U.S.
SECURITIES AND EXCHANGE COMMISSION




WASHINGTON,
D.C. 20549




FORM
10-Q




(Mark
One)




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




For the
quarterly period ended March 31, 2009




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




For the
transition period from _______ to __________






Commission
file number 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.




Yes  x 
No  o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):




Large
accelerated filer   o            Accelerated
filer   o            Non-accelerated
filer   x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).





Yes  
o No   x





Transitional
Small Business Disclosure Format (check one):




Yes  
o No  x




At March
31, 2009, the number of shares outstanding of common stock, $0.001 par value,
was 15,084,498 shares.






1





STUDIO
      ONE MEDIA, INC.INDEXPART
      I - FINANCIAL INFORMATIONPAGE NUMBERItem
      1.
                        Financial
      Statements (Unaudited)
                        3Balance
      Sheets - March 31, 2009 (unaudited) and June 30, 2008
                        3Statements
      of Operations - For the three months and nine months ended March 31,
      2009 and 2008, and cumulative from July 1, 2002 through March 31,
      2009 (unaudited)
                        4Statements
      of Stockholders’ Deficiency - For the year ended June 30, 2002, 2003,
      2004, 2005, 2006, 2007 and 2008 and the nine months ended March 31, 2009
      (unaudited)
                        5Statements
      of Cash Flows - For the nine months ended March 31, 2009 and 2008, and
      cumulative from July 1, 2002 through March 31, 2009
      (unaudited)
                        6Notes
      to Financial Statements (unaudited)
                        7Item
      2.
                        Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                        14Item
      3.
                        Quantitative
      and Qualitative Disclosure About Market Risks
                        22Item
      4T.
                        Controls
      and Procedures
                        22PART
      II - OTHER INFORMATIONItem
      1.
                        Legal
      Proceedings
                        23Item
      1A.
                        Risk
      Factors
                        23Item
      2.
                        Unregistered
      Sales of Equity Securities and Use of Proceeds
                        30Item
      3.
                        Defaults
      Upon Senior Securities
                        30Item
      4.
                        Submission
      of Matters to a Vote of Security Holders
                        30Item
      5.
                        Other
      Information
                        31Item
      6.
                        Exhibits
                        31SIGNATURES
                        32







































2




PART
I - FINANCIAL INFORMATION




ITEM
1. FINANCIAL STATEMENTS





STUDIO
      ONE MEDIA, INC.(A
      Development Stage Company)CONSOLIDATED
      BALANCE SHEETSMarch
      31,
                                                                                            
                                                                                            
                                                                                            June
      30,2009
                                                                                            
                                                                                            
                                                                                            2008(unaudited)
                                                                                            
                                                                                            
                                                                                            (restated)ASSETSCurrent
      AssetsCash
                                                                                            
                                                                                            $
                                                                                            45,184
                                                                                            
                                                                                            
                                                                                            $
                                                                                            391,109Accrued
      Interest Receivable
                                                                                            
                                                                                            
                                                                                            75,858
                                                                                            
                                                                                            
                                                                                            
                                                                                            55,701Accounts
      Receivable
                                                                                            
                                                                                            
                                                                                            1,500
                                                                                            
                                                                                            
                                                                                            
                                                                                            -Prepaid
      Expenses
                                                                                            
                                                                                            
                                                                                            105,733
                                                                                            
                                                                                            
                                                                                            
                                                                                            48,153Notes
      Receivable-Current
                                                                                            
                                                                                            
                                                                                            178,398
                                                                                            
                                                                                            
                                                                                            
                                                                                            178,752Total
      Current Assets
                                                                                            
                                                                                            
                                                                                            406,673
                                                                                            
                                                                                            
                                                                                            
                                                                                            673,715Property
      and Equipment, Net
                                                                                            
                                                                                            
                                                                                            1,329,802
                                                                                            
                                                                                            
                                                                                            
                                                                                            548,070Other
      AssetsDeposits
                                                                                            
                                                                                            
                                                                                            19,630
                                                                                            
                                                                                            
                                                                                            
                                                                                            29,630Intangible
      Assets, net
                                                                                            
                                                                                            
                                                                                            171,197
                                                                                            
                                                                                            
                                                                                            
                                                                                            138,084Total
      Other Assets
                                                                                            
                                                                                            
                                                                                            190,827
                                                                                            
                                                                                            
                                                                                            
                                                                                            167,714Total
      Assets
                                                                                            
                                                                                            $
                                                                                            1,927,302
                                                                                            
                                                                                            
                                                                                            $
                                                                                            1,389,499LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      LiabilitiesAccounts
      Payable and Accrued Expenses
                                                                                            
                                                                                            $
                                                                                            1,183,598
                                                                                            
                                                                                            
                                                                                            $
                                                                                            358,359Notes
      Payable - Related Party
                                                                                            
                                                                                            
                                                                                            201,591
                                                                                            
                                                                                            
                                                                                            
                                                                                            108,319Notes
      Payable - Current
                                                                                            
                                                                                            
                                                                                            50,000
                                                                                            
                                                                                            
                                                                                            
                                                                                            49,385Total
      Current Liabilities
                                                                                            
                                                                                            
                                                                                            1,435,189
                                                                                            
                                                                                            
                                                                                            
                                                                                            516,063Long-Term
      Liabilities
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            -Total
      Liabilities
                                                                                            
                                                                                            
                                                                                            1,435,189
                                                                                            
                                                                                            
                                                                                            
                                                                                            516,063Stockholders'
      EquityPreferred
      Stock, authorized 10,000,000 shares, par value $0.001;issued
      and outstanding are 799,044 and 524,044March
      31, 2009 and June 30, 2008, respectively
                                                                                            
                                                                                            
                                                                                            799
                                                                                            
                                                                                            
                                                                                            
                                                                                            524Common
      Stock, authorized 100,000,000 shares, par value $0.001;issued
      and outstanding are 15,084,498 and 13,212,398 shares
    atMarch
      31, 2009 and June 30, 2008, respectively
                                                                                            
                                                                                            
                                                                                            15,085
                                                                                            
                                                                                            
                                                                                            
                                                                                            13,212Additional
      Paid in Capital
                                                                                            
                                                                                            
                                                                                            20,768,499
                                                                                            
                                                                                            
                                                                                            
                                                                                            14,463,184Accumulated
      Deficit - Development Stage
                                                                                            
                                                                                            
                                                                                            (20,292,270
                                                                                            )
                                                                                            
                                                                                            
                                                                                            (13,603,484
                                                                                            )Total
      Stockholders' Equity
                                                                                            
                                                                                            
                                                                                            492,113
                                                                                            
                                                                                            
                                                                                            
                                                                                            873,436Total
      Liabilities and Stockholders' Equity
                                                                                            
                                                                                            $
                                                                                            1,927,302
                                                                                            
                                                                                            
                                                                                            $
                                                                                            1,389,499




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


3




STUDIO ONE MEDIA,
      INC.(A
      Development Stage Company)CONSOLIDATED STATEMENTS OF
      OPERATIONS(unaudited)CumulativeFor
      the Three Months Ended
                                                                      
                                                                      
                                                                      For
      the Nine Months Ended
                                                                      
                                                                      
                                                                      July
      1, 2002March
      31,
                                                                      
                                                                      
                                                                      March
      31,
                                                                      
                                                                      
                                                                      March
      31,
                                                                      
                                                                      
                                                                      March
      31,
                                                                      
                                                                      
                                                                      through2009
                                                                      
                                                                      
                                                                      2008
                                                                      
                                                                      
                                                                      2009
                                                                      
                                                                      
                                                                      2008
                                                                      
                                                                      
                                                                      March
      31,2009RevenuesKiosk
      Revenues
                                                                      
                                                                      $
                                                                      40,455
                                                                      
                                                                      
                                                                      $
                                                                      -
                                                                      
                                                                      
                                                                      $
                                                                      56,177
                                                                      
                                                                      
                                                                      $
                                                                      -
                                                                      
                                                                      
                                                                      $
                                                                      56,177Advertising
      Revenues
                                                                      
                                                                      
                                                                      15,852
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      38,047
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      38,047Total
      Revenues
                                                                      
                                                                      
                                                                      56,307
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      94,224
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      94,224COST
      OF SALES (less depreciation andamortization)
                                                                      
                                                                      
                                                                      43,387
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      91,203
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      91,203GROSS
      PROFIT (LOSS)
                                                                      
                                                                      
                                                                      12,920
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      3,021
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      3,021Operating
      ExpensesGeneral
      and Administrative Expenses
                                                                      
                                                                      
                                                                      1,093,102
                                                                      
                                                                      
                                                                      
                                                                      1,885,006
                                                                      
                                                                      
                                                                      
                                                                      6,335,188
                                                                      
                                                                      
                                                                      
                                                                      5,551,887
                                                                      
                                                                      
                                                                      
                                                                      18,508,722Research
      and Development
                                                                      
                                                                      
                                                                      37,851
                                                                      
                                                                      
                                                                      
                                                                      173,234
                                                                      
                                                                      
                                                                      
                                                                      356,467
                                                                      
                                                                      
                                                                      
                                                                      475,136
                                                                      
                                                                      
                                                                      
                                                                      1,879,305Total
      Operating Expenses
                                                                      
                                                                      
                                                                      1,130,953
                                                                      
                                                                      
                                                                      
                                                                      2,058,240
                                                                      
                                                                      
                                                                      
                                                                      6,691,655
                                                                      
                                                                      
                                                                      
                                                                      6,027,023
                                                                      
                                                                      
                                                                      
                                                                      20,388,027Loss
      from Operations
                                                                      
                                                                      
                                                                      (1,118,033
                                                                      )
                                                                      
                                                                      
                                                                      (2,058,240
                                                                      )
                                                                      
                                                                      
                                                                      (6,688,634
                                                                      )
                                                                      
                                                                      
                                                                      (6,027,023
                                                                      )
                                                                      
                                                                      
                                                                      (20,385,006
                                                                      )Other
      Income (Expense)Interest
      Expense
                                                                      
                                                                      
                                                                      (5,845
                                                                      )
                                                                      
                                                                      
                                                                      (875
                                                                      )
                                                                      
                                                                      
                                                                      (25,309
                                                                      )
                                                                      
                                                                      
                                                                      (2,625
                                                                      )
                                                                      
                                                                      
                                                                      (338,109
                                                                      )Other
      Income
                                                                      
                                                                      
                                                                      10,620
                                                                      
                                                                      
                                                                      
                                                                      5,711
                                                                      
                                                                      
                                                                      
                                                                      25,157
                                                                      
                                                                      
                                                                      
                                                                      19,133
                                                                      
                                                                      
                                                                      
                                                                      49,162Gain
      on Extinguishment of Indebtedness
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      381,683Total
      Other Income (Expense)
                                                                      
                                                                      
                                                                      4,775
                                                                      
                                                                      
                                                                      
                                                                      4,836
                                                                      
                                                                      
                                                                      
                                                                      (152
                                                                      )
                                                                      
                                                                      
                                                                      16,508
                                                                      
                                                                      
                                                                      
                                                                      92,736Loss
      before Income Taxes
                                                                      
                                                                      
                                                                      (1,113,258
                                                                      )
                                                                      
                                                                      
                                                                      (2,053,404
                                                                      )
                                                                      
                                                                      
                                                                      (6,688,786
                                                                      )
                                                                      
                                                                      
                                                                      (6,010,515
                                                                      )
                                                                      
                                                                      
                                                                      (20,292,270
                                                                      )Income
      Tax Expense
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -Net
      Loss
                                                                      
                                                                      $
                                                                      (1,113,258
                                                                      )
                                                                      
                                                                      $
                                                                      (2,053,404
                                                                      )
                                                                      
                                                                      $
                                                                      (6,688,786
                                                                      )
                                                                      
                                                                      $
                                                                      (6,010,515
                                                                      )
                                                                      
                                                                      $
                                                                      (20,292,270
                                                                      )Basic
      Loss Per Share of Common Stock
                                                                      
                                                                      $
                                                                      (0.08
                                                                      )
                                                                      
                                                                      $
                                                                      (0.16
                                                                      )
                                                                      
                                                                      $
                                                                      (0.47
                                                                      )
                                                                      
                                                                      $
                                                                      (4.98
                                                                      )Weighted
      Average Number of Shares Outstanding
                                                                      
                                                                      
                                                                      14,783,513
                                                                      
                                                                      
                                                                      
                                                                      12,573,685
                                                                      
                                                                      
                                                                      
                                                                      14,259,808
                                                                      
                                                                      
                                                                      
                                                                      1,206,089
    The accompanying notes are
an integral part of these financial
statements.






4






STUDIO
      ONE MEDIA, INC.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITYAccumulated
                                    
                                    
                                    AccumulatedDeficit
                                    
                                    
                                    DeficitPreferred
      Stock
                                    
                                    
                                    Common
      Stock
                                    
                                    
                                    Paid
      In
                                    
                                    
                                    Pre-Development
                                    
                                    
                                    Development
                                    
                                    
                                    TotalShares
                                    
                                    
                                    Amount
                                    
                                    
                                    Shares
                                    
                                    
                                    Amount
                                    
                                    
                                    Capital
                                    
                                    
                                    Stage
                                    
                                    
                                    Stage
                                    
                                    
                                    EquityBalance,
      December 31, 2006
                                    
                                    
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    
                                    7,102,500
                                    
                                    
                                    $
                                    23,225
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    $
                                    (671,671
                                    )
                                    
                                    $
                                    (648,446
                                    )Recapitalization
                                    
                                    
                                    524,044
                                    
                                    
                                    
                                    524
                                    
                                    
                                    
                                    3,464,870
                                    
                                    
                                    
                                    (12,658
                                    )
                                    
                                    
                                    748,201
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    736,067Common
      Shares issuedfor
      services
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    248,200
                                    
                                    
                                    
                                    248
                                    
                                    
                                    
                                    1,493,392
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,493,640Common
      Shares issued for cash
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    547,169
                                    
                                    
                                    
                                    548
                                    
                                    
                                    
                                    1,064,453
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,065,001Fair
      value of warrants granted
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,322,269
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,322,269Net
      Loss
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (4,314,840
                                    )
                                    
                                    
                                    (4,314,840
                                    )Balance,
      June 30, 2007
                                    
                                    
                                    524,044
                                    
                                    
                                    
                                    524
                                    
                                    
                                    
                                    11,362,739
                                    
                                    
                                    
                                    11,363
                                    
                                    
                                    
                                    5,628,315
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (4,986,511
                                    )
                                    
                                    
                                    653,691Common
      Shares issuedfor
      services
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    684,322
                                    
                                    
                                    
                                    684
                                    
                                    
                                    
                                    2,794,313
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,794,997Common
      Shares issued for cash
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,160,337
                                    
                                    
                                    
                                    1,160
                                    
                                    
                                    
                                    3,151,384
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    3,152,544Stock
      offering costs
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (147,000
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (147,000
                                    )Common
      Shares for assets
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    5,000
                                    
                                    
                                    
                                    5
                                    
                                    
                                    
                                    24,120
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    24,125Fair
      value of warrants granted
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    3,012,052
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    3,012,052Net
      Loss
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (8,616,973
                                    )
                                    
                                    
                                    (8,616,973
                                    )Balance,
      June 30, 2008
                                    
                                    
                                    524,044
                                    
                                    
                                    
                                    524
                                    
                                    
                                    
                                    13,212,398
                                    
                                    
                                    
                                    13,212
                                    
                                    
                                    
                                    14,463,184
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (13,603,484
                                    )
                                    
                                    
                                    873,436Common
      Shares issuedfor
      services (unaudited)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    758,059
                                    
                                    
                                    
                                    758
                                    
                                    
                                    
                                    1,402,110
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,402,868Common
      Shares issued for cash(unaudited)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,114,041
                                    
                                    
                                    
                                    1,115
                                    
                                    
                                    
                                    2,076,670
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,077,785Preferred
      Shares issued for cash(unaudited)
                                    
                                    
                                    275,000
                                    
                                    
                                    
                                    275
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    549,524
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    549,799Fair
      value of warrants granted(unaudited)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,277,011
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,277,011Net
      Loss(unaudited)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (6,688,786
                                    )
                                    
                                    
                                    (6,688,786
                                    )Balance,
      March 31, 2009
                                    
                                    
                                    799,044
                                    
                                    
                                    $
                                    799
                                    
                                    
                                    
                                    15,084,498
                                    
                                    
                                    $
                                    15,085
                                    
                                    
                                    $
                                    20,768,499
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    (20,292,270
                                    )
                                    
                                    $
                                    492,113






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






5




STUDIO
      ONE MEDIA, INC.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF CASH FLOWS(unaudited)For
      the Nine
                                
                                
                                For
      the Nine
                                
                                
                                CumulativeMonths
      Ended
                                
                                
                                Months
      Ended
                                
                                
                                July
      1, 2002 throughMarch
      31, 2009
                                
                                
                                March
      31, 2008
                                
                                
                                March
      31, 2009Cash
      Flows from Operating ActivitiesNet
      Loss
                                
                                $
                                (6,688,786
                                )
                                
                                $
                                (6,010,515
                                )
                                
                                $
                                (20,292,270
                                )Adjustments
      to reconcile to cash fromoperating
      activities:Depreciation
      and amortization
                                
                                
                                64,242
                                
                                
                                
                                26,534
                                
                                
                                
                                118,309Common
      stock issued for services
                                
                                
                                1,402,868
                                
                                
                                
                                2,122,553
                                
                                
                                
                                5,691,505Fair
      value of warrants granted
                                
                                
                                2,277,011
                                
                                
                                
                                2,153,685
                                
                                
                                
                                7,611,332Changes
      in Operating Assets & Liabilities:Accrued
      Interest Receivable
                                
                                
                                (20,157
                                )
                                
                                
                                (18,294
                                )
                                
                                
                                (75,858
                                )Notes
      Receivable
                                
                                
                                354
                                
                                
                                
                                35,159
                                
                                
                                
                                (184,398
                                )Prepaid
      Expenses
                                
                                
                                (57,580
                                )
                                
                                
                                15,888
                                
                                
                                
                                24,098Accounts
      Receivable
                                
                                
                                (1,500
                                )
                                
                                
                                -
                                
                                
                                
                                (1,500
                                )Other
      Current Assets
                                
                                
                                -
                                
                                
                                
                                (30,815
                                )
                                
                                
                                -Deposits
                                
                                
                                10,000
                                
                                
                                
                                (13,230
                                )
                                
                                
                                (19,630
                                )Accounts
      Payable and Accrued  Expenses
                                
                                
                                825,239
                                
                                
                                
                                (127,182
                                )
                                
                                
                                784,200Net
      Cash Used in Operating Activities
                                
                                
                                (2,188,309
                                )
                                
                                
                                (1,846,217
                                )
                                
                                
                                (6,344,212
                                )Cash
      Flows from Investing ActivitiesPurchase
      of Property and Equipment
                                
                                
                                (839,780
                                )
                                
                                
                                (213,574
                                )
                                
                                
                                (1,404,179
                                )Purchase
      of Other Assets
                                
                                
                                (39,307
                                )
                                
                                
                                (62,888
                                )
                                
                                
                                (901,934
                                )Net
      Cash Used in Investing Activities
                                
                                
                                (879,087
                                )
                                
                                
                                (276,462
                                )
                                
                                
                                (2,306,113
                                )Cash
      Flows from Financing ActivitiesIssuance
      of Common Stock
                                
                                
                                2,077,785
                                
                                
                                
                                2,325,000
                                
                                
                                
                                6,295,330Issuance
      of Preferred Stock
                                
                                
                                549,799
                                
                                
                                
                                -
                                
                                
                                
                                549,799Recapitalization
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                1,489,242Repayment
      of Notes Payable
                                
                                
                                (74,385
                                )
                                
                                
                                -
                                
                                
                                
                                (83,044
                                )Stock
      Offering Costs Paid
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (147,000
                                )Issuance
      of Notes Payable
                                
                                
                                168,272
                                
                                
                                
                                5,762
                                
                                
                                
                                591,164Net
      Cash from Financing Activities
                                
                                
                                2,721,471
                                
                                
                                
                                2,330,762
                                
                                
                                
                                8,695,491Net
      Increase (Decrease) in Cash
                                
                                
                                (345,925
                                )
                                
                                
                                208,083
                                
                                
                                
                                45,166Cash,
      Beginning of Period
                                
                                
                                391,109
                                
                                
                                
                                417,236
                                
                                
                                
                                18Cash,
      End of Period
                                
                                $
                                45,184
                                
                                
                                $
                                625,319
                                
                                
                                $
                                45,184Supplemental
      Cash Flow Disclosure:Cash
      Paid For:Interest
      Expense
                                
                                $
                                1,389
                                
                                
                                $
                                2,615
                                
                                
                                $
                                232,231Income
      Taxes
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -Non
      Cash Financing Activities:Common
      stock issued for assets
                                
                                $
                                -
                                
                                
                                $
                                24,125
                                
                                
                                $
                                147,136Equipment
      purchased under capital lease
                                
                                $
                                -
                                
                                
                                $
                                4,028
                                
                                
                                $
                                9,759




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




6
 
 STUDIO
ONE MEDIA, INC.
 NOTES
TO FINANCIAL STATEMENTS
 March
31, 2009 AND JUNE 30, 2008


Note
1: Summary of Significant Accounting Policies
 
 DESCRIPTION
OF BUSINESS, FINANCING AND BASIS OF
 FINANCIAL
STATEMENT PRESENTATION
 
 Studio
One Media, Inc., (the “Company” or “SOMD”) was originally organized in Delaware
on May 12, 1988, as Dimensional Visions Group, Ltd. The name was changed on
January 15, 1998 to Dimensional Visions Incorporated. On February 8, 2006, it
changed its name to Elevation Media, Inc., and on March 28, 2006 the Company’s
name was changed to Studio One Media, Inc., as part of its overall plan to
implement its revised business plan.
 
 Historically,
the Company produced and marketed lithographically printed stereoscopic and
animation print products.  The volume of business was not sufficient
to support the Company's cost structure. Accordingly during April 2002 the
Company ceased its prior operations and was reclassified as a development stage
company.  Since becoming a Development Stage Company in 2002, the Company
has financed its operations primarily through the sale of its
securities.
 
 The
Company recorded its initial revenues during the three months ended December 31,
2008.
 
 Effective
May 6, 2004, the Company's stockholders approved a one-for-sixty Reverse Split
of its common stock ("The Reverse Split"). The effect of the Reverse Split has
been retroactively reflected as of July 1, 2002 in the financial statements. All
references to number of shares issued conversions to common stock, per share
amounts and stock option data have been restated to reflect the effect of the
Reverse Split for the period presented.
 
 In March
2006, the Company entered into an agreement to purchase Studio One
Entertainment, Inc., a private Scottsdale, Arizona based company that is engaged
in the design and manufacturing of a proprietary (patents pending), self
contained interactive audio/video recording and conferencing studio designed for
installation in shopping malls and other high traffic public areas (the “Studio
One Entertainment Agreement”). The Studio One ®studio
will enable the public, for a fee, to record their video and voice images in a
portable state-of-the-art recording studio environment and enter their
performances in music, modeling and other talent related contests.
 
 On April
17, 2007, the Company announced that it had finalized the purchase of Studio One
Entertainment, Inc., (SOE) through an all-stock transaction. The purchase is
pursuant to an agreement entered into by the companies dated March 29, 2006. The
purchase includes the exchange of 7,000,000 restricted common shares of Studio
One Media, Inc. for 100% of the issued and outstanding shares of Studio One
Entertainment, Inc.   The purchase includes all right, title and
interest to Studio One Entertainment's proprietary interactive recording
studios, business plan and intellectual property, including pending patents,
foreign patent rights and federal trademark applications.  Studio One
Entertainment, Inc. will operate as a wholly owned subsidiary of Studio One
Media, Inc.  Accordingly, the financial statements present on a
consolidated basis the operations of SOMD and SOE.
 
 UNAUDITED
INTERIM FINANCIAL INFORMATION
 
 The
accompanying Consolidated Balance Sheet as of March 31, 2009, the Consolidated
Statements of Operations for the three months and nine months ended March 31,
2009 and 2008, and the Consolidated Statements of Cash Flows for the nine months
ended March 31, 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 March
31, 2009, our results of operations for the nine months ended March 31, 2009 and
2008, and our cash flows for the nine months ended March 31, 2009 and 2008. The
results of operations for the nine months ended March 31, 2009 are not
necessarily indicative of the results to be expected for the year ending
June 30, 2009. These unaudited interim Consolidated Financial Statements
should be read in conjunction with the consolidated financial statements and
related notes included in our 2008 Annual Report on Form 10-K filed on September
29, 2008.







7
 
 STUDIO
ONE MEDIA, INC.
 NOTES
TO FINANCIAL STATEMENTS
 March
31, 2009 AND JUNE 30, 2008





Note
1: Summary of Significant Accounting Policies-
continued
  GOING
CONCERN
 
 The
Company has incurred losses since inception of $20,292,270 and has minimal
revenues which raises substantial doubt about its ability to continue as a going
concern. The future of the Company as an operating business will depend on its
ability to (1) obtain sufficient capital contributions and/or financing as may
be required to sustain its operations and (2) ultimately achieve revenues from
its personal recording studio 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.
 
 The
financial statements have been prepared on a going concern basis, which
contemplates the realization and settlement of liabilities and commitments in
the normal course of business. The available funds at March 31, 2009, are not
sufficient to satisfy the present cost structure. Management recognizes that the
Company must obtain additional funding to enable it to continue operations.
Unless the Company is able to secure additional financing it may not be able to
continue as a going concern.
 
 Further,
there can be no assurances, that the Company will secure additional financing.
In the event the Company is not able to secured additional financing or
otherwise accomplish a sale, merger, or other business combination with another
entity, it may cease its operations and/or seek protection under the bankruptcy
laws.
 
 INCOME
TAXES
 
 The
Company accounts for income taxes under the liability method. Deferred tax
assets and liabilities are determined based on differences between the financial
reporting and tax bases of assets and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to
reverse.
 
 LOSS
PER SHARE
 
 Basic and
diluted loss per common share is calculated using the weighted average number of
common shares outstanding during the period. The effects of outstanding options,
warrants and convertible preferred stock are excluded from the computation of
diluted loss per share because they would be anti-dilutive.
 
 USE
OF ESTIMATES
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenue and expenses during the reporting periods.
Actual results could differ from those estimates.
  STOCK-BASED
COMPENSATION
  In
December 2004, the FASB issued FAS No. 123R, “Share-Based Payment.”
This statement is a revision to FAS No. 123, “Accounting for Stock-Based
Compensation,” and it supersedes APB Opinion No. 25, “Accounting for Stock
Issued to Employees,” and amends FAS No. 95, “Statement of Cash Flows.” FAS
No. 123R requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the income statement based on
their fair values.  The Company uses the Black-Scholes pricing model
for determining the fair value of stock based compensation.
 
 Equity
instruments issued to non-employees for goods or services are accounted for at
fair value and are marked to market until service is complete or a performance
commitment date is reached.
 
 IMPAIRMENT
OF LONG-LIVED ASSETS
 
 The
Company continually monitors events and changes in circumstances that could
indicate carrying amounts of long-lived assets may not be recoverable. When such
events or changes in circumstances are present, the Company assesses the
recoverability of long-lived assets by determining whether the carrying value of
such assets will be recovered through undiscounted expected future cash flows.
If the total of the future cash flows is less than the carrying amount of those
assets, the Company recognizes an impairment loss based on the excess of the
carrying amount over the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or the fair value less costs to
sell.









8
 
 STUDIO
ONE MEDIA, INC.
 NOTES
TO FINANCIAL STATEMENTS
 March
31, 2009 AND JUNE 30, 2008




Note
2: Accounts Payable, Accrued Expenses
 
 A summary
of Accounts Payable and Accrued Expenses Follows:
 
 March,
      31, 2009
                          
                          
                          June
      30,2008Accounts Payable
                          
                          $
                          529,402
                          
                          
                          $
                          180,000Outstanding Manufacturing Orders
                          
                          
                          623,731
                          
                          
                          
                          127,921Accrued Interest
                          
                          
                          29,481
                          
                          
                          
                          35,438Other Accrued Expenses
                          
                          
                          984
                          
                          
                          
                          15,000Total
                          
                          $
                          1,183,598
                          
                          
                          $
                          358,359
  Note
3: Short-Term Borrowings
 
 During
July of 2001 the Company borrowed $25,000 and issued a 14% convertible debenture
for $25,000 due in October 2001.  The debenture is in default under
the terms of the debenture agreement.  The Company only recently
obtained a current address for the debenture holder who has never made a demand
on the Company or given notice of intent to convert.  The Company
continues to accrue interest on this obligation.  The debenture is
convertible into 6,000 shares of the Company's common stock at $7.50 per share
after giving effect for the 1 to 60 share reverse split that occurred in May
2004.
 
 As of
June 30, 2008, the Company owed $108,319 for funds borrowed from related parties
including accrued interest of $11,053. The loans are unsecured, accrue interest
at 10% per annum and are due upon demand.   At March 31, 2009 the
amount owed to related parties was $201,591 including accrued
interest.
 
 During
2008, the Company purchased equipment under a capital lease. The lease is
secured by the equipment and due in monthly payments of $808.
 
 A summary
of Short Term Borrowings follows:
 
 Rates
                                        
                                        
                                        
                                        3-31-09
                                        
                                        
                                        
                                        6-30-08Related
      Party Loan
                                        
                                        
                                        10%
                                        
                                        
                                        $
                                        201,591
                                        
                                        
                                        $
                                        108,319Convertible
      Debenture
                                        
                                        
                                        14%
                                        
                                        
                                        
                                        50,000
                                        
                                        
                                        
                                        42,049Equipment
      Lease
                                        
                                        
                                        12%
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        7,336Total
                                        
                                        
                                        
                                        
                                        
                                        $
                                        251,591
                                        
                                        
                                        $
                                        157,704
 
 Note
4: Commitments and Contingencies
 
 There are
no legal proceedings, which the Company believes will have a material adverse
effect on its financial position.
 
 The
Company has not declared dividends on Series A or B Convertible Preferred Stock.
The cumulative dividends in arrears through June 30, 2008 were approximately
$158,625.
 
 The
Company leases certain office facilities pursuant to a one-year lease that
commenced February 2006, for approximately 5,400 square feet of office space
located in Scottsdale, Arizona.  The lease was extended for an
additional year ending January 31, 2007 and subsequently extended to August 31,
2008.   On June 15, 2008, the Company expanded into and also occupies
approximately 5,400 square feet adjoining the original
premises.  Under the terms of the extended, expanded lease, the
Company occupies the premises on a month-to-month basis.  The total
lease expense is $12,000 per month, payable in cash and common stock of the
Company
 
 In
anticipation of implementation of its business plan, the Company has also leased
an additional 9,400 feet of office space in another building located in
Scottsdale, Arizona, at a monthly cost of $12,225.   The Company
has not yet occupied this space.







9
 
 STUDIO
ONE MEDIA, INC.
 NOTES
TO FINANCIAL STATEMENTS
 March
31, 2009 AND JUNE 30, 2008


Note
5: Common Stock
 
 During
the nine months ended March 31, 2009, the Company issued 1,114,041 common shares
for $2,077,785 in cash  and  758,059 shares of the Company’s
common stock for consulting services rendered to the Company valued at
$1,402,868.
 
 Note
6: Preferred Stock
 
 The
Company has authorized 10,000,000 shares of $.001 par value per share Preferred
Stock, of which the following were issued outstanding:
 
 Allocated
                              
                              
                              OutstandingSeries
      A Preferred
                              
                              
                              100,000
                              
                              
                              
                              15,500Series
      A-1 Preferred
                              
                              
                              1,000,000
                              
                              
                              
                              275,000Series
      B Preferred
                              
                              
                              200,000
                              
                              
                              
                              3,500Series
      C Preferred
                              
                              
                              1,000,000
                              
                              
                              
                              13,404Series
      D Preferred
                              
                              
                              375,000
                              
                              
                              
                              130,000Series
      E Preferred
                              
                              
                              375,000
                              
                              
                              
                              275,000Series
      P Preferred
                              
                              
                              600,000
                              
                              
                              
                              86,640Total
      Preferred Stock
                              
                              
                              3,700,000
                              
                              
                              
                              799,044
 
 The
preferred shares are convertible into 564,814 shares of common
stock.
 
 The
Company's Series A Convertible 5% Preferred Stock ("Series A Preferred"),
100,000 shares authorized, is convertible into common stock at the rate of .027
share of common stock for each share of the Series A Preferred. Dividends from
date of issue, are payable from retained earnings, and have been accumulated on
June 30 each year, but have not been declared or paid.
 
 The
Company's Series A-1 Convertible 6% Preferred Stock ("Series A Preferred"),
1,000,000 shares authorized, is convertible into common stock at the rate of 2
shares of common stock for each share of the Series A Preferred. Dividends from
date of issue, are payable from retained earnings, and have been accumulated on
June 30 each year, but have not been declared or paid.
 
 The
Company's Series B Convertible 8% Preferred Stock ("Series B Preferred") is
convertible at the rate of .067 share of common stock for each share of Series B
Preferred. Dividends from date of issue are payable on June 30 from retained
earnings at the rate of 8% per annum and have not been declared or
paid.
 
 The
Company's Series C Convertible Preferred Stock ("Series C Preferred") is
convertible at a rate of .007 share of common stock per share of Series C
Preferred.
 
 The
Company's Series D Convertible Preferred Stock ("Series D Preferred") is
convertible at a rate of .034 share of Common stock per share of Series D
Preferred.
 
 The
Company's Series E Convertible Preferred Stock ("Series E Preferred") is
convertible at a rate of .034 share of Common stock per share of Series E
Preferred.
 
 The
Company's Series P Convertible Preferred Stock ("Series P Preferred") is
convertible at a rate of .007 share of common stock for each share of Series P
Preferred.







10
 
 STUDIO
ONE MEDIA, INC.
 NOTES
TO FINANCIAL STATEMENTS
 March
31, 2009 AND JUNE 30, 2008




Note
7: Stock Option Plan and Equity Incentive Plan


On
November 15, 1999, the Board of Directors of the Company adopted the 1999 Stock
Option Plan (the "1999 Plan"). This plan was approved by a majority of our
stockholders at our January 28, 2000, stockholders' meeting. The purpose of the
1999 Plan is to advance the interests of the Company by encouraging and enabling
acquisition of a financial interest in the Company by its officers and other key
individuals. The 1999 Plan is intended to aid the Company in attracting and
retaining key employees, to stimulate the efforts of such individuals and to
strengthen their desire to remain with the Company. A maximum of 1,500,000
shares of the Company's common stock are available to be issued under the 1999
Plan. The option exercise price will be 100% of the fair market value of the
Company's common stock on the date the option is granted and will be exercisable
for a period not to exceed 10 years from the date of grant. As of December 31,
2008, no stock options have been granted under this plan.
 
 On
October 13, 2006 the Company adopted an employee stock incentive plan setting
aside 100,000 shares of the Company’s common stock for issuance to officers,
employees, directors and consultants for services rendered or to be rendered.
The proposed maximum offering price of such shares is $1.00 per share.  A
compensation committee appointed by the Board of Directors who shall have the
right to grant awards or stock options administers the plan. On October 13,
2006, the Company filed a Registration on Form S-8 with the Securities Exchange
Commission covering shares provided by this plan. As of December 31, 2008, all
of the shares authorized by the 2006 Stock Incentive Plan have been
issued.  The value of shares issued pursuant to this Plan was computed
using the Black-Scholes model as prescribed by FAS No. 123R.
 
 During
the year ended June 30, 2008, the estimated value of the compensatory common
stock purchase warrants granted to non-employees in exchange for services and
financing expenses was determined using the Black-Scholes pricing model and the
following assumptions: expected term of 2 years, a risk free interest rate of
2.35% to 5.35%, a dividend yield of 0% and volatility of 26% to 70%. The amount
of the expense charged to operations for compensatory options and warrants
granted in exchange for services was $3,012,052.
 
 During
the nine months ended March 31, 2009, the estimated value of the compensatory
common stock purchase warrants granted to non-employees in exchange for services
and financing expenses was determined using the Black-Scholes pricing model and
the following assumptions: expected term of 1 to 2 years, a risk free interest
rate of 1.35% to 2.35%, a dividend yield of 0% and volatility of 55% to 92%. The
amount of the expense charged to operations for compensatory options and
warrants granted in exchange for services was $2,277,011.
 
 The
following table summarizes the changes in options outstanding and the related
prices for the shares of the Company’s common stock issued to employees and
non-employees of the Company. These warrants were granted in lieu of cash
compensation for services performed.
  Number
      of Shares
                            
                            
                            Weighted
      Average Exercise PriceOutstanding
      as of July 1, 2007
                            
                            
                            850,163
                            
                            
                            $
                            3.18Options
      Granted
                            
                            
                            1,677,706
                            
                            
                            
                            3.83Exercised
                            
                            
                            (54,507
                            )
                            
                            
                            2.91Cancelled/forfeited
                            
                            
                            -
                            
                            
                            
                            0.00Outstanding
      as of June 30, 2008
                            
                            
                            2,473,362
                            
                            
                            $
                            3.63Options
      Granted
                            
                            
                            1,498,721
                            
                            
                            
                            2.57Exercised
                            
                            
                            (244,999)
                            
                            
                            
                            1.24Cancelled/forfeited
                            
                            
                            (454,996
                            )
                            
                            
                            2.90Outstanding
      at March 31, 2009
                            
                            
                            3,272,088
                            
                            
                            $
                            3.14








11
 
 STUDIO
ONE MEDIA, INC.
 NOTES
TO FINANCIAL STATEMENTS
 March
31, 2009 AND JUNE 30, 2008





Note 7:
Stock Option Plan and Equity Incentive Plan-
continued




The
following table summarizes the warrants outstanding and the related exercise
prices for the shares of the Company’s common stock issued to non-employees of
the Company.
 
 Warrants
      Outstanding
                                          
                                          
                                          Warrants
      ExercisableFiscal
      Year Issued
                                          
                                          Exercise
      Price
                                          
                                          
                                          Number
      Shares Outstanding
                                          
                                          
                                          Weighted
      Average Contractual Life (Years)
                                          
                                          
                                          Number
      Exercisable
                                          
                                          
                                          Weighted
      Average Exercise Price2007
                                          
                                          $
                                          3.62
                                          
                                          
                                          
                                          355,167
                                          
                                          
                                          
                                          0.00
                                          
                                          
                                          
                                          355,167
                                          
                                          
                                          $
                                          3.622008
                                          
                                          $
                                          3.63
                                          
                                          
                                          
                                          1,472,443
                                          
                                          
                                          
                                          1.00
                                          
                                          
                                          
                                          1,472,443
                                          
                                          
                                          $
                                          3.862009
                                          
                                          $
                                          2.52
                                          
                                          
                                          
                                          1,444,478
                                          
                                          
                                          
                                          1.50
                                          
                                          
                                          
                                          1,444,478
                                          
                                          
                                          $
                                          2.53Total
                                          
                                          
                                          
                                          
                                          
                                          
                                          3,272,088
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          3,272,088
                                          
                                          
                                          $
                                          3.14
 
 Note
8: Income Taxes
  SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. In the Company’s
opinion, it is uncertain whether they will generate sufficient taxable income in
the future to fully utilize the net deferred tax asset. Accordingly, a valuation
allowance equal to the deferred tax asset has been recorded. The total deferred
tax asset is calculated by multiplying a 35% marginal tax rate by the cumulative
NOL. The total valuation allowance is equal to the total deferred tax
asset.
 
 The tax
effects of significant items comprising the Company's net deferred taxes as of
March 31, 2009 and June 30, 2008 were as follows:
  3-31-09
                            
                            
                            
                            6-30-08Deferred
      tax assets:Intangible assets
                            
                            $
                            251,944
                            
                            
                            $
                            251,944Net operating loss carry forwards
                            
                            
                            10,168,448
                            
                            
                            
                            8,994,974$
                            10,420,392
                            
                            
                            $
                            9,246,918Net
      deferred tax asset
                            
                            $
                            10,420,392
                            
                            
                            $
                            9,246,918Valuation
      allowance
                            
                            
                            (10,420,392
                            )
                            
                            
                            (9,246,918
                            )Net
      deferred tax asset reported
                            
                            $
                            --
                            
                            
                            $
                            --
  The
income tax provision differs from the amount of income tax determined by
applying the U.S. federal and state income tax rates of 35% to pretax income
from continuing operations for the nine months ended March 31, 2009 and the year
ended June 30, 2008 due to the following:
 
 3-31-09
                        
                        
                        
                        6-30-08Book
      loss from operations
                        
                        $
                        (2,608,627
                        )
                        
                        $
                        (
      3,015,941
                        )Options
      and warrants issued for services
                        
                        
                        888,034
                        
                        
                        
                        1,054,218Common
      stock issued for services
                        
                        
                        547,119
                        
                        
                        
                        978,249Valuation
      allowance
                        
                        
                        1,173,474
                        
                        
                        
                        983,474$
                        --
                        
                        
                        $
                        --
  The
federal net operating loss carry forwards of approximately $26,073,000 expire in
various years through 2029. In addition the Company has state carry forwards of
approximately $13,150,000.
 
 The
Company has had numerous transactions in its common stock.  Such
transactions may have resulted in a change in the Company's ownership, as
defined in the Internal Revenue Code Section 382.  Such change may result
in an annual limitation on the amount of the Company's taxable income that may
be offset with its net operating loss carry forwards.  The Company has not
evaluated the impact of Section 382, if any, on its ability to utilize its net
operating loss carry forwards in future years.





12
 
 STUDIO
ONE MEDIA, INC.
 NOTES
TO FINANCIAL STATEMENTS
 March
31, 2009 AND JUNE 30, 2008





Note
 9.  The Effect of Recent Account Standards





In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in FASB Statement of Financial Accounting
Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. We are not required
to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have
material effect on our consolidated financial positionand results of
operations if adopted.
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial
Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS
No. 163 clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement of premium revenue and
claims liabilities. This statement also requires expanded disclosures about
financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal
years beginning on or after December 15, 2008, and interim periods within those
years. SFAS No. 163 has no effect on the Company’s financial position,
statements of operations, or cash flows at this time.
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally
Accepted Accounting Principles”. SFAS No. 162 sets forth
the level of authority to a given accounting pronouncement or document by
category. Where there might be conflicting guidance between two categories, the
more authoritative category will prevail. SFAS No. 162 will become effective 60
days after the SEC approves the PCAOB’s amendments to AU Section 411 of the
AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s
financial position, statements of operations, or cash flows at this
time.
 
 Note
 10.  Restated Financial Statements
 
 The
Company has restated its balance sheet as of June 30, 2008. The restatement was
to correct the presentation of Studio One Entertainment, Inc. (SOE) as a
recapitalization.The
acquisition was originally recorded as a purchase. However it was determined
that since the shareholders of SOE became the controlling shareholders of the
Company that the transaction should be accounted for as a reverse
merger.  Accordingly, the historical financial statements of SOE are
presented as those of the combined company and no goodwill or other intangible
assets are recorded in the transaction. A comparison of the summarized financial
statements as revised and as originally presented is a follows:
 
 June
      30,
                              
                              
                              June
      30,2008
                              
                              
                              2008(original)
                              
                              
                              (restated)ASSETSTotal
      Current Assets
                              
                              $
                              673,715
                              
                              
                              $
                              673,715Property
      and Equipment, Net
                              
                              
                              548,070
                              
                              
                              
                              548,070Other
      AssetsDeposits
                              
                              
                              29,630
                              
                              
                              
                              29,630Intangible
      Assets, net
                              
                              
                              857,923
                              
                              
                              
                              138,084Total
      Other Assets
                              
                              
                              887,553
                              
                              
                              
                              167,714Total
      Assets
                              
                              $
                              2,109,338
                              
                              
                              $
                              1,389,499LIABILITIES AND STOCKHOLDERS'
      EQUITYTotal
      Liabilities
                              
                              $
                              516,063
                              
                              
                              $
                              516,063Stockholders'
      EquityPreferred
      Stock, authorized 10,000,000 shares, par value $0.001;issued
      and outstanding is 524,544 shares at June 30,2008
                              
                              
                              524
                              
                              
                              
                              524Common
      Stock, authorized 100,000,000 shares, par value $0.001;issued
      and outstanding is 13,212,398 shares atJune
      30, 2008
                              
                              
                              13,212
                              
                              
                              
                              13,212Additional
      Paid in Capital
                              
                              
                              40,672,472
                              
                              
                              
                              14,463,184Accumulated
      Deficit
                              
                              
                              (39,092,933
                              )
                              
                              
                              (13,603,484
                              )Total
      Stockholders' Equity
                              
                              
                              1,593,275
                              
                              
                              
                              873,436Total
      Liabilities and Stockholders' Equity
                              
                              $
                              2,109,338
                              
                              
                              $
                              1,389,499





13




ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  The
discussion and financial statements contained herein are for the nine months
ended March 31, 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:
 
 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.
 
 These
statements include, among other things, statements concerning our expectations
regarding:
 
 ·
              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 research and development, 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.
  as
well as other statements regarding our future operations, financial condition
and prospects and business strategies. These forward-looking statements are
subject to certain risks and uncertainties that could cause our actual results
to differ materially from those reflected in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this Report, and in particular, the risks
discussed under the heading “Risk Factors” in Part II, Item 1A of this
Report and those discussed in other documents we file with the Securities and
Exchange Commission. We undertake no obligation to evise
or publicly release the results of any revision to these forward-looking
statements. Given these risks and uncertainties, readers are cautioned not to
place undue reliance on such forward-looking statements.
   14
  ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-
continued
  FORWARD-LOOKING
AND CAUTIONARY STATEMENTS-
continued
  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 Media, Inc., (the “Company” or “SOMD”) was originally organized in Delaware
on May 12, 1988, as Dimensional Visions Group, Ltd.  Historically, the
Company produced and marketed lithographically printed stereoscopic and
animation print products.  The Company ceased all marketing and sales
activity during the last quarter of 2002. Subsequently, we have explored
possible new businesses and also a sale, merger, or other business combination
with another entity.
 
 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®.
 
 The
acquisition of SO Entertainment was completed on April 17, 2007, with the
exchange of 7 million shares of the Company’s Common Stock for an equal number
of shares of SO Entertainment common stock constituting 100% of the issued and
outstanding shares of SO Entertainment.  SO Entertainment operates as
a wholly-owned subsidiary.
 
 The
Company's office and principal place of business is located at 7650 E. Evans
Rd., Suite C, Scottsdale, Arizona 85260, and its telephone number is (480)
556-9303.
 
 OVERVIEW
 
 Studio
One is a leading edge entertainment company utilizing start of the art
technology.  Over the past several years, Studio One has developed
MyStudio, a self contained, high definition (HD) interactive audio/video
recording studio designed for installation in shopping malls and other
pedestrian high traffic areas.  MyStudio offers groundbreaking HD
audio and video quality from a proprietary (22 patents pending), stand alone
recording studio.  MyStudio and its accompanying website, www.MyStudio.net,
uniquely incorporate the best elements of some of the world’s leading internet
and entertainment properties: the video sharing of YouTube, the social
networking capabilities of MySpace and Facebook and talent based contests made
popular by American Idol, in a single entertainment venue.  MyStudio
offers a “bricks and clicks” combination of hardware and software drivers which
is unique in the entertainment and internet industries.
 
 The
MyStudio facility has a hexagon-shaped footprint and, at its widest points, is
10 ft by 10 ft.  Its height is 8 ft.  Its size permits
installation as a self-contained kiosk in a wide variety of possible
locations.  Its physical appearance and exterior features have been
designed to attract attention with a high technology look and project a feeling
of quality and value.  The exterior of the studio contains eight 37”
LCD flat screen monitors that are used to promote MyStudio and for advertising
by third parties as a revenue generator.  The Company plans to own,
install and operate the MyStudio units.
  The
studios enable the public, for a $20 fee, to record up to a 5 minute video in a
stand alone, state-of-the-art recording studio and enter their MyStudio
performances in music, modeling, comedy and other talent related
contests.  MyStudio can also be used to record video resumes, dating
profiles and personal messages.  The Company believes its MyStudio
methods, processes and business model are proprietary and a unique opportunity
in the entertainment industry.
 
 Users can
personalize their videos by choosing from over a thousand backdrops, which
appear through the use of Hollywood green-screen technology and thousands of
pre-licensed karaoke songs. The self-contained MyStudio recording studios can be
used by amateurs and professionals alike to record original compositions or
popular songs. Each MyStudio contains 5 plug-in ports for electrical instruments
such as guitars, DJ turntables, bass, drums, pianos or violins. The studios
provide professional recording studio-quality sound from their specially
engineered acoustic design, combined with a proprietary audio signal sequencing
process.  Minutes after creating a video, users can upload their
videos and view them online at www.mystudio.net,
share them with their friends and family, and view them to their cell
phone.
 
 The
Company installed and opened its first MyStudio in Scottsdale Fashion Square,
Scottsdale, Arizona, on September 29, 2008.  It has four more units in
production and subject to adequate financing, plans to install those units in
strategic locations in the second and third quarters of calendar year 2009.
Following the launch of the initial 5 studios, but subject to the ability to
raise additional capital for expansion, the Company plans to install additional
studios at other locations in the U.S., before it expands
internationally.
   15
  ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS-
continued
  OVERVIEW -
continued
  As a
companion feature of the studio, Studio One has developed the MyStudio website.
At www.mystudio.net,
users can become part of a unique experience by creating their own MyStudio
profile pages with their videos, music, photos and personal information. They an also
share their video with their friends as well as view publically posted videos
created by others. Users can also print high quality pictures directly from
their video on MyStudio.net.





The
MyStudio website also incorporates the video posting and sharing features of
YouTube.  This allows daily users to view new videos in multiple
categories including music and modeling to comedy and dating.  The
MyStudio website offers videos with a significantly larger sized video playback
and features higher audio and video resolution than many leading video sharing
websites.





MyStudio
registered members have the opportunity to enter their videos into monthly
contests, including entertainment industry sponsored music, modeling and comedy
contests.  In addition, members have the option of sending their
videos directly to hundreds of casting agencies and talent scouts
worldwide.





COMPANY
HISTORY





FISCAL
YEARS 2003-2008





Dimensional
Visions, Inc., the predecessor to Studio One, discontinued all operations in
2002 and became a shell company.  Although Studio One carries forward
the balance sheet history of Dimensional Visions, it is otherwise an entirely
new operating company.





On
September 8, 2003, Preston J. Shea was elected as a director, President and
Secretary of the company to evaluate new opportunities for the Company, such as
a sale, merger, or other type of business combination.  On September
9, 2003, all directors except Preston Shea resigned, leaving him as the sole
officer and director of the Company.  On May 6, 2004, the Company was
restructured and affected a 1 for 60 reverse stock split.  On May 18,
2004, the Company changed its trading symbol from DVUI to DVSO.  On
March 28, 2006, the name of the Company was changed to Studio One Media, Inc.,
and its trading symbol was changed from DVSO to SOMD.





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




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





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





During
fiscal year 2008 the Company devoted its efforts and resources to completing the
research and development program for the MyStudio recording studio and in
developing its companion website.  It also contracted for the
manufacture of the first series of studios for installation in
malls.





FISCAL
YEAR 2009





COMMENCEMENT
OF OPERATIONS





The
Company launched its first MyStudio®
in Scottsdale Fashion Square mall
in Scottsdale, Arizona on September 29, 2008. The studio has
enjoyed very high customer satisfaction, a high ratio of repeat
customers and has operated with negligible downtime.  Despite the
significant slowdown in mall traffic and consumer spending which began in
October, the Company recognized sales growth during the quarter ending March 31,
2009.





The
Company’s business plan calls for the establishment of regular events and
contests to drive traffic to its studios and this assumption was confirmed by a
marked increase in studio traffic when contests and promotions have been
offered. In late December, the Company finalized two important multiyear
partnerships with Mark Burnett Productions for reality TV casting and The GRAMMY
Foundation to do auditions for various GRAMMY Foundation programs. The Company
expects to continue to align itself nd enter
into partnerships with other high profile entertainment companies, so it can
offer consumers an ongoing variety of contests to ensure steady studio
traffic.






16





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




COMMENCEMENT OF
OPERATIONS -
continued




The
roll-out of four additional studios planned in the second quarter was
delayed due to the precipitous collapse of the nation’s financial markets
forcing the Company to prematurely terminate its then outstanding equity
offering, the proceeds of which were intended to fund the completion,
installation and marketing of the studios. The Company has since reduced
its burn rate substantially and continues to raise capital through private
placements by accredited investors. Based on current market conditions the
Company expects to install the four studios in the second and third quarters of
calendar 2009.  Additional studio installations will follow based on
the timing of the Company's ability to raise capital.




RECENT
DEVELOPMENTS





During
the first quarter of fiscal year 2009, the Company has transitioned from a
Development Stage Company to an operating entity.




On July
1, 2008, the Company entered into a multi-year licensing agreement with EMI
Music Publishing, the world’s leading music publisher, for consumer use of
licensed music in MyStudio®
videos.  The agreement gives the Company and users of MyStudio access
to EMI’s vast catalog of music spanning thousands of compositions by leading
songwriters and recording artists and allows consumers to create personalized
music videos, as well as videos for modeling, comedy, dating, resume, auditions
and personal messages, and post them online for public viewing.




On
September 25, 2008, as it prepared to launch its first MyStudio video recording
studio in Scottsdale, the Company announced a partnership with famed modeling
agency L.A. Models to create an exclusive modeling contest giving users the
opportunity to participate in a nationwide search that could launch a modeling
career.





On
September 29, 2008, the Company officially launched its first MyStudio video
recording studio at Scottsdale Fashion Square Mall.  Scottsdale
Fashion Square is the premier luxury and fashion regional shopping center in
Arizona, with approximately 2 million square feet of retail space, and is among
the largest malls in the country. MyStudio is located in the heart of the mall
in the Palm Court.   Scottsdale Fashion Square is owned by Macerich,
one of the country's largest owners, operators and developers of major retail
properties.





Additional
studio installations will follow based on the Company's ability to raise
capital. Each MyStudio is expected to generate revenue of $25,000 to
$50,000 per month when multiple studios are in operation.





On
November 6, 2008, the Company announced the formation of an Advisory Board
consisting of leaders in the entertainment, finance, media and technology
industries. The Advisory Board was formed to assist the Company in its overall
corporate development, product roll-out and strategic
relationships.  The current Studio One Advisory Board
includes:





·
            Richard
      Blackstone.  Former Chairman and CEO of Warner/Chappell Music,
      Inc.; former President of Zomba Music
  Publishing.





·
            Ted
      Field.  Chairman and CEO of Radar pictures; media investor and
      major film producer of over 50 feature films; co-founder of Interscope
      Records, and owner of Panavision.





·
            Paul
      Fisher. Modeling agent whose past clients include: Naomi Campbell,
      Stephanie Seymour, Carrie Otis, Djimon Hounsou, Brooke Burke, Brooke
      Burns, Kimora Lee Simmons, Janice Dickenson, Carol Alt and Nicky
      Hilton.





·
            Allan
      Kaplan.  Technology venture capitalist; Director of Clearview
      Capital Partners; co-founder of Entera, Primenet Services and Limelight
      Networks.





·
            Andrew
      Knight.  Director of News Corp. and Reuters, former chairman of
      News International, PLC and former editor-in-chief of The Economist.
      Currently serves as Chairman and Director, Rothschild Family Investment
      Trust.





·
            Paul
      Oreffice.  Former chairman, president and CEO of the Dow
      Chemical Company; former director of the Coca-Cola Company, Morgan Stanley
      and Cigna Corporation.




On
December 18, 2008, the Company entered into a multiyear licensing and
sponsorship agreement with The GRAMMY Foundation®, a
charity founded by The Recording Academy® in 1989.
Pursuant to the agreement, Studio One's MyStudio®
recording studios and its accompanying website, www.mystudio.net, will be 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. The Company completed its first
auditions for GRAMMY Camp on March 31, 2009.




On
December 22, 2008, the Company entered into a multiyear agreement with Mark
Burnett Productions, to use MyStudios to augment the casting of Mark Burnett
reality TV shows. The agreement also provides Mark Burnett the exclusive right
to produce reality based TV programs with MyStudio content.  Mark
Burnett Productions is responsible for some of TV’s biggest reality hits ncluding
“Survivor,” Donald Trump’s “the Apprentice,” “Are You Smarter Than a Fifth
Grader” and Sean “Diddy” Combs “Starmaker,” and “RockBand.” Subsequent to the
quarter ending March 31, 2009, the Company commenced its first audition for Mark
Burnett’s “Are You Smarter Than a Fifth Grader” on April 27, 2009.






17




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




COMPETITIVE
ADVANTAGES





The
Company knows of no direct competitors.  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.





TECHNOLOGICAL
ADVANTAGES




Studio
One’s recording studio contains proprietary technology and other intellectual
property which, in part, is the subject of 22 pending foreign and domestic
patents and 8 trademark applications (for which we have received 4 Notices of
Allowance from the USPTO). The Company believes that its multi-year product
development and engineering efforts have resulted in a multitude of
technological advantages over any other stand alone video recording studio in
operation.  The use of high definition recording, keying and audio
processing ensures the finest quality audio and video available today and in the
near future.





FINANCIAL
IMPACT





The
Company believes that each MyStudio can generate $300,000 - $600,000 in annual
revenue with five or more studios in operation in major cities. There are
multiple potential revenue streams for the company in addition to the revenue
generated from the studios, including revenues for advertising on the external
monitors located on each studio and on its website.





PATENTS,
TRADEMARKS AND PROPRIETARY PROTECTION





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





The
Company has embarked on an aggressive intellectual property program including
the filing of 22 pending foreign and domestic patent applications and 8
trademark applications (for which we have received 4 Notices of Allowance) with
the U.S. Patent and Trademark Office all designed to protect what the Company
believes is innovative and proprietary technology and applications derived from
the extensive research and development program undertaken by its subsidiary, SO
Entertainment.  All persons who were or could be deemed inventors have
assigned all rights under these patent applications to SO
Entertainment.





Historically,
when the Company engages in business transactions involving its technology, it
enters into confidentiality agreements with all persons and entities who or
which may have access to our technology.  However, no assurance can be
given that such agreements, the pending patents, or any patents that may be
issued to the Company will prevent third parties from developing similar or
competitive technology.




EMPLOYEES





As of
March 31, 2009, we employed twenty one full-time personnel including three
executives, twelve technical/engineering persons, one accountant, one
clerical/administrative person, a vice president of business development, a
research specialist and a manufacturing engineer.,.  We expect to seek
additional employees in the next year to handle anticipated potential
growth.





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





FACILITIES





Pursuant
to a lease originally dated January, 2006, we currently occupy approximately
5,400 square feet of office space located at 7650 E. Evans Rd., Suite C,
Scottsdale, Arizona 75260.  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 $12,000 per month, payable in cash, common stock of the Company
and on-studio advertising.





18





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




FACILITIES -
continued




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 not occupied this space and, subsequent to
March 31, 2009, have 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.





RESULTS
OF OPERATIONS





The
Company launched its first MyStudio in Scottsdale Fashion Square mall
in Scottsdale, Arizona on September 29, 2008. The studio has
enjoyed very high customer satisfaction, a high ratio of repeat
customers and has operated with negligible downtime.  Despite the
significant slowdown in mall traffic and consumer spending which began in
October, the Company recognized sales growth during the quarter ending March 31,
2009.





The
Company’s business plan calls for the establishment of regular events and
contests to drive traffic to its studios and this assumption was confirmed by a
marked increase in studio traffic when contests and promotions have been
offered. In late December, the Company finalized two important multiyear
partnerships with Mark Burnett Productions for reality TV casting and The GRAMMY
Foundation to do auditions for various GRAMMY Foundation programs. 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.  In the quarter ended March
31, 2009 the Company hosted a variety of contests and auditions.





Revenues:




Three Months
      Ended
                            
                            
                            
                            Nine Months
      Ended3-31-08
                            
                            
                            3-31-09
                            
                            
                            Increase/(Decrease)
                            
                            
                            
                            3-31-08
                            
                            
                            3-31-09
                            
                            
                            Increase/(Decrease)(unaudited)
                            
                            
                            (unaudited)
                            
                            
                            Amount
                            
                            
                            %
                            
                            
                            
                            (unaudited)
                            
                            
                            (unaudited)
                            
                            
                            Amount
                            
                            
                            %Revenue
                            
                            0
                            
                            
                            56,307
                            
                            
                            56,307
                            
                            
                            100%
                            
                            
                            
                            0.00
                            
                            
                            94,224
                            
                            
                            94,224
                            
                            
                            100%





The
Company opened its first MyStudio on September 29, 2008, and began generating
revenue on October 1, 2008.




It had no
operating revenue for the nine months ended March 31, 2008, as the Company had
ceased all marketing and sales activities during the last quarter of
2002.  Until the previous fiscal quarter, the Company had been a
Development Stage company.  It has had no revenues during the past
three fiscal years, during which time it has expended considerable effort and
funds in developing MyStudio.




The
Company’s business model provides for revenues from three sources:





·
            User
      fees from customers who utilize the entertainment studios to create an
      audio/video recording.·
            Advertising
      revenue from the external monitors located on each MyStudio
      facility.·
            Advertising
      revenue from its website.





The
revenues from each of the first two of these sources are 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.




In some
instances, in order to preserve available cash for other purposes, the Company
engages in barter transactions whereby it exchanges advertising services with
other media outlets, including print, radio and television.




The
Company accounts for advertising barter transactions in accordance with the
Emerging Issues Task Force ("EITF") consensus on Accounting for Advertising
Barter Transactions (EITF 99-17).  EITF 99-17 provides guidance on
recognizing revenues and expenses at fair value of the advertising surrendered
in the transactions, provided the fair value is determinable based on the
entity's own historical practice of receiving cash, marketable securities, or
other consideration that is readily convertible to a known amount of cash for
similar advertising from buyers unrelated to the counterparty in the barter
transactions.




During
the three months and nine months ended March 31, 2009, advertising barter
revenue and expense amounted to $500 and $8,250 respectively.  There
were no similar revenues and expenses for the three months and nine months ended
March 31, 2008.




Cost of Sales:




Three Months
      Ended
                              
                              
                              
                              Nine Months
      Ended3-31-08
                              
                              
                              3-31-09
                              
                              
                              Increase/(Decrease)
                              
                              
                              
                              3-31-08
                              
                              
                              3-31-09
                              
                              
                              Increase/(Decrease)(unaudited)
                              
                              
                              (unaudited)
                              
                              
                              Amount
                              
                              
                              %
                              
                              
                              
                              (unaudited)
                              
                              
                              (unaudited)
                              
                              
                              Amount
                              
                              
                              %Cost
      of Sales
                              
                              0
                              
                              
                              43,387
                              
                              
                              43,387
                              
                              
                              100%
                              
                              
                              
                              0.00
                              
                              
                              91,203
                              
                              
                              91,203
                              
                              
                              100%





19





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




RESULTS OF
OPERATIONS -
continued




Cost of
Sales is comprised of expenses directly related to the operation of the MyStudio
facility and includes studio rent paid to the mall, connectivity charges for
high speed internet access, utilities, advertising, attendant personnel and
related payroll costs, and other expenses associated with a particular
unit.  Depreciation and amortization associated with the operating
unit is accounted for in the Company’s general and administrative
expenses.





General
and Administrative Expenses:




Three Months
      Ended
                                
                                
                                
                                Nine Months
      Ended3-31-08
                                
                                
                                3-31-09
                                
                                
                                Increase/(Decrease)
                                
                                
                                
                                3-31-08
                                
                                
                                3-31-09
                                
                                
                                Increase/(Decrease)(unaudited)
                                
                                
                                (unaudited)
                                
                                
                                Amount
                                
                                
                                %
                                
                                
                                
                                (unaudited)
                                
                                
                                (unaudited)
                                
                                
                                Amount
                                
                                
                                %General
      andAdministrative
      Expenses
                                
                                1,885,006
                                
                                
                                1,093,102
                                
                                
                                (791,904)
                                
                                
                                (42)%
                                
                                
                                
                                5,551,886
                                
                                
                                6,335,188
                                
                                
                                783,301
                                
                                
                                14%


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





General
and administrative expenses decreased in the three-month period ended March 31,
2009 by approximately $791,904 compared to the three months ended March 31,
2008. The general and administrative expenses for the nine month period ended
March 31, 2009 increased by approximately $783,301 compared to the nine months
ended March 31, 2008.





The
overall increase for the nine-month period ended March 31, 2009 in general and
administrative costs is attributable to the development of
MyStudio, including the hiring of personnel, such as software developers,
design engineers, administrative staff, marketing personnel and others,
increasing expenses substantially.  The greatest portion of the
expenses occurred in the first quarter of the current fiscal year as we ramped
up to open our first studio.  Subsequently, for the second and third
quarters of the current fiscal year, we have taken actions to curtail our
general and administrative expenses to address the uncertainties of the current
economic environment.  The non-cash portion of General and
Administrative Expenses for the nine months ended March 31, 2009, was
$3,546,374,
compared to $4,171,051 for the period ended March 31, 2008, a decline of
approximately 15%.  These non-cash charges are attributable to shares
issued to various employees and consultants for services rendered and for
warrants to investors in connection with equity raises during the respective
periods.  We elected to use the Black-Scholes option-pricing model to
determine the fair value of stock option based awards under SFAS 123R,
consistent with that used for pro-forma disclosures under SFAS No. 123, Accounting for Stock-Based
Compensation.





The
decline in general and administrative expenses for the three months ended March
31, 2009, compared to the three months ended March 31, 2008, is attributed to
the fact that the Company contracted its staff and reduced other overhead
commitments during this quarter in an effort to conserve cash and address the
changing economic climate.  Further, during this three-month period,
the Company transitioned from a company involved primarily in research and
development to an operating entity focusing on marketing its products and
services.  Consequently, the nature of general and administrative
expenses changed, enabling a reduction in overall costs.





Research
and Development Expenses:




Three Months
      Ended
                                  
                                  
                                  
                                  Nine Months
      Ended3-31-08
                                  
                                  
                                  3-31-09
                                  
                                  
                                  Increase/(Decrease)
                                  
                                  
                                  
                                  3-31-08
                                  
                                  
                                  3-31-09
                                  
                                  
                                  Increase/(Decrease)(unaudited)
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  Amount
                                  
                                  
                                  %
                                  
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  Amount
                                  
                                  
                                  %Research
      andDevelopment
      Expenses
                                  
                                  173,234
                                  
                                  
                                  37,851
                                  
                                  
                                  (135,383)
                                  
                                  
                                  (78.2)%
                                  
                                  
                                  
                                  475,136
                                  
                                  
                                  356,467
                                  
                                  
                                  (118,669)
                                  
                                  
                                  (25.0)%


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.





MyStudio
is now a developed product and has been introduced to the market
place.  Although the Company has now moved into an operational stage,
with the production, installation and operation of its first studio and others
contemplated in various locations, it will also continue to incur additional
research and development costs in refinement of the MyStudio facility and its
website.  Research & Development costs, however, as a percentage
of overall costs, are expected to decline as the Company rolls-out additional
MyStudio units.





For the
nine months ended March 31, 2009, Research & Development
Expenses decreased by some 25% to $356,467 compared to $475,136 for
the nine months ended March 31, 2008.  For the three months ended
March 31, 2009, Research & Development expenses declined by approximately
78% to $37,851 compared to $173,234 for the three months ended March 31,
2008.  The Company expects such expenses to continue at the current
three-month level for an indefinite period.





20


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




Total
Operating Expenses:




Three Months
      Ended
                                
                                
                                
                                Nine Months
      Ended3-31-08
                                
                                
                                3-31-09
                                
                                
                                Increase/(Decrease)
                                
                                
                                
                                3-31-08
                                
                                
                                3-31-09
                                
                                
                                Increase/(Decrease)(unaudited)
                                
                                
                                (unaudited)
                                
                                
                                Amount
                                
                                
                                %
                                
                                
                                
                                (unaudited)
                                
                                
                                (unaudited)
                                
                                
                                Amount
                                
                                
                                %Total
      Operating Expenses
                                
                                1,130,953
                                
                                
                                2,058,240
                                
                                
                                (927,287)
                                
                                
                                (45)%
                                
                                
                                
                                6,027,023
                                
                                
                                6,691,655
                                
                                
                                664,632
                                
                                
                                11.0%


Overall
operating expenses during the three months ended March 31, 2009, declined by
$927,287, or approximately 45%, compared to the quarter ended March 31,
2008.  This decrease is mostly attributable to the decreased activity
surrounding the completion of the research and development on MyStudio and its
companion website.  The Company also continued reduced its staff and
other commitments during the quarter ended March 31, 2009.  However,
for the three months preceding the launch of its first studio, the Company
incurred marketing and promotion expenses not present in earlier periods and
ramped up its staff in preparation of a more aggressive roll-out of additional
studios.  Consequently, for the nine months ended March 31, 2009,
Total Operating Expenses increased to $6,691,632, compared to $6,027,023 for the
nine months ended March 31, 2008, an increase of approximately
11%.




As
discussed above, we account for advertising barter transactions in accordance
with EITF 99-17 – Accounting for Advertising Barter
Transactions.  Total advertising barter expenses during the three
months and nine months ended March 31, 2009, were $500 and  $8,250
respectively.   There were no similar expenses for the three
months and nine months ended March 31, 2008.





Net
Income/(Loss):




Three Months
      Ended
                                  
                                  
                                  
                                  Nine Months
      Ended3-31-08
                                  
                                  
                                  3-31-09
                                  
                                  
                                  Increase/(Decrease)
                                  
                                  
                                  
                                  3-31-08
                                  
                                  
                                  3-31-09
                                  
                                  
                                  Increase/(Decrease)(unaudited)
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  Amount
                                  
                                  
                                  %
                                  
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  Amount
                                  
                                  
                                  %Net
      Income (Loss)
                                  
                                  (2,053,404)
                                  
                                  
                                  (1,113,258)
                                  
                                  
                                  (940,146)
                                  
                                  
                                  (46)%
                                  
                                  
                                  
                                  (6,010,515)
                                  
                                  
                                  (6,688,786)
                                  
                                  
                                  678,271
                                  
                                  
                                  11.0%


The net
loss for the nine months ended March 31, 2009 was $(6,688,786) which is a 11%%
increase in the loss recorded for the comparable nine months ended March 31,
2008.   However, the net loss for the three months ended March
31, 2009 declined to $(2,053,404), from $(1,113,258) for the three months ended
March 31, 2008, a decline of approximately 46%.





The
Company recorded an interest expense of $25,309 in the nine months ended March
31, 2009 compared to $2,625 in interest expense for the nine months ended March
31, 2008.  The nominal amount of interest expense for the three and
nine month periods ending March 31, 2008, is attributable to the reduction in
outstanding short-term debt in the form of extinguishment and conversion
occurring in the previous two fiscal years.  The increased interest
expense occurring for the three and nine month periods ending March 31, 2009
relates to interest accrued on obligations to a related party.





The
increase in the net loss for the nine months ended March 31, 2009 and the
decrease for the three months ended March 31, 2009, parallels the changes in
general and administrative expenses and research and development costs for the
same periods.





NET
OPERATING LOSSES





We have
accumulated approximately $26,073,000 of federal net operating loss
carryforwards as of March 31, 2009, which the Company believes may be offset
against future taxable income through 2028.  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, 2008 or the nine months
ended March 31, 2009, because the potential tax benefits of the loss
carryforward is offset by valuation allowance of the same amount.





LIQUIDITY
AND CAPITAL RESOURCES




The
Company had minimal revenue collections during the nine months ended March 31,
2009, and none for the nine months ended March 31, 2008.  The Company
has incurred losses since inception of $20,292,270.  At March 31,
2009, the Company has a working capital deficit of $1,028,516, attributable
primarily to outstanding manufacturing orders for additional studios expected to
be delivered in the fourth quarter of the current fiscal year. 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, (b) obtaining
additional financing, and (c) aggressively pursing its plan to launch additional
studios in the current fiscal year.  Subsequent to the quarter ending
March 31, 2009, the Company has raised approximately $200,000 by way of equity
financing and loans and has engaged two investment banking firms on a
non-exclusive basis to raise additional capital for the Company.





21




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




LIQUIDITY AND CAPITAL
RESOURCES-
continued




A key
component of our operating plan impacting our continued existence is the ability
to obtain additional capital through equity and/or debt financing. Subsequent to
2002, when its then operations as Dimensional Visions Incorporated were
discontinued, the Company has met its financial needs primarily through the
sales and issuances of its securities.




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 of the MyStudio kiosks which are expected to be installed in
locations around the country, and to fully implement its marketing
plans.





As of
March 31, 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 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





We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the
specified time periods. As of the end of the period covered by this report,
Preston Shea, our President, and Kenneth Pinckard, our Chief Financial Officer
evaluated the effectiveness of our disclosure controls and procedures pursuant
to Exchange Act Rule 13a-15 to ensure that information required to be disclosed
by us in the reports filed or submitted by us under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, including to ensure that information
required to be disclosed by us in the reports filed or submitted by under the
Exchange Act is accumulated and communicated to our management, including our
principal executive and principal accounting officer, or persons performing
similar functions, as appropriate to allow timely decisions regarding
disclosure.  Based upon their evaluations, Mr. Shea and Mr. Pinckard
concluded that as of June 30, 2008, our disclosure controls and procedures were
effective at the reasonable assurance level due.  There were no
changes in our internal control over financial reporting that occurred
subsequent to the date of this evaluation or during our most recent fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.





(b)           Internal
Control over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the Company. Our internal control system is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles.





22





ITEM
4T.  CONTROLS AND PROCEDURES-
continued




Management
has assessed the effectiveness of the Company’s internal controls over financial
reporting as of March 31, 2009.  In making this assessment, management
used the criteria established in Internal Control – Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).  Based on this evaluation, management has concluded that the
Company’s internal control over financial reporting was ineffective as of March
31, 2009.  The Company has restated its balance sheet as of June 30,
2008.  The Company is implementing additional internal review
procedures to avoid such restatements in the future.





During
the 2008 fiscal year, the Company implemented a new secure accounting system,
separated internal responsibilities for accounting, record keeping, check
writing and reconciliation between different parties within the Company and also
adopted various policies and procedures designed to implement the Integrated
Framework issued by COSO.  These actions constituted changes in the
Company’s internal control over financial reporting that are reasonably likely
to affect the Company’s internal control over financial reporting.





We
regularly review our system of internal control over financial reporting to
ensure we maintain an effective internal control environment.  As we
grow, we will continue to create new processes and controls as well as improve
our existing environment to increase efficiencies.  Improvements may
include such activities as implementing new, more efficient systems,
consolidating activities, and migrating processes.  Except as noted
above, there were no changes in our internal control over financial reporting,
as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our
most recently completed fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our 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 quarterly report.








PART
II - OTHER INFORMATION





ITEM
1. LEGAL PROCEEDINGS




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






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” or “SOMD”) was originally organized in Delaware
on May 12, 1988, as Dimensional Visions Group, Ltd.  Historically, the
Company produced and marketed lithographically printed stereoscopic and
animation print products. The Company ceased all marketing and sales activity
during the last quarter of 2002. Subsequently, we have explored possible new
businesses and also a sale, merger, or other business combination with another
entity.





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





23





ITEM
1A. RISK FACTORS-
continued




History of Operations and Dependence
on Future Developments. -
continued




The
Company opened its first studio in Scottsdale Fashion Square, Scottsdale,
Arizona, on September 29, 2008, and subject to financing, intends to place the
entertainment kiosks in malls across America, as well as expand into other high
traffic locations, theme parks, airport terminals and theaters. Revenues for the
Company are expected to be generated by both services provided by the kiosk, as
well as through web site advertising.





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





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




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





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 or debt markets periodically to obtain the funds we need to support our
operations and continued growth.  There is no assurance that the
Company will be able to obtain additional funding when needed, or that such
funding, if available, can be obtained on terms acceptable to the Company.
 If we require, but are unable to obtain, additional financing in the
future on acceptable terms, or at all, we will not be able to continue our
business strategy, respond to changing business or economic conditions,
withstand adverse operating results or compete effectively.  If the
Company cannot obtain needed funds, the Company may be forced to curtail, in
whole or in part, or cease its activities altogether.  When additional
shares are issued to obtain financing, current shareholders will suffer a
dilutive effect on their percentage of stock ownership in the Company.





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





Lack
of Diversification.




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





Competition.





The
Company knows of no competitors.  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.






24




ITEM
1A. RISK FACTORS -
continued




Competition. -
continued




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.





Performance
- Market Acceptance.




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




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 22 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 8 trademark applications and have received Notices of Allowance on 4 of
those applications.  Effective protection may not be available for our
service marks.  Although we plan to continue to register our service
marks in the United States and in countries in which we do business or expect to
do business, we cannot assure you that we will be able to secure significant
protection for these marks.  Our competitors, if any exist, or others
may adopt product or service names similar to those used by the Company, thereby
impeding our ability to build brand identity and possibly leading to client
confusion.  If circumstances make it impossible to adequately protect
the name and brand, it could seriously harm our business.





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




Economic
Downturn.





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






25




ITEM
1A. RISK FACTORS-
continued




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.





Exposure
to Product Liability Lawsuits.




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




Dependency
on Key Suppliers and Product Availability.




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




Dependency
on Long Supply Chains.




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




Fluctuations
in Cost of Raw Materials.




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





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.






26


ITEM
1A. RISK FACTORS -
continued




Terms
of Subsequent Financing.





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





Rapid
Technological Change.





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





Effect
of Fluctuations in Operations on Price of Common Stock.





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





●
            ability
      to commercialize 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;●
            general
      economic conditions and economic conditions specific to the entertainment
      industry; and●
            the
      ability to maintain a product margin on sales, given the early stage of
      our market for our products.





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




Our
Common Stock is Subject to Penny Stock Regulations.





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





Uncertainty
as a Going Concern.




Our
future existence remains uncertain and the report of our auditors on our June
30, 2008 financial statements contains a “going concern”
qualification.  The report of the independent auditors on our
financial statements for the year ended June 30, 2008, includes an explanatory
paragraph relating to our ability to continue as a going concern.  We
have suffered substantial losses from operations, require additional financing,
and have not yet brought MyStudio to market.  Ultimately we need to
generate additional revenues and attain profitable operations.  These
factors raise substantial doubt about our ability to continue as a going
concern.  There can be no assurance
that we will be able to develop commercially viable products or an effective
marketing system.  Even if we are able to develop commercially viable
products, there is no assurance that we will be able to attain profitable
operations.






27


ITEM
1A. RISK FACTORS -
continued




Dilution;
Dilutive Effect of Future Transactions.





As of
March 31, 2009, the Company has 15,084,498 shares of common stock, $0.001 par
value, issued and outstanding.  The Company contemplates issuing a
maximum of 1,000,000 shares of common stock pursuant to a Non-Executive Employee
Stock Incentive Plan approved by the Board on August 28, 2007, and further
shares to certain of its management, directors, officers, employees and
consultants in the immediate future.  The Company also has 799,044
shares of various classes of Convertible Preferred Stock outstanding, which can
be converted to 564,814 shares of common stock.  In addition, the
Company has warrants outstanding that would permit, if exercised, the issuance
of 3,272,088 additional shares of common stock at an average exercise price of
$3.14.  The issuance of additional shares by the Company will result
in a further dilution of the Company, which could be significant; meaning your
percentage ownership of any such merged entity will be significantly less than
your percentage ownership of the Company.  If the Company issues
additional shares either outright or through any future options or warrants
programs or requires additional financing, further dilution in value and in the
percentage ownership represented by the purchaser’s Investment Units will
occur.





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





Restrictions
on Transfer - No Public Market for Restricted Shares.





The
shares of common stock of the Company are traded on the 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 being
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.  Although our current revenue model contemplates revenues
from MyStudio sufficient to break-even within twelve months, there is no
assurance that these revenues will occur.  In addition, we expect our
expenses to increase significantly as we develop the infrastructure necessary to
implement our business strategy.  Our expenses will continue to
increase as we: hire additional employees; pursue research and development;
expand our information technology systems; and lease and purchase more space to
accommodate our operations.




Costs
associated with designing, developing, manufacturing, marketing and developing
the infrastructure we will need to support our customers will depend upon many
factors, including the number of 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 or 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 found 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.  If an infringement claim
is made, with or without merit, it 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 new
officer, director, and other key personnel, will have an employment agreement
with the Company which will contain provisions dealing with confidentiality of
trade secrets, ownership of patents, copyrights and other work product, and
non-competition.  Nonetheless, there can be no assurance that these
personnel will remain employed for the entire duration of the respective terms
of such agreements or that any employee will not breach covenants and
obligations owed to the Company.





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





Inability
to Attract and Retain Qualified Personnel.





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





Inability
to Manage Rapid Growth.





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





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





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




Effects
of Amortization Charges.





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





Dividend
Policy.





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





Conflicts
of Interest.





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






29




ITEM
1A. RISK FACTORS -
continued




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.  All of our
executive officers and key employees are at-will employees, and 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 15,084,498 post-reverse shares of
      common stock outstanding. In addition, the Company has 799,044 shares of
      preferred stock issued and outstanding as of March 31,
      2009.  The preferred shares are convertible into 564,814 shares
      of common stock.




(b)
            During
      the nine months ended March 31, 2009, we closed various private placements
      and issued 758,330shares of restricted common stock for total of
      approximately $1,687,500 in proceeds, issued 275,000 shares of preferred
      stock for $550,000 in proceeds, and granted warrants to various security
      holders and others to acquire an additional 1,498,721 shares at an average
      exercise price of $2.57 at any time within two years after the dates of
      their respective investments.  During this period,
      warrantholders having the right to purchase 245,000 shares of the
      Company’s common stock exercised their right and we received an additional
      $305,000 in proceeds from the exercise of those warrants.  The
      average warrant exercise price was $1.24.  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 units 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 selling 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 research
      and development program and to manufacture the initial production model of
      the MyStudio interactive recording studio, as well as for working capital
      and general corporate purposes.





(c)
            During
      the nine months ended March 31, 2009, the Company also issued
      868,771shares of the Company’s common stock for employment, consulting and
      other services rendered to the Company valued at $1,487,952  The
      Company uses the Black-Scholes pricing model for determining the fair
      value of stock based compensation. We believe the issuance of the
      shares listed in this Item 2 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.







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 15,084,498 post-reverse shares
      outstanding.






30




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




(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 is pursuant to an agreement entered into by the companies dated
      March 29, 2006. The purchase includes the exchange of 7,000,000 restricted
      common shares of Studio One Media, Inc., for 100% of the issued and
      outstanding shares of Studio One Entertainment, Inc. The purchase includes
      all right, title and interest to Studio One Entertainment's proprietary
      interactive recording studios, business plan and intellectual property,
      including pending patents, foreign patent rights and federal trademark
      applications. Studio One Entertainment, Inc. will operate as a wholly
      owned subsidiary of Studio One Media, Inc. 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 nine months ended March 31, 2009, no matters were submitted to the
      shareholders for a vote.







ITEM
5. OTHER INFORMATION





Change
of Name





On March
29, 2006, the Company filed a Certificate of Amendment to Articles of
Incorporation with the Office of the Secretary of State for the State of
Delaware, changing its name from Dimensional Visions Incorporated to STUDIO ONE
MEDIA, INC. The new name was effective March 29, 2006, and its stock is now
traded Over The Counter Bulletin Board under the Symbol SOMD.





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 March
31, 2008 and March 31, 2008, 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 May
19, 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.




Subsequent
Events:





None







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










31








SIGNATURES





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








STUDIO
      ONE MEDIA, INC.Date:  May
      19, 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: 
      May 19, 2009
              By:
              /s/ 
      Preston J. SheaPreston
      J. Shea,Title:
       Director, President,
Secretary




STUDIO
      ONE MEDIA, INC.Date: 
      May 19, 2009
              By:
              /s/ 
      Kenneth R. PinckardKenneth
      R. Pinckard,Title: 
      Director, Vice President, Chief Financial Officer, Chief Accounting
      Officer



















32