UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549









FORM
10-K









(Mark
One)




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




For the
fiscal year ended December 31, 2008




OR




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
transition period from
             to




Commission
File Number 333-128060




DATAMEG
CORPORATION


(Exact
name of registrant as specified in its charter)




Delaware
            
            13-3134389(State
      or Other Jurisdiction of
              Incorporation
      or Organization)
            
            (I.R.S.
      Employer
              Identification
      Number)2150
      S 1300 E, #500, Salt Lake City, UT
            
            84106(Address
      of principal executive offices)
            
            (Zip
      Code)




(866)739-3945


(Registrant’s
telephone number, including area code)




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




None




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


Common
Stock, $.0001 par value


(Title of
Class)




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  ̈ No x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes  ̈ No x




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




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x




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




Large
accelerated filer  ̈    Accelerated
filer  ̈    Non-accelerated
filer  ̈    Smaller
reporting company x




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




The
aggregate market value of the registrant’s common stock held by non-affiliates
of the registrant as of June 30, 2008 was approximately
$19,693,838(1).




There
were 411,696,087 and 411,206,087 shares of the registrant’s Common Stock,
$0.0001 par value per share, issued and outstanding, respectively, as of April
15, 2009.  Of the issued shares, 490,000 are being held in treasury
for future issuance.





(1)
            Non-affiliates
      of the registrant include all shareholders other than directors, executive
      officers and holders of 10% or more of the registrant’s Common
      Stock.




Documents
Incorporated by Reference




Portions
of the Company’s definitive proxy statement for its annual meeting of
shareholders to be held on May 22, 2009, which the Company intends to file
within 120 days after the end of the Company’s fiscal year ended
December 31, 2008 are incorporated by reference into Part III
hereof.

















TABLE OF CONTENTS




Item
      Number and Description
            
            PagePart IItem
      1.
            
            Description of
      Business
            
            1Item 1A.
            
            Risk
      Factors
            
            11Item 1B.
            
            Unresolved Staff
      Comments
            
            15Item
      2.
            
            Description of
      Properties
            
            15Item
      3.
            
            Legal
      Proceedings
            
            15Item
      4.
            
            Submission of Matters to a Vote
      of Security Holders
            
            16Part IIItem
      5.
            
            Market for Registrant’s Common
      Equity and Related Stockholder Matters and Issues of Purchases of Equity
      Securities
            
            17Item
      7.
            
            Management’s Discussion and
      Analysis of Financial Condition and Results of Operations
            
            18Item
      7A.
            
            Quantitative and Qualitative
      Disclosures about Market Risk
            
            23Item
      8.
            
            Financial
      Statements
            
            23Item
      9.
            
            Changes in and Disagreements with
      Accountants on Accounting and Financial
    Disclosure
            
            23Item 9A(T).
            
            Controls and
      Procedures
            
            23Item 9B.
            
            Other
      Information
            
            24Part IIIItem
      10.
            
            Directors, Executive Officers and
      Corporate Governance.
            
            25Item 11.
            
            Executive
      Compensation
            
            25Item 12.
            
            Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters
            
            25Item 13.
            
            Certain Relationships and Related
      Transactions and Director Independence
            
            25Item 14.
            
            Principal Accounting Fees and
      Services
            
            25Item 15.
            
            Exhibits
            
            25Signatures
            
            28Exhibits





PART
I


Item 1.
            Description
      of Business.




Overview




Datameg
Corporation (“the Company” “Datameg”) is a holding company and Delaware
corporation that is a successor by merger as of April 27, 2005 to Datameg
Corporation, which was a New York corporation incorporated in October 1982 as
The Viola Group, Inc. In August 2000 the Company exchanged 90% of its common
stock for 100% of the stock of Datameg Corporation, a Virginia corporation that
was incorporated in January 1999. The Viola Group then changed its name to
Datameg Corporation, remaining a New York corporation. Virginia Datameg was
terminated on May 31, 2001 by operation of law.




On April
27, 2005, we entered into an Agreement and Plan of Merger with New York Datameg
setting forth the terms of our re-incorporation from New York to Delaware. As
part of the re-incorporation, the Company increased its authorized number of
shares to 503,000,000, of which 10,000,000 are preferred shares and 493,000,000
are common stock. The Company also changed its par value from $0.01 to $0.0001
per share.






Datameg
Corporation has four subsidiaries: American Marketing and Sales, Inc. (“American
Marketing and Sales,” American Marketing,” and “AMS”), a Massachusetts
corporation that the Company wholly owns; NetSymphony Corporation
(“NetSymphony”) and QoVox Corporation (“QoVox”), North Carolina corporations
that the Company wholly owns; and CASCommunications, Inc., a Florida
corporation, of which the Company owns 40%. The primary business of American
Marketing and Sales, Inc., doing business as Innovative Designs, is marketing
and selling food service products and caterware. NetSymphony Corporation was
incorporated on March 29, 2007 to take advantage of additional, software-driven
network assurance products and services, and its planning and staffing are in
the formative stage.  QoVox was known as North Electric Company, Inc.
until July 1, 2005, when North Electric Company filed an Amendment to its
Articles of Incorporation with the North Carolina Secretary of State to change
its corporate name. Datameg and its subsidiaries individually and collectively
have been considered development stage enterprises in prior
years.  With the acquisition of American Marketing and Sales, Inc.,
the Company is no longer considered to be in the development stage as defined in
SFAS No. 7, “Accounting for
Development Stage Enterprises.” CASCommunications, Inc. is an inactive
company.  CASCommunications, Inc. did not generate any revenue in 2008
and is not expected to generate any revenue in 2009.




During
the years ended December 31, 2008 and 2007, American Marketing and Sales, Inc.
recorded revenue of approximately $11M and $12M,
respectively.  American Marketing has successfully developed and
introduced an extensive line of environment-friendly, injection-molded Green
Line food-packaging/caterware products and has received orders or commitments to
purchase the new Green Line products from Whole Foods, the U.S. House of
Representatives purchasing office in Washington, D.C., and several schools and
colleges, including the University of Massachusetts. The new Green Line products
consist of 25 items including various sizes of trays, party platters, and
serving bowls with lids.  These non-toxic products qualify for the
Green label inasmuch as they are manufactured from FDA-approved polypropylene
and polystyrene resins that contain up to 40 percent recycled plastic content.
American Marketing and Sales, Inc. is one of the first manufacturers in the
industry to introduce injection-molded caterware and food service products
worthy of the prestigious ‘recycled’ logo mark.




During
the first quarter of 2008, American Marketing and Sales introduced additional
new products manufactured with 40% recycled resins. The new product line
consists of fifteen items of office products including desk top organizers,
letter trays, legal letter trays, pencil holders, paper clip and card holders,
magazine holders, and telephone and draw organizers. Current and targeted
customers include Walmart, Target, BJ’S, Sam’s Club, Staples, Office Max,
Office Depot, W.B. Mason, Madison Square Garden, Finagle A Bagel, and
numerous mail order catalogs.






NetSymphony
is focusing on becoming a provider of network assurance products and services.
NetSymphony’s network assurance products are designed to enable communications
network operators and service providers to quickly and automatically determine
if their network is meeting its quality and service expectations, while lowering
network operating costs. NetSymphony has developed its Maestro System that
covers the existing traditional telephone networks, networks that use the same
communication technology as the Internet, and converged networks comprised of
both of these network types. NetSymphony announced its first product sales in
the first quarter of 2008, resulting in $3,520 in revenues for
2008.






QoVox
provides consulting service to NetSymphony on a work-for-hire
basis.  Any revenues generated by QoVox or expenses incurred by
NetSymphony as a result of this arrangement will be eliminated in consolidation.
During the years ended December 31, 2008 and 2007, QoVox recorded no
revenues.






CASCommunications,
Inc. had no recorded assets as of December 31, 2008 and had a loss before
minority interest of zero for the years ended December 31, 2008 and 2007 due to
the lack of activity during those periods. No consolidated assets are collateral
for liabilities of CASCommunications, Inc. Datameg has provided $270,000 of the
total capital of $388,000 provided to CASCommunications, Inc. as of December 31,
2008.






The
consolidated financial statements reflect those of Datameg Corporation, American
Marketing and Sales, Inc., Netsymphony Corporation, QoVox Corporation, and
CASCommunications, Inc. In accordance with the Financial Accounting Standards
Board (FASB) interpretation (FIN) 46R, “Consolidation of Variable Interest
Entities, an interpretation of ARB No. 51,” the Company continues to
consolidate CASCommunications, Inc. as it expects to continue to absorb a
majority of CASCommunications, Inc.’s losses.






The
Company operates under the name of Datameg Corporation and trades under the
symbol DTMG on the OTCBB. The Company’s active subsidiaries are American
Marketing & Sales, Inc., NetSymphony Corporation and QoVox Corporation, each
of which the Company wholly owns.






As of
March 31, 2009, we had a total of five full time employees, one part time
employee, and two part time independent contractors or consultants. Of these,
two individuals serve in administrative and senior management capacities at our
subsidiaries.






Recent
Developments






In March
2009 and subject to shareholder approval, Datameg Corporation announced the sale
of American Marketing and Sales, Inc.   The material definitive
agreement is disclosed in a Form 8-K filed with the Securities and Exchange
Commission on April 2, 2009.






On April
14, 2009, Datameg Corporation announced the proposed acquisition of Natural Blue
Resources, Inc.  The acquisition is not binding unless approved by a
majority of the Company’s shareholders. A timely Form 8K will be filed
concerning the proposed acquisition in April 2009 and a detailed proxy statement
and shareholder meeting are planned.






Products
in Development






Our
products and products in development are:






The Green
Line






The
primary business of American Marketing and Sales, Inc, doing business as
Innovative Designs, is marketing and selling food service products and
caterware,  American Marketing has successfully developed and
introduced an extensive line of environment-friendly, injection-molded Green
Line food-packaging/caterware products and has received orders or commitments to
purchase the new Green Line of products from Whole Foods, the U.S. House of
Representatives purchasing office in Washington, D.C., and several schools and
colleges, including the University of Massachusetts. The new Green Line products
consist of 25 items including various sizes of trays, party platters, and
serving bowls with lids.  These non-toxic products qualify for the
Green label inasmuch as they are manufactured from FDA-approved polypropylene
and polystyrene resins that contain up to 40 percent recycled plastic content.
American Marketing is one of the first manufacturers in the industry to
introduce injection-molded caterware and food service products worthy of the
prestigious ‘recycled’ logo mark.






During
the first quarter of 2008, American Marketing & Sales introduced additional
new products manufactured with 40% recycled resins. The new product line
consists of fifteen items of office products including desk top organizers,
letter trays, legal letter trays, pencil holders, paper clip and card holders,
magazine holders, and telephone and draw organizers.  Current and
targeted customers include Walmart, Target, BJ’S, Sam’s Club, Staples,
Office Max, Office Depot, W.B. Mason, and numerous mail order
catalogs.






Maestro
System




NetSymphony has developed the Maestro
System that sets new standards for size, simplicity and value. The Maestro
system provides integrated management of IP services by assessing, monitoring
and troubleshooting IP systems.  Maestro leverages measurement points,
servers and reporting to allow network operators to manage a customer’s
experience from initial deployment through to problem resolution years
later.  The M10P probe has the smallest form factor in the industry (1
inch by 1 inch by 4.375 inches).  Its zero-configuration startup
feature lets users plug it in and begin immediately performing tests and
measurements without any complicated configuration required.  Maestro
provides valuable functions in three major areas: system assessment; assurance
and service level agreement monitoring; and fault isolation and
troubleshooting.




Description
of Primary Industry






American
Marketing and Sales, Inc.






Plastics
play an indispensable role in a wide variety of markets, ranging from packaging
and building/construction to transportation; consumer and institutional
products; furniture and furnishings; electronics and more.






Plastic
product manufacturing is third among the top manufacturing industry groups in
the United States. The plastics industry as a whole, including resin (raw
material) suppliers, plastic product manufacturers and machinery and mold
makers, contributes 1.1 million jobs and $379 billion in shipments to the U.S.
economy.






In 2006,
the U.S. Plastics Industry employed 1.1 million people and U.S. plastics
shipments totaled $379 billion.  From 1980 to 2006, employment in the
plastics manufacturing industry grew 1.1 percent per year.  Real value
added in the plastics manufacturing industry grew 184 percent, from $42.1
billion to $119.4 billion. The real value of shipments by this industry grew 140
percent, from $114.5 billion to $275 billion.






NetSymphony
Corporation






Public
and private telephone networks are evolving from traditional telephone networks
to an Internet-based network infrastructure that makes more efficient use of
network resources. Various new technologies are enhancing Internet-based
networks to provide new carrier class services while lowering capital and
operating costs. These rapidly changing technological developments, coupled with
increased bandwidth availability, have enabled the launch of a new generation of
network services, such as Internet-based telephony that permits the transfer of
voice data over the Internet and secure private networks for the exchange of
sensitive data.






Communication
service providers, such as telecom operators and cable operators, are challenged
to deliver high quality voice services, at the lowest cost, over managed IP
infrastructures inter-working with traditional circuit switched networks. To do
this effectively, service providers must monitor and measure their voice service
offering, proactively detect problems and resolve them quickly and cost
effectively, ideally before their customers experience any problem or service
degradation. Additionally, when customers do report service problems, operators
must be able to effectively identify the cause and fix the problem. NetSymphony
provides the systems (products) and services to address these
challenges.






The next
generation of networks, such as Internet-based telephony, is introducing new
capabilities and opportunities for the sale of new products and services.
However, for network operators and service providers, the implementation of new
network technologies introduces a new set of operational challenges. Many of
these challenges arise from the integration of innovative communications systems
technologies with existing operational infrastructure. Service providers and
enterprise network operators must verify that the new technologies have been
installed and are working properly within the framework of their existing
network. This verification process and actions to correct detected errors can be
very labor intensive and may negatively affect customers by lowering the level
of quality below the service level guaranteed to customers. This network
assurance market segment is the focus and target of our current and future
technologies that will assist our customers in satisfying their obligations to
customers with respect to agreed upon levels of service quality.






Integrated
and automated network monitoring, testing and automatic detection and location
of errors are essential to reliable communications on which enterprise customers
depend for mission critical business communications. Our research and
development is dedicated towards products and services which will solve the
challenging aspects of deploying new technologies into the advanced networks and
network services of the future, and monitoring and testing those
technologies.






Competition






Competition
in the current communications industry is very robust, with many companies from
many different backgrounds wrestling for their piece of the
business.






Investors
can best understand our competitive environment by considering several axes that
characterize the operational support system and service assurance
market:






Enterprise
vs. Carrier






Different
companies dominate either the market for services to enterprise or large
business customers or the market for services to the public network operators or
carriers. We target the carrier market segment, but focus on new technologies
and service types which are typically first implemented and proven in the
enterprise arena. Therefore, we anticipate that competitive threats will come
both from carrier service assurance companies seeking to expand their
established business and from enterprise service assurance companies seeking to
take their expertise from the enterprise into the carrier domain.






Datacom
vs. Telecom






Different
companies dominate the telecom, or telephone networking sector of the
communications networking business, and the datacom, or data/computer networking
sector. Our target market is at the convergence of telecom and datacom in the
networking world. Therefore, we expect firms specializing in the data/computer
networking sector will seek to expand their market by adding telephone
communications functionality to their products in the carrier network
infrastructure areas. Similarly, we expect telecom infrastructure service
assurance companies will try to expand into the data communications
areas.






Test
Equipment vs. Network Management Systems






The
market for operational support systems is generally divided between the test
equipment vendors, who make specialized equipment designed to test particular
functions in a piece of networking equipment, and the network management system
vendors, who make systems that provide integrative overviews of the network
status. We are developing a system that will enable automation of test equipment
deployed around a network. With this system in place, a network operator in a
single location will have the ability to assess the networks quality of service
and to identify and locate errors. This puts us in the path of potential
expansion from both the established test equipment vendors seeking to expand
their product line into systems level products, and the network management
system vendors seeking to broaden their integrated control of the network to
include the network test functions previously provided by test equipment
vendors.






Our
current strategy for competing in this complex environment is to:






·
            remain
      focused on the network assurance market by ramping up our sales marketing
      efforts;






·
            continue
      onsite product testing at strategic telecommunication service
      providers;






·
            launch
      product development to maintain a competitive lead;
  and






·
            continue
      toestablish
      alliances with selected manufacturers and service providers and implement
      international distribution agreements to help us gain rapid market
      acceptance on an international
scale.






Intellectual
Property






Our
intellectual property is in our software products and hardware configurations,
which are principally protected by copyright and trade secret law. We are
exploring additional protections through potential patents.






Research
and Development






For the
year ended December 31, 2008, NetSymphony Corporation and QoVox Corporation
incurred research and development expense of approximately $94,000 and $159,000,
respectively.  We anticipate NetSymphony Corporation, rather than
QoVox Corporation or American Marketing and Sales, Inc., will incur the majority
of the Company’s research and development costs during the next twelve
months.






Business
Overview of CASCommunications, Inc.






CASCommunications, Inc.,
a Florida corporation in which we hold a 40% equity interest, halted development
of its devices related to high speed broadband access in 2004 due to a lack of
sufficient capital. CASCommunications is inactive and we do not expect that
CASCommunications will generate any revenue in 2008. The Company is currently
exploring options.




Item 1A.
            Risk
      Factors




Forward-Looking and Cautionary
Statements.




Statements
in this Annual Report that are not strictly historical are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements include statements about our
future operating results, strategic relationships and product development. You
can identify these forward-looking statements because they involve our
expectations, beliefs, projections, anticipations or other characterizations of
future events or circumstances. These forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties that
may cause actual results to differ significantly from results discussed in the
forward-looking statements. These factors include, but are not limited to, our
history of operating losses, our need for additional financing, a failure of our
products to perform as expected, introduction of competing products by other
companies, pressures on prices from competitors and/or customers, regulatory
obstacles to new product introductions, lack of acceptance of our products and
changes in the VoIP and technology industries.Set forth below is a
discussion of certain factors that could cause our actual results to differ
materially from the results projected in such forward looking
statements.




Business
Risks






American
Marketing and Sales, Inc.






Dependence on Key
Employees.Our success will depend upon the successful recruitment and
retention of highly skilled and experienced managerial, technical, marketing and
financial.






NetSymphony
Corporation & QoVox Corporation






Profitability
Uncertain.Since our inception, we have been principally engaged in
product and business development activities for our network monitoring system.
Our technology demonstration programs with certain IP telephony service
providers, including Sprint and Time Warner Cable, confirm the QoVox Network
Assurance Systems performance and value to the communications industry. We
believe that our initial demonstration and evaluation programs with certain
carriers support the performance and efficacy of our system and will result in
long-term implementation agreements. However, we cannot assure you that
commercial viability will be demonstrated for the QoVox Network Assurance
Systems, or that other competitive network monitoring solutions will not be
chosen as alternatives to our QoVox solutions. Should competitor products
displace our products in the market, our prospects for profitability may not be
realized.






History of
Operating Losses.We have had a history of substantial operating losses
since we commenced our current operations in January 1999. From 1999 to December
31, 2007 and prior to the acquisition of American Marketing and Sales, Inc., we
generated approximately $135,000 in total revenue and accumulated a net loss of
approximately $37 million. These losses were principally the result of our
general and administrative costs, our research and development costs and adverse
judgments in litigation to which we have been a party. As a result, our
liabilities currently greatly exceed our assets.   American
Marketing and Sales, Inc. generated approximately $11 Million in revenues during
2008, and  NetSymphony started generating minimal revenues during the
current quarter.






Dependence on
Distributor Acceptance.Our NetSymphony sales for the foreseeable future
are expected to come from Internet telephony service providers and
telecommunications network equipment OEMs. We expect that carriers will
integrate our product into services they offer to their aggregated subscriber
base. We expect OEMs will incorporate the QoVox Network Assurance Systems into
their products once QoVox's Active Monitoring System becomes a network
monitoring option. We cannot assure you that we will receive orders from our
prospective distribution partners sufficient to provide cash from operations in
amounts required to sustain profitable operations. Additionally, we cannot
assure you that our products will be adopted at the rate we forecast. Any
decrease in the adoption rate could adversely affect our
performance.






Sales and
Distribution.We now have dedicated sales and marketing personnel. Our
larger potential competitors have stronger brand name recognition and
significant sales and marketing infrastructures.






Dependence on Key
Employees.Our success will depend upon the successful recruitment and
retention of highly skilled and experienced managerial, technical, marketing and
financial. The competition for such personnel is intense and our competitors
will have substantially greater financing and other resources to offer such
personnel. Therefore, we cannot assure you that we will successfully recruit and
retain necessary personnel.






New Products.NetSymphony andQoVox
products and services are in development and are based upon our proprietary core
technology. We believe that our future success will depend on additional
monitoring algorithms and equipment, and related services, and therefore, on our
ability to develop and introduce additional variations on our core technology
that provide measurable competitive performance and economic benefit compared to
existing and future network monitoring alternatives.






In March
2008, American Marketing & Sales announced the introduction of additional
new products manufactured with 40% recycled resins. The new product line
consists of fifteen items of office products including desk top organizers,
letter trays, legal letter trays, pencil holders, paper clip and card holders,
magazine holders, and telephone and draw organizers. Current and targeted
customers include Walmart, Target, BJ’S, Sam’s Club, Staples, Office Max,
Office Depot, W.B. Mason, and numerous mail order catalogs. Sales of
our Office Products Green Line commenced in April 2008.




The
Office Products Green Line supplements American Marketing & Sales’ extensive
line of environment-friendly, injection-molded Green Line
food-packaging/caterware products announced in January 2008. For those products,
Innovative Designs has received orders or commitments to purchase the new Green
Line of products from Whole Foods, the U.S. House of Representatives purchasing
office in Washington, D.C., and several schools and colleges, including the
University of Massachusetts.




Dependence on
Product Requirements of Customers.Our success prior to acquiring the new
companies   depended significantly on our ability to develop and
introduce, on a timely basis, advanced network assurance products and systems
that meet the needs of our customers. If we are unable to design, develop and
introduce competitive products on a timely basis, our results of operations for
QoVox and NetSymphony will be adversely affected.






Competition.Our potential network access competitors include, but are not limited to,
major network equipment manufacturers such as Agilent Technologies, Empirex,
MinaCom, Packet Island, and Radcom. Our competitors may have substantially
greater research and development, marketing, financial, technological, personnel
and managerial resources than we have.






Industry Risks.We depend on the willingness of telecommunications carriers and Internet
service providers to purchase our products and services. A slowdown in the
telecommunication or networking industries would adversely affect our ability to
find partners and prospective customers. Segments of the telecommunications
industry have experienced significant business downturns characterized by
decreased product demand, price erosion, work slowdowns and layoffs. Our
operations may in the future experience substantial fluctuations as a
consequence of general economic conditions affecting the timing of orders from
major customers and other factors affecting capital spending.






Selling
Price/Manufacturing Cost Reduction.We assume that our selling price per
unit of product will be reduced over time as production is increased and target
unit manufacturing costs are achieved. Selling price reduction and cost
reductions are necessary to improve unit price/performance ratios and remain
competitive. We cannot assure you that we will successfully achieve target cost
goals. Furthermore, our product costs may not be competitive with other
commercially available network monitoring technologies.






Management of
Growth.Our further development, and our goal to transition into a
profitable going concern, will require additional management as well as improved
operational and financial systems. In addition, to achieve broader market
acceptance, we will need to expand our marketing and sales staff, our employee
base and the scope of our operations, all of which will require additional
personnel and associated costs. We cannot assure you that we will successfully
manage such transition or the expansion of our operations, and our failure to do
so could have an adverse effect on our Company. In general, our business plan
calls for significant growth over the next five years. Our failure to manage our
growth effectively could have a material adverse effect on our business,
financial condition and operating results.






Technological
Risks






Products Fail to
Perform.We have operated our network demonstration systems on live
client network conditions. We designed our technology to operate consistent with
telephony standards, but we cannot assure you that our products will work
uniformly over the entire range of network conditions. While our network
monitoring tools are based on well-known and robust microelectronics components,
we have limited commercial experience with our products. Accordingly, we lack
information on maintenance and returns that might result from less than expected
product performance.






Technological
Obsolescence.Network monitoring and performance assurance technology is
rapidly evolving and highly competitive. We cannot assure you that our research
and product development efforts will remain up-to-date given research efforts
and technological activities of others, including initiatives and activities of
governments, major research facilities and other corporations, nearly all of
which enjoy far greater resources than we do.






Intellectual
Property Risks.We do not own any patents. We rely primarily on trade
secret laws, copyright law, unfair competition law and confidentiality
agreements to protect our intellectual property. Our lack of ownership of
patents together with the trend toward litigation regarding patent and other
intellectual property rights in the telecommunications and networking
industries, mean that litigation by third parties is a possibility. While we do
not believe that any of our products infringe the valid intellectual property
rights of third parties, we may be unaware of intellectual property rights of
others that may cover some of our technology, products or services. Any
litigation regarding patents or other intellectual property could be costly and
time consuming and could divert our management and key personnel from our
business operations. The complexity of the technology involved and the
uncertainty of intellectual property litigation increase these risks. Claims of
intellectual property infringement might also require us to enter into costly
royalty or license agreements. However, we may be unable to obtain royalty or
license agreements on terms acceptable to us, or at all. In addition, third
parties may infringe our intellectual property, and we may expend significant
resources enforcing our rights or suffer competitive injury.






Regulatory
Risks






Regulatory
Environment.The regulatory environment for the telecommunications
industry has been undergoing liberalization at varying paces and with differing
objectives, and in certain markets has been subject to political interference.
For the most part, we believe that there will be increasing motivation on the
part of regulators to set the regulatory framework for rapid deployment and use
of Next Generation Network services. While it is unlikely, we could face
regulatory risks.






Financing
Risks






Need for
Additional Financing; Dilution. Sufficient revenue is
needed to cover our operating costs for the next twelve months and start to pay
down our debts.  We may raise working capital from private and public
sources and prospectively from corporate alliances to fund our operations to the
point of being self-funding. Should we fail to raise the necessary funding at
the levels planned, we may be required to scale back or cease operations but the
acquisition has significantly diminished that possibility.  We may be
required to seek additional financing in the future. We cannot assure you that
adequate additional financing, on acceptable terms or at all, will be available
when needed, or that future financing would not further dilute stockholders’
interests. In addition, as a result of our inability to generate sufficient cash
flow, we have historically issued stock and options to our executives, employees
and consultants in lieu of cash compensation. Additional dilution to our
stockholders’ interests is a possibility that may occur.




Item 1B.
            Unresolved
      Staff Comments




Not
Applicable.




Item 2.
            Properties




American
Marketing and Sales, Inc. rents a 3600-square-foot showroom and warehouse at 20
Mohawk Drive, Leominster, MA 01453.  The arrangement is month-to-month
and cancellable at any time.  Monthly payments are $1,200 and include
taxes and utilities.






NetSymphony
leases approximately 2,600 square feet of space at 7200 Falls of the Neuse Road,
Suite 101, Raleigh, North Carolina 27615. The term of the lease is for 26 months
beginning December 1, 2007 and expiring January 31, 2010. The monthly
rent is approximately $1,950. The property is being used to market and develop
NetSymphony’s products.






QoVox and
Datameg currently are not in need of office space.  Our management
believes that our insurance coverage for our existing office spaces is
adequate.




Item 3.
            Legal
      Proceedings.




On July
31, 2006, the Company received a letter from counsel for Joshua E. Davidson,
giving Mr. Davidson’s notice of termination as the Company Comptroller and
Acting Chief Financial Officer. The letter further demands $17,500 to satisfy
Mr. Davidson’s claims against the Company, with the potential for multiple
damages for willful deceptive and unfair acts and practices if the matter
proceeds to suit. On September 22, 2006, Mr. Davidson filed suit against the
Company and the Company’s CEO, individually, in Boston municipal court for
$14,900 and multiple damages. The Company obtained litigation counsel and on
October 16, 2006, defendants filed their answers denying all Mr. Davidson’s
claims with the Company, filing counter claims against Mr. Davidson, and asking
for removal of the action to a court of increased jurisdiction.  The
matter was settled in October 2008 From Court impounded Company funds, the
Company  received the return of $2,500 and Davidson kept
$12,500.






On
February 9, 2007, QoVox filed suit in the United States District Court, East
District of North Carolina, Western Division, No. 5:07CV00046BO against Omni
Solutions, Inc. and a team of Ohio software consultants and business entities,
alleging as to some or all of them, among other things, breach of contract,
conspiracy, fraud, conversion, and violation of the North Carolina Trade Secrets
Act.  Defendants retained counsel, answered the QoVox complaint and
filed a counter claim against QoVox and Datameg for amounts defendants claim are
due them. The entire action was dismissed in January 2008 after the parties
entered into a confidential settlement agreement. Defendants released QoVox and
Datameg from all amounts owed them and granted QoVox joint use of the products
that were the subject of the litigation.






On
February 15, 2007, Datameg received a letter from collection counsel for Merrill
Communications LLC for electronic and paper printing work allegedly incurred in
2004 by past outside corporate counsel.  Datameg has paid $41,490 and
Merrill claims an additional $21,929.  Datameg contends Merrill has
been paid in full and that Datameg is further entitled to reimbursement of
$10,179 for over billing. On or about August 31, 2007, Merrill filed suit in
Boston Municipal Court and the Company has filed its answer and counter claims.
In September 2008, the Company settled this matter for $10,000 payable over five
months.






On March
14, 2007, QoVox was sued in the General District Court of Justice for $7,200 by
Joseph L. Turgeon, a past consultant, concerning consulting fees alleged to be
owed from March 2004. On March 26, 2009, Mr. Turgeon obtained a writ of
execution in the amount of $9,224.




In July
2003, the Company signed a promissory note with a professional for fees and the
interest on unpaid fees due that professional through September 30, 2003 in the
amount of $247,007. The note was due on August 15, 2003 and was guaranteed
personally by the Company’s Chairman. The note stated an interest rate of 18%
per annum, which had been accrued since the note’s inception and totaled
$222,442 and $200,166 at September 30, 2008 and December 31, 2007,
respectively.  No significant payments had been made on the note, and
on September 25, 2007, the note holder filed suit, seeking to have a judgment
rendered against the Company for all amounts claimed due. On June 23, 2008, the
court entered an order for judgment for the full principal and interest on the
promissory note.  On August 15, 2008, the parties entered into a
settlement agreement before entry of a final judgment requiring the Company to
pay the plaintiff in full settlement of this case, the sum of $555,000. After
making an initial payment of $100,000 under the settlement, the Company
defaulted and on February 18, 2009, the court entered final judgment for
plaintiff in the amount of $457,927.50. Additional negotiations ensued and the
Company and plaintiff entered into a second settlement agreement wherein
plaintiff will accept (in escrow) 10 million Datameg common shares as payment of
the judgment if the sale of American Marketing and the change of control of
Datameg are concluded on or before June 1, 2009.  If not, the second
settlement is void and the 10 million shares in escrow are to be
returned.









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









No
matters were submitted to a vote of Datameg’s shareholders during the fourth
quarter of fiscal year 2008.




PART
II






Item 5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer of
      Purchases of Equity Securities.




Market
Information






Our
common stock has been listed on the Over-the-Counter Bulletin Board sponsored by
the National Association of Securities Dealers, Inc. under the symbol
DTMG.OB since September 19, 2000.






The
following table sets forth the range of high and low bid prices for the our
common stock as reported on the Over the Counter Bulletin Board for each quarter
since January 2006 for the periods indicated, as reported by the Over the
Counter Bulletin Board for the each period mentioned below. Such information
reflects inter dealer prices without retail markup, mark down or commissions and
may not represent actual transactions.




Low
            
            HighYear
      Ended December 31, 2006Quarter
      1
            
            $
            0.03
            
            $
            0.08Quarter
      2
            
            $
            0.02
            
            $
            0.07Quarter
      3
            
            $
            0.01
            
            $
            0.03Quarter
      4
            
            $
            0.04
            
            $
            0.08Year
      Ended December 31, 2007Quarter
      1
            
            $
            0.04
            
            $
            0.07Quarter
      2
            
            $
            0.03
            
            $
            0.04Quarter
      3
            
            $
            0.03
            
            $
            0.05Quarter
      4
            
            $
            0.03
            
            $
            0.04Year
      Ended December 31, 2008Quarter
      1
            
            $
            0.02
            
            $
            0.05Quarter
      2
            
            $
            0.02
            
            $
            0.04Quarter
      3
            
            $
            0.02
            
            $
            0.04Quarter
      4
            
            $
            0.01
            
            $
            0.02











Dividend
Policy






In the
first quarter of 2008, American Marketing and Sales, Inc., pursuant to the
acquisition agreement with the Company, paid $373,641 in cash dividends to the
selling stockholders to offset taxes incurred by them due to the
acquisition.  However, it is our present policy not to pay cash
dividends and to retain future earnings for use in the operations of the
business and to fund future growth. Any payment of cash dividends in the future
will depend on the amount of funds legally available, our earnings, financial
condition, capital requirements and other factors that the board of directors
may think are relevant.  We do not contemplate or anticipate paying
any dividends in cash on the common stock in the foreseeable
future.






Holders
of Record of Common Stock






As of
April 15, 2009, we had outstanding 409,206,087 shares of our common stock and
approximately 552 shareholders of record.  An additional 490,000 of
previously-issued shares were repurchased by the Company in December 2008 and
are currently being held in treasury for resale.






Equity
Compensation Plan Information






We have
granted options and warrants to employees and consultants to purchase up to
177,185,430 shares of our common stock at prices ranging from $0.01 to $5 per
share from inception (January 13, 1999) through December 31, 2008. As of
December 31, 2008, options and warrants which would permit the purchase of
10,267,738 shares were exercised and options and warrants for which would permit
the purchase of 131,517,692 shares expired or were terminated. The remaining
options and warrants to purchase up to 35,400,000 shares expire between January
2009 and June 2013.






The
following table shows the aggregate amount of securities related to equity
compensation plans as of December 31, 2008:




Plan
      Category
            
            Number
      of Securities to be issued upon exercise of oustanding options, warrants
      and rights
            
            Weighted
      average exercise price of outstanding options, warrants and
      rights
            
            Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a))Equity
      compensation plans approved by security holders
            
            None
            
            
            NA
            
            NAEquity
      compensation plans not approved by security holders
            
            35,400,000
            
            $
            0.06
            
            None




Securities
that were not registered under the Securities Act but were issued under equity
compensation plans:




Purchased
            Service
      Provider
            Non
      Cash Consideration
            Fair
      Value Share Price (1)
            Number
      of Common Shares3/14/2008
            Paul
      Vuksich
            $         41,625
            0.040
            1,035,6843/26/2008
            Terry
      Clarke
            2,000
            0.040
            50,0003/26/2008
            Lynn
      Kettleson
            1,500
            0.040
            37,5004/15/2008
            Lynel
      J. Tocci
            26,500
            0.0265
            1,000,0004/15/2008
            Leanne
      J. Whitney
            26,500
            0.0265
            1,000,0004/15/2008
            Linnea
      J. Clary
            26,500
            0.0265
            1,000,0005/27/2008
            Shirley&Adams,PLLC
            28,000
            0.028
            1,000,00011/13/2008
            Equiti•trend
      Advisors, LLC
            49,000
            0.0098
            5,000,00011/13/2008
            Shareholder
      Intelligence Services LLC
            4,900
            0.0098
            500,00011/13/2008
            Paul
      Vuksich
            14,146
            0.0135
            1,047,84111/13/2008
            Cornelius
      Kane
            980
            0.0098
            100,00011/13/2008
            Jack
      Geckler
            4,900
            0.0098
            500,00011/13/2008
            Kim
      McIntosh
            2,450
            0.0098
            250,000$       229,001
            
            12,521,025




(1)  The
Fair Value Price may not equate with share closing price on the date of share
issuance.






Recent
Sales of Unregistered Securities:




Purchased
            Investor
            Consideration
            Share
      Price
            Number
      of Common Shares3/22/2008
            John
      Boniface
            $         50,000
            0.025
            2,000,0004/13/2008
            Esther
      H. Levens
            15,000
            0.025
            600,0008/19/2008
            Paul
      Mikulas
            3,125
            0.025
            125,00010/1/2008
            D.A.S.
            5,000
            0.010
            500,00010/3/2008
            Francis
      Seymour
            10,000
            0.010
            1,000,00010/13/2008
            John
      Boniface
            10,000
            0.010
            1,000,00012/1/2008
            Christiane
      Hermstedt
            10,000
            0.010
            1,000,000$       103,125
            
            6,225,0003/18/2009
            John
      Boniface
            $50,000
            0.025
            2,000,000








Item 7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.




Results
of Operations




Overview




The sections of “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
contain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934 which involve risks
and uncertainties. Our actual results may differ significantly from results
discussed in the forward-looking statements due to a number of important
factors, including, but not limited to our history of operating losses, our need
for additional financing, a failure of our products to perform as expected,
introduction of competing products by other companies, pressures on prices from
competitors and/or customers, regulatory obstacles to new product introductions,
lack of acceptance of our products and changes in the VoIP and technology
industries.




PLAN OF
OPERATION






THE GREEN
LINE






American
Marketing and Sales, Inc., located in Leominster, Massachusetts, has
successfully developed and introduced an extensive line of environment-friendly,
injection-molded Green Line food-packaging/caterware products and has received
orders or commitments to purchase the new Green Line of products from U.S.
Foodservice, Madison Square Garden, Whole Foods, Le Pain Quotidien restaurants,
Finagle A Bagel, the U.S. House of Representatives purchasing office in
Washington, D.C., and several schools and colleges including the University of
Massachusetts. The new Green Line products consist of 25 items including various
sizes of trays, party platters, and serving bowls with lids.  These
non-toxic products qualify for the Green label inasmuch as they are manufactured
from FDA-approved polypropylene and polystyrene resins that contain up to 40
percent recycled plastic content. American Marketing and Sales, Inc. is one of
the first manufacturers in the industry to introduce injection-molded caterware
and food service products worthy of the prestigious ‘recycled’ logo
mark.  On March 11, 2008, American Marketing and Sales, Inc. entered
into a binding term sheet to acquire one-third of the outstanding shares and 50%
of the voting rights in one of American Marketing and Sales, Inc.’s primary
manufacturers, JAM Plastics, also located in Leominster.  As of April
15, 2009, the agreement had not yet closed and no stock had been
exchanged.






During
the first quarter of 2008, American Marketing and Sales introduced additional
new products manufactured with 40% recycled resins. The new product line
consists of fifteen items of office products including desk top organizers,
letter trays, legal letter trays, pencil holders, paper clip and card holders,
magazine holders, and telephone and draw organizers. Current and targeted
customers include Walmart, Target, BJ’S, Sam’s Club, Staples, Office Max,
Office Depot, W.B. Mason, and numerous mail order
catalogs.






Green
Line food caterware and office products are marketed through a dedicated web
site entitled Green Planet Plastics (greenplanetplastic.com). Green Line
products are made with recycled material as part of American Marketing’s efforts
to take earth-friendly steps toward product awareness.






SERVICE
ASSURANCE SYSTEMS PRODUCTS AND SERVICES FOR NETWORK OPERATORS IN THE
TELECOMMUNICATIONS INDUSTRY






Datameg
is a holding company, but through its subsidiary, NetSymphony Corporation, is a
technology company focused on providing service assurance systems products and
services for network operators in the telecommunications industry. Our target
customers are telecom operators and cable operators worldwide. We focus
specifically on voice services over traditional circuit switched and managed IP
networks.






Through
our wholly owned subsidiary, NetSymphony Corporation subcontracting with QoVox
Corporation and 3rd party
consultants, we design, develop and sell an active voice quality test system,
capable of monitoring and providing analytical/statistical data that
characterizes the connectivity and measurement of voice quality across
communications networks. QoVox will continue its focus on PSTN testing
interfaces and NetSymphony will be developing Internet Protocol (IP) based
testing interfaces that are software based. We are working on tools and
techniques for network wide fault identification, isolation and
troubleshooting.






Communication
service providers, such as telecom operators and cable operators, are challenged
to deliver high quality voice services, at the lowest cost, over managed IP
infrastructures and inter-working with traditional circuit switched networks. To
do this effectively, service providers must monitor and measure their voice
service offering, proactively detect problems and resolve them quickly and cost
effectively, ideally before their customers experience any problem or service
degradation. Additionally, if customers do report service problems, operators
must be able to effectively identify the cause and fix the problem. QoVox
provides the systems (products) and services to address these
challenges.






VoIP
Market






VoIP is
one of the fastest growing segments in the telecommunications sector. Yankee
Group and IDC, leading market research firms, estimate the growth of VoIP
subscribers. Yankee Group estimated VoIP subscribers would grow from one million
at the end of 2004 to 18 million by 2008. IDC reported the number of VoIP
subscribers in the U.S. will jump from three million in 2005 to 27 million in
2009.






VoIP
service providers include local and long distance telephone companies, such as,
AT&T, Verizon,  Qwest, Sprint,  MCI and others; cable
multi service operators (MSO's) such as Cablevision, Comcast, Cox, Rogers, Time
Warner Cable and others; and emerging service providers, such as Vonage and
others.






In
November 2004, Frost & Sullivan reported the VoIP Monitoring market in 2004
was $50 million. By 2008, the VoIP Monitoring market is forecasted to reach $297
million, representing a 56% compounded annual growth rate from 2004 through
2008.






Business
Challenge Driving Demand for New Tools and Services






Enterprise
and residential customers expect and demand that their voice services are high
quality and are offered at the lowest possible cost. To meet these expectations,
communication service providers must save significant capital costs and
operating expenses through deploying and operating next generation networks.
These next generation networks utilize packet switching technology that is
different from the traditional circuit switched networks. Some service operators
expect to save between 40% to 50% of their capital and operating
expenditures.






Service
providers are deploying and operating these next generation networks today,
often inter-working with traditional circuit switched networks. Service
providers need tools and services, like those QoVox offers, to report
statistically and analytically the performance of their service and to isolate,
diagnose and fix problems. Many service providers who have limited experience in
managing these emerging networking technologies are focused today on deployment
and need help to report on the service performance and to identify and
troubleshoot problems. To deploy and operate these networks and services,
service providers must buy tools and develop new expertise to deploy, operate
and manage these new networks and services. This is the business opportunity
that NetSymphony targets.






We
believe the NetSymphony systems and services enable service providers to
proactively depict their voice services and to detect and pinpoint network
problems. These problems may be repaired effectively; thus, minimizing the
number and extent of incidences of customers experiencing loss of service or
poor voice quality.






Business
Objectives






We strive
to be among the global leaders in developing and selling systems and services
for service assurance of next generation networks and services.






Our goal
is to be the leading supplier of active voice quality test systems within three
years. Thus, we have an immediate business focus on expanding our relationships
with our customer base through value-added services while developing a new
platform to increase revenue through systems sales. There are three important
elements to achieve this:






·
            Develop
      a new platform with extensive correlation and analytic capabilities to
      detect and isolate problems in our customer’s
  networks,






·
            Invest
      heavily in Internet Protocol (IP) measurement technology,
    and






·
            Convert
      our current trials into service
engagements.






We plan
to leverage our existing Time-division multiplexing (TDM) and Analog solutions
and combine them with new IP based solutions to provide the market with the most
complete service assurance platform for converged / next-generation networks.
TDM is a method of putting multiple data streams in a single signal by
separating the signal into many segments, each having a very short
duration.  While investing heavily in our new platform, we will
continue to grow customer relationships and accelerate revenue generation
through offering professional services. Services overcome the obstacles of
lengthy sales cycles while more rapidly solving customer problems.






Current
Situation






NetSymphony’s
Maestro System,
consisting of hardware and software, actively makes calls between various points
across communication networks and correlates and reports the results of these
call campaigns on a centralized server. We can operate the system on behalf of
our customers, or our customer can operate the system.






Although
we commenced sales of the Maestro Systemin the first
quarter of 2008, only $3,520 of revenues were recognized during
2008.






NetSymphony
and QoVox have their offices in Raleigh, North Carolina.






Business
Strategy and Direction






NetSymphony
intends to:






·
            Develop
      and sell systems products and
services;






·
            Continue
      to target telecom operators and cable
operators;






·
            Develop
      its business first in the U.S. and Canada. Africa, Mid-East and European
      markets will also be addressed in
2009.






·
            Continue
      providing solutions for the challenges related to deploying and operating
      voice services, especially in the areas of quality and security.
      NetSymphony plans to extend its capability into fault isolation and
      troubleshooting. Additionally, NetSymphony plans to make contributions for
      other emerging technologies, such as video over
  IP.






NetSymphony
will pursue the following strategy to achieve our business
objectives:




·
            Develop
      the industry’s premier service assurance system that enables customers to
      assess, monitor and troubleshoot IP based
  services;


·
            Develop
      and offer the servicesto characterize network and service health and to isolate and
      diagnose performance and security
problems;


·
            Create
      a consultative sales and
      supportorganization in both our direct and channel sales
      initiatives; and


·
            Partner
      with selected system
      integratorsto facilitate the easy installation and customization
      of NetSymphony systems into the customers’ operating environment and
      workflow. In addition, system integrators are expected to be a source of
      leads, referrals and support for our sales
  efforts.




Product
Development






NetSymphony
has products and services that help service providers deploy and manage voice
services. To date, the majority of product development activity has been
centered on analog and TDM probe hardware. This investment was necessary to
establish the company in the test and measurement market.






NetSymphony
will add the IP networking technology to the Datameg solution portfolio and
become the premier service assurance provider. To achieve this goal, additional
investment will be in the following areas:






·
            Server
      Software: In complex networks the most pressing need is to be able to
      correlate and analyze measurement information along with network elements
      statistics to pinpoint where problems are occurring. We will be developing
      this capability in 2009.






·
            IP
      Measurement Technology: NetSymphony now has as employees IP measurement
      experts that have developed products that should be very successful
      commercially. This team will introduce IP measurement solutions in 2009
      that will be the most advanced in the
industry.






·
            Leverage
      Existing Products: The value of the current NetSymphony system will be
      integrated into the new server platform and operate in conjunction with
      the new IP probes and software agents. This will greatly enhance the value
      of existing technology.






Our
products are deployed throughout the service provider’s network. Our products
check that calls can be connected properly across these networks and measure the
voice quality between various points in the network.






Services
Offering






At
present, NetSymphony operates a Network Operations Center in Raleigh, NC, for a
small number of network operators.






NetSymphony
plans to aggressively convert our existing sales opportunities to services
offerings in 2009. Customers are still wary of large capital budget outlays
causing an extended sales cycle that can extend over 18 months. Our customers
have immediate problems and the current NetSymphony solutions can solve many of
their issues. Therefore, we are working with our trial partners to move to a
services engagement that is based on their expense budget and can be done
quickly. We will offer Assessment Testing, Service Assurance Monitoring and
Consulting as professional services.






Marketing
and Sales






NetSymphony
plans to develop a joint global sales and support channel, comprised
of:






·
            Direct
      sales representatives, sales engineers and support
      specialists;






·
            High
      end distributors that offer system integration in this market;
      and






·
            A
      small number of operational support system vendors, equipment
      manufacturers and system integrators who will provide referrals or resell
      the NetSymphony products and
services.






In the
next three years, NetSymphony expects to fully develop sales and support
channels in:






·
            The
      U.S. and Canada, covering Tier 1 and Tier 2 wireline and mobile telecom
      operators and the Top 25 cable
operators;






·
            Western
      and eastern Europe; and






·
            Japan,
      China, Korea and India.






NetSymphony
plans to actively participate in international and regional industry forums and
standardization bodies to build and earn a reputation as an innovative industry
leader.






NetSymphony
plans to organize and host regional Industry Leadership Forums, bringing
together industry leaders






Competition






There are
a number of competitors in the VoIP Monitoring business. These companies can be
segmented into Enterprise and Service Provider markets.






Enterprise
focused competitors feature lower cost solutions that are not designed to scale
to requirements of service providers. Vendors such as Attachmate (formerly
NetIQ),Viola Networks and Packet Island fall into the Enterprise
segment.






The
Service Provider segment is comprised of traditional Service Assurance vendors
such as Spirent, JDSU and Agilent. These companies come from a physical layer
test background and are attempting to gain market share in the IP services
market that involves significant investment.






There are
3 key areas of competitive differentiation for QoVox:






1.
            Software-Based
      Approach. Competitors are very hardware-based in their solutions, which
      limits the flexibility of instrumenting networks for service assurance and
      causes their price points to be very high. NetSymphony’s solutions will be
      software-based to overcome these
challenges.






2.
            Active
      & Passive Analysis. Most competitors rely on providing measurements
      through active testing (generating real calls on a network) or passive
      monitoring (analyzing customers’ calls as they occur). Customers realize
      there are merits to both methods and NetSymphony will provide passive
      analysis in addition to its existing active
  capabilities.






3.
            Media
      & Signaling. Competitors such as Agilent rely on Signaling analysis to
      verify user status in VoIP. Other vendors such as JDSU and Sprint focus on
      analyzing the media streams (actual calls) to verify the quality. In
      reality, to measure the user experience and to isolate problems when they
      occur both media and signaling need to be measured. NetSymphony is
      currently adding signaling capabilities to its media stream
      technology.






CasCommunications






We own
40% of CasCommunications, an inactive development stage entity. We do not expect
CasCommunications to generate any revenue in 2009.  The Company is
exploring options.






Liquidity
and Capital Resources






Due to
our recent and future acquisitions, current cash on hand and projected cash on
hand is now adequate to execute our plan of operation based on loans from the
companies being acquired.  Since and after the closings, we expect to
no longer continue to seek additional financing through the offering and sale of
our securities in order to satisfy our immediate and short term cash needs.
Given the losses incurred to date and the lack of substantial revenue generated,
we have little or no access to conventional debt markets.  Funding to
support both short and midterm requirements for product development and launch
may be done through additional sale of shares and potentially, to a lesser
extent, from working capital that might be generated from customer revenue in
the future. Until the Company’s products generate significant revenue from a
customer, future cash flows cannot be meaningfully projected.






There can
be no assurance that we will be able to raise additional capital on acceptable
terms or at all. If we are unable to raise additional capital, we would need to
curtail or reduce some or all of our operations, and some or all of
NetSymphony’s or QoVox's operations.






Critical
Accounting Policies






Our
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of our consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities
and equity and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. These estimates have a material impact on our
financial statements. Revenue Recognition






American
Marketing & Sales, Inc.




American
Marketing and Sales, Inc. recognizes revenue from product sales in accordance
with Staff Accounting Bulletin No. 104, which requires recognition when
persuasive evidence of an arrangement exists, the price is fixed or
determinable, delivery has occurred, and payment is reasonably
assured.  The Company has determined that these criteria have been met
upon shipment, and recognizes revenue at that point.





Pursuant
to SFAS No. 5, “Accounting for
Contingencies,” American Marketing and Sales, Inc. has examined
collection history, financial conditions of clients, and general economic
conditions and determined that it is not necessary to set an allowance for
doubtful accounts, which have historically not been significant.




NetSymphony
Corporation & QoVox Corporation






NetSymphony
Corporation and QoVox Corporation derive revenue from three primary sources: (1)
system hardware component sales revenue, (2) software license revenue and (3)
services and maintenance and right to use revenue, which include support,
maintenance, right to use fees and consulting. Revenue on system hardware
component sales is recognized upon delivery to, and acceptance by, the customer.
Software license revenue recognition is substantially governed by the provisions
of Statement of Position No. 97-2, “Software Revenue
Recognition,” (SOP 97-2) issued by the American Institute of Certified
Public Accountants. The Company exercises judgment and uses estimates in
connection with the determination of the amount of software license and services
revenue to be recognized in each accounting period. For software license
arrangements that do not require significant modification or customization of
the underlying software, the Company recognizes revenue when: (1) it enters into
a legally binding arrangement with a customer for the license of software; (2)
it delivers the products or perform the services; (3) customer payment is deemed
fixed or determinable and free of contingencies or significant uncertainties (4)
collection is probable and (5) vendor specific objective evidence (VSOE) of fair
value exists to allocate the total fee among all delivered and undelivered
elements in the arrangement.






Multiple
Element Arrangements






The
Company typically enters into arrangements with customers that include perpetual
software licenses, system hardware, maintenance and right to use fees. Software
licenses are sold on a per copy basis. Per copy licenses give customers the
right to use a single copy of licensed software for exclusive use on the
Company’s system hardware. Assuming all other revenue recognition criteria are
met, license revenue is recognized upon delivery using the residual method in
accordance with SOP No. 98-9, “Modification of SOP 97-2: Software
Revenue Recognition.” Under the residual method, the Company allocates
and defers revenue for the undelivered elements, based on VSOE of fair value,
and recognizes the difference between the total arrangement fee and the amount
deferred for the undelivered elements as revenue. The determination of fair
value of each undelivered element in multiple element arrangements is based on
the price charged when the same element is sold separately. If sufficient
evidence of fair value cannot be determined for any undelivered item, all
revenue from the arrangement is deferred until VSOE of fair value can be
established or until all elements of the arrangement have been delivered. If the
only undelivered element is maintenance and technical support for which the
Company cannot establish VSOE, the Company will recognize the entire arrangement
fees ratably over the maintenance and support term.






System
hardware is hardware that is installed at a customer site for the purpose of
utilizing the licensed software and as such, does not qualify as a separately
deliverable element. The timing of revenue recognition from the sale of system
hardware is therefore dependent upon the recognition of revenue for the related
software licenses.






Maintenance
and right to use fees include updates (unspecified product upgrades and
enhancements) on a when and if available basis, telephone support and bug fixes
or patches and maintenance of the systems hardware, which would include repairs
or replacement as necessary. VSOE of fair value for maintenance and right to use
fees is based upon stated annual renewal rates. Maintenance and right to use
fees revenue is recognized ratably over the maintenance and right to use
term.






Revenue
Recognition Criteria






The
Company defines revenue recognition criteria as follows:






·
            Persuasive Evidence of an
      Arrangement Exists.It is the Company’s customary practice to have
      a purchase order prior to recognizing revenue on an
      arrangement.






·
            Delivery has Occurred.The Company’s software and systems hardware are physically
      delivered and installed at its customer’s site. The Company considers
      delivery complete when the software and system hardware products have been
      installed and the testing phase completed. The Company defers all the
      revenue until the testing phase has been completed and the Company
      receives customer acceptance.






·
            The Vendor’s Fee is Fixed or
      Determinable.The Company’s invoices or service agreements identify
      the price for services to be rendered, and customary payment terms are
      generally within 30 days after the invoice
date.






·
            Collection is Reasonably
      Assured.Due to a lack of customer history upon which a judgment
      could be made as to the collectability of a particular receivable, revenue
      is currently recognized upon receipt of payment assuming all other
      conditions of the sale have been
met.






Cost
of Revenue






Cost of
revenue includes costs related to user license, systems hardware and maintenance
and right to use fees revenue. Cost of user license revenue includes material,
packaging, shipping and other production costs and third party royalties. Cost
of systems hardware includes the cost of goods sold and installation costs. Cost
of maintenance and right to use fees and consulting fees include related
personnel costs, and hardware repair costs. Third party consultant fees are also
included in cost of services.






Inventory






The
Company’s inventory is stated at the lower of cost or market value. Cost is
determined using the first in, first out method. Unusual losses resulting from
lower of cost or market adjustments or losses on firm purchase commitments, if
any, are disclosed, and if material, separately stated from cost of goods sold
in the statement of operations.






Commitments
and Contingencies






Commitments
and contingencies are evaluated on an individual basis to determine the impact
on current and future liabilities and assets. We make a determination as to
whether such a liability or loss is reasonably possible, and we either estimate
the amount of possible loss or liability or range of loss or liability. In rare
cases, we are not able to determine the amount of such loss or liability or even
a range of amounts in a way that would not be misleading. We may be unable to
calculate a liability or loss if substantiated information is unavailable or the
amount of the loss or liability depends significantly on future
events.






In
addition to evaluating estimates relating to the items discussed above, we also
consider other estimates, including but not limited to, those related to
software development costs, goodwill and identifiable intangible assets. We base
our estimates on historical experience and on various other assumptions that we
believe are reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets, liabilities and
equity that are not readily apparent from other sources. Actual results and
outcomes could differ from these estimates and assumptions.






Software
Development Costs






Statement
of Financial Accounting Standards (SFAS) No. 86, “Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed,” requires
capitalization of certain software development costs subsequent to the
establishment of technological feasibility and readiness of general release. In
2004, certain costs were incurred subsequent to the establishment of
technological feasibility and prior to the readiness of general release. These
expenses were immaterial in nature and in total and therefore not
capitalized.  We also license from a third party the use of certain
software that we utilize in our products.  These computer software
license fees are expensed as incurred.






Fair
Value of Financial Instruments






The
carrying value of cash, notes receivable, accounts payable and accrued expenses
and notes payable approximate fair value because of the relatively short
maturity of these instruments.






Stock
Based Compensation






The
Company follows guidance provided in SFAS No. 123(R), “Accounting for Stock Based
Compensation,” which requires companies to recognize expense for stock
based awards issued to employees or outside consultants based on their estimated
fair value on the grant date.  We have elected to use the
Black-Scholes Pricing Model to value these awards.






Income
Taxes






The
Company, a “C” corporation, accounts for income taxes under SFAS No. 109, “Accounting for Income
Taxes.” Under this method, deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The principal differences are net operating
losses, startup costs and the use of accelerated depreciation methods to
calculate depreciation expense for income tax purposes.






Consolidation
of Variable Interest Entities






In
January 2003 and revised December 2003, the FASB issued FIN No. 46, “Consolidation of Variable
Interest Entities.” This interpretation of Accounting Research Bulletin
No. 51, “Consolidated
Financial Statements,” requires consolidation by business enterprises of
variable interest entities, as defined, when certain conditions are met.
Pursuant to FIN No. 46, the Company continues to consolidate CASCommunications,
Inc.




RESULTS OF
OPERATION









As of
December 31 2008, the Company incurred a net loss from operations compared with
an operation loss of $1,609,964 for the year ended December 31,
2007.  We recognized an overall net income of $794,792 for 2008, which
is primarily due to significant settlements and debt write-offs, as compared to
an overall net loss of $1,632,658 during 2007.  Cash on hand was
$398,978 as of December 31, 2008 compared with $49,086 as of December 31, 2007.
Our gross revenues increased significantly from $817,477 in 2007 to $10,916,314,
which is attributable to continued and growing profitability of American
Marketing and Sales, which continues to expand its customer base as to its Green
Line caterware and office products.  On the expense side, the Company
has diligently pruned its expenses and settled many outstanding
liabilities.  NetSymphony and QoVox continue to struggle with product
development, particularly in the current financial climate.  Many
potential customers have delayed trials of the NetSymphony’s Maestro VoIP
testing system and it is not expected that serious trials by any potential
customer will begin earlier than Q3 of 2009.








Item 8.
            Financial
      Statements.




INDEX




Datameg
Corporation


Consolidated
Financial Statements


Years
Ended December 31, 2008 and 2007








CONTENTSConsolidated
      Balance Sheets
            
            2Consolidated
      Statements of Operations
            
            3Consolidated
      Statement of Changes in Stockholders’ Deficit
            
            4Consolidated
      Statements of Cash Flows
            
            6Notes
      to Consolidated Financial Statements
            
            8










5296
South Commerce Drive, Suite
300                                                                                                           1284
West Flint Meadow Drive, Suite D


Salt
Lake City,
Utah 84107-5370                                                                                                           Kaysville,
Utah 84037-9590


Telephone
(801)
281-4700                                                                                                Telephone
(801) 927-1337


Facsimile
(801)
281-4701                                                                                                           Facsimile
(801) 917-1344







REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To The
Board of Directors and Stockholders


Datameg
Corporation




We have
audited the accompanying consolidated balance sheets of Datameg (the Company) as
of December 31, 2008 and 2007, and the related consolidated statements of
operations, changes in stockholders’ deficit, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, 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 Datameg Corporation as of
December 31, 2008 and 2007, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.




The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note L to the
consolidated financial statements, the Company has incurred losses since
inception, and has generated minimal revenues from its planned principal
operations. This raises substantial doubt about the Company’s ability to meet
its obligations and to continue as a going concern. Management’s plans in regard
to this matter are described in Note L. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.




/s/ Child, Van Wagoner &
Bradshaw, PLLC




Child,
Van Wagoner & Bradshaw, PLLC


Salt Lake
City, Utah


April 13,
2008





DATAMEG
      CORPORATION AND SUBSIDIARIESConsolidated
      Balance SheetsDecember
      31,
            
            December
      31,2008
            
            2007ASSETSCURRENT
      ASSETSCash
      and cash equivalents
            $          398,978
            
            $            49,086Stock
      subscriptions receivable, current (Note I)
            3,000
            
            -Accounts
      receivable, net (Note M)
            1,250,973
            
            1,616,605Inventory
      (Note C)
            310,186
            
            301,724Prepaid
      expenses
            9,540
            
            -Deposits
            
            -
            
            7,218Total
      Current Assets
            1,972,677
            
            1,974,633PROPERTY
      AND EQUIPMENT – NET (Note J)
            2,319,341
            
            2,777,524TOTAL
      ASSETS
            $             4,292,018
            
            $             4,752,157LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
            $             2,362,979
            
            $             3,309,345Due
      to related parties (Note D)
            12,200
            
            28,560Judgments
      payable (Note H)
            455,000
            
            -Notes
      payable, current portion (Note E)
            364,329
            
            956,877Total
      Current Liabilities
            3,194,508
            
            4,294,782NOTES
      PAYABLE – LONG-TERM PORTION (Note E)
            4,209,497
            
            4,347,459TOTAL
      LIABILITIES
            7,404,005
            
            8,642,241MINORITY
      INTEREST
            (67,939)
            
            (67,939)STOCKHOLDERS'
      DEFICIT (Note I)Common
      stock, $0.0001 par value; 493,000,000 shares authorized, 409,696,087 and
      409,206,087 shares issued and outstanding, respectively, at December 31,
      2008; 391,950,062 shares issued and outstanding at December 31,
      2007
            40,970
            
            39,195Additional
      paid-in capital
            33,360,781
            
            33,056,270Stock
      subscriptions receivable, long-term (Note F)
            (105,000)
            
            (210,000)Services
      prepaid with stock (Note I)
            (36,750)
            
            -Liability
      for stock to be issued
            -
            
            9,750Accumulated
      deficit
            (36,296,209)
            
            (36,717,360)Total
      Stockholders' Deficit (before treasury stock)
            (3,036,208)
            
            (3,822,145)Less:
      Treasury stock, cost of 490,000 shares at $.016 per share
            (7,840)
            
            -Total
      Stockholders' Deficit
            (3,044,048)
            
            (3,822,145)TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
            $             4,292,018
            
            $             4,752,157




See
accompanying notes to the financial statements.











DATAMEG
      CORPORATIONConsolidated
      Statements of OperationsYear
      EndedDecember
      31,2008
            
            2007NET
      SALES
            
            
            
            
            $  10,916,314
            
            $        817,477COST
      OF SALES
            
            
            
            
            (9,414,299)
            
            (655,635)INVENTORY
      WRITE-OFF
            
            
            
            
            -
            
            (163,400)GROSS
      MARGIN
            
            
            
            
            1,502,015
            
            (1,558)OPERATING
      EXPENSESGeneral
      and administrative
            
            
            
            
            2,130,406
            
            1,439,597Selling
      and marketing
            
            
            
            
            406,773
            
            127,213Research
      and development
            
            
            
            
            93,896
            
            159,111Goodwill
      impairment
            
            
            
            
            -
            
            206,746Litigation
      (gain) loss
            
            
            
            
            85,551
            
            (324,261)Total
      Operating Expenses
            
            
            
            
            2,716,626
            
            1,608,406LOSS
      FROM OPERATIONS
            
            
            
            
            (1,214,611)
            
            (1,609,964)OTHER
      INCOME (EXPENSES)Interest
      expense
            
            
            
            
            (399,528)
            
            (138,122)Gain
      on trade-in of fixed assets
            
            
            
            
            46,221
            
            -Accounts
      payable reserve amortization
            
            
            
            
            16,000
            
            16,000Debt
      write-off
            
            
            
            
            2,342,302
            
            95,343Other
      income
            
            
            
            
            4,408
            
            4,085Total
      Other Income (Expenses)
            
            
            
            
            2,009,403
            
            (22,694)INCOME
      (LOSS) BEFORE INCOMETAXES
      AND MINORITY INTEREST
            
            
            
            
            794,792
            
            (1,632,658)PROVISION
      FOR INCOME TAXES
            
            
            
            
            -
            
            -MINORITY
      INTEREST INSUBSIDIARIES
      LOSSES
            
            
            
            
            -
            
            -NET
      (INCOME) LOSS
            
            
            
            
            $        794,792
            
            $(1,632,658)BASIC
      AND DILUTED:Net
      loss per common share
            
            
            
            
            $              0.00
            
            $        (0.00)Weighted
      average shares outstanding
            
            
            
            
            398,863,987
            
            372,135,169




See
accompanying notes to the financial statements.




DATAMEG
      CORPORATIONConsolidated
      Statement of Changes in Stockholders’ DeficitYears
      Ended December 31, 2008 and 2007Common
      Stock
            
            
            
            
            
            CommonPrice
      per Share
            
            Shares
              Outstanding
            
            Amount
            
            Additional
              Paid-In
      Capital
            
            Stock
      to be Issued
            
            Stock
      Subscriptions Receivable
            
            Accumulated
      Deficit
            
            Total
              Stockholders'
              DeficitBalance,
      December 31, 2006
            
            
            359,394,435
            
            $           35,939
            
            $           31,764,672
            
            $              93,750
            
            $      (315,056)
            
            $       (35,084,702)
            
            $              (3,505,397)Stock
      issued Jan. 07 for cash received Dec. 06
            
            
            1,927,380
            
            193
            
            83,807
            
            (84,000)
            
            
            
            
            
            -Stock
      issued for cash
            0.030
            
            6,230,678
            
            623
            
            188,797
            
            
            
            
            
            
            
            189,420Stock
      issued for cash
            0.035
            
            1,428,571
            
            143
            
            49,857
            
            
            
            
            
            
            
            50,000Stock
      issued for cash
            0.050
            
            6,000,000
            
            600
            
            299,400
            
            
            
            
            
            
            
            300,000Stock
      issued for expense reimbursement
            0.040
            
            127,500
            
            13
            
            5,087
            
            
            
            
            
            
            
            5,100Stock
      issued for services
            0.040
            
            100,000
            
            10
            
            3,990
            
            
            
            
            
            
            
            4,000Stock
      issued for services
            0.045
            
            182,665
            
            18
            
            8,202
            
            
            
            
            
            
            
            8,220Stock
      issued for services
            0.049
            
            2,650,000
            
            265
            
            129,585
            
            
            
            
            
            
            
            129,850Stock
      issued for services
            0.050
            
            148,000
            
            15
            
            7,385
            
            
            
            
            
            
            
            7,400Stock
      issued for exercise of warrants
            0.040
            
            187,500
            
            19
            
            7,481
            
            
            
            
            
            
            
            7,500Stock
      option vesting
            
            
            
            
            
            
            114,420
            
            
            
            
            
            
            
            114,420Stock
      issued for acquisition of AMS
            0.030
            
            15,000,000
            
            1,500
            
            498,500
            
            
            
            
            
            
            
            500,000Cancellation
      of stock
            
            
            (1,426,667)
            
            (143)
            
            143
            
            
            
            
            
            
            
            -Write-down
      of stock subscriptions receivable
            
            
            
            
            
            
            (105,056)
            
            
            
            105,056
            
            
            
            -Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            (1,632,658)
            
            (1,632,658)Balance,
      December 31, 2007
            
            
            391,950,062
            
            39,195
            
            33,056,270
            
            9,750
            
            (210,000)
            
            (36,717,360)
            
            (3,822,145)(continued)


DATAMEG
      CORPORATIONConsolidated
      Statement of Changes in Stockholders’ Deficit (continued)Years
      Ended December 31, 2008 and 2007Common
      Stock
            
            
            
            
            
            CommonPrice
      per Share
            
            Shares
      Outstanding
            
            Amount
            
            Additional
      Paid-In Capital
            
            Stock
      to be Issued
            
            Stock
            
            Prepaid
      Expense
            
            Treasury
      Stock
            
            Accum.
      Deficit
            
            Total
      Stockholders' DeficitSubscr.
      ReceivableStock
      Issued for Cash23-Mar-08
            0.025
            
            2,000,000
            
            200
            
            49,800
            
            
            
            
            
            
            
            
            
            
            
            50,00015-Apr-08
            0.025
            
            600,000
            
            60
            
            14,940
            
            
            
            
            
            
            
            
            
            
            
            15,00019-Aug-08
            0.025
            
            125,000
            
            13
            
            3,112
            
            
            
            
            
            
            
            
            
            
            
            3,1251-Oct-08
            0.01
            
            500,000
            
            50
            
            4,950
            
            
            
            
            
            
            
            
            
            
            
            5,0003-Oct-08
            0.01
            
            1,000,000
            
            100
            
            9,900
            
            
            
            
            
            
            
            
            
            
            
            10,00013-Oct-08
            0.01
            
            1,000,000
            
            100
            
            9,900
            
            
            
            
            
            
            
            
            
            
            
            10,0001-Dec-08
            0.01
            
            1,000,000
            
            100
            
            9,900
            
            
            
            
            
            
            
            
            
            
            
            10,000Stock
      Issued for Current Year Services26-Mar-08
            0.04
            
            87,500
            
            9
            
            3,491
            
            
            
            
            
            
            
            
            
            
            
            3,50015-Apr-08
            0.0265
            
            3,000,000
            
            300
            
            79,200
            
            
            
            
            
            
            
            
            
            
            
            79,50013-Nov-08
            0.0098
            
            2,100,000
            
            210
            
            20,370
            
            
            
            
            
            
            
            
            
            
            
            20,580Stock
      Issued for Prior Year Services (Reduction of Accounts
    Payable)19-Feb-08
            0.04
            
            1,035,684
            
            103
            
            41,522
            
            (9,750)
            
            
            
            
            
            
            
            
            
            31,87527-May-08
            0.028
            
            1,000,000
            
            100
            
            27,900
            
            
            
            
            
            
            
            
            
            
            
            28,00013-Nov-08
            0.0135
            
            1,047,841
            
            105
            
            14,041
            
            
            
            
            
            
            
            
            
            
            
            14,14613-Nov-08
            0.0098
            
            500,000
            
            50
            
            4,850
            
            
            
            
            
            
            
            
            
            
            
            4,900















DATAMEG
      CORPORATIONConsolidated
      Statement of Changes in Stockholders’ Deficit
  (continued)Years
      Ended December 31, 2008 and 2007Common
      StockPrice
      per Share
            
            Shares
      Outstanding
            
            Amount
            
            Additional
      Paid-In Capital
            
            Stock
      to be Issued
            
            Common
              Stock
              Subscr.
              Receivable
            
            Prepaid
      Expense
            
            Treasury
      Stock
            
            Accum.
      Deficit
            
            Total
      Stockholders' DeficitOther
      TransactionsStock
      issued as prepayment for future services
            0.0098
            
            3,750,000
            
            375
            
            36,375
            
            
            
            
            
            (36,750)
            
            
            
            
            
            -Stock
      option vesting expense
            
            
            
            
            62,500
            
            
            
            
            
            
            
            
            
            
            
            62,500Stock
      cancellation
            
            (1,000,000)
            
            (100)
            
            100
            
            
            
            
            
            
            
            
            
            
            
            -Purchase
      of treasury stock
            (490,000)
            
            
            
            
            
            
            
            
            
            
            
            (7,840)
            
            
            
            (7,840)Declaration
      and payment of cash dividend
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (373,641)
            
            (373,641)Write-down
      of subscription receivable
            
            
            
            
            (105,000)
            
            
            
            105,000
            
            
            
            
            
            
            
            -Forgiveness
      of related party debt
            
            
            
            
            16,660
            
            
            
            
            
            
            
            
            
            
            
            16,660Net
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            794,792
            
            794,792Balance
      December 31, 2008
            
            
            409,206,087
            
            $40,970
            
            $  33,360,781
            
            $           -
            
            $  (105,000)
            
            $(36,750)
            
            $   (7,840)
            
            $(36,296,209)
            
            $
      3,044,048


















DATAMEG
      CORPORATIONConsolidated
      Statements of Cash FlowsYear
      EndedDecember
      31,2008
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
            $             794,792
            
            $      (1,632,658)Adjustments
      to reconcile net income (loss) to net cashprovided
      by (used in) operating activities:Write-off
      of debts
            
            (2,342,302)
            
            (95,343)Depreciation
            
            747,195
            
            73,125Gain
      on trade-in of fixed assets
            
            (46,221)
            
            -Stock
      issued for services
            
            103,580
            
            17,320(Gain)
      loss on litigation
            
            85,551
            
            (324,361)Stock
      option vesting expense
            
            62,500
            
            114,420Amortization
      of accounts payable reserve
            
            16,000
            
            16,000Write-off
      of inventory
            
            -
            
            163,400Impairment
      of goodwill
            
            -
            
            206,746Change
      in operating assets and liabilities:Decrease
      in accounts receivable, net
            
            365,632
            
            121,288(Increase)
      decrease in inventory
            
            (8,462)
            
            478,322(Increase)
      decrease in prepaid expenses
            
            (9,540)
            
            8,750Decrease
      in deposits
            
            7,218
            
            -Increase
      (decrease) in accounts payable and accrued expenses
            
            1,315,102
            
            (158,658)Increase
      (decrease) in related party payables
            
            300
            
            (9,700)Net
      cash provided by (used in) operating activities
            1,091,345
            
            (1,021,349)CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of fixed assets
            
            (242,791)
            
            (1,354)Net
      cash acquired in acquisition
            
            -
            
            35,418Net
      Cash Provided by (Used in) Investing Activities
            (242,791)
            
            34,064CASH
      FLOWS FROM FINANCING ACTIVITIES:Checks
      in excess of bank balance
            -
            
            37,825Proceeds
      from stock issuances
            100,125
            
            539,420Proceeds
      from stockholder loan
            -
            
            425,000Principal
      payments on notes payable
            (117,306)
            
            (45,000)Principal
      payments on judgments payable
            (100,000)
            
            -Proceeds
      from exercise of warrants
            -
            
            7,500Purchase
      of treasury stock
            (7,840)
            
            -Payment
      of dividends
            (373,641)
            
            -Net
      Cash Provided by (Used in) Financing Activities
            (498,662)
            
            964,745NET
      INCREASE (DECREASE) IN CASH
            349,892
            
            (22,540)CASH,
      BEGINNING OF PERIOD
            49,086
            
            71,626CASH,
      END OF PERIOD
            $             398,978
            
            $             49,086




(continued)











DATAMEG
      CORPORATIONConsolidated
      Statements of Cash Flows (continued)Year
      EndedDecember
      31,2008
            
            2007SUPPLEMENTAL
      DISCLOSURE OF CASH FLOWSCash
      paid for interest
            
            $                     34,889
            
            $                     12,916Cash
      paid for income taxes
            
            $                              -
            
            $                              -SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Stock
      issued for satisfaction of debt
            
            $                     78,921
            
            $                   129,850Stock
      issued for fixed assets
            
            $                              -
            
            $                       7,400Conversion
      of accounts payable to notes payable
            
            $                   230,605
            
            $                              -Conversion
      of notes payable and accrued interest to judgments payable
            
            $                   469,449
            
            $                              -Cancellation
      of 1,000,000 shares of  stock, $.0001 par value
            
            $                          100
            
            $                              -Stock
      issued as a reduction of  “Stock to be Issued”
            
            $                       9,750
            
            $                     84,000Note
      payable issued for purchase of subsidiary
            
            $                              -
            
            $                4,000,000Stock
      issued for purchase of subsidiary
            
            $                              -
            
            $                   500,000Stock
      issued as prepayment for future services
            
            $                     36,750
            
            $                              -Forgiveness
      of related party debt
            
            $                     16,660
            
            $                              -Write
      down of common stock subscription receivable
            
            $                   105,000
            
            $                              -Stock
      issued for subscription receivable
            
            $                       3,000
            
            $                              -




See
accompanying notes to the financial statements.




DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




A. BASIS
OF PRESENTATION AND ORGANIZATION






Datameg
Corporation has four subsidiaries: American Marketing and Sales, Inc., a
Massachusetts corporation that the Company wholly owns; NetSymphony Corporation
and QoVox Corporation, North Carolina corporations that the Company wholly owns;
and CASCommunications, Inc., a Florida corporation, of which the Company owns
40%. The primary business of American Marketing and Sales, Inc. (doing business
as Innovative Designs) is marketing and selling food service products and
caterware. NetSymphony Corporation was incorporated on March 29, 2007 to take
advantage of software-driven network assurance products and services, and its
planning and staffing are in the formative stage.  QoVox was known as
North Electric Company, Inc. until July 1, 2005, when North Electric Company
filed an Amendment to its Articles of Incorporation with the North Carolina
Secretary of State to change its corporate name. Datameg and its subsidiaries
individually and collectively have been considered development stage enterprises
in prior years.  With the acquisition of American Marketing and Sales,
Inc., the Company is no longer considered to be in the development stage as
defined in SFAS No. 7, “Accounting for Development Stage
Enterprises.” CASCommunications, Inc. is an inactive
company.  CASCommunications, Inc. did not generate any revenue in 2008
and is not expected to generate any revenue in 2009.






NetSymphony
focuses on becoming a provider of network assurance products and services.
NetSymphony’s network assurance products are designed to enable communications
network operators and service providers to quickly and automatically determine
if their network is meeting its quality and service expectations, while lowering
network operating costs. NetSymphony has developed their Maestro System that
covers the existing traditional telephone networks, networks that use the same
communication technology as the Internet, and converged networks comprised of
both of these network types. NetSymphony announced its first product sales in
the first quarter of 2008, resulting in $3,520 gross revenues during
2008.






QoVox
provides consulting service to NetSymphony on a work for hire basis. Any
revenues generated by QoVox or expenses incurred by NetSymphony as a result of
this arrangement will be eliminated in consolidation.  On August 1,
2008, QoVox licensed the use of certain residual software it developed to
NetSymphony. During the years ended December 31, 2008 and 2007, QoVox did not
generate any revenues.






CASCommunications
had no recorded assets as of December 31, 2008 or 2007, and had a loss before
minority interest of zero for the the years then ended due to the lack of
activity. No consolidated assets are collateral for liabilities of
CASCommunications. Datameg has provided $270,000 of the total capital of
$388,000 provided to CASCommunications as of December 31, 2008.






These
consolidated financial statements reflect those of Datameg Corporation, American
Marketing & Sales, Inc., NetSymphony Corporation, QoVox Corporation, and
CASCommunications, Inc. In accordance with the Financial Accounting Standards
Board (FASB) interpretation (FIN) 46R, “Consolidation of Variable Interest
Entities, an
interpretation of ARB No. 51,” the Company continues to consolidate
CASCommunications, Inc. as it expects to continue to absorb a majority of
CASCommunications, Inc.’s losses.






The
Company operates under the name of Datameg Corporation and trades under the
symbol DTMG on the OTCBB. The Company’s active subsidiaries are American
Marketing & Sales, Inc., NetSymphony Corporation, and QoVox Corporation,
each of which the Company wholly owns.







DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




A. BASIS
OF PRESENTATION AND ORGANIZATION (CONT’D)






As of
December 31, 2008, the Company had a total of five full time employees, one
part-time employee, and two part time independent contractors or consultants. Of
these, two individuals serve in administrative and senior management
capacities.






B.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES






Principles
of Consolidation:






The
accompanying consolidated financial statements present the consolidation of the
financial statements of Datameg Corporation, its partially owned subsidiary,
CASCommunications, Inc., and its wholly owned subsidiaries, American Sales
and Marketing, Inc., QoVox Corporation, and NetSymphony Corporation. All
intercompany transactions and balances have been eliminated in the
consolidation.






Consolidation
of Variable Interest Entities:






In
January 2003 and revised December 2003, the FASB issued FIN
No. 46, “Consolidation of
Variable Interest Entities.”  This interpretation of Accounting
Research Bulletin No. 51, “Consolidated Financial
Statements,” requires consolidation by business enterprises of variable
interest entities, as defined, when certain conditions are met. Pursuant to FIN
No. 46, the Company continues to consolidate
CASCommunications, Inc.






Basis of
Accounting:






The
accounts of the Company are maintained on the accrual basis of accounting
whereby revenue is recognized when earned, and costs and expenses are recognized
when incurred.






Use of
Estimates:






Management
uses estimates and assumptions in preparing financial statements in accordance
with generally accepted accounting principles. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and expenses.
Actual results could vary from those estimates.






Inventory:






The
Company’s inventory is stated at the lower of cost or market value. Cost is
determined using the first in, first out method. Unusual losses resulting from
lower of cost or market adjustments or losses on firm purchase commitments, if
any, are disclosed, and if material, separately stated from cost of goods sold
in the statement of operations.




Cash and
Cash Equivalents:





Cash and
cash equivalents consists principally of currency on hand, demand deposits at
commercial banks, and liquid investment funds having a maturity of three months
or less at the time of purchase.











DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




B.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Property
and Equipment:






Property
and equipment are stated at cost. Depreciation and amortization are determined
using the straight-line method over estimated useful lives ranging from three to
eight years.






Fair
Value of Financial Instruments:






The
carrying value of cash, notes receivable, accounts payable and accrued expenses,
and notes payable are assumed to approximate fair value because of the
relatively short maturity of these instruments. However, since the Company has
been unable to pay its liabilities as they became due, significant discounts
that cannot be estimated, may be appropriate for liabilities.






Concentrations
of Credit Risk:






Financial
instruments that potentially subject the Company to concentrations of credit
risk consist primarily of cash. The Company maintains its cash accounts with
several commercial banks. Cash balances are insured by the Federal Deposit
Insurance Corporation, up to $250,000 per financial institution. At December 31,
2008 and December 31, 2007, the Company had no uninsured cash
balances.






Capital
Structure:






SFAS
No. 129, “Disclosure of
Information about Capital Structure,” requires a summary presentation of
the pertinent rights and privileges of the various securities outstanding. The
Company’s voting common stock is comprised of 409,696,087 and 409,206,087 shares
issued and outstanding, respectively, at December 31, 2008, of which 490,000
shares were repurchased by the Company and are being held in
treasury.  The Company had 391,950,062 shares issued and outstanding
December 31, 2007.  In April 2003, the Company amended its
certificate of incorporation with the state of New York to increase the number
of authorized shares of stock to 340,000,000 shares of common stock. In April
2005, the Company entered into an Agreement and Plan of Merger with Datameg
Corp. NY setting forth the terms of our reincorporation from New York to
Delaware. As part of the reincorporation the Company increased its authorized
number of shares to 503,000,000, of which 10,000,000 are preferred shares and
493,000,000 are common shares. The Company also changed its par value from $0.01
to $0.0001 per share.






Reclassifications:






Some of
the prior period balances have been reclassified to conform to current period
presentation.






Revenue
Recognition:




American Market & Sales,
Inc.


The
Company recognizes revenue from product sales in accordance with Staff
Accounting Bulletin No. 104, which requires recognition when persuasive evidence
of an arrangement exists, the price is fixed or determinable, delivery has
occurred, and payment is reasonably assured.  The Company has
determined that these criteria have been met upon shipment, and recognizes
revenue at that point.   Pursuant to SFAS No. 5, “Accounting for
Contingencies,” the Company has examined collection history, financial
conditions of clients, and general economic conditions and determined that it is
not necessary to set an allowance for doubtful accounts, which have historically
not been significant.


DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




B.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Revenue
Recognition (cont’d):




NetSymphony Corporation and
QoVox Corporation


The
Company derives revenue from three primary sources: (1) system hardware
component sales revenue, (2) software license revenue, and
(3) services and maintenance and right to use revenue, which include
support, maintenance, right to use fees and consulting.  Revenue on system
hardware component sales is recognized upon delivery to and acceptance by the
customer.  Software license revenue recognition is substantially governed
by the provisions of Statement of Position No. 97-2, “Software Revenue
Recognition,” (SOP 97-2) issued by the American Institute of Certified
Public Accountants.  The Company exercises judgment and uses estimates in
connection with the determination of the amount of software license and services
revenue to be recognized in each accounting period.  For software license
arrangements that do not require significant modification or customization of
the underlying software, the Company recognizes revenue when: (1) it enters
into a legally binding arrangement with a customer for the license of software;
(2) it delivers the products or performs the services; (3) customer
payment is deemed fixed or determinable and free of contingencies or significant
uncertainties; (4) collection is probable, and (5) vendor specific
objective evidence (VSOE) of fair value exists to allocate the total fee among
all delivered and undelivered elements in the arrangement.




Multiple
Element Arrangements:






The
Company typically enters into arrangements with customers that include perpetual
software licenses, system hardware, maintenance, and right to use fees. Software
licenses are sold on a per copy basis. Per copy licenses give customers the
right to use a single copy of licensed software for exclusive use on the
Company’s system hardware. Assuming all other revenue recognition criteria are
met, license revenue is recognized upon delivery using the residual method in
accordance with SOP No. 98-9, “Modification of SOP 97-2: Software
Revenue Recognition.” Under the residual method, the Company allocates
and defers revenue for the undelivered elements, based on VSOE of fair value,
and recognizes the difference between the total arrangement fee and the amount
deferred for the undelivered elements as revenue. The determination of fair
value of each undelivered element in multiple element arrangements is based on
the price charged when the same element is sold separately. If sufficient
evidence of fair value cannot be determined for any undelivered item, all
revenue from the arrangement is deferred until VSOE of fair value can be
established or until all elements of the arrangement have been delivered. If the
only undelivered element is maintenance and technical support for which the
Company cannot establish VSOE, the Company will recognize the entire arrangement
fees ratably over the maintenance and support term.






System
hardware is hardware that is installed at a customer site for the purpose of
utilizing the licensed software and as such, does not qualify as a separately
deliverable element. The timing of revenue recognition from the sale of system
hardware is therefore dependent upon the recognition of revenue for the related
software licenses.






Maintenance
and right to use fees includes updates (unspecified product upgrades and
enhancements) on a when and if available basis, telephone support and bug fixes
or patches and maintenance of the systems hardware, which would include
repairs or replacement as necessary. VSOE of fair value for maintenance and
right to use fees is based upon stated annual renewal rates. Maintenance and
right to use fees revenue is recognized ratably over the maintenance and right
to use term.










DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




B.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Revenue
Recognition Criteria:






The
Company defines revenue recognition criteria as follows:






Persuasive Evidence of an
Arrangement Exists.It is the Company’s customary practice to have
a purchase order prior to recognizing revenue on an
arrangement.






Delivery has Occurred.The Company’s software and systems hardware are physically delivered and
installed at its customer’s site. The Company considers delivery complete when
the software and system hardware products have been installed and the testing
phase completed. The Company defers all the revenue until the testing phase
has been completed and the Company receives customer acceptance.






The Vendor’s Fee is Fixed or
Determinable.The Company’s prices and services are indicated in invoices
and service agreements.  Customary payment terms are generally within
30 days after the invoice date.






Collection is Reasonably
Assured.Due to a lack of customer history upon which a judgment could be
made as to the collectability of a particular receivable, revenue is currently
recognized upon shipment assuming all other conditions of the sale have been
met.






Cost of
Revenue:






Cost of
revenue includes costs related to user license, systems hardware and maintenance
and right to use fees revenue. Cost of user license revenue includes material,
packaging, shipping and other production costs and third party royalties. Cost
of systems hardware includes the cost of goods sold and installation costs. Cost
of maintenance and right to use fees and consulting fees include related
personnel costs, and hardware repair costs. Third party consultant fees are also
included in cost of services.






Advertising:






Advertising
costs are charged to operations as incurred. For the quarters ended December 31,
2008 and 2007, there were only minimal advertising costs charged to
operations.






Research
and Development:






The
Company expenses research and development costs as incurred.






Software
Development Costs:






Statement
of Financial Accounting Standards (SFAS) No. 86, “Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed,”requires
capitalization of certain software development costs subsequent to the
establishment of technological feasibility and readiness of general release. The
Company also licenses from a third party the use of certain software that it
utilizes in its products.  These computer software license fees are
expensed as incurred.







DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




B.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Income
Taxes:






The
Company, a C-Corporation, accounts for income taxes under SFAS No. 109,
“Accounting for Income
Taxes.” Under this method, deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The principal differences are net operating
losses, startup costs and the use of accelerated depreciation methods to
calculate depreciation expense for income tax purposes.






Stock-Based
Compensation:






The
Company follows guidance provided in SFAS No. 123R, “Accounting for Stock-Based
Compensation,” which requires companies to recognize expense for
stock-based awards granted to employees or outside consultants based on their
estimated fair value on the grant date.






Comprehensive
Income:






SFAS
No. 130, “Reporting
Comprehensive Income,” establishes standards for reporting comprehensive
income and its components. Comprehensive income is defined as the change in
equity during a period from transactions and other events from non-owner
sources. Entities that do not have items of other comprehensive income in any
period presented are not required to report comprehensive income. Accordingly
the Company has not made any such disclosure in the statements presented
herein.






Earnings
Per Common Share:






The
Company reports basic and diluted earnings per share (EPS) according to the
provisions of SFAS No. 128, “Earnings Per Share.”SFAS
No. 128 requires the presentation of basic EPS and, for companies with
complex capital structures, diluted EPS. Basic EPS excludes dilution and is
computed by dividing net income (loss) available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
EPS is computed by dividing net income (loss) available to common stockholders,
adjusted by any convertible preferred dividends; the after-tax amount of
interest recognized in the period associated with any convertible debt; and any
other changes in income or loss that would result from the assumed conversion of
those potential common shares, by the weighted number of common shares and
common share equivalents (unless their effect is antidilutive)
outstanding.  The Company also considers the potential effects of the
exercise of options and warrants outstanding during the reporting
period.  Due to the Company’s continuing net losses, potentially
dilutive securities have historically had an antidilutive effect on
EPS.  Although the Company generated a net income for the year ended
December 31, 2008, the average exercise price of the options and warrants
outstanding exceeded the average fair market value of the Company’s common
stock.  Exercising these instruments would also have an antidilutive
effect.  Accordingly, basic and diluted EPS are the same.






















DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




B.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Recently
Issued Accounting Pronouncements:




In May
2008, FASB issued Statement on Financial Accounting Standards (SFAS) No. 163,
“Accounting for Financial
Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60.”Diversity exists in practice in accounting for financial guarantee
insurance contracts by insurance enterprises under FASB Statement No. 60, “Accounting and Reporting by
Insurance Enterprises.”That diversity results in
inconsistencies in the recognition and measurement of claim liabilities because
of differing views about when a loss has been incurred under FASB Statement No.
5, “Accounting for
Contingencies.”This Statement requires that an insurance enterprise
recognize a claim liability prior to an event of default (insured event) when
there is evidence that credit deterioration has occurred in an insured financial
obligation. This Statement also clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement to be
used to account for premium revenue and claim liabilities. Those clarifications
will increase comparability in financial reporting of financial guarantee
insurance contracts by insurance enterprises. This Statement requires expanded
disclosures about financial guarantee insurance contracts. The accounting and
disclosure requirements of the Statement will improve the quality of information
provided to users of financial statements. This Statement is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and all interim periods within those fiscal years.





In May
2008, FASB issued SFAS No. 162, “The Hierarchy of Generally
Accepted Accounting Principles.” This Statement identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). This Statement is effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles.”





In March
2008, FASB issued SFAS No. 161, “Disclosure about Derivative
Instruments and Hedging Activities - an amendment to FASB Statement No.
133.” The use and complexity of derivative instruments and hedging
activities have increased significantly over the past several years.
Constituents have expressed concerns that the existing disclosure requirements
in FASB Statement No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” do not provide adequate information
about how derivative and hedging activities affect an entity's financial
position, financial performance, and cash flows. Accordingly, this Statement
requires enhanced disclosures about an entity's derivative and hedging
activities and thereby improves the transparency of financial reporting. This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008.





In
December 2007, FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51.” This
statement amends ARB No. 51 to improve the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards of the portion of equity in a subsidiary not attributable, directly or
indirectly, to a parent.  SFAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008 (that is, January 1, 2009, for entities with calendar
year-ends).   This standard will not have current application to
our financial statements.












DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




B.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Recently
Issued Accounting Pronouncements (cont’d):




In
December 2007, FASB issued a revision to Financial Accounting Standards No. 141
(revised 2007), “Business
Combinations.”The objective of this Statement is to improve
the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial reports about a
business combination and its effects. This Statement applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008.  This standard will have application on our financial
statements, as we are actively seeking acquisition candidates.




Segment
Information:




SFAS
No. 131, “Disclosure
about Segments of an Enterprise and Related Information,” requires public
enterprises to report certain information about operating segments, including
products and services, geographic areas of operations, and major customers.
American Marketing and Sales, Inc. (AMS), is considered a separately reportable
business segment that fulfills the ‘Single Industry Dominance’ test, which
eliminates the segment disclosure requirements if the segment accounts for 90%
or more of combined revenue, reported profit, and assets.  Thus, the
revenues, profits, and assets reported in the consolidated financial statements
are primarily those of AMS.





C.
INVENTORY




AMS
produces caterware for the food service industry via an intense heat injection
molding process using Polystyrene/Polypropylene recycled resins.  The
raw materials and finished goods are produced and held by two third-party
manufacturing plants, from where they are shipped to customers across the
nation.  AMS does not enter into long-term contracts and generally
experiences a high inventory turnover ratio while maintaining minimal quantities
on-hand in the warehouses.  At December 31, 2008, AMS had raw
materials, work in process, and finished goods totaling $88,635, $178,423, and
$17,163, respectively, and at December 31, 2007, AMS held raw resins totaling
$301,724.






QoVox’s
inventory consists of various components of its network assurance
telecommunications system held for specific sale-on-approval
contracts.  At December 31, 2008 QoVox held raw materials and finished
goods of $927 and $25,038, respectively.






D.
RELATED PARTY TRANSACTIONS






At
December 31, 2007, the Company was indebted to officers and stockholders in the
amount of $28,560 for advances received and expenses incurred on behalf of the
Company.  During 2008, $16,660 of this amount was forgiven and
recognized as an increase to Additional Paid-In Capital.  The Company
also received another $300 advance, resulting in a balance of $12,200 at
December 31, 2008. This is exclusive of amounts included in accrued
compensation.  Interest was not imputed on these advances due to
immaterial impact on the financials, and the amounts will be repaid as cash
flows allow.



















DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




E. NOTES
PAYABLE




Principal
      balanceDecember
      31,2008
            
            2007On
      October 29, 2001, the Datameg VA (a former subsidiary of the Company)
      signed a confessed judgment promissory note with a law firm acknowledging
      monies owed amounting to $596,802, which had been previously accrued. The
      note accrued interest at a rate of 9% and matured on December 31, 2001. On
      January 7, 2002, the Company received a notice of default and as of
      January 1, 2002 the outstanding balance was increased 5% and began to
      accrue interest at an annual rate of 15%.
              The
      Company no longer acknowledges this debt as its legal
      obligation.  Accordingly, principal and interest of $596,802 and
      $641,046 were written off to other income at December 31, 2008 (Note
      O).  Accrued interest on the note totaled $551,425 at December
      31, 2007 and was included in accounts payable and accrued
      expenses.
            $               -
            
            $   596,802On
      July 21, 2006, the Company signed a settlement and mutual release and
      promissory note with former counsel, whereby the Company was required to
      pay the principal sum of $155,000 in past-due fees and other costs, plus
      6% interest.  The Company was current on its payments through
      November 2008, but did not make the full December 15, 2008 payment
      pursuant to the payment schedule.  Accordingly, the Company is
      in default at December 31, 2008.  The Company has made $87,500
      in principal payments ($32,500 during the current year), and the remaining
      $67,500 principal is payable as follows:
              
              ·$10,000.00
      on or before December 15, 2008,  ($7,500 unpaid)
              ·$10,000.00
      on or before March 15, 2009, and ($10,000 unpaid)
              ·$50,000.00
      plus all accrued and unpaid interest on or before June 15,
      2009.
              
              Accrued
      interest on the note totaled $16,881 and $0 at December 31, 2008 and
      December 31, 2007, respectively.
            67,500
            
            100,000On
      July 1, 2008, the Company’s QoVox subsidiary entered into a promissory
      note with one of its consultants for $230,605, which represents past-due
      fees previously included in accounts payable.  Payment terms
      stated therein require monthly installments of $1,000 paid to the
      consultant the last day of each month commencing July 31, 2008 through
      December 31, 2008; $2,000 per month January through September 2009; and
      $3,000 per month thereafter until the remaining balance is
      paid.  Interest at 8% resulted in accrued interest for the year
      of $9,171, which is included in accounts payable and accrued
      expenses.  As of December 31, 2008, the Company was in default
      and the principal balance has been reflected as a current liability in
      accordance with the promissory note terms.
            227,605
            
            -


























DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




E. NOTES
PAYABLE (CONT’D)




Principal
      balanceDecember
      31,2008
            
            2007As
      part of the purchase of American Marketing and Sales, Inc., (AMS), the
      Company entered into a $4 million note secured by the assets and stock of
      AMS and payable to the former stockholders of AMS. The note provides for
      increases to principal for loans made by AMS to Datameg or its
      subsidiaries up to $500,000. To raise the cap on additional loans up to $1
      million from AMS, Datameg entered into a stock pledge agreement with the
      former stockholders, pledging its stock in NetSymphony.  At the
      time of the pledge agreement, NetSymphony assets were valued at $0. The
      note accrues interest at 6% and the entire note balance, including accrued
      interest, is due and payable on December 7, 2009.  Accrued
      interest totaled $240,000 and $0 at December 31, 2008 and 2007,
      respectively, and is included in accounts payable and accrued
      expenses.
            4,000,000
            
            4,000,000Dec.
      31,
            Payments
            Principal
            Interest2009
            86,092
            69,224
            16,8682010
            93,918
            83,183
            10,7352011
            93,918
            88,754
            5,1642012
            37,979
            37,560
            419Totals
            311,907
            278,721
            33,186






Dec.
      31,
          Payments
          Principal
          Interest2009
          86,092
          69,224
          16,8682010
          93,918
          83,183
          10,7352011
          93,918
          88,754
          5,1642012
          37,979
          37,560
          419Totals
          311,907
          278,721
          33,186


278,721


360,527


The July
2003 promissory note payable to a former consultant totaling $247,007 included
in notes payable at December 31, 2007 has been reclassified to Judgments Payable
at December 31, 2008 (see Note H).


-


247,007


Total
notes payable


4,573,826


5,304,336


Less
current portion


(364,329)


(956,877)


Total
notes payable – long-term


$4,209,497


$4,347,459

























DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




F. STOCK
SUBSCRIPTION RECEIVABLE, LONG-TERM






On March
5, 2004, the Company entered into a stock subscription agreement with a foreign
investor to purchase 2,941,176 shares of the Company’s common stock at a
purchase price of $0.17 per share. On April 1, 2004, the investor made an
initial subscription payment of $80,000 and the Company issued and delivered the
full 2,941,176 shares of restricted Common Stock to the investor with the
understanding that the investor was sending the Company the $420,000 balance and
a stock subscription receivable was duly recorded on the Company’s books in the
amount of $420,000. On April 14, 2004, the investor notified the Company of
the investor’s intent not to invest further in the Company. The Company offered
to issue a new stock certificate in the amount of 470,588 shares to accommodate
the $80,000 initial subscription payment in exchange for the investor’s return
of the stock certificate issued and delivered to the investor on April 1, 2004
for the full share amount of 2,941,176 shares.The investor
refused the Company’s exchange offer and has continued to refuse to return the
stock certificate for 2,941,176 shares.




The
Company is convinced of the merits of its claim against the investor and intends
to institute a legal action to vindicate that claim in 2009. The Company has
retained Massachusetts litigation counsel. Given the uncertainties inherent in
litigation, the Company took a charge of $105,000 (25%) against the receivable
in the fourth quarter of 2006, another charge of $105,056 in the fourth quarter
of 2007, and a third charge of $105,000 during the fourth quarter of 2008,
resulting in a $105,000 and $210,000 balance at December 31, 2008 and December
31, 2007, respectively.




G. NET
LOSS PER COMMON SHARE






As
required by SFAS No. 128, the following is a reconciliation of the basic and
diluted EPS calculations for the periods presented:




Years
      Ended
              December
      31,2008
            2007Net
      Income (Loss) (numerator)
            $       794,792
            $   (1,632,658)Weighted
      Average Shares (denominator)
            398,863,987
            372,135,169Basic
      and diluted net loss per common share
            $                   -
            $                     -





As
required by the Securities and Exchange Commission Staff Accounting Bulletin No.
98, the above calculation of EPS is based on SFAS No. 128, “Earnings Per Share.”Although the Company generated a net income for the year ended December
31, 2008, the average exercise price of the options and warrants outstanding
exceeded the average fair market value of the Company’s common stock during the
year.  Exercising these instruments would have an antidilutive
effect.  Thus, total options and warrants outstanding as of December
31, 2008 and 2007 of 35,400,000 and 66,723,704, respectively, are not included
in the calculation of diluted EPS.
































DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




H.  JUDGMENTS
PAYABLE




In July
2003, the Company signed a promissory note with a professional for fees and the
interest on unpaid fees due that professional through September 30, 2003 in the
amount of $247,007. The note was due on August 15, 2003 and was guaranteed
personally by the Company’s Chairman. The note stated an interest rate of 18%
per annum, which had been accrued since the note’s inception and totaled
$222,442 and $200,166 at September 30, 2008 and December 31, 2007,
respectively.  No significant payments had been made on the note, and
on September 25, 2007, the note holder filed suit, seeking to have a judgment
rendered against the Company for all amounts claimed due. On June 23, 2008, the
court entered judgment for the full principal and interest on the promissory
note.  On August 15, 2008, the parties entered into a settlement
agreement requiring the Company to pay the plaintiff in full settlement of this
case, the sum of $555,000 pursuant to the following schedule:





Number
            Amount
            Due1
            $        100,000
            9/18/20082
            65,000
            1/6/20093
            65,000
            4/6/20094
            65,000
            7/7/20095
            65,000
            10/6/20096
            65,000
            1/7/20107
            65,000
            4/6/20108
            65,000
            7/7/2010555,000Payment
            (100,000)Bal,
      12/31/08
            $         455,000





The
principal and interest on the settlement date totaling $469,449 were
reclassified from accounts and notes payable to judgments payable, and an
additional $85,551 was accrued to record the full settlement
amount.  After making an initial payment of $100,000, the Company
defaulted on the January 2009 payment. Additional negotiations ensued and the
Company and plaintiff entered into a second settlement agreement wherein
plaintiff will accept (in escrow) 10 million Datameg common shares as payment of
the judgment if certain events are concluded on or before June 1, 2009 (Note
Q).  If not, the second settlement is void and the 10 million shares
in escrow are to be returned for cancellation.




I.
            STOCKHOLDERS’
      EQUITY






In the
first quarter of 2008, American Marketing and Sales, Inc., pursuant to the
acquisition agreement with the Company, paid $373,641 in cash dividends to the
selling stockholders to offset taxes incurred by them due to the
acquisition.






In June
2008, the Company issued 15,000,000 stock options to its legal
counsel.  The options were immediately vested resulting in
compensation expense of $60,000.  In September 2008, the Company
issued 750,000 stock options in Director compensation.  Of these
options, 500,000 were immediately vested, resulting in compensation expense of
$2,500.






In
September 2008, the Company cancelled 1,000,000 shares of issued and outstanding
stock pursuant to a settlement agreement dated January 9, 2008 whereby alleged
debts owed between the Company and former consultants were
forgiven.  The terms of the settlement were accounted for in the prior
year due to their material impact on the December 31, 2007 financials, but the
Company was awaiting the return of the stock certificate in question prior to
canceling the stock.




DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




I.
            STOCKHOLDERS’
      EQUITY (CONT’D)






During
2008, the Company issued 6,225,000 shares of common stock at $.01 and $.025 per
share for total cash of $103,125.  Of this amount, $3,000 was received
in March 2009, resulting in a current asset stock subscription receivable at
December 31, 2008.






During
2008, the Company issued a total of 12,521,025 shares of its common stock and
prices ranging from $.0098 to $.04 to management, vendors, and legal counsel in
lieu of cash for services rendered.   Of this amount, $103,580
(5,187,500 shares) represented payment for services rendered and expensed during
2008 (including 3,000,000 shares at $.0265 issued to AMS management as $79,500
in compensation pursuant to the NetSymphony stock pledge agreement – Note E),
$88,671 (3,583,525 shares) represented repayment for services performed in prior
years (including satisfaction off a $9,750 liability for stock to be issued
initially expensed in 2005 upon engagement of legal counsel), and $36,750
(3,750,000 shares) represented prepayment for future services.






In
December 2008, the Company repurchased from a prior officer 490,000 shares of
its issued and outstanding stock, which will be retained and reissued in the
near future.  The treasury stock was recorded at repurchase cost of
$7,840 and is reported as a decrease to stockholders’ equity.






J.
PROPERTY AND EQUIPMENT






Property
and equipment consisted of the following:




December
      31,2008
            
            2007Equipment
            $       81,220
            
            $       54,062Furniture
            13,806
            
            40,224Automobiles
            66,682
            
            35,003Capital
      Leases
            35,100
            
            35,100Tooling
      Molds
            3,019,612
            
            2,777,561Total
      property and equipment
            3,216,420
            
            2,941,950Less:
      accumulated depreciation
            (897,079)
            
            (164,426)Property
      and equipment, net
            $   2,319,341
            
            $  2,777,524











Depreciation
expense totaled $747,195 and $73,125 for the years ended December 31, 2008 and
2007, respectively, of which $721,123 and $60,439, respectively, is attributable
to the tooling molds used in production and has therefore been reported with
cost of goods sold on the statement of operations.






During
2008, the Company traded in some old vehicles with a carrying value of $20,461
for new vehicles with a cost of $66,682, resulting in a gain on trade-in of
$46,221.













K. STOCK
OPTIONS AND WARRANTS






During
the years ended December 31, 2007, the Company granted options and warrants to
consultants, employees, and investors to purchase 11,225,000 shares of common
stock, at prices ranging from $0.01 to $0.25 per share. The vesting of the stock
options resulted in an expense in the amount of $114,420 and $328,360 during the
years ended December 31, 2008 and 2007, respectively. Of the options and
warrants granted since inception, options and warrants for shares are
unexercised and expire between January 2008 and January 2013.






DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007











K. STOCK
OPTIONS AND WARRANTS (CONT’D)






A summary
of option and warrant activity, for both employees and consultants, for the
years ended December 31, 2008 and 2007 is as follows:




#
      of Shares
            Price
      Per Share
            Weighted
      Ave Price Per ShareOutstanding,
      December 31, 2006
            102,739,243
            $0.01
      - $0.25
            $0.13Options
      and warrants granted
            11,225,000
            $0.06
      - $0.07
            $0.07Options
      and warrants exercised
            187,500
            $0.04Options
      and warrants expired or terminated
            47,053,039
            $0.01
      - $0.25
            $0.13Outstanding,
      December 31, 2007
            66,723,704
            $0.01
      - $0.25
            $0.14Options
      granted
            15,750,000
            $0.03Options
      expired or terminated
            22,986,250
            $0.03Warrants
      expired or terminated
            24,087,454
            $0.04
      - $0.10
            $0.06Outstanding,
      December 31, 2008
            35,400,000
            $0.01
      - $0.17
            $0.06











At
December 31, 2008 the weighted average remaining life of outstanding stock
options and warrants, for both employees and consultants, was approximately 24
months.






The fair
value of options and warrants granted in 2008 are estimated on the date of the
grant using a type of Black Scholes option pricing model. During the year ended
December 31, 2008, the following assumptions were used to value grants: dividend
yield of 0%, volatilities ranging from 70-80, terms varied based on the
negotiated term of the options agreement, and risk free interest rates varied
based on the Treasury bond yield with a term comparable to the length of the
term listed in the options agreement.






L. GOING
CONCERN






The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern. The Company
has sustained substantial costs in implementing its action plan. In addition,
the Company used substantial amounts of working capital in funding these costs.
At December 31, 2008, current liabilities exceeded current assets by $1,185,081.
The Company is seeking to raise additional capital and develop partnerships and
cooperative agreements. In view of these matters, the ability of the Company to
continue as a going concern is dependent upon the Company’s ability to achieve
its business objectives and the success of its future operations.






M.
ACCOUNTS RECEIVABLE




NetSymphony
and QoVox have no receivables due to absence of revenues. Accounts receivable
for American Marketing and Sales, Inc. totaled $1,250,973 and $1,616,605 at
December 31, 2008 and 2007, respectively. Pursuant to SFAS No. 5, “Accounting for
Contingencies,” the Company has examined collection history, financial
conditions of clients, and general economic conditions and determined that it is
not necessary to set an allowance for doubtful accounts, which have historically
not been significant.





DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




N.  INCOME
TAXES






A
reconciliation of income tax expense (benefit) at the statutory rate to the
Company’s effective rate for 2008 and 2007 is as follows:




2008
            
            2007
            
            2006Computed
      at the expected statutory rate (35%)
            $     278,000
            
            $  (571,000)
            
            $  (528,000)State
      income tax net federal tax benefit
            40,000
            
            (81,000)
            
            (75,000)Compensatory
      stock options cancelled or expired
            670,000
            
            324,000
            
            -NOL’s
      used
            (343,000)
            
            -
            
            -Adjustment
      to prior year’s deferred tax asset
            1,379,000
            
            -
            
            -Less:
      valuation allowance change, net of NOL’s used
            (2,024,000)
            
            328,000
            
            603,000Total
      expense (benefit) for income taxes
            $                 -
            
            $               -
            
            $                 -




Deferred
tax assets and (liabilities) at December 31, 2008 and 2007 are as
follows:




2008
            
            2007
            
            2006Deferred
      tax assets:Net
      operating loss carry forwards (NOL's)
            $    3,184,000
            
            $
      3,527,000
            
            $
      4,418,000Depreciation
      and amortization
            (20,000)
            
            (20,000)
            
            (20,000)Stock
      option compensation
            260,000
            
            905,000
            
            1,065,000Gross
      deferred tax assets
            3,424,000
            
            4,412,000
            
            5,463,000Valuation
      allowance
            (3,424,000)
            
            (4,412,000)
            
            (5,463,000)Net
      deferred tax assets
            $                 -
            
            $                -
            
            $                -











The
Company has available at December 31, 2008 approximately $7,959,928 of unused
net operating loss carry forwards that may be applied against future taxable
income that expire in 2019 through 2026. Due to stock ownership changes and
other income tax statutes, the ability to benefit from the net operating loss
carry forwards may be significantly restricted. Accordingly, for this and other
reasons, including uncertainties regarding the Company’s ability to generate
taxable income sufficient to utilize NOL’s prior to their expiration, a
valuation allowance has been provided against the deterred tax
assets.






O.  DEBT
WRITE-OFF






Management
and legal counsel determined that the statute of limitations had expired on
several liabilities or their payment was remote based on aging and lack of
collection efforts by creditors. Accordingly, debts totaling $2,342,302,
consisting of $1,060,813 in accounts payable and $1,281,489 in notes payable and
settlements (including accrued interest), were written off to other income
at  December 31, 2008.






P.  COMMITMENTS
AND CONTINGENCIES






In
October 2004, Datameg signed a lease agreement for office space in Raleigh,
North Carolina. The term of the lease was for 37 months beginning December 2004
and ending in January 2008, and called for monthly payments of approximately
$5,000.


















DATAMEG
CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




P.  COMMITMENTS
AND CONTINGENCIES (CONT’D)




In
January 2008 upon expiration of the above lease agreement, the Company entered
into a lease agreement at a new location for approximately 2,600 square feet of
space at 7200 Falls of the Neuse Road, Suite 101, Raleigh, North Carolina 27615.
The term of the lease is for 26 months beginning December 1, 2007 and
expiring January 31, 2010. The monthly rent is approximately $1,950. The
property is being used to market and develop NetSymphony’s
products.





American
Marketing and Sales, Inc. rents a 3600-square-foot showroom and warehouse at 20
Mohawk Drive, Leominster, MA 01453. The arrangement is month-to-month and
cancellable at any time. Monthly payments are $1,200 and include taxes and
utilities.  Total rent expense for all operating leases was
approximately $48,000 and $60,000 for the years ending December 31, 2008 and
2007, respectively.




Q.
SUBSEQUENT EVENTS






Material
Definitive Agreement:






On March
18, 2009, the Company entered into a Stock Purchase Agreement and purchase money
promissory note Assignment and Assumption Agreement incident to its proposed
sale of its wholly owned subsidiary American Marketing and Sales, Inc. (“AMS”)
to an unrelated third party ("Buyer"). The sale is subject to the consent of a
majority of the Company’s stockholders. Some of the Company’s principal
shareholders (“Principal Shareholders) also hold a purchase money note ("Note")
secured by all of the assets of AMS concerning an election to return the 15
million Datameg shares previously issued in the acquisition of AMS in December
2007, in favor of full payment of the purchase money note. As of December 31,
2008, the principal and interest due on the Note is approximately $5.4 Million,
consisting of a promissory note issued in the December 2007 AMS acquisition with
a face amount of $4 Million, and additional loans and accrued interest of
approximately $1,418,000.






The Stock
Purchase Agreement provides that Datameg (or its shareholders of record) shall
receive 1 Million shares of the Buyer’s common stock (restricted with piggy-back
registration rights) in exchange for the transfer of AMS shares to the Buyer.
Datameg shall deliver to the Principal Shareholders from escrow 15 Million
shares of Datameg common stock in exchange for (1) a complete release of Datameg
and its directors and officers, etc. from further liability upon the Note, (2)
the Principal Shareholders’ written
consent to the assumption of the Note by the Buyer, (3) the Buyer’s written
assumption of the Note, and (4) the Principal Shareholders’ and the Buyer’s
agreement to extend the term of the Note for one year. During the term of the
extended Note, AMS’ President shall have the right to convert the principal and
interest then due into the Buyer’s common stock (restricted with piggy-back
registration rights) at the price of $6 per share. For its assumption of the
additional loans from AMS on the Note, the Buyer shall be issued 50Million unregistered
Datameg common shares at the closing.






The
Principal Shareholders shall release their security interest in NetSymphony
Corporation stock and return the stock certificate to Datameg. In consideration
of their aforementioned acts and consents, the Buyer shall deliver to the
Principal Shareholders 400,000 shares of the Buyer’s common stock (restricted
with piggy-back registration rights).






Stock
Purchase:






On March
18, 2009, the Company issued 2,000,000 shares of stock at $.025 per share for
total cash proceeds of $50,000 pursuant to a private placement.











Item 9.
            Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure.









Not
Applicable.







Item 9A(T).
            Controls
      and Procedures.







The
Company’s management, consisting of our Chief Executive Officer, evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended) as of December 31, 2008. Based upon this
evaluation, our Chief Executive Officer concluded that, as of December 31,
2008, our disclosure controls and procedures were not effective in providing
reasonable assurance that information required to be disclosed in the reports
that we file or submit under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s rules and forms.






Through
its current audit, the Company learned that our disclosure controls and
procedures in past reports failed to properly account for the provisions of SFAS
5 (Contingencies). Corrective action will be taken in the future to properly
evaluate and disclose Company’s liabilities as required by SFAS
5.   The Company will ensure that each liability is reviewed
under SFAS 5, which will be accomplished by hiring a CFO and implementing
further training of current personnel.  Additional written policy
guidance will also be adopted.






Management’s
Annual Report on Internal Control Over Financial Reporting




Our Chief
Executive Officer is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Company. Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. Our management conducted an assessment of the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2008
based on criteria established in “Internal Control—Integrated Framework” issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on this assessment, the Company’s management concluded that, as of
December 31, 2008, the Company’s internal control over financial reporting
was not effective.




Through
its current audit, the Company learned that our disclosure controls and
procedures in past reports failed to properly account for the provisions of SFAS
5 (Contingencies). Corrective action will be taken in the future to properly
evaluate and disclose Company’s liabilities as required by SFAS
5.   The Company will ensure that each liability is reviewed
under SFAS 5, which will be accomplished by hiring a CFO and implementing
further training of current personnel.  Additional written policy
guidance will also be adopted.






There was
no change in our internal control over financial reporting (as defined in Rule
13a-15(f) or Rule 15d-15(f) under the Securities Exchange Act of 1934, as
amended) during our last fiscal quarter and our year ended December 31,
2008 that materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.




This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management’s report
in this Annual Report.




Item 9B.
            Other
      Information.









None.




PART
III




Item 10.
            Directors,
      Executive Officers, and Corporate
Governance.




Directors
and Executive Officers






Our directors, executive officers,
significant employees, significant consultants and control persons as of
December 31, 2008 were as follows:




Name
            
            Age
            
            Position
            
            Held
      SinceJames
      Murphy
            
            56
            
            Chairman,
      Chief Executive Officer, President and Director of Datameg Corporation and
      Director and President of NetSymphony Corporation and QoVox,
      Inc.
            
            Dec.
      2005Leonard
      Tocci
            
            67
            
            President,
      American Marketing and Sales
            
            Dec.
      2007Gerald
      C. Bellis
            
            80
            
            Director
      of Datameg Corporation
            
            Sept.
      2008Dan
      Ference
            
            60
            
            Chief
      Operating Officer of QoVox Corporation
            
            Sept. 2001Neil
      R. Gordon
            
            59
            
            Director
      of Datameg Corporation
            
            Sept.
      2005




Each of
our directors will hold his directorship until the next annual meeting of our
shareholders or until his successor is duly elected and qualified.
Mr. Murphy will hold his position as our Chairman, Chief Executive Officer
and President until the next annual meeting of the directors or until his
successor is duly elected and qualified






James Murphy,
Chairman, Chief Executive Officer, President and Director






Mr.
Murphy has a wide range of business experience including a highly successful
partnership in Building #19 Corporation, and served as President of Sportbuild,
Inc., a subsidiary of the Building #19 Corporation. Mr. Murphy has also been a
successful partner in several other companies.




Leonard
Tocci, President of American Marketing and Sales, Inc.





Mr. Tocci
has a history of success in his 44-year career in the plastics
industry.  From 1988 to 1998, he served as president and CEO of Tamor
Plastics, where he grew sales from $25 million in 1991 to more than $100 million
in 1998.





Following
graduation from the University of Bridgeport in 1963, Mr. Tocci began his career
by joining Tucker Housewares Corp. where he rose to the position of vice
president and director of marketing. Under his direction, Tucker became one of
the leading manufacturers of houseware products in the U.S., second only to
Rubbermaid.  Tucker’s sales rose from $7.5 million in 1968 to more
than $76 million in 1984.  A proven entrepreneur, Mr. Tocci also
founded and owned American Hanger, Inc., a manufacturer of plastic hangers,
which grew to more than $18 million in annual revenues under his
direction.





Gerald
C. Bellis, Director




On
September 12, 2008, the Board of Directors of Datameg Corporation elected Gerald
C. Bellis as a new director. Mr. Bellis has over 40 years of experience in the
management of high technology manufacturing companies at every level of
responsibility through CEO. As compensation, Mr. Bellis receives 500,000 Datameg
options vesting immediately with an exercise price of $.025/ share and an
additional 250,000 Datameg options vesting on April 1, 2009 with an exercise
price of $.035 / share. Mr Bellis is expected to serve on the SOX Compliance
Committee. Mr. Bellis is also expected to engage in significant oversight of
NetSymphony’s operations.






Neil R. Gordon,
Director






Mr. Gordon has served
as a director since September 2005. Since 1995, Mr. Gordon has been the
President of N.R. Gordon & Company, Inc., a financial consulting
services company. From 1981 to 1995, Mr. Gordon was employed by Ekco Group,
Inc., a consumer products manufacturer and marketer, serving as its Treasurer
from 1987 to 1995. Mr. Gordon began his career with the accounting firm of
Haskins & Sells. He serves as an advisor to a number of emerging
companies. Mr. Gordon is a director of Avitar, Inc., a company that
manufactures and sells an oral based test for drugs of abuse. Mr. Gordon
received a Bachelor of Science Degree from Pennsylvania State
University.






Dan Ference,
Chief Operating Officer of QoVox Corporation






Mr. Ference
has served as Chief Operating Officer of QoVox Corporation since July 2005.
Mr. Ference served as the President and Chief Executive Officer of QoVox
from September 2001 to July 2005. Mr. Ference has over 27 years experience
in the communications industry with various voice and data products and
technologies, including almost 20 years of managing research and development
programs and centers. From May 1994 to June 2001, Mr. Ference was vice
president of Fujitsu Network Communications Raleigh, North Carolina Development
Center, where he was responsible for overall Development Center Operations and
the Network Management and related Network Element development programs. Prior
to this, his career included serving at Bell Laboratories, ITT Network Systems,
CITAlcatel, and Nortel, Inc. Mr. Ference holds a B.S. degree from Penn
State University and an M.S. degree from Ohio State University both in
Electrical Engineering.






Audit Committee and Audit
Committee Financial Expert






We have a
standing audit committee comprised of three members of the Board of Directors,
two of whom are independent. We do not have an audit committee financial expert.
As we generate revenue in the future, we intend to identify and appoint a
financial expert to serve on our audit committee.






Code of
Ethics






Due to a
lack of adequate resources, we have not yet adopted a code of ethics. Prior to
the adoption of a code of ethics, our management intends to promote honest and
ethical conduct, full and fair disclosure in our reports to the SEC, and
compliance with applicable governmental laws and regulations.






Item 11.
            Executive
      Compensation.




The below
table sets forth the total compensation paid to or accrued for the years ended
December 31, 2006 through 2008 to our chief executive officer and our other most
highly compensated executive officers who were serving as executive officers at
the end of our last fiscal year. None of our other executive officers earned
more than $100,000 in total annual salary and bonus in the most recently
completed fiscal year.






Summary
Compensation Table




Annual
            Other
            Long
      Term CompensationCompensation
            Annual
            AwardsName
            Position
            Year
            Salary
            
            Bonus
            Comp.
            Restricted
            Underlying($)
            
            ($)
            ($)
            Stock
            Options/Award(s)
            SARs($)
            (#)James
      Murphy
            President
      Datameg/ QoVox/ NetSymphony
            2008
            $150,000
            
            $0
            $0
            $0
            
            0James
      Murphy
            President
      Datameg/ QoVox/ NetSymphony
            2007
            $150,000
            
            $0
            $0
            $0
            
            0James
      Murphy
            President
      Datameg/ QoVox/ NetSymphony
            2006
            $150,000
            
            $0
            $0
            $0
            
            2,500,000Leonard
      Tocci
            President
      American Marketing and Sales, Inc.
            2008
            $200,000
            (1)
            $0
            $0
            $0
            
            0Leonard
      Tocci
            President
      American Marketing and Sales, Inc.
            2007
            $200,000
            (1)
            $0
            $0
            $0
            
            0Dan
      Ference
            COO
      QoVox
            2008
            $144,000
            
            $0
            $0
            $0
            
            0Dan
      Ference
            COO
      QoVox
            2007
            $144,000
            
            $0
            $0
            $0
            
            0Dan
      Ference
            COO
      QoVox
            2006
            $144,000
            
            $0
            $0
            $0
            
            0




(1)
Only the portion of the Mr. Tocci’s 2007 salary earned subsequent to the date of
the American Marketing and Sales, Inc. acquisition, December 7, 2007, has been
presented in the consolidated statement of operations.






At
December 31, 2008, our executive officers had the following outstanding
options:




Percent
      of totalNumber
      of Securities
            
            Options/SARsUnderlying
      Options/
            
            Granted
      to Employees
            Exercise
      or baseName
            SARs
      Granted (#)
            
            In
      fiscal year
            Price
      ($/sh)
            
            Expiration
      Date(s)James
      Murphy
            2,500,000
            (1)
            -
            $0.10
      per share
            
            12/28/2010James
      Murphy
            2,500,000
            (1)
            -
            $0.17
      per share
            
            12/28/2010James
      Murphy
            1,000,000
            (1)
            -
            $0.05
      per share
            
            9/1/2008James
      Murphy
            1,000,000
            (1)
            -
            $0.05
      per share
            
            12/28/2010Daniel
      Ference
            6,250,000
            (2)
            -
            $0.06
      per share
            
            12/31/2010Neil
      Gordon
            750,000
            (1)
            -
            $0.04
      per share
            
            9/22/2010Gerald
      C. Bellis
            750,000
            (1)
            -
            $0.03
      per share
            
            9/12/2010




(1)
            All
      options are fully vested.






(2)
            In
      January 2007, the Company settled outstanding fees for services rendered
      during 2006 and prior.  Included in the settlement was the
      cancellation and replacement of his prior option agreements for the
      exercise of 5,500,000 and 2,000,000 options at $.15 and $.18,
      respectively, with the option to purchase 6,250,000 shares at
      $.06.  Since the circumstances leading to the settlement were in
      existence at December 31, 2007 and related to services rendered during
      2006 and prior, the options were considered issued and outstanding at
      December 31, 2007 and an incremental compensation expense resulting from
      the cancellation and replacement of the option agreements of $64,800 was
      recorded during 2006.






Directors
Remuneration






We do not
currently compensate our directors for serving on the board of directors, other
than through options as discussed above.






Item 12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.




The
following table sets forth the following information about the beneficial
ownership of our common stock outstanding of 409,206,087 as of December 31,
2008 by (i) each person who we know is the beneficial owner of more than 5%
of the outstanding shares of common stock, (ii) each of our directors and
executive officers, and (iii) all of our directors and executive officers
as a group. We are not aware of any beneficial owner of more than 5% of the
outstanding common stock. Unless otherwise indicated, the address of each named
beneficial owner or executive officer is c/o Datameg Corporation, 2150 S 1300 E,
Suite 500, Salt Lake City, UT 84107.




NAME
            
            AMOUNT
      AND NATURE OF
            
            PERCENT
      OF CLASS(3)DIRECTOR
      OR EXECUTIVE OFFICER
            BENEFICIAL
      OWNERSHIPJames
      Murphy
            
            18,560,000
            (3)
            
            4.5
            %Leonard
      Tocci
            
            20,091,666
            
            
            4.9
            %Neil
      Gordon
            
            750,000
            (4)
            
            0.2
            %Gerald
      C. Bellis
            
            750,000
            (5)
            
            0.2
            %Dan
      Ference
            
            8,500,000
            (6)
            
            2.1
            %Directors
      and Officers as a Group
            
            48,651,666
            
            
            11.9
            %




(1)
Unless otherwise
noted below, we believe that all persons named in the table have sole voting and
investment power with respect to all shares of common stock beneficially owned
by them. For purposes of this chart, a person is considered to be the beneficial
owner of securities that can be acquired by such person within 60 days after
March 31, 2009 through the exercise of warrants or options or the
conversion of convertible securities.






(2) Each beneficial owner’s,
director’s or executive officer’s percentage ownership is determined by assuming
that any warrants, options or convertible securities that are held by such
person (but not those held by any other person) and which are exercisable within
60 days after March 31, 2009 have been exercised.






(3)   Including
7,000,000 shares of our common stock that Mr. Murphy has the right to
acquire through the exercise of fully vested stock options.






(4)
Including 750,000 shares of our common stock that Mr. Gordon has the right
to acquire through the exercise of fully vested stock options.






(5)
Including 750,000 shares of our common stock that Mr. Bellis has the right
to acquire through the exercise of fully vested stock options






(6)  Including
6,250,000 shares of our common stock that Mr. Ference has the right to
acquire through the exercise of fully vested stock options.






Item 13.
            Certain
      Relationships and Related Transactions, and Director
      Independence.




The
Company’s officers and stockholders occasionally advance the Company money or
make purchases in the Company’s behalf. As of December 31, 2008 and December 31,
2007, the Company was indebted to officers and stockholders in the amount of
$12,200 and $28,560, respectively.  This is exclusive of amounts
included in accrued compensation.  Interest was not imputed on these
advances due to immaterial impact on the financials, and the amounts will be
repaid as cash flows allow.






Item 14.
            Principal
      Accounting Fees and Services.









Fiscal
      Year
            
            
            
            Audit
            
            
            
            AllEnded
            
            Audit
            
            Related
            
            Tax
            
            Other
            
            TotalDecember 31,
            
            Fees
      (1)
            
            Fees
      (2)
            
            Fees
      (3)
            
            Fees
      (4)
            
            Fees2008
            
            $
            88,400
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            88,4002007
            
            $
            92,000
            
            $
            0
            
            $
            5,000
            
            $
            0
            
            $
            97,000




(1) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit of the
registrant’s annual financial statements and review of the registrants financial
statements included in the registrants Form 10-Q (17 CFR 249.308a) or
10-QSB (17 CFR 249.308b) or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years.






(2) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are reasonably
related to the performance of the audit or review of the registrants financial
statements and are not reported under Item 9(e)1 of
Schedule 14A.






(3) The aggregate fees billed in the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning. All the fees billed under this item in 2008 and 2007 were for
tax compliance services.






(4) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than the
services reported in Items 9(e)1 through 9(e)3 of Schedule 14A (See (1),
(2), and (3) above).






Audit
Committees Pre-Approval Policies and Procedures






Our
president pre-approves all professional services and fees provided by our
principal accountants. During 2008 and 2007, our sole director approved only
professional services rendered by our principal accountants for the audit of our
annual financial statements and review of our financial statements included in
our Forms 10-QSB or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years and tax compliance.




Item 15.
            Exhibits.




(a)(1)
Financial Statements




Our
consolidated financial statements and notes to our consolidated financial
statements filed with this report are set forth herein.






(a)(3)
Exhibits




ExhibitNo.
            Description2.10
            Agreement
      and Plan of Merger between Datameg Corp., a New York corporation ("Datameg
      NY"), and Datameg Corporation, a Delaware corporation, dated
      April 27, 2005.(1)3.10
            Certificate
      of Incorporation of Datameg Corporation, a Delaware corporation, dated
      April 27, 2005.(1)3.20
            Bylaws
      of Datameg Corporation, a Delaware corporation, effective as of
      April 27, 2005.(1)5.10
            Opinion
      of Duane Morris LLP as to legality of securities being
      registered.10.10
            Engagement
      Agreement between Datameg Corporation and 350 Group, LLC, dated
      April 28, 2005.(1)10.20
            Form
      of Convertible Promissory Notes issued in May and June 2004, together with
      table identifying issuance date, noteholder, amount and conversion
      price.(2)10.30
            Form
      of Subscription Agreement, Individual Investor Questionnaire, Sample
      Convertible Promissory Note and Sample Warrant for Common
      Stock.(3)10.40
            Joint
      Sales and Marketing Agreement, dated as of July 16, 2004, by and
      between North Electric Company and Tekno Telecom
    LLC.(4)10.50
            Exclusive
      Distribution Agreement, dated January 1, 2004, by and between North
      Electric Company, Inc. and International Network Technology,
      Ltd.(5)10.60
            Release
      dated as of April 1, 2005, by an among Datameg NY and Hickey Hill
      Partners, LLC.(6)10.70
            Subscription
      Agreement, dated March 5, 2004, by and between Datameg and Mei Chung
      Tang Lee.(2)10.80
            Consulting
      Agreement, dated as of August 6, 2004, by and between Datameg NY and
      Mark McGrath.(6) (*)10.90
            Option
      Agreement between Datameg NY and Mark McGrath, dated as of April 17,
      2005.(1) (*)10.10
            Option
      Agreement between Datameg Corporation and Mark P. McGrath, dated as of
      July 25, 2005.(7) (*)10.11
            Management
      Consultant Agreement between William J. Mortimer and QoVox Corporation,
      dated July 18, 2005.(7) (*)10.12
            Restricted
      Stock Agreement between William J. Mortimer and Datameg Corporation, dated
      as of July 25, 2005.(7) (*)10.13
            Letter
      Agreement by and between Neil R. Gordon and Datameg Corporation dated
      September 22, 2005 (8) (*)10.14
            Option
      Agreement by and between Neil R. Gordon and Datameg Corporation dated
      September 22, 2005 (8) (*)10.15
            Employment
      Agreement between Dan Ference and QoVox Corporation, dated August 19,
      2005.(3) (*)10.16
            Settlement
      Agreement and Mutual Release, dated as of February 12, 2004, by and
      between Datameg NY and Rex Hestor.(9) (*)10.17
            Option
      Agreement by and between Datameg NY and Rex Hestor, dated as of January
      2004.(3) (*)10.18
            Stock
      Lock-up Agreement by and between Datameg NY and Rex Hestor, dated as of
      January 2004.(9) (*)10.19
            Letter
      Agreement by and between Joshua E. Davidson and Datameg Corporation, dated
      as of July 1, 2005.(10) (*)10.20
            Option
      Agreement between Datameg Corporation and Joshua E. Davidson, dated as of
      July 25, 2005.(7) (*)10.21
            Agreement
      dated as of March 22, 2005, by and between Datameg NY and Kanti
      Purohit.(6) (*)10.22
            Agreement
      and Settlement, dated as of March 22, 2005, by and between Datameg NY
      and Kanti Purohit.(6) (*)10.23
            Consulting
      Agreement, dated as of July 1, 2004, by and between Datameg NY and
      James Murphy.(4) (*)10.24
            Option
      Agreement, dated January 1, 2004, by and between Datameg NY and
      Andrew Benson.(9) (*)10.25
            Option
      Agreement between Datameg NY and Andrew Benson, dated April 17,
      2005.(1) (*)10.26
            Mutual
      General Release between Andrew Benson and Datameg NY dated April 27,
      2005.(1) (*)10.27
            Resignation
      by Andrew Benson from directorship of Datameg Corporation, a Delaware
      corporation, dated April 29, 2005.(1) (*)10.28
            Consulting
      Agreement between Datameg Corporation, a Delaware corporation, and Andrew
      Benson, dated as of May 1, 2005.(1) (*)10.29
            Resignation
      by William J. Mortimer as General Manager of QoVox,
    Inc.(11)10.30
            Appointment
      of James Murphy as its Chief Executive Officer, President and Chairman of
      the Board of Directors.(12)10.31
            Appointment
      of Lehman Bros. Managing Director John T. Grady Jr. to Board of
      Directors.(13)10.32
            Appointment
      of Bob Nelson as Vice President, Worldwide Sales, for
      QoVox.(14)10.33
            Appointment
      of Michael West as Senior Vice President, National Accounts, for
      QoVox.(15)10.34
            Benson
      And Gordon Compensation Amendments.(16)10.35
            Director
      Mark P. McGrath resignation. (17)10.36
            Investment
      banker Byron J. Collier appointed to the Advisory Board
    (18)10.37
            Director
      William J. Mortimer receives 2 million Datameg common shares, returns 10
      million under RSA (19)10.38
            Benson
      Amendment And Utah Move (20)10.39
            Former
      Director and Chief Executive Mark P. McGrath canceled his option agreement
      for 10 million shares. (21)10.40
            Changes
      in Registrant’s Certifying Accountant (22)10.41
            QoVox
      received its 4th purchase order from the Time Warner Cable Raleigh
      Division. (23)10.42
            Patrick
      J. Glennon was appointed to the Company’s advisory board.
    (24)10.43
            Dr.
      Jim DeCoste was appointed to the Company’s advisory board.
      (25)10.44
            Ragusa
      consulting services retained as Chief Marketing Officer for
      QoVox.(26)10.45
            FeatureTel
      enters 60 day trial of QoVox product. (27)10.46
            Lingle
      and Stewart become President and Chief Techology Officer of QoVox.
      (28)10.47
            Shireman
      becomes VP Sales of QoVox. (29)10.48
            Non-Reliance
      on Previously Filed Audited Report (30)10.49
            Amendment
      to Notice of Non-Reliance on Previously Filed Audited Report
      (31)10.50
            Entry
      into a Material Definitive Agreement to Acquire Computer Ctr.Com,
      Inc.(32)10.51
            Appointment
      of Winthrop Sargent as contracted Vice President of Finance.
      (33)10.52
            Announcement
      of acquisition of American Marketing & Sales, Inc.
  (34)10.53
            Announcement
      of completion of field audits for American Marketing & Sales, Inc. and
      Computer Center.Com (35)10.54
            Announcement
      of closing of American Marketing & Sales, Inc. acquisition
      (36)10.55
            Announcement
      of American Marketing & Sales, Inc. financial statements
      (37)10.56
            Announcement
      of Commencement of Maestro Product Sales by NetSymphony
    (38)10.57
            Announcement
      of First Sale by NetSymphony of Maestro product sales.
  (39)10.58
            Announcement
      by American Marketing & Sales, Inc. of stake in JAM Plastics.
      (40)10.59
            Announcement
      by NetSymphony of Sales Agent Agreement with Acorn Technologies
      (41)10.60
            Announcement
      by American Marketing & Sales, Inc (AMS) of Greenline Products
      (42)10.61
            AMS
      announces two new distributors for caterware (43)10.62
            AMS
      books $555,000 and test order (44)10.63
            AMS
      announces Balducci's as new customer (45)10.64
            AMS
      announces Madison Square Garden as new customer (46)10.65
            Datameg
      announced resignation of Director John Grady (47)10.66
            NetSymphony
      announces significant customer test (48)10.67
            Datameg
      announces marketing contract with Mirielle Abi Nader agency
      (49)10.68
            Datameg
      announces election of Director Gerald Bellis (50)10.69
            American
      Marketing announces Green Plastics Web Site (51)10.70
            American
      Market announces new customer Le Pain Quotidien (52)10.71
            American
      Market announces new customer U.S. Food Service (53)10.72
            American
      Market announces new customer Finagle a Bagel (54)10.73
            Datameg
      announces entry in material agreement to sell American Marketing
      (55)21.10
            Subsidiaries
      of the Registrant.(3)99.10
            Exhibit
      of Unregistered Sales of Securities.(7)99.20
            Press
      Release dated September 1, 2005.(3)Footnotes
      to Exhibits(1)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on May 4, 2005.(2)
            Incorporated
      by reference to the Form SB-2/A filed by Datameg NY on June 14,
      2004.(3)
            Incorporated
      by reference to the Form SB-2 filed by Datameg Corporation on September 1,
      2005.(4)
            Incorporated
      by reference to the Quarterly Report on Form 10-QSB/A filed by
      Datameg NY on November 26, 2004.(5)
            Incorporated
      by reference to the Annual Report on Form 10-KSB filed by Datameg NY on
      April 14, 2004.(6)
            Incorporated
      by reference to the Annual Report on Form 10-KSB/A filed by Datameg NY on
      April 20, 2005.(7)
            Incorporated
      by reference to the Quarterly Report on Form 10-QSB/A filed by Datameg
      Corporation on August 29, 2005.(8)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on September 22, 2005.(9)
            Incorporated
      by reference to the Form SB-2/A filed by Datameg NY on February 27,
      2004.(10)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on July 26, 2005.(11)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on December 14, 2005.(12)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on January 17, 2006.(13)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on February 23, 2006.(14)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on March 1, 2006.(15)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on March 14, 2006.(16)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on April 20, 2006.(17)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on June 7, 2006.(18)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on July 12, 2006.(19)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on July 14, 2006.(20)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on July 31, 2006.(21)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on August 4, 2006(22)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on August 7, 2006(23)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on September 5, 2006(24)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on September 19, 2006(25)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on September 26, 2006(26)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on November 17, 2006(27)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on December 20, 2006(28)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on January 24, 2007(29)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on February 15, 2007(30)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on April 18, 2007(31)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on May 24, 2007(32)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on June 14, 2007(33)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on August 8, 2007(34)
            Incorporated
      by reference to the Current Report on Form 8-Kfiled by Datameg Corporation
      on August 17, 2007(35)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on October 31, 2007(36)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on December 13, 2007(37)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on January 24, 2008(38)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on February 21, 2008(39)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on March 5, 2008(40)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on March 12, 2008(41)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on March 19, 2008(42)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on March 26, 2008(43)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on May 16, 2008(44)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on May 23, 2008(45)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on July 1, 2008(46)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on July 2, 2008(47)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on August 29, 2008(48)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on September 3, 2008(49)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on September 9, 2008(50)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on September 15, 2008(51)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on December 31, 2008(52)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on February 20, 2009(53)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on March 6, 2009(54)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on March 6, 2009(55)
            Incorporated
      by reference to the Current Report on Form 8-K filed by Datameg
      Corporation on April 2, 2009(*)
            Management
      contract or compensatory plan.





SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized on this 15th day of
April 2009.




Datameg
      CorporationBY:
            
            /s/    James
      MurphyJames
      Murphy,Chairman,
      President and Chief Executive
Officer