UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549








FORM
10-K





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





For the
Fiscal Year EndedAugust 31,
2008








Commission
File Number 000-32923







(Exact
name of registrant as specified in its charter)





Nevada
            
            33-0198542(State
      or other jurisdiction of incorporation or organization)
            
            (IRS
      Employer Identification No.)








2355
      Main Street, Suite 120, Irvine, California
            92614
            (949)
      486-3990(Address
      of principal executive office)
            (Postal
      Code)
            (Issuer's
      telephone number)




Securities
registered pursuant to Section 12(b) of the Act:  None




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





Title
      of each class
            
            Name
      of each exchange on which registeredCommon
      Stock, $0.001 par value
            
            Over-the-Counter
      Bulletin Board




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




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




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




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of the registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o




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





Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o    (Do
      not check if a smaller reporting company)
            Smaller
      reporting company x




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





The
aggregate market value of the voting common equity held by non-affiliates as of
February 29, 2008, based on the closing sales price of the Common Stock as
quoted on the Over-the-Counter Bulletin Board was $6,573,263. For purposes of
this computation, all officers, directors, and five percent (5%) beneficial
owners of the registrant are deemed to be affiliates. Such determination should
not be deemed an admission that such directors, officers, or five percent (5%)
beneficial owners are, in fact, affiliates of the registrant.




As of
December 8, 2008, there were 67,043,794 shares of registrant’s common stock
outstanding.


Table of Contents


FINANCIAL MEDIA GROUP, INC.


TABLE
OF CONTENTS





PagePART IItem
      1. Description of Business
            3Item
      1A. Risk Factors
            5Item
      1B. Unresolved Staff CommentsItem
      2. Properties
            9Item
      3. Legal Proceedings
            10Item
      4. Submission of Matters to Vote of Security Holders
            10PART IIItem
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity Securities
            11Item
      6. Selected Financial Data
            12Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
            13Item
      7A. Quantitative and Qualitative Disclosures about Market
    Risk
            17Item
      8. Financial Statements and Supplementary Data
            17Item
      9. Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure
            17Item
      9A(T). Controls and Procedures
            17Item 9B. Other Information
            18PART IIIItem
      10.  Directors, Executive Officers and Corporate
      Governance
            19Item
      11. Executive Compensation
            21Item
      12. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters
            23Item
      13. Certain Relationships and Related Transactions; and Director
      Independence
            24Item
      14. Principal Accountant Fees and Services
            24PART IVItem
      15. Exhibits; Financial Statement Schedules
            25Signatures
            26


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PART I





Item
1. Description of Business





This
Annual Report on Form 10-K includes the accounts of Financial Media Group, Inc.
(FMG) and its wholly and majority-owned subsidiaries, WallStreet Direct, Inc.
(“WallStreet”), Digital WallStreet, Inc. (“Digital WallStreet”), Financial
Filings Corp, (“Financial Filings”), My WallStreet, Inc. (“My WallStreet”) and
The Wealth Expo Inc. (“The Wealth Expo”), collectively “we”, us” or the
"Company".





This
Annual Report on Form 10-K (including the section regarding Management's
Discussion and Analysis of Financial Condition and Results of Operations)
contains forward-looking statements regarding our business, financial condition,
results of operations and prospects. Words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions or
variations of such words are intended to identify forward-looking statements,
but are not deemed to represent an all-inclusive means of identifying
forward-looking statements as denoted in this Annual Report on Form
10-K.  Additionally, statements concerning future matters are
forward-looking statements.





Although
forward-looking statements in this Annual Report on Form 10-K reflect the good
faith judgment of our Management, such statements can only be based on facts and
factors currently known by us. Consequently, forward-looking statements are
inherently subject to risks and uncertainties and actual results and outcomes
may differ materially from the results and outcomes discussed in or anticipated
by the forward-looking statements. Factors that could cause or contribute to
such differences in results and outcomes include, without limitation, those
specifically addressed under the heading "Risks Related to Our Business" below,
as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers
are urged not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Annual Report on Form 10-K. We file reports
with the Securities and Exchange Commission ("SEC"). You can read and copy any
materials we file with the SEC at the SEC's Public Reference Room at 100 F
Street, NE, Washington, DC 20549.  You can obtain additional
information about the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov)
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, including
us.





We
undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this
Annual Report on Form 10-K. Readers are urged to carefully review and consider
the various disclosures made throughout the entirety of this annual Report,
which attempt to advise interested parties of the risks and factors that may
affect our business, financial condition, results of operations and
prospects.





OVERVIEW





We are a
full service financial media company focused on developing tools and
applications that enable the retail investment community to collaborate directly
with publicly traded companies. We provide Internet based media and advertising
services through our network of financial websites. We provide a full array of
customized investor awareness programs including executive interviews; press
releases; display and text advertising, e-mail marketing, and promotion across
our network of websites.





Our
original content is distributed through our Web properties including
http://www.wallst.net (“WallSt”), http://my.wallst.net (“MyWallSt”), and
http://tv.wallst.net (“WallStTV”). Our flagship, advertising-supported Web
property, WallSt, was launched in 2003, and offers free access to breaking news,
financial research tools, videos, and original editorial content including our
library of more than 4,000 audio interviews with executives from public and
private companies. MyWallSt, launched in January 2007, is a financial social
network with community stock ratings, personal profile pages, blogs, message
boards, and a proprietary trading simulator that allows members to compete
against each other for weekly cash and prizes. WallStTV was launched in May 2008
and offers free access to our original video programming including the 3-Minute
Press Show, Sweet Picks, the Analyst’s Review, and WallSt.net News Magazine
(“WSNM”). WSNM is also distributed through television as a paid advertisement on
the Fox Business Network. More than 15 episodes of WSNM have aired since March
2008. Our half-hour television program at Fox Business Network is also
syndicated on our Web properties, allowing visitors to watch the show on the Web
as well as on television. Revenue from the television program is derived from
the sale of interviews to paid clients, and the sale of segments of the show
where our clients’ press releases are summarized. We incur production costs
related to booking talent, renting studio time, and members of our production
crew.





In
addition to our online brands, we own and operate The Wealth Expo, a line of
investment conferences that we acquired in January 2007. Wealth Expo seminars
are typically held at large convention centers in large cities throughout the
United States, and feature high-profile keynote speakers, exhibition booths, and
educational seminars.





Our
wholly-owned subsidiary Financial Filings Corp. (“Financial Filings”), was
launched in March 2006. Financial Filings provides news distribution and
electronic document conversion (EDGAR) services to public
companies.





We plan
to continue to enhance the WallSt.net brand through continued organic growth and
capitalizing on growth-oriented acquisition opportunities as they
arise.





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CORPORATE
HISTORY





We were
incorporated in Nevada in 1984 as Southern Development Company, Inc. In December
1994, we merged with Integrated Communications Access Network, Inc. In March
1996, we were renamed Southern Development Company, Inc., and in September 1998,
we changed our name to EssxSport Corp. From September 1998 until August 31,
2004, we were primarily engaged in the manufacture and distribution of athletic
equipment, primarily for pole vaulting and other track and field activities.
Effective August 31, 2004, we sold, transferred, and delivered all of our assets
relating to our pole vault and sports business to our former President and
director, and subsequently changed our name to Giant Jr. Investments
Corp.





On June
30, 2004, we filed with the Securities and Exchange Commission ("SEC") to become
a business development company ("BDC") under the 1940 Act and on September 1,
2004, we began our BDC operations. On June 1, 2005, we terminated our BDC status
and on August 1, 2005, our shareholders approved an amendment to the Articles of
Incorporation changing our name to “Financial Media Group, Inc.”





On
January 6, 2006, we acquired 100% of the equity of WallStreet in exchange for
19,998,707 shares or 82% of the issued and outstanding shares of our common
stock at the time of the acquisition.  In connection with the reverse
merger, we changed our fiscal year end to August 31.





On
January 15, 2005, WallStreet acquired 100% of the assets and outstanding shares
of Digital WallStreet in exchange for two promissory notes of $1,500,000 each,
carrying interest at 6% per annum, due and payable on January 31, 2007 and
January 31, 2010. On December 11, 2006, the payment due date of the promissory
note due January 31, 2007 was extended to January 31, 2010. WallStreet is a full
service financial media company focused on developing tools and applications
that enable the retail investors to collaborate directly with publicly traded
companies. WallStreet provides internet based media and advertising services
through its network of Web sites.





On
February 10, 2006, we established Financial Filings as a wholly-owned
subsidiary. Financial Filings is a provider of news wire and compliance services
to small and mid-sized publicly traded companies worldwide. Customer
acquisitions are initially facilitated by WallStreet which provides media and
advertising services to hundreds of publicly traded companies, many of which are
seeking Financial Filings’ services, including the preparation review of
registration statements, electronic filings for SEC documents (EDGAR),
preparation of proxy materials, and news distribution.





On June
13, 2006, we established a wholly owned subsidiary, My WallStreet, Inc. and
launched in January 2007, http://my.wallst.net is an online community for
investors. The website offers free membership and provides social networking
applications including messaging, blogs, message boards, video and audio
uploads, and personal profile pages. In addition, members of MyWallSt can
participate in the “Rookie Challenge,” a proprietary virtual stock trading
simulator that allows members to compete against each other for a weekly cash
prize. Members can also communicate with another, rate individual stocks, post
comments on individual stocks, and compile their own Watchlist of stocks, which
can be viewed and commented on by other members of the online community. Unlike
other social network services, MyWallSt members have one interest in common:
they want to become better investors. MyWallSt also provides a venue for
investors to interact with public company executives, many of which have
profiles on the website.





In
January 2007, we acquired the trade name “The Wealth Expo” and formed a
wholly-owned subsidiary The Wealth Expo Inc. on June 12, 2007. The Wealth Expo
is designed to provide a broad range of information on investing techniques, and
tools to investors through workshops and exhibits held throughout the United
States. Exhibitors at the Wealth Expo include public and private companies,
franchises, financial newsletter publishers, investor education providers, and
real estate companies. The Wealth Expo provides us several new revenue streams
through exhibition sales, speaking presentation sales, collateral material
sales, and advertising sales. Since its inception, The Wealth Expo has attracted
hundreds of exhibitors and thousands of attendees from around the
world.





BUSINESS
STRATEGY





We have
established ourselves as specializing in financial news, tools and original,
compelling content for the global investment community. WallStreet Direct’s
flagship website, Wallst.net, features information on thousands of publicly
traded companies through exclusive executive management interviews, original
articles, financial tools, and community driven applications.





WallSt is
an end-destination website for retail investors, investment professionals, and
executives from around the world. Our Financial Filings Corp. subsidiary was
initiated to leverage WallStreet Direct’s existing client base, by offering
Edgarization services to small and mid-sized public companies. My WallStreet
operates MyWallSt, a social networking Web site for investors and executives.
The Web site’s membership is mostly comprised of individuals that either
register to view content on WallSt, and executives that have participated in
WallSt programming. We also have a subscription service that features content
from a roster of more than 20 contributors with expertise in a variety of topics
including equities, mutual funds, trading strategies, and foreign currency. Our
subscription service was recently launched in June 2008 and costs $99.95
per-month, and our subscribers receive a daily e-mail newsletter with investment
ideas from our team of contributors. We currently have minimal subscribers;
however, we anticipate increasing our subscriber base as we continue to market
and expand our products and services to the financial community.





WallSt’s
original content is also distributed on television. Wall Street News Magazine
(WSNM), a half-hour paid advertisement that has aired more than 15 episodes
since March 2008. Each episode features interviews with public company
executives and market strategists, as well as news reports that are recorded at
the Nasdaq Marketsite.  Our half-hour television program at Fox
Business Network is also syndicated on our Web properties, allowing visitors to
watch the show on the Web as well as on television.





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Market





Regulation
Fair Disclosure and The Sarbanes Oxley Act have changed the landscape of
investor relations dramatically, forcing companies to re-evaluate the methods
they use to communicate with investors. These regulations have also put the
spotlight on web-based disclosure and have turned web casting and web sites into
mission-critical applications. In the wake of these regulatory changes,
investors are looking to get more of their information directly from the
company.





Small and
medium size public companies do not receive the same coverage as large public
companies. Over the last few years, the internet has become a cost-effective
solution to enhance the profile of public companies, but many small and mid cap
companies have lacked the skills and knowledge to take full advantage of this
opportunity. This had led to the outsourcing of internet related services.
Requirements of small and mid cap companies are broad and range from the design,
development, and maintenance of investor relations oriented websites to the
creation of effective on-line advertising campaigns.





The
recent wake of corporate scandals has resulted in declining investor confidence
and heightened demands to make publicly traded companies more transparent.
Investors today expect more financial and non-financial data than ever before.
With the widespread use of the web as a timely, low-cost means of disseminating
information, both regulatory bodies and investors have grown more aggressive in
their demands for fair and timely access to unfiltered company
information.





Many
companies have fewer sell-side analysts covering their stock. Since most
investors use some formal analysis to make investment decisions, sell-side
coverage is valuable for attracting investors who might not otherwise find an
emerging company on their radar screen. The staff reductions at Wall Street
securities firms in the last few years have resulted in thinner coverage by
sell-side analysts and brokers, opening the way for companies to use the
internet to communicate directly with investors and the media. Gone are the days
when a company can rely exclusively on their sell-side analysts to deliver their
message to the buy side. In this new environment, companies need to find ways to
communicate directly to investors. Web-based communications can play an
important role in providing tools for companies to reach buy side investors with
a company’s message.





Competition





Generally,
competitive factors within the investor awareness market include the range and
depth of financial tools and dimensions of email offerings, the quality of web
site content, and the reliability of reference information provided in
connection with the sundry active campaigns. We are aware of several companies
which are much larger and have greater name recognition, that provide some level
of investor awareness in similar delivery formats. However, we believe that: (i)
the depth and quality of our information, (ii) the assortment of our financial
tools, (iii) and our network of websites, provide us with a competitive
advantage compared to other investor awareness providers.





Employees





As of
December 1, 2008, we employed 22 full-time employees. Management consisted of
five employees, sales and client management department consisted of six
employees, editorial and development staff consisted of three employees,
technology department consisted of five employees, and administration staff
consisted of three employees.





Item
1A. Risk Factors





WE
HAVE A HISTORY OF LOSSES WHICH MAY CONTINUE, WHICH MAY NEGATIVELY IMPACT OUR
ABILITY TO ACHIEVE OUR BUSINESS OBJECTIVES.





We
incurred net losses of $2,849,462 and $5,937,675 for the years ended August 31,
2008 and 2007, respectively. We cannot assure you that we can achieve or sustain
profitability on a quarterly or annual basis in the future. Our operations are
subject to the risks and competition inherent in the establishment of a business
enterprise. There can be no assurance that future operations will be profitable.
Revenues and profits, if any, will depend upon various factors, including
whether we will be able to continue expansion of our revenue. We may not achieve
our business objectives and the failure to achieve such goals would have an
adverse impact on us.





OUR
INDEPENDENT AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO
CONTINUE AS A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN FUTURE
FINANCING.





In their
report dated November 18, 2008, our independent auditors stated that our
financial statements for the year ended August 31, 2008 were prepared assuming
that we would continue as a going concern. Our ability to continue as a going
concern is an issue raised as a result of recurring losses from operations. We
continue to experience net operating losses. Our ability to continue as a going
concern is subject to our ability to generate a profit and/or obtain necessary
funding from outside sources, including obtaining additional funding from the
sale of our securities, increasing sales or obtaining loans and grants from
various financial institutions where possible. Our continued net operating
losses increase the difficulty in meeting such goals and there can be no
assurances that such methods will prove successful.




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WE
HAVE A LIMITED OPERATING HISTORY AND IF WE ARE NOT SUCCESSFUL IN CONTINUING TO
GROW OUR BUSINESS, THEN WE MAY HAVE TO SCALE BACK OR EVEN CEASE OUR ONGOING
BUSINESS OPERATIONS.





We have
received a limited amount of revenues from operations and have limited assets.
We have yet to generate positive earnings and there can be no assurance that we
will ever operate profitably. Our company has a limited operating history. Our
success is significantly dependent on a successful acquisition, drilling,
completion and production program. Our operations will be subject to all the
risks inherent in the establishment of a developing enterprise and the
uncertainties arising from the absence of a significant operating history. We
may be unable to locate recoverable reserves or operate on a profitable basis.
We are in the exploration stage and potential investors should be aware of the
difficulties normally encountered by enterprises in the exploration stage. If
our business plan is not successful, and we are not able to operate profitably,
investors may lose some or all of their investment in our company.




OUR
FAILURE TO MANAGE GROWTH EFFECTIVELY COULD IMPAIR OUR BUSINESS.





Our
business strategy envisions a period of rapid growth that may put a strain on
its administrative, operational resources and funding requirements. Our ability
to effectively manage growth will require them to continue to expand the
capabilities of its operational and management systems and to attract, train,
manage and retain qualified editors, technicians, salespersons and other
personnel. There can be no assurance that we will be able to do so, particularly
if losses continue and we are unable to obtain sufficient financing. If the
Company is unable to successfully manage growth, its business, prospects,
financial condition, and results of operations could be adversely
affected.





WE
OPERATE WITHIN A HIGHLY COMPETITIVE AND COMPLEX MARKET THAT IS DIRECTLY OR
INDIRECTLY AFFECTED BY MARKET RISKS AND REGULATIONS, WHICH COULD HAVE AN ADVERSE
EFFECT ON OUR BUSINESS.





Financial
media is extremely competitive and fragmented industry. The industry can be
significantly affected by many factors, including changes in local, regional,
and national economic conditions, changes in consumer preferences, brand name
recognition, marketing and the development of new and competing financial media
companies. We expect that existing businesses that compete with us and have
greater financial resources than us will be able to undertake more extensive
marketing campaigns and more aggressive advertising sales policies than us,
thereby generating more attention to their companies and websites. These
competitive pressures could have a material adverse effect on our business,
prospects, financial condition, and results of operations.





OUR
DEPENDENCE ON THE CONTINUED GROWTH IN THE USE OF THE WEB, PARTICULARLY FOR
FINANCIAL NEWS AND INFORMATION, COULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS.





Our
business depends on consumers continuing to increase their use of the web for
obtaining news and financial information as well as for conducting commercial
transactions. The rapid growth and use of the Internet is a recent phenomenon.
As a result this acceptance and use may not continue to develop at historical
rates. Web usage may be inhibited for a number of reasons, such as - Inadequate network
infrastructure; security concerns; inconsistent quality of service; and
availability of cost-effective, high-speed
service.





If web
usage grows, the Internet infrastructure may not be able to support the demands
placed on it by this growth or its performance and reliability may decline. In
addition, web sites have experienced interruptions in their service as a result
of outages and other delays occurring throughout the Internet network
infrastructure. If these outages or delays frequently occur in the future, web
usage, as well as usage of our web site, could grow more slowly or decline,
which could adversely affect our results of operations.





IF
WE ARE UNABLE TO ESTALISH AND MAINTAIN STRATEGIC RELATIONSHIPS WITH OTHER WEB
SITES TO ATTRACT USERS, ADVERTISERS AND CONTENT, OUR BUSINESS COULD BE ADVERSELY
AFFECTED.





We depend
on establishing and maintaining distribution relationships with high-traffic web
sites for a significant portion of our traffic. There is intense competition for
placements on these sites, and we may not be able to enter into such
relationships on commercially reasonable terms or at all. Even if we enter into
distribution relationships with these web sites, they themselves may not attract
significant numbers of users. Therefore, our web site may not receive additional
users from these relationships. Moreover, we may have to pay significant fees to
establish these relationships.





Occasionally
we enter into agreements with advertisers, content providers or other high
traffic web sites that require us to exclusively feature these parties in
certain sections of our web site. Existing and future exclusivity arrangements
may prevent us from entering into other content agreements, advertising or
sponsorship arrangements, or other strategic relationships. Many companies we
may pursue for a strategic relationship also offer competing services. As a
result, these competitors may be reluctant to enter into strategic relationships
with us. Our business could be adversely affected if we do not establish and
maintain additional strategic relationships on commercially reasonable terms or
if any of our strategic relationships do not result in increased use of our web
site.





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DIFFICULTY
ACCOMMODATING INCREASES IN THE NUMBER OF USERS OF OUR SERVICES AND INTERNET
SERVICE PROBLEMS OUTSIDE OF OUR CONTROL ULTIMATELY COULD RESULT IN THE REDUCTION
OF USERS OF OUR WEB SITE.





In the
past, our Web site has experienced significant increases in traffic when there
is noteworthy business or financial news stories. In addition, the number of our
users has continued to increase over time as we are seeking to further increases
in our user base. Therefore, our Web site must accommodate a high volume of
traffic and deliver frequently updated information. Our Web site has in the
past, and may in the future experience slower response times or other problems
for a variety of reasons.





Our web
site could experience disruptions or interruptions in service due to the failure
or delay in the transmission or receipt of this information. In addition, our
users depend on Internet service providers, online service providers and other
web site operators for access to our Web site. Each of them has experienced
significant outages in the past, and could experience outages, delays and other
difficulties due to system failures unrelated to our systems. These types of
occurrences could cause users to perceive our Web site as not functioning
properly, and therefore cause them to use other methods to obtain their business
and financial news and other information.





IF
WE DO NOT DEVELOP NEW AND ENHANCED SERVICES AND FEATURES FOR OUR WEB SITE, WE
MAY NOT BE ABLE TO ATTRACT AND RETAIN A SUFFICIENT NUMBER OF USERS.





We
believe that our Web site will be more attractive to advertisers if we develop a
larger audience comprised of demographically favorable users. Accordingly, we
intend to introduce additional or enhanced services in the future in order to
retain its current users and attract new users. If we introduce a service that
is not favorably received, the current users may not continue using our service
as frequently. New users could also choose a competitive service over
ours.





We may
also experience difficulties that could delay or prevent us from introducing new
services. Furthermore, these services may contain errors that are discovered
after the services are introduced. We may need to significantly modify the
design of these services on its Web site to correct these errors. Our business
could be adversely affected if it experiences difficulties in introducing new
services or if users do not accept these new services.





THERE
IS INTENSE COMPETITION FOR OUR WEB-BASED BUSINESS AND FINANCIAL CONTENT AND WE
MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.





Many web
sites compete for consumers' and advertisers' attention and spending,
particularly in the business and financial information and news area. We expect
this competition to continue to increase. We compete for investor relation
campaign, advertisers, users, and content providers with many types of
companies, including:





·
            Publishers
      and distributors of traditional media (television, radio and print), such
      as The WallStreet Journal, CNN and
CNBC;


·
            general
      purpose consumer online services such as America Online and Microsoft
      Network;


·
            online
      services or web sites targeted to business, finance and investing needs,
      such as TheStreet.com and Motley Fool;
and


·
            web
      retrieval and other web "portal" companies, such as Excite, Infoseek,
      Lycos, and Yahoo!





Increased
competition could result in price reductions, reduced margins, or loss of market
share, any of which would adversely affect our business.





THE
DIMINUTION OR LOSS, MISAAPROPRIATION OR LEGAL CLAIMS ON THE BRAND NAME
"WALLST.NET" WOULD HAVE A MATERIAL ADVERSE AFFECT ON OUR BUSINESS.





We are
highly dependent on our brand name "Wallst.net" for the success of our venture.
We believe the diminution or loss, misappropriation of our existing proprietary
rights or claims of infringement or legal actions related to intellectual
property of "Wallst.net" brand name, or any other negative market or industry
perception arising from these, would have a material adverse effect on our
business.





We
currently rely on contractual rights, copyrights, trademarks, and trade secrets
to protect our intellectual property rights. We do not hold any patents. We
cannot assure you that our means of protecting our proprietary rights will be
adequate or that our competitors will not independently develop comparable or
superior technologies or obtain unauthorized access to our proprietary
technologies.





We hold
the Internet domain name www.wallst.net. Under current domain name registration
practices, no one else can obtain an identical domain name, but someone might
obtain a similar name, or the identical name with a different suffix, such as
".org,” or with a country designation. The regulation of domain names in the
United States and in foreign countries is subject to change, and we could be
unable to prevent third parties from acquiring domain names that infringe or
otherwise decrease the value of our domain names.





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WE
COULD FACE LIABILITY FOR THE INFORMATION DISPLAYED ON OUR WEB SITE, WHICH COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





We may be
subjected to claims for defamation, negligence, and copyright or trademark
infringement or based on other theories relating to the information we publish
on our web site. These types of claims have been brought, sometimes
successfully, against online services as well as other print publications in the
past. We could also be subjected to claims based upon the content that is
accessible from its Web site through links to other web sites. Defending such
claims could be costly and could distract management from concentrating on other
aspects of our business, which could adversely affect our financial condition
and results of operations.





A
SIGNIFICANT PORTION OF OUR REVENUE AND EARNINGS CONSIST OF SECURITIES THAT ARE
NOT FREELY TRANSFERABLE, WHICH COULD HAVE AN ADVERSE AFFECT ON OUR FINANCIAL
CONDITION.





We accept
the major, and sometimes the entire, portion of our fee for our services in the
form of shares of our clients’ common stock which are “restricted securities” as
that term is defined in Rule 144 under the Securities Act and are not freely
transferable without registration or an exemption from registration. We accept
this as a form of payment because our clients are usually “small-cap” publicly
held companies that do not otherwise have the cash to pay for the services that
we provide.  The market for these securities is sometimes volatile and
at other times there may only be a limited trading volume. Therefore, we may be
unable to sell or distribute such securities at the times we would like if at
all, which could adversely affect our financial condition.





A
SIGNIFICANT PORTION OF OUR ASSETS CONSISTS OF STOCK ISSUED BY SMALL, UNPROVEN
ISSUERS, WHICH STOCK MAY PROVE TO BE OF LIMITED OR NO VALUE.





Many of
our clients are primarily “small-cap” public companies and are subject to all of
the risks of small businesses. They frequently depend on the management talents
and efforts of one person or a small group of persons for their success, and the
death, disability or resignation of one or more of these persons could have a
material adverse impact on our clients and their ability to grow. In addition,
small businesses often have narrower product lines and smaller market shares
than their competition. Such companies may also experience substantial
variations in operating results. These companies may be more vulnerable to
customer preferences, market conditions or economic downturns. Because of these
factors, most of which are beyond our control, we cannot assure you that the
securities we receive will have any value when we are able to dispose of
them.





VALUATION
OF OUR MARKETABLE SECURITIES MAY BE SUBJECT TO MATERIAL IMPAIRMENTS WHICH REDUCE
THEIR VALUE AND AFFECT OUR FINANCIAL STATEMENTS.





Marketable
securities are classified as trading securities, which are carried at their fair
value based upon quoted market prices of those securities at the end of each of
our quarters. Accordingly, net realized and unrealized gains and losses on
trading securities are included in net income. The marketable securities that we
hold are traded on the Pink Sheets and the OTCBB. The market price for these
securities is subject to wide fluctuations from period to period, which may
cause fluctuations in our net income.





IF
WE ARE UNABLE TO RETAIN THE SERVICES OF MESSR. AIMERS OR IF WE ARE UNABLE TO
SUCCESSFULLY RECRUIT SKILLED PERSONNEL, WE MAY NOT BE ABLE TO CONTINUE OUR
OPERATIONS.





Our
success depends to a significant extent upon the continued services of Mr.
Albert Aimers, our Chief Executive Officer and Chairman of the Board of
Directors. We do not maintain key-man insurance on the life of Mr. Aimers. In
addition, in order to successfully implement and manage our business plan, we
will be dependent upon, among other things, successfully recruiting qualified
skilled personnel. Competition for qualified individuals is intense. There can
be no assurance that we will be able to find, attract and retain existing
employees or that we will be able to find, attract and retain qualified
personnel on acceptable terms.





Our
future success also depends on the continuing ability to retain and attract
highly qualified technical, editorial, and managerial personnel. We anticipate
that the number of employees will increase in the next 12 months. Wages for
managerial and technical employees are increasing and are expected to continue
to increase in the foreseeable future due to the competitive nature of this job
market. We have experienced difficulty from time to time in attracting the
personnel necessary to support the growth of our business, and there can be no
assurance that we will not experience similar difficulty in the future. The
inability to attract and retain the technical and managerial personnel necessary
to support the growth of our business could have a material adverse effect upon
our business, results of operations and financial condition.





OUR
OFFICERS AND DIRECTORS OWN A CONTROLLING INTEREST IN OUR VOTING STOCK AND
INVESTORS WILL NOT HAVE ANY VOICE IN OUR MANAGEMENT.





Our
officers and directors, in the aggregate, beneficially own approximately 45.9%
of our outstanding common stock. As a result, these stockholders, acting
together, will have the ability to control substantially all matters submitted
to our stockholders for approval, including:





-
            election
      of our board of directors;


-
            removal
      of any of our directors;


-
            amendment
      of our certificate of incorporation or bylaws;
  and


-
            adoption
      of measures that could delay or prevent a change in control or impede a
      merger, takeover or other business combination involving
    us.





As a
result of their ownership and positions, our directors and executive officers
collectively are able to influence all matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions. In addition, sales of significant amounts of shares held by our
directors and executive officers, or the prospect of these sales, could
adversely affect the market price of our common stock. Management's stock
ownership may discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of us, which in turn could reduce our
stock price or prevent our stockholders from realizing a premium over our stock
price.





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Risks Relating to Our Common
Stock:





IF
WE FAIL TO REMAIN CURRENT IN OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED
FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO
SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN
THE SECONDARY MARKET.





Companies
trading on the OTC Bulletin Board, such as us, must be reporting issuers under
Section 12 of the Securities Exchange Act of 1934, as amended, and must be
current in their reports under Section 13, in order to maintain price quotation
privileges on the OTC Bulletin Board. If we fail to remain current on our
reporting requirements, we could be removed from the OTC Bulletin Board. As a
result, the market liquidity for our securities could be severely adversely
affected by limiting the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary
market.





OUR
COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE TRADING
MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK
CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.





The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require:





·
            that
      a broker or dealer approve a person's account for transactions in penny
      stocks; and·
            the
      broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased.





In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:





·
            obtain
      financial information and investment experience objectives of the person;
      and·
            make
      a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.





The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:




·
            sets
      forth the basis on which the broker or dealer made the suitability
      determination; and·
            that
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.




Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our
stock.





Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.





Item
2. Properties





Corporate
Offices





Our
corporate offices consist of 11,531 sq. feet of office space in Irvine,
California. We have a four year lease expiring on February 28, 2010 at a monthly
rental of $24,791. We lease an office space in New York, New York from a third
party under an agreement to pay a monthly rental of $6,150. The lease
arrangement expired on October 31, 2008 and we are currently leasing the office
space on a month-to-month lease. We believe that our existing facilities are
suitable and adequate to meet our current business requirements.





Intellectual Property, Proprietary
Rights and Domain Names





We own
the domain names www.wallst.net, www.18004wallst.com, www.financialfilings.com,
www.mywallst.net, www.wealthexpo.net as well as the phone number 1-800-4WALLST.
We believe our ownership of these domain names gives us adequate protection over
them and we intend to keep them in our possession.





Other
intellectual property is protected through a combination of trademark law, trade
secret protection, and confidentiality agreements with our employees, customers,
independent contractors, agents, and vendors. We pursue the registration of our
domain names, trademarks, and service market in the United States. Effective
trademark, service mark, copyright, and trade secret protection may not be
available in every country in which we provide services and products are made
available online. We create some of our own content and obtain the balance of
our content from third parties. It is possible that it could become subject to
infringement actions based upon the content obtained by third parties. In
addition, others may use this content and we may be subject to claims from our
licensors. We currently have no patents or patents pending and do not anticipate
that patents will become a significant part of our intellectual property in the
future. We have entered into confidentiality agreements with our employees and
independent consultants and have instituted procedures to control access to and
distribution of our technology, documentation and other proprietary information
and the proprietary information of others from who we licenses content. The
steps we take to protect our proprietary rights may not be adequate and third
parties may infringe or misappropriate the trademarks, service marks, and
similar proprietary rights. In addition, other parties may assert claims of
infringement of intellectual property or alter proprietary rights against us.
The legal status of intellectual property on the Internet is currently subject
to various uncertainties as legal precedents have not been set and are still to
be determined in many areas of Internet law.





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Item 3. Legal Proceedings





Except as
disclosed below, there are no legal proceedings to which we are a party or to
which any of our property is subject, and to the best of our knowledge, no such
actions against us is contemplated or threatened.





U.S.
Farms, Inc. vs. WallStreet Direct, Inc.





On June
5, 2008, U.S. Farms, Inc. filed a complaint in the Superior Court of the State
of California in and for the county of San Diego, against WallStreet Direct,
Inc., claiming that that WallStreet Direct made false representations and
concealed material facts susceptible of knowledge, made with knowledge of their
falsity or without knowledge on the subject to warrant a representation, and
with the intent to induce U.S. Farms to act on it. Based on these alleged false
representations and concealment of facts, U.S. Farms issued 2.5 million shares
of its common stock to WallStreet Direct. U.S. Farms requested a temporary
restraining order, preliminary injunction and permanent injunction for the
return of 2.5 million shares of its common stock, general damages, exemplary or
punitive damages, cost of suit and attorney fees. We have denied all of the
claims and plans to vigorously contest the litigation.





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





None.









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PART II





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





Our
common stock is traded on the Over-the-Counter Bulletin Board under the symbol
"FNGP.” The following table sets forth, for the period indicated, the range of
high and low closing prices reported by the Over-the-Counter Bulletin Board.
Such quotations represent prices between dealers and may not include markups,
markdowns, or commissions and may not necessarily represent actual
transactions.





Fiscal
      Year Ending August 31, 2007
            
            High
      Bid
            
            
            Low
      BidQuarter
      Ending November 30, 2006
            
            $
            2.80
            
            
            $
            1.91Quarter
      Ending February 28, 2007
            
            $
            2.54
            
            
            $
            1.22Quarter
      Ending May 31, 2007
            
            $
            1.70
            
            
            $
            0.52Quarter
      Ending August 31, 2007
            
            $
            0.50
            
            
            $
            0.36Fiscal
      Year Ending August 31, 2008
            
            High
      Bid
            
            
            Low
      BidQuarter
      Ending November 30, 2007
            
            $
            0.51
            
            
            $
            0.30Quarter
      Ending February 29, 2008
            
            $
            0.48
            
            
            $
            0.18Quarter
      Ending May 31, 2008
            
            $
            0.70
            
            
            $
            0.15Quarter
      Ending August 31, 2008
            
            $
            0.89
            
            
            $
            0.62





Holders





On
December 9, 2008 the closing "bid" price for our common stock on the
Over-the-Counter Bulletin Board was $0.07 per share. On December 9, 2008, there
were 722 shareholders of record of our common stock.





Dividends





We have
never paid any cash dividends on our capital stock and do not anticipate paying
any cash dividends on our common stock in the foreseeable
future.   We intend to retain future earnings to fund ongoing
operations and future capital requirements of our business. Any future
determination to pay cash dividends will be at the discretion of the Board and
will be dependent upon our financial condition, results of operations, capital
requirements and such other factors as the Board deems relevant.




Recent
Sales of Unregistered Securities





Unless
otherwise noted, the issuances noted below are all considered exempt from
registration by reason of Section 4(2) of the Securities Act of 1933, as
amended.





Between
June 1, 2008 and August 31, 2008, we sold 300,778 shares of our common stock
pursuant to exemptions from registration provided by Regulation S of the
Securities Act of 1933, at prices between $0.50 and $0.72 per share. The Company
received a total cash consideration of $48,174 from sale of such shares after
giving a discount of approximately 75% from the bid prices.





Regulation
S provides generally that any offer or sale that occurs outside of the United
States is exempt from the registration requirements of the Securities Act,
provided that certain conditions are met. Regulation S has two safe harbors. One
safe harbor applies to offers and sales by issuers, securities professionals
involved in the distribution process pursuant to contract, their respective
affiliates, and persons acting on behalf of any of the foregoing, and the other
applies to re-sales by persons other than the issuer, securities professionals
involved in the distribution process pursuant to contract, their respective
affiliates (except certain officers and directors), and persons acting on behalf
of any of the forgoing. An offer, sale or re-sale of securities that satisfied
all conditions of the applicable safe harbor is deemed to be outside the United
States as required by Regulation S. The distribution compliance period for
shares sold in reliance on Regulation S is one year.





We
complied with the requirements of Regulation S by having no directed selling
efforts made in the United States, by selling only to an offeree who was outside
the United States at the time of the offering, and ensuring that the entity to
whom the stock was issued was a non-U.S. person with an address in a foreign
country.





On June
17, 2008 and August 26, 2008, we sold 7 Units and 28 Units, respectively, to an
investor for total cash consideration of $620,000. Each Unit consisted of 40,000
shares of common stock, 40,000 Class A Common Stock Purchase Warrants, 40,000
Class B Common Stock Purchase Warrants and 40,000 Class C Common Stock Purchase
Warrants. The Class A Warrants, Class B Warrants and Class C Warrants entitle
the holder to purchase, at any time until the 9-month, 12-month and 18-month
anniversaries of the date of purchase of shares, respectively, at exercise
prices of $0.75, $1.50 and $3.00, respectively, subject to adjustment. All of
the Warrants are redeemable by us, at a redemption price of $0.05 per Warrant,
upon at least 30 days’ prior written notice, commencing on the earlier of (i) an
effective date of a registration statement registering the common stock
underlying the Warrants for resale, or (ii) 12 months after the date of issuance
of the Warrants, provided that the market price per share of our common stock
for any five consecutive trading days prior to a notice of redemption shall
exceed $1.50 per share for Class A Warrants, $3.00 per share for the Class B
Warrants and $5.00 per share for Class C Warrants. The shares were issued
pursuant to an exemption under Section 4(2) of the Securities Act of
1933.





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On June
18, 2008, we issued 200,000 shares of common stock in exchange for cancellation
of 200,000 shares of MyWallStreet, Inc.’s common stock and Class A Warrants. The
shares were issued pursuant to an exemption under Section 4(2) of the Securities
Act of 1933.





On June
17, 2008, we issued 200,000 shares of common stock to two consultants for
services performed pursuant to a consulting agreement. The shares were issued
pursuant to an exemption under Section 4(2) of the Securities Act of
1933.





On July
16, 2008, we issued to a vendor 40,000 shares of common stock in full settlement
of our debt to the vendor. The shares were issued pursuant to an exemption under
Section 4(2) of the Securities Act of 1933.





Item 6. Selected Financial Data





Not
required under Regulation S-K for “smaller reporting companies.”









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





This
Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements that reflect
Management's current views with respect to future events and financial
performance. You can identify these statements by forward-looking words such as
“may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or
similar words.  Those statements include statements regarding the
intent, belief or current expectations of us and members of its management team
as well as the assumptions on which such statements are based. Prospective
investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risk and uncertainties, and that
actual results may differ materially from those contemplated by such
forward-looking statements.





Readers
are urged to carefully review and consider the various disclosures made by us in
this report and in our other reports filed with the Securities and Exchange
Commission.  Important  factors  currently  known  to
Management  could  cause  actual  results  to
differ  materially  from  those in
forward-looking  statements.  We undertake no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes in the future operating results
over time. We believe that our assumptions are based upon reasonable data
derived from and known about our business and operations.  No
assurances are made that actual results of operations or the results of our
future activities will not differ materially from its
assumptions.  Factors that could cause differences include, but are
not limited to, expected market demand for our services, fluctuations in pricing
for materials, and competition.




Overview





Our
current operations consist of the operations of WallStreet, a financial media
and advertising company that provides various financial Internet solutions,
tools, content and services to individual investors, media, corporate, and
financial services companies. WallStreet also provides Internet-based media and
advertising services through its financial Web site www.wallst.net, Advertising
on WallSt.net consists of continuous or rotating client profiles on various Web
pages within WallSt.net. Delivery of these profiles is based on a certain number
of impressions on WallSt.net depending on our client agreements. An impression
is defined as a single instance of an advertisement being displayed. WallStreet
also provides E-mail services to its clients, which are mailings sent to a
targeted list of e-mail addresses, with delivery consisting solely of
transmitting the mailing to the e-mail targets. E-mail services may be purchased
on a per-transmittal basis, for which revenue is recorded when the transmittal
occurs, or on a fixed-fee basis in which the client receives access to a fixed
number of transmittals per-month. We record the revenue on the fixed-fee basis
pro-rated over the term of the client agreement.





We
established our Financial Filings Corp. subsidiary to leverage WallStreet
Direct, Inc.’s existing client base, by offering Edgarization services to small
and mid-sized public companies. Financial Filings is a provider of news wire and
compliance services to small and mid-sized publicly traded companies worldwide
including preparation of registration statements, electronic filings for SEC
documents (EDGAR), preparation of proxy materials, and news distribution in more
than 30 languages to media outlets in more than 135 countries.





In
January 2007, we acquired the trade name “The Wealth Expo” and formed a wholly
owned subsidiary The Wealth Expo Inc. on June 12, 2007. The Wealth Expo is
designed to provide a broad range of information on investing techniques, and
tools to investors through workshops and exhibits held throughout the United
States. Exhibitors at the Wealth Expo include public and private companies,
franchises, financial newsletter publishers, investor education providers, and
real estate companies. The Wealth Expo provides us several new revenue streams
through exhibition sales, speaking presentation sales, collateral material
sales, and advertising sales. Since its inception, The Wealth Expo has attracted
hundreds of exhibitors and thousands of attendees from around the
world.





WallStTV
was launched in May 2008 and offers free access to our original video
programming including the 3-Minute Press Show, Sweet Picks, the Analyst’s
Review, and WSNM. WSNM is also distributed through television via as a paid
advertisement on the Fox Business Network. More than 15 episodes of WSNM have
aired since March 2008. Our half-hour television program at Fox Business Network
is also syndicated on our Web properties, allowing visitors to watch the show on
the Web as well as on television. Revenue from the television program is derived
from the sale of interviews to paid clients, and the sale of segments of the
show where our clients’ press releases are summarized. We incur production costs
related to booking talent, renting studio time, and members of our production
crew.





Results
of Operations





Our
consolidated results of operations for the twelve months ended August 31, 2008
include our wholly-owned subsidiary WallStreet, its wholly-owned subsidiary
Financial Filings, Corp., its wholly-owned subsidiary My WallStreet, Inc., and
its wholly-owned subsidiary The Wealth Expo Inc.





Our
consolidated results of operations for the twelve months ended August 31, 2007
include our wholly-owned subsidiary WallStreet, its wholly-owned subsidiary
Financial Filings, Corp., its wholly-owned subsidiary My WallStreet, Inc., and
its wholly-owned subsidiary The Wealth Expo Inc. from the date of incorporation
of June 12, 2007 to August 31, 2007.





We
reported a net loss of $2,849,462 for the twelve months ended August 31, 2008
compared to a loss of $5,937,675 for the same period ended August 31, 2007. The
reduction in loss was principally attributable to the reduced valuation of
market securities in our portfolio and reduction in selling, general &
administrative expenses, as more fully explained in "Operating Expenses"
below.





Revenues





Revenues
for the twelve months period ended August 31, 2008 were $7,795,924 compared to
$7,090,042 for the same period in 2007. Revenues increased by $705,882 (10%)
during the twelve months period due to our expanded effort in marketing our
services and gaining new clients.


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Operating
Expenses





Selling,
general, and administrative expenses (S,G&A) for the twelve months period
ended August 31, 2008 were $6,073,190 compared to $6,870,888 for the same period
in 2007. S,G&A expenses decreased by $797,698 (12%) during the twelve month
period ended August 31, 2008 as compared to the same period in 2007, primarily
due to reduction in payroll costs, right sizing the costs associated with our
new office in New York City, reduction in administrative, sales and marketing
personnel and reduction in legal costs.





Impairment
of marketable securities for the twelve months period ended August 31, 2008 was
$4,119,303 compared to $5,595,929 for the same period ended in 2007. Impairment
expense was recorded because the market value of the securities we received as
compensation for services declined in excess of 50% of their market value. This
reduction in our judgment appeared to be other than temporary reduction in the
fair value of the marketable securities. Therefore, we took a conservative
approach of recording the impairment expense. Furthermore, to safeguard us with
impairments of marketable securities, we have revised our contractual terms on
agreements with our clients which provides that, in the event during the term of
the agreement, the share bid price of client securities decline by more than 10%
of the share bid price on the date of execution of the agreement, the client
agrees to issue additional shares of their common stock to us in order to make
up the deficiency caused by the reduction in the value of their stock.
Implementation of this new policy further helped us reduce our impairment
expense during the year ended August 31, 2008.




Depreciation
expense for the twelve month period ended August 31, 2007 was $49,753 compared
to $36,963 for the same period in 2007.





Interest
expense for the twelve months period ended August 31, 2008 was $72,973 compared
to $199,844 for the same period in 2007. Interest expense decreased by $126,871
(64%) primarily because we converted the $3,000,000 promissory notes due to an
officer into 15,000,000 shares of common stock in January 2008. Interest is
charged on the $3,000,000 promissory notes we executed in January 2005 due and
payable in January 2010.





Realized
loss on sale of marketable securities for the twelve months period ended August
31, 2008 was $325,377 compared to $318,400 for the same period in 2007. We sold
non-performing marketable securities held in our possession and realized losses
on their sale to better manage our portfolio. Unrealized loss for the year ended
August 31, 2008 was $63,880 compared to unrealized loss of $255,682 for the same
period in 2007. Unrealized loss resulted due to the decrease in market value of
the marketable securities held at August 31, 2008 and 2007,
respectively.





Liquidity
and Capital Resources





Cash and
cash equivalents were $73,312 at August 31, 2008. As shown in the accompanying
consolidated financial statements, we recorded a loss of $2,849,462 for the
twelve months period ended August 31, 2008 compared to loss of $5,937,675 for
the same period in 2007. Our current liabilities exceeded our current assets by
$954,454 at August 31, 2008 and net cash used in operating activities for the
twelve months ended August 31, 2008 was $3,617,432. These factors and our
ability to meet our debt obligations from current operations, and the need to
raise additional capital to accomplish our objectives raises doubt about our
ability to continue as a going concern.





We expect
significant capital expenditures during the next 12 months, contingent upon
raising capital. These anticipated expenditures are for software
development, assets additions, administrative overheads and working capital
requirements. We have sufficient funds to conduct our operations for a few
months, but not for 12 months or more.  We anticipate that we will
need an additional $2,000,000 to fund our anticipated operations for the next 12
months, depending on revenues from operations.  We have no contracts
or commitments for additional funds and there can be no assurance that financing
will be available in amounts or on terms acceptable to us, if at
all.





We
presently do not have any available credit, bank financing or other external
sources of liquidity. Due to our historical operating losses, our operations
have not been a source of liquidity. We will need to obtain additional capital
in order to expand operations and become profitable. In order to obtain capital,
we may need to sell additional shares of our common stock or borrow funds from
private lenders. There can be no assurance that we will be successful in
obtaining additional funding.





To the
extent that we raise additional capital through the sale of equity or
convertible debt securities, the issuance of such securities may result in
dilution to existing stockholders. If additional funds are raised through the
issuance of debt securities, these securities may have rights, preferences and
privileges senior to holders of common stock and the terms of such debt could
impose restrictions on our operations. Regardless of whether our cash assets
prove to be inadequate to meet our operational needs, we may seek to compensate
providers of services by issuance of stock in lieu of cash, which may also
result in dilution to existing shareholders. Even if we are able to raise the
funds required, it is possible that we could incur unexpected costs and
expenses, fail to collect significant amounts owed to us, or experience
unexpected cash requirements that would force us to seek alternative
financing.





Whereas
we have been successful in the past in raising capital, no assurance can be
given that these sources of financing will continue to be available to us and/or
that demand for our equity/debt instruments will be sufficient to meet our
capital needs, or that financing will be available on terms favorable to us. If
funding is insufficient at any time in the future, we may not be able to take
advantage of business opportunities or respond to competitive pressures, or may
be required to reduce the scope of our planned service development and marketing
efforts, any of which could have a negative impact on our business and operating
results. In addition, insufficient funding may have a material adverse effect on
our financial condition, which could require us to:





-
            curtail
      operations significantly;-
            sell
      significant assets;-
            seek
      arrangements with strategic partners or other parties that may require the
      company to relinquish significant rights to products, technologies or
      markets; or-
            explore
      other strategic alternatives including a merger or sale of our
      company.





We have
been able to meet our obligations through liquidation of our “Market Securities”
portfolio; however, we have missed opportunities to maximize our value, due to
the untimely demands for cash not matching with the highest market value. The
components of the current liabilities specifically the “Deferred Revenue”
classification, reflects a more informative view. As we enter into sundry
contracts for services with our customers, contractually the revenue is earned
upon execution of the agreement. We are in compliance with GAAP and amortize
this revenue stream over the life of the contract, resulting in a non-cash
reduction of this liability.





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Operating
Activities





Net cash
used in operating activities for the twelve months period ended August 31, 2008
was $3,617,432 resulted due to an increase in receivables of $370,754, decrease
in other current assets and deposits of $57,468, increase in accounts payable of
$287,387, increase in accrued expenses and other liabilities of $358,911, and
increase in deferred revenues of $340,258.


Investing
Activities





Net cash
provided by investing activities for the twelve months period ended August 31,
2008 was $1,444,246. We received $1,497,829 in net cash proceeds from sale and
purchase of marketable securities, and expended cash of $53,583 for purchase of
property and equipment.





Financing
Activities





Net cash
provided by financing activities for the twelve months period ended August 31,
2008 was $2,107,465 due to cash received from sale of securities amounting to
$2,114,965 and payment of note payable to an officer of $7,500.





As a
result of the above activities, we experienced a net decrease in cash of $98,701
for the twelve months period ended August 31, 2008. Our ability to continue as a
going concern is still dependent on our success in obtaining additional
financing from investors through the sale of our securities.





Application
of Critical Accounting Policies





Marketable
Securities and Impairments





Our
investments in securities are classified as available-for-sale and, as such, are
carried at fair value based on quoted market prices. Securities classified as
available-for-sale may be sold in response to changes in interest rates,
liquidity needs, and for other purposes.





Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholder’s equity. Realized
and unrealized gains and losses for securities classified as available-for-sale
are included in the statement of operations and comprehensive gain,
respectively.





We
review, on a quarterly basis or more frequently if warranted by circumstances,
the carrying value of the marketable securities we receive from our customers
for providing services. We record impairment expense each quarter when the
market value of the securities received show a consistent decline over 90 to 180
days, and the carrying amount of the marketable securities exceeds its fair
value by 50% or more, and is deemed not recoverable. As such, we record on a
quarterly basis in our financial statements the impairment loss for the
difference between the carrying amount of the marketable securities and their
fair value.





At the
end of each quarter, we evaluate the marketable securities that show a
consistent decline in market value than the cost over a period of 90 to 180 days
for any possible impairment. We evaluate various factors relating to the
securities one of which is the length of the time and the extent to which the
market value has been less than cost. Our accounting policy is consistent with
SFAS 115 and SAB Topic 5M, whereby we record impairment expense each quarter
when the market value of the securities show a consistent decline over 90 to 180
days, and the cost of the marketable securities exceeds its fair value by a
material amount (50% or more), and is deemed not recoverable. In those instances
where impairment charges have been taken, the cost of the marketable securities
on a quarterly basis is brought down to the market value of securities in our
financial statements. The marketable securities are written down to zero only if
the marketable securities are either de-listed or not traded. However, after an
impairment for certain securities is recorded in a period, further impairment is
recorded if the fair value of the securities in future period falls
substantially (more than 50%) below the cost (after impairment adjustment) and
if the decline in market value is consistent for a period of time. Accordingly,
after the first impairment, we may record an unrealized loss for some period
till we are convinced that there is further impairment in the marketable
securities.





Revenue
Recognition





We record
revenues on the basis of services provided to our client for a fixed
determinable fee pursuant to a contractual agreement. In lieu of providing
services, we receive from our clients cash and/or securities, as compensation
for providing such services.





Our
primary source of revenue is generated from providing Internet based media and
advertising services and a full array of customized investor awareness programs
to small and medium sized companies through its financial websites
www.wallst.net and my.wallst.net. The services include audio and video
production of senior management interviews, text and display advertising, press
releases, e-mail marketing, and promotion across our network of web sites. These
services are provided by our subsidiaries WallStreet Direct, Inc. and Digital
WallStreet, Inc. Revenues from Internet based media and advertising services are
recognized and recorded when the performance of such services are completed. We
adhere to the guidelines established under Staff Accounting Bulletin 104
whereby, we execute a contractual agreement with the client for a fixed fee to
perform services, delivery of services has occurred when we performed the
contracted services, and collectibility of the fees has occurred when we receive
cash and/or marketable securities in satisfaction for services
provided.





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We
provide news wire and compliance services to small and medium size publicly
traded companies including preparation of registration statements, electronic
filings and reporting of SEC documents (EDGAR), preparation of proxy materials
and news distribution. Such services are provided by our subsidiary Financial
Filings Corp. Revenues are recognized and recorded when the performances of such
services are completed. We adhere to the guidelines established under Staff
Accounting Bulletin 104 whereby, we execute a contractual agreement with the
client for a fixed fee to perform services, delivery of services has occurred
when we completed the performed the contracted services, and collectibility of
the fees has occurred when we receive cash and/or marketable securities in
satisfaction of services provided.





We
provide a broad range of information on investing techniques and education tools
to investors through workshops and exhibits. Our subsidiary, The Wealth Expo,
provides us revenue streams through exhibition sales, speaking presentation
sales, collateral material sales and advertising sales. Revenues from Wealth
Expo services is recognized and recorded when the performance of such services
are completed. We adhere to the guidelines established under Staff Accounting
Bulletin 104 whereby, we execute a contractual agreement with the client for a
fixed fee to perform services, delivery of services has occurred when we
completed the performed the contracted services, and collectibility of the fees
has occurred when we receive cash and/or marketable securities in satisfaction
of services provided.





Payments
received in advance of services provided, are recorded as deferred
revenue.





Stock-Based
Compensation





We
adopted SFAS No. 123 (Revised 2004), Share Based Payment(“SFAS
No. 123R”), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of
employee services received in exchange for an award of equity instruments based
on the grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation,for all share-based payments granted prior to and not yet
vested as of January 1, 2006 and share-based compensation based on the
grant-date fair-value determined in accordance with SFAS No. 123R for all
share-based payments granted after January 1, 2006. SFAS No. 123R
eliminates the ability to account for the award of these instruments under the
intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion
No. 25, Accounting for Stock
Issued to Employees, and allowed under the original provisions of SFAS
No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted for our
stock option plans using the intrinsic value method in accordance with the
provisions of APB Opinion No. 25 and related interpretations.





Issuance
of Shares for Service





We
account for the issuance of equity instruments to acquire goods and services
based on the fair value of the goods and services or the fair value of the
equity instrument at the time of issuance, whichever is more reliably
measurable.





Recent
Accounting Pronouncements





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements”. This Statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
non-controlling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for our fiscal year beginning
October 1, 2009. Management is currently evaluating the effect of this
pronouncement on financial statements.





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141(R) will apply prospectively to business combinations for which the
acquisition date is on or after our fiscal year beginning October 1, 2009. While
we have not yet evaluated this statement for the impact, if any, that SFAS No.
141(R) will have on our consolidated financial statements, we will be required
to expense costs related to any acquisitions after September 30,
2009.





FASB
Staff Position on FAS No. 115-1 and FAS No. 124-1 (“the FSP”), “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments,” was
issued in November 2005 and addresses the determination of when an investment is
considered impaired, whether the impairment on an investment is
other-than-temporary and how to measure an impairment loss. The FSP also
addresses accounting considerations subsequent to the recognition of
other-than-temporary impairments on a debt security, and requires certain
disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. The FSP replaces the impairment guidance on
Emerging Issues Task Force (EITF) Issue No. 03-1 with references to
existing authoritative literature concerning other-than-temporary
determinations. Under the FSP, losses arising from impairment deemed to be
other-than-temporary, must be recognized in earnings at an amount equal to the
entire difference between the securities cost and its fair value at the
financial statement date, without considering partial recoveries subsequent to
that date. The FSP also required that an investor recognize other-than-temporary
impairment losses when a decision to sell a security has been made and the
investor does not expect the fair value of the security to fully recover prior
to the expected time of sale. The FSP is effective for reporting periods
beginning after December 15, 2005. The adoption of this statement will not have
a material impact on our consolidated financial statements.





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In March
2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The new standard also improves transparency about the location and
amounts of derivative instruments in an entity’s financial statements; how
derivative instruments and related hedged items are accounted for under
Statement 133; and how derivative instruments and related hedged items affect
its financial position, financial performance, and cash flows. FASB Statement
No. 161 achieves these improvements by requiring disclosure of the fair values
of derivative instruments and their gains and losses in a tabular format. It
also provides more information about an entity’s liquidity by requiring
disclosure of derivative features that are credit risk–related. Finally, it
requires cross-referencing within footnotes to enable financial statement users
to locate important. Based on current conditions, we do not expect the adoption
of SFAS 161 to have a significant impact on our results of operations or
financial position.





In May of
2008, FSAB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting
Principles”. The pronouncement mandates the GAAP hierarchy reside in the
accounting literature as opposed to the audit literature. This has the practical
impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP
hierarchy. This pronouncement will become effective 60 days following SEC
approval. We do not believe this pronouncement will impact our financial
statements.





In May of
2008, FASB issued SFASB No. 163, “Accounting for Financial Guarantee Insurance
Contracts-an interpretation of FASB Statement No. 60”. The scope of the
statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. We not believe this pronouncement will impact our financial
statements.





Off
Balance Sheet Arrangements





None.





Item 7A. Quantitative and Qualitative Disclosures about
Market Risk





Not
required under Regulation S-K for “smaller reporting companies.”





Item
8. Financial Statements and Supplementary Data





Financial
statements are filed and included elsewhere herein as a part of this Annual
Report on Form 10-K.





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





None.





Item
9A(T). Controls and Procedures





Evaluation of
disclosure controls and procedures.We maintain "disclosure controls and
procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in Securities and Exchange Commission
rules and forms, and that such information is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating our disclosure controls and procedures,
management recognized that disclosure controls and procedures, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the disclosure controls and procedures are met.
Additionally, in designing disclosure controls and procedures, our management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible disclosure controls and procedures. The design of any
disclosure controls and procedures also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions.





As of August 31, 2008, we carried out an evaluation, under the
supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective in ensuring that information required to
be disclosed by us in our periodic reports is recorded, processed, summarized
and reported, within the time periods specified for each report and that such
information is accumulated and communicated to our management, including our
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.





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Management’s
Annual Report on Internal Control Over Financial Reporting.Management is
responsible for establishing and maintaining an adequate system of internal
control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance with
GAAP.





Our
internal control over financial reporting includes those policies and procedures
that:





•
            pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect our transactions and dispositions of our
      assets;


•
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with GAAP, and that
      receipts and expenditures are being made only in accordance with
      authorizations of our management and directors;
  and


•
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.





Management
has conducted, with the participation of our Chief Executive Officer and our
Chief Financial Officer, an assessment, including testing of the effectiveness
of our internal control over financial reporting as of April 30, 2008.
Management’s assessment of internal control over financial reporting was based
on the framework in Internal
Control over Financial Reporting – Guidance for Smaller Public
Companiesissued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, Management concluded that our
system of internal control over financial reporting was effective as of August
31, 2008.





The
effectiveness of our internal control over financial reporting as of August 31,
2008 has not been audited by Kabani & Company, Inc., an independent
registered public accounting firm. Management’s report was not subject to
attestation by the Company’s registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only management’s report in this annual report.





Changes in
Internal Control Over Financial Reporting.There were no changes in our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.





Item
9B. Other Information





None.







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 PART III





Item 10. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act





Our
directors and executive officers and their ages as of the date hereof are as
follows:





NAME
            
            AGE
            
            POSITIONS
      HELDAlbert
      Aimers
            
            45
            
            Chairman
      of the Board and Chief Executive OfficerManu
      Ohri
            
            53
            
            Chief
      Financial Officer and DirectorTyson
      Le
            
            27
            
            SecretaryNick
      Iyer
            
            30
            
            DirectorTom
      Hemingway
            
            51
            
            Director





Albert
Aimers, Chief Executive Officer and Chairman of the Board of
Directors





Albert Aimers was electedChairman of the Board and Chief Executive Officer in January 2006. From
2003-2006, Mr. Aimers was President and CEO of Digital WallStreet, Inc. and the
founder of Wallst.net and Financial Publishing company. From 1999-2003, Mr.
Aimers was Chairman and one of the founders of iLive Inc (LIVE), a streaming
media company. Mr. Aimers has been in the financial industry for over 15 years
specializing in such areas as Merchant and Investment Banking, Mergers and
Acquisitions, Investor Awareness and Investor Relations and Financial and Media
Relations and Strategic Investor. Mr. Aimers was a former Board member of Envoy
Communications (ECGI-NASDAQ). Mr. Aimers attended University of Guelph Ont
(B.Sc) and also Wilfred Lauier University (Business) BBA.




Manu
Ohri, Chief Financial Officer and Director





Manu Ohri
was appointed as Executive Vice President, Finance & Chief Financial Officer
in January 2007 and was appointed to serve as a Director on June 18, 2008. From
August 2001 to December 2006, Mr. Ohri served as Director and Executive Vice
President of Finance & Chief Financial Officer of Elephant Talk
Communications, Inc., a telecommunications services provider. From December 1999
to September 2002, Mr. Ohri served as Director and Executive Vice President
& Chief Financial Officer of The Hartcourt Companies, Inc., an investment
holding company. From June 1999 to November 1999, Mr. Ohri served as the
President and Chief Executive Officer of Pego Systems, Inc., an industrial air
and gas equipment manufacturer’s representative organization, an affiliate of
The Hartcourt Companies, Inc. From January 1997 to March 1999, Mr. Ohri served
as Chief Operating Officer and Chief Financial Officer of Dynamic Cooking
Systems, Inc., a privately held manufacturing company of upscale commercial and
kitchen appliances. From September 1989 to December 1996, Mr. Ohri served as
Chief Financial Officer of Startel Corporation, a software development business.
Mr. Ohri is a Certified Public Accountant with over six years experience with
Deloitte & Touche, LLP and PriceWaterhouseCoopers, LLP. Mr. Ohri earned his
Master’s Degree in Business Administration from University of Detroit in 1979
and Bachelor’s degree in Accounting from University of Delhi in India in
1975.





Tyson
Le, Secretary





Tyson Le
was appointed as Secretary in January 2006. Mr. Le joined us in March 2005 in
the position of Controller. From March 2004 to December 2004, Mr. Le worked for
United Parcel Service and designed back-end documentation to aid in supply chain
management. From June 2002 to February 2004, Mr. Le worked for iNet Corporation
in office administration. Mr. Le received his education at Orange Coast College
in Costa Mesa, California.





Nick
Iyer, Director





Nick Iyer
became a director in January 2006. Mr. Iyer has been a director of WallStreet
Direct, Inc. since January 2005. Prior to joining WSD in 2003, Mr. Iyer worked
first as an editorial assistant, and later as a reporter at Newsday in Long
Island, New York. He has published more than 150 articles and was selected by
Newsday's senior editors to work on a combined Tribune Co. effort, titled "The
Lost” which profiled the victims of the September 11, 2001 terrorist attacks.
Mr. Iyer's work has been published in well-recognized and established print
media such as Newsday, The Los Angeles Times, The Chicago Tribune,
Encyclopedia.com, and by the National Institute of Literacy. He holds a
Bachelor's Degree in English Literature from the State University of New York at
Stony Brook.





Tom
Hemingway, Director





Tom
Hemingway became a director in November 2004. Mr. Hemingway is currently the
Chairman and CEO of Redwood Investment Group, a position he has held since its
inception in [year].  Since December 2006, Mr. Hemingway has been a
Director of NextPhase Wireless, a next-generation connectivity company that
specializes in delivering integrated Internet, voice and data communication
solutions to its customers.  Between December 2006 and June 2008, Mr.
Hemingway was the Chief Operating Officer of NextPhase
Wireless.  Since June 2008, Mr. Hemingway has been the CEO and CFO of
NextPhase Wireless.  Between 2004 and [month] 2006, Mr. Hemingway was
the Chief Executive Officer and Chairman of Oxford Media Corp., a developer of
electronic digital distribution technology. Mr. Hemingway has also served as CEO
and Chairman of Esynch Corporation (1998 to 2003), a publicly traded company,
and Chairman and CEO of Intermark Corporation (1995 to 1998), a software
developer and publisher in the entertainment markets. Prior, Mr. Hemingway was
President and CEO of Omni Advanced Technologies and Intellinet Information
Systems. In addition, Mr. Hemingway has been a consultant to several NASDAQ and
privately held companies, including Smart House /LV, Great American Coffee
Company (GACC), Redwood Investment Group, CBC, Pure Bioscience, and Smart
OnLine. He has a Bachelor’s Degree from the State University of New
York.


No family
relationships exist between any of our executive officers or
directors.


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BOARD
MEETINGS AND COMMITTEES





During
the year ended August 31, 2008, the Board of Directors held four board meetings
to conduct business. The Board also approved certain actions by unanimous
written consent.





Audit
Committee





In
January 2006, the Board of Directors formed an Audit Committee. Currently Tom
Hemmingway, an independent director, serves as the sole member of the Audit
Committee. We are formulating and developing a formal written Audit Committee
charter, however, the Audit Committee's responsibilities include: (i) reviewing
the independence, qualifications, services, fees, and performance of the
independent auditors, (ii) appointing, replacing and discharging the independent
auditors, (iii) pre-approving the professional services provided by the
independent auditors, (iv) reviewing the scope of the annual audit and reports
and recommendations submitted by the independent auditors, and (v) reviewing our
financial reporting and accounting policies, including any significant changes,
with management and the independent auditors. Mr. Hemingway has been identified
by the Board as the Audit Committee financial expert.





The Audit
Committee reviewed and discussed our audited financial statements as of and for
the year ended August 31, 2008 with the Board of Directors. The Audit Committee
reviewed and discussed with representatives of Kabani & Company, Inc., our
independent registered public accounting firm, the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol.
1. AU §380). The Audit Committee has also received and reviewed the written
disclosures and the letter from Kabani & Company, Inc. required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, as amended by the Independence Standards Board, and has
discussed with Kabani & Company, Inc. their independence. Based on the
review and discussions referred to in this paragraph, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in our Annual Report on Form 10–K for filing with the SEC.




Compensation
and Stock Option Committee





In
January 2006, the Board of Directors formed a Compensation and Stock Option
Committee. Currently, Tom Hemingway and Albert Aimers serve as its members. The
Compensation and Stock Option Committee is formulating and developing a written
charter for its members describing their functions and responsibilities, and
procedures for the consideration and determination of executive and director
compensation. This committee currently recommends to the Board of Directors
policies under which compensation will be paid or awarded to our directors,
officers and certain other personnel. Among other things, the committee
recommends to the Board of Directors the amount of compensation to be paid or
awarded to our directors, officers and other personnel, including salary,
bonuses, stock option grants, other cash or stock awards under any of our
incentive compensation and stock option plans as in effect from time to time,
retirement and other compensation.





Nominating
Committee





We do not
currently have a Nominating Committee. Our entire Board of Directors acts as the
Nominating Committee and evaluates and recommends nominees for membership on our
Board of Directors and its committees. Our Board of Directors
is responsible for (1) reviewing suggestions of candidates for director
made by directors and others; (2) identifying individuals qualified to become
Board members, and recommending the director nominees for the next annual
meeting of stockholders; (3) recommending director nominees for each committee
of the Board; (4) recommending corporate governance principles; and (5)
overseeing the annual evaluation of the Board and management. There is no
difference in the manner in which a nominee is evaluated based on whether the
nominee is recommended by a stockholder or otherwise.





The Board
of Directors determines the required selection criteria and qualifications of
director nominees based upon our needs at the time nominees are considered. In
general, directors should possess the highest personal and professional ethics,
integrity and values, and be committed to representing the long-term interests
of our stockholders. In addition to the foregoing considerations, the Board of
Directors will consider criteria such as strength of character and leadership
skills; general business acumen and experience; broad knowledge of the industry;
age; number of other board seats; and willingness to commit the necessary time
to ensure an active board whose members work well together and possess the
collective knowledge and expertise required by the Board. The Board of Directors
considers these same criteria for candidates regardless of whether the candidate
was identified by the Board of Directors, by stockholders, or any other
source.





The Board
of Directors considers qualified candidates for possible nomination that are
submitted by our stockholders. Stockholders wishing to make such a submission
may do so by sending the following information to the Board of Directors c/o
Chief Executive Officer at the address indicated on the Notice of Annual Meeting
of Stockholders. Any recommendations submitted to the Chief Executive Officer
should be in writing and should include whatever supporting material the
stockholder considers appropriate in support of that recommendation, but must
include the information that would be required under the rules of the SEC in a
proxy statement soliciting proxies for the election of such candidate and a
signed consent of the candidate to serve as a director of the Company, if
elected. As permitted by SEC rules, stockholders who wish to submit a proposal
or nominate a person as a candidate for election to our Board of Directors at an
annual meeting must follow certain procedures. These procedures require that
timely, written notice of such proposal or nomination be received by our Chief
Executive Officer at our principal executive offices prior to the first
anniversary of the preceding year’s annual meeting.





The Board
of Directors conducts a process of making a preliminary assessment of each
proposed nominee based upon the resume and biographical information provided, an
indication of the candidate’s willingness to serve and other background
information, business experience, and leadership skills, all to the extent
available and deemed relevant by the Board of Directors. This information is
evaluated against the criteria set forth above and the Company’s specific needs
at that time. Based upon a preliminary assessment of the candidate(s), those who
appear best suited to meet our needs may be invited to participate in a series
of interviews, which are used as a further means of evaluating potential
candidates. On the basis of information learned during this process, the Board
of Directors determines which candidate(s) to recommend to the Board to
submit for election at the next stockholder meeting. The Board of Directors uses
the same process for evaluating all candidates, regardless of the original
source of the nomination.





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Our goal
is to seek to achieve a balance of knowledge and experience on our Board. To
this end, we seek nominees with the highest professional and personal ethics and
values, an understanding of our business and industry, diversity of business
experience and expertise, a high level of education, broad-based business
acumen, and the ability to think strategically. Although we use the criteria
listed above as well as other criteria to evaluate potential nominees, we do not
have a stated minimum criteria for nominees. The Board does not use different
standards to evaluate nominees depending on whether they are proposed by our
directors and management or by our stockholders. To date, we have not paid any
third parties to assist us in finding director nominees.





Code
of Ethics





We have
adopted a Code of Ethics that are designed to deter wrongdoing and to promote
honest and ethical conduct, full, fair, accurate, timely and understandable
disclosure in our SEC reports and other public communications. The Code of
Ethics promotes compliance with applicable governmental laws, rules and
regulations.





COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT





Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors, executive officers and holders of more than 10% of our common stock
to file with the SEC reports regarding their ownership and changes in ownership
of our securities. We believe that, during fiscal 2008, our directors, executive
officers and 10% stockholders complied with all Section 16(a) filing
requirements.




Item
11. Executive Compensation





The
following tables set forth certain information regarding our CEO and each of our
most highly-compensated executive officers whose total annual salary and bonus
for the fiscal years ending August 31, 2008 and 2007 exceeded
$100,000





SUMMARY
COMPENSATION TABLE





Name
      and Principal Position
            
            Year
      Ended August 31,
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              ($)
            
            Option
      Awards
              ($)
            
            
            Non-Equity
              Incentive
      Plan Compensation
            
            Nonqualified
      Deferred Compensation Earnings
              ($)
            
            All
      Other Compensation
              ($)
            
            
            Total
              ($)Albert
      Aimers
            
            2008
            
            $
            295,000
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            $
            -
            
            $
            -
            
            $
            77,083
            (4)(5)
            
            $
            372,083President
      and CEO
            
            2007
            
            $
            295,000
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            $
            -
            
            $
            -
            
            $
            101,600
            
            
            $
            401,600Javan
      Khazali
            
            2008
            
            $
            175,000
            
            $
            -
            
            $
            -
            
            $
            25,368
            (1)
            
            $
            -
            
            $
            -
            
            $
            3,333
            (4)
            
            $
            203,701Chief
      Operating Officer
            
            2007
            
            $
            175,000
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            $
            175,000Manu
      Ohri
            
            2008
            
            $
            165,000
            
            $
            -
            
            $
            -
            
            $
            40,916
            (2)
            
            $
            -
            
            $
            -
            
            $
            3,333
            (4)
            
            $
            209,249Chief
      Financial Officer
            
            2007
            
            $
            100,000
            
            $
            -
            
            $
            -
            
            $
            193,938
            (3)
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            $
            293,938





(1)
            On
      December 20, 2007, we awarded Mr. Khazali an option to purchase 330,000
      shares of our common stock at an exercise price of $0.30 per share under
      our 2007 Equity Incentive Plan, and an option to purchase 135,000 shares
      of our common stock at an exercise price of $0.30 per share under our 2007
      Non-Qualified Stock Option Plan.


(2)
            On
      December 20, 2007, we awarded Mr. Ohri an option to purchase 250,000
      shares of our common stock at an exercise price of $0.30 per share under
      our 2007 Equity Incentive Plan, and an option to purchase 500,000 shares
      of our common stock at an exercise price of $0.30 per share under our 2007
      Non-Qualified Stock Option Plan.


(3)
            On
      January 26, 2007, we awarded Mr. Ohri an option to purchase 500,000 shares
      of our common stock at an exercise price of $1.25 per share under our 2007
      Non-Qualified Stock Option Plan. This award was subsequently cancelled in
      December 2007.


(4)
            Includes
      $3,333 earned as director fees for attending Board meetings during the
      period July 1, 2008 to August 31,
2008.


(5)
            Includes
      $73,750 being our contribution towards pension
  plan.





Employment
Agreements with Executive Officers





Albert
Aimers





On July
19, 2003, Digital WallStreet entered into an employment agreement with Albert
Aimers, its Chief Executive Officer to provide salary, bonuses, and other fringe
benefits through December 31, 2006. Pursuant to the terms of the employment
agreement, the annual base salary and benefits payable under the employment
agreement for the twelve months period ended December 31, 2006 amounted to
$368,750. The employment agreement has not been renewed subsequent to December
31, 2006; however, we continue to provide Mr. Aimers the same salary and fringe
benefits pursuant to the terms of the expired employment agreement.





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Manu
Ohri





On
January 26, 2007, we entered into an employment agreement with Manu Ohri to
serve as Chief Financial Officer for a three year period. Mr. Ohri’s annual base
salary is $150,000 for the twelve months period ended December 31, 2007,
$172,500 for the year ended December 31, 2008 and $198,375 for the year ended
December 31, 2009. In addition to the base salary, Mr. Ohri is entitled to
receive bonuses as determined by the Board of Directors based upon our
performance. In the event we are unable to pay Mr. Ohri the base compensation in
cash, Mr. Ohri at his discretion and upon the consent and acceptance thereto by
the President and Chief Executive Officer, may agree to receive restricted
common shares for compensation earned, calculated at the closing price on the
first trading day of the month of compensation earned, discounted by
50%.





In
addition, we issued Mr. Ohri options to purchase 500,000 shares of our common
stock at an exercise price of $1.25 per share under the 2007 Non-Qualified Stock
Option Plan. 250,000 of such options vested and became exercisable on February
1, 2008 and the remaining 250,000 shall vest and become exercisable on February
1, 2009. On December 1, 2007, we and Mr. Ohri agreed to terminate the options.
Subsequently, on December 20, 2007, we issued Mr. Ohri an option to purchase
500,000 shares of our common stock at an exercise price of $0.30 per share under
the 2007 Non-Qualified Stock Option Plan. One-third of such Options vested on
December 20, 2007 and become exercisable. The remaining options shall vest in
equal installments of 166,667 shares on each of December 20, 2008 and December
20, 2009.





Directors’
Compensation Policy





The Board
of Directors approved the quarterly compensation of our directors with $5,000
worth of restricted common shares valued at the closing market price of the
common shares on first day of each month of each fiscal quarter. The quarterly
compensation to the Board members became effective July 1, 2008. We will also
reimburse the Board members for their actual expenses in attending the Board
meetings. The Board members did not receive any compensation during the year
ended August 31, 2008.




Option/SAR
Grants as of August 31, 2008





Name
      and Position
            
            Number
      of UnitsManu
      Ohri, Chief Financial Officer
            
            
            250,000Javan
      Khazali, Chief Operating Officer (1)
            
            
            465,000Tyson
      Le, Secretary
            
            
            200,000Executives
      as a Group
            
            
            915,000Nick
      Iyer, Director
            
            
            265,000





(1)
            Mr.
      Khazali resigned as Chief Operating Officer subsequent to our fiscal year
      end.




Outstanding
Equity Awards at August 31, 2008





Option
      Awards
            
            
            
            Stock
      AwardsName
            
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Securities
      Underlying
              Unexercised
              Unearned
              Options
              (#)
            
            Option
              Exercise
              Price
              ($)
            
            Option
              Expiration
              Date
            
            Number
              of
      Shares
              or
      Units
              of
      Stock
              That
      Have
              Not
              Vested
              (#)
            
            Market
              Value
      of
              Shares
      or
              Units
      of
              Stock
              That
      Have
              Not
              Vested
              ($)
            
            Equity
      Incentive
              Plan
      Awards: Number
              of
      Unearned
              Shares,
      Units or Other Rights That Have Not
              Vested
              (#)
            
            Equity
      Incentive
              Plan
      Awards: Market or Payout
              Value
      of Unearned
              Shares,
      Units or Other Rights That Have Not Vested
              ($)Manu
      Ohri, CFO (1)
            
            111,111
            
            388,889
            
            -
            
            $
            0.30
            
            12/20/2017
            
            -
            
            -
            
            -
            
            -Manu
      Ohri, CFO (2)
            
            55,556
            
            444,444
            
            
            
            
            
            
            12/20/2017Javan
      Khazali, COO (1)
            
            30,000
            
            105,000
            
            -
            
            $
            0.30
            
            12/20/2017
            
            -
            
            -
            
            -
            
            -Javan
      Khazali, COO (2)
            
            73,333
            
            256,667
            
            
            
            
            
            
            12/20/2017Nick
      Iyer (2)
            
            58,889
            
            206,111
            
            -
            
            $
            0.30
            
            12/20/2017
            
            -
            
            -
            
            -
            
            -Tyson
      Le (2)
            
            44,444
            
            155,556
            
            -
            
            $
            0.30
            
            12/20/2017
            
            -
            
            -
            
            -
            
            -TOTAL
            
            373,333
            
            1,306,667





(1)
            Mr. Khazali resigned as Chief Operating Officer subsequent
      to our fiscal year end.




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





The
following table sets forth certain information regarding beneficial ownership of
our common stock as of December 9, 2008.





-
            by
      each person who is known by us to beneficially own more than 5% of our
      common stock;-
            by
      each of our officers and directors;
and


-
            by
      all of our officers and directors as a
group.





Name
            
            Number
      of Shares
              Beneficially
      Owned (1)
            
            
            Percentage
      of
              Outstanding
      Shares (2)Albert
      Aimers, Chairman and CEO
            
            29,088,750
            (3)
            
            43.39
            %Manu
      Ohri, CFO and Director
            
            779,167
            (4)
            
            1.16
            %Tyson
      Le, Secretary
            
            61,111
            (5)
            
            *Tom
      Hemingway, Director
            
            100,000
            
            
            *Nick
      Iyer, Director
            
            944,372
            (6)
            
            1.41
            %Officers
      and Directors as a Group (5 individuals)
            
            30,973,400
            (7)
            
            45.94
            %





* Less than 1%.





(1)
            Beneficial
      Ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities. Shares of common stock subject to options or
      warrants currently exercisable or convertible, or exercisable or
      convertible within 60 days of December 9, 2008 are deemed outstanding for
      computing the percentage of the person holding such option or warrant but
      are not deemed outstanding for computing the percentage of any other
      person.(2)
            Based upon 67,043,794 shares issued and outstanding on
      December 9, 2008.(3)
            Shares
      are owned by AMC Capital Group, Inc., a corporation of which Mr. Aimers is
      an officer, director and shareholder.(4)
            Shares
      are owned by Anarjay Concepts, Inc., a corporation of which Mr. Ohri is an
      officer, director and a shareholder. Includes 229,167 shares issuable upon
      presently exercisable options.(5)
            Represents
      shares issuable upon presently exercisable options.(6)
            Includes
      80,972 shares issuable upon presently exercisable
  options.(7)
            Includes
      371,250 shares issuable upon presently exercisable
  options.





EQUITY
COMPENSATION PLAN INFORMATION





The
following table sets forth information about the shares of our common stock that
may be issued upon the exercise of options granted to employees under the 2007
Non-Qualified Stock Option Plan and the 2008 Non-Qualified Stock Option Plan,
which were approved by the Board of Directors, and the 2007 Equity Incentive
Plan approved by the Board of Directors and shareholders.





Plan
      Category
            
            (a)
              Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
            
            
            (b)
              Weighted-average
      exercise price of outstanding options, warrants and rights
            
            (c)
              Number
      of securities remaining available for future issuance under equity
      compensation plans excluding securities reflected in column (a)
      (1)Equity
      compensation plan approved by security holders (1)
            
            2,235,000
            
            
            $
            0.23
            
            765,000Equity
      compensation plan approved by security holders (2)
            
            2,375,000
            
            
            $
            0.30
            
            4,625,000Equity
      compensation plan  approved by security holders
    (3)
            
            -
            
            
            
            -
            
            2,000,000Total
            
            4,610,000
            
            
            
            
            
            7,390,000





(1)
            We
      established a non-qualified stock option plan pursuant to which options to
      acquire a maximum of 3,000,000 shares of our common stock were reserved
      for grant (the “2007 Non-Qualified Plan”).  As of August 31,
      2008, included above in the 2007 Non-Qualified Plan are 635,000 shares
      issuable upon exercise of options granted to employees and directors, and
      1,600,000 options granted to outside consultants for services rendered to
      our company.




(2)
            We
      established an equity compensation plan pursuant to which options to
      acquire a maximum of 7,000,000 shares of our common stock were reserved
      for grant (the “2007 Equity Plan”).  As of August 31, 2008,
      included above in the 2007 Equity Plan are 2,375,000 shares issuable upon
      exercise of options granted to employees and
  directors.





(3)
            We
      established a nonqualified stock option plan pursuant to which options to
      acquire a maximum of 2,000,000 shares of our common stock were reserved
      for grant (the “2008 Non-Qualified Plan”). As of August 31, 2008, no
      options under the 2008 Non-Qualified Plan were issued or
      outstanding.




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





There
have been no transactions, or proposed transactions, which have materially
affected or will materially affect us in which any director, executive officer
or beneficial holder of more than 5% of the outstanding common stock, or any of
their respective relatives, spouses, associates or affiliates, has had or will
have any direct or material indirect interest. We have no policy regarding
entering into transactions with affiliated parties.





Item
14. Principal Accounting Fees and Services





Audit
Fees





The
aggregate fees billed by our previous auditors, for professional services
rendered for the audit of our annual financial statements during the years ended
August 31, 2008 and 2007, and for the reviews of the financial statements
included in our Quarterly Reports on Form 10-QSB during the fiscal years, were
$30,500 and $35,500, respectively.





Audit-Related
Fees





Our
independent registered public accounting firm did not bill us during the years
ended August 31, 2008 and 2007 for audit related services.





Tax
Fees





Our
independent registered public accounting firm did not bill us for tax related
work during the fiscal years ended August 31, 2008 and 2007.





All
Other Fees





Our
independent registered public accounting firm did not bill us during fiscal
years ended August 31, 2008 or 2007 for other services.





The Board
of Directors and Audit Committee have considered whether the provision of
non-audit services is compatible with maintaining the principal accountant's
independence.  The Audit Committee requires that prior to the
engagement of our principal accountant to audit our financial statements or to
perform other Audit Related or Non-Audit Related services, the engagement be
reviewed to consider the scope of services to be rendered and the expected fees
to be charged by the principal accountant in connection with rendering such
services.






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PART IV





Item
15. Exhibits and Financial Statement Schedules





Exhibit
Index





3.1
            Certificate
      of Incorporation, filed as an exhibit to the Registration Statement on
      Form 10SB-12G, filed with the Securities Exchange Commission on June 25,
      2001 and incorporated herein by
reference.


3.2
            Certificate of Amendment, filed with the Nevada Secretary
      of State on May 21, 2004


3.3
            Certificate of Amendment, filed with the Nevada Secretary
      of State on November 30, 2004


3.4
            Certificate of Amendment, filed with the Nevada Secretary
      of State on September 9, 2005


3.5
            Bylaws,
      filed as an exhibit to the Registration Statement on Form 10SB-12G, filed
      with the Securities Exchange Commission on June 25, 2001 and incorporated
      herein by reference.


3.6
            Plan
      and Agreement of Reorganization, filed as an exhibit to the Current Report
      on Form 8-K, filed with the Securities Exchange Commission on September
      23, 2005 and incorporated herein by
reference.


3.7
            Amendments
      to Plan and Agreement of Reorganization, filed as an exhibit to the
      Current Report on Form 8-K, filed with the Securities Exchange Commission
      on January 12, 2006 and incorporated herein by
  reference.


10.1
            Employment Agreement, dated as of July 19, 2003, by and
      between Digital WallStreet, Inc. and Albert
  Aimers


10.2
            Employment Agreement dated as of January 27, 2007, by and
      between Financial Media Group, Inc. and Manu
  Ohri


10.3
            2007
      Nonqualified Stock Option Plan, filed as an exhibit to the Registration
      Statement on Form S-8, filed with the Securities Exchange Commission on
      January 19, 2007 and incorporated herein by
  reference.


10.4
            2007
      Equity Incentive Plan, filed as an exhibit to the Annual Report on Form
      10-KSB, filed with the Securities Exchange Commission on December 7, 2007
      and incorporated herein by
reference.


10.5
            2008 Nonqualified Stock Option
  Plan


14.1
            Code of Ethics


21.1
            List of Subsidiaries of the
  Registrant


23.1
            Consent
      of Kabani & Company, Inc., Independent Registered Public Accounting
      Firm


31.1
            Certification of Chief Executive Officer pursuant to Rule
      13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange
      Act of 1934, as amended


31.2
            Certification of Chief Financial Officer pursuant to Rule
      13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange
      Act of 1934, as amended


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


32.2
            Certification pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief
      Financial Officer)




- 25
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SIGNATURES







In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.







FINANCIAL MEDIA GROUP, INC.





Date:  December
      12, 2008
            By:/s/ ALBERT AIMERSAlbert
      AimersChief
      Executive Officer (Principal Executive Officer)Date:  December
      12, 2008
            By:/s/ MANU OHRIManu
      OhriChief
      Financial Officer (Principal Accounting
Officer)







Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.







Name
            
            Position
            
            Date/s/ ALBERT
      AIMERS
              Albert
      Aimers
            
            Chairman
      of the Board
            
            December
      12, 2008/s/
      MANU OHRI
              Manu Ohri
            
            Chief
      Financial Officer, Director
            
            December
      12, 2008/s/ NICK
      IYER
              Nick
      Iyer
            
            Director
            
            December
      12, 2008TOM
      HEMINGWAY
              Tom
      Hemingway
            
            Director
            
            December
      12, 2008





- 26
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FINANCIAL
MEDIA GROUP, INC.


AND
SUBSIDIARIES








TABLE
OF CONTENTS








PageREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            28CONSOLIDATED
      BALANCE SHEETS AS OF AUGUST 31, 2008 AND 2007
            29CONSOLIDATED
      STATEMENTS OF OPERATIONS
              FOR
      THE YEARS ENDEDAUGUST
      31, 2008 AND 2007
            30CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
              FOR
      THE YEARS ENDED AUGUST 31, 2008 AND 2007
            31CONSOLIDATED
      STATEMENTS OF CASH FLOWS
              FOR
      THE YEARS ENDEDAUGUST
      31, 2008 AND 2007
            32NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
            33 –
      45













- 27
-
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the
Board of Directors of


Financial
Media Group, Inc. and Subsidiaries








We have
audited the accompanying consolidated balance sheet of Financial Media Group,
Inc. and Subsidiaries as of August 31, 2008 and 2007, and the related
consolidated statements of operations, changes in stockholders’ deficit and cash
flows for the years ended August 31, 2008 and 2007. These financial statements
are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.





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





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Financial Media Group, Inc.
and Subsidiaries as of August 31, 2008 and 2007 and the results of its
operations, changes in stockholders’ deficit and cash flows for the years ended
August 31, 2008 and 2007 in conformity with accounting principles generally
accepted in the United States of America.





The
Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has accumulated deficit of $12,536,538 as of August 31,
2008 and has incurred net loss of $2,864,462 for the year ended August 31, 2008.
These factors as discussed in notes to the financial statements raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in the Note 14
to the consolidated financial statements. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.








/s/
      KABANI & COMPANY, INC.CERTIFIED
      PUBLIC ACCOUNTANTSLos
      Angeles, CaliforniaNovember
      18, 2008








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FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





August
      31,2008
            
            
            2007ASSETSCURRENT
      ASSETS:Cash
      & cash equivalents
            
            $
            73,312
            
            
            $
            172,013Accounts
      receivable, net
            
            
            53,718
            
            
            
            70,184Marketable
      securities
            
            
            2,217,852
            
            
            
            3,634,505Other
      current assets
            
            
            1,793
            
            
            
            67,411Total
      current assets
            
            
            2,346,675
            
            
            
            3,944,113PROPERTY
      & EQUIPMENT, net
            
            
            82,566
            
            
            
            78,737DEPOSIT
            
            
            34,671
            
            
            
            26,521Total
      assets
            
            $
            2,463,912
            
            
            $
            4,049,371LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIES:Accounts
      payable
            
            $
            613,929
            
            
            $
            326,542Accrued
      expenses
            
            
            806,639
            
            
            
            1,185,288Deferred
      revenue
            
            
            424,832
            
            
            
            2,196,106Due
      to officers
            
            
            820,729
            
            
            
            633,169Notes
      payable
            
            
            650,000
            
            
            
            100,000Shares
      to be Issued
            
            
            -
            
            
            
            112,453Current
      portion of note payable-officers
            
            
            -
            
            
            
            7,500Total
      current liabilities
            
            
            3,316,129
            
            
            
            4,561,058Long
      term debt - officer
            
            
            -
            
            
            
            3,000,000CommitmentSTOCKHOLDERS'
      DEFICIT:Common
      stock, $0.001 par value, 300,000,000 shares authorized,65,726,835
      and 33,082,566 shares issued and outstandingat
      August 31, 2008 and 2007, respectively
            
            
            65,727
            
            
            
            33,083Paid
      in capital
            
            
            11,339,465
            
            
            
            5,872,385Unrealized
      gain on marketable securities
            
            
            279,130
            
            
            
            254,921Accumulated
      deficit
            
            
            (12,536,538
            )
            
            
            (9,672,076
            )Total
      stockholders' deficit
            
            
            (852,216
            )
            
            
            (3,511,687
            )Total
      liabilities and stockholders' deficit
            
            $
            2,463,912
            
            
            $
            4,049,371











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


- 29
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 Table of Contents


FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





For
      the years endedAugust
      31,2008
            
            
            2007Net
      revenues
            
            $
            7,795,924
            
            
            $
            7,090,042Operating
      expensesSelling,
      general & administrative
            
            
            6,088,190
            
            
            
            6,870,888Depreciation
            
            
            49,753
            
            
            
            36,963Impairment
      of marketable securities
            
            
            4,119,303
            
            
            
            5,595,929Total
      operating expenses
            
            
            10,257,246
            
            
            
            12,503,780Loss
      from operations
            
            
            (2,461,322
            )
            
            
            (5,413,738
            )Non-Operating
      Income (Expense):Interest
      expense
            
            
            (72,973
            )
            
            
            (199,844
            )Interest
      income
            
            
            10
            
            
            
            520Loss
      on settlement of debt
            
            
            -
            
            
            
            (1,413
            )Realized
      loss on sale of marketable securities
            
            
            (325,377
            )
            
            
            (318,400
            )Total
      non-operating expense
            
            
            (398,340
            )
            
            
            (519,137
            )Loss
      from operations before income taxes
            
            
            (2,859,662
            )
            
            
            (5,932,875
            )Provision
      for income tax
            
            
            4,800
            
            
            
            4,800Net
      Loss
            
            
            (2,864,462
            )
            
            
            (5,937,675
            )Other
      comprehensive gain (loss):Unrealized
      gain (loss) on marketable securities
            
            
            (63,880
            )
            
            
            (255,682
            )Reclassification
      Adjustment
            
            
            88,089
            
            
            
            161,817Comprehensive
      gain (loss)
            
            $
            (2,840,253
            )
            
            $
            (6,031,540
            )Basic
      & diluted net loss per share
            
            $
            (0.05
            )
            
            $
            (0.21
            )Weighted
      average shares of share capital outstanding-
      basic & diluted
            
            
            52,473,307
            
            
            
            28,161,001








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





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 Table of Contents




FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT





Common
      Stock
            
            Additional
            
            Common
      Stock
            
            
            Unrealized
            
            Accumulated
            
            
            Stockholders'Shares
            
            Par
      Value
            
            Paid
      in Capital
            
            To
      be Issued
            
            
            Gain
      (Loss)
            
            Deficit
            
            
            DeficitBalance,
      August 31, 2006
            
            25,760,507
            
            $
            25,761
            
            $
            1,054,087
            
            $
            130,500
            
            
            $
            348,786
            
            $
            (3,734,401
            )
            
            $
            (2,175,267
            )Common
      stock issued for cash
            
            5,076,982
            
            
            5,077
            
            
            2,457,980
            
            
            (130,500
            )
            
            
            -
            
            
            -
            
            
            
            2,332,557Common
      stock issued for Wealth Expo brand
            
            100,000
            
            
            100
            
            
            138,900
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            139,000Common
      stock issued for exercise of options
            
            1,800,000
            
            
            1,800
            
            
            710,700
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            712,500Common
      stock issued for exercise of warrants
            
            63,173
            
            
            63
            
            
            63,110
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            63,173Common
      stock issued for services
            
            281,904
            
            
            282
            
            
            405,812
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            406,094Options
      issued for services
            
            -
            
            
            -
            
            
            1,041,796
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            1,041,796Reclassification
      adjustment
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            
            161,817
            
            
            -
            
            
            
            161,817Unrealized
      loss on marketable securities
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            
            (255,682
            )
            
            -
            
            
            
            (255,682
            )Net
      loss
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            
            (5,937,675
            )
            
            
            (5,937,675
            )Balance,
      August 31, 2007
            
            33,082,566
            
            
            33,083
            
            
            5,872,385
            
            
            -
            
            
            
            254,921
            
            
            (9,672,076
            )
            
            
            (3,511,687
            )Common
      stock issued for cash
            
            17,404,307
            
            
            17,584
            
            
            2,209,835
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            2,227,419Options
      issued for services
            
            -
            
            
            -
            
            
            200,217
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            200,217Warrants
      issued for services
            
            -
            
            
            -
            
            
            13,675
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            13,675Conversion
      of note payable to common stock
            
            15,000,000
            
            
            15,000
            
            
            2,985,000
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            3,000,000Shares
      issued for services
            
            240,000
            
            
            60
            
            
            58,353
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            58,413Reclassification
      adjustment
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            
            88,089
            
            
            -
            
            
            
            88,089Unrealized
      loss on marketable securities
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            
            (63,880
            )
            
            -
            
            
            
            (63,880
            )Net
      loss
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            
            -
            
            
            (2,864,462
            )
            
            
            (2,864,462
            )Balance,
      August 31, 2008
            
            65,726,873
            
            $
            65,727
            
            $
            11,339,465
            
            $
            -
            
            
            $
            279,130
            
            $
            (12,536,538
            )
            
            $
            (852,216
            )













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





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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





For
      the years ended August 31,2008
            
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
            
            $
            (2,864,462
            )
            
            $
            (5,937,675
            )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Bad
      debts
            
            
            387,220
            
            
            
            107,133Depreciation
      and amortization
            
            
            49,753
            
            
            
            36,963Revenues
      in form of marketable securities
            
            
            (6,613,179
            )
            
            
            (5,958,082
            )Impairment
      of marketable securities
            
            
            4,119,303
            
            
            
            5,595,929Loss
      on sale of marketable securities
            
            
            325,377
            
            
            
            318,400Loss
      on settlement of debt
            
            
            -
            
            
            
            1,413Issuance
      of common stock for services
            
            
            58,413
            
            
            
            406,094Issuance
      of options for services
            
            
            200,217
            
            
            
            1,041,796Issuance
      of warrants for services
            
            
            13,675
            
            
            
            -(Increase)/Decrease
      in current assets:Receivables
            
            
            (370,754
            )
            
            
            (122,159
            )Other
      assets
            
            
            57,468
            
            
            
            (62,844
            )Increase
      in current liabilities:Accounts
      payable
            
            
            287,387
            
            
            
            59,992Accrued
      expenses and other liabilities
            
            
            358,911
            
            
            
            583,173Deferred
      revenues
            
            
            340,258
            
            
            
            200,585Net
      cash used in operating activities
            
            
            (3,650,412
            )
            
            
            (3,729,281
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of property & equipment
            
            
            (53,583
            )
            
            
            (20,568
            )Cash
      received from sale/purchase marketable securities-net
            
            
            1,497,829
            
            
            
            871,394Net
      cash provided by investing activities
            
            
            1,444,246
            
            
            
            850,826CASH
      FLOWS FROM FINANCING ACTIVITIES:Payments
      of loans from third parties
            
            
            (7,500
            )
            
            
            (227,045
            )Cash
      received from exercise of options & warrants
            
            
            -
            
            
            
            775,673Proceeds
      from issuance of common stock
            
            
            2,114,965
            
            
            
            2,445,010Net
      cash provided by financing activities
            
            
            2,107,465
            
            
            
            2,993,638NET
      INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
            
            
            (98,701
            )
            
            
            115,183CASH
      & CASH EQUIVALENTS, BEGINNING BALANCE
            
            
            172,013
            
            
            
            56,830CASH
      & CASH EQUIVALENTS, ENDING BALANCE
            
            $
            73,312
            
            
            $
            172,013











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





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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS








NOTE
1      NATURE OF BUSINESS AND BASIS
OF PRESENTATION





Financial
Media Group, Inc. (the “Company,” "We," or "FMG") is a full service financial
media company focused on developing tools and  applications that
enable retail investors  to collaborate directly with publicly traded
companies. The Company provides Internet based media and advertising services
through its network of financial websites.  The Company provides full
array of customized investor awareness programs such senior management
interviews, text and display advertising, press releases, conferences and
seminars, and email marketing.





WallStreet
Direct, Inc. (“WallStreet”), a wholly-owned subsidiary of Financial Media Group,
Inc. was incorporated in the State of Nevada on January 5, 2005 as a financial
holding company specializing as a provider of financial news, tools and content
for the global investment community. On January 15, 2005, WallStreet acquired
100% of the assets and outstanding shares of Digital WallStreet, Inc. which was
100% owned by the majority shareholder (86%) of the Company, in exchange for two
promissory notes of $1,500,000 each, carrying interest at 6% per annum, due and
payable on January 31, 2007 and January 31, 2010. As this merger is between
entities under the common control, the issuance of the promissory notes to the
majority shareholder has been recorded as a distribution to the majority
shareholder. The merger has been accounted for on historical cost
basis.





Digital
WallStreet, Inc. was incorporated in Nevada on June 12, 2002, and commenced its
operations during the first quarter of 2003. WallStreet is a full service
financial media company focused on applications that enable investors to
collaborate directly with publicly traded companies. The company provides
internet media and advertising services through its network of financial
websites.





On
January 6, 2006, Financial Media Group, Inc. acquired 100% of the equity in
WallStreet pursuant to an Agreement and Plan of Reorganization dated September
19, 2005 by and between WallStreet and the Company. Financial Media Group, Inc.,
formerly known as Giant Jr. Investments Corp., was incorporated in Nevada in
1984 as Business Development Company, Inc. Pursuant to the acquisition of
WallStreet, it became the wholly owned subsidiary of Financial Media Group, Inc.
The former shareholders of WallStreet received 19,998,707 shares or 82% of the
issued and outstanding shares of the Company’s common stock in exchange for all
the issued and outstanding shares of WallStreet.





The
acquisition of WallStreet is accounted for as a reverse acquisition under the
purchase method of accounting since the shareholders of WallStreet obtained
control of the consolidated entity. Accordingly, the reorganization of the
two companies is recorded as a recapitalization of WallStreet, with WallStreet
being treated as the continuing operating entity. The historical financial
statements presented herein will be those of WallStreet. The continuing entity
retained August 31 as its fiscal year end.





On
February 10, 2006, Financial Media Group, Inc. established a 100% wholly owned
subsidiary Financial Filings Corp. This business unit focuses on providing
edgarization and newswire services to small and mid-sized public companies.
These compliance services provide formatting of pertinent SEC filings and
distribution of news in more than 30 languages to media outlets in more than 135
countries.





On June
13, 2006, Financial Media Group, Inc. established a wholly-owned subsidiary My
WallStreet, Inc. and launched in January 2007, http://my.wallst.net, an online
community for investors. The website offers free membership and provides social
networking applications including messaging, blogs, message boards, video and
audio uploads, and personal profile pages. In addition, members of MyWallSt can
participate in the “Rookie Challenge,” a proprietary virtual stock trading
simulator that allows members to compete against each other for a weekly cash
prize. Members can also communicate with another, rate individual stocks, post
comments on individual stocks, and compile their own Watchlist of stocks, which
can be viewed and commented on by other members of the online community. Unlike
other social network services including MySpace and FaceBook, MyWallSt members
have one interest in common: they want to become better investors. MyWallSt also
provides a venue for investors to interact with public company executives, many
of whom have active profiles on the website.





In
January 2007, the Company acquired the trade name “The Wealth Expo” and formed a
wholly owned subsidiary The Wealth Expo Inc. on June 12, 2007. The Wealth Expo
provides a broad range of information on investing techniques, and tools to
investors through workshops and exhibits held throughout the United
States.





In May
2008, the Company launched WallStTV and offer free access to its original video
programming including the 3-Minute Press Show, Sweet Picks, the Analyst’s
Review, and WallSt.net News Magazine (“WSNM”). WSNM half-hour program is run
weekly and distributed through television via the Fox Business
Network.




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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS







NOTE
2       SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES





Principles
of Consolidation





The
consolidated financial statements include the accounts of the Company, its
wholly-owned subsidiaries WallStreet Direct, Inc., Digital Wall Street, Inc.,
Financial Filings, Corp., My WallStreet, Inc. and Wealth Expo Inc. All
significant inter-company accounts and transactions have been
eliminated.





Use
of Estimates





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





Cash
and Cash Equivalents





The
Company considers all liquid investments with a maturity of three months or less
from the date of purchase that are readily convertible into cash to be cash
equivalents.





Accounts
Receivable





The
Company maintains reserves for potential credit losses on accounts receivable.
Management reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer credit worthiness,
current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves. Reserves are recorded primarily on a specific
identification basis. Allowance for doubtful debts amounted to $201,872 and
$140,158 as of August 31, 2008, respectively.





Marketable
Securities





The
Company’s investments in securities are classified as available-for-sale and, as
such, are carried at fair value based on quoted market prices. Securities
classified as available-for-sale may be sold in response to changes in interest
rates, liquidity needs, and for other purposes.





Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholder’s equity. Realized
and unrealized gains and losses for securities classified as available-for-sale
are included in the statement of operations and comprehensive gain,
respectively.





Property
and Equipment





Property
and equipment are carried at cost less accumulated depreciation. Depreciation is
provided using the straight-line method over the estimated useful life of the
assets from three to five years. Expenditures for maintenance and repairs are
charged to expense as incurred.





Revenue
Recognition Policy





The
Company’s primary source of revenue is generated from providing Internet based
media and advertising services and a full array of customized investor awareness
programs to small and medium sized companies through its financial websites
www.wallst.net
and my.wallst.net. The
services include audio and video production of senior management interviews,
newsletters and editorials, small cap companies’ conferences and seminars,
e-mail mailings and forums, media and advertising. These services are provided
by the Company’s subsidiaries WallStreet Direct, Inc. and Digital WallStreet,
Inc. Revenues from Internet based media and advertising services are recognized
and recorded when the performance of such services are completed. The Company
adheres to the guidelines established under Staff Accounting Bulletin 104
whereby, the Company executes a contractual agreement with the client for a
fixed fee to perform services, delivery of services has occurred when the
Company performed the contracted services, and collectibility of the fees has
occurred when the Company receives cash and/or marketable securities in
satisfaction for services provided.





The
Company provides news wire and compliance services to small and medium size
publicly traded companies including preparation of registration statements,
electronic filings and reporting of SEC documents (EDGAR), preparation of proxy
materials and news distribution. Such services are provided by the Company’s
subsidiary Financial Filings Corp. Revenues are recognized and recorded when the
performances of such services are completed. The Company adheres to the
guidelines established under Staff Accounting Bulletin 104 whereby, the Company
executes a contractual agreement with the client for a fixed fee to perform
services, delivery of services has occurred when the Company completed the
performed the contracted services, and collectibility of the fees has occurred
when the Company receives cash and/or marketable securities in satisfaction of
services provided.





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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
   NOTE
2       SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
 
 Revenue
Recognition Policy (cont.)




The
Company provides a broad range of information on investing techniques and
education tools to investors through workshops and exhibits. The Company’s
subsidiary Wealth Expo provides revenue streams for the Company through
exhibition sales, speaking presentation sales, collateral material sales and
advertising sales. Revenues from Wealth Expo services is recognized and recorded
when the performance of such services are completed. The Company adheres to the
guidelines established under Staff Accounting Bulletin 104 whereby, the Company
executes a contractual agreement with the client for a fixed fee to perform
services, delivery of services has occurred when the Company completed the
performed the contracted services, and collectibility of the fees has occurred
when the Company receives cash and/or marketable securities in satisfaction of
services provided.





The
Company records revenues on the basis of services provided to its clients for a
fixed determinable fee pursuant to a contractual agreement. In lieu of providing
services, the Company receives from its clients cash and/or securities, as
compensation for providing such services. Payments received in advance of
services provided, are recorded as deferred revenue.





Fair
Value of Financial Instruments





Statement
of financial accounting standard No. 107, Disclosures about fair value of
financial instruments, requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for assets and liabilities qualifying, as financial
instruments are a reasonable estimate of fair value.





Advertising
and Marketing Costs





The
Company expenses costs of advertising and marketing as incurred. Advertising and
marketing expense for the years ended August 31, 2008 and 2007 amounted to
$743,713 and $687,945, respectively.





Income
Taxes





The
Company accounts for income taxes under the Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ('Statement 109"). Under Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.





Basic
and Diluted Net Loss Per Share





Net loss
per share is calculated in accordance with the Statement of financial accounting
standards No. 128 (SFAS No. 128), “Earnings per share. Basic net loss per share
is based upon the weighted average number of common shares outstanding. Diluted
net loss per share is based on the assumption that all dilutive convertible
shares and stock options were converted or exercised. Dilution is computed by
applying the treasury stock method. Under this method, options and warrants are
assumed to be exercised at the beginning of the period (or at the time of
issuance, if later), and as if funds obtained thereby were used to purchase
common stock at the average market price during the period.





Weighted
average number of shares used to compute basic and diluted loss per share is the
same since the effect of dilutive securities is anti-dilutive. The following
number of potential shares of common stock has been excluded from the
computation of diluted net loss per share for the year ended August 31, 2008 and
2007, respectively as effect is anti-dilutive.





Year
      ended August 31,2008
            
            
            2007Stock
      options
            
            
            4,610,000
            
            
            
            500,000Stock
      warrants
            
            
            409,667
            
            
            
            574,6675,019,667
            
            
            
            1,074,667







- 35
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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
    NOTE
2       SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT.)


Concentration
of Credit Risk





Financial
instruments which potentially subject the Company to concentrations of credit
risk are cash, accounts receivable and marketable securities. The Company places
its cash with financial institutions deemed by management to be of high credit
quality. The amount on deposit in any one institution that exceeds federally
insured limits is subject to credit risk. All of the Company’s investment in
marketable securities are considered “available-for-sale” and are carried at
their fair value, with unrealized gains and losses (net of income taxes) that
are temporary in nature recorded in accumulated other comprehensive income
(loss) in the accompanying balance sheets. The fair values of the Company’s
investments in marketable sureties are determined based on market quotations.
Exposure to losses on receivables is principally dependent on each customer's
financial condition. The Company monitors its exposure for credit losses and
maintains allowances for anticipated losses, as required.





Reporting
Segments





Statement
of financial accounting standards No. 131, Disclosures about segments of an
enterprise and related information (SFAS No. 131), which superseded statement of
financial accounting standards No. 14, Financial reporting for segments of a
business enterprise, establishes standards for the way that public enterprises
report information about operating segments in annual financial statements and
requires reporting of selected information about operating segments in interim
financial statements regarding products and services, geographic areas and major
customers. SFAS No. 131 defines operating segments as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performances.





The
Company offers a broad range of services to its clients and its primary source
of revenue is generated from providing Internet based media and advertising
services and a full array of customized investor awareness programs to small and
medium sized companies through its financial websites http://www.wallst.net,
http://my.wallst.net, and http://tv.wallst.net. The Company also provides news
wire and compliance services including preparation of registration statements,
electronic filings and reporting of SEC documents (EDGAR), preparation of proxy
materials and news distribution to the same types of clients whom the Company
provides Internet based media and advertising services. The Company started to
offer a broad range of information on investing techniques and education tools
to investors through workshops, exhibition sales, speaking presentation sales,
collateral material sales and advertising sales.





For the
year ended August 31, 2008, the revenue generated, assets and net loss from the
two sources, i.e. news wire and compliance services, and investing techniques
and education tools services, is less than 10% of the total revenue, total
assets and total net loss, respectively. Hence, SFAS 131 has no effect on the
Company's financial statements as substantially all of the Company's operations
are conducted in one primary industry segment i.e. providing Internet based
media and advertising services and a full array of customized investor awareness
programs to small and medium sized companies.





Stock-Based
Compensation





The
Company adopted SFAS No. 123 (Revised 2004), Share Based Payment(“SFAS
No. 123R”), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of
employee services received in exchange for an award of equity instruments based
on the grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation,for all share-based payments granted prior to and not yet
vested as of January 1, 2006 and share-based compensation based on the
grant-date fair-value determined in accordance with SFAS No. 123R for all
share-based payments granted after January 1, 2006. SFAS No. 123R
eliminates the ability to account for the award of these instruments under the
intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion
No. 25, Accounting for Stock
Issued to Employees, and allowed under the original provisions of SFAS
No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted for our
stock option plans using the intrinsic value method in accordance with the
provisions of APB Opinion No. 25 and related interpretations.





Issuance
of Shares for Services





The
Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.





Comprehensive
Income





Statement
of financial accounting standards No. 130, Reporting comprehensive income (SFAS
No. 130), establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity, except those resulting from investments by
owners and distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in
financial statements that are displayed with the same prominence as other
financial statements. The unrealized loss as of August 31, 2008 and 2007 was
$63,880 and $255,682 respectively, and the net comprehensive gain for the year
ended August 31, 2008 was $24,209 net comprehensive loss for the year ended
August 31, 2007 was $93,865.





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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
    NOTE
2       SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT.)


Recent
Accounting Pronouncements


In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations”.The
objective of this statement will significantly change the accounting for
business combinations. Under Statement 141R, an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition date fair value with limited exceptions.
Statement 141 applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The Company does not expect the
adoption of SFAS No. 141R to have a material impact on the consolidated
financial statements.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements-An Amendment of ARB No. 51".The
objective of this statement is to establish new accounting and reporting
standards for the Noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary.. Statement 160 is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008. The Company does not expect the adoption of SFAS No. 160 to have a
material impact on the consolidated financial statements.





In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
161, Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133,which requires additional disclosures about the objectives of
the derivative instruments and hedging activities, the method of accounting for
such instruments under SFAS No. 133 and its related interpretations, and a
tabular disclosure of the effects of such instruments and related hedged items
on our financial position, financial performance, and cash flows. The Company
does not expect the adoption of SFAS No. 161 to have a material impact on the
consolidated financial statements.





In May
2008, FASB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting
Principles”. The pronouncement mandates the GAAP hierarchy reside in the
accounting literature as opposed to the audit literature. This has the practical
impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP
hierarchy. This pronouncement will become effective 60 days following SEC
approval. The Company does not believe this pronouncement will impact its
financial statements.





In May
2008, FASB issued SFASB No. 163, “Accounting for Financial Guarantee Insurance
Contracts-an interpretation of FASB Statement No. 60”. The scope of the
statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. The Company does not believe this pronouncement will impact
its financial statements.





Supplemental
Disclosure of Cash Flows





The
Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95. The Company paid $2,100
for interest and $0 for income taxes during the year ended August 31, 2008. The
Company paid $305,305 for interest and $0 for income taxes during the year ended
August 31, 2007.





NOTE
3      MARKETABLE
SECURITIES





The
Company receives cash and/or securities of client companies as payment in full
for services rendered. The numbers of shares the Company receives for services
is based on contract amount, and the number of shares is determined based on the
bid price at the time of signing the agreement. The securities received from
clients are classified as available-for-sale and, as such, are carried at fair
value based on the quoted market prices. The securities comprised of shares of
common stock of third party customers and securities purchased. Securities
classified as available-for-sale may be sold in response to changes in interest
rates, liquidity needs, and for other purposes. The Company does not currently
have any held-to-maturity or trading securities.





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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  NOTE
3      MARKETABLE
SECURITIES (CONT.)


Marketable
securities classified as available for sale consisted of the following as of
August 31, 2008:




Equity
      Securities Name and Symbol
            
            Number
      of shares held at August 31, 2008
            
            Cost
            
            Market
      Value at August 31, 2008
            
            Accumulated
      Unrealized Gain
            
            Accumulated
      Unrealized Loss
            
            Traded
      on Pink Sheets (PK) or Bulletin Board (BB)Axial
      Vector Engine Corp. (AXVC)
            
            410,958
            
            $
            127,397
            
            $
            127,397
            
            $
            -
            
            $
            (0
            )
            PKBio-Clean
      International, Inc. (BCLE)
            
            100,000
            
            
            4,000
            
            
            4,000
            
            
            -
            
            
            -
            
            PKCanAm
      Uranium Corp (CAUI)
            
            1,180,000
            
            
            11,800
            
            
            8,850
            
            
            -
            
            
            (2,950
            )
            BBChina
      YouTV Corp
            
            1,400,000
            
            
            42,000
            
            
            42,000
            
            
            -
            
            
            -
            
            BBExousia
      Advanced mat (EXOU)
            
            401,538
            
            
            261,000
            
            
            244,938
            
            
            -
            
            
            (16,062
            )
            BBFIMA,
      Inc (FIMA)
            
            357,000
            
            
            14,994
            
            
            14,994
            
            
            -
            
            
            -
            
            PKGENCO
      Corp (GNCC)
            
            294,118
            
            
            17,647
            
            
            38,235
            
            
            20,588
            
            
            -
            
            PKGlobal
      8 Technologies, Inc. (GBLE)
            
            331,180
            
            
            131,860
            
            
            69,548
            
            
            -
            
            
            (62,313
            )
            PKIfinix
      Corp. (INIX)
            
            34,500,000
            
            
            315,000
            
            
            483,000
            
            
            168,000
            
            
            -
            
            PKInternational
      Food Products Group, Inc. (IFDG)
            
            4,000,000
            
            
            22,000
            
            
            22,000
            
            
            -
            
            
            -
            
            PKNexplore
      Corp. (NXPC)
            
            200,000
            
            
            108,000
            
            
            108,000
            
            
            -
            
            
            -
            
            PKNutriPure
      Beverages, Inc. (NUBV)
            
            250,033,333
            
            
            10,000
            
            
            25,003
            
            
            15,003
            
            
            -
            
            PKPRG
      Group, Inc. (PRGJ)
            
            454,000
            
            
            13,620
            
            
            13,620
            
            
            -
            
            
            -
            
            PKPSM
      Holdings, Inc. (PSMH)
            
            157,895
            
            
            142,106
            
            
            86,842
            
            
            -
            
            
            (55,263
            )
            PKRaven
      Moon Entertainment (RAEM)
            
            2,500,624,843
            
            
            250,000
            
            
            250,062
            
            
            62
            
            
            -
            
            BBSebastian
      River Holdings, Inc. (SBRH)
            
            75,000
            
            
            100,000
            
            
            67,500
            
            
            -
            
            
            (32,500
            )
            PKSignature
      Devices, Inc. (SDVI)
            
            3,880,000
            
            
            39,352
            
            
            69,840
            
            
            30,488
            
            
            -
            
            PKSunrise
      Consulting Group (SNRS)
            
            1,015,000,000
            
            
            101,500
            
            
            101,500
            
            
            -
            
            
            -
            
            PKVidShadow
      Inc. (VSHD)
            
            147,052
            
            
            132,800
            
            
            169,110
            
            
            -
            
            
            36,310
            
            PKVOIP
      PAL.com, Inc. (VPLM)
            
            2,500,000
            
            
            15,000
            
            
            25,000
            
            
            10,000
            
            
            -
            
            PKWayPoint
      Biomedical Holdings, Inc. (WYPH)
            
            715,000
            
            
            10,725
            
            
            7,150
            
            
            -
            
            
            (3,575
            )
            PKXTend
      Medical Corp. (XMDC)
            
            12,375,000
            
            
            7,425
            
            
            7,425
            
            
            -
            
            
            -
            
            PKOthers
      - Less than $10,000 cost
            
            59,469,863
            
            
            47,219
            
            
            230,336
            
            
            180,572
            
            
            (9,232
            )$
            1,926,946
            
            $
            2,217,852
            
            $
            424,714
            
            $
            (145,585
            )





Marketable
securities classified as available for sale consisted of the following as of
August 31, 2007:




Equity
      Securities Name and Symbol
            
            Number
      of shares held at August 31, 2007
            
            Cost
            
            Market
      Value on August 31, 2007
            
            Accumulated
      Unrealized Gain
            
            Accumulated
      Unrealized Loss
            
            Traded
      on Pink Sheets (PK) or Bulletin Board (BB)WayPoint
      Biomedical Holdings (WYPH)
            
            715,000
            
            $
            10,725
            
            $
            57,200
            
            $
            46,475
            
            $
            -
            
            PKCytoDyn
      Incorporated (CYDY)
            
            142,857
            
            
            107,142
            
            
            92,857
            
            
            -
            
            
            (14,285
            )
            BBPlatina
      Energy Group (PLTG)
            
            1,250,000
            
            
            137,500
            
            
            250,000
            
            
            112,500
            
            
            -
            
            BBHomeland
      Safety International (HSFI)
            
            650,000
            
            
            8,450
            
            
            26,000
            
            
            17,550
            
            
            -
            
            PKOrganic
      Recycling Technologies (ORCY)
            
            1,596,000
            
            
            750,320
            
            
            718,200
            
            
            -
            
            
            (32,120
            )
            BBItronics
      Incorporated (ITRO)
            
            15,000,000
            
            
            187,500
            
            
            150,000
            
            
            -
            
            
            (37,500
            )
            BBAtlantis
      Holding, Inc. (AHGD)
            
            1,400,000
            
            
            112,000
            
            
            56,000
            
            
            -
            
            
            (56,000
            )
            PKPRG
      Group Incorporated (PRGJ)
            
            454,000
            
            
            40,860
            
            
            40,860
            
            
            -
            
            
            -
            
            PKRaven
      Moon Entertainment (RAEM)
            
            2,500,624,843
            
            
            250,000
            
            
            250,000
            
            
            -
            
            
            -
            
            BBCanam
      Energy Incorporated (CNGJ)
            
            550,000
            
            
            258,500
            
            
            330,000
            
            
            71,500
            
            
            -
            
            PKFundstech
      Corporation (FNDS)
            
            192,308
            
            
            298,077
            
            
            269,231
            
            
            -
            
            
            (28,846
            )
            BBiPhone2
      Incorporated (IPHE)
            
            56,000,000
            
            
            61,600
            
            
            61,600
            
            
            -
            
            
            -
            
            PKMagplane
      Technology (MAGP)
            
            3,000,000
            
            
            60,000
            
            
            60,000
            
            
            -
            
            
            -
            
            PKAlternate
      Energy Holdings Inc. (AEHI)
            
            100,000
            
            
            35,000
            
            
            45,000
            
            
            10,000
            
            
            -
            
            PKRBID.COM
      Inc. (RBID)
            
            50,000,000
            
            
            25,000
            
            
            25,000
            
            
            -
            
            
            -
            
            PKSignature
      Devices Incorporated (SDVI)
            
            640,000
            
            
            156,800
            
            
            132,544
            
            
            -
            
            
            (24,256
            )
            PKNew
      Medium Enterprises (NMEN)
            
            1,500,000
            
            
            330,000
            
            
            345,000
            
            
            15,000
            
            
            -
            
            BBNew
      NRG Incorporated (NNRG)
            
            320,000
            
            
            192,000
            
            
            240,000
            
            
            48,000
            
            
            -
            
            PKAll
      Energy Incorporated (ALRY)
            
            700,000
            
            
            40,950
            
            
            63,000
            
            
            22,050
            
            
            -
            
            PKOthers
            
            496,570,022
            
            
            317,160
            
            
            422,013
            
            
            104,853
            
            
            
            
            PK/BB$
            3,379,584
            
            $
            3,634,505
            
            $
            447,928
            
            $
            (193,007
            )




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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS






NOTE
3      MARKETABLE
SECURITIES (CONT.)




As of
August 31, 2008, the Company evaluated its marketable securities holdings by
valuing the securities according to the quoted price of the securities on the
stock exchange.





It is the
Company’s policy to assess its marketable securities for impairment on a
quarterly basis, or more frequently if warranted by circumstances. The Company
recognized an impairment loss on the marketable securities of $4,119,303 for the
year ended August 31, 2008 compared to $5,456,929 for the year ended August 31,
2007.





The
Company reviews, on a quarterly basis or more frequently if warranted by
circumstances, the carrying value of the marketable securities it receives from
its customers for providing services. The Company records impairment expense
each quarter when the market value of the securities received show a consistent
decline over 90 to 180 days, and the carrying amount of the marketable
securities exceeds its fair value by 50% or more, and is deemed not recoverable.
As such, the Company records on a quarterly basis in its financial statements
the impairment loss for the difference between the carrying amount of the
marketable securities and their fair value.





To
safeguard the Company with impairments of marketable securities, the Company has
revised its contractual terms on its agreements with its clients which provides
that, in the event during the term of the agreement, the share bid price
declines by more than ten per cent (10%) of the share bid price on the date of
execution of the agreement, the Client would agree to issue additional shares of
their common stock to the Company in order to make up the deficiency caused by
the reduction in the value of their stock.





Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a separate component of stockholder’s equity. Realized
gains and losses for securities classified as available-for-sale are reported in
the statement of operations and comprehensive gain.





The
Company sold marketable securities during the years ended August 31, 2008 and
2007 and recorded a realized loss of $325,377 and $318,400,
respectively.





NOTE
4      PROPERTY AND
EQUIPMENT





Property
and equipment consist of the following:





August
      31,2008
            
            
            2007Office
      and computer equipment
            
            $
            191,652
            
            
            $
            138,070Less
      accumulated depreciation:
            
            
            (109,086
            )
            
            
            (59,333
            )$
            82,566
            
            
            $
            78,737





Depreciation
expense for the years ended August 31, 2008 and 2007 was $49,753 and $36,963,
respectively.





NOTE
5     OTHER ASSETS AND
DEPOSITS





Other
assets consist of the following:





August
      31,2008
            
            
            2007Prepaid
      expenses
            
            $
            243
            
            
            $
            33,411Rent
      deposits
            
            
            34,671
            
            
            
            35,521Advances
      to third parties
              (interest
      free, unsecured and due on demand)
            
            
            1,550
            
            
            
            25,000Total
            
            
            36,464
            
            
            
            93,932Less
      : current portion
            
            
            (1,793
            )
            
            
            (67,411
            )Long
      term other assets - Deposits
            
            $
            34,671
            
            
            $
            26,521





NOTE
6     DEFERRED
REVENUES





The
Company receives marketable securities and cash for services to be provided in
future periods. The Company recognizes revenue on a pro-rata basis over the term
of the agreement. The Company recorded $424,832 and $2,196,106 in deferred
revenues at August 31, 2008 and 2007, respectively which will be recognized over
the next 12 months.




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FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE
7     ACCRUED
EXPENSES





Accrued
expenses consist of the following:





August
      31,2008
            
            
            2007Accrued
      consulting fees
            
            $
            98,649
            
            
            $
            659,802Accrued
      interest
            
            
            36,457
            
            
            
            27,457Accrued
      salaries and payroll taxes
            
            
            376,038
            
            
            
            493,469Advances
      from third parties
            
            
            295,495
            
            
            
            -Other
            
            
            -
            
            
            
            4,560$
            806,639
            
            
            $
            1,185,288





NOTE
8     DUE TO
OFFICERS





Due to
officers consist of the following:





August
      31,2008
            
            
            2007Accrued
      officer’s compensation
            
            $
            539,974
            
            
            $
            412,414Accrued
      consulting fees
            
            
            32,382
            
            
            
            32,382Accrued
      interest
            
            
            248,373
            
            
            
            188,373$
            820,729
            
            
            $
            633,169





The
Company recorded an expense of $372,083 and $401,600 for the years ended August
31, 2008 and 2007 for compensation to the Chief Executive Officer of the
Company.





NOTE
9      NOTE
PAYABLE





In August
2004, the Company executed a promissory note of $100,000 to a third party,
unsecured, interest at 9% per annum and due on demand. The Company recorded an
interest expense of $9,000 in the accompanying financial statements for each of
the years ended August 31, 2008 and 2007, respectively.





On July
20, 2008, the Company executed a promissory note of $550,000 to a third party,
unsecured, non-interest bearing and due January 20, 2009. The promissory note
originated as a result of conversion of consulting expenses payable to a third
party into a promissory note.





NOTE
10     NOTES PAYABLE
OFFICERS




August
      31,2008
            
            
            2007Notes
      payable to an officer, due January 31, 2010, interest rate 6%, secured by
      the shares
            
            $
            -
            
            
            $
            3,000,000Note
      payable to an officer, due on demand, interest rate 8%,
      unsecured
            
            
            -
            
            
            
            7,5003,007,500Less
      current portion
            
            
            -
            
            
            
            (7,500
            )Long
      term debt – Officer
            
            $
            -
            
            
            $
            3,000,000





In
September 2005, the Company executed a promissory note of $7,500 with an
officer, unsecured, interest at 8% per annum and due on demand. The Company paid
$9,600 to settle the payment of the promissory note in full, including accrued
interest of $2,100 as of August 31, 2008.





On
January 15, 2005, the Company acquired 100% of the assets and outstanding shares
of Digital WallStreet, Inc. which was 100% owned by the majority shareholder
(86%) of the Company in exchange for two $1,500,000 promissory notes, carrying
interest at 6% per annum, notes are due and payable on January 31, 2010. As this
merger was between entities under the common control, the issuance of the two
$1,500,000 promissory notes to the majority shareholder was recorded as a
distribution to the majority shareholder. On January 4, 2008, the Company issued
to the officer 15,000,000 shares of its common stock in exchange for settlement
of the two promissory notes of $1,500,000 each, due on January 31,
2010.





The
Company recorded an interest expense of $62,235 and $180,000 on the above notes
to the officers for the years ended August 31, 2008 and 2007,
respectively.


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 FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 11COMMITMENTS





Operating
Lease





The
Company leases its corporate office facilities in California from a third party
under an operating lease that terminates on February 28, 2010. The office
facility in New York is leased on a month-to-month basis starting June 1, 2007.
Rent expense under the operating lease for the years ended August 31, 2008 and
2007 was $426,128 and $377,464. The Company has future minimum lease obligations
as follows:





Year
      endingAugust
      31,
            
            Amount2009
            
            $
            314,7962010
            
            
            185,649$
            500,445





Employment
Agreement





On
January 26, 2007, the Company entered into an employment agreement with its
Chief Financial Officer for a three year period, to provide salary, bonuses, and
other fringe benefits. The Company recorded an expense of $189,921 in general
and administrative expenses for the year ended August 31, 2008. The Company has
future minimum salary commitments as follows:





Year
      endingAugust
      31,
            
            Amount2009
            
            $
            214,3902010
            
            
            93,821$
            308,211





Contingencies





From time
to time, the Company may be involved in various claims, lawsuits, and disputes
with third parties, actions involving allegations of discrimination or breach of
contract actions incidental to the normal operations of the business. Company is
not currently involved in any litigation which it believes could have a material
adverse effect on its financial position or results of operations.





NOTE
12 INCOME
TAXES





Income
tax for the years ended August 31, 2008 and 2007 is summarized as
follows:




August
      31,2008
            
            
            2007Current:Federal
            
            $
            --
            
            
            $
            --State
            
            
            4,800
            
            
            
            4,800Deferred taxes
            
            
            --
            
            
            
            --Income
      tax expense (benefit)
            
            $
            4,800
            
            
            $
            4,800





The
following is a reconciliation of the provision for income taxes at the U.S.
federal income tax rate to the income taxes reflected in the Consolidated
Statements of Operations:





August
      31,2008
            
            
            2007Tax
      expense (credit) at statutory rate-federal
            
            
            (34
            %)
            
            
            (34
            %)State
      tax expense net of federal tax
            
            
            (6
            %)
            
            
            (6
            %)Valuation
      allowance
            
            
            40
            %
            
            
            40
            %Tax
      expense at actual rate
            
            
            --
            
            
            
            --




- 41
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FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS






NOTE
12 INCOME
TAXES (CONT.)




The tax
effects of temporary differences that gave rise to significant portions of
deferred tax assets and liabilities at August 31, 2008 and 2007 are as
follows:





August 31,2008
            
            2007Deferred
      tax assets:Net
      operating loss carry forward
            $
            1,184,163
            
            $
            1,907,569Total
      gross deferred tax assets
            
            1,184,163
            
            
            1,907,569Less
      valuation allowance
            
            (1,184,163
            )
            
            (1,907,569
            )Net
      deferred tax assets
            $
            --
            
            $
            --





At August
31, 2008, the Company had net operating loss carry forwards of $12,536,538 for
U.S. federal income tax purposes available to offset future taxable income
expiring on various dates through 2027. The Company has recorded a 100%
valuation allowance on the deferred tax assets due to the uncertainty of its
realization.





NOTE
13     EQUITY
TRANSACTIONS





Common
Stock





Through a
private placement on January 25, 2006 and after the acquisition of WallStreet,
the Company sold 8 units to eight accredited investors for cash consideration of
$120,000. Each unit sold consists of 15,000 common shares, a redeemable Class C
Warrant (the “Class C Warrant”), a redeemable Class D Warrant (the “Class D
Warrant”), and a redeemable Class E Warrant (the “Class E Warrant”) of Financial
Media Group, Inc. Each Class C Warrant entitles the registered holder thereof to
purchase, at any time until the first anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $1.50 per share, subject
to adjustment. Each Class D Warrant entitles the registered holder thereof to
purchase, at any time until the second anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $2.25 per share, subject
to adjustment. Each Class E Warrant entitles the registered holder thereof to
purchase, at any time until the third anniversary of the date of the purchase,
15,000 shares of Common Stock at an exercise price of $3.75 per share, subject
to adjustment. The Class C Warrants, the Class D Warrants and the Class E
Warrants (collectively, the “Warrants”) are redeemable by the Company, at a
redemption price of $0.05 per share, upon at least 30 days prior written notice.
Commencing 12 months from the date of the private placement or upon an effective
Registration Statement, whichever is earlier, at the price of $0.05 per Warrant,
upon not less than 30 days notice to the holders of the Warrants called for
redemption, provided that the average closing bid price of the Common Stock
exceeds $2.50 for Class C Warrants, $4.50 for the Class D Warrants and $7.50 for
the Class E Warrants for 20 trading days. The holders of the Warrants called for
redemption shall have exercise rights until the close of business on the date
fixed for redemption. Class C Warrants expired on January 25, 2007, Class D
Warrants expired on January 25, 2008, and Class E Warrants expire on January 25,
2009, respectively.





The
Company initiated a private placement on September 1, 2006, offering 335 units
to accredited investors through its placement agent, WestCap Securities, Inc., a
NASD member. The minimum subscription was $15,000 for each unit. Each unit
consisted of 10,000 shares of Common Stock, par value $0.001 per share, 5,000
redeemable Class A1 Warrant and 5,000 redeemable Class A2 Warrant of the
Company's common stock. Class A1 and A2 Warrant entitles the registered
holder thereof to purchase, at any time until September 1, 2007 and September 1,
2008 respectively, shares of Common Stock at an exercise price of $2.50 and
$3.50, respectively, subject to adjustment. The Class A1 and A2 Warrants are
redeemable by the Company, at a redemption price of $0.05 per share, upon at
least 30 days’ prior written notice, commencing on the completion of an
effective Registration Statement of the said securities or after September 1,
2007, whichever is earlier, if the average of the closing bid price of the
common stock, for 20 consecutive business days exceeds $3.50 per share for the
Class A1Warrants, and $4.50 per share for the Class A2 Warrants. The exercise
prices and the number of shares issuable upon the exercise of Warrants are
subject to adjustment in certain circumstances.  The Company closed
the private placement on February 23, 2007. During the year ended August 31,
2007, the Company received a cash consideration of $648,500 from the sale of
432,333 shares of Common Stock under this private placement. No other classes of
warrant holders exercised their warrants. Class A1 Warrants expired
on September 1, 2007 and Class A2 Warrants expire on September 1, 2008,
respectively.





Through a
private placement memorandum of My WallStreet dated March 20, 2007, MyWallStreet
offered to sell to accredited investors 6,400,000 units at $0.25 per unit, with
each unit consisting of one share of Common Stock, par value $0.001 per share
and a redeemable Class A Warrant of My WallStreet, Inc. Each Class A Warrant
entitles the registered holder to purchase, at any time until the second
anniversary of the date of this memorandum, one share of Common Stock at an
exercise price of $0.25. On June 18, 2008, the Company negotiated with the
accredited investors who made a total investment of $50,000 under the private
placement of MyWallStreet, Inc. dated March 20, 2007, and issued 200,000 shares
of Common Stock in exchange for cancellation of 200,000 shares of MyWallStreet,
Inc.’s common stock and Class A Warrants.





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FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS






NOTE
13     EQUITY
TRANSACTIONS (CONT.)
 
 Common
Stock (cont.)




On June
28, 2007, the Company entered into a Stock Purchase Agreement with an investor
for private placement of shares under Regulation S as promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
As of August 31, 2008, the Company sold 15,147,609 shares of its common stock
under Regulation S to the investors and received cash proceeds of $1,434,352
which amounted to approximately 34% of the total proceeds from such sale of its
shares. These shares were sold at a price equal to the previous day's last bid
price as traded on the Over the Counter Bulletin Board.





On June
29, 2007, the Company entered into a Regulation S Distribution Agreement to sell
up to $3,000,000 worth of common shares through private placement of shares
under Regulation S as promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended. The term of the Distribution
Agreement expired on November 29, 2007. As of August 31, 2008, the Company has
issued 906,080 shares of its common stock under Regulation S Distribution
Agreement to the investors and received cash proceeds of $141,320 which amounted
to approximately 33.5% of the total proceeds from the sale of its shares. These
shares were sold at a price equal to the previous day's last bid price as traded
on the Over the Counter Bulletin Board.





On March
1, 2008, the Company entered into a consulting agreement with an investor
relations firm to provide services for a period of three months ending May 31,
2008. The terms of the agreement provided for the Company to issue 100,000
shares of common stock valued at $17,000. On June 18, 2008, the Company issued
the 100,000 shares of common stock to the consultant for services.





On April
1, 2008, the Company entered into a consulting agreement with an investor
relations firm to provide marketing, promotional and investor relations services
for a period of two months ending May 31, 2008. The terms of the agreement
provided for the Company to issue 100,000 shares of common stock valued at
$16,000. On June 18, 2008, the Company issued the 100,000 shares of common stock
to the consultant for services.





On June
17, 2008 and August 26, 2008, the Company sold 7 Units and 28 Units to an
investor pursuant to the Private Placement Memorandum dated June 12, 2008 for a
total cash consideration of $620,000. Each Unit consisted of 40,000 shares of
Common Stock, par value $0.001 per share and 40,000 Class A Common Stock
Purchase Warrants, 40,000 Class B Common Stock Purchase Warrants and 40,000
Class C Common Stock Purchase Warrants. The offering entitles the registered
investor redeemable Class A Warrants, redeemable Class B Warrants and redeemable
Class C Warrants to purchase, at any time until the 9-month, 12-month and
18-month anniversary of the date of purchase of shares, at an exercise price of
$0.75, $1.50 and $3.00, respectively, subject to adjustment. The Class A, Class
B and Class C Warrants (collectively, the “Warrants”) are redeemable by the
Company, at a redemption price of $0.05 per share, upon at least 30 days’ prior
written notice, commencing on the effective date of a registration statement
registering the common stock underlying the Warrants (the “Warrant Shares”) for
resale or 12 months after the date of issuance of the Warrant, whichever is
earlier, if the market price per share of the common stock for any five
consecutive trading days prior to a notice of redemption shall exceed $1.50 per
share for Class A Warrants, $3.00 per share for the Class B Warrants and $5.00
per share for Class C Warrants.





On July
16, 2008, the Company issued to a third party 40,000 shares of Common Stock
valued at $25,393 in full settlement of their service fees outstanding with the
Company.





Outstanding
Warrants:





Following
is a summary of the various classes of warrants outstanding at August 31,
2008:





Description
      of Warrants
            
            Exercise
      Price
            
            Expiration
              Date
            
            Warrants
      Outstanding at August 31, 2007
            
            
            Warrants
      Issued during the period
            
            Warrants
      Exercised during the period
            
            Warrants
      Expired during the period
            
            Warrants
      Outstanding at August 31, 2008Class
      D Warrant
            
            $
            2.25
            
            01/25/2008
            
            165,000
            
            
            -
            
            -
            
            (165,000
            )
            -Class
      E Warrant
            
            $
            3.75
            
            01/25/2009
            
            165,000
            
            
            -
            
            -
            
            -
            
            165,000Class
      A2 Warrant
            
            $
            3.50
            
            09/01/2008
            
            244,667
            
            
            -
            
            -
            
            -
            
            244,667Class
      A Warrant
            
            $
            1.00
            
            03/20/2009
            
            200,000
            
            
            -
            
            -
            
            (200,000)
            
            -774,667
            
            
            -
            
            -
            
            (365,000
            )
            409,667




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FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
   NOTE
13     EQUITY
TRANSACTIONS (CONT.)




The
number and weighted average exercise prices of warrants granted by the Company
are as follows:





Number
      of Warrants
            
            
            Weighted
      Average Exercise Price
            
            
            Aggregate
      Intrinsic ValueOutstanding
      August 31, 2007
            
            
            774,667
            
            
            $
            2.64
            
            
            $
            -Issued
      during the period
            
            
            -
            
            
            
            -Expired
            
            
            (365,000
            )
            
            
            -Exercised
            
            
            -
            
            
            
            -Outstanding
      August 31, 2008
            
            
            409,667
            
            
            $
            3.60
            
            
            $
            -





Following
is a summary of the status of warrants outstanding at August 31,
2008:





Range
      of Exercise Prices
            
            Total
      Warrants Outstanding
            
            Weighted
      Average Remaining Life (Years)
            
            Weighted
      Average Exercise Price
            
            Warrants
      Exercisable
            
            Weighted
      Average Exercise Price of Exercisable Warrants$1.00
      - $3.75
            
            409,667
            
            0.16
            
            $
            3.60
            
            409,667
            
            $
            3.60409,667
            
            0.16
            
            $
            3.60
            
            409,667
            
            $
            3.60





Outstanding Stock
Options:





2007 Non-Qualified Stock
Option Plan (“2007 Non-Qualified Plan”):





On
January 5, 2007, the Company adopted the 2007 Non-Qualified Plan and reserved a
maximum of 3,000,000 shares of common stock as Options to grant to employees,
non-employee directors, consultants and advisors. The stock subject to Options
granted under the Non-Qualified Plan shall be shares of the Company’s Common
Stock, par value $0.001 per share. The 2007 Non-Qualified Plan shall terminate
within ten (10) years from the date of adoption by the Board of Directors or
sooner, and no Options shall be granted after termination of the plan. The
Options have been granted to certain employees and consultants to purchase
Common Shares at prices equal to fair market value on the date of
grant.





The
number and weighted average exercise prices of options granted by the Company at
August 31, 2008 are as follows:





Options
      Outstanding
            
            
            Weighted
      Average Exercise Price
            
            
            Aggregate
      Intrinsic ValueOutstanding
      August 31, 2007
            
            
            750,000
            
            
            $
            1.05
            
            
            $
            -Granted
            
            
            2,235,000
            
            
            
            0.23
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -Expired/forfeited
            
            
            (750,000
            )
            
            
            (1.05
            )
            
            
            -Outstanding
      August 31, 2008
            
            
            2,235,000
            
            
            $
            0.23
            
            
            $
            -





Following
is a summary of the status of stock options outstanding at August 31,
2008:





Range
      of Exercise Prices
            
            Total
      Options Outstanding
            
            Weighted
      Average Remaining Life (Years)
            
            Total
      Weighted Average Exercise Price
            
            Options
      Exercisable
            
            Weighted
      Average Exercise Price$0.10
      - $0.30
            
            2,235,000
            
            9.31
            
            $
            0.17
            
            169,238
            
            $
            0.232,235,000
            
            9.31
            
            $
            0.17
            
            169,238
            
            $
            0.23





The
Company issued 2,235,000 options to officers and consultants at the exercise
prices ranging from $0.10 to $0.30 with the fair value of the options valued at
$0 calculated using the Black-Scholes option pricing model using the assumptions
of risk free interest rate of 3.50%, volatility of 148%, ten (10) years term,
and dividend yield of 0%. The stock option expense for the year ended August 31,
2008 and August 31, 2007 was $30,074 and $0, respectively.




- 44
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FINANCIAL
MEDIA GROUP, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
   NOTE
13     EQUITY
TRANSACTIONS (CONT.)




2008 Non-Qualified Stock
Option Plan (“2008 Non-Qualified Plan”):





On July
2, 2008, the Company adopted the 2008 Non-Qualified Plan and the Board of
Directors approved the reservation of 2,000,000 shares of the Company’s
authorized but unissued common stock for issuance under the plan. As of August
31, 2008, no options have been granted under the 2008 Non-Qualified
Plan.





2007 Equity Incentive Plan
(“2007 Equity Plan”):





On
February 6, 2007, the Company adopted the 2007 Equity Plan which was approved by
the shareholders on April 11, 2007, and reserved 3,000,000 shares of the
Company’s authorized common stock as Options to grant to employees, directors
and officers. On August 28, 2008, the shareholders approved reserving an
additional 4,000,000 common shares for issuance under the 2007 Equity Plan for a
total of 7,000,000 common shares. The stock subject to Options granted under the
2007 Equity Plan shall be the Common Shares of the Company’s common stock, par
value $0.001 per share. The 2007 Equity Plan shall become effective and shall
remain in effect until all Common Shares subject to the 2007 Equity Plan have
been purchased or acquired according to the terms of the 2007 Equity Plan or the
2007 Equity Plan is terminated by the Board or January 4, 2017, whichever is
earlier. No stock Options shall be granted after termination of the plan. The
Options have been granted to certain employees to purchase Common Shares at
prices equal to fair market value on the date of grant.





The
number and weighted average exercise prices of stock Options granted by the
Company at August 31, 2008 are as follows:





Options
      Outstanding
            
            
            Weighted
      Average Exercise Price
            
            
            Aggregate
      Intrinsic ValueOutstanding
      August 31, 2007
            
            
            -
            
            
            $
            -
            
            
            $
            -Granted
            
            
            2,990,000
            
            
            
            0.30
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -Expired/forfeited
            
            
            (615,000
            )
            
            
            0.30
            
            
            
            -Outstanding
      August 31, 2008
            
            
            2,375,000
            
            
            $
            0.30
            
            
            $
            -





Following
is a summary of the status of stock Options outstanding at August 31,
2008:





Range
      of Exercise Prices
            
            Total
      Options Outstanding
            
            Weighted
      Average Remaining Life
              (Years)
            
            Total
      Weighted Average Exercise Price
            
            Options
      Exercisable
            
            Weighted
      Average Exercise Price$0.01
      - $0.30
            
            2,375,000
            
            9.31
            
            $
            0.30
            
            351,632
            
            $
            0.302,375,000
            
            9.56
            
            $
            0.30
            
            351,632
            
            $
            0.30





The
Company has issued 2,375,000 stock options to employees at the exercise prices
of $0.30 with the fair value of the options of $583,050 calculated using the
Black-Scholes option pricing model using the assumptions of risk free interest
rate of 3.5%, volatility of 148%, ten (10) years term, and dividend yield of 0%.
The stock option expense for the year ended August 31, 2008 and August 31, 2007
was $135,655 and $0, respectively.





NOTE 14GOING
CONCERN





The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. This basis of accounting contemplates the recovery
of the Company's assets and the satisfaction of its liabilities in the normal
course of business. The Company had accumulated deficit of $12,536,538 as of
August 31, 2008 and has incurred net loss of $2,864,462 for the year ended
August 31, 2008. In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to raise
additional capital, obtain financing and to succeed in its future operations.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.





Management
has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. Management devoted considerable effort
during the period ended August 31, 2008 towards (i) obtaining additional equity
financing, (ii) evaluation of its distribution and marketing methods, and (iii)
further streamlining and reducing costs.





NOTE
15       SUBSEQUENT
EVENTS





As of
November 17, 2008, the Company received a cash consideration of $39,418 from
sale of 300,605 shares of common stock under the June 28, 2007 private placement
of shares under Regulation S as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended. The Company has also
received a cash consideration of $260,000 from the sale of 510,000 shares of
common stock to two accredited investors under the June 8, 2008 private
placement.




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