U.S. SECURITIES AND EXCHANGE COMMISSION





WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)





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





For the quarterly period ended September 30, 2009





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





For the transition period from _______ to __________








Commission file number 001-10196











STUDIO ONE MEDIA, INC.


(Exact name of registrant as specified in its charter)





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





7650 E. Evans Rd., Suite C


Scottsdale, Arizona  85260


(Address of principal executive offices) (Zip Code )





(480) 556-9303


(Registrant’s telephone number, including area code)








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.





x Yes     o No





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files).





o  Yes     o  No   (Not required)





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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer
o
Accelerated filer
oNon-accelerated filer
o
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).





o Yes     x No





At September 30, 2009, the number of shares outstanding of common stock, $0.001 par value, was 19,001,335 shares.





1





STUDIO ONE MEDIA, INC.INDEXPART I - FINANCIAL INFORMATIONPAGE NUMBERItem 1.
Financial Statements (Unaudited)
3Balance Sheets - September 30, 2009 (unaudited) and June 30, 2009
3Statements of Operations - For the three months ended September 30, 2009 and 2008 (unaudited)
4Statements of Stockholders’ Deficiency - For the year ended June 30, 2007, 2008 and 2009 and the three months ended September 30, 2009 (unaudited)
5Statements of Cash Flows - For the three months ended September 30, 2009 and 2008 (unaudited)
6Notes to Financial Statements (unaudited)
7Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
10Item 3.
Quantitative and Qualitative Disclosure About Market Risks
21Item 4T.
Controls and Procedures
21PART II - OTHER INFORMATIONItem 1.
Legal Proceedings
22Item 1A.
Risk Factors
23Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
30Item 3.
Defaults Upon Senior Securities
31Item 4.
Submission of Matters to a Vote of Security Holders
31Item 5.
Other Information
31Item 6.
Exhibits
32SIGNATURES
33














2


PART I - FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS




STUDIO ONE MEDIA, INC.Consolidated Balance SheetsSeptember 30,

June 30,2009

2009(unaudited)ASSETSCurrent AssetsCash

$
140,983


$
439,474Prepaid Expenses


72,992



57,513Total Current Assets


213,975



496,987Property and Equipment, net


391,604



421,980Property and Equipment, yet to be placed in service


658,328



631,169Other AssetsNotes Receivable


177,228



177,228Accrued Interest Receivable


78,133



73,811Deposits


78,854



76,400Intangible Assets, net


100,129



107,314Total Other Assets


434,344



434,753Total Assets

$
1,698,251


$
1,984,889LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current LiabilitiesAccounts Payable and Accrued Expenses

$
1,089,622


$
1,483,797Notes Payable - Related Party


50,000



268,788Notes Payable


357,065



436,897Total Current Liabilities


1,496,687



2,189,482Long-Term Liabilities


-



-Total Liabilities


1,496,687



2,189,482Stockholders' Equity (Deficit)Preferred Stock, authorized 10,000,000 shares, par value $0.001;issued and oustanding are 574,044  and 774,044 at September 30,2009, and June 30, 2009, respectively


574



774Common Stock, authorized 100,000,000 shares, par value $0.001;issued and outstanding are 19,001,335 and 16,417,447 shares atSeptember 30, 2009, and June 30, 2009, respectively


19,001



16,417Additional Paid in Capital


16,705,102



15,039,491Common Shares to be issued


221,834



24,000Common Stock Issued in Advance of Services


(48,153
)


(48,153
)Accumulated Deficit


(16,696,794
)


(15,237,122
)Total Stockholders' Equity (Deficit)


201,564



(204,593
)Total Liabilities and Stockholders' Equity (Deficit)

$
1,698,251


$
1,984,889The accompanying notes are an integral part of these financial statements.
   
 3


STUDIO ONE MEDIA, INC.Consolidated Statements of Operations(Unaudited)For the Three Months EndedSeptember 30,


September 30,2009


2008(Restated)RevenuesRecording Studio Session Revenues

$
18,700


$
-Advertising Revenues


10,643



-Total Revenues


29,343



-COSTS AND EXPENSESCosts of Sales (Exclusive of Depreciation and Ammortization)


41,255



-Cost of Barter Exchanges


21,643



-Advertising Expenses


67,264



186,247Depreciation Expense


38,422



10,509Professional Fees


966,642



913,387Research and Development


9,857



368,268General and Administrative Expenses


338,078



534,972Total Costs and Expenses


1,483,161



2,013,383Loss from Operations


(1,453,818
)


(2,013,383
)Other Income (Expense)Interest Expense


(10,176
)


(875
)Intersest Income


4,322



8,726Total Other Income (Expense)


(5,854
)


7,851Loss before Income Taxes


(1,459,672
)


(2,005,532
)Income Tax Expense


-



-NET LOSS

$
(1,459,672
)

$
(2,005,532
)Basic Loss Per Share of Common Stock

$
(0.08
)

$
(0.15
)Weighted Average Number of Shares Outstanding


18,976,335



13,487,767The accompanying notes are an integral part of these financial statements.


4






STUDIO ONE MEDIA, INC.Consolidated Statements of Stockholders' Equity (Deficit)Common Stock Issued in Advance for ServicesTotal Stockholders' Equity (Deficit)Additional Paid In Capital


Common Shares to be IssuedPreferred Stock


Common Stock








Accumulated DeficitShares


Amount


Shares


AmountBalance, June 30, 2008


524,044


$
524


$
13,212,398


$
13,212


$
9,473,679


$
221,000


$
(337,052
)

$
(8,637,756
)

$
733,607Common shares issued for services


-



-



1,142,935



1,143



1,707,779



-



-



-



1,708,922Common shares issued for cash


-



-



1,505,478



1,505



2,059,569



(197,000
)


-



-



1,864,074Warrants exercised for cash


-



-



349,335



349



363,068



-



-



-



363,417Common shares issued in conversionof preferred shares


(25,000
)


(25
)


50,000



50



(25
)


-



-



-



-Common shares issued in conversionof debt


-



-



52,733



53



26,314



-



-



-



26,367Common shares issued as collateralfor promissory note


-



-



100,000



100



69,900



-



-



-



70,000Adjustment to account forfractional shares


-



-



4,568



5



(5
)


-



-



-



-Preferred shares issued for cash


275,000



275



-



-



549,725



-



-



-



550,000Fair value of warrants granted


-



-



-



-



789,487



-



-



-



789,487Amortization of stock issued inadvance for servcies


-



-



-



-



-



-



288,899



-



288,899Net Loss for the Year EndedJune 30, 2009


-



-



-



-



-



-



-



(6,599,366
)


(6,599,366
)Balance, June 30, 2009


774,044



774



16,417,447



16,417



15,039,491



24,000



(48,153
)


(15,237,122
)


(204,593
)Common shares issued in conversionof preferred shares (unaudited)


(200,000
)


(200
)


377,051



377



(177
)


-



-



-



-Common shares issued for services


-



-



394,508



395



241,571



-



-



-



241,966(unaudited)Common shares issued for cash


-



-



1,016,000



1,016



506,984



-



-



-



508,000(unaudited)Warrants exercised for cash


-



-



37,084



37



18,505



-



-



-



18,542(unaudited)Common shares issued in conversionof debt  (unaudited)


-



-



759,245



759



396,325



-



-



-



397,084Fair value of warrants granted


-



-



-



-



502,403



-



-



-



502,403(unaudited)Common shares to be issued


-



-



-



-



-



197,834



-



-



197,834(unaudited)Amortization of stock issued inadvance for servcies  (unaudited)


-



-



-



-



-



-



-



-



-Net Loss for the Three MonthsEnded September 30, 2009 (unaudited)


-



-



-



-



-



-



-



(1,459,672
)


(1,459,672
)Balance, September 30, 2009 (unaudited)


574,044


$
574



19,001,335


$
19,001


$
16,705,102


$
221,834


$
(48,153
)

$
(16,696,794
)

$
201,564The accompanying notes are an integral part of these financial statements.







5




STUDIO ONE MEDIA, INC.Consolidated Statements of Cash Flows(Unaudited)For the Three Months EndedSeptember 30,2009


2008(Restated)Cash Flows from Operating ActivitiesNet Loss

$
(1,459,672
)

$
(2,005,532
)Adjustments to reconcile to cash fromoperating activities:Depreciation and amortization


38,422



10,509Common stock issued for services


241,966



589,319Common stock to be issued for services


197,834



-Fair value of warrants granted


502,403



297,346Changes in Operating Assets and Liabilities:Accrued interest receivable


(4,322
)


(8,727
)Prepaid expenses


(15,479
)


(57,762
)Notes Receivable


-



(19,523
)Deposits


(2,454
)


-Accounts payable and accrued  expenses


(420,711
)


448,371Net Cash Used in Operating Activities


(922,013
)


(745,999
)Cash Flows from Investing ActivitiesPurchase of Other Assets


-



(31,453
)Purchase of property and equipment


(28,020
)


(811,169
)Net Cash Used in Investing Activities


(28,020
)


(842,622
)Cash Flows from Financing ActivitiesIssuance of common stock


508,000



1,670,000Warrants exercised for cash


18,542



-Repayment of notes payable


-



(27,379
)Proceeds from notes payable


125,000



-Net Cash from Financing Activities


651,542



1,642,621Net Increase (Decrease) in Cash


(298,491
)


54,000Cash, Beginning of Year


439,474



317,630Cash, End of Year

$
140,983


$
371,630Supplemental Cash Flow Disclosure:Cash Paid For:Interest Expense

$
446


$
875Income Taxes


-



-Non Cash Financing Activities:Common stock issued to extinguish debt

$
433,559


$
-The accompanying notes are an integral part of these financial statements.
  
 6
 
 STUDIO ONE MEDIA, INC.
 
 Note 1: Summary of Significant Accounting Policies
 DESCRIPTION OF BUSINESS, FINANCING AND BASIS OF FINANCIAL STATEMENT PRESENTATION
 
 Studio One Media, Inc., (the “Company” or “SOMD”) was originally organized in Delaware on May 12, 1988 as Dimensional Visions Group, Ltd. The name was changed on January 15, 1998 to Dimensional Visions Incorporated. On February 8, 2006, it changed its name to Elevation Media, Inc., and on March 28, 2006 the Company’s
name was changed to Studio One Media, Inc., as part of its overall plan to implement its revised business plan.
 
 In April 2006, the Company entered into an agreement to purchase Studio One Entertainment, Inc., a private Scottsdale, Arizona based company that designed and manufactured a proprietary (patents pending), self contained interactive audio/video recording and conferencing studio designed for installation in shopping malls and other high traffic
public areas (the “Studio One Entertainment Agreement”).  MyStudioTM enables the public, for a fee, to record their video and voice images in a portable state-of-the-art recording studio environment and enter their performances in music, modeling and other talent related contests.
 
 On April 17, 2007, the Company announced that it had finalized the reverse merger of Studio One Entertainment, Inc., (SOEI) through an all-stock transaction. The purchase was pursuant to an agreement entered into by the companies dated March 29, 2006. The reverse merger included the exchange of 7,000,000 restricted common shares of Studio
One Media, Inc. for 100% of the issued and outstanding shares of Studio One Entertainment, Inc.   The substance of the transaction resulted in a reverse merger wherein SOEI became the accounting acquirer of SOMD.  Therefore, historical financial data reflects the operations and accumulated deficit of SOEI.  The transaction essentially is a recapitalization of SOEI. The reverse merger included all rights, title and interest to Studio One Entertainment's proprietary interactive
recording studios, business plan and intellectual property, including pending patents, foreign patent rights and federal trademark applications.  Studio One Entertainment, Inc. continues to operate as a wholly owned subsidiary of Studio One Media, Inc. Accordingly, the financial statements present on a consolidated basis the operations of SOMD and SOEI.
 
 During fiscal year 2009, the Company is no longer considered to be a development stage company, as a result of the commencement of its principle revenue activities in September 2008.
 
 UNAUDITED INTERIM FINANCIAL INFORMATION
 
 The accompanying Consolidated Balance Sheet as of September 30, 2009, the Consolidated Statements of Operations for the three months ended September 30, 2009 and 2008, and the Consolidated Statements of Cash Flows for the three months ended September 30, 2009 and 2008 are unaudited. These unaudited interim Consolidated Financial Statements
have been prepared in accordance with U.S. generally accepted accounting principles. In our opinion, the unaudited interim Consolidated Financial Statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of September 31, 2009, our results of operations for the three months ended September 30, 2009 and 2008, and our cash flows for the three months ended September 30, 2009 and 2008. The results of operations for the three months ended September
30, 2009 are not necessarily indicative of the results to be expected for the year ending June 30, 2010. These unaudited interim Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in our 2009 Annual Report on Form 10-K filed on October 15, 2009.
 
 GOING CONCERN
 
 The Company has incurred losses since inception of $16,696,794 and has generated limited revenues which raise substantial doubt about its ability to continue as a going concern. The future of the Company as an operating business will depend on its ability to (1) obtain sufficient capital contributions and/or financing as may be required
to sustain its operations and (2) ultimately achieve revenues from its personal recording studio kiosk business. Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, and (c) place in service its personal recording studios.
 
 
  7
 
 STUDIO ONE MEDIA, INC.
 
 Note 1: Summary of Significant Accounting Policies (continued)
 
 USE OF ESTIMATES
 
 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue
and expenses during the reporting periods. Actual results could differ from those estimates.
 
 REVENUE RECOGNITION
 
 The Company applies the provisions of SEC Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements" ("SAB 104"), which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. SAB 104 outlines the basic criteria that must be met to recognize revenue and
provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.
 
 The Company's revenues are generated from studio sessions, on-studio advertising and website advertising.  Revenues from the sale of studio sessions are be collected at the point of sale. The studio sessions are delivered simultaneously with the sale accordingly revenues are realized and recognized at the time of the transaction.
 
 Barter Transactions - Barter revenue relates to recording session services provided by Studio One to business customers in exchange for products and services that Studio One would otherwise be required to buy for cash. Barter expenses reflect the expense offset to barter revenue.
The amount of barter revenue and expense is recorded at the estimated fair value of the services received or the services provided, whichever is more objectively determinable, in the month the services and advertising are exchanged.  Studio One applies APB 29, “Accounting for Non-Monetary Transactions”, the provisions of EITF 93-11, “Accounting for Barter Transactions Involving Barter Credits” and EITF 99-13 “Accounting for Advertising Barter Transactions” and, accordingly,
recognizes barter revenues only to the extent that Studio One has similar cash transactions within a period not to exceed six months prior to the date of the barter transaction.
 
 To date, the amount of barter revenue to be recognized has been more objectively determinable based on the value of products or services received rather than based upon the value of advertising provided.  For revenue from recording sessions services provided for cash to be considered similar to the recording session services provided
in barter transactions, the services rendered must have been in the same media and similar term as the barter transaction.
 
 Studio One had no barter revenues for the three months ended September 30, 2008.  Barter revenues for the three months ended September 30, 2009 is broken out by studio session income and advertising income.  Of the $18,700 of studio session income, $7,700 was cash and the remaining $11,000 was in barter.  The
entire $10,643 of advertising revenue was in barter.
 
 Studio One had no barter revenues for the fiscal year ended June 30, 2008.  Barter revenues totaled $78,379 for the fiscal year ended September 30, 2009.
 
 PRINCIPLES OF CONSOLIDATION
 
 The consolidated financial statements include the accounts of Studio One Media, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. The Company operates on a June 30 fiscal year.
 
 
 
  8
 
 STUDIO ONE MEDIA, INC.
 
 Note 1: Summary of Significant Accounting Policies (continued)
 
 RECENT ACCOUNTING PRONOUNCEMENTS
 
 In May 2009, the FASB issued SFAS 165 (ASC 855-10) entitled “Subsequent Events”.  Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued and provide
disclosure that such date was used for this evaluation. SFAS 165 (ASC 855-10) provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. SFAS 165 (ASC 855-10) is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of SFAS 165 (ASC 855-10) during the quarter ended September 30, 2009 did not have a significant effect on the Company’s
financial statements as of that date or for the quarter then ended. In connection with preparing the accompanying unaudited financial statements as of September 30, 2009, management evaluated subsequent events through the date that such financial statements were issued (filed with the SEC).
 
 In June 2009, the FASB issued SFAS 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”. (SFAS 168 or ASC 105-10) SFAS 168 (ASC 105-10) establishes the codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all
nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 and interim periods within those fiscal years. The adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact the Company’s results of operations or financial condition. The codification did not change GAAP, however, it did change the way GAAP is organized and presented.
As a result, these changes impact how companies reference GAAP in their financial statements and in their significant accounting policies. The Company implemented the codification in this Report by providing references to the codification topics alongside references to the corresponding standards.
 
 With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.
 
 Note 2: Accounts Payable and Accrued Expenses
 
 A summary of Accounts Payable and Accrued Expenses follows:
 
 September 30, 2009


June 30, 2009Accounts Payable

$
1,014,392


$
1,232,807Accrued Interest


33,302



38,344Other Accrued Expenses


41,927



212,646Total

$
1,089,621


$
1,483,797
 
 Note 3: Short-Term Borrowings
 
 The Company entered into two additional notes during the three months ended September 30, 2009.  The Company signed a $50,000 note payable to a related party that bears 8% annual interest.  The Company also signed notes with unrelated parties totaling $25,000 bearing 8% annual interest.
 
 Note 4: Common Stock
 
 During the three months ended September 30, 2009, the Company issued 1,053,084 common shares for $526,542 in cash and 394,508 shares of the Company’s common stock for consulting services rendered to the Company valued at $241,966.  The Company also issued 37,084 shares of common stock for warrants exercised
for cash for a total of $18,542.
 
 Note 5: Preferred Stock
  During the three months ended September 30, 2009, the Company converted 175,000 share of Series A-1 preferred stock for 377,051 shares of common stock.  In addition, the Company repurchased 25,000 shares of Series A-1 preferred stock issuing in exchange, a promissory note in the amount of $50,000, bearing interest at 8% per
annum.
 
 Note 6: Subsequent Events
 
 In accordance with FAS 165, management evaluated the subsequent events as of November 16, 2009.  The Company has not entered into any material subsequent events as of the date noted.


9





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





The discussion and financial statements contained herein are for the three months ended September 30, 2009 and 2008. The following discussion regarding the financial statements of the Company should be read in conjunction with the financial statements of the Company included herewith.





FORWARD-LOOKING AND CAUTIONARY STATEMENTS





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





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





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





·
uncertainties involved in the growth and  growth rate of our operations, business, revenues, operating margins, costs, expenses, and acceptance of any products or services;





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





·
our future stock-based compensation charges;





·
our dilution related to all equity grants to employees;





·
that we will continue to make significant capital expenditure investments;





·
that we will continue to make investments and acquisitions;




·
the sufficiency of our existing cash, cash equivalents, marketable securities and cash generated from operations;
  ·
the increase of sales and marketing and general and administrative expenses in the future;





·
that growth in advertising revenues from our web sites and studios will be achievable and sustainable;





·
that seasonal fluctuations in internet usage and traditional advertising seasonality are likely to affect our business; and





·
general economic conditions.








10





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




FORWARD-LOOKING AND CAUTIONARY STATEMENTS- continued





Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements.  We urge you not to place undue reliance on these forward-looking statements.  We undertake no obligation
to revise or publicly release the results of any revision to these forward-looking statements.





The following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated Financial Statements and related notes included elsewhere in this Report.





General





Corporate Background





Studio One Entertainment, Inc., of Scottsdale, Arizona, was formed in 2004 to develop the MyStudio® concept.  In April 2007, it completed a reverse merger with Studio One Media, Inc., (formerly Dimensional Visions, Incorporated).  The
acquisition of Studio One Entertainment, Inc. by Studio One Media, Inc. (the “Company”, “Registrant” or “Studio One”), included a one-for-one, stock-for-stock transaction, involving the issuance of 7 million shares of Studio One Media, Inc. stock to the shareholders of Studio One Entertainment, Inc.





Studio One is a Delaware publicly company traded on the Over-The-Counter Bulletin Board (ticker symbol: SOMD).  As of September 30, 2009, there were 19,001,335 shares issued and outstanding.  Insiders and affiliates control approximately 41% of the issued and outstanding shares.  Since April 2006, the Company
has raised approximately $9 million in the form of equity for purposes of research and development and the launch of MyStudio.





Commencement of Operations





Over the last six years, Studio One and its wholly-owned subsidiary, Studio One Entertainment, Inc., have been engaged in the research and development of proprietary, leading edge audio and video technologies for professional and consumer use. During the first quarter of fiscal year 2009, the Company transitioned from a Development Stage
Company to an operating entity with the installation of its first MyStudio interactive audio and video recording studio in the Scottsdale Fashion Square mall in Scottsdale, Arizona on September 29, 2008. The Scottsdale studio has enjoyed high customer satisfaction, a high ratio of repeat customers and has operated with negligible downtime.  Despite launching and operating in the most difficult retail environment in decades, the Scottsdale studio generated $141,861 in sales and trade revenues during
its first nine months of operations ended June 30, 2009, including an initial sixty day launch period which offered free or discounted recording sessions to attract customers and build brand awareness.





Quarterly Update





In August 2009, the Company launched its second MyStudio, which is located at 8560 W. Sunset Boulevard on the Sunset Strip in Los Angeles, California.  The location is one of the most prominent addresses in Hollywood, having served as the former headquarters for Playboy Enterprises and is currently home to some of the leading
entertainment companies.   Since its opening in Los Angeles, the studio has been used to showcase MyStudio to music and entertainment executives and has generally not been open to the public.  The feedback from the entertainment industry has been very positive as they see the potential for numerous uses for the studio, and we expect to announce future strategic partnerships accordingly.  The Company expects to begin generating revenues from this studio in the second fiscal quarter
of 2010.   Additionally, the Company expects to launch its third studio in the New York area in the second quarter of fiscal 2010.





Studio session results for the quarter were adversely affected by in-mall construction in the Scottsdale Fashion Square adjacent to our studio.  Since completion of the construction, mall traffic has increased on the side of the mall where the Scottsdale studio is located and a greater number of paid sessions have been achieved.  Revenues
for the second fiscal quarter of 2010 should increase sequentially for Scottsdale, as well as incremental revenue generated from the Los Angeles studio once opened to the public.


11


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

Quarterly Update- continued MyStudio.net has seen substantial website traffic increases during the quarter. MyStudio.net achieved over 2 million page views during one month within the first fiscal quarter of 2010.  We believe that such traffic is significant considering that
a single studio was available to the public during the quarter.  Further, we expect web traffic to grow substantially as additional studios are launched. Such traffic further confirms our thesis that the web property has and is creating significant value for our shareholders.  The leading social media websites, such as Facebook, have created substantial valuations for themselves based on website advertising.  Our more diverse “bricks and clicks” business model allows
our shareholders to benefit from multiple revenue streams, with the website being just one of the Company’s valuation drivers.





On November 15, 2009, the Company announced its groundbreaking strategic partnership with RealityWanted.com.  RealityWanted.com is the leading source for reality TV casting calls in the U.S.  The partnership will open opportunities for members of both companies to create audition videos for hundreds of top reality television
shows.  Most reality TV applicants are missing one of the most critical components to being selected – the video. This partnership creates a turnkey reality TV casting platform to help complete the casting process. Users can easily supplement their RealityWanted.com profiles with a high-quality video that better conveys their talents and unique personality traits giving them a greater chance of being selected for a reality television show. As MyStudio offers over 1,000 high definition backgrounds,
users can pick an environment to best suit their audition. The RealityWanted.com partnership complements our existing multi-year agreement with reality TV producer Mark Burnett Productions.  This is another example of the Company forming strategic partnerships to drive traffic to our studios and website.





Since June 2009, the Company has announced a number of contests which have driven traffic to the studio and increased brand awareness, including The Comedy Store, Project Ethos in conjunction with The House of Blues, and the Gotham Comedy Club. All of these events drive additional traffic to the studios.





Talent agents are using the MyStudio.net as a resource for identifying talent due to the high quality of the audio and video. Several artists have recently been discovered by talent agents since using MyStudio including:   Guy Lundy who was signed by R&B label Allmighty Entertainment and Diamond Hollaway who earned the
chance to perform at the legendary Apollo Theater in New York where she won the youth competition from which hundreds of kids from across the country auditioned.  We believe that success stories like these will continue and provide additional traffic to MyStudio.





The Company recently announced its radio show, MyStudio Radio, which first aired on KWSS 106.7 FM on November 14, 2009. The radio show is designed to feature artists who have recorded videos at MyStudio and posted them online at MyStudio.net. This low-cost radio show is another example of a way management is providing additional opportunities
for users of the studio to gain the recognition for their talents they are seeking. We believe that such radio and potential future television opportunities will drive additional traffic to the studios as artists discover the power of MyStudio’s “Step In, Stand Out” campaign.





In October 2009, the Company announced its revolutionary MyStudio Masters and Aftermasters products. The Company believes that its MyStudio Masters process for mastering audio makes music significantly louder, fuller and more exciting than traditionally mastered music. The MyStudio Mastering process achieves its sound without adding compression
distortion or exceeding recording industry limits of digital zero. MyStudio Mastering technology is a proprietary, patent pending combination of hardware and software which was developed over the last four years by the MyStudio audio engineering team.  It can be applied on virtually all audio sources including, music, radio, television and film.





The MyStudio Mastering process can be used to create both a master from a master audio mix or to “AfterMaster®” existing music that has already been mastered. MyStudio AfterMastering allows any mastered audio to be remastered without the need
to access the master mix. The business model includes the mastering and AfterMastering of both new music releases as well as catalog music. The Company believes that MyStudio Masters can be the technological impetus that can revitalize the music industry by providing consumers with a new leap in sound quality and added value.   Some music industry experts who have recently been introduced to our Mastering technologies have equated it with high definition television: this technology has the opportunity
to do for music what HD has done for television.





The Company is in discussions with several major record labels to Master and Aftermaster new and existing catalog music.  The first commercial music release utilizing MyStudio’s Aftermaster technology was Janet Jackson’s new single, “Make Me,” produced
by nationally recognized producer Rodney Jerkins.  This song was released by Universal Music and produced by nationally recognized record producer Rodney Jerkins.


12




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




Business





Studio One Media, Inc. is a diversified media and technology company based in Scottsdale, Arizona. Studio One subsidiaries and divisions include Studio One Entertainment, Inc., MyStudio Recording Studios, MyStudio Audio Labs, Inc., MyStudio Music, MyStudio Management and MyStudio Masters.





Over the last six years, Studio One and its wholly-owned subsidiary, Studio One Entertainment, Inc., have been engaged in the research and development of proprietary, leading-edge audio and video technologies for professional and consumer use.





Studio One introduced its first groundbreaking product on September 29, 2008 with the installation of its first MyStudio interactive audio and video recording studio in the Scottsdale Fashion Square mall in Scottsdale, Arizona.  A second studio was introduced in Los Angeles in August 2009 and currently resides in a showroom on
Sunset Boulevard where it is being showcased for entertainment industry executives.  The LA studio is expected to be permanently relocated in a local mall at a future date.  The Company expects to install its third studio in the New York area in the second quarter of fiscal 2010.





Studio One’s MyStudio business model and website featuring user generated content (“UGC”) are highly differentiated from leading companies in the entertainment and Internet industries. MyStudio offers a unique “bricks and clicks” business model of cash-generating studios and Internet-based advertising revenues.
Currently, all major video sharing and social networking websites receive little or no revenue from the creation of the UGC hosted on their websites, forcing them to rely almost exclusively on revenue from website advertisers. The MyStudio business model uniquely provides for revenues generated from both the creation of UGC by MyStudio customers and advertising. MyStudio revenue is derived from paid session revenue, on-studio monitor advertising and traditional website advertising.





In addition, the Company expects additional future revenue to be generated from its recently announced MyStudio Masters and Aftermasters products, as well as music sales and talent management arising from UGC on the MyStudio.net website. Subject to the availability and timing of capital,
Studio One expects to install and operate many MyStudios both nationally and internationally.





The multiple revenue streams differentiate the Company from other social media sites that rely primarily on website advertising.





MyStudio® Recording Studios





Studio One has developed MyStudio, a self contained, state-of-the-art, high definition (“HD”) interactive audio/video recording studio designed for installation in shopping malls and other high traffic areas.





MyStudio offers consumers true professional recording studio-quality audio and HD broadcast-quality video with an ease, economy and convenience never before available to the public. MyStudio is designed for installation in malls and other high traffic pedestrian areas. MyStudio and its accompanying website, MyStudio.net,
incorporate into a single entertainment venue some of the best elements of the world’s leading Internet and entertainment properties including video sharing, social networking and talent-related television programming. MyStudio eliminates the high cost and technological and logistical barriers inherent in the creation of high quality production and uploading of video content onto the Internet for both amateurs and professionals alike.





MyStudio enables users, for a $20 fee, to record up to a five-minute personalized video with professional-quality backdrop, lighting and sound. The studios feature Hollywood-style green screen technology, and users can select from over a thousand HD virtual backgrounds (static and dynamic) and thousands of exclusively licensed karaoke tracks
from EMI Music Publishing. The studio lighting is custom programmed for each virtual background, and the sound quality is derived from a specially engineered acoustic design and a proprietary audio signal sequencing process.  Professional users, such as musicians and entertainers, often pay hundreds or thousands of dollars for comparable professionally produced audio and video.







13




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




MyStudio® Recording Studios- continued




Finished videos are available within minutes for viewing at MyStudio.net upon completion of the recording. Videos are protected with a privacy pass-code, and uses can decide whether to make their videos available to the public. The MyStudio.net website
offers users the opportunity to share videos and create member profile pages in a dynamic social networking environment. Users may also create links between MyStudio.net and other social networking sites or their own websites, such as their own small businesses. MyStudio.net members can enter contests, order free DVDs of their videos, download MP3 audio files (restrictions apply), access embedded
codes or print high resolution photos from their video.





MyStudio has been used to create videos for music, modeling, comedy, dating, job resumes, auditions, and personal messages and greetings. Users can also enter their videos into industry-sponsored music, casting, modeling and comedy contests, such as the recently held Are You Smarter Than
a Fifth Grader auditions. In addition, the Company has offered various themed holiday greetings, as well as greetings to U.S. troops overseas.





Current MyStudio locations include Scottsdale, Arizona and Los Angeles, California. The Company expects to install its next studio in the New York area in the second quarter of fiscal 2010.





MyStudio Business Strategy





The Company plans to introduce its MyStudios into key markets throughout the U.S. followed by a rollout into international markets.  The ease and quality of the studios have created significant repeat users and increasing traffic to the Company’s MyStudio.net website.





Provide High Quality Interactive Recording Studios to the Public.   The Company believes MyStudio offers a service never before available to the public – a professional quality recording experience at an affordable price.  The HD virtual
backgrounds, professional lighting and specially engineered sound cannot be replicated by users at home or outside a professional studio.





Connect Talent to Talent Seekers.   MyStudio provides the aspiring artist or entertainer with a cost-effective, professional quality platform to showcase his or her talent.  Entertainers often pay hundreds or thousands of dollars for comparable
professionally produced audio and video products.  Users can often afford to make numerous videos to showcase their talents due to minimal price point for using MyStudio.  There have been several recent incidents where users’ videos have allowed them to be discovered by talent agents.





The studios provide entertainment recruiters with an entirely new method for locating talent. Using MyStudio’s software casting applications, casting directors are able to review a standardized and efficient format for judging talent prospects. This contrasts with the inefficiencies of them receiving, loading and screening numerous
formats of video (i.e., VHS and DVDs) for talent. Additionally, MyStudio allows prospective contestants the ability to perform their auditions on their own time and in unlimited quantities versus the current casting call standard of having only a few moments and a single opportunity in front of a casting agent.  Reality television producers understand that their shows are only as good as the talent. MyStudio will allow for a greater number of contestants to try-out for these shows which provides producers
with a much deeper well of talent. MyStudio has the ability to set a new standard and create a new marketplace for sellers and buyers of talent.





The Company has announced a groundbreaking strategic partnership with RealityWanted.com.  RealityWanted.com is the leading source for reality TV casting calls in the U.S.  The partnership will open opportunities for members of both companies to create audition videos for hundreds of top reality television shows.  Most
reality TV applicants are missing one of the most critical components to being selected – the video. This partnership creates a turnkey reality TV casting platform to help complete the casting process. Users can easily supplement their RealityWanted.com profiles with a high-quality video that better conveys their talents and unique personality traits giving them a greater chance of being selected for a reality television show. As MyStudio offers over 1,000 high definition backgrounds, users can pick an
environment to best suit their audition. This is another example of the Company forming strategic partnerships to drive traffic to our studios and website.


14




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




MyStudio Business Strategy- continued




Build an Online Community Featuring User-Generated Content.    MyStudio.net captures the social networking phenomena of MySpace, Facebook and YouTube and
combines it with a superior audio/visual experience.  The MyStudio.net website allows users to create personal profiles, share videos with family and friends and make their videos available to the public, all of which encourage user loyalty and viral growth opportunities.





Expand the MyStudio Concept into New Vertical Industries.   The potential utilization of the recording studios extends well beyond the entertainment industry. The studios can facilitate efficiency, personalization and differentiation in many industries
including professional recruitment and staffing, Internet dating, corporate training, online greeting cards and business promotion.  The Company expects to develop future partnerships for content and users with recruiting, dating and greeting card companies among others.





MyStudio Business Model





The Company’s “bricks and clicks” business model is currently based upon three primary sources of revenue: recording session fees from the MyStudio studios and advertising revenue from both the individual studios and the Company’s MyStudio.net website.  The
Company plans to drive recording session revenue through the use of industry-sponsored music, modeling and talent contests and drive revenue growth through the addition of new studios and new and repeat users.  These studios in turn will drive exponential traffic to the MyStudio.net website as each new video generates a greater number of unique website visitors due to the viral effect of the Company’s video sharing offering.





The Company’s management team believes that its success depends on the Company’s ability to raise additional capital, deploy multiple studios and create strategic partnerships that drive traffic to the studios.  The Company’s current two studios are insufficient to generate adequate revenues to achieve overall
profitability for the Company.  By deploying multiple studios, the Company believes that it will be able to successfully implement its business plan, attract a greater number of strategic partnerships and achieve profitability.





MyStudio Recording Session Revenue. Each studio is designed to record videos during a mall’s operating hours, which can average 13 hours per day.  The Company charges $20 per session for use of the studio. Each session lasts up to five
minutes.  There are two pay stations on the studio to expedite the song and background selection and payment process.  Additionally, users may prepay their sessions from home and have an opportunity to select from a greater variety of songs and backgrounds.  The two pay stations and home prepayment are designed specifically to increase throughput of those using the studio.





The Company has over 1,000 HD backgrounds from which to select or users may provide their own backgrounds.   Additionally, MyStudio currently offers thousands of songs licensed from EMI Music Publishing for karaoke usage and expects to have additional licensing agreements in the future.  In many instances, users
perform their own songs using their guitar, keyboard or other instruments, which may be plugged into the studios for a professionally sounding quality video.





MyStudio Advertising Revenue.   The exterior of the studios contain eight (8) 37” LCD flat screen monitors that are used to promote MyStudio and display advertising messages from selected sponsors and third party advertisers.  The Company
has successfully sold advertising on the Scottsdale studio, and the Company believes that it will secure national advertising sponsors when it has multiple studios in operation.





Website Advertising Revenue. Visitors, visitor demographics and time spent on a website are the primary drivers behind advertising-based revenue models for Internet properties.  The user-generated content created in MyStudio is the traffic
generator for the Company’s MyStudio.net website.





MyStudio.net has seen substantial website traffic increases during the quarter. MyStudio.net achieved over 2 million page views during one month within the first fiscal quarter of 2010.  We believe that such traffic is significant considering that a single studio was available
to the public during the quarter.  Further, we expect web traffic to grow substantially as additional studios are launched. Such traffic further confirms our thesis that the web property has and is creating significant value for our shareholders.  The leading social media websites, such as Facebook, have created substantial valuations for themselves based on website advertising.  Unlike a number of other social media and Internet companies, the Company is not solely dependent upon
website advertising to generate revenues. Our more diverse “bricks and clicks” business model allows our shareholders to benefit from multiple revenue streams, with the website being just one of the Company’s valuation drivers.


15





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




MyStudio Marketing and Promotion Strategy





The Company launched its first MyStudio in Scottsdale Fashion Square mall in Scottsdale, Arizona on September 29, 2008. The studio has enjoyed high customer satisfaction, a high number of repeat customers and has operated with negligible downtime. During its first month of operations, the Company offered mostly
free studio access through the distribution of unpaid promotional cards to familiarize the public with the operation and capabilities of the studio while building brand awareness. In November 2008, the Company began a 2-for-1 offer and then moved to the full retail price of $20 per paid session in December. The Company also commenced selling on-studio advertising in December 2008.





The Company’s business plan calls for the establishment of regular events and contests to drive traffic to its studios; this assumption has been confirmed by a marked increase in studio traffic when contests and promotions have been offered.  Our comprehensive marketing and promotion strategy is designed to drive traffic
through the studios which in turn drives traffic to the MyStudio.net website.  The Company is focused on forming strategic partnerships at the local, regional and national levels with talent seekers (the television, music, film, performing arts and modeling industries), the media (radio and television stations and printed media) and corporate sponsors who may seek access to the Company’s expanding user base.  The partnerships are
designed to generate industry-sponsored music, modeling and talent contests to stimulate trial of and demand for the studios.





In December 2008, the Company finalized two important multi-year agreements with Mark Burnett Productions for reality TV casting and The GRAMMY Foundation to host auditions for various GRAMMY Foundation programs.  Studio One’s MyStudio recording studios and its accompanying website, MyStudio.net,
have and are being used for auditions and promotions relating to several GRAMMY Foundation programs for young people including GRAMMY Camp® , GRAMMY® Signature Schools and the GRAMMY Jazz Ensembles.





Studio One’s agreement with Mark Burnett Productions provides for the use of MyStudio video recording studios to augment the casting of Mark Burnett television shows such as Are You Smarter Than a 5th Grader.  
Mark Burnett Productions is a leading production company for primetime television, cable and the Internet, and has produced over 1,100 hours of television programming which regularly air in over 70 countries around the world.  The Company believes the agreement is a significant development in encouraging trial and utilization of MyStudio and creating national exposure for the Company.  The Company expects to enter into similar agreements with other television production companies in the future.





A number of high-profile organizations have hosted contests in the Scottsdale studio. The Company expects to continue to align itself and enter into partnerships with other high profile entertainment companies, so it can offer consumers an ongoing variety of contests to ensure steady studio traffic.





Licensed musical content is another facet in the Company’s marketing and promotional strategy.  In July 2008, the Company entered into a multi-year licensing agreement with EMI Music Publishing (“EMI”) which grants Studio One access to EMI’s extensive music catalog.  Notable EMI artists include
Madonna, Stevie Wonder, Reba McEntire, Beyoncé, Kelly Clarkson, Alicia Keyes and Elvis Presley.  The agreement allows users to legally incorporate popular music from one of the world’s largest music publishers into their creative endeavors, synchronizing music, voice and video into a single format.  The Company believes this licensing agreement is unique in the user-generated content industry, and the Company plans to expand its music licensing activities in the future.





The Company is in discussion with several reality television companies about using the studios for casting.  These companies recognize the casting efficiencies from using MyStudio in terms of screening a greater number of candidates on an expedited basis to provide viewers with the best on-screen personalities possible.





Since June 2009, the Company has announced a number of contests which have driven traffic to the studio and increased brand awareness, including The Comedy Store, Project Ethos in conjunction with The House of Blues, and the Gotham Comedy Club.





Talent agents are using the MyStudio.net as a resource for identifying talent due to the high quality of the audio and video. Several artists have recently been discovered by talent agents since using MyStudio including:   Guy Lundy who was signed by R&B label Allmighty Entertainment and Diamond Hollaway who earned the
chance to perform at the legendary Apollo Theater in New York where she won the youth competition from which hundreds of kids from across the country auditioned.  We believe that success stories like these will continue and provide additional traffic to MyStudio.






16





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

MyStudio Marketing and Promotion Strategy - continued





The Company recently announced its radio show, MyStudio Radio, which first aired on KWSS 106.7 FM on November 14, 2009. The radio show is designed to feature artists who have recorded videos at MyStudio and posted them online at MyStudio.net. This low-cost radio show is another example of a way management is providing additional opportunities
for users of the studio to gain the recognition for their talents they are seeking. We believe that such radio and potential future television opportunities will drive additional traffic to the studios as artists discover the power of MyStudio’s “Step In, Stand Out” campaign.





On November 15, 2009, the Company announced its groundbreaking strategic partnership with RealityWanted.com.  RealityWanted.com is the leading source for reality TV casting calls in the U.S.  The partnership will open opportunities for members of both companies to create audition videos for hundreds of top reality television
shows.  This partnership creates a turnkey reality TV casting platform to help complete the casting process. This is another example of the Company forming strategic partnerships to drive traffic to our studios and website.





The Company continues to aggressively solicit additional reality TV, music, modeling and comedy audition opportunities and expects to make additional partnership announcements in the future.





MyStudio Audio Labs, Inc. and MyStudio Masters®





The Company has recently completed the research and development of a new technology for mastering audio that it has branded MyStudio Masters. The Masters technology falls under the recently incorporated MyStudio Audio Labs, Inc., a wholly-owned subsidiary of the Company. The Company believes that its MyStudio Masters process for mastering
audio makes music significantly louder, fuller and more exciting than traditionally mastered music. The MyStudio Mastering process achieves its sound without adding compression distortion or exceeding recording industry limits of digital zero. MyStudio Mastering technology is a proprietary, patent pending combination of hardware and software which was developed over the last four years by the MyStudio audio engineering team.  It can be applied on virtually all audio sources including, music, radio,
television and film.





The MyStudio Mastering process can be used to create both a master from a master audio mix or to “AfterMaster®” existing music that has already been mastered. MyStudio AfterMastering allows any mastered audio to be remastered without the need
to access the master mix. The business model includes the mastering and AfterMastering of both new music releases as well as catalog music. The Company believes that MyStudio Masters can be the technological impetus that can revitalize the music industry by providing consumers with a new leap in sound quality and added value.   Some music industry experts who have recently been introduced to our Mastering technologies have equated it with high definition television: this technology has the opportunity
to do for music what HD has done for television.





The Company is in discussions with several major record labels to Master and Aftermaster new and existing catalog music.   The first commercial music release utilizing MyStudio’s Aftermaster technology was Janet Jackson’s new single, “Make Me.”  This
song was released by Universal Music and produced by nationally recognized record producer Rodney Jerkins.





Manufacturing





The studios are currently outsourced for manufacture to an Arizona-based manufacturing company. The Company plans to take delivery of two additional MyStudio structures for installation in strategic locations before calendar year-end for a total of five MyStudios expected to be operating by the end of the first quarter in calendar 2010.





Intellectual Property and Licensing





The Company has embarked on an aggressive intellectual property program including the filing of 24 pending foreign and domestic patent applications and eight trademark applications (for which it has received four Notices of Allowance) with the U.S. Patent and Trademark Office all designed to protect what the Company believes is innovative
and proprietary technology. We also enter into confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with third parties, and we rigorously control access to proprietary technology.





With respect to licensed content, Studio One will be responsible for paying for all underlying music- related licensing rights including publishing, synchronization and internet performance rights, for karaoke music used in MyStudio videos.







17





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





Employees





As of the end of our fiscal quarter on September 30, 2009, we employed seventeen full-time employees consisting of three executives, nine technical/engineering persons, one manufacturing engineer, one accountant, one clerical/administrative person, and one talent coordinator.  We also employed four part-time employees as attendants
at the MyStudio recording studio.  During the quarter ended September 30, 2009, we added a senior vice president of corporate development.  We expect to hire additional employees in the next year to handle anticipated growth.





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





Facilities





Pursuant to a lease originally dated January, 2006, we currently occupy approximately 5,400 square feet of office space located at 7650 E. Evans Rd., Suite C, Scottsdale, Arizona 75260.  On June 15, 2008, we expanded into and also occupy approximately 5,400 square feet adjoining the original premises on a month-by month basis.  Under
the terms of the extended, expanded lease, we occupy the premises on a month-to-month basis.  The total lease expense is $6,650 per month, payable in cash, common stock of the Company and on-studio advertising.





In anticipation of implementation of our business plan, we had also leased an additional  9,400 feet of office space in another building located at 7812 E. Acoma, Scottsdale, Arizona, at a monthly cost of $12,225.   We have never occupied this space and in May 2009, entered into a termination agreement with the
landlord pursuant to which the Company will pay the sum of $50,000 over a period of ten months in exchange for terminating future obligations under the lease.





The Company leases space at Scottsdale Fashion Square for its MyStudio recording studio pursuant to a two-year lease.   The Company also leases space at 8650 West Sunset Boulevard, Los Angeles, California for its MyStudio recording studio pursuant to a short-term lease.  The monthly rent for the space in both locations
is at a market rate commensurate with other kiosk operations.





As the Company expands, it will continue to secure space for its recording studios at various venues and locations around the country and abroad.





RESULTS OF OPERATIONS





Revenues




Three Months EndedSept. 30, 2009


Sept. 30, 2008Revenues

$
29,343



-0-





The Company generated revenues of $29,343 for the first fiscal quarter ended September 30, 2009, of which $18,700 was derived from session revenues and $10,643 was generated from on-studio and website advertising.  All of the above revenues were earned from the Scottsdale studio.





Studio session results for the quarter were adversely affected by in-mall construction in the Scottsdale Fashion Square adjacent to our studio.  Since completion of the construction, mall traffic has increased on the side of the mall where the Scottsdale studio is located and a greater number of paid sessions have been achieved.











18




ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS- continued
  RESULTS OF OPERATIONS- continued
  While the Hollywood studio opened in August 2009, that studio was generally not open to the public during the quarter but was instead used to showcase MyStudio to the music and entertainment industry in Los Angeles. The Company expects to begin generating revenues from this studio in the second fiscal quarter of 2010.





Revenues for the second fiscal quarter of 2010 should increase sequentially for Scottsdale, as well as incremental revenue generated from the Los Angeles studio once opened to the public.





The Company launched its first studio on September 29, 2008.  The Company began generating revenues during in October 2008, hence there were no revenues in the first quarter of fiscal 2009.


The Company’s business model currently generates revenues from three primary sources:





·
Paid user fees from customers who utilize the studios to create an audio/video recording;·
Advertising revenue from the external monitors located on each MyStudio facility; and


·
Advertising revenue from its website.





The revenues from each of the first two of these sources is expected to increase proportionally to the number of studios we place in operation.   The revenue from advertising on the website will depend on the number and length of visits to our website by MyStudio users and other viewers.





Cost of Sales




Three Months EndedSept. 30,


Sept. 30,2009


2008Cost of Sales

$
41,255


$
-0-





Cost of sales, excluding depreciation and amortization, totaled $41,255 for the quarter ended September 30, 2009.  Cost of sales consists primarily of studio rent, attendant labor and Internet connectivity. The Company launched its first studio on September 29, 2008.  The Company began generating revenues during
in October 2008, hence there were no cost of sales in the first quarter of fiscal 2009.





Research and Development Expenses




Three Months EndedSept. 30,


Sept. 30,2009


2008Research and Development Expenses

$
9,857


$
368,268





Research and development expenses consist primarily of compensation and related costs for personnel and consultants responsible for developing the MyStudio prototype and the Company’s companion social networking website, MyStudio.net.  These costs include persons engaged on a contractual basis to develop MyStudio and its
intellectual components, as well as outside expenses incurred to construct a working prototype and the first production model and the hardware and software necessary to make the studio fully operational.  We expense research and development costs as they are incurred.





Studio One completed the research and development of MyStudio in the first quarter of 2008, which is responsible for the significant decrease of $358,411 in the research and development expenses.  The Company continues to make additional investments in research and development to further enhance the customer experience for both
the studios and website.




19




ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS- continued
  RESULTS OF OPERATIONS- continued
 
 Other Costs and Expenses
  Three Months EndedSept. 30,


Sept. 30,2009


2008Advertising Expense

$
77,907


$
186,247Depreciation Expense


38,422



10,509Professional Fees


966,642



913,387General and Administrative Expenses


349,078



534,972$
1,432,049


$
1,645,115





Other costs and expenses consist primarily of compensation and related costs for personnel and facilities to our finance, human resources, facilities, information technology, and fees for professional services.  Professional services are principally comprised of outside legal, audit, information technology, consulting and outsourcing
services.




Total other costs and expenses decreased in the three-month period ended September 30, 2009 by $213,066 compared to the three months ended September 30, 2008 due to the completion of the studio. The increase in professional fees is primarily attributable to non-cash expenses from shares valued at $241,966 issued to various employees and
consultants for services rendered and for options warrants to employees and consultants for services during the period valued at $502,403.  Due to the Company’s cash position, it uses its stock as currency to pay many employees, vendors and consultants.  Once the Company has raised additional capital from outside sources, as well as generated cash flows from operations, it expects to reduce the use of stock as a primary means of compensation. We elected to use the Black-Scholes option-pricing
model to determine the fair value of stock option based awards under FASB ASC 718 (SFAS 123R), consistent with that used for pro-forma disclosures under (FASB ASC 718 (SFAS No. 123), Accounting for Stock-Based Compensation.





Net Income/(Loss)




Three Months EndedSept. 30,


Sept. 30,2009


2008Net Loss

$
(1,459,672
)

$
(2,005,532
)
  The net loss for the three months ended September 30, 2009 decreased by $545,860 as compared to the three months ended September 30, 2008.    The increase in the net loss is primarily related to completion of the development of the kiosk.





NET OPERATING LOSSES





We have accumulated approximately $15,237,122 of federal net operating loss carry forwards as of June 30, 2009, which expire in various years through 2029.  In addition, the Company has state carry forwards of approximately $14,931,000.   which the Company believes may be offset against future taxable income
through 2029.  The use of these losses to reduce future income taxes will depend on several factors including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards.  In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carryforwards which can be used.  No tax benefit has been reported in the financial statements for the year ended June 30, 2009 or the three months ended
September 30, 2009 and 2008, because the potential tax benefits of the loss carryforward are offset by a valuation allowance of the same amount.





LIQUIDITY AND CAPITAL RESOURCES





The Company had revenues of $29,343 during the three months ended September 30, 2009 as compared to no revenues in the comparable quarter of 2008.  The Company has incurred losses since inception of $16,696,794.  At September 30, 2009,
the Company has a working capital deficit of $1,282,712, which is a decrease of $409,783 from June 30, 2009.  The decrease in the working capital deficit was primarily due to lower accounts payable, as well as the conversion of a note payable to related party to common stock of the Company.  The future of the Company as an operating business will depend on its ability to obtain sufficient capital contributions and/or financing as may be required to sustain its operations.  Management’s
plan to address these issues includes a continued exercise of tight cost controls to conserve cash and obtaining additional debt and/or equity financing.









20




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




LIQUIDITY AND CAPITAL RESOURCES - continued
  As we continue our activities, we will continue to experience net negative cash flows from operations, pending receipt of significant revenues that generate a positive sales margin.





The Company expects that additional operating losses will occur until net margins gained from sales revenue is sufficient to offset the costs incurred for marketing, sales and product development. Until the Company has achieved a sales level sufficient to break even, it will not be self-sustaining or be competitive in the areas in
which it intends to operate.





In addition, the Company will require substantial additional funds to continue production and installation of the additional studios and to fully implement its marketing plans.





The Company’s management team believes that its success depends on the Company’s ability to raise additional capital, deploy multiple studios and create strategic partnerships that drive traffic to the studios.  The Company’s current two studios are insufficient to generate adequate revenues to achieve overall
profitability for the Company.  By deploying multiple studios, the Company believes that it will be able to successfully implement its business plan, attract a greater number of strategic partnerships and achieve profitability.





As of September 30, 2009, the existing capital and anticipated funds from operations were not sufficient to sustain Company operations or the business plan over the next twelve months.  We anticipate substantial increases in our cash requirements which will require additional capital be generated from the sale of common stock,
the sale of preferred stock, equipment financing, debt financing and bank borrowings, to the extent available, or other forms of financing to the extent necessary to augment our working capital.  In the event we cannot obtain the necessary capital to pursue our strategic business plan, we may have to significantly curtail our operations.  This would materially impact our ability to continue operations. There is no assurance that the Company will be able to obtain additional funding when needed,
or that such funding, if available, can be obtained on terms acceptable to the Company.





Recent global events, as well as domestic economic factors, have recently limited the access of many companies to both debt and equity financings. As such, no assurance can be made that financing will be available, or available on terms acceptable to the Company, and, if available, it may take either the form of debt or equity. In either
case, any financing will have a negative impact on our financial condition and will likely result in an immediate and substantial dilution to our existing stockholders.





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








ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not required.








ITEM 4T.  CONTROLS AND PROCEDURES





(a)
Evaluation of disclosure controls and procedures





Our Chief Executive Officer, President, and Chief Financial Officer (the “Certifying Officers”) are responsible for establishing and maintaining disclosure controls and procedures for the Company.  The Certifying Officers have designed
such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which this Report was prepared.








21





ITEM 4T.  CONTROLS AND PROCEDURES- continued


(a)
Evaluation of disclosure controls and procedures- continued


Total other costs and expenses decreased in the three-month period ended September 30, 2009 by $213,066 compared to the three months ended September 30, 2008 due to the completion of the studio. The increase in professional fees is primarily attributable to non-cash expenses from shares valued at $241,966 issued to various employees
and consultants for services rendered and for options warrants to employees and consultants for services during the period valued at $502,403.  Due to the Company’s cash position, it uses its stock as currency to pay many employees, vendors and consultants.  Once the Company has raised additional capital from outside sources, as well as generated cash flows from operations, it expects to reduce the use of stock as a primary means of compensation. We elected to use the Black-Scholes option-pricing
model to determine the fair value of stock option based awards under FASB ASC 718 (SFAS 123R), consistent with that used for pro-forma disclosures under (FASB ASC 718 (SFAS No. 123), Accounting for Stock-Based Compensation.
  The Certifying Officers based their conclusion on the fact that the Company has identified a material weakness in controls over financial reporting, detailed below.  In order to mitigate this risk, the Company has contracted with consultants with expertise in US GAAP and SEC financial reporting standards to review and compile
all financial information prior to filing that information with the SEC.  There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.





(b)
Internal Controls over Financial Reporting





Management is responsible for establishing and maintaining adequate internal controls over financial reporting for the Company.  Management used the Internal Control over Financial Reporting Integrated Framework issued by Committee of Sponsoring Organizations to conduct an extensive review of the Company’s internal controls
over financial reporting to make that evaluation.  As of September 30, 2009, the Company had a deficiency in internal controls that constituted a material weakness in internal controls. Due to this material weaknesses, management concluded that internal controls over financial reporting as of September 30, 2009 were ineffective, based on COSO’s framework.





This deficiency is attributed to the fact that the Company does not have adequate resources to address complex accounting issues, as well as an inadequate number of persons to whom it can segregate accounting tasks within the Company so as to ensure the separation of duties between those persons who approve and issue payment from those
persons who are responsible to record and reconcile such transactions within the Company’s accounting system.  This control deficiency will be monitored and attention will be given to the matter as the Company begins operations as an active business entity. Management has concluded that this control deficiency constituted a material weakness that continued throughout fiscal year 2009.  In order to mitigate this risk, the Company has contracted with consultants with expertise in US GAAP
and SEC financial reporting standards to review and compile all financial information prior to filing that information with the SEC.  There were no significant changes in our internal control over financial reporting or in other factors that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.





This Quarterly 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 Report.








PART II - OTHER INFORMATION





ITEM 1. LEGAL PROCEEDINGS





The Company is an interpleaded party to a lawsuit in the Southern District of Georgia, Savannah Division, pursuant to which the Company seeks to prevent the release of 100,000 shares of its common stock to a third-party and asks the court to return those shares to the Company.   The suit seeks no damages from the Company
and the Company believes that it will prevail in the matter.




Except as described in the preceding paragraph, to the best knowledge of our management, there are no material litigation matters pending or threatened against us.







22





ITEM 1A - RISK FACTORS





Risks Related to Our Business and Industry





You should carefully consider the risk factors and other uncertainties set forth below and all other information contained in this Report, as well as the public disclosure documents incorporated by reference herein.  If any of the events contemplated by the following risks actually
occurs, then our business, financial condition, or results of operations could be materially adversely affected. As a result, the trading price of our common stock could decline, and you may lose all or part of your investment. The risks and uncertainties below are not the only risks facing our company.  Additional risks and uncertainties, including those that are not yet identified or that we
currently believe are immaterial, may also adversely affect our business, financial condition or operating results.





History of Operations and Dependence on Future Developments.





Studio One Media, Inc., (the “Company”, “Studio One” or “SOMD”) was originally organized in Delaware on May 12, 1988, as Dimensional Visions Group, Ltd.  The Company ceased all marketing and sales activity during the last quarter of 2002.





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





The reverse merger of SO Entertainment was completed on April 17, 2007, with the exchange of 7 million shares of the Company’s common stock for an equal number of shares of SO Entertainment common stock constituting 100% of the issued and outstanding shares of SO Entertainment.  SO Entertainment operates as a wholly-owned
subsidiary.





The Company opened its first studio in Scottsdale Fashion Square, Scottsdale, Arizona, on September 29, 2008, and intends to place its studios in malls across America, as well as expand into other high traffic locations, theme parks, airport terminals and theaters – both domestically and internationally.  Ultimately, Studio
One intends to be a one-stop accessible facility that acts as a link between aspiring entertainers and the acting, fashion and music industries.  Revenues for the Company are expected to be generated by both services provided by the studio, such as session revenues, as well as through on-studio and website advertising.





The Company has a history of losses and will likely realize future losses.  MyStudio has limited operations and is currently generating modest revenues.





The Company is dependent upon its management, certain shareholders and investors for its fundraising.  The Company expects additional operating losses will occur until revenue is sufficient to offset the level of costs to be incurred for marketing, sales, general and administrative and product and services development.  The
Company is subject to all of the risks inherent in establishing an early stage business enterprise.  Since the Company has limited operations, there can be no assurance that its business plan will be successful.  The potential for success of the Company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered with an early stage business and the competitive environment in which the Company will operate.  A prospective investor
should be aware that if the Company is not successful in achieving its goals and achieving profitability, any money invested in the Company will likely be lost.  The Company’s management team believes that its potential near-term success depends on the Company’s success in raising additional capital, deploying studios and creating strategic partnerships that drive traffic to the studios.





As an early stage company we are particularly susceptible to the risks and uncertainties described herein and we will be more likely to incur the expenses associated with addressing them.  Our business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in early
stages of development.  These risks are particularly severe among companies in new markets, such as those markets in which we expect we will operate.  Accordingly, shareholders will bear the risk of loss of their entire investment in the Company’s shares.








23





ITEM 1A - RISK FACTORS - continued




New Business Model.





We have a relatively new business model in an emerging and rapidly evolving market.  This makes it difficult to evaluate our future prospects and may increase the risk that we will not continue or be successful.  We will encounter risks and difficulties as a company operating in a new and rapidly evolving market.  We
may not be able to successfully address these risks and difficulties, which could materially harm our business and operating results.





Limited Capital and Need for Additional Financing.





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





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





Lack of Diversification.





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





Competition.





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





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





The Company’s web property competes in a growing social media market with companies like Facebook, YouTube and MySpace .  The Company believes its HD-quality, user-generated content is unique and may allow it
to differentiate itself from other social media companies.







24





ITEM 1A - RISK FACTORS - continued





Performance - Market Acceptance.





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





Dependence on Intellectual Property - Design and Proprietary Rights.





Our success and ability to compete depends to a degree on our intellectual property.  We will rely on copyright, trademark and patent filings as well as confidentiality arrangements, to protect our intellectual property locally and internationally.  Studio One Entertainment, Inc. has filed 24 patent applications relating
to MyStudio and related technologies and processes, and while the Company believes the technologies, methods and processes merit patent protection, there is no assurance that any patent will be issued.  If circumstances make it impossible to try to adequately protect our intellectual property that intellectual property could be used by others without our consent and there could be material adverse consequences to the Company.  We have filed eight trademark applications and have received Notices
of Allowance on four of those applications.  Effective protection may not be available for our service marks.  Although we plan to continue to register our service marks in the United States and in countries in which we do business or expect to do business, we cannot assure you that we will be able to secure significant protection for these marks.  Our competitors, if any exist, or others may adopt product or service names similar to those used by the Company, thereby impeding our
ability to build brand identity and possibly leading to client confusion.  If circumstances make it impossible to adequately protect the name and brand that result could seriously harm our business.





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





Economic Downturn.





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





Some of Our Markets are Cyclical.





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





Disaster.





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





Dependency on Foreign Components for our Products.





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






25




ITEM 1A - RISK FACTORS - continued




Exposure to Product Liability Lawsuits.





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





Dependency on Key Suppliers and Product Availability.





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





Dependency on Long Supply Chains.





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





Fluctuations in Cost of Raw Materials.





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





Regulatory Factors.





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





Terms of Subsequent Financings.





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







26




ITEM 1A - RISK FACTORS- continued





Rapid Technological Change.





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





Effect of Fluctuations in Operations on the Price of Common Stock.





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





●
Ability to broadly commercialize and expand MyStudio;●
Changes in entertainment technology;●
Price and availability of alternative entertainment available to the public;●
Availability and cost of technology and marketing personnel;●
Our ability to establish and maintain key relationships with industry partners;●
The amount and timing of operating costs and capital expenditures relating to maintaining our business, operations, and infrastructure; and●
General economic conditions and economic conditions specific to the entertainment industry.


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





Our Common Stock is Subject to Penny Stock Regulations.





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





Uncertainty as a Going Concern.





Our future existence remains uncertain and the report of our auditors on our June 30, 2009 financial statements contains a “going concern” qualification.  The report of the independent auditors on our financial statements for the year ended June 30, 2009, includes an explanatory paragraph relating to our ability to
continue as a going concern.  We have suffered substantial losses from operations and require additional financing.  Ultimately we need to generate additional revenues and attain profitable operations.  These factors raise substantial doubt about our ability to continue as a going concern.  There can be no assurance that we will be able to develop commercially viable products or an effective marketing system.  Even if we are able to develop commercially viable
products, there is no assurance that we will be able to attain profitable operations.






27




ITEM 1A - RISK FACTORS - continued




Dilution; Dilutive Effect of Future Transactions.





As of September 30, 2009, the Company had 19,001,335 shares of common stock, $0.001 par value, issued and outstanding.  The Company contemplates issuing a maximum of 1,500,000 shares of common stock pursuant to its 2009 Stock Incentive Plan approved by the Board on June 10, 2009, and further shares to certain of its management,
directors, officers, employees and consultants in the immediate future.  The Company also had 574,044 shares of various classes of Convertible Preferred Stock outstanding, which can be converted to 114,814 shares of common stock.  In addition, the Company had warrants outstanding that would permit, if exercised, the issuance of 4,300,460 additional shares of common stock at an average exercise price of $2.14 and options to various employees and consultants granting the right to purchase 437,529
shares at an average price of $0.56.  The issuance of additional shares by the Company will result in a further dilution of the Company, which could be significant; meaning your percentage ownership of any such merged entity will be significantly less than your percentage ownership of the Company.  If the Company issues additional shares either outright or through any future options or warrants programs or requires additional financing, further dilution in value and in the percentage ownership
represented by the purchaser’s investment will occur.





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





Restrictions on Transfer - No Public Market for Preferred Shares or Restricted Common Shares.





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





Expect to Incur Losses for the Foreseeable Future.





We expect to incur losses for the foreseeable future and we may never become profitable.   Our business model requires that additional studios be deployed and operating for the Company to generate such revenues to reach break-even.  There are no assurances that such revenues will occur. We expect our expenses to
increase significantly as we develop the infrastructure necessary to implement our business strategy.  Our expenses will continue to increase as we: hire additional employees; pursue further research and development; expand our information technology systems; and lease and purchase more space to accommodate our operations.





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





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





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





Business Plans and Operational Structure May Change.





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






28




ITEM 1A - RISK FACTORS - continued




Reliance on Management.





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





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





Inability to Attract and Retain Qualified Personnel.





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





Inability to Manage Rapid Growth.





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





●
Rapidly improve, upgrade and expand its business infrastructures;●
Deliver its product and services on a timely basis;●
Maintain levels of service expected by clients and customers;●
Maintain appropriate levels of staffing;●
Maintain adequate levels of liquidity; and●
Expand and upgrade its technology, transaction processing systems and network hardware or software or find third parties to provide these services.





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





Effects of Amortization Charges/Stock Based Compensation





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





Dividend Policy.





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







29




ITEM 1A - RISK FACTORS- continued





Conflicts of Interest.





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





Voting Control.





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





Loss of Services of Key Members of Our Senior Management Team.





Our future success depends in a large part upon the continued services of key members of our senior management team.  These persons are critical to the overall management of Studio One as well as the development of our technology, our culture and our strategic direction.  We do not maintain any key-person life insurance
policies.  The loss of any of our management or key personnel could seriously harm our business.








ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





(a)
On May 6, 2004, the Registrant amended its Articles of Incorporation to authorize the Registrant to reverse its issued and outstanding shares, giving one (1) new share for each sixty (60) existing shares issued and outstanding. The Registrant now has 19,001,335 post-reverse shares of common stock outstanding. In addition, the Company has
574,044 shares of preferred stock issued and outstanding as of September 30, 2009.  The preferred shares are convertible into 114,814 shares of restricted common stock.




(b)
During the three months ended September 30, 2009, the Company accepted subscriptions for 1,016,000 shares of unregistered restricted shares of common stock at an average price per share of $0.50 for a total of $508,000 and agreed to issue 412,500 shares pursuant to warrants granted in connection with such placements.  Generally,
the warrants may be exercised at any time within a one to two-year period beginning on the date of the respective investments at an average exercise price of $0.50.  The Company also agreed to issue 1,087,000 shares pursuant to warrants granted to various employees and consultants, which may be exercised at varying times ranging from two to ten years at an average exercise price of $0.52 per share.  In addition, the Company issued 377,051 shares in conversion of preferred shares and 759,245
shares in conversion of debt valued at $433,559.   During the three months ended September 30, 2009, warrantholders exercised various warrants for 37,084 shares for a total of $18,542, an average of $0.50 per share.  All shares issued were subject to the restrictions set forth in Section 144 of the Securities Exchange Act of 1933.  We believe that the sale of the unregistered restricted common stock (the “Units”) noted above was exempt from registration and prospectus
delivery requirements of the Securities Act of 1933 by virtue of Sections 4(2), and/or Regulation D, Rule 506. The Units were sold directly by us to accredited investors and did not involve a public offering or general solicitation. The purchasers of the Units were afforded an opportunity for effective access to files and records of our Company that contained the relevant information needed to make their investment decision, including our financial statements and 34 Act reports. We reasonably believed that the
purchasers, immediately prior to purchasing the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investment. The purchasers had the opportunity to speak with our management on several occasions prior to their investment decision.  All proceeds from the sale of these securities were used to continue the Company’s capital expenditures related to MyStudio, as well as for working capital and general corporate
purposes.




(c)
During the three months ended September 30, 2009, the Company also issued 394,508 shares of the Company’s common stock for consulting, legal and other services rendered to the Company valued at $241,966.  We believe the issuance of the shares listed in this Item 2(a) are exempt from the registration and prospectus delivery
requirement of the Securities Act of 1933 by virtue of Section 4(2). The shares were issued directly by us and did not involve a public offering or general solicitation. The recipients of the shares were afforded an opportunity for effective access to our files and records that contained the relevant information needed to make their investment decision, including our financial statements and reports filed under the Securities Exchange Act of 1934. We reasonably believed that the recipients had such knowledge
and experience in the Company’s financial and business matters that they were capable of evaluating the merits and risks of their investment.(d)
In June 2009, the Company adopted the 2009 Long-Term Incentive Plan intended to aid the Company in attracting and retaining key employees and consultants, to stimulate the efforts of such individuals and to strengthen their desire to remain with the Company.   As of September 30, 2009, the Company had granted options under this Plan to fourteen eligible participants to purchase, in the aggregate, 466,000
shares of the Company’s common stock.  The exercise period for each of the grants ranges from two to three years from the date of grant and the average exercise price in each instance is $0.56.  One individual has exercised her rights under the option grant and the Company issued 28,571 shares for an exercise price of $10,000.







30





ITEM 3. DEFAULTS UPON SENIOR SECURITIES





None.








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





(a)
On May 6, 2004, the Registrant (f/k/a Dimensional Visions Incorporated) filed a Certificate of Amendment of Certificate of Incorporation with the Secretary of State for the State of Delaware. The number of shares common stock of the Registrant outstanding and entitled to vote on an amendment to the Articles of Incorporation was 61,771,510.
The May 6, 2004 amendment was consented to and approved by a majority vote of the stockholders holding a majority of the stock entitled to vote thereon. The amendment authorized the Registrant to reverse its issued and outstanding shares, giving one (1) new share for each sixty (60) existing shares issued and outstanding. The Registrant now has 19,001,335 post-reverse shares outstanding.





(b)
On April 17, 2007, the Company announced that it had finalized the purchase of Studio One Entertainment, Inc., through an all-stock transaction. The purchase was pursuant to an agreement entered into by the companies dated March 29, 2006. The purchase included the exchange of 7,000,000 restricted common shares of Studio One Media, Inc.,
for 100% of the issued and outstanding shares of Studio One Entertainment, Inc. The purchase includes all right, title and interest to Studio One Entertainment’s proprietary interactive recording studios, business plan and intellectual property, including pending patents, foreign patent rights and federal trademark applications. Studio One Entertainment, Inc., operates as a wholly owned subsidiary of Studio One Media, Inc. The transaction was approved by consent of a majority of the shareholders of Studio
One Media, Inc. and Studio One Entertainment, Inc.





(c)
During the three months ended September 30, 2009, no matters were submitted to the shareholders for a vote.








ITEM 5. OTHER INFORMATION





Shell Company Status





Studio One Media, Inc. (the “Company”) ceased being a shell company on April 17, 2007, when it finalized the purchase of Studio One Entertainment, Inc. Form 10-KSB filed by the Company for the year ended June 30, 2007, and the Company’s Form 10-QSB for the quarterly periods ended September
30, 2008 and December 31, 2007, incorrectly indicated that the Company remained a shell company after April 17, 2007.





On September 28, 2007, upon filing of its Form 10-KSB for the fiscal year ended June 30, 2007, the Company filed all of its “Form 10 Information” with the SEC. The disclosure made under the above mentioned Form 10-KSB is incorporated by reference herein.





On November 14, 2008, the Company filed a Form 8-K concerning the change of its status as a shell company. The disclosure made under that Form 8-K is incorporated by reference herein.





Change of Independent Accountants





On August 11, 2009, the Board of Directors of the Registrant dismissed Moore & Associates Chartered (“Moore”), its independent registered public accounting firm.  On the same date, August 11, 2009, the accounting firm of Seale and Beers, CPAs was engaged as the Registrant’s new independent registered public
accounting firm. The Board of Directors of the Registrant and the Registrant’s Audit Committee approved of the dismissal of Moore & Associates Chartered and the engagement of Seale and Beers, CPAs as its independent auditor.








31




ITEM 5. OTHER INFORMATION - continued




Change of Independent Accountants - continued




On August 27, 2009, the Public Company Accounting Oversight Board (“PCAOB”) revoked the registration of Moore because of violations of PCAOB rules and auditing standards in auditing financial statements, PCAOB rules and quality controls standards, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and noncooperation with a
Board investigation.  Notice of such revocation was received by the Registrant on September 7, 2009, from the Securities and Exchange Commission (“SEC”).  Prior to receipt of such notice, the Registrant had no knowledge of any issues involving Moore and the PCAOB or the SEC.





On September 11, 2009, the Registrant dismissed Seale and Beers, LLC, as its independent registered public accounting firm, and engaged Mantyla McReynolds, LLC, an Independent Member of the BDO Seidman Alliance.  The Board of Directors of the Registrant approved of the dismissal of Seale and Beers and the engagement of Mantyla
McReynolds as its independent auditor.  During the period prior to the engagement of Mantyla McReynolds, neither the Registrant nor anyone on its behalf consulted Mantyla McReynolds regarding the application of accounting principles to a specific completed or contemplated transaction, the type of audit opinion that might be rendered on the Registrant’s financial statements, or any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable
event as described in Item 304(a)(1)(v) of Regulation S-K.  Further, Mantyla McReynolds has not provided written or oral advice to the Registrant that was an important factor considered by the Registrant in reaching a decision as to any accounting, auditing or financial reporting issues.





Subsequent Events:





On November 7, 2009, the Company notified all warrantholders who have obtained their warrants through private placement offerings with Studio One of the opportunity to exercise their respective warrants to purchase common stock of Studio One at an exercise price of $0.75 per share, subject to certain
terms.  This offer was made to provide Studio One with additional working capital to continue its plans to place additional studios in strategic locations.





This offer will terminate on November 20, 2009.  The offer has been limited to existing Studio One warrantholders only and does not in any manner otherwise amend the terms of their respective warrants. Unless exercised under the current terms of this offer, the terms of the warrants
will remain unchanged.








ITEM 6. EXHIBITS





a) The following Exhibits are filed herein:





NO.
TITLE





31.1
Certification of Chief Executive Officer pursuant to the Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002





31.2
Certification of Chief Financial Officer pursuant to the Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002





32.1
Certification of Chief Executive Officer and of Chief Financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002












32







SIGNATURES





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








STUDIO ONE MEDIA, INC.Date: November 16, 2009
By:
/s/ Preston J. SheaPreston J. Shea,Title:   President








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








STUDIO ONE MEDIA, INC.Date: November 16, 2009
By:
/s/ Preston J. SheaPreston J. Shea,Title:  Director, President, Secretary





STUDIO ONE MEDIA, INC.Date: November 16, 2009
By:
/s/ Kenneth R. PinckardKenneth R. PinckardTitle:  Director, Vice President, Chief Financial Officer, Chief Accounting Officer












33