expenses
              
              
              1,418,774
              
              
              910,418Embedded
                  derivatives at fair value
              
              
              7,508,864
              
              
              —Other
                  current liabilities
              
              
              96,852
              
              
              36,965Total
                  current liabilities
              
              
              13,071,626
              
              
              9,239,818Capital
                  leases payable - long term portion
              
              
              1,636
              
              
              11,876Equipment
                  note - long term portion
              
              
              23,683
              
              
              36,668Convertible
                  notes payable - net of unamortizeddiscounts
              
              
              375,408
              
              
              854,178Total
                  liabilities
              
              
              13,472,353
              
              
              10,142,540COMMITMENTS
                  AND CONTIGENCIESShareholders’
                  equity (deficiency)Preferred
                  stock, $0.0001 par value; 10,000,000 shares authorized,-0-
                  shares issued and outstanding
              
              
              —
              
              
              —Common
                  stock, $0.0001 par value; 100,000,000 shares authorized,26,046,711
                  and 23,392,576 shares issued and outstanding
              
              
              2,604
              
              
              2,339Additional
                  paid-in capital
              
              
              17,762,512
              
              
              8,249,675Accumulated
                  Deficit
              
              
              (28,520,791
              )
              
              (6,701,657
              )Total
                  shareholders' (deficiency) equity
              
              $
              (10,755,675
              )
              $
              1,550,357Total
                  liabilities and shareholders' equity (deficiency)
              
              $
              2,716,678
              
              $
              11,692,897





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


41


**THE
      TUBE MEDIA CORP.**


**(Formerly
      AGU Entertainment Corp.)**


**AND
      SUBSIDIARIES**


**Consolidated
      Statements of Operations**


**For
      the Years Ended December 31, 2005** **and
      2004**


**2005**
              
              **2004****(Restated)**Net
                  revenues
              
              $
              360,503
              
              $
              906,605Cost
                  of sales and services performed
              
              
              30,214
              
              
              107,297Gross
                  profit
              
              
              330,289
              
              
              799,308Operating
                  ExpensesLegal
                  and professional fees
              
              
              1,167,362
              
              
              583,440Promotion
                  and advertising
              
              
              300,195
              
              
              1,335,364Bad
                  debt expense
              
              
              197,388
              
              
              —Depreciation
                  and amortization
              
              
              509,909
              
              
              194,063Other
                  general and administrative costs
              
              
              6,396,301
              
              
              4,054,370Total
                  operating expenses
              
              
              8,571,155
              
              
              6,167,237Operating
                  loss
              
              
              (8,240,866
              )
              
              (5,367,929
              )Interest
                  expense
              
              
              6,560,928
              
              
              303,753Derivative
                  expense at fair market value
              
              
              7,508,864
              
              
              —Settlement
                  Expenses
              
              
              1,270,000
              
              
              —Loss
                  from continuing operations
              
              
              (23,580,658
              )
              
              (5,671,682
              )Loss
                  from discontinued operations
              
              
              (3,413,414
              )
              
              (218,708
              )Gain
                  from disposition of discontinued operations
              
              
              5,174,938
              
              
              —Gain
                  from discontinued operations
              
              
              1,761,524
              
              
              (218,708
              )Net
                  loss
              
              $
              (21,819,134
              )
              $
              (5,890,390
              )Loss
                  per common share from continuing operations
              
              $
              (0.95
              )
              $
              (0.28
              )Loss
                  per common share from discontinued operations
              
              $
              (0.14
              )
              $
              (0.01
              )Income
                  per common share from gain from disposition ofdiscontinued
                  operations
              
              $
              0.21
              
              $
              —Net
                  loss per common share
              
              $
              (0.88
              )
              $
              (0.29
              )Weighted
                  average common shares outstanding -Basic
                  and diluted
              
              
              24,903,658
              
              
              20,180,951





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


42




**THE
      TUBE MEDIA CORP.**


**(Formerly
      AGU Entertainment Corp.)**


**AND
      SUBSIDIARIES**


**Consolidated
      Statement of Changes in Shareholders’ Equity (Deficiency)**


**For
      the Years Ended December 31, 2005 and 2004**


**(Restated)**


**Shares**
              
              **Common
                  Stock**
              
              **Additional
                  Paid-in Capital**
              
              **Accumulated
                  Deficit**
              
              **Total**Balance
                  at December 31, 2003
              
              
              14,628,324
              
              $
              1,463
              
              $
              (1,063
              )
              $
              (811,267
              )
              $
              (810,867
              )Issuance
                  of shares of common stockto
                  employees on March 22, 2004
              
              
              2,294,140
              
              
              229
              
              
              28,448
              
              
              —
              
              
              28,677Recapitalization
                  as a result of merger withLexington
                  Barron Technologies
              
              
              4,230,614
              
              
              423
              
              
              (423
              )
              
              —
              
              
              —Debt
                  and accrued interest converted intocommon
                  stock
              
              
              1,173,540
              
              
              117
              
              
              3,462,509
              
              
              —
              
              
              3,462,626Issuance
                  of shares of common stock, Warrants and aconvertible
                  note with a beneficial conversion feature in a private
                  placement transaction
              
              
              500,000
              
              
              50
              
              
              499,950
              
              
              —
              
              
              500,000Issuance
                  of shares of common stock in exchangefor
                  cash
              
              
              15,000
              
              
              1
              
              
              59,999
              
              
              —
              
              
              60,000Issuance
                  of common stock in exchange for services
              
              
              195,958
              
              
              20
              
              
              329,846
              
              
              —
              
              
              329,866Issuance
                  of common stock to directors
              
              
              17,500
              
              
              2
              
              
              26,809
              
              
              —
              
              
              26,811Common
                  stock issued in connection with the acquisitionof
                  property and equipment
              
              
              337,500
              
              
              34
              
              
              749,966
              
              
              —
              
              
              750,000Issuance
                  of warrants in connection with issuance ofconvertible
                  debt
              
              
              —
              
              
              —
              
              
              93,634
              
              
              —
              
              
              93,634Beneficial
                  conversion feature and issuance of warrantsin
                  connection with issuance of convertible debt,
              
              
              —
              
              
              —
              
              
              3,000,000
              
              
              —
              
              
              3,000,000Net
                  loss
              
              
              —
              
              
              —
              
              
              
              
              
              (5,890,390
              )
              
              (5,890,390
              )Balance
                  at December 31, 2004
              
              
              23,392,576
              
              $
              2,339
              
              $
              8,249,675
              
              $
              (6,701,657
              )
              $
              1,550,357Issuance
                  of common stock for services
              
              
              500,475
              
              
              50
              
              
              1,191,116
              
              
              —
              
              
              1,191,166Issuance
                  of common stock to employeesfor
                  compensation
              
              
              70,540
              
              
              7
              
              
              153,724
              
              
              —
              
              
              153,731Issuance
                  of common stock as a price adjustmentfor
                  certain investors
              
              
              410,000
              
              
              41
              
              
              14,190
              
              
              —
              
              
              14,231Issuance
                  of common stock in connection with the acquisitionof
                  property and equipment
              
              
              97,800
              
              
              10
              
              
              244,490
              
              
              —
              
              
              244,500Issuance
                  of common stock in connection with the sale of the building
              
              
              300,000
              
              
              30
              
              
              404,970
              
              
              —
              
              
              405,000Issuance
                  of warrants in connection with the issuance of;convertible
                  debt
              
              
              —
              
              
              —
              
              
              4,326,777
              
              
              —
              
              
              4,326,777convertible
                  note with a beneficial conversion feature in aprivate
                  placement transaction
              
              
              —
              
              
              —
              
              
              114,408
              
              
              —
              
              
              114,408Issuance
                  of common stock in settlement of liabilities
              
              
              135,083
              
              
              14
              
              
              370,699
              
              
              —
              
              
              370,713Issuance
                  of common stock to directors for services
              
              
              20,000
              
              
              2
              
              
              54,250
              
              
              —
              
              
              54,252Issuance
                  of common stock to co-founders in connection withthe
                  settlement of a dispute
              
              
              500,000
              
              
              50
              
              
              1,179,950
              
              
              —
              
              
              1,180,000Issuance
                  of common stock to a director in pursuant toan
                  employment agreement
              
              
              444,000
              
              
              44
              
              
              1,047,796
              
              
              —
              
              
              1,047,840Issuances
                  of common stock in connection withamending
                  the terms of certain notes payable
              
              
              60,000
              
              
              6
              
              
              138,000
              
              
              —
              
              
              138,006Issuance
                  of common stock as interest expense
              
              
              4,671
              
              
              0
              
              
              9,178
              
              
              —
              
              
              9,178Issuance
                  of common stock to a director inconnection
                  with a termination letter
              
              
              111,566
              
              
              11
              
              
              263,289
              
              
              —
              
              
              263,300Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              (21,819,134
              )
              
              (21,819,134
              )Balance
                  at December 31, 2005
              
              
              26,046,711
              
              $
              2,604
              
              $
              17,762,512
              
              $
              (28,520,791
              )
              $
              (10,755,675
              )




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


43


**The
      Tube Media Corp.** **(Formerly AGU Entertainment Corp.)**


**and
      Subsidiaries**


**Consolidated
      Statements of Cash Flows**


**For
      the Year Ended December 31, 2005 and December 31, 2004**


**2005**
              
              **2004**Cash
                  flows from operating activities:
              
              
              **(Restated**)****Net
                  loss
              
              $
              (21,819,134
              )
              $
              (5,890,390
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Provision
                  for doubtful accounts
              
              
              197,388
              
              
              —Depreciation
                  and amortization
              
              
              509,909
              
              
              194,063Common
                  stock issued as payment for services
              
              
              1,245,366
              
              
              385,353Common
                  stock issued as payment in settlement of a dispute
              
              
              1,180,000
              
              
              —Common
                  stock issued as compensation to a director
              
              
              1,047,840
              
              
              —Gain
                  on disposal of discontinued operations
              
              
              (5,174,938
              )
              
              —Expense
                  of embedded derivative at fair market value
              
              
              7,508,864
              
              
              —Decrease
                  (increase) in accounts receivable
              
              
              98,660
              
              
              (466,811
              )(Increase)
                  in prepaid expenses
              
              
              (288,460
              )
              
              (225,037
              )(Increase)
                  in other assets
              
              
              (31,974
              )
              
              (12,293
              )Increase
                  in accounts payable and accrued liabilities
              
              
              786,808
              
              
              849,441Increase
                  in other liabilities
              
              
              59,887
              
              
              36,965Amortization
                  of discount on notes payable
              
              
              9,177,623
              
              
              122,812Net
                  cash (used in) operating activities
              
              
              (5,502,161
              )
              
              (5,005,897
              )Cash
                  flows from investing activities:Disbursements
                  for intangibles
              
              
              (175,370
              )
              
              (151,035
              )Proceeds
                  from sale of assets of discontinued operations
              
              
              14,542,108
              
              
              (1,326,458
              )Net
                  cash provided by (used in) investing activities
              
              
              14,366,738
              
              
              (1,477,493
              )Cash
                  flows from financing activities:Payment
                  of notes payable
              
              
              (10,205,276
              )
              
              (86,350
              )Proceeds
                  from notes payable to related parties
              
              
              1,970,852
              
              
              282,910Payment
                  of deferred financing fees
              
              
              —
              
              
              (148,059
              )Payment
                  on capital leases
              
              
              (23,222
              )
              
              (11,622
              )Payment
                  of notes payable to related parties
              
              
              (1,190,049
              )
              
              (308,004
              )Proceeds
                  from the sale of common stock
              
              
              —
              
              
              60,000Proceeds
                  from other notes payable
              
              
              158,583
              
              
              7,329,000Net
                  cash (used in) provided by financing activities
              
              
              (9,289,112
              )
              
              7,117,875Net
                  (decrease) increase in cash
              
              
              (424,535
              )
              
              634,485Cash,
                  beginning of year
              
              
              771,533
              
              
              137,048Cash,
                  end of year
              
              $
              346,998
              
              $
              771,533Supplemental
                  disclosure of cash flow information:Cash
                  paid for income taxes
              
              $
              —
              
              $
              —Cash
                  paid for interest
              
              $
              9,178
              
              $
              22,969Non-cash
                  financing activities:Common
                  stock issued as payment for services
              
              $
              1,399,149
              
              $
              385,353Equipment
                  acquired through issuance of common stock
              
              $
              244,500
              
              $
              750,000Conversion
                  of liabilities to common stock
              
              $
              370,713
              
              $
              3,462,627Equipment
                  acquired through capital lease obligations
              
              $
              —
              
              $
              14,637Property
                  and equipment acquired through notes payable
              
              $
              —
              
              $
              7,000,000Common
                  stock issued as price adjustment
              
              $
              14,231
              
              $
              —Common
                  stock issued in connection with adjusting notes
                  payable
              
              $
              138,006
              
              $
              —Common
                  stock issued in connection with director's
                  termination
              
              $
              263,300
              
              $
              —Common
                  stock issued in connection with the sale of the
                  building
              
              $
              405,000
              
              $
              —





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




44


**THE
        TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2005 AND 2004**


**1.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





***Organization.*** ****** The
      Tube
      Media Corp. (the “Company”), formerly AGU Entertainment Corp. (“AGU”) (and
      formerly Lexington Barron Technologies, Inc.) was incorporated in the state
      of
      Colorado on August 23, 2000 to engage in financial, operational and
      systems  consulting
      to startup and small businesses. Prior to April 1, 2004, the Company was a
      development stage, public reporting company and did not engage in any
      significant operations or enter into any material transactions.





Effective
      April 1, 2004, the Company entered into a Share Exchange Agreement with Pyramid
      Music Corp. ("PMC"), a Florida corporation having an inception date of May
      20,
      2003, whereby the Company acquired 100% of the outstanding common stock of
      PMC
      in exchange for issuing 16,922,464 shares of its common stock to the
      stockholders of PMC (see Note 2). PMC was a development stage company and was
      formed for the purpose of developing market share in the recording and broadcast
      media industries through the establishment of a music oriented television
      network and archived video and music collection libraries.





On
      October 20, 2004, AGU was reincorporated in the state of Delaware through a
      merger of AGU into a wholly owned subsidiary corporation incorporated in the
      State of Delaware. The reincorporation resulted in AGU becoming a Delaware
      corporation effective as of October 21, 2004. On February 26, 2006, AGU changed
      its name to The Tube Media Corp. The Company’s name change did not result in any
      change in the Company’s, business, assets, liabilities or net
      worth.





In
      February of 2005, the Company formed two new subsidiaries, AGU Studios, Inc.
      (“AGU Studios”), a Florida corporation, and 3200 Oakland Park Boulevard, Inc., a
      Florida corporation (“3200 Oakland Park”). These subsidiaries were formed for
      the intended purpose of developing a media center for the film and entertainment
      business. As a result of liquidity issues and the sale of the property located
      in Lauderdale Lakes, Florida, the operations of AGU Studios and 3200 Oakland
      Park have been discontinued.




At
      December 31, 2005, the Company had two wholly-owned operating subsidiaries
      that
      were engaged in the following services: (i) the formation and operation of
      a
      television network, The Tube Music Network, Inc., ("The Tube") that airs
      traditional music videos and live concerts of contemporary music material that
      is derived from archived video and music collection libraries, and (ii) a
      production, marketing and distribution record company, AGU Music, Inc. ("AGU
      Music").





***Principles
      of Consolidation.*** The
      accompanying consolidated financial statements include the accounts of Tube
      Media and its subsidiaries. References to the Company mean The Tube Media Corp.
      and its subsidiaries unless otherwise indicated. All significant inter-company
      transactions have been eliminated.





***Reverse
      Acquisition.*** Under
      the
      terms of the Share Exchange Agreement (see Note 2), the number of shares of
      Tube
      Media’s common stock exchanged in the transaction represented approximately 80%
      of the issued and outstanding common stock of Tube Media, resulting in a change
      in control. As a result, the transaction was accounted for as a reverse merger
      and recapitalization whereby PMC is deemed to be the acquirer for accounting
      purposes. Because PMC is deemed to be the surviving accounting and reporting
      entity, and because Tube Media had no identifiable assets or liabilities as
      of
      the date of the transaction, only PMC and its subsidiaries’ historical balances
      and results of operations are reflected in the accompanying financial statements
      for all periods presented.





45
 
  **THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


***Revenue
      Recognition and Accounts Receivable.*** With
      respect to the sales of recorded music, the Company recognizes revenue when
      products are shipped to retail music outlets. Revenue is recorded net of
      distribution fees and an allowance for anticipated returns in accordance with
      the terms of the Company’s distribution agreements and established industry
      practice. Other revenues are recognized as services are provided to the customer
      and collectibility is reasonably assured. Accounts receivable primarily
      represents amounts due from the Company’s distributors of recorded music and is
      comprised of net revenue earned, less production, marketing and promotional
      expenses incurred by the distributors on the Company’s behalf. At December 31,
      2005 the Company had an allowance for doubtful accounts in the amount of
      approximately $196,000 based on the Company’s analysis of the collectibility of
      the receivables that were outstanding as of the balance sheet date. The Company
      will continue to monitor collections and payments from its customers and
      distributors for future potential credit losses.





***Loss
      Per Common Share.*** Basic
      earnings or loss per share is computed by dividing net earnings or loss
      attributable to common stockholders by the weighted average number of shares
      outstanding during the period. Diluted earnings or loss per share attributable
      to common stockholders further considers the impact of dilutive common stock
      equivalents. Diluted loss per share is equal to basic loss per share for all
      periods presented, because the effect of the additional shares which would
      be
      issued assuming conversion of convertible debt and outstanding common stock
      warrants are anti-dilutive in each period. The aggregate amount of securities
      that could potentially dilute EPS in future years at December 31, 2005 was
      21,648,575.




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





***Property
      & Equipment.*** Property
      and equipment is stated at cost. Depreciation is recorded using the
      straight-line method over the estimated useful lives of the assets. The
      depreciable lives range from one to ten years for machinery and equipment,
      ten
      to twenty-five years for buildings and building improvements and three to five
      years for furniture and fixtures. Leasehold improvements are depreciated over
      the remaining applicable lease term, or their estimated useful lives, whichever
      is shorter. Leasehold and building improvements are written-off if the related
      leasehold or building is vacated. Major renewals and improvements are
      capitalized, while maintenance, repairs and minor renewals not expected to
      extend the life of an asset beyond its normal useful life are expensed as
      incurred. Land is not depreciated.





***Impairment
      of Long-Lived Assets.*** The
      Company evaluates the carrying value of long-lived assets under the provisions
      of Statement of Financial Accounting Standards (“SFAS”) No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* .
      SFAS
      No. 144 requires impairment losses to be recorded on long-lived assets used
      in
      operations when indicators of impairment are present and the undiscounted future
      cash flows estimated to be generated by those assets are less than the assets'
      carrying amount. If such assets are impaired, the impairment to be recognized
      is
      measured by the amount by which the carrying amount of the assets exceeds their
      fair value. Assets to be disposed of are reported at the lower of the carrying
      value or fair value, less costs to sell. No impairment losses were recognized
      by
      the Company as of December 31, 2005 or 2004.




***Advertising
      Costs*** .
      Promotion and advertising costs, which amounted to approximately $300,000 and
      $1,300,000 in 2005 and 2004, respectively, are expensed as
      incurred.




46


**THE
        TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2005 AND 2004**


***Concentrations
      of Credit Risk.*** The
      Company’s potential exposure to concentration of credit risk is primarily
      through cash and accounts receivable. At certain times, the Company has cash
      balances in excess of Federal Deposit insurance limits, which potentially
      subject the Company to market and credit risks. At December 31, 2005 the Company
      had an aggregate cash balance of $430,522 that was not covered by Federal
      Deposit insurance. This cash balance is maintained at a financial institution
      with favorable credit ratings, and the Company believes no significant risk
      of
      loss exists with respect to this balance.





***Financial
      Instruments.*** At
      December 31, 2005 and 2004, the carrying value of the Company's financial
      instruments, which include cash, accounts receivable, accounts payable, accrued
      expenses, notes payable and other current liabilities approximates their fair
      value due to the short-term maturity of those instruments.





***Stock-Based
      Compensation.*** For
      the
      year ended December 31, 2005 and from the date of the 2004 Stock Option Plan’s
      inception through December 31, 2004, the Company did not grant any stock option
      awards to employees under its 2004 Stock Option Plan. Shares of common stock
      issued to employees are recorded as compensation expense based on the estimated
      fair value of the stock at the date of issuance. During the year ended December
      31, 2005, the Company recognized $153,731 of
      compensation expense for shares of common stock issued to employees.





***Recent
      Accounting Pronouncements.*** In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      123, Share-Based Payments (revised 2004), (“SFAS No. 123R”). This statement
      eliminates the option to apply the intrinsic value measurement provisions of
      Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued
      to Employees, to stock based compensation issued to employees. The Statement
      requires companies to measure the cost of employee services received in exchange
      for an award of equity instruments based on the fair value of the award at
      the
      date of grant, and recognize that cost over the period during which an employee
      is required to provide services in exchange for the award. SFAS No. 123R is
      effective for small business public companies as of the first interim or annual
      reporting period for their first fiscal year beginning on or after December
      15,
      2005. Adoption of SFAS No. 123R during the first quarter of 2006 will not have
      a
      material effect on the Company’s results of operations.





***Reclassifications.*** Certain
      amounts from prior year have been reclassified to conform to current year
      presentation.





**Restatement**





The
      Company has restated its previously issued, December 31, 2005 audited
      consolidated financial statements to reflect a liability in connection with
      a
      convertible promissory note and a warrant that contain an embedded derivative
      as
      of December 31, 2005.





The
      Company concluded that the Mitchell Note (See Notes 4 and 14) contained an
      embedded derivative due to the registration rights and liquidated damages
      provisions contained in the surviving provision of the note which provides
      Mitchell the right to repurchase the shares of the Company’s common stock into
      which the note was convertible for a period of one year. In addition there
      is a
      requirement that the shares underlying the note and a warrant issued to
      Mitchell, be registered by June 30, 2005 (which requirement the Company did
      not
      satisfy) in order to avoid liquidated damages of .5% per month. The Mitchell
      Note also included a provision, which provides that in the event the Company’s
      EBITDA for the calendar quarter ending September 30, 2006 did not equal at
      least
      $5,000,000, the holder of the Mitchell Note has the right to extend the option
      to purchase shares of Common Stock to March 31, 2007. If the Maturity Date
      is so
      extended and the Company’s EBITDA does not equal $5,000,000 for the calendar
      quarter ending December 31, 2006 then Mitchell has the right to extend the
      option to purchase shares of Common Stock for an additional calendar quarter.
      The holder of the Mitchell Note has the right to extend the option to purchase
      shares of Common Stock for an indefinite number of additional calendar quarters
      until the Company’s EBITDA equals $5,000,000 for the calendar quarter which
      immediately preceding the calendar quarter ending on the then applicable
      Maturity Date.





47




**THE
        TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2005 AND 2004**


***The
      effect on the Company’s previously issued audited December 31, 2005 financial
      statements are summarized as follows:***


Loss
                  from operations as originally reported at December 31,
                  2005
              
              $
              (14,220,270
              )Less;Adjustment
                  to record embedded derivative
              
              
              (7,508,864
              )Liquidated
                  damages in connection with embedded derivative
              
              
              (90,000
              )Net
                  Loss at December 31, 2005 as restated
              
              $
              (21,819,134
              )





***Balance
      Sheet as of December 31, 2005*** **:**




***Previously***
              ***Reported***
            
            ***Increase***
              ***(Decrease)***
            
            ***Restated***Current
                Assets
            
            $
            1,123,084
            
            
            —
            
            $
            1,123,084All
                Other Assets
            
            
            1,593,594
            
            
            —
            
            
            1,593,594Total
                Assets
            
            $
            2,716,678
            
            
            —
            
            $
            2,716,678Current
                Liabilities
            
            $
            5,472,762
            
            
            7,598,864
            
            $
            13,071,626Long
                Term Debt
            
            
            400,727
            
            
            —
            
            
            400,727Total
                Liabilities
            
            $
            5,873,489
            
            
            7,598,864
            
            $
            13,472,353Stockholders’
                Deficit:Common
                Stock
            
            
            2,604
            
            
            —
            
            
            2,604Additional
                paid-in-capital
            
            
            17,762,512
            
            
            
            
            
            17,762,512Accumulated
                deficit
            
            
            (20,921,927
            )
            
            (7,598,864
            )
            
            (28,520,791
            )Total
                Liabilities and Shareholders’ Deficiency
            
            $
            2,716,678
            
            $
            —
            
            $
            2,716,678








48


**THE
        TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2005 AND 2004**




***Shareholders
      Deficiency as of December 31, 2005*** ****




***Number
                of***
              ***Shares***
            
            ***Common***
              ***Stock***
            
            ***Additional***
              ***Paid
                in***
              ***Capital***
            
            ***Accumulated***
              ***Deficit***
            
            ***Total***
              ***Shareholders***
              ***Equity
                (Deficiency)***Balance
                at December 31, 2005, as previously reported
            
            
            26,046,711
            
            $
            2,604
            
            $
            17,762,512
            
            $
            (20,921,927
            )
            $
            (3,156,811
            )Additional
                Expenses in connection with embedded derivative (See Note
                14)
            
            
            
            
            
            
            
            
            
            
            
            (7,508,864
            )
            
            (7,508,864
            )Liquidated
                damages on embedded derivative
            
            
            —
            
            
            —
            
            
            
            
            
            (90,000
            )
            
            (90,000
            )Balance
                at December 31, 2005, as restated
            
            
            26,046,711
            
            $
            2,604
            
            $
            17,762,512
            
            $
            (28,520,791
            )
            $
            (10,755,675
            )




**2.
      SHARE EXCHANGE AGREEMENT**





On
      April
      1, 2004, under the terms of the Share Exchange Agreement, Tube Media (an
      inactive public reporting company) acquired 100% of the stock of PMC in exchange
      for 16,922,464 newly issued shares of common stock of Tube Media. The number
      of
      shares of Tube Media exchanged in this transaction represented approximately
      80%
      of the then-issued and outstanding common stock of Tube Media. As a result
      of
      this transaction, the former shareholders of PMC own, on a fully diluted basis,
      approximately 80% of the outstanding common stock of the Company, resulting
      in a
      change in control.





The
      transaction was accounted for as a reverse merger and recapitalization whereby
      PMC is deemed to be the acquirer for accounting purposes. Because PMC is deemed
      to be the surviving accounting and reporting entity, only PMC and its
      subsidiaries' historical balances and results of operations are reflected in
      the
      consolidated financial statements for all periods presented. At April 1, 2004,
      Tube Media had no identifiable assets or liabilities, therefore the transaction
      did not have a material effect on PMC's financial condition or results of
      operations.





**3.
      PROPERTY AND EQUIPMENT**





Property
      and equipment consisted of the following at December 31, 2005 and
      2004:





***Continuing
                Operations***
            
            
            **2005**
            
            
            **2004**Equipment,
                furniture and fixtures
            
            $
            732,689
            
            $
            347,546Leasehold
                improvements
            
            
            2,040
            
            
            2,040734,729
            
            
            349,586Less
                accumulated depreciation and amortization
            
            
            (296,876
            )
            
            (103,442
            )$
            437,853
            
            $
            246,144***Discontinued
                Operations***Land
            
            $
            —
            
            $
            5,832,706Building
                and building improvements
            
            
            —
            
            
            3,035,116Equipment,
                furniture and fixtures
            
            
            36,000
            
            
            —Leasehold
                improvements
            
            
            —
            
            
            16,22536,000
            
            
            8,884,047Less
                accumulated depreciation and amortization
            
            
            (7,900
            )
            
            (19,818
            )$
            28,100
            
            $
            8,864,229





49


**THE
        TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2005 AND 2004**


On
      December 22, 2004, the Company purchased certain real property in Lauderdale
      Lakes, Florida consisting of approximately 23 acres of land and a 162,000 square
      foot building (the “Lauderdale Property”). The Company had intended to develop
      the property; however, on September 1, 2005, the Company entered into a purchase
      and sale agreement for $15 million, dated as of August 29, 2005 (the “Agreement
      for Purchase and Sale”), with Tarragon South Development Corp. (“Tarragon”)
      pursuant to which the Company agreed to sell and Tarragon agreed to buy the
      Lauderdale Property.





Depreciation
      expense for continuing operations was $201,335 for the year ended December
      31,
      2005 and $65,499 for the year ended December 31, 2004. Additionally,
      depreciation expense for discontinued operations for the year ended December
      31,
      2005 and 2004 was $77,166 and $13,058, respectively.





**4.
      NOTES PAYABLE**





**Convertible
      Notes and Promissory Notes**





Convertible
      notes payable and promissory notes payable consisted of the following at
      December 31, 2005 and 2004:


2005
              
              2004First
                  mortgage note secured by Lauderdale Property
              
              $
              —
              
              $
              7,000,000Second
                  mortgage note secured by Lauderdale Property
              
              
              —
              
              
              3,000,000Other
                  convertible and promissory notes
              
              
              3,277,818
              
              
              1,475,0003,277,818
              
              
              11,475,000Less:
                  current portion
              
              
              (1,832,818
              )
              
              (7,150,000
              )Less:
                  Discount on convertible notes payable
              
              
              (1,069,592
              )
              
              (3,470,822
              )Notes
                  payable, long term portion, net of discounts
              
              $
              375,408
              
              $
              854,178





As
      part
      of the purchase price of the Lauderdale Property (see note 3), the Company
      issued to the seller on December 22, 2004 a convertible promissory note in
      the
      principal amount of $7 million (the “December Buntrock Note”). The note paid
      interest at an annual rate of 6.5% and was convertible at any time into shares
      of the Company’s common stock at a conversion price of $2.50 per share.





50


**THE
        TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2005 AND 2004**


On
      September 1, 2005, the Company entered into an agreement to sell the Lauderdale
      Property to a local real estate developer. The purchase price received for
      the
      Lauderdale Property was $15.0 million paid in cash.





In
      connection with the purchase and sale agreement for the Lauderdale Property,
      Tarragon agreed to loan $2.5 million to the Company, advanced in three tranches
      upon the Company meeting certain conditions. The first two tranches, totaling
      $1.5 million, was received by the Company on October 21, 2005. The third tranche
      of $1.0 million was received by the Company on November 17, 2005. These advances
      were repaid at the time of closing of the purchase and sale agreement on
      December 28, 2005.





Also
      on
      December 22, 2004, the Company issued a secured convertible term note in the
      principal amount of $3 million to Mitchell Entertainment Company (the “Mitchell
      Note”). The Mitchell Note paid interest at an annual rate of 10% and had a
      maturity date of December 19, 2006. The Mitchell Note could have been converted
      at any time by the lender into shares of the Company’s stock at an initial
      conversion price of $1.50 per share, subject to anti-dilution protections and
      certain other adjustments. In connection with the issuance of the Mitchell
      Note,
      the Company also issued to the lender warrants to purchase 2,000,000 shares
      of
      the Company’s common stock at an exercise price of $2.00 per share. In
      connection with the issuance of the Mitchell Note, the Company incurred deferred
      financing fees of approximately $148,000, which is reflected in other assets
      on
      the Company’s balance sheet. The Mitchell Note was secured by a second mortgage
      on the Lauderdale Property and by substantially all of the Company’s other
      assets, including the capital stock of its subsidiaries.





The
      issuance of the warrants, as well as the existence of an embedded beneficial
      conversion feature, resulted in the Company recording a discount on the Mitchell
      Note of $3,000,000 as of the date of issuance. This discount was being accreted
      as interest expense from the date of issuance to the Mitchell Note's maturity
      date. The Mitchell Note was paid in full on December 28, 2005 (See Note
      14).





On
      December 28, 2005 the December Buntrock Note, issued in connection with the
      purchase of the Lauderdale Property, the October Buntrock Note, as defined
      below, and Mitchell Note were paid in full from the proceeds of the sale of
      the
      Lauderdale Property, and the remaining balance of the unamortized discount
      on
      the Mitchell Note was charged off as interest expense.





On
      October 21, 2005, the Company issued a promissory note in the aggregate
      principal amount of $250,000 (the "October Buntrock Note") to the holder of
      the
      first mortgage note secured by the Lauderdale Property, as consideration for
      past defaults by the Company under the first mortgage. The Company did not
      receive any additional cash proceeds in connection with the October Buntrock
      Note. The October Buntrock Note bore interest at the applicable Internal Revenue
      Service federal interest rate per annum, as adjusted from time to time, and
      matured on the earlier of (i) the date of closing of the purchase and sale
      of
      the Lauderdale Property or (ii) December 23, 2005. The October Buntrock Note
      was
      paid in full on December 28, 2005.





In
      addition, in connection with the October Buntrock Note, the Company and the
      holder of the first mortgage note on the Lauderdale Property entered into an
      agreement pursuant to which the holder agreed to waive certain defaults under
      the first mortgage and the Company agreed to issue 175,000 shares of the
      Company's common stock to the holder and 125,000 shares to the holder’s legal
      counsel.




51


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


In
      connection with advances of working capital to the Company, the Company issued
      in 2005 promissory notes to a stockholder in the amount of $532,818; $350,000
      of
      which was repaid in the same period. The remaining $182,818 is due on various
      dates in 2006.





On
      September 14, 2004, the Company issued a $500,000 convertible promissory note
      payable to Galt Financial Corporation (the "Galt Note"). The Galt Note pays
      interest quarterly at an annual rate of 10%, and matures on September 14, 2006.
      In accordance with the terms of the Galt Note, the lender may convert all or
      any
      portion of the outstanding principal into common stock of the Company at a
      conversion price of $1.00 per share, subject to certain adjustments. In
      connection with this transaction, the Company issued warrants with a five-year
      term to purchase a total of 500,000 shares of the Company's common stock at
      a
      price of $1.00 per share, subject to certain adjustments. The Company also
      issued 500,000 shares of its common stock to a principal of the lender as part
      of this transaction.





The
      issuance of the stock and warrants, as well as the existence of an embedded
      beneficial conversion feature of the Galt Note, resulted in the Company
      recording a discount on the Galt Note of $500,000 as of the date of issuance.
      This discount is being accreted as interest expense from the date of issuance
      to
      the Galt Note's maturity date. In the event of early conversion or default,
      the
      remaining discount would be recognized as interest expense during the period
      in
      which such early conversion or default occurs.





The
      carrying value of the Galt Note at December 31, 2005 was $324,658. The
      unamortized balance of the discounts on the Galt Note at December 31, 2005
      was
      $175,342. Notwithstanding the financial statement presentation required under
      accounting principles generally accepted in the United States of America, the
      Company remains legally obligated to repay the $500,000 principal amounts of
      the
      Galt Note, on its maturity date, plus all accrued interest thereon in accordance
      with the terms of the Galt Note.





The
      Company issued convertible promissory notes to various accredited investors
      in
      2004 and 2005, in the aggregate principal amount of $825,000 and $1.3 million,
      respectively, of which $600,000, plus accrued interest of $24,834 have been
      converted into 208,278 shares of the Company’s common stock. The remaining $1.52
      million of convertible promissory notes are due on the second anniversary of
      their issuance date and are convertible into shares of the Company’s common
      stock at the option of each holder at a conversion price ranging from $2.00
      and
      $3.00 per share. Also during 2004, the Company issued approximately $2.7 million
      of promissory notes that were converted, along with $106,187 of accrued
      interest, into 930,827 shares of the Company’s common stock prior to December
      31, 2004.





The
      Company also issued in 2004 a promissory note in the amount of $225,000; $75,000
      of which was repaid in the same period. The remaining $150,000 promissory note
      was due May 31, 2005, however, on April 11, 2006, the note was extended until
      such time the Company raises an additional $2 million in equity or equity
      related securities in addition to the $2.45 million raised on April 21, 2006.





In
      connection with the issuance of the convertible notes, other promissory notes,
      interim working capital advances, the extension of maturity dates and the
      performance of certain services, the Company issued to the holders warrants
      to
      purchase an aggregate of 8,370,911 shares the Company’s common stock. The
      warrants have a two to five year term and an exercise price ranging from $1.00
      to $5.00 per share. The warrants were valued at $5,078,192, and this amount
      was
      recorded as a discount to the convertible promissory notes. The unamortized
      balance of the discount for these notes as of December 31, 2005 and 2004 was
      $1,069,592 and $90,685, respectively.




52


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


During
      2003 the Company issued $600,000 of convertible subordinated debentures and
      an
      additional $50,000 of similar debentures in February of 2004. All of these
      debentures, plus accrued interest of $12,890, were converted into 244,482 shares
      of the Company’s common stock in 2004. Also during 2003, the Company entered
      into an installment note to purchase equipment in the amount of $62,880.
      Principal and interest payments are paid monthly, and the outstanding balance
      on
      this note as of December 31, 2005 is $36,788.





**Related
      Party Notes**




During
      2003, the Company received loans in the aggregate amount of $114,400 from three
      shareholders of the Company. The loans pay interest at 5% and were due on June
      30, 2005. During 2004 the Company received additional loans from an officer
      of
      the Company and another major shareholder in the amount of $283,000, which
      was
      repaid in 2004 with a portion of the proceeds from the Mitchell
      Note.





In
      June
      2004, the Company received loans from and executed two promissory notes totaling
      $235,000 in favor of DML Marketing Corp., an entity controlled by Donna M.
      Levy,
      the wife of David C. Levy, in the principal amount of $150,000, which matured
      on
      October 30, 2004, and John P. Grandinetti, who at the time was a significant
      stockholder of the Company, in the principal amount of $85,000, which matured
      on
      October 30, 2004. The notes accrued interest at an annual rate of 5%. These
      notes were repaid in December 2004.




In
      August
      2004 and October 2004, the Company received loans from and executed promissory
      Notes in the principal amounts of $40,000 and $1,000 respectively, in favor
      of
      DML Marketing Corp. The notes accrued interest at an annual rate of 5% and
      matured on November 1, 2004. These notes were repaid in December
      2004.




On
      March
      3, 2004, AGU Music entered into an Assignment and Assumption Agreement with
      Pyramid Media Group, Inc. (“PMG”) (of which a related party and a shareholder of
      the Company own a controlling interest, whereby AGU Music agreed to assume
      all
      of the covenants and obligations of a Distribution Agreement between PMG and
      ARK
      21 Records, LP (“ARK21”). The Distribution Agreement provides that ARK21 be the
      manufacturer and distributor of certain recorded music projects for AGU Music
      through normal retail channels throughout the United States. In exchange for
      the
      rights to the Distribution Agreement between PMG and ARK21, AGU Music assumed
      the obligation to repay $350,000 of notes payable to Neil Strum and Ned Siegel,
      two significant stockholders of the Company. The Company guaranteed payment
      on
      the notes. The notes have an annual interest rate of 8%. Approximately $19,000
      of the notes were paid in 2004 and the outstanding balance at December 31,
      2005
      was approximately $331,000. The terms of these notes required monthly payments
      of principal and interest. The Company had not made the required monthly
      principal and interest payments since June of 2004. On May 5, 2005, the Company
      entered into a settlement agreement, effective April 15, 2005, with the holders
      of the notes. Under the terms of the settlement agreement, the notes were
      cancelled and were replaced with new notes containing the same terms and
      conditions as the old notes, except that the new notes had a beginning principal
      balance of $345,806. The Company did not make any of the required payments
      under
      the new notes. The stockholders filed suit and commenced litigation in the
      State
      of Florida and on January 16, 2006, the Company and the stockholders reached
      an
      agreement which required the immediate payment of $175,000 to the stockholders,
      and a subsequent payment of $125,000 on February 15, 2006, subject to a personal
      guarantee by David Levy, President of the Company and Donna Levy, his wife,
      as a
      complete settlement of the Distribution Agreement and dispute.




During
      2005, the Company received loans in the aggregate amount of approximately $1.5
      million from, David Levy and DML Marketing, of which $679,025 were repaid as
      of
      December 31, 2005, leaving an amount outstanding as of December 31, 2005 of
      $780,803. On April 3, 2006, the Company repaid a promissory note dated December
      9, 2005 to DML Marketing, in the amount of $108,377. The loans, which are
      considered working capital advances, generally pay interest at 10% and are
      due
      upon additional equity transactions. In April 2006, the Company repaid DML
      Marketing $108,000 leaving an amount outstanding of $672,803. The Company has
      also issued warrants to purchase up to 800,000 shares of common stock to DML
      Marketing at $1.50 per share. On April 3, 2006, the warrants were amended to
      change the exercise price per share to $2.00.




53


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


The
      Company also received promissory notes from, Dr. Robert A. Kast and his family
      during 2005 in the aggregate amount of $700,000, including the extension of
      a
      $150,000 promissory note, which was originally issued in 2004. As of December
      31, 2005, $375,000 was unpaid and in default. The $150,000 promissory note
      originally paid interest at 8% interest, which was increased to 10% until its
      repayment in 2005. The $700,000 promissory notes pay interest at 6% and were
      due
      at various dates in 2005. On April 12, 2006, the due date of the remaining
      $375,000 promissory notes was extended until such time as the Company raises
      an
      additional $2 million of equity or equity related securities in addition to
      the
      $2.45 million raised on April 21, 2006. The Company has also issued warrants
      to
      purchase up to 3,128,575 shares of common stock to Dr. Robert A. Kast.





Aggregate
      maturities of the Company’s promissory notes and convertible notes payable as of
      December 31, 2005 are as follows:





**Fiscal
                Year**
            
            **Amount**2006
            
            $
            3,073,8282007
            
            
            1,445,000$
            4,518,828





Also
      see
      Note 7, Legal Proceedings, for settlements of relating party notes.





**5.
      CAPITAL LEASES**





The
      Company is obligated under various capital leases, primarily computer equipment.
      For financial reporting purposes, minimum lease payments relating to the
      equipment have been capitalized. Capital lease obligations totaling $21,183
      require minimum monthly lease payments with interest rates ranging from 15.5%
      to
      17.8%.





Future
      capital lease obligations as of December 31, 2005 were as follows:





Fiscal
                Year
            
            Amount2006
            
            $
            11,2782007
            
            
            1,636Principal
            
            
            12,914Interest
            
            
            —12,914Current
                Portion
            
            
            11,278Long-term
                Portion
            
            $
            1,636




54


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


Equipment
      leased under capital leases as of December 31, 2005 and 2004, amounts to $10,408
      and $30,268, respectively, net of accumulated depreciation of $24,335 and
      $17,271, respectively.




**6.
      INTANGIBLES**





Intangible
      assets at December 31, 2005 were as follows:




Value
                atacquisition
            
            Accumulatedamortization
            
            Balance
                atDecember
                31, 2005Distribution
                agreements (see Note 4)
            
            $
            822,000
            
            $
            (251,200
            )
            $
            570,800Other
                intangibles
            
            
            651,035
            
            $
            (144,674
            )
            
            506,361Total
                intangibles
            
            $
            1,473,035
            
            $
            (395,874
            )
            $
            1,077,161





Intangible
      assets at December 31, 2004 are as follows:




Value
                atacquisition
            
            Accumulatedamortization
            
            Balance
                atDecember
                31, 2004Distribution
                agreement (see note 4)
            
            $
            350,000
            
            $
            (87,300
            )
            $
            262,700Other
                intangibles
            
            
            651,035
            
            
            —
            
            
            651,035Total
                intangibles
            
            $
            1,001,035
            
            $
            (87,300
            )
            $
            913,735




The
      distribution agreement with ARK21 is being amortized on a straight line basis
      over a period of three years. Distribution agreements also include $472,000
      in
      connection with a distribution agreement to broadcast the Tube Music Network
      on
      various television stations. The distribution agreement is being amortized
      over
      a five year period, which is the initial term of the agreement. Other
      intangibles include $651,035 of costs to develop network logos, graphic
      templates and on-air interstitials for The Tube. Under the terms of an amended
      agreement with the developer of these assets, the Company agreed to pay the
      developer $200,000 in cash and 150,000 shares of common stock, which is being
      amortized on a straight line basis over a period of three years. Amortization
      expense for 2004 and 2005 was $87,300 and $308,574, respectively. Aggregate
      amortization expense over the next five years is expected to be as
      follows:





For
                the year ending December 31:2006
            
            $
            428,2122007
            
            $
            340,6122008
            
            $
            166,7372009
            
            $
            94,4002010
            
            $
            47,200





55


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


**7.
      COMMITMENTS AND CONTINGENCIES**





**Operating
      Leases**





The
      Company leases certain warehouse space under a non-cancelable operating lease
      that expires on October 31, 2006. Rent expense for this operating lease was
      $16,614 for the year ended December 31, 2005 and $16,918 for the year ended
      December 31, 2004. Future minimum annual rental obligations as of December
      31,
      2005 are as follows:





**Fiscal
                Year**
            
            **Operating**
              **Leases**2006
            
            $
            14,190





The
      Company also leases certain office and studio space under month-to-month rental
      agreements which are cancellable at any time with thirty days notice.





**Legal
      Proceedings**





On
      January 27, 2005, the Company was served with a summons and notice by Jarred
      Weisfeld and Cherry Jones, individually and doing business as JarredCherry
      Productions LLC, which indicates that the Plaintiffs commenced an action against
      the Company. Although the Company expressly denies any allegation of wrongdoing
      on its part a settlement agreement was reached between parties on December
      12,
      2005 in the amount of $73,809, which was paid in full.




October
      13, 2004, The Tube received notification from a television channel featuring
      music related programming that the circle logo used by The Tube is "confusingly
      similar" to the circle logo used by that television channel, supporting claims
      of trademark infringement and unfair competition. On November 3, 2004, the
      Company responded to the October 13, letter stating it does not believe the
      logos are confusingly similar or that any trademark infringement has occurred.
      The Company intends to vigorously defend any challenge to its use of its logo.




In
      an
      action initiated by Michael Jay Solomon (“Solomon”) against the Company for
      breach of contract, Solomon asserts that the Company failed to pay him
      approximately $100,000 in connection with his resignation from the Company,
      $50,000 of which was alleged an agreed upon sum plus $50,000 for asserted
      reimbursements. The Company is aggressively defending this action. The parties
      have begun the discovery stage of the action wherein each party will seek
      documents and other evidence from the other to support their positions.




An
      action
      was initiated by Lalah Hathaway against MB Recordings, Inc. d/b/a Mesa Blue
      Moon
      naming the Company as a defendant in the action as a result of an alleged
      agreement between MB Recordings and AGU Music, for which Hathaway asserts AGU
      Music is liable for her damages caused by MB Recordings. This action is still
      in
      the pleading stage and AGU Music has not yet been required to file a response
      to
      the action.




MB
      Recording, Inc. has also filed a cross-claim against AGU Music and the Company
      in connection with an alleged agreement between the Company and MB Recordings.
      AGU Music has not been served with the cross-complaint and AGU Music has not
      been required to file a response to said cross-complaint.




On
      May 5,
      2005, the Company entered into a settlement and mutual release agreement,
      effective as of April 15, 2005 (the “Initial Settlement Agreement”), with Ned
      Siegel, Neil Strum and Strum Brothers Investment, LLC (the "Settlement
      Parties"). The Company guaranteed the repayment of the notes AGU Music assumed
      on March 3, 2004 to repay $350,000 to Ned Siegel and Neil Strum (the “Notes”) in
      connection with the assumption of a distribution agreement. Pursuant to the
      Initial Settlement Agreement, the Notes were cancelled and replaced with new
      notes having a principal beginning balance of $345,806 (the "New Notes"). The
      Company did not make any of the required payments under the New Notes and/or
      Initial Settlement Agreement.




56


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


On
      February 1, 2006, the Company entered into a settlement and mutual release
      agreement, effective January 16, 2006 (the “Final Settlement Agreement”), with
      the Settlement Parties. Pursuant to the terms of the Final Settlement Agreement,
      the Company (i) was required to pay the Settlement Parties the sum of $175,000
      upon the execution of the Final Settlement Agreement and (ii) was required
      to
      pay the Settlement Parties the sum of $125,000 on a date no later than February
      15, 2006. As of February 22, 2006, the Company had made all of the required
      payments under the Final Settlement Agreement. In connection with the Final
      Settlement Agreement, the Settlement Parties agreed to dismiss, with prejudice,
      the litigation they filed against the Company on September 1, 2005 in the
      Superior Court of the State of California for the County of Los Angeles in
      connection with (i) the Company’s failure to make the required payments due
      under the New Notes and (ii) other disputes between the Company and Neil Strum.
      In addition, the Settlement Parties and the Company released each other from
      all
      past claims the parties have or may have against each other in connection such
      litigation. Simultaneously with the execution of the Final Settlement Agreement,
      David Levy, Chief Executive Officer of the Company, and Donna Levy, his wife,
      executed personal guaranty agreements in the amount of $125,000 in favor of
      the
      Settlement Parties.




The
      Company is subject to claims and legal actions that arise in the ordinary course
      of its business. The Company believes that the ultimate liability, if any,
      with
      respect to these claims and legal actions, will not have a material effect
      on
      the financial position or results of operations of the Company.




**Other**




During
      2004 and 2005, the Company did not remit its payroll taxes timely due to
      liquidity issues. The Company has recorded a liability for the 2004 unpaid
      payroll taxes in the amount of $45,147 and the expected interest and penalties
      for 2004 in the amount of $26,920. In 2005 all of the payroll taxes have been
      paid with the exception of $157,936. The Company has recorded this amount as
      a
      liability in 2005, and an estimate of the expected interest and penalties in
      respect of the late taxes for 2005, in the amount of $123,469. The Company
      believes the amounts reserved are adequate in all material
      respects.





**8.
      STOCKHOLDERS’ EQUITY**





During
      2005, the Company issued an aggregate of 300,475 shares of common stock to
      third
      parties in exchange for services performed. These services were valued at
      $719,146 for fiscal year ended December 31, 2005. The Company issued 646,106
      shares of common stock to employees and directors in 2005, and recorded
      compensation expense of $1,519,123. The Company issued 200,000 shares of common
      stock pursuant to a charter affiliation agreement. The charter affiliation
      agreement provides distribution services for five years which were valued at
      $472,000 for fiscal year ended December 31, 2005. The Company issued 135,083
      shares of common stock to settle certain liabilities of $370,713. The Company
      issued 500,000 shares of common stock to two co-founders in settlement of a
      dispute and recorded settlement expenses of $1,180,000. The Company also issued
      97,800 shares of common stock in connection with certain equipment purchases.
      These purchases were valued at $244,500 for fiscal year ended December 31,
      2005.
      In November 2005, the Company issued 300,000 shares of common stock in
      connection with the extension of the Buntrock Note’s Maturity prior to the sale
      of the Lauderdale Property valued at $405,000. Also, the Company issued 60,000
      shares in connection with amending the terms of certain notes payable and
      recorded $138,006 in interest expense and 4,671 shares of common stock for
      payment of interest expense in lieu of cash and recorded $9,178 in interest
      expense.




57


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


During
      2005 and 2004 the Company issued warrants to purchase 670,000 and 2,682,336
      shares of common stock, respectively, in connection with the issuance of
      convertible promissory notes (see Note 4). The warrants have exercise prices
      ranging from $1.00 to $3.00 per share and generally expire on the maturity
      dates
      of the respective convertible promissory notes with which they were issued.
      In
      addition, the Company issued warrants to purchase 2,553,575 shares of common
      stock at an exercise price of $3.00 per share, warrants to purchase 25,000
      shares of common stock at an exercise price of $2.00 per share and warrants
      to
      purchase 550,000 shares of common stock at exercise prices of $2 per share
      to $5
      per share to a significant stockholder in consideration for his converting
      a
      substantial portion of his holdings of Company promissory notes to common stock,
      for his extending the maturity dates of some of the other promissory notes
      of
      the Company and for his extension of additional debt. The Company also issued
      warrants to purchase 300,000 shares of common stock at an exercise price of
      $1.50 per share to the holder of the Mitchell Note in connection with advances
      made to the Company during 2005. The Company also issued warrants to purchase
      50,000 shares of common stock at an exercise price of $3 per share to two
      investors in consideration for a $150,000 promissory note. The Company also
      issued warrants to purchase 200,000 shares of common stock at an exercise price
      of $2 per share to an investor in consideration for a $200,000 promissory note.
      The Company also issued warrants to purchase 30,000 shares of common stock
      at an
      exercise price of $2 per share to an existing investor. The Company also issued
      warrants to purchase 1,300,000 shares of common stock at an exercise price
      of $2
      per share to certain investors in consideration for interim advances of working
      capital. The Company also issued warrants to purchase 10,000 shares of common
      stock at an exercise price of $3 per share to an investor in consideration
      for
      services performed for the Company. The Company estimates the fair value of
      each
      stock option at the grant date by using the Black-Scholes pricing model with
      the
      following weighted average assumptions: no dividend yield for all years;
      expected volatility of 50%; risk free interest rate of 3.5%; and expected life
      from one to ten years. The aggregate value of the warrants issued during 2005
      was $4,987,507, and this amount was recorded at a discount on the Company’s
      convertible debt with an offset to paid-in-capital. The discount is being
      amortized on a pro rata basis over the life of the respective convertible debt
      instruments. The unamortized balance of the discount for all notes as of
      December 31, 2005 was $1,069,592. No warrants were exercised during 2005 and
      8,370,911 warrants were outstanding at December 31, 2005.




During
      2004, the Company issued 195,958 shares of common stock to third parties in
      exchange for services performed. These services were valued at $329,866 and
      this
      amount was charged to earnings during the year. The Company also issued
      2,311,640 shares of common stock to employees in 2004 and recorded compensation
      expense of $55,488. Also in 2004, the Company issued 337,500 shares of common
      stock in connection with the acquisition of the Lauderdale Property (see note
      3), 500,000 shares of common stock in connection with the issuance of a
      convertible note, 1,173,540 shares of common stock in connection with the
      conversion of debt and accrued interest (see note 5), 337,500 shares of common
      stock in connection with the acquisition of real property and 15,000 shares
      of
      common stock in exchange for $60,000 in cash. In addition, the recapitalization
      resulting from the Share Exchange Agreement (see note 2) resulted in an increase
      to the number of shares outstanding by 4,230,614.





On
      October 20, 2004, the Company’s shareholders approved The 2004 Stock Option and
      Stock Incentive Plan (“the Plan”). The purpose of the Plan is to promote the
      long-term interests of the Company and its shareholders by providing a means
      for
      attracting and retaining officers, directors and other key employees of and
      consultants to the Company and its affiliates by providing for awards in the
      form of options to purchase the Company’s common stock or grants of shares of
      restricted stock. No awards were granted under the Plan during 2005 and 2004
      and
      there were no stock options outstanding under the Plan as of December 31,
      2004.




58


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


During
      2004 the Company issued warrants to purchase 2,682,336 shares of the Company’s
      common stock in connection with the issuance of convertible promissory notes
      (see note 4). The warrants have exercise prices ranging from $1.00 to $3.00
      per
      share and generally expire on the maturity dates of the respective convertible
      promissory notes with which they were issued. No warrants were exercised during
      2004 and warrants to purchase 2,682,336 shares of the Company’s common stock
      were outstanding at December 31, 2004.





There
      were 26,046,711 and 23,392,576 shares of common stock outstanding at December
      31, 2005 and 2004, respectively.




**9.
      INCOME TAXES**





The
      components of the provision (benefit) for income taxes consisted of the
      following:





**2005**
            
            **2004**Current
                provision (benefit):Federal
            
            $
            —
            
            $
            —State
            
            
            —
            
            
            —Total
                current
            
            
            —
            
            
            —Deferred
                provision (benefit):Federal
            
            
            —
            
            
            —State
            
            
            —
            
            
            —Total
                deferred
            
            
            —
            
            
            —Total
                provision (benefit) for income taxes
            
            $
            —
            
            $
            —





The
      reconciliation of the Company’s tax benefit based on the U.S. federal statutory
      income tax rate to the Company’s effective tax rate was as follows:





**Consolidated**
            
            **Continuing
                Operations**
            
            **Discontinued
                Operations**Tax
                at U.S. federal statutory tax of 34%
            
            $
            (7,418,505
            )
            $
            (8,017,423
            )
            $
            598,918Increase
                in federal valuation reserves
            
            
            3,303,638
            
            
            3,902,556
            
            
            (598,918
            )Permanent
                items
            
            
            4,067,607
            
            
            4,067,607
            
            
            —Other
                provision/return
            
            
            47,260
            
            
            47,260
            
            
            —Total
                income tax benefit
            
            $
            —
            
            $
            —
            
            $
            —





Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes.  Significant
      components of the Company’s deferred tax assets and deferred tax liabilities as
      of December 31, 2005 and December 31, 2004 were as follows:





**2005**
            
            **2004****Deferred
                Tax Assets (Liabilities)**Net
                operating loss carry forwards
            
            $
            5,676,526
            
            $
            2,251,379Start-up
                expenses
            
            
            89,121
            
            
            127,316Organizational
                expenditures
            
            
            66,920
            
            
            95,599Allowance
                for doubtful accounts
            
            
            74,367
            
            
            —Accrued
                expenses
            
            
            210,824
            
            
            —Property,
                Plant, Equipment & other
            
            
            —
            
            
            (11,263
            )Other
            
            
            72,202
            
            
            35,033Total
                deferred tax assets
            
            
            6,189,960
            
            
            2,498,064Less:
                Valuation allowance
            
            
            (6,189,960
            )
            
            (2,498,064
            )Net
                Deferred Tax Asset (Liability)
            
            $
            —
            
            $
            —





59


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


The
      valuation allowances as of December 31, 2005, and December 31, 2004 were
      established due to the Company’s determination that it is more likely than not
      that the Company will not generate sufficient future taxable income to utilize
      its deferred tax assets. The valuation allowance increased by $3,691,896 from
      2004 to 2005. The Company has approximately $15.0 million of net operating loss
      carry forwards which begin to expire in 2023. A portion of these losses is
      subject to limitations regarding the offset of the Company’s future taxable
      income, including limitations resulting from changes in ownership of greater
      than 50% of the Company’s common stock as a result of the issuance by the
      Company of additional common stock.





**10.
      SEGMENT REPORTING**





The
      Company has two reportable operating segments: The Tube Music Network (“The
      Tube”) and AGU Music. The Tube airs traditional music videos and live concerts
      of contemporary music material that is derived from archived video and music
      collection libraries. When fully operational, the Company expects that The
      Tube,
      which has not generated revenues to date, will generate revenues by selling
      advertising time and through direct sales of music related to the content
      broadcasted on the network. AGU Music is a record company engaged in the release
      of recorded music materials acquired through artist signings and acquisitions.
      The accounting policies of each segment are the same as those described in
      the
      summary of significant accounting policies (see Note 1). Each segment is
      separately managed and is evaluated by the Company’s management for the purpose
      of allocating the Company’s resources. The Company also has a corporate
      headquarters function, which does not meet the criteria of a reportable
      operating segment. Interest expense and corporate expenses are not allocated
      to
      the operating segments.





The
      table
      below presents information about reportable segments for the years ended
      December 31, 2005 and December 31, 2004.





60


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


**(Restated)****2005**
                
                **2004****Revenues**AGU
                    Music
                
                $
                360,503
                
                $
                906,605The
                    Tube
                
                
                —
                
                
                —Consolidated
                    revenues before discontinued operations
                
                
                360,503
                
                
                906,605Discontinued
                    Operations
                
                
                146,463
                
                
                50,325Consolidated
                    revenues
                
                $
                506,966
                
                $
                956,930**Operating
                    income (loss)**AGU
                    Music
                
                $
                (854,441
                )
                $
                (1,344,827
                )The
                    Tube
                
                
                (3,593,907
                )
                
                (2,554,618
                )Segment
                    loss before corporate and discontinued operations
                
                
                (4,448,348
                )
                
                (3,899,445
                )Corporate
                
                
                (3,792,518
                )
                
                (1,583,911
                )Discontinued
                    operations
                
                
                (1,309,274
                )
                
                (103,281
                )Consolidated
                    operating loss
                
                $
                (9,550,140
                )
                $
                (5,586,637
                )**Depreciation
                    and amortization**AGU
                    Music
                
                $
                130,356
                
                $
                100,699The
                    Tube
                
                
                331,764
                
                
                44,456Segment
                    total before discontinued operations
                
                
                462,120
                
                
                145,155Corporate
                
                
                47,789
                
                
                45,760Discontinued
                    operations
                
                
                77,166
                
                
                3,148Consolidated
                    depreciation and amortization
                
                $
                587,075
                
                $
                194,063**Expenditures
                    for long-lived assets**AGU
                    Music
                
                $
                —
                
                $
                13,566The
                    Tube
                
                
                368,747
                
                
                326,710Segment
                    total before discontinued operations
                
                
                368,747
                
                
                340,276Corporate
                
                
                —
                
                
                181,686Discontinued
                    operations
                
                
                87,500
                
                
                955,531Consolidated
                    expenditures for long lived assets
                
                $
                456,247
                
                $
                1,477,493




61


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


The
      table
      below reconciles the measurement of segment profit (loss) shown in the previous
      table to the Company’s consolidated income (loss) before taxes:


**2005**
              
              **2004****(Restated)**Total
                  segment loss
              
              $
              (4,448,348
              )
              $
              (3,784,018
              )Operating
                  loss - corporate
              
              
              (3,792,518
              )
              
              (1,583,911
              )Interest
                  expense
              
              
              (6,560,928
              )
              
              (303,753
              )Settlement
                  expense
              
              
              (1,270,000
              )
              
              —Derivative
                  expense at fair market value
              
              
              (7,508,864
              )
              
              —Loss
                  before income tax and discontinued operations
              
              $
              (23,580,658
              )
              $
              (5,671,682
              )


The
      table
      below shows information regarding segment assets:


**2005**
              
              **2004****Segment
                  assets**AGU
                  Music
              
              $
              580,887
              
              $
              845,722The
                  Tube
              
              
              1,302,182
              
              
              800,506Segment
                  total before discontinued operations
              
              
              1,883,069
              
              
              1,646,228Corporate
              
              
              454,281
              
              
              1,317,227Discontinued
                  Operations
              
              
              379,328
              
              
              8,729,442Consolidated
                  total assets
              
              $
              2,716,678
              
              $
              11,692,897




With
      the
      exception of de minimis sales generated in Canada by AGU Music, the Company
      did
      not generate any revenues outside the United States of America for the years
      ending December 31, 2005 and 2004, and the Company did not have any assets
      located outside the United States of America. During the year ended December
      31,
      2005, approximately 40% of the Company’s revenues were generated through sales
      of the Lalah Hathaway album.





**11.
      RELATED PARTY TRANSACTIONS**





The
      Company, initially known as Lexington Barron Technologies, Inc., was
      incorporated in the State of Colorado on August 23, 2000. From its inception
      through April 1, 2004, Lexington Barron Technologies, Inc. conducted no
      significant operations or other activities. On March 15, 2004, Lexington Barron
      Technologies, Inc. entered into a stock exchange agreement with Pyramid Music
      Corp., a Florida corporation. Under the terms of the stock exchange agreement,
      Lexington Barron Technologies, Inc. acquired 100% of the outstanding common
      stock of Pyramid Music Corp. in exchange for 16,922,464 shares of common stock
      of Lexington Barron Technologies, Inc. As a result of the share exchange, which
      was consummated on April 1, 2004, the former shareholders of Pyramid Music
      Corp.
      owned, on a fully diluted basis, approximately 80% of the then-issued and
      outstanding shares of common stock of Lexington Barron Technologies, Inc. and
      the former principal owners of Lexington Barron Technologies, Inc.’s common
      stock (who are former directors of the company) owned, on a fully diluted basis,
      approximately 20% of the then-issued and outstanding shares of Lexington Barron
      Technologies, Inc. On March 26, 2004, Lexington Barron Technologies, Inc.
      amended its articles of incorporation to change its name to AGU Entertainment
      Corp., and on February 25, 2006, the Company amended and restated its
      certificate of incorporation to change its name to The Tube Media Corp. In
      connection with the share exchange, the then board of directors of the Company
      appointed nominees selected by the former shareholders of Pyramid Music Corp.
      to
      fill the existing vacancies on the Company’s board of directors. The former
      directors resigned as members of our board of directors.




62


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


Effective
      December 8, 2004, Allen Jacobi resigned as President of AGU Music, Inc., one
      of
      our subsidiaries. The Company was not obligated to make any payments to him
      under the termination provisions of his former employment agreement. On December
      8, 2004, as part of his resignation, we and our subsidiaries entered into a
      mutual release and settlement agreement with Allen Jacobi, Josh Danoff, Jeff
      Shane, Delsy Gutierrez, each an employee of Allen Jacobi, Pyramid Records Corp.,
      a Florida corporation, and Pyramid Media Group, Inc., referred to herein as
      the
      Pyramid Parties. Under the terms of the mutual release and settlement agreement,
      the Pyramid Parties had to deliver all rights to certain master recordings
      to
      the Company, pay all brokerage commissions under the license agreement, deliver
      all business files and computers to the Company, forfeit all rights to a
      telephone number and notify parties to certain agreements that the Pyramid
      Parties are no longer authorized to act on the Company’s behalf. The terms of
      the mutual release and settlement agreement provided for the Company to pay
      $11,000 for an outstanding legal bill owed by Pyramid Records Corp. to a third
      party, permit Allen Jacobi to retain $40,000 received under a license agreement,
      transfer any rights to the existing Stephen Stills contract to Allen Jacobi,
      subject to approval by the artist, and relinquish all rights to an internet
      domain name. The Company was also entitled to all future monies to be received
      under the license agreement.




In
      June
      2004, the Company received loans from and executed two promissory notes totaling
      $235,000 in favor of DML Marketing Corp., an entity controlled by Donna M.
      Levy,
      the wife of David C. Levy, in the principal amount of $150,000, which matured
      on
      October 30, 2004, and John P. Grandinetti, who at the time was a significant
      stockholder of the Company, in the principal amount of $85,000, which matured
      on
      October 30, 2004. The notes accrued interest at an annual rate of 5%. These
      notes were repaid in December 2004.




In
      August
      2004 and October 2004, the Company received loans from and executed promissory
      Notes in the principal amounts of $40,000 and $1,000 respectively, in favor
      of
      DML Marketing Corp. The notes accrued interest at an annual rate of 5% and
      matured on November 1, 2004. These notes were repaid in December
      2004.




Accounts
      payable to related parties at December 31, 2004 totaled approximately $120,000.
      Included in this amount was $1,000 in consulting services and expenses provided
      by a director.




In
      December 2004, the Company offset a note receivable from David Levy, an officer
      of the Company, in the amount of $15,500 against deferred salary, which had
      been
      deferred under an employment agreement.




For
      the
      period from May 20, 2003 (inception) through December 31, 2005, the Company
      received various computer and internet services totaling $39,866 from Broad
      Vision Group, an entity owned by John P. Grandinetti. In June 2004, $36,000
      was
      converted into common stock of the Company. At December 31, 2005 $0 was unpaid.




For
      the
      period from May 20, 2003 (inception) through December 2005, the Company received
      various consulting services totaling approximately $97,206 from Dr. Robert
      A.
      Kast, a significant stockholder of the Company. At December 31, 2005
      approximately $97,206 was unpaid.




Additionally,
      David Levy and John Poling, two executive officers of the Company, agreed to
      defer a portion of their salaries payable under their employment agreements
      until such time as adequate capital has been raised by the Company. Mr. Levy
      and
      Mr. Poling have both agreed to discontinue the deferral and waived any rights
      to
      the deferred amounts. The amount waived was approximately $213,000, and was
      credited to compensation during the year ended December 31, 2005.




63


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


On
      March
      3, 2004, in connection with the Distribution Agreement and assignment of certain
      assets of PMG (see Note 5), the Company assumed the obligation to repay $350,000
      of notes payable to Neil Strum and Ned Siegel, two significant stockholders
      of
      the Company. The notes have an annual interest rate of 8%. Payments commenced
      in
      March of 2004, and the balance due as of September 30, 2004 was approximately
      $331,000. The terms of these notes required monthly payments of principal and
      interest. The Company had not made the required monthly principal and interest
      payments since June of 2004. On May 5, 2005, the Company entered into a
      settlement agreement, effective April 15, 2005, with the holders of the notes.
      Under the terms of the settlement agreement, the notes were cancelled and were
      replaced with new notes containing the same terms and conditions as the old
      notes, except that the new notes had a beginning principal balance of $345,806.
      The Company did not make any of the required payments under the new notes.
      The
      stockholders filed suit and commenced litigation in the State of Florida and
      on
      January 16, 2006, the Company and the stockholders reached an agreement which
      required the immediate payment of $175,000 to the stockholders, and a subsequent
      payment of $125,000 on February 15, 2006, subject to a personal guarantee by
      David Levy, President of the Company and Donna Levy, his wife, as a complete
      settlement of the Distribution Agreement and dispute.




Prior
      to
      his appointment as a director of the Company on November 1, 2004, Mr. Gelberg
      was paid approximately $8,800 in 2004 and $14,775 in 2005, for consulting
      services provided to the Company. Mr. Gelberg resigned as a director of the
      Company on January 24, 2006. At December 31, 2005, approximately $2,500 of
      director fees was unpaid.




During
      2005, the Company received loans in the aggregate amount of approximately $1.5
      million from, David Levy and DML Marketing, of which $679,025 were repaid as
      of
      December 31, 2005, leaving an amount outstanding as of December 31, 2005 of
      $780,803. On April 3, 2006, the Company repaid a promissory note dated December
      9, 2005 to DML Marketing, in the amount of $108,377. The loans, which are
      considered working capital advances, generally pay interest at 10% and are
      due
      upon additional equity transactions. In April 2006, the Company repaid DML
      Marketing $108,000 leaving an amount outstanding of $672,803. The Company has
      also issued warrants to purchase up to 800,000 shares of common stock to DML
      Marketing at $1.50 per share. On April 3, 2006, the warrants were amended to
      change the exercise price per share to $2.00.





The
      Company also received promissory notes from, Dr. Robert A. Kast and his family
      during 2005 in the aggregate amount of $700,000, including the extension of
      a
      $150,000 promissory note, which was originally issued in 2004. As of December
      31, 2005, $375,000 was unpaid. The $150,000 promissory note, which was
      originally at 8% interest, currently pays interest at 10% and was due in March
      2005. The $700,000 promissory notes pay interest at 6% and were due at various
      dates in 2005. On April 12, 2006, the due date of these promissory notes was
      extended until such time as the Company raises an additional $2 million of
      equity or equity related securities in addition to the $2.45 million raised
      on
      April 21, 2006. The Company has also issued warrants to purchase up to 3,128,575
      shares of common stock to Dr. Robert A. Kast.




The
      Company has an employment agreement with David Levy, dated as of April 1, 2004.
      Mr. Levy serves as the Company’s President. The agreement terminates on March
      23, 2009 and may be extended for subsequent one-year periods by both parties
      signing an extension prior to 30 days of the expiration date. Under the
      agreement, Mr. Levy is entitled to receive an annual salary of $350,000 or
      such
      greater amount as the board of directors may determine. This annual salary
      increased 5% on March 23, 2005. Under the agreement, Mr. Levy deferred any
      salary in excess of $2,500 per week until the Company raises a minimum of
      $5,000,000 in equity or equity equivalents. If Mr. Levy is terminated without
      cause, the Company must pay him any of his annual salary that has accrued,
      and
      an amount equal to the lesser of his annual salary for the number of months
      remaining in the term of the agreement or his monthly salary multiplied by
      24.




64


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


The
      Company has an employment agreement with Les Garland, dated July 2003 and
      amended as of March 1, 2006. Mr. Garland serves as Chief Executive Officer
      of
      The Tube. Under the agreement, Mr. Garland is entitled to receive an annual
      salary of $350,000 of which amount was increased to $450,000 by the board of
      directors of the Company effective July 1, 2005. Under the agreement, Mr.
      Garland is also entitled to a $50,000 bonus in 2006, bonuses based on the
      advertising revenue of the Tube and the Company and performance bonuses based
      on
      the profits earned by The Tube. Effective January 1, 2007 and January 1, 2008,
      Mr. Garland is entitled to receive an annual salary of $550,000 and $650,000,
      respectively. If Mr. Garland is terminated without cause or resigns for good
      reasons, the Company must pay him monthly installments during the severance
      period in an amount equal to one-twelfth of his base salary. If the Company
      undergoes a change of control, the Company must pay Mr. Garland a fee equal
      to
      3% of the aggregate market value of the business combination, with a minimum
      of
      $3 million and a maximum of $10 million. If Mr. Garland introduces the
      transaction to the Company, there is no maximum.





The
      Company has an employment agreement with John W. Poling dated November 1, 2004
      and amended on December 28, 2005. Mr. Poling serves as the Company’s Executive
      Vice President and Chief Financial Officer. Under the agreement, Mr. Poling
      is
      entitled to receive an annual salary of $200,000. Under the amendment, salary
      will no longer be deferred and the annual salary was set at $160,000. Mr. Poling
      also agreed to waive his right to receive any of his deferred salary. In the
      event Mr. Poling is terminated without cause, he will be entitled to severance
      equal to one year’s salary and payable in 12 monthly payments.




**12.
      GOING CONCERN**





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. The Company's financial condition
      and operating results, specifically a working capital deficiency of
      approximately $11.9 million and a shareholders deficiency of approximately
      $10.7
      million at December 31, 2005, as well as a net loss of approximately $21.82
      million and net cash used in operations of approximately $5.5 million for the
      year ended December 31, 2005 and de minimis cash on hand, raise substantial
      doubt about its ability to continue as a going concern. The Company's existence
      is dependent on management's ability to develop profitable operations and
      resolve the Company's liquidity problems. Management anticipates that the
      Company will attain profitable status and improve its liquidity through the
      continued development of the Company’s television network and recorded music
      business.





These
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty. If the Company is unsuccessful in obtaining the
      additional capital necessary to fund its operations, it may be forced to
      downsize certain operations, restructure its current debt obligations on terms
      less favorable to the Company than the existing obligations or sell some of
      its
      assets. It may also need to seek protection under the federal bankruptcy laws
      or
      be forced into bankruptcy by its creditors. There can be no assurance the
      Company will be successful in its efforts to raise additional financing.





65


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


**13.
      SUBSEQUENT EVENTS**





During
      the first quarter of 2006, the Company received loans in the aggregate amount
      of
      $326,816 from three stockholders of the Company, who are related parties, of
      which $76,000 was repaid as of March 31, 2006, leaving an amount outstanding
      as
      of March 31, 2006 of $250,816. The loans, which are considered working capital
      advances, pay interest at 10% and are due when subsequent financing
      occurs.





During
      the first quarter of 2006, the Company issued 135,419 shares of common stock
      to
      third parties for services performed to the Company, 5,000 shares of common
      stock to directors as compensation for services on the Company’s Board of
      Directors and 5,711 shares of common stock to an investor as interest payment
      on
      a note payable.





During
      the first quarter of 2006, the Company issued convertible promissory notes
      to
      various accredited investors in the aggregate principal amount of $210,000.
      These convertible promissory notes pay interest at 10% and are due on the second
      anniversary of their issuance date and are convertible into shares of the
      Company’s common stock at the option of each holder at a conversion price of
      $2.50 per share. In connection with the issuance of the convertible notes,
      the
      Company issued to the holders an aggregate of 84,000 warrants to purchase the
      Company’s common stock. The common stock purchase warrants have two year terms
      and the exercise price is $2.50 per share.





The
      Company also issued a convertible promissory note of $300,000 to an accredited
      investor on March 21, 2006. This convertible promissory note pays interest
      at
      10% and is due on the second anniversary of its issuance date and is convertible
      into shares of the Company’s common stock at the option of the holder at a
      conversion price of $3.00 per share. In connection with the issuance of the
      convertible note, the Company issued to the holder a warrant to purchase 100,000
      shares of the Company’s common stock. The common stock purchase warrant has a
      two year term and the exercise price is $3.00 per share.





On
      February 25, 2006, AGU Entertainment Corp. changed its name to The Tube Media
      Corp. The name change was effected pursuant to Section 253 of the General
      Corporation Law of the State of Delaware by the merger of a wholly-owned
      subsidiary of the Company into the Company. The Company was the surviving
      corporation and, in connection with the merger, the Company amended its
      Certificate of Incorporation to change its name pursuant to the Certificate
      of
      Ownership and Merger filed with the Secretary of State of the State of Delaware.
      The Company also amended its Bylaws to reflect the name change and restated
      its
      Certificate of Incorporation.





The
      Company has an employment agreement with Les Garland, dated July 2003 and
      amended as of March 1, 2006. Mr. Garland serves as Chief Executive Officer
      of
      The Tube. Under the agreement, Mr. Garland is entitled to receive an annual
      salary of $350,000 of which amount was increased to $450,000 by the board of
      directors of the Company effective July 1, 2005. Under the agreement, Mr.
      Garland is also entitled to a $50,000 bonus in 2006, bonuses based on the
      advertising revenue of the Tube and the Company and performance bonuses based
      on
      the profits earned by The Tube. Effective January 1, 2007 and January 1, 2008,
      Mr. Garland is entitled to receive an annual salary of $550,000 and $650,000,
      respectively. If Mr. Garland is terminated without cause or resigns for good
      reasons, the Company must pay him monthly installments during the severance
      period in an amount equal to one-twelfth of his base salary. If the Company
      undergoes a change of control, the Company must pay Mr. Garland a fee equal
      to
      3% of the aggregate market value of the business combination, with a minimum
      of
      $3 million and a maximum of $10 million. If Mr. Garland introduces the
      transaction to the Company, there is no maximum.





On
      March
      3, 2004, in connection with the Distribution Agreement and assignment of certain
      assets of PMG (see note 5), the Company assumed the obligation to repay $350,000
      of notes payable to two shareholders of the Company. The notes have an annual
      interest rate of 8%. Payments commenced in March of 2004, and the balance due
      as
      of September 30, 2004 was approximately $331,000. The terms of these notes
      require monthly payments of principal and interest. The Company has not made
      the
      required monthly principal and interest payments since June of 2004. The
      shareholders filed suit and commenced litigation in the State of Florida. On
      January 16, 2006, the Company and the shareholders reached an agreement which
      required the immediate payment of $175,000 to the shareholders, and a subsequent
      payment of $125,000 on February 15, 2006, subject to a personal guarantee by
      David Levy, President of the Company and Donna Levy, his wife as a complete
      settlement of the Distribution Agreement and dispute.




66


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


On
      March
      6, 2006, The Tube, entered into a charter affiliation agreement, with the
      Tribune Broadcasting Company (“Tribune”). The charter affiliation agreement
      provides that Tribune will have the exclusive right and obligation to transmit
      The Tube’s music network via broadcast television from Tribune’s existing and
      acquired stations in the designated markets specified in the charter affiliation
      agreement.




The
      charter affiliation agreement provides the terms and conditions of broadcasting,
      as well as the obligations of each of the parties. Pursuant to the terms of
      the
      charter affiliation agreement, The Tube will pay a portion of its advertising
      revenue and a portion of the revenue that it receives from the sale of products
      on The Tube’s music network to Tribune as compensation, and other compensation
      as described in the Tribune Letter Agreement (as defined below).




The
      charter affiliation agreement has an initial term that commences on the
      effective date of the charter affiliation agreement and expires on March 31,
      2011. The initial term automatically renews for an additional four years if
      Tribune fails to notify The Tube of its desire to terminate the charter
      affiliation agreement at least six months prior to the scheduled expiration
      date. Tribune may terminate the charter affiliation agreement upon at least
      45
      days prior written notice to The Tube if The Tube’s music network is being
      distributed to less than a specified percentage of television households or
      cable households. In connection with the charter affiliation agreement, the
      parties also entered into a letter agreement, dated March 6, 2006 (the “Tribune
      Letter Agreement”), pursuant to which the Company agreed to issue to Tribune (i)
      within 10 days after the execution of the charter affiliation agreement, a
      common stock purchase warrant to purchase shares of the Company’s common stock,
      par value $0.0001 per share (the “common stock”), at an exercise price of $2.25
      per share, and shares of common stock; (ii) upon Tribune’s transmission of The
      Tube’s music network to television stations in markets that represent 75% of all
      television households in the markets where Tribune owns and/or operates
      broadcast television stations, a common stock purchase warrant to purchase
      shares of common stock at an exercise price of $2.50 per share; and (iii) a
      specified number of shares of common stock for each 11,000,000 television
      households (or pro rata if less than 11,000,000) that first receive The Tube’s
      music network as a result of a launch of The Tube’s music network on a Tribune
      television station; provided, however, that television households that receive
      The Tube’s music network in markets with less than 100,000 television households
      will not be included in the calculation of television households. The Company
      granted “piggyback” registration rights with respect to all of the securities to
      be issued under the Tribune Letter Agreement. Each common stock purchase warrant
      entitles its holder to purchase one share of common stock for either $2.25
      or
      $2.50 per share, subject to adjustments for stock splits, reverse splits and
      stock dividends. In addition, if the Company issues or sells shares of common
      stock in certain subsequent issuances for a price per share that is less than
      the applicable exercise price of the common stock purchase warrant, the exercise
      price will be reduced. The exercise price of the common stock purchase warrants
      will also be adjusted if the Company issues, sells or grants options, warrants
      or other securities or rights to subscribe to or exercisable for common stock
      in
      an issuance not specifically exempt by the terms of the common stock purchase
      warrants. The common stock purchase warrants may be exercised at any time prior
      to the earlier of the tenth anniversary of the issuance of the common stock
      purchase warrant or the termination or expiration of the charter affiliation
      agreement.




67


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


Pursuant
      to the terms of the Tribune Letter Agreement, The Tube agreed that if, in
      relation to any third party that owns or operates broadcast television stations
      and distributes The Tube’s music network, The Tube or the Company provide to
      such third party (i) a greater percentage of the advertising revenue or revenue
      that it receives from the sale of products on The Tube’s music network than that
      provided to Tribune or (ii) equity securities at a ratio more favorable than
      that provided to Tribune for each 11,000,000 television households, The Tube
      will offer such greater percentage or more favorable ratio to Tribune. If the
      granting of such greater percentage or more favorable ratio requires such third
      party to perform any material obligation not being performed by Tribune, then
      Tribune must perform such material obligation in order to receive the greater
      percentage or more favorable ratio.




The
      Tribune Letter Agreement grants Tribune the right to attend all meetings of
      the
      board of directors and committees of the board of directors of the Company
      and
      The Tube, and to receive any information given to the members of the board
      of
      directors of the Company and The Tube. The Company also agreed not to issue
      any
      equity in The Tube (or securities convertible into or exchangeable for equity
      in
      the Tube) during the term of the charter affiliation agreement.




On
      March
      22, 2006, The Tube also entered into a charter affiliation agreement with
      Sinclair television Group, Inc. (“Sinclair”). The charter affiliation agreement
      provides that Sinclair will have the exclusive right and obligation to transmit
      The Tube’s music network from Sinclair’s existing and acquired stations in the
      designated markets specified in the affiliation agreement.




The
      affiliation agreement provides the terms and conditions of broadcasting, as
      well
      as the obligations of each of the parties.




Pursuant
      to the terms of the affiliation agreement, The Tube will pay a portion of its
      advertising revenue and a portion of the revenue that it receives from the
      sale
      of products on The Tube’s music network to Sinclair as compensation, and other
      compensation as described in the Sinclair Letter Agreement (as defined below).
      The affiliation agreement has an initial term of five years that commences
      on
      the earlier of (i) the date on which The Tube’s music network is initially
      transmitted by Sinclair’s first station; or (ii) March 31, 2006. Sinclair may
      renew the affiliation agreement for two successive terms of five years each
      upon
      written notice to The Tube no later than 120 days prior to the expiration of
      the
      initial term or the first renewal term, as applicable. Sinclair may terminate
      the affiliation agreement as of March 31, 2007 with no liability upon written
      notice to The Tube no later than December 31, 2006. If at least 60 days prior
      to
      the end of the fourth year of the initial term, The Tube notifies Sinclair
      that
      it does not intend to pay the compensation specified in the Sinclair Letter
      Agreement (as defined below), Sinclair may terminate the affiliation agreement
      upon at least 45 days prior written notice to The Tube.




In
      connection with the affiliation agreement, the parties also entered into a
      letter agreement, dated March 22, 2006 (the “Sinclair Letter Agreement”),
      pursuant to which the Company agreed to issue to Sinclair (i) within 20 days
      after the execution of the affiliation agreement, a common stock purchase
      warrant to purchase shares of the common stock, at an exercise price of $2.25
      per share, and shares of common stock; (ii) upon Sinclair’s transmission of The
      Tube’s music network to television stations in markets that represent 50% of the
      designated markets where Sinclair owns and/or operates broadcast television
      stations, shares of common stock; and (iii) on or after April 1, 2007 and upon
      Sinclair’s transmission of The Tube’s music network to television stations in
      markets that represent 75% of the designated markets where Sinclair owns and/or
      operates broadcast television stations, a common stock purchase warrant to
      purchase shares of common stock at an exercise price of $2.50 per share and
      shares of common stock.




Each
      common stock purchase warrant entitles its holder to purchase one share of
      Common stock for either $2.25 or $2.50 per share, subject to adjustments for
      stock splits, reverse splits, stock dividends, reorganizations, consolidations
      and mergers. The common stock purchase warrants may be exercised at any time
      prior to the earlier of the tenth anniversary of the issuance of the common
      stock purchase warrant.




68


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


Pursuant
      to the terms of the Sinclair Letter Agreement, The Tube agreed that the Company
      may issue shares of common stock (i) as payment for services when the aggregate
      amount of all such issuances does not exceed 10% of the total number of shares
      of common stock outstanding as of the date of such issuance and so long as
      each
      share is issued at fair market value; (ii) to other distributors of The Tube’s
      music network when the aggregate amount of all such issuances does not exceed
      a
      specified number of shares of common stock; (iii) to satisfy existing
      obligations of the Company to issue equity, which obligations are specified
      in
      the Sinclair Letter Agreement; (iv) pursuant to the Company’s 2004 Stock Option
      and Stock Incentive Plan or any other equity incentive plan approved by the
      Company’s stockholders; provided, that the maximum number of shares issuable
      under such plans does not exceed 10% of the total number of shares of common
      stock outstanding as of the date such plan is approved by the Company’s
      stockholders; and (v) in connection with a purchase, merger or consolidation
      where the Company is the surviving corporation or an acquisition of the assets
      of a third party by the Company.




The
      Sinclair Letter Agreement provides Sinclair with a seat on the board of
      directors of The Tube, which shall be composed of no less than three and no
      more
      than ten members.




On
      March
      31, 2006, the Company entered into agreements with two individuals (“the
      Lenders”) pursuant to which the Lenders agreed to loan an aggregate amount of
      $800,000 (the “Bridge Loan”) to the Company. In connection with the Bridge Loan,
      the Company issued two promissory notes (the “Bridge Notes”), in the aggregate
      principal amount of $800,000, to the Lenders, both of whom are accredited
      investors. Pursuant to the terms of the Bridge Notes, the Bridge Loan will
      accrue interest at the rate of four percent per year, and the principal and
      interest on the Bridge Notes will be due on March 31, 2007. The payments due
      under the Bridge Notes will be accelerated as follows: (i) in the event the
      Company closes a round of financing of not less than $2.0 million and not more
      than $2.49 million prior to March 31, 2007, the Company will pay each Lender
      an
      amount equal to $320,000; and (ii) in the event the Company closes a round
      of
      financing equal to or greater than $2.5 million prior to March 31, 2007, the
      Company will pay each Lender the total amount due under each Bridge Note. Upon
      the occurrence of an event of default under the Bridge Notes, (i) the entire
      unpaid balance of the principal and any interest on the Bridge Notes will bear
      interest at the rate of 12% per year; and (ii) the holders of the Bridge Notes
      may, without notice and at their option, accelerate the maturity of the Bridge
      Notes and cause the entire unpaid balance and any interest on the Bridge Notes
      to be immediately due and payable. An event of default under the Notes occurs
      upon (i) the Company’s failure to timely pay any amount due under the Bridge
      Notes; (ii) the institution of any bankruptcy, reorganization, insolvency,
      liquidation or other proceeding for relief by or against the Company, and if
      instituted against the Company, the Company consents to any such proceeding
      or
      such proceeding is not dismissed within 90 calendar days; and (iii) any breach
      by the Company of the terms of the Bridge Notes that remains uncured for more
      than five days after receipt of written notice of such breach.




On
      April
      6, 2006, the Company amended warrants that were issued to DML Marketing and
      a
      stockholder in 2005 to purchase an aggregate 1,300,000 shares of common stock
      originally issued at $1.50 per share to $2.00 per share. These warrants were
      issued in 2005 in connection with the issuance of promissory notes and interim
      advances for working capital.





On
      April
      21, 2006, the Company completed a private placement (the “Private Placement”) of
      $2.45 million of securities to accredited investors (the “Investors”). In
      connection with the Private Placement, the Company and the Investors entered
      into a purchase agreement (the “Purchase Agreement”) and a registration rights
      agreement (the “Registration Rights Agreement”), each of which is dated as of
      April 21, 2006. Pursuant to the terms of the Purchase Agreement, the Company
      sold 7% secured convertible notes in the aggregate principal amount of $2.45
      million (the “7% Notes”) and issued common stock purchase warrants to purchase
      an aggregate of 1,088,889 shares of the common stock at an exercise price of
      $2.25 per share (the “Warrants”) to the Investors.




69


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


Pursuant
      to the terms of the 7% Notes, the Company is required to make equal monthly
      principal payments of $136,111, commencing on November 21, 2006 and continuing,
      on the first business day of each month, until the aggregate principal amount
      has been paid in full. Interest on the 7% Notes accrues quarterly and is payable
      on the last day of March, June, September and December of each year, commencing
      on September 30, 2006. At the option of the Company and subject to certain
      conditions, principal and interest payments due under the 7% Notes may be paid
      in cash or shares of common stock.




The
      7%
      Notes are convertible in shares of common stock at a conversion price of $2.25
      per share, subject to adjustments for stock splits, stock dividends, mergers
      and
      reorganizations. In addition, if the Company issues or sells any shares of
      common stock for a price per share that is less than the applicable conversion
      price of the 7% Notes, the conversion price of the 7% Notes will be reduced.
      The
      conversion price of the 7% Notes will also be adjusted if the Company issues,
      sells or grants any stock or other securities convertible into or exchangeable
      for common stock in an issuance that is not specifically exempt by the terms
      of
      the 7% Notes. The number of shares that may be acquired by any holder of the
      7%
      Notes upon any conversion of the 7% Notes or issuance of shares of common stock
      as principal or interest payments shall be limited to the extent to insure
      that
      the total number of shares of common stock beneficially owned by any holder
      does
      not exceed 4.99% of the total number of issued and outstanding shares of common
      stock.




Upon
      the
      occurrence of an event of default, the 7% Notes will bear interest at the rate
      of 12% per annum and all unpaid principal and interest accrued under the 7%
      Notes shall become (1) immediately due and payable upon the election of the
      holder, with respect to the events in (i) through (iv) and (vi) through (vii)
      below; and (2) automatically due and payable, with respect to the event in
      (v)
      below. An event of default under the 7% Notes occurs upon (i) the Company’s
      failure to timely pay principal due under the 7% Notes; (ii) the Company’s
      failure to timely pay interest due under the 7% Notes and such failure continues
      for more than five days; (iii) the Company and its subsidiaries failure to
      make
      a required payment or payments of indebtedness of $500,000 or more in aggregate
      principal amount and such failure continues for more than 20 days; (iv) an
      acceleration of the stated maturity date of any indebtedness of the Company
      or
      its subsidiaries of $500,000 or more in aggregate principal amount, which
      acceleration in not rescinded within 20 days; (v) the Company’s assignment for
      the benefit of creditors or admission in writing of its inability to pay its
      debts generally as they become due, or the voluntary or involuntary bankruptcy
      of the Company; (vi) the rendering of a final judgment that exceeds $500,000
      in
      the aggregate against the Company or its subsidiaries, which is not discharged
      within 60 days; (vii) proof that any representation of material fact made in
      any
      of the transaction documents or furnished to the holder by the Company was
      false
      in any material respect; and (viii) the Company’s failure to observe or perform
      in any material respect certain covenants in the transaction
      documents.




The
      7%
      Notes are secured by shares of common stock pledged by David Levy, President
      of
      the Company, pursuant to the terms of a stock pledge agreement.




The
      Warrants may be exercised for common stock on or before April 21, 2011. The
      Warrants are exercisable for shares of common stock at an exercise price of
      $2.25 per share, subject to adjustments for stock splits, stock dividends,
      mergers and reorganizations, or through a “cashless exercise” provision
      contained in the Warrants. In addition, if the Company issues or sells any
      shares of common stock for a price per share that is less than the applicable
      exercise price of the Warrants, the exercise price of the Warrants will be
      reduced. The exercise price of the Warrants will also be adjusted if the Company
      issues, sells or grants any stock or other securities convertible into or
      exchangeable for common stock in an issuance that is not specifically exempt
      by
      the terms of the Warrants.




70


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


Under
      the
      Registration Rights Agreement, on or prior to the 60 th calendar
      day after the closing of the Private Placement, the Company is obligated to
      file
      with the Securities and Exchange Commission (the “SEC”) a registration statement
      covering the resale of the registrable securities, which includes (i) 150%
      of
      the shares of common stock issuable upon the conversion of the 7% Notes; (ii)
      150% of the shares of common stock issuable as payment of interest on the 7%
      Notes; (iii) 150% of the shares of common stock issuable upon the exercise
      of
      the Warrants. The Company will use reasonable efforts to cause the registration
      statement to be declared effective by the SEC the earlier of (i) the
      120 th day
      following the closing of the Private Placement and (ii) the fifth trading day
      following the date on which the Company is notified by the SEC that the
      registration statement will not be reviewed or is no longer subject to further
      review. The Company is also obligated to use commercially reasonable efforts
      to
      keep such registration statement continuously effective until all registrable
      securities covered by such registration statement have been sold or may be
      sold
      pursuant to Rule 144(k) under the Securities Act of 1933, as amended. If (i)
      the
      registration statement is not filed by the required filing date; (ii) the
      registration statement is not declared effective by the SEC by the required
      effectiveness date; or (iii) after its effective date, the registration
      statement ceases for any reason to be effective or available to holders of
      all
      registrable securities for more than 20 consecutive trading days or an aggregate
      of 50 trading days (each, an “Event”), then (i) on the date of such Event, the
      Company shall pay each holder an amount in cash equal to 1.0% of the aggregate
      subscription amount paid by such holder in the Private Placement; and (ii)
      on
      each monthly anniversary of such an Event, until the Event is cured, the Company
      shall pay each holder an amount in cash equal to 1.0% of the aggregate
      subscription amount paid by such holder in the Private Placement. If the Company
      fails to pay any damages pursuant to an Event in full within ten days after
      its
      due date, the Company will pay interest thereon equal to 10% per annum. The
      maximum amount payable to any holder shall not exceed 12% of the aggregate
      subscription amount paid by such holder in the Private Placement.




The
      Company has used a portion of the proceeds from the Private Placement to repay
      the Bridge Loan obtained by the Company on March 31, 2006.




On
      April
      3, 2006, the Company repaid a promissory note dated December 9, 2005 to DML
      Marketing, in the amount of $108,377.





On
      April
      27, 2006, the Company repaid $182,818 of promissory notes payable to a
      stockholder, plus $56,752 of interest due, which included $37,534 of interest
      payable on the Galt Note.




**Note
      14. Embedded Derivatives**




On
      December 22, 2004, the Company issued a secured convertible term note in the
      principal amount of $3 million to Mitchell Entertainment Company (the “Mitchell
      Note”). The Mitchell Note paid interest at an annual rate of 10% and had a
      maturity date of December 19, 2006. The Mitchell Note could have been converted
      at any time by the lender into shares of the Company’s stock at an initial
      conversion price of $1.50 per share, subject to anti-dilution protections and
      certain other adjustments. In connection with the issuance of the Mitchell
      Note,
      the Company also issued to the lender warrants to purchase 2,000,000 shares
      of
      the Company’s common stock at an exercise price of $2.00 per share. In
      connection with the issuance of the Mitchell Note, the Company incurred deferred
      financing fees of approximately $148,000, which is reflected in other assets
      on
      the Company’s balance sheet. The Mitchell Note was secured by a second mortgage
      on the Lauderdale Property and by substantially all of the Company’s other
      assets, including the capital stock of its subsidiaries. The issuance of the
      warrants, as well as the existence of an embedded beneficial conversion feature,
      resulted in the Company recording a discount on the Mitchell Note of $3,000,000
      as of the date of issuance. This discount was being accreted as interest expense
      from the date of issuance to the Mitchell Note's maturity date.




71


**THE
          TUBE MEDIA CORP. (Formerly AGU Entertainment Corp.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2005 AND 2004**


On
      December 28, 2005 Mitchell Note was paid in full from the proceeds of the sale
      of the Lauderdale Property, and the remaining balance of the unamortized
      discount on the Mitchell Note was charged off as interest expense. Pursuant
      to
      the terms of the Mitchell Note, if such note is prepaid, the holder has the
      continuing right and option to purchase shares of Common Stock with an aggregate
      purchase price equal to $3 million. The Mitchell Note also included a provision
      that in the event that the Company’s EBITDA for the calendar quarter ending
      September 30, 2006 did not equal at least $5,000,000, the holder of the Mitchell
      Note has the right to extend the option to purchase shares of Common Stock
      to
      March 31, 2007. If the Maturity Date is so extended and the Company’s EBITDA
      does not equal $5,000,000 for the calendar quarter ending December 31, 2006
      then
      Mitchell has the right to extend the option to purchase shares of Common Stock
      for an additional calendar quarter. The holder of the Mitchell Note also has
      the
      right to extend the option to purchase shares of Common Stock for an indefinite
      number of additional calendar quarters until the Company’s EBITDA equals
      $5,000,000 for the calendar quarter which immediately preceding the calendar
      quarter ending on the then applicable Maturity Date.





The
      Company concluded that the Mitchell Note contained an embedded derivative due
      to
      the registration rights and liquidated damages provisions contained in the
      surviving provision of the note which provides Mitchell the right to repurchase
      the shares of the Company’s common stock into which the note was convertible for
      a period of one year. In addition a requirement that the shares underlying
      the
      note and a warrant issued to Mitchell, be registered by June 30, 2005 (which
      requirement the Company did not satisfy) in order to avoid liquidated damages
      of
      .5% per month. In accordance with the Company’s policy of accruing the liability
      for liquidating damages as incurred, the Company recorded a liability and a
      corresponding expense at December 31, 2005.





The
      Company expensed the following amounts and recorded liabilities at December
      31,
      2005 as follows;


Embedded
                  Derivative in connection with the perpetual option to acquire shares
                  on
                  terms provided in the Mitchell Note,
              
              $
              4,999,955Embedded
                  Derivative, Warrant
              
              $
              2,508,909Total
                  Embedded Derivative
              
              $
              7,508,864Liquidated
                  damages on embedded derivative
              
              $
              90,000Total
                  recorded liabilities at December 31, 2005
              
              $
              7,598,864


The
      Company will recalculate the liability recorded from the embedded derivative
      in
      the Mitchell Note and Warrant in
      each
      successive period based on the completion of a calculation of the fair market
      value of the embedded derivative by an independent valuation consultant retained
      by the Company.





72




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




On
      June
      8, 2004, we notified our principal accountants, Cordovano and Honeck, P.C.,
      that
      we were terminating their engagement as principal accountants and engaging
      Weinberg & Company, P.A. ("Weinberg") as our new principal accountants. The
      termination of Cordovano and Honeck, P.C. and the engagement of Weinberg were
      approved by our Audit Committee. The reports of Cordovano and Honeck, P.C our
      consolidated financial statements for the previous two fiscal years did not
      contain an adverse opinion or a disclaimer of opinion, nor were they qualified
      or modified as to uncertainty, audit scope, or accounting principles, except
      as
      follows: Cordovano and Honeck, P.C.'s report on the consolidated financial
      statements of AGU Entertainment Corp. as of and for the two fiscal years ended
      December 31, 2002 and 2003 contained a separate paragraph stating that "the
      accompanying consolidated financial statements have been prepared assuming
      that
      AGU Entertainment will continue as a going concern. As discussed in AGU
      Entertainment's Notes to the financial statements, AGU Entertainment has
      suffered significant operating losses since inception, which raises a
      substantial doubt about its ability to continue as a going concern."
      Management's plans in regard to this matter are also described in Note 9 to
      the
      audited financial statements of Pyramid Music Corp. and Subsidiaries ("PMC")
      filed with the Securities and Exchange Commission on Form 8-K/A on June 15,
      2004. The consolidated financial statements do not include any adjustments
      that
      might result from the outcome of this uncertainty.





In
      connection with its audits of the two fiscal years ended December 31, 2002
      and
      2003, and the review of the consolidated financial statements through March
      31,
      2004, there were no disagreements with Cordovano and Honeck, P.C on any matter
      of accounting principles or practices, financial statement disclosure or
      auditing scope or procedure which disagreements, if not resolved to their
      satisfaction would have caused them to make reference in connection with their
      opinion to the subject matter of the disagreement. We requested Cordovano and
      Honeck, P.C to furnish a letter addressed to the Securities and Exchange
      Commission stating whether Cordovano and Honeck, P.C. agrees with the above
      statements. A copy of that letter, dated June 11, 2004, was filed as Exhibit
      16
      to Form 8-K/A filed with the Securities and Exchange Commission on June 15,
      2004.





On
      June
      8, 2004, we engaged the firm of Weinberg and Company P.A. as our independent
      principal accountants to audit our financial statements for the 2004 fiscal
      year. During the two most recent fiscal years and the first quarter 2004,
      neither we, nor anybody on our behalf, consulted the newly engaged accountants
      regarding the application of accounting principles to a specified transaction,
      either completed or proposed, or the type of audit opinion that might be
      rendered on our financial statements.





**Item
      8A. CONTROLS AND PROCEDURES**




The
      Company, under the supervision and with the participation of its management,
      including its principal executive officer and principal financial officer,
      evaluated the effectiveness of the design and operation of its disclosure
      controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange
      Act of 1934, as amended (the “Act”) as of the end of the period covered by this
      report (the “Disclosure Controls”). Based upon the Disclosure Controls
      evaluation, the principal executive officer and principal financial officer
      have
      concluded that the Company’s disclosure controls and procedures were not
      effective in connection with preparing this Annual Report on Form 10-KSB due
      to
      a material weakness in the Company’s internal control over financial reporting,
      mainly its financial closing, review and analysis process.





In
      addition, the timeliness of the Company's filing of this Annual Report on Form
      10-KSB was **** adversely
      impacted by a multitude of factors, including, but not limited to, the
      involuntary relocation of the Company's headquarters in October 2005 due to
      Hurricane Wilma and the subsequent disposal of that facility in December of
      2005, the negotiation and entering into of two significant agreements in the
      first quarter of 2006 regarding the broadcasting of the Company's TV station,
      as
      well as significant financing agreements entered into in the first and second
      quarters of fiscal 2006 which were critical to the Company's ability to continue
      as a going concern. The occurrence of these events consumed a substantial amount
      of the Company's limited financial and human resources, diverting management's
      attention from the preparation of this Annual Report on Form 10-KSB to these
      other critical transactions.




73





The
      Company believes that the issues surrounding the restatement of this report,
      mainly the internal control related to the financial closing, review and
      analysis process, have been addressed and the Company has taken steps to avoid
      the reoccurrence of this condition by adding additional qualified staff with
      SEC
      experience in the financial reporting and analysis area. The Company believes
      that the efforts taken by new management since the end of 2005 to strengthen
      the
      Company’s internal controls related to the financial closing, review, and
      analysis process will address this issue in future periods.





A
      control
      system, no matter how well conceived and operated, can provide only reasonable,
      not absolute, assurance that the objectives of the control system are met.
      Further, the design of a control system must reflect the fact that there are
      resource constraints, and the benefits of controls must be considered relative
      to their costs. Because of the inherent limitations in all control systems,
      no
      evaluation of controls can provide absolute assurance that all control issues
      and instances of fraud, if any, within the Company have been detected. Because
      of the inherent limitations in a cost-effective control system, misstatements
      due to error or fraud may occur and not be detected.





The
      Company’s internal control over financial reporting was modified during the
      Company’s most recent fiscal quarter to add additional qualified staff to
      address deficiencies in the financial closing, review and analysis process,
      which has materially affected the Company’s internal control over financial
      reporting.




**Item
      8B. OTHER INFORMATION**





On
      April
      21, 2006, the Company received notice from the OTC Bulletin Board (“OTCBB”)
      indicating that the Company was not current in its reporting obligations because
      the Company’s Annual Report on Form 10-KSB was not timely filed. Pursuant to
      NASD Rule 6530, unless the delinquency was cured by the expiration of the grace
      period, May 22, 2006, the Company’s common stock would not have been eligible
      for quotation on the OTCBB and would have been removed effective May 24, 2006.
      The Company contacted the Staff of the OTCBB and informed them that the Company
      would be in compliance with NASD Rule 6350 prior to the grace period expiration
      date.





In
      the
      letter, OTCBB also noted that as of April 20, 2006, notification of the
      delinquency appeared on the OTCBB Daily List and a fifth character “E” was
      appended to the Company’s ticker symbol on the first business day following the
      date that the delinquency notification appeared on the Daily list. As this
      Form
      10-KSB has been filed prior to the expiration of the grace period, the Company
      expects that the Company’s delinquency notification on the Daily List and the
      fifth character “E” appended to the Company’s ticker symbol will be
      removed.





Any
      OTCBB
      issuer that is delinquent in its reporting obligations three times in a 24-month
      period and/or is actually removed from the OTCBB for failure to file two times
      in a 24-month period, in each case, is ineligible for quotation on the OTCBB
      for
      a period of one year. The Company has been delinquent one time in the past
      24-month period.




74




**PART
      III.**




**Item
              9.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(A) OF THE EXCHANGE ACT**




The
      following table sets forth information regarding the Company’s directors and
      executive officers as of December 31, 2005. There are no family relationships
      among any of our directors and officers.





**Name**
            
            **Age**
            
            **Positions******David
                C. Levy
            
            53
            
            Director
                and President of the CompanyLes
                Garland
            
            52
            
            Director,
                Senior Executive Vice President of the Company and Chief Executive
                Officer
                of The TubeGregory
                R. Catinella
            
            54
            
            DirectorJohn
                W. Poling
            
            60
            
            Director,
                Executive Vice President and Chief Financial
                Officer





David
      C.
      Levy has served as President of the Company since May 2003. Prior to joining
      the
      Company, Mr. Levy was the Vice President of Business Development of Northwestern
      Bell Phones, a manufacturing and marketing company of consumer electronics
      from
      1995 to May 2003. Mr. Levy became a director of the Company upon the
      consummation of the share exchange with Pyramid Music Corp. in April 2004.
      In
      the late 1970's, Mr. Levy managed hit dance music group "Foxy," which had a
      #1
      record titled "Get Off" and a gold album.





Les
      Garland served as President of The Tube from August 2003 until he became Chief
      Executive Officer of the Tube in March 2006, and has served as President of
      Afterplay Marketing, Inc., an entertaining consulting company, since 1995.
      Mr.
      Garland is also a Senior Executive Vice President of the Company, which position
      he has held since April 2004. From 1998 to 2000, Mr. Garland was a consultant
      to
      the College Television Network, a television network on college campuses across
      the United States. Mr. Garland became a director of the Company upon the
      consummation of the share exchange with Pyramid Music Corp. in April 2004.
      Mr.
      Garland was a co-founder/originator of both MTV: Music Television and VH1.
      In
      1987, MTV Networks was sold to Viacom for over $1 billion. In the 1990's, Mr.
      Garland played an essential role in the domestic and international launch of
      the
      interactive music channel, The Box, acting as senior executive vice president.
      Responsible for entertainment programming, promotion, advertising sales and
      marketing, Mr. Garland oversaw the rollout of the channel from a base of 200,000
      homes at its inception to more than 30 million U.S. households and 25 million
      households internationally. In 1998, The Box was sold to Viacom. Mr. Garland's
      next venture was College Television Network. He was involved in the rollout,
      which put the network on college campuses across the country. In 2000, the
      College Television Network was sold to Viacom.





Gregory
      R. Catinella has been the owner of Catinella Realty, a real estate investment
      company, since January 2004. Prior to owning Catinella Realty, Mr. Catinella
      was
      Chairman and President of Catinella Consulting Inc., a provider of consulting,
      marketing and business development services to public and private companies
      since 1986. Mr. Catinella became a director of the Company upon the consummation
      of the share exchange with Pyramid Music Corp. in April 2004.




75





John
      W.
      Poling has served as our Executive Vice President and Chief Financial Officer
      since November 2004. Mr. Poling was a partner at Tatum Partners, LLP provides
      financial services to emerging growth, middle market and multinational
      companies. Prior to joining Tatum Partners, LLP, Mr. Poling served as Chief
      Financial Officer of U.S. Plastic Lumber Corp., a manufacturer and distributor
      of plastic lumber products, from 1999 to July 2002. In July of 2004, U. S.
      Plastic Lumber Corp. filed for bankruptcy. Mr. Poling serves on the board of
      directors of Kreisler Manufacturing Corporation, a manufacturer and distributor
      of metal aircraft engine and industrial turbine components, and SystemOne
      Technologies Inc., a manufacturer and distributor of self-contained recycling
      parts washers. Mr. Poling became a director of the Company upon the consummation
      of the share exchange with Pyramid Music Corp. in April 2004.





Upon
      the
      consummation of the merger on October 21, 2004, our board of directors was
      divided into three classes, designated as Class I, Class II and Class III.
      The
      term of the Class I directors was scheduled to expire after the 2005 annual
      meeting of stockholders, the term of the Class II directors expires after the
      2006 annual meeting of stockholders, and the term of the Class III directors
      expires after the 2007 annual meeting of stockholders. After each such meeting,
      the newly elected directors will serve three-year terms. Upon the consummation
      of the merger, Mr. Catinella was designated Class I director, Mr. Levy was
      designated a Class II director, and Mr. Garland and Mr. Poling were designated
      Class III directors. The Company did not hold a 2005 annual meeting of
      stockholders; therefore, the directors for Class I and Class II will be voted
      upon at the 2006 annual meeting of stockholders. After such meeting, the Class
      I
      directors elected will serve two-year terms.





The
      Company does not currently have a Financial Expert heading the Audit Committee,
      but is actively seeking one.





The
      Company’s board of directors has a standing Audit Committee. The Audit Committee
      is currently composed of Gregory R. Catinella. The Board has determined that
      such member of the Audit Committee is independent as defined in applicable
      Nasdaq National Market listing standards.





The
      board
      of directors has adopted a code of ethics that applies to the Company’s
      principal executive officer, principal financial officer and principal
      accounting officer or controller. The code of ethics was previously filed with
      the Commission in the Company’s Current Report on Form 8-K filed with the
      Commission on April 23, 2004 and is incorporated by reference as an exhibit
      to
      this Annual Report on Form 10-K.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





During
      2005, Michael Jay Solomon filed one late report on Form 4 relating to one
      transaction, Marc Gelberg filed one late report on Form 4 relating to two
      transactions, and Gregory Catinella filed two late reports on Form 4 relating
      to
      three transactions.





76




**Item
      10.** **SUMMARY
      COMPENSATION TABLE**




The
      following table sets forth the total compensation paid to or accrued by our
      President and other named executive officers for the fiscal years ended December
      31, 2005, 2004 and 2003.





Annual
                CompensationName
                and Principal Position
            
            Fiscal
              Year
            
            Salary
            
            Bonus
            
            All
              Other
              CompensationDavid
                Levy
              President
                and Director of the Company
            
            
            2005
              2004
              2003
            
            $
              $
              $
            174,000
              172,000
              3,607
            
            $
            40,000
              —
              —
            
            $
              $
              $
            19,374(1
              13,695
                (2
              11,934
                (3
            )
              )
              )Les
                Garland, Executive Vice Presidentand Director of the
                Company
            
            
            2005
              2004
              2003
            
            $
              $
              $
            406,154
              397,343
              64,421
            
            $
            85,000
              —
              29,000
            
            $
              $
            19,374
                (1
              1,031(4
            )
              )John
                W. Poling Executive Vice President and Director of the Company
                (5)
            
            
            2005
              2004
            
            $
              $
            130,000
              45,500
            
            $
            30,000
              —
            
            
            —
              —





(1)
      Includes compensation for an automobile allowance of $ 18,000 and
      health insurance of $1,374.




(2)
      Includes compensation for an automobile allowance of $12,664 and
      health insurance of $1,031.




(3)
      Includes compensation for an automobile allowance of $10,903 and health
      insurance of $1,031.




(4)
      Includes compensation for health insurance of $ 1,031.




(5)
      Mr.
      Poling was appointed Executive Vice President of the Company effective as of
      November, 1 2004.





**Employment
      Agreements**





*David
      Levy.* Under an
      employment agreement, dated as of April 1, 2004, David Levy serves as our
      President. The agreement terminates on March 23, 2009 and may be extended for
      subsequent one-year periods by both parties signing an extension prior to 30
      days of the expiration date. Under the agreement, Mr. Levy is entitled to
      receive an annual salary of $350,000 or such greater amount as the board of
      directors may determine. This annual salary increased 5% on March 23, 2005.
      Under the agreement, Mr. Levy deferred any salary in excess of $2,500 per week
      until the Company raises a minimum of $5,000,000 in equity or equity
      equivalents. If Mr. Levy is terminated without cause, the Company must pay
      him
      any of his annual salary that has accrued, and an amount equal to the lesser
      of
      his annual salary for the number of months remaining in the term of the
      agreement or his monthly salary multiplied by 24.





*Les
      Garland.*  Under
      an
      employment agreement, dated July 2003 and amended as of March 1, 2006, Les
      Garland serves as Chief Executive Officer of The Tube. Under the agreement,
      Mr.
      Garland is entitled to receive an annual salary of $350,000 of which amount
      was
      increased to $450,000 by the board of directors of the Company effective July
      1,
      2005. Under the agreement, Mr. Garland is also entitled to a $50,000 bonus
      in
      2006, bonuses based on the advertising revenue of the Tube and the Company
      and
      performance bonuses based on the profits earned by The Tube. Effective January
      1, 2007 and January 1, 2008, Mr. Garland is entitled to receive an annual salary
      of $550,000 and $650,000, respectively. If Mr. Garland is terminated without
      cause or resigns for good reasons, the Company must pay him monthly installments
      during the severance period in an amount equal to one-twelfth of his base
      salary. If the Company undergoes a change of control, the Company must pay
      Mr.
      Garland a fee equal to 3% of the aggregate market value of the business
      combination, with a minimum of $3 million and a maximum of $10 million. If
      Mr.
      Garland introduces the transaction to the Company, there is no
      maximum.





*John
      W. Poling* ** Under
      an
      employment agreement dated November 1, 2004 and amended on December 28, 2005.
      Mr. Poling serves as our Executive Vice President and Chief Financial Officer.
      Under the agreement, Mr. Poling is entitled to receive an annual salary of
      $200,000. Under the amendment, salary will no longer be deferred and the annual
      salary was set at $160,000. Mr. Poling also agreed to waive his right to receive
      any of his deferred salary. In the event Mr. Poling is terminated without cause,
      he will be entitled to severance equal to one year’s salary and payable in 12
      monthly payments.




77





**2004
      Stock Option and Stock Incentive Plan**





The
      Company adopted the 2004 Stock Option and Stock Incentive Plan (the "Incentive
      Plan") on July 29, 2004. The purpose of the Incentive Plan is to promote the
      long-term interests of the Company and its stockholders by providing a means
      for
      attracting and retaining officers, directors and other key employees of and
      consultants to the Company and its affiliates by providing for awards in the
      form of common stock.




Set
      forth
      below is a summary of the provisions of the Incentive Plan. This summary is
      qualified in its entirety by the detailed provisions of the text of the actual
      Incentive Plan which is incorporated by reference as an exhibit to this Annual
      Report on Form 10-KSB.




All
      officers, directors, important consultants and key employees of the Company
      and
      of any present or future Company parent or subsidiary corporation are eligible
      to receive an option or options or awards of restricted stock under the
      Incentive Plan.





Awards
      made pursuant to the Incentive Plan may be in the form of options or grants
      of
      shares of restricted stock. Options granted under the Incentive Plan may be
      Incentive Stock Options or Non-Qualified Stock Options. Unless the context
      otherwise requires, the term "option" includes both Incentive Stock Options
      and
      Non-Qualified Stock Options. The administrator may also grant awards entitling
      the participant to receive a stated number of shares of common stock, which
      awards may be subject to restrictions or forfeiture for a period of time as
      stipulated by the Board of Directors or the Committee, as applicable. The dollar
      value of awards of restricted stock granted under the Incentive Plan shall
      be
      based upon the fair market value of common stock on the date of
      grant.





The
      Incentive Plan shall be administered by the Board of Directors of the Company,
      or a Compensation Committee appointed by the Company's Board of Directors.
      Pursuant to the terms of the Incentive Plan, the Compensation Committee must
      consist of a minimum of two and a maximum of five members of the Board of
      Directors, each of whom shall be a "Non-Employee Director" within the meaning
      of
      Exchange Act Rule 16b-3(b)(3) or any future corresponding rule, except that
      the
      failure of the Compensation Committee for any reason to be composed solely
      of
      Non-Employee Directors shall not prevent an option or restricted stock award
      from being considered granted under the Incentive Plan. References to the term
      "Committee" under Proposal 2 refer to either the Company's Board of Directors
      or
      a Compensation Committee comprised of Non-Employee Directors. Our Board of
      Directors will administer the Incentive Plan until such time that our
      Compensation Committee is comprised of Non-Employee Directors. Under the
      Incentive Plan, the Committee has the right to adopt such rules for the conduct
      of its business and the administration of the Incentive Plan as it considers
      desirable. The Committee has the right to construe the Incentive Plan and the
      options or awards of restricted stock issued pursuant to it, to correct defects
      and omissions and to reconcile inconsistencies to the extent necessary to
      effectuate the purpose of the Incentive Plan and the options or awards of
      restricted stock issued pursuant to it.





Pursuant
      to the terms of the Incentive Plan, 2,000,000 shares of common stock were
      reserved for issuance upon the exercise of options or awards of restricted
      stock
      granted under the Incentive Plan. All 2,000,000 share of common stock may be
      awarded in form of Incentive Stock Options.




78





The
      Incentive Plan provides that the maximum number of options or restricted stock
      which may be awarded to any single participant under the Incentive Plan shall
      be
      no more than is equal to 90% of the shares reserved for issuance under the
      Incentive Plan. The purpose of this limitation is to enable awards of Incentive
      Stock Options made pursuant to the Incentive Plan to comply with one of the
      conditions of Section 162(m) of the Code which provide for the deductibility
      of
      compensation paid to the Company's named executive officers if it is performance
      based.





The
      option price for options issued under the Incentive Plan shall be at least
      equal
      to the fair market value of common stock on the date of grant of the option.
      The
      exercise price of an option may be paid in cash or the delivery of already
      owned
      shares of common stock of the Company having a fair market value equal to the
      exercise price, or a combination thereof.





The
      Board
      of Directors has interpreted the provision of the Incentive Plan which allows
      payment of the option price in common stock of the Company to permit the
      "pyramiding" of shares in successive exercises. Thus, an optionee could
      initially exercise an option in part, acquiring a small number of shares of
      common stock, and immediately thereafter effect further exercises of the option,
      using the common stock acquired upon earlier exercises to pay for an
      increasingly greater number of shares received on each successive exercise.
      This
      procedure could permit an optionee to pay the option price by using a single
      share of common stock or a small number of shares of common stock and to acquire
      a number of shares of common stock having an aggregate fair market value equal
      to the excess of (a) the fair market value of all shares to which the option
      relates over (b) the aggregate exercise price under the option.





All
      options granted pursuant to the Incentive Plan are exercisable in accordance
      with a vesting schedule (if any) which is set by the Committee at the time of
      grant. The expiration date of an option is also determined by the Committee
      at
      the time of the grant, but in no event will an option be exercisable after
      the
      expiration of ten years from the date of grant of the option.





All
      unexercised options terminate three months following the date on which an
      optionee's employment with the Company terminates, other than by reason of
      disability or death. An exercisable option held by an optionee who dies or
      who
      ceases to be employed by the Company because of disability may be exercised
      by
      the employee or his representative within one year after the employee dies
      or
      becomes disabled (but not later than the scheduled option termination
      date).





The
      Committee may in its sole discretion, provide in an option agreement the
      circumstances under which the option shall become immediately exercisable and
      may accelerate the date on which all or any portion of an option may be
      exercised.





All
      awards of restricted stock of common stock granted pursuant to the Incentive
      Plan may be subject to vesting for a period of time and will become unrestricted
      under the Incentive Plan in accordance with a vesting schedule, if any, set
      by
      the Committee at the time of grant. Under the terms of the Incentive Plan,
      the
      Committee may also establish an additional time period during which the
      participant must hold the vested shares prior to resale. During the restricted
      period, if any, the participant shall have the right to vote the shares subject
      to the award.





All
      unvested awards terminate immediately upon termination of the participant's
      employment with the Company, other than by reason of disability or death. If
      the
      participant ceases to be employed by the Company because of death or disability,
      any unvested awards will immediately vest. Additionally, unless the Committee
      shall otherwise provide, if the participant's employment with the Company is
      involuntarily terminated for any reason, except for cause, during an 18 month
      period after a change in control of the Company, the shares of Common Stock
      subject to the participant's award will fully vest and no longer be subject
      to
      the restrictions under the Incentive Plan. A change in control includes a change
      within a 12 month period in holders of more than 50% of the outstanding voting
      stock of the Company, or any other events deemed to be a change in control
      by
      the Committee.




79





The
      Committee has the authority, in its sole discretion, to accelerate the time
      at
      which any or all of the restrictions shall lapse with respect thereto, or to
      remove any restrictions whenever it shall determine such action s appropriate
      by
      reason of changes in tax or other laws or other changes in circumstances
      occurring after the commencement of the restricted period.





**Compensation
      of Directors**




Each
      non-officer director is paid $2,500 in cash and 2,500 shares of our common
      stock
      per quarter.




**Item 11.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS**




The
      following table sets forth certain information with respect to the beneficial
      ownership of the Company’s common stock as of December 31, 2005, by each person
      known by the Company to own beneficially more than 5% of the Company’s common
      stock; each of the Company’s named executive officers; each director of the
      Company; and all of the executive officers and directors as a
      group.





The
      amount and percentage of common stock beneficially owned are reported on the
      basis of regulations of the SEC governing the determination of beneficial
      ownership of securities. Under the rules of the SEC, a person is deemed to
      be a
      beneficial owner of a security if that person has or shares voting power, which
      includes the power to dispose of or to direct the disposition of the security.
      Unless otherwise indicated below, each beneficial owner named in the table
      below
      has sole voting and sole investment power with respect to all shares owned
      beneficially. The percentage of beneficial ownership of common stock is based
      on
      26,046,711 shares outstanding as of December 31, 2005.





**Name
                and Address of Beneficial Owner (1)**
            
            **Shares
                Beneficially Owned**
            
            **Percentage
                of Outstanding Common stock Owned**Les
                Garland
              President
                of The Tube and Director of the Company
            
            
            1,542,000
            
            
            5.9
            %David
                Levy
              President
                of the Company and Director of the Company
            
            
            2,744,373(2)(4
            )
            
            10.6
            %Gregory
                Catinella
              Director
                of the Company
            
            
            746,500
            
            
            2.9
            %John
                W. Poling
              Executive
                Vice President and Chief Financial Officer of the Company and Director
                of
                the Company
            
            
            200,000
            
            
            *




80




**Name
                  and Address of Beneficial Owner (1)**
              
              **Shares
                  BeneficiallyOwned**
              
              **Percentage
                  of Outstanding Common stock Owned**Ned
                  Siegel
                500
                  T-Rex Ave., Suite 150
                Boca
                  Raton, FL 33431
              
              
              1,725,691
              
              
              6.6
              %Neil
                  Strum
                3849
                  Rambla Pacifico
                Malibu,
                  California 90265
              
              
              1,905,691
              
              
              7.3
              %VLC
                  Holdings, LLC
                2455
                  E. Sunrise Blvd., Suite 502
                Ft.
                  Lauderdale, FL 33304
              
              
              2,739,373(3)(4
              )
              
              10.5
              %Mitchell
                  Entertainment Company
                11601
                  Wilshire Blvd., Suite 2400
                Los
                  Angeles, CA 90025
              
              
              4,300,000(5
              )
              
              14.2
              %Robert
                  Kast
                21875
                  Cartagena Drive
                Boca
                  Raton, FL 33428
              
              
              4,537,861(6
              )
              
              15.6
              %All
                  executive officers and directors as a group (4 persons)
              
              
              5,232,873
              
              
              20.1
              %





*
      Less
      than 1%


(1)
                Unless otherwise indicated, the address of record for the owner is
                1451
                West Cypress Creek Road, Ft. Lauderdale, FL 33309(2)
                Includes 5,000 shares owned by David Levy and 2,739,373 owned by
                VLC
                Holdings, LLC. Excludes 1,272,784 shares owned by Rachel Levy, David
                Levy’s mother and 8,000 shares owned by Victoria Levy, David Levy’s
                daughter.(3)
                The aggregate holdings of David Levy, Rachel Levy and VLC Holdings
                total
                4,017,157 and represent approximately 15.4% of the Company’s outstanding
                common stock.(4)
                The principal owners of VLC Holdings, LLC are the wife and daughter
                of
                David Levy, the President and a director of the Company. Excludes
                shares
                held by Rachel Levy.(5)Represents
                the right to purchase 2,000,000 shares pursuant to a repaid convertible
                term note and 2,300,000 shares issuable upon the exercise of a common
                stock purchase warrant.(7)
                Includes common stock purchase warrants to purchase up to 3,128,575
                shares
                of common stock.




81




**Equity
      Compensation Plan Information**





The
      following table details information regarding our equity compensation plan
      information as of December 31, 2005.


Plan
                  Category
              
              Number
                  of securities to be issued upon exercise of outstanding options,
                  warrants
                  and rights (a)
              
              Weighted-average
                  exercise price of outstanding options, warrants and rights
                  (b)
              
              Number
                  of securities remaining available for future issuance under equity
                  compensation plans (excluding securities reflected in column (a))
                  ( c
                  )Equity
                  compensation plans approved by security holders
              
              
              —
              
              $
              —
              
              
              2,000,000
                  (1
              )Equity
                  compensation plans not approved by security holders
              
              
              10,000
              
              $
              3.00
                  (3
              )
              
              —Total
                  (4)
              
              
              10,000
              
              $
              3.00
              
              
              2,000,000




(1)
            No
                stock options have been issued under the 2004 Employee****Stock
                Option Plan approved by security
                holders.





(2)
            A
                warrant to purchase 10,000 shares of common stock was issued to a
                consultant on August 2, 2005. This warrant has a term of two years
                and is
                immediately exercisable at the option of the holder. The exercise
                price is
                $3.00 per share.





(3)
            Weighted
                average fair market value of securities
                issued.





(4)
            This
                table does not include shares of common stock that the company has
                issued
                to employees, directors, vendors and
                others.




**Item
      12.** **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**




The
      Company, initially known as Lexington Barron Technologies, Inc., was
      incorporated in the State of Colorado on August 23, 2000. From its inception
      through April 1, 2004, Lexington Barron Technologies, Inc. conducted no
      significant operations or other activities. On March 15, 2004, Lexington Barron
      Technologies, Inc. entered into a stock exchange agreement with Pyramid Music
      Corp., a Florida corporation. Under the terms of the stock exchange agreement,
      Lexington Barron Technologies, Inc. acquired 100% of the outstanding common
      stock of Pyramid Music Corp. in exchange for 16,922,464 shares of common stock
      of Lexington Barron Technologies, Inc. As a result of the share exchange, which
      was consummated on April 1, 2004, the former shareholders of Pyramid Music
      Corp.
      owned, on a fully diluted basis, approximately 80% of the then-issued and
      outstanding shares of common stock of Lexington Barron Technologies, Inc. and
      the former principal owners of Lexington Barron Technologies, Inc.’s common
      stock (who are former directors of the company) owned, on a fully diluted basis,
      approximately 20% of the then-issued and outstanding shares of Lexington Barron
      Technologies, Inc. On March 26, 2004, Lexington Barron Technologies, Inc.
      amended its articles of incorporation to change its name to AGU Entertainment
      Corp., and on February 25, 2006, the Company amended and restated its
      certificate of incorporation to change its name to The Tube Media
      Corp.




In
      connection with the share exchange, the then board of directors of the Company
      appointed nominees selected by the former shareholders of Pyramid Music Corp.
      to
      fill the existing vacancies on the Company’s board of directors. The former
      directors resigned as members of our board of directors.




Effective
      December 8, 2004, Allen Jacobi resigned as President of AGU Music, Inc., one
      of
      our subsidiaries. The Company was not obligated to make any payments to him
      under the termination provisions of his former employment agreement. On December
      8, 2004, as part of his resignation, we and our subsidiaries entered into a
      mutual release and settlement agreement with Allen Jacobi, Josh Danoff, Jeff
      Shane, Delsy Gutierrez, each an employee of Allen Jacobi, Pyramid Records Corp.,
      a Florida corporation, and Pyramid Media Group, Inc., referred to herein as
      the
      Pyramid Parties. Under the terms of the mutual release and settlement agreement,
      the Pyramid Parties had to deliver all rights to certain master recordings
      to
      us, pay all brokerage commissions under the license agreement, deliver all
      business files and computers to the Company, forfeit all rights to a telephone
      number and notify parties to certain agreements that the Pyramid Parties are
      no
      longer authorized to act on the Company’s behalf. The terms of the mutual
      release and settlement agreement provided for us to pay $11,000 for an
      outstanding legal bill owed by Pyramid Records Corp. to a third party, permit
      Allen Jacobi to retain $40,000 received under a license agreement, transfer
      any
      rights to the existing Stephen Stills contract to Allen Jacobi, subject to
      approval by the artist, and relinquish all rights to an internet domain name.
      The Company was also entitled to all future monies to be received under the
      license agreement.




82




In
      June
      2004, the Company received loans from and executed two promissory notes totaling
      $235,000 in favor of DML Marketing Corp., an entity controlled by Donna M.
      Levy,
      the wife of David C. Levy, in the principal amount of $150,000, which matured
      on
      October 30, 2004, and John P. Grandinetti, who at the time was a significant
      stockholder of the Company, in the principal amount of $85,000, which matured
      on
      October 30, 2004. The notes accrued interest at an annual rate of 5%. These
      notes were repaid in December 2004.




In
      August
      2004 and October 2004, the Company received loans from and executed promissory
      Notes in the principal amounts of $40,000 and $1,000 respectively, in favor
      of
      DML Marketing Corp. The notes accrued interest at an annual rate of 5% and
      matured on November 1, 2004. These notes were repaid in December
      2004.




For
      the
      period from May 20, 2003 (inception) through December 31, 2005, the Company
      received various computer and internet services totaling $39,866 from Broad
      Vision Group, an entity owned by John P. Grandinetti. In June 2004, $36,000
      was
      converted into common stock of the Company. At December 31, 2005 approximately
      $0 was unpaid.




For
      the
      period from May 20, 2003 (inception) through December 2005, the Company received
      various consulting services totaling approximately $97,206 from Dr. Robert
      A.
      Kast, a significant stockholder of the Company. At December 31, 2005
      approximately $97,206 was unpaid.




In
      December 2004, the Company offset a note receivable from David Levy, an officer
      of the Company, in the amount of $15,500 against deferred salary, which had
      been
      deferred under an employment agreement.




Additionally,
      David Levy and John Poling, two executive officers of the Company, agreed to
      defer a portion of their salaries payable under their employment agreements
      until such time as adequate capital has been raised by the Company. Mr. Levy
      and
      Mr. Poling have both agreed to discontinue the deferral and waived any rights
      to
      the deferred amounts.




On
      March
      3, 2004, in connection with the Distribution Agreement and assignment of certain
      assets of PMG (see Note 5), the Company assumed the obligation to repay $350,000
      of notes payable to Neil Strum and Ned Siegel, two significant stockholders
      of
      the Company. The notes have an annual interest rate of 8%. Payments commenced
      in
      March of 2004, and the balance due as of September 30, 2004 was approximately
      $331,000. The terms of these notes required monthly payments of principal and
      interest. The Company had not made the required monthly principal and interest
      payments since June of 2004. On May 5, 2005, the Company entered into a
      settlement agreement, effective April 15, 2005, with the holders of the notes.
      Under the terms of the settlement agreement, the notes were cancelled and were
      replaced with new notes containing the same terms and conditions as the old
      notes, except that the new notes had a beginning principal balance of $345,806.
      The Company did not make any of the required payments under the new notes.
      The
      stockholders filed suit and commenced litigation in the State of Florida and
      on
      January 16, 2006, the Company and the stockholders reached an agreement which
      required the immediate payment of $175,000 to the stockholders, and a subsequent
      payment of $125,000 on February 15, 2006, subject to a personal guarantee by
      David Levy, President of the Company and Donna Levy, his wife, as a complete
      settlement of the Distribution Agreement and dispute.




83




Prior
      to
      his appointment as a director of the Company on November 1, 2004, Mr. Gelberg
      was paid approximately $8,800 in 2004 and $14,775 in 2005, for consulting
      services provided to the Company. Mr. Gelberg resigned as a director of the
      Company on January 24, 2006. At December 31, 2005, approximately $2,500 of
      director fees was unpaid.




During
      2005, the Company received loans in the aggregate amount of approximately $1.5
      million from, David Levy and DML Marketing, of which $679,025 were repaid as
      of
      December 31, 2005, leaving an amount outstanding as of December 31, 2005 of
      $780,803. On April 3, 2006, the Company repaid a promissory note dated December
      9, 2005 to DML Marketing, in the amount of $108,377. The loans, which are
      considered working capital advances, generally pay interest at 10% and are
      due
      upon additional equity transactions. In April 2006, the Company repaid DML
      Marketing $108,000 leaving an amount outstanding of $672,803. The Company has
      also issued warrants to purchase up to 800,000 shares of common stock to DML
      Marketing at $1.50 per share. On April 3, 2006, the warrants were amended to
      change the exercise price per share to $2.00.





The
      Company also received promissory notes from, Dr. Robert A. Kast and his family
      during 2005 in the aggregate amount of $700,000, including the extension of
      a
      $150,000 promissory note, which was originally issued in 2004. As of December
      31, 2005, $375,000 was unpaid. The $150,000 promissory note, which was
      originally at 8% interest, currently pays interest at 10% and was due in March
      2005. The $700,000 promissory notes pay interest at 6% and were due at various
      dates in 2005. On April 12, 2006, the due date of these promissory notes was
      extended until such time as the Company raises an additional $2 million of
      equity or equity related securities in addition to the $2.45 million raised
      on
      April 21, 2006. The Company has also issued warrants to purchase up to 3,128,575
      shares of common stock to Dr. Robert A. Kast.




**Item
      13.** **EXHIBITS**




List
      of
      Exhibits filed as part of this report. The following exhibits are incorporated
      by reference herein or filed herewith. The warranties, representations and
      covenants contained in the agreements listed below as exhibits should not be
      relied upon by buyers, sellers or holders of the Company’s securities and are
      not intended as warranties, representations or covenants to any individual
      or
      entity except as specifically set forth in the agreements.


**Number**
              
              **Title**2.1
              
              Share
                  Exchange Agreement, dated March 15, 2004, between the shareholders
                  ofPyramid
                  Music Corp.,
                  Pyramid Music Corp. and Lexington Barron Technologies, Inc. (Incorporated
                  by reference to the Registrants Form 8-K filed April 16, 2004,
                  as
                  amended)2.2
              
              Agreement
                  and Plan of Merger, dated as of September 30, 2004, by and between
                  AGU
                  Entertainment Corp., a Colorado corporation, and AGU Entertainment
                  Corp.,
                  a Delaware corporation (incorporated herein by reference to the
                  Registrant’s Form 10-QSB filed November 12, 2004)3.1
              
              Amended
                  and Restated Certificate of Incorporation of The Tube Media Corp.,
                  a
                  Delaware corporation (incorporated herein by reference to the Registrant’s
                  Form 8-K filed March 2, 2006)
  84
 3.2
              
              Bylaws
                  as amended, of The Tube Media Corp., a Delaware corporation (incorporated
                  herein by reference to the Registrant’s Form 8-K filed March 2,
                  2006)3.4
              
              Specimen
                  certificate of the common stock of The Tube Media Corp.4.1
              
              Convertible
                  Promissory Note dated September 13, 2004, made by AGU Entertainment
                  Corp.
                  in favor of Galt Financial Corp. (incorporated herein by reference
                  to the
                  Registrant’s Form 8-K filed September 20, 2004)4.2
              
              Warrant
                  to subscribe for 500,000 shares of common stock of AGU Entertainment
                  Corp.
                  issued to Galt Financial Corporation (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed September 20, 2004)4.3
              
              Secured
                  Convertible Term Note issued by AGU Entertainment Corp., The Tube
                  Music
                  Network, Inc., and Pyramid Records International, Inc. to Mitchell
                  Entertainment Company (incorporated herein by reference to the
                  Registrant’s Form 8-K filed December 29, 2004)4.4
              
              Common
                  stock Purchase Warrant of AGU Entertainment Corp. issued to Mitchell
                  Entertainment Company (incorporated herein by reference to the
                  Registrant’s Form 8-K filed December 29, 2004)4.5
              
              Promissory
                  Note issued by AGU Entertainment Corp. to Charley Zeches, in her
                  capacity
                  as trustee of Lakes Holding Trust U/A (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed December 29, 2004)4.6
              
              Promissory
                  Note, dated March 31, 2006, issued by The Tube Media Corp. in the
                  aggregate principal amount of $800,000 to Michael H. Brauser (incorporated
                  herein by reference to the Registrant’s Form 8-K filed April 5,
                  2006)4.7
              
              Promissory
                  Note, dated March 31, 2006, issued by The Tube Media Corp. in the
                  aggregate principal amount of $800,000 to Barry Honig (incorporated
                  herein
                  by reference to the Registrant’s Form 8-K filed April 5,
                  2006)4.8
              
              Form
                  of 7% Secured Convertible Note, dated April 21, 2006, issued by
                  The Tube
                  Media Corp. (incorporated herein by reference to the Registrant’s Form 8-K
                  filed April 26, 2006)4.9
              
              Form
                  of Common Stock Purchase Warrant, dated April 21, 2006, issued
                  by The Tube
                  Media Corp. (incorporated herein by reference to the Registrant’s Form 8-K
                  filed April 26, 2006)10.1
              
              Employment
                  agreement of David Levy, dated as of April 1, 2004. (incorporated
                  herein
                  by reference to the Registrant’s Form 8-K filed April 16, 2004, as
                  amended)10.2
              
              Employment
                  agreement of Allen Jacobi, dated as of April 1, 2004. (incorporated
                  herein
                  by reference to the Registrant’s Form 8-K filed April 16, 2004, as
                  amended)
  85
 10.3
              
              Assignment
                  and Assumption Agreement, dated as of March 3, 2004, among Pyramid
                  Media
                  Group, Inc., Allen Jacobi and Pyramid Records International , Inc.
                  (incorporated herein by reference to the Registrant’s Form 8-K filed April
                  16, 2004, as amended)10.4
              
              Amendment
                  to Assignment and Assumption Agreement, dated March 8, 2004, by
                  and among
                  Pyramid Media Group, Inc., Allen Jacobi and Pyramid Records International
                  , Inc. (incorporated herein by reference to the Registrant’s Form 8-K
                  filed April 16, 2004, as amended)10.5
              
              Corporate
                  Guaranty, dated March 5, 2004. (incorporated herein by reference
                  to the
                  Registrant’s Form 8-K filed April 16, 2004, as amended)10.6
              
              Employment
                  Agreement of Les Garland, dated July 2003 (incorporated herein
                  by
                  reference to the Registrant’s Form 8-K filed April 16, 2004, as
                  amended)10.7
              
              Agreement
                  with GSMB regarding marketing and promotional expenditure commitment
                  (incorporated herein by reference to the Registrant’s Form 10-QSB filed
                  August 20, 2004)10.8
              
              Trust
                  Agreement in connection with the marketing and promotional expenditure
                  commitment (incorporated herein by reference to the Registrant’s Form
                  10-QSB filed August 20, 2004)10.9
              
              Agreement
                  with Radical Media, Inc. (incorporated herein by reference to the
                  Registrant’s Form 10-QSB filed August 20, 2004)10.10
              
              Agreement
                  for Purchase and Sale, dated, dated as of September 10, 2004, by
                  and
                  between AGU Entertainment Corp. and Charley Zeches, in her capacity
                  as
                  trustee of Lakes Holding Trust U/A dated July 27, 2001 (incorporated
                  herein by reference to the Registrant’s Form 8-K filed September 20,
                  2004)10.11
              
              Consulting
                  Agreement, dated as of September 13, 2004, by and between AGU
                  Entertainment Corp. and Kevin Waltzer (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed September 20, 2004)10.12
              
              Employment
                  Agreement dated as of November 1, 2004 between AGU Entertainment
                  Corp. and
                  John W. Poling (incorporated herein by reference to the Registrant’s Form
                  8-K filed November 9, 2004)10.13
              
              Stock
                  Purchase Agreement between AGU Entertainment Corp. and AUW, Inc.
                  (incorporated herein by reference to the Registrant’s Form 10-QSB filed
                  November 12, 2004)10.14
              
              2004
                  Stock Option and Stock Incentive Plan (incorporated herein by reference
                  to
                  the Registrant’s Form 10-QSB filed November 12, 2004)10.15
              
              Amendment
                  to Agreement for Purchase and Sale, dated, dated as of September
                  10, 2004,
                  by and between AGU Entertainment Corp. and Charley Zeches, in her
                  capacity
                  as trustee of Lakes Holding Trust U/A dated July 27, 2001 (incorporated
                  herein by reference to the Registrant’s Form 10- QSB filed November 12,
                  2004)
  86
 10.16
              
              Securities
                  Purchase Agreement, effective as of December 20, 2004, by and among
                  AGU
                  Entertainment Corp., The Tube Music Network, Inc. and Pyramid Records
                  International, Inc. and Mitchell Entertainment Company (incorporated
                  herein by reference to the Registrant’s Form 8-K filed December 29,
                  2004)10.17
              
              Mortgage
                  Deed and Security Agreement, effective as of December 20, 2004,
                  by and
                  between AGU Entertainment Corp. and Mitchell Entertainment Company
                  (incorporated herein by reference to the Registrant’s Form 8-K filed
                  December 29, 2004)10.18
              
              Master
                  Security Agreement, effective as of December 20, 2004, by and among
                  AGU
                  Entertainment Corp., The Tube Music Network, Inc. and Pyramid Records
                  International, Inc. and Mitchell Entertainment Company (incorporated
                  herein by reference to the Registrant’s Form 8-K filed December 29,
                  2004)10.19
              
              Assignment
                  of Rents, Leases and Deposits, effective as of December 20, 2004,
                  by and
                  between AGU Entertainment Corp. and Mitchell Entertainment Company
                  (incorporated herein by reference to the Registrant’s Form 8-K filed
                  December 29, 2004)10.20
              
              Subordination
                  Agreement, effective as of December 20, 2004, by and between Charley
                  Zeches, in her capacity as trustee of Lakes Holding Trust, and
                  Mitchell
                  Entertainment Company, as agreed to, accepted and acknowledged
                  by AGU
                  Entertainment Corp. (incorporated herein by reference to the Registrant’s
                  Form 8-K filed December 29, 2004)10.21
              
              Registration
                  Rights Agreement, effective as of December 20, 2004, by and between
                  AGU
                  Entertainment Corp. and Mitchell Entertainment Company (incorporated
                  herein by reference to the Registrant’s Form 8-K filed December 29,
                  2004)10.22
              
              Environmental
                  Indemnity Agreement, effective as of December 20, 2004, by and
                  among AGU
                  Entertainment Corp., The Tube Music Network, Inc. and Pyramid Records
                  International, Inc. and Mitchell Entertainment Company (incorporated
                  herein by reference to the Registrant’s Form 8-K filed December 29,
                  2004)10.23
              
              Mortgage
                  Deed and Security Agreement, effective as of December 20, 2004,
                  by and
                  between AGU Entertainment Corp. and Charley Zeches, in her capacity
                  as
                  Trustee of Lakes Holding Trust U/A (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed December 29, 2004)10.24
              
              Assignment
                  of Rents, Leases and Deposits, effective as of December 20, 2004,
                  by and
                  between AGU Entertainment Corp. and Charley Zeches, in her capacity
                  as
                  Trustee of Lakes Holding Trust U/A (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed December 29, 2004)10.25
              
              Amendment
                  No. 2 to Agreement for Purchase and Sale, dated as of November
                  30, 2004,
                  by and between AGU Entertainment Corp. and Charley Zeches, in her
                  capacity
                  as Trustee of Lakes Holding Trust U/A (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed December 29, 2004)
  87
  10.26
              
              Letter
                  Agreement regarding $145,000 Protective Advance, dated April 14,
                  2005
                  (incorporated herein by reference to the Registrant’s Form 8-K filed April
                  20, 2005)10.27
              
              Letter,
                  dated April 22, 2005 (incorporated herein by reference to the Registrant’s
                  Form 8-K/A filed April 28, 2005)10.28
              
              Settlement
                  and Mutual Release Agreement, effective April 15, 2005 (incorporated
                  herein by reference to the Registrant’s Form 8-K/A filed May 11,
                  1005)10.29
              
              Mitchell
                  Letter Agreement, dated as of April 29, 2005 (incorporated herein
                  by
                  reference to the Registrant’s Form 8-K filed May 20,
                  2005)10.30
              
              Solomon
                  Letter Agreement, effective May 18, 2005 (incorporated herein by
                  reference
                  to the Registrant’s Form 8-K filed May 20, 2005)10.31
              
              Technical
                  Services Agreement, dated as of December 1, 2004, by and between
                  The Tube
                  Music Network, Inc. and Skyport Services, Inc. (incorporated herein
                  by
                  reference to the Registrant’s Form 8-K/A filed May 23,
                  2005)10.32
              
              Charter
                  Affiliate Affiliation Agreement, dated as of April 15, 2005, by
                  and
                  between The Tube Music Network, Inc. and Raycom Media, Inc. (incorporated
                  herein by reference to the Registrant’s Form 8-K filed May 20,
                  2005)10.33
              
              Confidential
                  Settlement Agreement and Mutual Release, dated June 21, 2005 (incorporated
                  herein by reference to the Registrant’s Form 8-K/A filed July 8,
                  2005)10.34
              
              Loan
                  Agreement, dated July 25, 2005, among Robert Jaffee and AGU Entertainment
                  Corp., Les Garland, David C. Levy, Victoria Levy, Marc Gelberg,
                  Greg
                  Catinella and John W. Poling (incorporated herein by reference
                  to the
                  Registrant’s Form 8-K filed August 2, 2005)10.35
              
              $500,000
                  Promissory Note issued by AGU Entertainment Corp. to Robert Jaffee
                  (incorporated herein by reference to the Registrant’s Form 8-K filed
                  August 2, 2005)10.36
              
              Warrant
                  to purchase up to 400,000 shares of common stock of AGU Entertainment
                  Corp. issued to Robert Jaffee (incorporated herein by reference
                  to the
                  Registrant’s Form 8-K filed August 2, 2005)10.37
              
              Letter
                  Agreement, dated August 11, 2005, by and between AGU Entertainment
                  Corp.
                  and Mitchell Entertainment Company regarding extension of maturity
                  date
                  (incorporated herein by reference to the Registrant’s Form 10-QSB filed
                  August 19, 2005)10.38
              
              Letter
                  Agreement, dated August 17, 2005, by and between AGU Entertainment
                  Corp.
                  and Mitchell Entertainment Company regarding extension of due date
                  for
                  filing of registration statement (incorporated herein by reference
                  to the
                  Registrant’s Form 10-QSB filed August 19, 2005)
  88
  10.39
              
              Agreement
                  for Purchase and Sale, dated as of August 29, 2005, by and between
                  AGU
                  Entertainment Corp. and Tarragon South Development Corp. (includes
                  side
                  letter) (incorporated herein by reference to the Registrant’s Form 8-K
                  filed November 11, 2005)10.40
              
              Consulting
                  Agreement, dated as of August 31, 2005, by and between AGU Entertainment
                  Corp. and DKK-RK Enterprises, Inc. (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed September 8, 2005)10.41
              
              Letter
                  Agreement, dated September 2, 2005, by and between AGU Entertainment
                  Corp., The Tube Music Network, Inc. and AGU Music Inc. and Robert
                  Alan
                  Kast (incorporated herein by reference to the Registrant’s Form 8-K filed
                  September 8, 2005)10.42
              
              $500,000
                  Promissory Note, dated August 31, 2005, issued to Robert Alan Kast
                  by AGU
                  Entertainment Corp. (incorporated herein by reference to the Registrant’s
                  Form 8-K filed September 8, 2005)10.43
              
              $200,000
                  Promissory Note, dated August 31, 2005, issued to Daniel K. Kast
                  and
                  Lenore S. Kast by AGU Entertainment Corp. (incorporated herein
                  by
                  reference to the Registrant’s Form 8-K filed September 8,
                  2005)10.44
              
              Warrant
                  to subscribe for 100,000 shares of common stock of AGU Entertainment
                  Corp.
                  issued to Robert Alan Kast (incorporated herein by reference to
                  the
                  Registrant’s Form 8-K filed September 8, 2005)10.45
              
              Warrant
                  to subscribe for 200,000 shares of common stock of AGU Entertainment
                  Corp.
                  issued to Robert Alan Kast (incorporated herein by reference to
                  the
                  Registrant’s Form 8-K filed September 8, 2005)10.46
              
              Warrant
                  to subscribe for 100,000 shares of common stock of AGU Entertainment
                  Corp.
                  issued Robert Alan Kast (incorporated herein by reference to the
                  Registrant’s Form 8-K filed September 8, 2005)10.47
              
              Warrant
                  to subscribe for 150,000 shares of common stock of AGU Entertainment
                  Corp.
                  issued to Robert Alan Kast (incorporated herein by reference to
                  the
                  Registrant’s Form 8-K filed September 8, 2005)10.48
              
              Warrant
                  to subscribe for 200,000 shares of common stock of AGU Entertainment
                  Corp.
                  issued to Robert Alan Kast (incorporated herein by reference to
                  the
                  Registrant’s Form 8-K filed September 8, 2005)10.49
              
              Promissory
                  Note dated October 21, 2005, issued by AGU Entertainment Corp.
                  to Tarragon
                  South Development Corp. (incorporated herein by reference to the
                  Registrant’s Form 8-K filed October 27, 2005)10.50
              
              Third
                  Mortgage Deed and Security Agreement, dated as of October 21, 2005,
                  by and
                  among AGU Entertainment Corp. and Tarragon South Development Corp.
                  (incorporated herein by reference to the Registrant’s Form 8-K filed
                  October 27, 2005)10.51
              
              Subordination
                  Agreement dated as of October 21, 2005, by and among Charley Zeches,
                  in
                  her capacity as trustee of Lakes Holding Trust, Mitchell Entertainment
                  Company, Tarragon South Development Corp., as agreed to, accepted
                  and
                  acknowledged by AGU Entertainment Corp. (incorporated herein by
                  reference
                  to the Registrant’s Form 8-K filed October 27, 2005)
  89
  10.52
              
              Tri-Party
                  Developer’s Agreement, dated as of October 21, 2005, by and among the City
                  of Lauderdale Lakes, AGU Entertainment Corp. and Tarragon South
                  Development Corp. (incorporated herein by reference to the Registrant’s
                  Form 8-K filed October 27, 2005)10.53
              
              Promissory
                  Note, dated October 31, 2005, issued by AGU Entertainment Corp.
                  to Charley
                  Zeches, in her capacity as trustee of Lakes Holding Trust U/A
                  (incorporated herein by reference to the Registrant’s Form 8-K filed
                  October 27, 2005)10.54
              
              Receipt
                  for Future Advance and Mortgage Modification Agreement, dated as
                  of
                  October 21, 2005, by and between AGU Entertainment Corp. and Charley
                  Zeches, in her capacity as trustee of Lakes Holding Trust U/A
                  (incorporated herein by reference to the Registrant’s Form 8-K filed
                  October 27, 2005)10.55
              
              Easement
                  Search Letter, dated October 21, 2005 (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed October 27, 2005)10.56
              
              Notice
                  of Limitation on Mortgage Future Advance by AGU Entertainment Corp.
                  relating to mortgage in favor of Mitchell Entertainment Corp.
                  (incorporated herein by reference to the Registrant’s Form 8-K filed
                  October 27, 2005)10.57
              
              First
                  Amendment to Agreement for Purchase and Sale, dated as of November
                  1,
                  2005, by and between AGU Entertainment Corp. and Tarragon South
                  Development Corp. (incorporated herein by reference to the Registrant’s
                  Form 10-QSB filed December 9, 2005)10.58
              
              Second
                  Amendment to Agreement for Purchase and Sale, dated as of December
                  2,
                  2005, by and between AGU Entertainment Corp. and Tarragon South
                  Development Corp. (incorporated herein by reference to the Registrant’s
                  Form 10-QSB filed December 9, 2005)10.59
              
              Amendment
                  No. 3 to Agreement for Purchase and Sale, dated as of December
                  2, 2005, by
                  and between Charley Zeches, in her capacity as trustee of Lakes
                  Holding
                  Trust U/A and AGU Entertainment Corp. (incorporated herein by reference
                  to
                  the Registrant’s Form 10-QSB filed December 9, 2005)10.60
              
              Amendment
                  to Employment Agreement dated as of March 6, 2006, by and between
                  The Tube
                  Media Corp. and Les Garland (incorporated herein by reference to
                  the
                  registrant’s Form 8-K filed March 10, 2006).10.61
              
              Charter
                  Affiliation Agreement, dated as of March 6, 2006, by and between
                  The Tube
                  Media Corp., The Tube Music Network, Inc. and Tribune Broadcasting
                  Company
                  (incorporated herein by reference to the registrant’s Form 8-K filed March
                  10, 2006.)10.62
              
              Letter
                  Agreement, dated March 6, 2006, by and among The Tube Media Corp.,
                  The
                  Tube Music Network, Inc. and Tribune Broadcasting Company. (This
                  agreement
                  has been redacted pursuant to a confidential treatment request
                  filed with
                  the Securities and Exchange Commission on the date hereof.) (incorporated
                  herein by reference to the registrant’s Form 8-K filed March 10,
                  2006)
  90
  10.63
              
              Securities
                  Issuance Agreement, dated March 6, 2006, by and between The Tube
                  Media
                  Corp. and Tribune Broadcasting Company. (This agreement has been
                  redacted
                  pursuant to a confidential treatment request filed with the Securities
                  and
                  Exchange Commission on the date hereof.) (incorporated herein by
                  reference
                  to the registrant’s Form 8-K filed March 10, 2006)10.64
              
              Registration
                  Rights Agreement, dated as of March 6, 2006, by and between The
                  Tube Media
                  Corp. and Tribune Broadcasting Company (incorporated herein by
                  reference
                  to the registrant’s Form 8-K filed March 10, 2006.).10.65
              
              Common
                  stock Purchase Warrant of The Tube Media Corp. issued to Tribune
                  Broadcasting Company. (This agreement has been redacted pursuant
                  to a
                  confidential treatment request filed with the Securities and Exchange
                  Commission on the date hereof.) (incorporated herein by reference
                  to the
                  registrant’s Form 8-K filed March 10, 2006)10.66
              
              Affiliation
                  Agreement, dated as of March 22, 2006, by and between The Tube
                  Media
                  Corp., The Tube Music Network, Inc. and Tribune Sinclair Television
                  Group,
                  Inc. (incorporated herein by reference to the registrant’s Form 8-K filed
                  March 28, 2006.)10.67
              
              Letter
                  Agreement, dated March 22, 2006, by and among The Tube Media Corp.,
                  The
                  Tube Music Network, Inc. and Sinclair Television Group, Inc. (This
                  agreement has been redacted pursuant to a confidential treatment
                  request
                  filed with the Securities and Exchange Commission on the date hereof.)
                  (incorporated herein by reference to the registrant’s Form 8-K filed March
                  28, 2006)10.68
              
              Securities
                  Purchase Agreement, dated March 22, 2006, by and between The Tube
                  Media
                  Corp. and Sinclair Television Group, Inc. (This agreement has been
                  redacted pursuant to a confidential treatment request filed with
                  the
                  Securities and Exchange Commission on the date hereof.) (incorporated
                  herein by reference to the registrant’s Form 8-K filed March 28,
                  2006)10.69
              
              Common
                  stock Purchase Warrant of The Tube Media Corp. issued to Sinclair
                  Television Group, Inc. (This agreement has been redacted pursuant
                  to a
                  confidential treatment request filed with the Securities and Exchange
                  Commission on the date hereof.) (incorporated herein by reference
                  to the
                  registrant’s Form 8-K filed March 28, 2006)10.70
              
              Subscription
                  Agreement dated as of March 31, 2006, by and between The Tube Media
                  Corp.
                  and Michael H. Brauser (incorporated herein by reference to the
                  Registrant’s Form 8-K filed April 5, 2006).10.71
              
              Subscription
                  Agreement dated as of March 31, 2006, by and between The Tube Media
                  Corp.
                  and Barry Honig (incorporated herein by reference to the Registrant’s Form
                  8-K filed April 5, 2006).
  91
  10.72
              
              Amendment
                  to Employment Agreement, dated as of December 29, 2005 by and between
                  The
                  Tube Media Corp. and John W. Poling (incorporated herein by reference
                  to
                  the Registrant’s Form 8-K filed April 3, 2006).10.73
              
              Settlement
                  and Mutual Release Agreement effective January 16, 2006 (incorporated
                  herein by reference to the Registrant’s Form 8-K filed April 13,
                  2006).10.74
              
              Guaranty
                  Agreement by David Levy, dated as of January 16, 2006 (incorporated
                  herein
                  by reference to the Registrant’s Form 8-K filed April 13,
                  2006).10.75
              
              Guaranty
                  Agreement by Donna Levy, dated as of January 16, 2006 (incorporated
                  herein
                  by reference to the Registrant’s Form 8-K filed April 13,
                  2006).10.76
              
              Letter
                  Agreement, dated April 11, 2006, with Robert Alan Kast relating
                  to
                  $225,000 Promissory Note (incorporated herein by reference to the
                  Registrant’s Form 8-K filed April 13, 2006).10.77
              
              Letter
                  Agreement, dated April 11, 2006, with Robert Alan Kast relating
                  to
                  $150,000 Promissory Note (incorporated herein by reference to the
                  Registrant’s Form 8-K filed April 13, 2006).10.78
              
              Form
                  of Purchase Agreement, dated as of April 21, 2006, by and between
                  The Tube
                  Media Corp. and the investors listed on the signature pages thereto.
                  incorporated herein by reference to the Registrant’s Form 8-K filed April
                  26, 2006)10.79
              
              Form
                  of Registration Rights Agreement, dated as of April 21, 2006, by
                  and
                  between The Tube Media Corp. and the investors listed on the signature
                  pages thereto. (incorporated herein by reference to the Registrant’s Form
                  8-K filed April 26, 2006)10.80
              
              Form
                  of Pledge and Security Agreement, dated April 21, 2006, made by
                  David Levy
                  in favor of Nite Capital, L.P. and acknowledged by The Tube Media
                  Corp.
                  (incorporated herein by reference to the Registrant’s Form 8-K filed April
                  26, 2006)10.81
              
              Services
                  Agreement dated as of July 13, 2005 by and between The Tube Music
                  Network,
                  Inc. and Crawford Communications, Inc. *14.1
              
              Code
                  of Ethics, as amended (incorporated herein by reference to the
                  Registrant’s Form 8-K filed August 23, 2004)16.1
              
              Letter
                  regarding Change in Certifying Accountant (incorporated herein
                  by
                  reference to the Registrant’s Form 8-K/A filed June 15,
                  2004)21.1
              
              List
                  of Subsidiaries (incorporated herein by reference to the Registrant’s Form
                  10-KSB filed March 31, 2005).31.1
              
              Certification
                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act.31.2
              
              Certification
                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act.
  92
  32.1
              
              Section
                  906 Certification


· Previously
      filed





**Item 14.**
            **PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES**




Fees
      for
      professional services provided by Weinberg & Company, P.A., the Company’s
      independent registered public accounting firm, for the fiscal years ended
      December 31, 2005 and 2004 in each of the following categories
      were:





**Fiscal
                Year Ended December 31,****2005**
            
            **2004**Audit
                Fees
            
            $
            67,968
            
            $
            36,957Audit-Related
                Fees
            
            
            3,521
            
            
            25,530Tax
                Fees
            
            
            —
            
            
            4,388All
                Other Fees
            
            
            —
            
            
            —Total
            
            $
            71,489
            
            $
            66,875





**Audit
      Fees.** The
      aggregate fees billed by Weinberg & Company, P.A., **** for
      professional services rendered for the audit of the Company’s annual financial
      statements for the fiscal years ended December 31, 2004 and 2005, and the review
      of the financial statements included in the Company’s Forms 10-Q for fiscal
      years ended 2004 and 2005 were $36,975 and $67,968, respectively.





**Audit-Related
      Fees.** The
      aggregate fees billed by Weinberg & Company, P.A. for assurance and related
      services that are reasonably related to the performance of the audit or review
      of the Company’s financial statements for the fiscal years ended December 31,
      2004 and 2005 and that are not disclosed in the paragraph captioned “Audit Fees”
above, were $25,530 and $3,521, respectively. The services performed by Weinberg
      & Company, P.A., in connection with these fees consisted primarily of review
      of our SEC filings.





**Tax
      Fees.** The
      aggregate fees billed by Weinberg & Company, P.A., **** for
      professional services rendered for tax compliance, tax advice, and tax planning
      for the fiscal years ended  December
      31, 2004 and 2005 were $4,388 and $0, respectively The services performed by
      Weinberg & Company, P.A., in connection with these fees consisted of
      preparing the Company’s 2004 federal and state tax returns.





**All
      Other Fees.** There
      were no other fees paid to Weinberg & Company, P.A.





The
      Company’s audit committee charter provides that authority to pre-approve all
      audit and permitted non-audit services may be delegated to one or more members
      of the audit committee or a sub-committee thereof. During the fiscal year ended
      December 31, 2005, all services performed by the independent registered public
      accounting firm were pre-approved pursuant to the pre-approval policies of
      our
      audit committee.


93




**Signatures**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized, on December 6, 2006.




**THE
              TUBE
              MEDIA CORP.**By:
            /s/ 
D.
              Patrick LaPlatneyD.
              Patrick LaPlatneyChief Executive Officer


In
      accordance with the requirements of the Exchange Act, this report has been
      signed below by the following persons on behalf of the registrant and in the
      capacities indicated on December 6, 2006.




By: 
/s/
              D.
              Patrick LaPlatneyD. Patrick LaPlatneyDirector and Chief Executive
              Officer  By: 
/s/
                Shane CapollaShane
                  Capolla
                Director
                  and Chairman  By: 
/s/
                  Celestine F. SpodenCelestine
                    F. Spoden
                  Chief
                    Financial Officer  By: 
/s/
                    Gregory R. CatinellaGregory
                      R. Catinella
                    Director  By: 
/s/
                      John
                      W. PolingJohn W. Poling
                      Director
                        and Executive Vice President  By:  
                        /s/ David LevyDavid
                          Levy
                        Director


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