U.
S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549








FIRST
AMENDED


FORM
10-K







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


For the
fiscal year ended December 31,
2008





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


For the
transition period from ___________ to _____________





Commission
File Number: 333-138083





AUDIOSTOCKS,
INC.


(Name of
small business issuer as specified in its charter)





Delaware
            20-2197964(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)2038
      Corte Del Nogal, Suite 110
              Carlsbad,
      California 92011
              _______________________________________________________________
              (Address
      of principal executive offices, including zip
  code)





Registrant’s
telephone number, including area
code:                                                                                                                760-804-8844


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


Securities
registered pursuant to Section 12(g) of the Act:  $.001 par value common
stock


___________________





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





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





The
issuer’s net loss for the most recent fiscal year was
$4,423,626.


The
aggregate market value of the common equity held by non-affiliates of the
registrant was approximately $5,520,538 based upon the closing price of our
common stock which was $1.01 on March 23, 2009.  Shares of common
stock held by each officer and director and by each person or group who owns 10%
or more of the outstanding common stock amounting to 17,535,096 shares have been
excluded in that such persons or groups may be deemed to be
affiliates.  This determination of affiliate status is not necessarily
a conclusive determination for other purposes.





As of
April 9, 2009, there were 23,000,975 shares of our common stock issued and
outstanding.





Documents
Incorporated by Reference:      See Item 13, of
which, all referenced Exhibits are incorporated herein.





Transitional
Small Business Disclosure Format:  No.





INTRODUCTION




This
First Amended Form 10-K is being filed to clarify the Company's Form 10-K filing
for the year ended December 31, 2008 which was filed with the SEC on April 14 ,
2009 (the "April 2009 Form 10-K").




First, throughout this First
Amended Form 10-K, we add information related to the ownership position of
Noctua Fund LP related to an option Noctua Fund acquired to purchase 2,250,617
shares held by our senior executive, Luis Leung.  This option is
exercisable at any time, and therefore, for beneficial ownership purposes, it
should be disclosed as such.  Throughout this First Amended Form
10-K, specifically in Items 1, 9, 11 and 12, we add language to further
describe Noctua Fund's option on the shares owned by Luis Leung..  We also
have attached the option agreement hereto as an exhibit and have therefore
changed Item 13 to reflect this addition.




Second, we have entirely
replaced exhibits 11.1.5 and 11.1.6 of the April 2009 Form 10-K entirely
and attached new versions of the exhibits in order to accurate reference the
correct section of Delaware law the Board of Directors of the Company relied on
in order to designate the Series C Preferred stock.




Lastly, between the time we
filed the April 2009 Form 10-K and now, we were notified by the Delaware
Secretary of State that our Series C Preferred stock, and the related amendment
to our Articles of Incorporation was received and the related amendment was made
as of March 20, 2009.  This also means that our Series B Preferred stock
has now been cancelled.




All
other content in the previously filed April 2009 Form 10-K shall remains the
same, although in this filing we only include the new versions of exhibits
11.1.5 and 11.1.6, and the newly disclosed exhibit 11.1.9.







PART
I





References
herein to “we”, “us”, “our”, “Company”, “Audiostocks.com” or “Audiostocks” refer
to Audiostocks, Inc. and its subsidiaries, if any, and as described
herein.





This Form
10-K may contain forward-looking statements. In addition, from time to time, we
or our representatives may make forward-looking statements orally or in writing.
These are statements that relate to future periods and include statements
regarding our future strategic, operational and financial plans, potential
acquisitions, anticipated or projected revenues, expenses and operational
growth, markets and potential customers for our products and services, plans
related to sales strategies and efforts, the anticipated benefits of our
relationships with strategic partners, growth of our competition, our ability to
compete, the adequacy of our current facilities and our ability to obtain
additional space, use of future earnings, and the feature, benefits and
performance of our current and future products and services.





You can
identify forward-looking statements by those that are not historical in nature,
particularly those that use terminology such as “may,” “will,” “should,”
“expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,”
“projected,” “predicts,” “potential,” “seek” or “continue” or the negative of
these or similar terms. In evaluating these forward-looking statements, you
should consider various factors, including those described in this prospectus
under the heading “Risk Factors” beginning on page 10. These and other factors
may cause our actual results to differ materially from any forward-looking
statement. We caution you not to place undue reliance on these forward-looking
statements.





We base
these forward-looking statements on our expectations and projections about
future events, which we derive from the information currently available to us.
Such forward-looking statements relate to future events or our future
performance. Forward-looking statements are only predictions. The
forward-looking events discussed in this prospectus, the documents to which we
refer you and other statements made from time to time by us or our
representatives, may not occur, and actual events and results may differ
materially and are subject to risks, uncertainties and assumptions about us. For
these statements, we claim the protection of the “bespeaks caution” doctrine.
The forward-looking statements speak only as of the date hereof, and we
expressly disclaim any obligation to publicly release the results of any
revisions to these forward-looking statements to reflect events or circumstances
after the date of this filing.




Factors
that may affect forward-looking statements.





A wide
range of factors could materially affect future developments and performance of
our business. This prospectus describes significant factors affecting specific
business operations and the financial results of these operations. General
factors affecting our operations include:




·
            Changes
      in business plans (which
      is a significant issue as is described further
    herein)


·
            Changes
      in U.S., global or regional economic
conditions


·
            Changes
      in U.S. and global financial and equity markets, including market
      disruptions and significant interest rate
  fluctuations


·
            Increased
      competitive pressures


·
            Legal
      developments that may affect our
business


·
            Technological
      developments that may affect our
business





This list
of factors that may affect future performance and the accuracy of
forward-looking statements are merely illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.








Item
1.   Description of Business





Company
Overview





Since
January of 2005, we have operated an Internet based publishing platform designed
to compile, catalogue, distribute and make functional, financial content and
data related to that content.  Due to certain regulatory changes in
the securities and financial industries following the Sarbanes-Oxley Act of
2002, as well as the most recent global financial crisis, our ability to find
paying customers for our services has been severely challenged, and in spite of
our best efforts, it would not be a misstatement to describe the AudioStocks.com
business as a failed enterprise.





With the
above in mind, in calendar year 2008, particularly in the latter half of the
year, we underwent numerous changes, not the least of which was completely
divesting ourselves of the Audiostocks.com business.





The
presentation below will discuss (i) in brief, AudioStocks.com, as a legacy
operation, (ii) the transaction which effected our divestiture of the
AudioStocks.com business and (iii) our present operations, which are based
exclusively on the StockVert.com vertical search engine platform.





In
addition, as we discuss further below, we are devoting a considerable amount of
effort to finding qualified business candidates to merge with or to otherwise
acquire.  We believe this strategy will bring more value to our
shareholders than simply continuing in the same direction we have been over the
past few years.





It is
critical that anyone who has any interest in (i) our present business, (ii) the
likelihood of our success with our present business and operational plan or
(iii) the success of any succeeding enterprise should we be able to execute on
our plan to find candidates to merge with or acquire (as described below)
carefully read this First Amended Form 10-K Report (the “Report”) and all of the
disclosures and Exhibits referred to and described herein.





Our
present corporate headquarters are located at 2038 Corte Del Nogal, Suite 110,
Carlsbad, California 92011. Our telephone number at our corporate head office is
(760) 804-8844.








Corporate
History





We were
originally incorporated under the laws of the State of Delaware on January 22,
2002, as Jupiter Processing Inc. On January 13, 2005, we changed our name to
Audiostocks, Inc.  Our fiscal year end is December
31.


Legacy
Business: AudioStock.com





Audiostocks.com
was designed to be a financial media and technology company for publicly traded
small and micro capitalization companies, providing the latest fact-based
information to current and prospective shareholders. Audiostocks.com content was
to be made available online to individuals, financial professionals, investment
research professionals and portfolio managers.   All recipients
of Audiostocks content received Audiostocks content because they filled out a
user request form and requested to receive Audiostocks
content.  Audiostocks.com never offered investment advice, nor was
Audiostocks.com a broker or dealer in securities.  All information
posted on the Audistocks.com website was provided by the client companies or was
originated by Audiostocks.com in direct cooperation with a client company,
approved by the client company before posting.





Due to
certain regulatory changes in the securities and financial industries following
the Sarbanes-Oxley Act of 2002, as well as the most recent global financial
crisis, our ability to find customers for our services has been severely
challenged, and in spite of our best efforts, it would not be a misstatement to
describe the AudioStocks.com business as a failed enterprise.





Sale
of the Audiostocks.com Business





In the
third calendar quarter of 2008, we concluded that the Audiostocks.com business
was underperforming and that our efforts would be better focused on adopting a
new strategy – to develop our StockVert.com business and to aggressively seek
business candidates to acquire or merge with.





With
respect to the merger or acquisition candidates we are pursuing, while we would
prefer that they be in a business which is related to the business we are
presently focused on, we will certainly consider candidates in other fields,
particularly if they historically, or are highly likely to in the future: (i)
consistently generate revenues or (ii) consistently generate profits; or (iii)
are in a business which is related to new US national government priorities such
as alternative fuels, alternative energy, nanotechnology or
biotechnology.





Beginning
September 1, 2008, we commenced a radical re-structuring process and the below
narrative, the balance of the First Amended Form 10-K Report and the attached
and incorporated disclosures describe our progress thus far:





The
Asset Sale Transaction and Related Transactions





On
September 30, 2008, because of the failure of our AudioStocks.com business,
including the fact that our liabilities exceeded our existing and potential
future asset value, we entered into a transaction (the “Asset Sale Transaction”)
to begin to execute our restructuring strategy.  The Asset Sale
Transaction, along with certain related transactions, was described in our Form
10-Q, filed with the SEC on the 19th of November 2008 and in a subsequently
filed Form 8-K, filed on January 21, 2009.  The underlying documents
related to these transactions were filed as Exhibits in the Form 10-Q, filed
with the SEC on the 19th of November 2008 and in a subsequently filed Form 8-K,
filed on January 21, 2009.





On
September 30, 2008 we entered into an asset sale agreement with Dao Information
Systems, Inc. (“Dao”). Dao purchased all assets associated with our
Audiostocks.com business division (the “AudioStocks Business”) which included
the existing licensing rights and all interests associated with the Audiostocks
Business and related software. As consideration for the sale of our AudioStocks
Business, we sold certain liabilities and receivables associated with the
AudioStocks Business to Dao.   We also agreed to sell our rights
to the proceeds from the eventual sale of certain shares of stock held by us
related to the AudioStocks Business division (the “AudioStocks
Shares”).  Pursuant to the terms of the Asset Sale Transaction, the
proceeds from the eventual sale of the AudioStocks Shares were to be used by Dao
to pay down liabilities assigned to Dao in the Asset Sale
Transaction.





Dao is
100% owned by Dao Information Systems, LLC whose managing member and 60% owner
is Luis Leung, the president of Audiostocks, Inc.





As a part
of the transaction related to the sale of the AudioStocks Business, we executed
a License Consent Agreement (the “LCA”) with BCGU, LLC (“BCGU”).  The
LCA was attached as Exhibit 10.1 to a Form 8-K filed with the SEC on January 21,
2009.





On
September 30, 2008, we entered into settlement agreements with four consultants
for the final settlement of certain liabilities related to past software
development services (the “Software Settlement Agreements” (the first two of
which were attached as Exhibits in a Form 10-Q filed for the period ended
September 30, 2008 and the third and fourth are attached hereto as Exhibits
11.1.1 and 11.1.2)) related to the AudioStocks Business.  Pursuant to
the terms of the Software Settlement Agreements, we agreed to issue a total of
92,687 shares of our restricted common stock as a final settlement of all
amounts claimed to be due and owing pursuant to the past software development
services for the AudioStocks Business.





On
September 30, 2008, we entered into settlement agreements with two separate
investors (the “Investors Settlement Agreements”) for the final settlement of
certain liabilities related to existing convertible promissory notes totaling
$22,500 (the “Investor Notes”) and warrants to purchase up to a total of 30,001
shares of our common stock (the “Investor Warrants”). Pursuant to the terms of
the Investor Settlement Agreements (see Exhibit 10.5 in our Form 10-Q filed for
the period ended September 30, 2008), we agreed to issue a total of 30,001
shares of our restricted common stock as a final settlement of all amounts
claimed to be due and owing pursuant to Investor Notes and Investor
Warrants.  No Investor Notes and Investor Warrants remain issued or
outstanding at this time.





On
September 30, 2008, we entered into a settlement agreement with our president,
Luis J. Leung, for the settlement of $94,010 related to salary currently owed to
Mr. Leung (the “Employee Settlement Agreement,” attached as Exhibit 10.6 to our
Form 10-Q for the period ended September 30, 2008). Pursuant to the terms of the
Employee Settlement Agreement, we agreed to issue a total of 1,750,309 shares of
our restricted common stock as a final settlement of such amount owed pursuant
to Mr. Leung’s employment agreement.  Due to the issuance of stock the
company incurred an additional stock based compensation expense of
$1,218,722.





On
October 1, 2008, we entered into a second agreement with Mr. Leung which was an
omnibus settlement agreement of all liabilities owed to him by the
Company.  We have attached this agreement as Exhibit 11.1.3 to this
First Amended Form 10-K Report.





On
November 25, 2008, we executed a First Amended Licensing Consent Agreement which
amended LCA and provided consideration to BCGU in the form of the Company’s
Preferred Series A and Preferred Series B shares.  The Preferred
Series A and B shares were previously designated with the State of Nevada on
July 1, 2007, and until the November 25, 2008 transaction with BCGU, none of our
Preferred Series A and B shares had been validly issued.  The
designation of the Company’s Preferred Series A and B stock was previously
described in Exhibit 3.1.3 in the Company’s Form 10-Q filing, filed with the SEC
on November 14, 2007.  The Preferred Series A shares provide the
holder of the same with certain voting rights, among other rights, that may
equal, when cast, a majority of the votes which could be cast at a meeting of
the Company’s shareholders.  The Preferred Series A are convertible on
a one-for-one basis into our common stock, at the option of the
holder.  The Preferred Series B shares provide the holder with a
significant dividend right, among other rights, which in the case of the
issuance related to the execution of the First Amended License Consent
Agreement, was designed to equal the percentage due to BCGU from revenues the
Company generated from assets BCGU had licensed to the Company and which were
being assigned to Dao Information Systems, Inc. under the First Amended License
Consent Agreement.





On
November 30, 2008 we again amended the LCA, including the First Amended
Licensing Consent Agreement, and entered into a Second Amended License Consent
Agreement with BCGU in order to legally release us from more than $240,000 in
obligations which was due and owing at the time of the sale of the AudioStocks
Business.  We have attached this agreement as Exhibit 11.1.4 to this
First Amended Form 10-K Report.





Relevant
Transactions That Occurred After December 31, 2008 to Present





On
January 15, 2009, BCGU, the holder of our Series B Preferred stock, agreed to
exchange it’s Series B Preferred stock for 3,624,888 of our common
shares.  A copy of this agreement is included as Exhibit 11.1.8 to
this First Amended Form 10-K Report.





On
February 27, 2009, Noctua Fund LP acquired an option to purchase a total of
2,250,617 Company common shares from Luis Leung, president, for
$40,000.  This option expires on February 27, 2012.





As a
result of the January 15, 2009 transaction with BCGU involving the exchange of
our Series B Preferred stock for common stock, and due to a provision in the
designation of our Series B Preferred stock, on March 19, 2009, our board of
directors (the “Board”) voted to cancel our Series B Preferred stock and amend
our Article of Incorporation (the “Articles”) to reflect this
cancellation.  A copy of the amendment to our Articles is included as
Exhibit 11.1.5 to this First Amended Form 10-K Report.





On March
6, 2009, we had approximately $162 in cash on hand.  We required
significantly more cash to pay our auditors in order to file this First Amended
Form 10-K Report.  On March 6, 2009, we were able





to reach
an agreement with Noctua Fund LP whereby Noctua Fund LP agreed to purchase
$10,000 in Preferred shares in a class which was to be called our Series C
Preferred class of stock.  In order to designate a Series C Preferred
class of stock, we sought and received consent from our Series A Preferred stock
owners.





On March
19, 2009, pursuant to Article 6.3 of our Articles of Incorporation, our Board
voted to designate a Series C class of Preferred stock.





On March
23, 2009, the Secretary of State of the State of Delaware received an amendment
to our Articles of Incorporation to designate a Series C class of Preferred
stock.  A total of 150 shares of the Series C Preferred stock are to
be designated, and in consideration of a $10,000 investment made on March 6,
2009, Noctua Fund LP is to be issued 100 of our Series C Preferred stock once
the State of Delaware has accepted our newly amended Articles of
Incorporation.  A copy of the designation of the Series C Preferred
class of stock is included as Exhibit 11.1.6 to this First Amended Form 10-K
Report.  It is important that one carefully read the Series C
Preferred stock designation and the newly amended Articles as the Series C
Preferred stock provides the holder of the Series C Preferred stock with a
priority dividend and other certain rights with are superior to other holders of
our equity.





Related
Party Transactions in the Sale of the Audiostocks.com Business





In the
Form 10-Q filed on November 19, 2008, we stated that the managing member of Dao
Information Systems, LLC was Luis Leung, the president of Audiostocks,
Inc.  We also believe it is important to disclose that there were
additional related parties in the Asset Sale Transaction and the transactions
that were related to the sale of the AudioStocks Business.





Dao’s
managing member and 60% owner is Luis Leung, the president of Audiostocks,
Inc.





Dao is
40% owned by Noctua Fund LP.  Mark L. Baum and James B. Panther II are
limited partners in Noctua Fund LP, and through Noctua Fund Manager LLC, manage
the investments of Noctua Fund LP.









As was
previously disclosed in Schedule 13D filings dated December 4, 2006, entities
owned or controlled by Mark L. Baum and James B. Panther II, each own and
control one-half of BCGU LLC, which directly owns 15,284,479 of our common
shares or approximately 66.45% of our common shares.





In
addition to his interests in BCGU, Mark L. Baum (i) individually owns 1,846,706
of our common shares, a number equal to just over 8% of our common shares, and
(ii) through another affiliated entity, owns an additional 500,000 of our common
shares or approximately 2.2% of our common shares.





Mark L.
Baum is a licensed attorney in the State of California and through The Baum Law
Firm PC, from time-to-time over the past four years, has provided the Company
with certain legal services.  Mark L. Baum is the administrative
manager of the general partner of Meaux Street





Partners
LP, a holder of approximately $25,000 in our debt, incurred by the Company from
legal services rendered by Mr. Baum.





In
addition to his interest in BCGU’s 15,284,479 common shares, through entities he
beneficially owns, James B. Panther II owns and controls approximately 1,776,195
or 7.7 percent of our outstanding common shares.





Current
Operations: StockVert.com





Stockvert.com
is a vertical search engine in the financial information space. StockVert
collects and indexes information from thousands of sources.   The
information managed by the platform includes profiles for publicly traded
companies and their executives and directors. All information is correlated to
allow a richer search experience. The objective of the site is to provide its
users with a platform through which they can perform due diligence on companies
(and their executives) before investing on them.





The
platform also works as a tool through which executives can make their profiles
available for recruiters and potential employers.





The
revenue model for this platform is similar to that of typical search engines
such as Google and Yahoo.  Companies interested in marketing with
Stockvert.com would pay for higher rankings and better positioning in search
results.





Recent
research published by multiple sources indicates that the Online Advertising
market is estimated to reach 50 billion dollars by 2011. Currently, the Internet
accounts for approximately 20% of overall media consumption in the U.S., but
advertisers invest only 7.5% of their budget online.  There is a very
good potential for marketplace growth as advertisers bridge this gap. There are
also inherent risks related to this marketspace, such as a global advertising
market contraction, as well as the risk related to other search engine giants
such as Google and Yahoo extending their capabilities into the financial
vertical search engine space.





Competition





The
market for our Internet products and services is relatively new and has been
highly fragmented, but we have seen a trend toward consolidation of the market
in recent months. We compete intensely with other companies providing similar
services to us. Many of those services are commodity-like and not easily
differentiated. Our competition includes direct competitors such as CEOCast.com,
Stockgroup Information Systems, Inc., and www.WallStreet.net, as well as
general-purpose Internet portals such as Yahoo! and AOL, who provide financial
and investment research information. Our competition in the advertising market
includes other financial and business related Websites such as Thestreet.com and
Globeandmail.com. We expect our competitors to remain strong as the Internet
industry further consolidates.





Nearly
all of our competitors are much better funded and are far better positioned to
be effective in the market for the services we wish to sell, especially given
our weak intellectual and financial resources.





Employees





We
currently have one full time employee, Luis Leung.  Mr. Leung receives
no salary.  Mr. Leung presently owns 2,250,617 of our common shares;
however, on February 27, 2009, Noctua Fund LP acquired an option to purchase a
total of 2,250,617 Company common shares from Luis Leung for
$40,000.  This option expires on February 27, 2012.





We hire
independent contract labor on an as needed basis.  We have not entered
into a collective bargaining agreement with any union.  We have not
experienced any work stoppages and consider the relations with the individuals
that work for us to be good.





Section
17(b) Disclosures





Section
17(b) of the Securities Act of 1933 requires certain disclosures by any person
that publishes, gives publicity to, or circulates any notice, circular,
advertisement, newspaper, article, letter, investment service, or communication
which, though not purporting to offer a security for sale, describes such
security for a consideration received or to be received, directly or indirectly,
from an issuer, underwriter, or dealer. In the event Section 17(b) applies,
certain disclosures must be made regarding the compensation received including
the nature of the compensation, the amount of the compensation and the source of
the compensation.





Regulatory
Issues





Aside
from the above 17(b) disclosures, we do not believe we are subject to
governmental regulation in our Internet publishing efforts, nor do we know of
any pending legislation or regulation which may impose regulatory requirements
on our Internet activities. We believe that we are in compliance in all material
respects with all laws, rules, regulations and requirements that affect our
business, and that compliance with such laws, rules, regulations and
requirements does not impose a material impediment on our ability to conduct our
business.





Subsidiaries





We own no
subsidiaries at this time.





Item
1A.   Risk Factors and Cautionary Statement Regarding
Forward-Looking Information





The
following factors should be considered carefully in evaluating Audiostocks and
its business.  We have a limited operating history upon which an
evaluation of our current business and prospects can be based. Our limited
operating history makes it difficult for you to judge our prospects. We have
reported losses for each fiscal year since we became incorporated. You should
consider any purchase of our shares in light of the risks, expenses and problems
frequently encountered by all companies in the early stages of its corporate
development, such as lack of capital, difficulty attracting high quality
personnel, lack of market exposure, and uncertainty about the viability of our
business plan.





The
risks described below may materially impact your investment in our company or
may in the future, and, in some cases already do, materially affect us and our
business, financial condition and results of operations and could likely result
in a total loss of your investment. You should carefully consider these factors
with respect to your investment in our securities.





RISKS RELATED TO OUR
BUSINESS





We
have not generated any significant revenues and may never achieve
profitability.





We are a
development stage company and, to date, have not generated any significant
revenues. We cannot assure you that we can achieve or sustain profitability 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 our product development can be
completed, and if it will achieve market acceptance. We may not achieve our
business objectives and the failure to achieve such goals would have an adverse
impact on us.





Liquidity
and capital resources are uncertain.





You
should be cautioned that there can be no assurance that revenue, margins, and
profitability will increase. There can be no assurance that we will be
successful in raising a sufficient amount of additional capital or in internally
generating a sufficient amount of capital to meet our operational
requirements.





Our
ability to continue as a going concern is uncertain.





In view
of our liquidity conditions, our ability to continue as a going concern is
uncertain and dependent upon achieving a profitable level of operations and, if
necessary, on our ability to obtain necessary financing to fund ongoing
operations. As well, our ability to absorb a large unforeseen expenditure or
other disaster is limited by our current lack of capital resources. Our
auditors' report also discusses substantial doubt about our ability to continue
as a going concern.





Computer
equipment problems and failures could adversely affect our
business.





Problems
or failures in Internet-related equipment, including file servers, computers and
software, could result in interruptions or slower response times for our
Web-based services, which could reduce the attractiveness of our Website,
financial tools or investor relations services to advertisers and users. Should
such interruptions continue for an extended period we could lose significant
business and reputation. Equipment problems and failures could result from a
number of causes, including an increase in the number of users of our Website,
computer viruses, outside programmers penetrating and disrupting software
systems, human error, fires, floods, power and telecommunications failures and
internal breakdowns. In addition, any disruption in Internet access and data
feeds provided by third parties could have a material and adverse effect on our
businesses. Our limited resources do not currently permit us to maintain an
off-site disaster recovery facility. As a result, if we experience a major
disaster such as a fire, theft, or
intentional destruction of our computer equipment, it could have catastrophic
results for our business.








Our
computer systems may not be able to accommodate increases in the number of users
of our services.





In the
past, our Website 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 continue to seek further
increases in our user base. Consequently, our Website must accommodate a high
volume of traffic and deliver frequently updated information. Our Website has in
the past and may in the future experience slower response times or other
problems for a variety of reasons.





We
may not be able to compete successfully against current and future
competitors.





We
currently compete with several other companies offering similar services. Many
of these companies have significantly greater financial resources, name
recognition, and technical and marketing resources, and virtually all of them
are seeking to improve their technology, products and services. We can not
assure you that we will have the financial resources or the technological
expertise to successfully meet this competition. Increased competition could
result in price reductions, reduced margins, or loss of market share, any of
which would adversely affect our business.





We
are significantly influenced by our officers, directors and entities affiliated
with them.





In the
aggregate, ownership of Audiostocks shares by management, and /or entities
affiliated with management, represents a majority of our present issued and
outstanding shares of common stock. These shareholders, if acting together, will
be able to significantly influence all matters requiring approval by
shareholders, including the election of directors and the approval of mergers or
other business combinations.





We
license some of our software from a third party licensor.





We do not
own and currently license many parts of the software we use, which we procure
from a third party licensor. The use of this software currently provides us with
all of our opportunities to realize revenues. In the event we lose the license
rights to this software, our business operations will be severely hindered and
may result in a loss all revenue streams.





We
are highly dependent on revenue referrals.





We
currently obtain a significant number of our business referrals through third
party referral sources. They may not continue to provide referrals to us and we
may not be able to establish relationships with new referral sources to ensure a
steady flow of clients companies. Our inability to acquire suitable referrals in
the future or the loss of our current referral source and our failure to replace
them may result in a loss of all revenue streams.





We
may not be unable to protect the intellectual property rights upon which our
business relies.





We have
pursued or may pursue certain trademarks, and we have brand names and certain
subscriber lists which make up the intellectual property we view as important to
our business. It may be possible for a third party to copy or otherwise obtain
or use our intellectual property without authorization or to develop similar
technology independently. There can also be no assurance that our business
activities will not infringe upon the proprietary rights of others, nor that
other parties will not assert infringement claims against us, including claims
that by, directly or indirectly, providing hyperlink text links to Websites
operated by third parties, we have infringed upon the proprietary rights of
other third parties. Due to the global nature of the Internet, there can be no
assurance that obtaining trademark protection in the United States will prevent
infringements on our trademarks by parties in other countries.





We
may be held liable for online information or services provided by us or third
parties.





Because
materials may be downloaded by the public on Internet services offered by us or
the Internet access providers with whom we have relationships, and because third
party information may be posted by third parties on our Website through
discussion forums and otherwise, there is the potential that claims will be made
against us for defamation, negligence, copyright or trademark infringement or
other theories. The imposition of liability based on such claims could
materially and adversely affect us.





Even to
the extent such claims do not result in liability, we could incur significant
costs in investigating and defending against such claims. The imposition on us
of potential liability for information or services carried on or disseminated
through our Website could require implementation of measures to reduce exposure
to such liability, which may require the expenditure of substantial resources
and limit the attractiveness of services to members and users.





Even if
we obtain general liability insurance, it will not cover all potential claims to
which we are exposed or may not be adequate to indemnify us for all liability
that may be imposed. In any event, even if we obtain general liability
insurance, any imposition of liability that is not covered by insurance or is in
excess of insurance coverage could have a material adverse effect on our
business, results of operations and financial condition.





Government
regulation and legal uncertainties relating to the web could hinder the
popularity of Internet services.





There are
currently few laws or regulations that specifically regulate communications or
commerce on the web. However, laws and regulations may be adopted in the future
that address issues such as user privacy, pricing, and the characteristics and
quality of products and services. Several telecommunications companies have
petitioned the federal communications commission to regulate Internet service
providers and online services providers in a manner similar to long distance
telephone carriers and to impose access fees on these companies. This could
increase the cost of transmitting data over the Internet. Moreover, it may take
years to determine the extent to
which existing laws relating to issues such as property ownership, libel and
personal privacy are applicable to the web. Any new laws or regulations relating
to the web could adversely affect our business.








We
are highly dependent on activity levels in the securities market.





Our
business is dependent upon the health of the financial markets. Some of the
financial data and information market demand is dependent on activity levels in
the securities markets. In the event that the U.S. or international financial
markets suffer a prolonged downturn that results in a significant decline in
investor activity, our revenue levels could be materially adversely
affected.





Our
business and revenues may be affected by restrictions on use of third party
information.





We post
news clippings from other third party news websites on the StockVert.com website
with links to the source site. Most publishers currently encourage this
practice.  To the extent that a large majority of news publishers
prohibit posting of their stories on our Websites or begin charging royalty fees
for such stories, our Website traffic could decrease or our costs could
increase, thereby adversely impacting our profitability.





We
could face liability for the information displayed on our Website.





We may be
subjected to claims for defamation, negligence, and copyright or trademark
infringement relating to the information we publish on our web site. These types
of claims have been brought, sometimes successfully, against online services in
the past. We could also be subjected to claims based upon the content that is
accessible from our Website through links to other websites.





We
may attempt to raise additional capital through the sale of additional common
stock in the near future.  Future issuances of common stock may dilute
your position in us.





Our stock
price is highly vulnerable to buying and selling pressures. As there is a
limited market for our common stock, there may be considerable volatility in our
stock price due to selling and buying pressures. Future sales of shares by our
existing or future shareholders could cause the market price of our common stock
to decline.





Our
Board has authorized and issued preferred shares.





Our Board
has the authority to issue certain preferred shares with rights, preferences
and/or privileges senior to or on parity with the rights of the holders of
common stock. The potential consequences to our investors include, but are not
limited to, a loss of perceived value of the stock in the market, a loss of
voting powers and a loss of future earnings and dividends, if and when dividends
are declared.








Future
sales of our equity securities will dilute current investors.





To fully
execute our long-term business plan, we will need to raise debt and equity
capital in the future. We will need to raise additional equity capital as we
raise additional debt capital to keep our debt to equity ratio in a range
acceptable to the financial institutions providing debt capital. Such additional
equity capital when and if it is raised would result in an investor being
diluted.





If
we grow very rapidly, this will place strains on our management team and other
company resources.





We plan
to grow rapidly and significantly expanded our operations. This growth will
place a significant strain on our management systems and resources. We will not
be able to implement our business strategy in a rapidly evolving market without
an effective planning and management process. We will not be able to increase
revenues unless we continue to improve our transaction-processing, operational,
financial and managerial controls and reporting systems and procedures, expand,
train and manage our work force and manage multiple relationships with third
parties.





INVESTMENT
RISKS





Our
common stock price is likely to be highly volatile.





The
market price for our common stock is likely to be highly volatile. We cannot
assure you that our common stock will trade at the same levels of other stock in
our industry. The following factors will add to our common stock price's
volatility:





·
            our
      ability to execute our business plan and significantly grow our
      business;


·
            our
      ability to further develop and enhance our services and
      products;


·
            our
      ability to generate a market and recognition for our products and
      services;


·
            increased
      competition from competitors who offer competing
  services;


·
            our
      financial condition and results of our
  operations;


·
            actual
      or anticipated variations in our quarterly operating
    results;


·
            new
      sales formats or new products or services offered by us, or our
      competitors;


·
            conditions
      or trends in our industry in
general;


·
            announcements
      by us or our competitors of significant acquisitions, strategic
      partnerships or joint ventures;


·
            our
      capital commitments;


·
            additions
      or departures of our key personnel;
and


·
            sales
      of our common stock.





Many of
these factors are beyond our control. These factors may decrease the market
price of our common stock, regardless of our operating performance.








Trading
of our stock may be restricted by the SEC's penny stock regulations which may
limit a stockholder's ability to buy and sell our stock.





The
Securities and Exchange Commission has adopted regulations which generally
define “penny stock” to be any equity security that has a market price (as
defined) less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. Our securities are currently covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
“accredited investors”. The term “accredited investor” refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock. Future issuances of shares
may adversely impact the value of our stock.





Investors
may face significant restrictions on the resale of our stock due to state blue
sky laws.





Each
state has its own securities laws, often called “blue sky laws,” which (1) limit
sales of stock to a state's residents unless the stock is registered in that
state or qualifies for an exemption from registration and (2) govern the
reporting requirements for broker-dealers and stock brokers doing business
directly or indirectly in the state. Before a security is sold in a state, there
must be a registration in place to cover the transaction, and the broker must be
registered in that state, or otherwise be exempt from registration. We do not
know whether our stock will be registered under the laws of any states. A
determination regarding registration will be made by the broker-dealers, if any,
who agree to serve as the market-makers for our stock. There may be significant
state blue sky law restrictions on the ability of investors to sell, and on
purchasers to buy, our securities.





Accordingly,
investors should consider the secondary market for our securities to be a
limited one. Investors may be unable to resell their stock, or may be unable to
resell it without the significant expense of state registration or
qualification.





Investors
may face significant restrictions on the resale of our stock due to federal
regulations of penny stock.





Our stock
differs from many stocks, in that it is a “penny stock.” The Securities and
Exchange Commission has adopted a number of rules to regulate “penny stocks.”
These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3,
15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934, as
amended.





Because
our securities probably constitute "penny stock" within the meaning of the
rules, the rules would apply to us and our securities. The rules may further
affect the ability of owners of our stock to sell their securities in any market
that may develop for them. There may be a limited market for penny stocks, due
to the regulatory burdens on broker-dealers. The market among dealers may not be
active. Investors in penny stock often are unable to sell stock back to the
dealer that sold them the stock. The mark-ups or commissions charged by the
broker-dealers may be greater than any profit a seller may make. Because of
large dealer spreads, investors may be unable to sell the stock immediately back
to the dealer at the same price the dealer sold the stock to the investor. In
some cases, the stock may fall quickly in value. Investors may be unable to reap
any profit from any sale of the stock, if they can sell it at all.





Stockholders
should be aware that, according to the Securities and Exchange Commission
Release No. 34-29093, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse. These patterns include:





·
            control
      of the market for the security by one or a few broker-dealers that are
      often related to the promoter or
issuer;


·
            manipulation
      of prices through prearranged matching of purchases and sales and false
      and misleading press releases;


·
            "boiler
      room" practices involving high pressure sales tactics and unrealistic
      price projections by inexperienced sales
  persons;


·
            excessive
      and undisclosed bid-ask differentials and markups by selling
      broker-dealers; and


·
            the
      wholesale dumping of the same securities by promoters and broker-dealers
      after prices have been manipulated to a desired level, along with the
      inevitable collapse of those prices with consequent investor
      losses.





Shares
eligible for future sale by our current shareholders may decrease the price of
our common stock.





If our
shareholders sell substantial amounts of our common stock in the public market
following future offerings, then the market price of our common stock could
fall. Restrictions under the securities laws limit the number of shares of
common stock available for sale in the public market.





Cautionary
Statement Concerning


Forward-Looking
Statements





Some of
the statements in this annual Report are forward looking statements, which are
subject to risks and uncertainties.  These risks and uncertainties
could cause actual results to differ materially from those expressed in
forward-looking statements.  We base these forward-looking statements
on our expectations and projections about future events, which we derive from
the information currently available to us.  Such forward-looking
statements relate to future events or our future
performance.  Forward-looking statements are only
predictions.  The forward-looking events discussed in this annual
Report, the documents to which we refer you and other statements made from time
to time by us or our representatives, may not occur, and actual events and
results may differ materially and are subject to risks, uncertainties and
assumptions about us.  For these statements, we claim the protection
of the “bespeaks caution” doctrine.  The forward-looking statements
speak only as of the date hereof, and we expressly disclaim any obligation to
publicly release the results of any revisions to these forward-looking
statements to reflect events or circumstances after the date of this
filing.





Item
2.  Description of Property





Intellectual
Property, Proprietary Rights And Domain Names





We own
the domain name www.StockVert.com.  It is our intention to purchase
additional domain names in the future as the nature of our business, and the
products and services we offer, continues to expand. We believe our rental and
ownership of these domain names gives us adequate protection over them and we
intend to continue to keep them in our possession.





We have
no plans to register any trademarks as of the date of this First Amended Form
10-K Report. We may pursue other trademarks in the future.





We
protect our other intellectual property 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 marks in the United
States and internationally. Effective trademark, service mark, copyright and
trade secret protection may not be available in every country in which our
services and products are made available on-line. We create some of our own
content and obtain the balance of our content from third parties. It is possible
that we could become subject to infringement actions based upon the content
obtained from these 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 enter 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 whom we license content. The steps we take to protect our
proprietary rights may not be adequate and third parties may infringe or
misappropriate our 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.





Real
Property





At
present, we do not own any property.  Our executive offices currently
consist of shared leased office space located at:  2038 Corte Del
Nogal, Suite 110, Carlsbad, California 92011 and our phone number is
760-804-8844.  We are currently re-negotiating our lease terms. We
believe there is an adequate supply of suitable office space in surrounding
areas on terms acceptable to us.





Item
3.  Legal Proceedings





None.





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





None.





PART
II





Item
5.  Market for Common Equity and Related Stockholder
Matters.





Our
common stock is currently traded over the counter and is listed on the OTC
Bulletin Board under the symbol "AUIO" and began trading in 2008.





Our stock
is extremely thinly traded and there is not an active market for our
stock.





The
ownership of our securities is extremely concentrated, and presently, there is
very little market support for our common stock.





The most
recent closing bid price for our common stock was on April 9, 2009 at $1.01 per
share. The trading price of our common stock may be volatile with dramatic
changes over short periods. The trading price may reflect imbalances in the
supply and demand for shares of the Company, market reaction to perceived
changes in the industry in which we sell products and services, general economic
conditions, and other factors. Investors are cautioned that the trading price of
the common stock can change dramatically based on changing market perceptions
that may be unrelated to us and our activities.





Holders





As of
December 31, 2008 there were approximately 177 record holders of our common
stock.





Dividends





We have
declared one stock dividend in January 2005 for 99 shares of our common stock to
each shareholder of record. We do not contemplate paying dividends in the
foreseeable future.  It is anticipated that earnings, if any, will be
retained to retire debt and for the operation of the business.





Securities
Authorized for Issuance Under Equity Compensation Plans.





None.








Recent
Sales of Unregistered Securities:





During
January 2002 to December 2004, the Company issued 51,439 shares of common stock
for services valued at $0.001 per share.





During
January 2005, the Board approved a 200 to 1 reverse split.  Our
financial statements were retroactively restated for the relevant period to
reflect this change.





During
January 2005, the Company issued 72 shares of common stock due to the 200 to 1
reverse split.


During
January 2005, the Company issued 17,148,561 shares of common stock for services
valued at $0.001 per share.





During
January 2005, the Company issued 16,236 shares of common stock as a dividend
valued at $0.001 per share.





During
July 2007, the Company reacquired and immediately retired 800,000 shares of
common stock valued at $0.03 per share.





During
July 2007, the Company reacquired and immediately retired 24,281 shares of
common stock at par value





During
July 2007, the Company issued 420,308 shares of common stock as officer
compensation valued at $0.001 per share.





During
October 2007, the Company issued 1,000 shares of common stock in exchange of
cash valued at $0.75 per share.





During
October 2007, the Company issued 609,755 shares of common stock pursuant to a
stock exchange agreement valued at $0.22 per share.





During
April 2008, the Company issued 80,000 shares of common stock in lieu of wages
valued at $.50 per share.





During
January 2009, the Company issued 5,497,885 common shares described
below:





·
            1,812,444
      common shares in exchange of 50 of our Series B Preferred
      stock


·
            1,812,444
      common shares in exchange of 50 of our Series B Preferred
      stock


·
            1,750,309
      common shares in lieu of salary valued at $.75 per
  share


·
            17,398
      common shares at $1.00 per share as a part of settlement agreement and for
      the relief of certain debts owed by the
Company


·
            73,669
      common shares at $1.00 per share as a part of settlement agreement and for
      the relief of certain debts owed by the
Company


·
            1,620
      common shares at $1.00 per share as a part of settlement agreement and for
      the relief of certain debts owed by the
Company


·
            16,667
      common shares at $.75 per share as a part of settlement agreement and for
      the relief of certain debts owed by the Company related to a January 1,
      2008 private placement agreement


·
            13,334
      common shares at $.75 per share as a part of settlement agreement and for
      the relief of certain debts owed by the Company related to a January 1,
      2008 private placement agreement





All of
the issuances of securities described above were deemed to be exempt from
registration in reliance on Section 4(2) of the Securities Act of 1933 as
transactions by an issuer not involving a public offering.  We made the
determination that each investor had enough knowledge and experience
in finance and business matters to evaluate the risks and merits of the
investment.  There was no general solicitation or general advertising
used to market the securities.  We provided each investor with disclosure
of all aspects of our business, including providing the investor with press
releases, access to our auditors, and other financial, business, and corporate
information. A legend was placed on the stock certificates stating that the
securities have not been registered under the Securities Act and cannot be sold
or otherwise transferred without an effective registration or an exemption there
from.








Discussion
of our Present Liabilities





At the
time of the Asset Sale Agreement, the company assigned $418,089 in liabilities
(the “Assigned Liabilities”) to Dao Information Systems, Inc. (“Dao”). 
These Assigned Liabilities consisted of promissory notes, accounts
payable and other accrued liabilities.  Pursuant to the Asset Sale
Agreement, these Assigned Liabilities were removed from our balance sheet;
however the
legal obligation to satisfy some of these debts remains with the
Company.





Of the
Assigned Liabilities, we have been legally
relieved of this entire amount except for (i) approximately $8,500 due to
our independent auditor, (ii) approximately $76,000 due in secured convertible
promissory notes due to Black Forest International LLC (“BFI”) and (iii)
approximately $5,500 in unsecured debt due to BFI.





To be
clear ... BFI has not legally released the Company from these obligations and
although Dao has promised to pay these BFI obligations, because of the poor and
limited credit history of Dao, we may ultimately be made to pay these BFI
obligations, some of which are discussed below.





As
previously disclosed with the SEC in our Form 10-Q filed on May 15, 2008, on
March 17, 2008, we issued an 8% convertible promissory note to BFI for $7,500
which was received by the Company in cash from BFI.  We were in
default on this note and pursuant to the Asset Sale Agreement the obligation to
satisfy this note was assigned to Dao.





As
previously disclosed with the SEC in our Form 10-Q filed on May 15, 2008, on
June 1, 2008, we issued an 8% convertible promissory note to BFI for $19,000
which was received by the Company in cash from BFI.  We were in
default on this note and pursuant to the Asset Sale Agreement the obligation to
satisfy this note has been assigned to Dao.





Both of
the above convertible promissory notes, along with another secured convertible
promissory note we issued to BFI in the amount of $50,000 (disclosed in our
First Amended Form 10-KSB for the period ended December 31, 2007 and in Note 3
of this First Amended Form 10-K Report) and a smaller approximately $5,500
unsecured obligation owed to BFI: (i) are presently held by Noctua Fund LP and
(iii) are therefore, due, owing and payable to Noctua Fund LP.





All of
the obligations owed to BFI are in default.




On
January 1, 2008, the Company entered into a private offering with certain
investors for the purchase of Convertible Debentures and associated Series A
Warrants.  The Warrants were exercisable at the date of issuance, have
an exercise price of $0.90 per share and a two (2) year term. During January
2008, 10% Convertible Debentures were issued for a total of $22,500, in exchange
of cash as part of this transaction.  The Convertible Debentures were
due and payable one year from their issuance and are convertible into common
stock at the price of $0.75 per share.  In January of this year, we
negotiated an agreement with the holders of the 10% Convertible Debentures and
issued them a total of 30,001 common shares in exchange for the 10% Convertible
Debentures.  None of the Convertible Debentures and Series A Warrants
are outstanding.





On July
1, 2008, we consolidated all obligations due and owing to The Baum Law Firm PC
and Mark L. Baum, Esq., for legal services rendered to the Company over the past
four years, and issued to Meaux Street Partners LP a 10% promissory note for
$25,000.  This 10% promissory note to Meaux Street Partners LP remains
due, payable and outstanding.





Item
6.  Management’s Discussion and Analysis or Plan of
Operation





The
following discussion and analysis should be read in conjunction with our audited
consolidated financial statements and related notes included in this First
Amended Form 10-K Report.  This First Amended Form 10-K Report
contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995.  The statements contained in
this Report that are not historic in nature, particularly those that utilize
terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“estimates,” “believes,” or “plans” or comparable terminology are
forward-looking statements based on current expectations and
assumptions.





Various
risks and uncertainties could cause actual results to differ materially from
those expressed in forward-looking statements.  Factors that could
cause actual results to differ from expectations include, but are not limited
to, those set forth under the section “Risk Factors” set forth in this First
Amended Form 10-K Report.





The
forward-looking events discussed in this Report, the documents to which we refer
you and other statements made from time to time by us or our representatives,
may not occur, and actual events and results may differ materially and are
subject to risks, uncertainties and assumptions about us.  For these
statements, we claim the protection of the “bespeaks caution”
doctrine.  All forward-looking statements in this document are based
on information currently available to us as of the date of this Report, and we
assume no obligation to update any forward-looking
statements.  Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements.





Critical
Accounting Policies





Our
critical and significant accounting policies, including the assumptions and
judgments underlying them, are disclosed in the Notes to the Financial
Statements.  These policies have been consistently applied in all
material respects and address such matters as revenue recognition and
depreciation methods.  The preparation of the financial statements in
conformity with generally accepted accounting principles in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reported period.  Actual results
could differ from those estimates.  The accounting treatment of a
particular transaction is specifically dictated by accounting principles,
generally accepted in the United States of America, with no need for
management’s judgment in their application.  There are also areas in
which management’s judgment in selecting any viable alternative would not
produce a materially different result.  See our audited financial
statements and notes thereto which contain accounting policies and other
disclosures required by accounting principles, generally accepted in the United
States of America.








Plan
of Operation





Stockvert.com
is a vertical search engine in the financial information space. It collects and
indexes information from thousands of sources.   The information
managed by the platform includes profiles for publicly traded companies and
their executives and directors. All information is correlated to allow a richer
search experience. The objective of the site is to provide its users with a
platform through which they can perform due diligence on companies (and their
executives) before investing on them.





The
platform also works as a tool through which executives can make their profiles
available for recruiters and potential employers.





The
revenue model for this platform is similar to that of typical search engines
such as Google and Yahoo.  Companies interested in marketing with
Stockvert.com would pay for higher rankings and better positioning in search
results.





Recent
research published by multiple sources indicates that the Online Advertising
market is estimated to reach 50 billion dollars by 2011. Currently, the Internet
accounts for approximately 20% of overall media consumption in the U.S., but
advertisers invest only 7.5% of their budget online.  There is a very
good potential for marketplace growth as advertisers bridge this gap. There are
also inherent risks related to this marketspace, such as a global advertising
market contraction, as well as the risk related to other search engine giants
such as Google and Yahoo extending their capabilities into the financial
vertical search engine space.





Competition





The
market for our Internet products and services is relatively new and has been
highly fragmented, but we have seen a trend toward consolidation of the market
in recent months. We compete intensely with other companies providing similar
services to us. Many of those services are commodity-like and not easily
differentiated. Our competition includes direct competitors such as CEOCast.com,
Stockgroup Information Systems, Inc., and www.WallStreet.net, as well as
general-purpose Internet portals such as Yahoo! and AOL, who provide financial
and investment research information. Our competition in the advertising market
includes other financial and business related Websites such as Thestreet.com and
Globeandmail.com. We expect our competitors to remain strong as the Internet
industry further consolidates.





Nearly
all of our competitors are much better funded and are far better positioned to
be effective in the market for the services we wish to sell, especially given
our weak intellectual and financial resources.





Liquidity
and Capital Resources





At
December 31, 2008, we had $4,389 cash on hand as compared to $27,181 on hand at
December 31, 2007.  For both years ended December 31, 2008 and 2007
the company produced $0 of cash inflow from operating
activities.  During the year ended December 31, 2008 the company
had cash inflows of $135,893 due to revenue from discontinued operations as
compared to $426,950 produced during the year ended December 31,
2007.


As of the
date of this Report, we require additional capital investments or borrowed funds
to meet cash flow projections and carry forward our business
objectives.  There can be no assurance that we will be able to raise
capital from outside sources in sufficient amounts to fund our new
business.





We may
continue to seek additional capital over the next 12 months from the additional
sale of our securities.  The amount and timing of our future capital
requirements will depend upon many factors, including the level of funding
received by us, anticipated private placements of our common stock, the level of
funding obtained through other financing sources, and the timing of such
funding.  In the event we are unable to raise additional capital, we
will be unable to expand operations as desired.





We intend
to retain any future earnings, if any, to retire any existing debt, finance the
expansion of our business and any necessary capital expenditures and for general
corporate purposes.








Inflation





Although
management expects that our operations will be influenced by general economic
conditions, we do not believe that inflation had a material effect on our
results of operations during the year ending December 31, 2008.





Going
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.  The history of losses and the inability
for the Company to produce substantial cash flow has raised doubt about our
ability to continue as a going concern.





Expenses





Our total
expenses from continuing operations for the year ending December 31, 2008 were
$1,283,827 as compared to $5,869 for the year ending December 31, 2007. Total
expenses for discontinued operations for the year ending December 31, 2008 were
$1,363,189 as compared to $3,574,189 for the year ending December 31,
2007.  General and administrative expenses for the year ending
December 31, 2008 totaled $18,921 as compared to $0 for the year ending December
31, 2007.  Professional consulting fees for continuing operations for
the year ended December 31 2008 amounted to $3,650 as compared to $0 for the
year ending December 31, 2007.  .





Results
of Operations for the Year Ended December 31, 2008.





We had no
revenues from continuing operations for both years ended December 31, 2008 and
2007.  We had $909,368 in total revenues from discontinued operations
for the year ended December 31, 2008 as compared to $3,587,802 in total revenues
from discontinued operations for the
year ended December 31, 2007. Total operating expenses for the year ended
December 31, 2008 amounted to $1,283,827 as compared to total operating expenses
for the year ended December 31, 2007 of $5,869. Losses from discontinued
operations totaled $3,095,042 for the year ended December 31, 2008 and $13,613
for the year ended December 31, 2007.  Total loss for the year ended
December 31, 2008 was $4,423,626 as compared to total income for the year ended
December 31, 2007 of $3,661.





Item 7.  Financial Statements





AUDIOSTOCKS,
      INC.Report
      of Independent Registered Public Accounting FirmBalance
      Sheets at December 31, 2008 and 2007Statements
      of Operations and Comprehensive Income for the years ended December 31,
      2008 and 2007Statements
      of Stockholders Equity (Deficit) for the years ended December 31, 2008 and
      2007Statements
      of Cash Flows for the years ended December 31, 2008 and
    2007Notes
      to Financial Statements








REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the
Board of Directors and Shareholders of AudioStocks, Inc.





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





We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of AudioStocks, Inc. at December 31,
2008 and 2007, and the results of its operations and cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.





The
accompanying financial statements have been prepared assuming that AudioStocks,
Inc. will continue as a going concern. As discussed in Note 2 to the financial
statements, AudioStocks, Inc. has a significant working capital deficit and
is dependent of financing to continue operations. These issues 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 Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.








/s/Chisholm, Bierwolf,
Nilson & Morrill


Chisholm,
Bierwolf, Nilson & Morrill, LLC


Bountiful,
UT


April 7,
2009







AUDIOSTOCKS, INCBALANCE
      SHEETSDecember
      31,
                December
      31,2008
                2007ASSETSCurrent
      assetsCash
                $                                                     
      4,389
                27,181Accounts
      Receivable
                -
                -Total
      current assets
                4,389
                27,181Fixed
      AssetsProperty,
      Plant and Equipment
                213,969
                202,782Less:
      Accumulated Depreciation
                (48,403)
                (5,869)Total
      Fixed Assets
                165,566
                196,913Other
      AssetsSecurities
      Available for Sale
                -
                211,194Deposits
                -
                3,296Employee
      Receivable
                -
                22,095Deferred
      Expenses
                -
                267,447Total
      Other Assets
                -
                504,032TOTAL
      ASSETS
                $                                                  169,955
                728,125LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      liabilitiesLicensing
      Fees Payable - Related Party
                $                  -
                267,362Deferred
      Revenues
                -
                407,543Due
      to/from Related Party
                7,457
                -Shareholder
      Loan
                -
                15,000Accounts
      Payable and Accrued Liabilities
                2,085
                109,675Convertible
      Debentures - Short Term
                50,000
                50,000Stock
      To Be Issued
                -
                40,000Taxes
      Payable
                14,744
                14,744Accrued
      Interest
                2,500
                2,000Total
      current liabilities
                76,786
                906,324Long
      Term LiabilitiesConvertible
      Debentures
                -
                25,000Total
      Long Term Liabilities
                -
                25,000TOTAL
      LIABILITIES
                76,786
                931,324COMMITMENTSSTOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      stock, 5,000,000 shares authorized, $0.001 par value4,000,100  and
      0 issued and outstandingat
      December 31, 2008 and 2007, respectively
                4,000
                -Common
      stock, 95,000,000 shares authorized, $0.001 par valueissued
      and outstanding 19,376,087 and 17,423,090shares
      at December 31, 2008 and 2007 respectively
                19,376
                17,423Additional
      Paid in Capital
                4,512,365
                13,563Accumlated
      Deficit
                (4,442,572)
                (18,945)Accumulated
      Other Comprehensive Income
                -
                (215,239)TOTAL
      STOCKHOLDERS' EQUITY (DEFICIT)
                93,169
                (203,198)TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                $                                                 
       169,955
                728,125The
      accompanying notes are an integral part of these financial
      statements


AUDIOSTOCKS, INC.STATEMENTS
      OF OPERATIONS AND COMPREHENSIVE INCOMEFor
      the years endedDecember
      31,
                December
      31,2008
                2007RevenuesNet
      revenues
                $                     -
                $                     -Total
      revenues
                -
                -ExpensesGeneral
      and administrative
                18,921
                -Stock
      based compensation
                1,218,722Professional
      fees
                3,650
                -Depreciation,
      depletion, and amortization
                42,534
                5,869Total
      operating expenses
                1,283,827
                5,869Other
      Income (Expense)Other
      Income
                -
                -Interest
      income
                30
                169Interest
      expense
                (44,787)
                (2,008)Total
      Other Income (Expense)
                (44,757)
                (1,839)Loss
      from Continuing Operations
                (1,328,584)
                (7,708)Discontinued
      OperationsGain
      on sale of Audiostocks.com division
                (2,641,226)
                -Loss
      from discontinued Audiostocks.com division
                (453,816)
                13,613Income
      (Loss) from Discontinued Audiostocks.com Operations
                (3,095,042)
                13,613Income
      (Loss) Before Income Taxes
                (4,423,626)
                5,905Provision
      for Income Taxes
                -
                2,244Net
      Income (Loss)
                $       (4,423,626)
                $              3,661Income
      (Loss) per common share:Net
      income (loss) from continued operations
                (0.07)
                (0.00)Net
      income (loss) from discontinued operations
                (0.18)
                0.00Net
      income (loss) per common share
                $               (0.25)
                0.00Income
      (Loss) per common share - diluted:Net
      income (loss) from continued operations
                (0.07)
                (0.00)Net
      income (loss) from discontinued operations
                (0.18)
                0.00Net
      income (loss) per common share - diluted
                $               (0.25)
                0.00Weighted
      average common and common equivalent shares outstandingBasic
                17,950,291
                17,127,449Diluted
                17,950,291
                17,377,449Net
      Income(Loss)
                $       (4,423,626)
                $              3,661Other
      Comprehensive IncomeSecurities
      Available for Sale-fair
      value adjustments
                215,239
                92,150Comprehensive
      Income/Loss
                $       (4,208,387)
                $            95,811The
      accompanying notes are an integral part of these financial
      statements


AUDIOSTOCKS, INCSTATEMENTS
      OF STOCKHOLDERS'' EQUITY (DEFICIT)


From
December 31, 2006 through December 31, 2008


Other
            TotalPreferred
      Stock
            Common
      Stock
            Additional
            Retained
            ComprehensivePar
            
            Par
            Paid-in
            Earnings
            IncomeShares
            Value
            Shares
            Value
            Capital
            and
      (Deficit)Balance
      at December 31, 2006
            -
            $     -
            17,216,308
            $17,216
            $           -
            $        1,593
            $     (307,389)
            $
      (288,580)Cancellation
      of 24,281 shares
            
            
            (24,281)
            (24)
            24
            
            
            -Buyback
      and Cancellation of 800,000 shares
            
            
            (800,000)
            (800)
            
            (24,200)
            
            (25,000)Issuance
      of common stock as compensationvalued
      at $0.001 per share
            
            
            420,308
            420
            
            
            
            420Issuance
      of common stock in exchange of cashvalued
      at $0.75 per share
            
            
            1,000
            1
            749
            
            
            750Issuance
      of common stock as a share exchange
            
            609,755
            610
            12,789
            
            
            13,399agreement
      valued at $0.22 per shareNet
      Income
            
            
            
            
            
            3,661
            
            3,661Fair
      Value Adjustments of Marketable Securities
            
            
            
            
            
            92,150
            92,150Balance
      at December 31, 2007
            -
            $     -
            17,423,090
            $17,423
            $
      13,563
            $    (18,945)
            $     (215,239)
            $
      (203,199)Issuance
      of warrants
            
            
            
            
            11,070
            
            
            11,070Beneficial
      conversion factor related to theissuance
      of convertible debt
            
            
            
            
            36,834
            
            
            36,834Issuance
      of common stock as compensationvalued
      at $0.50 per share
            
            
            80,000
            80
            39,920
            
            
            40,000Cancellation
      of warrants
            
            
            
            
            (11,070)
            
            
            (11,070)Issuance
      of preferred stock series A as part ofconsideration
      of licensing consent agreement
            4,000,000
            4,000
            
            
            2,996,000
            
            
            3,000,000Issuance
      of preferred stock series B as part ofconsideration
      of licensing consent agreement
            100
            -
            
            
            -
            
            
            -Issuance
      of common shares as settlementof
      debt
            
            
            1,872,997
            1,873
            1,426,048
            
            
            1,427,921Net
      (Loss)
            
            
            
            
            
            (4,423,626)
            
            (4,423,426)Fair
      Value Adjustments of Marketable Securities
            
            
            
            
            
            215,239
            215,239Balance
      at December 31, 2008
            4,000,100
            $4,000
            19,376,087
            $19,376
            $4,512,365
            $(4,442,572)
            $                    -
            $     93,169The
      accompanying notes are an integral part of these financial
      statements



















AUDIOSTOCKS, INC.STATEMENTS
      OF CASH FLOWSFor
      the years endedDecember
      31,
            December
      31,2008
            2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income(Loss)
            $   (4,423,626)
            $          3,661Adjustments
      to Reconcile Net Earnings to Net Cash Usedby
      Operating Activities:Stock
      issued as settlement of debt
            1,405,421
            420Preferred
      stock issued for licensing consent agreement
            3,000,000
            -Depreciation
            42,534
            5,869Amortization
      of discount on notes
            36,834
            -Assignment
      of convertible note
            (76,500)Convertible
      Note issued for services and debt settlement
            25,000
            -Changes
      in Assets and Liabilities, net of sale of divisionAccounts
      Receivable
            -
            4,280Securities
      Available for Sale
            191,329
            51,712Market
      adjustment of Securities Available for Salereceived
      as compensation
            1,092,116
            (677,790)Deferred
      Expenses
            267,447
            (60,702)Deposits
            3,296
            (3,296)Employee
      Receivable
            22,095
            (22,095)Licensing
      Fees Payable
            (267,362)
            (12,749)Market
      adjustments of Licensing Fees Payable in the formof
      securities available for sale
            (728,702)
            621,765Deferred
      Revenues
            (407,543)
            37,673Accounts
      Payable and Accrued Liabilities
            (99,634)
            78,471Market
      adjustments of Payables in the form ofsecurities
      available for sale
            (148,175)
            148,175Taxes
      Payable
            -
            2,244NET
      CASH USED IN OPERATING ACTIVITIES
            (65,470)
            177,638CASH
      FLOWS FROM INVESTING ACTIVITIESProceeds
      from Sale of Securities Available for Sale
            19,865
            -Additions
      to Securities Available for Sale
            -
            (13,333)Additions
      to Fixed Assets
            (11,188)
            (202,782)NET
      CASH FROM INVESTING ACTIVITIES
            8,678
            (216,115)CASH
      FLOWS FROM FINANCING ACTIVITIESPurchase
      and cancellation of treasury stock
            -
            (25,000)Proceeds
      from the issuance of stock
            -
            750Proceeds
      from Convertible Debentures
            49,000
            75,000Payment
      of Shareholder Loans
            (15,000)Proceeds
      from Shareholder Loans
            -
            14,900NET
      CASH FROM FINANCING ACTIVITIES
            34,000
            65,650NET
      CHANGE IN CASH
            (22,792)
            27,174CASH
      BALANCESBeginning
      of period
            27,181
            6End
      of period
            $            4,389
            $         27,181SUPPLEMENTAL
      DISCLOSURE:Interest
      paid
            $            1,029
            $                  8Income
      taxes paidNON-CASH
      ACTIVITIES:Stock
      issued in exchange of stock investment
            -
            13,999Debt
      converted into common stock
            1,467,921
            420Preferred
      stock issued as licensing consent agreement
            3,000,000Assignment
      of Convertible Debentures
            76,500Assignment
      of Payables and Accrued Liabilities
            341,589Assignment
      of Receivables and securities available for sale
            59,315The
      accompanying notes are an integral part of these financial
      statements
















AUDIOSTOCKS,
INC.


Notes
to the Financial Statements


December
31, 2008 and 2007





NOTE
      1.
            SUMMARY
      OF ACCOUNTING POLICIES





a.  Organization





Audiostocks,
Inc. (the Company) was incorporated in the state of Delaware on January 15, 2002
as Jupiter Processing, Inc.. On January 13, 2005, the Company changed its name
to Audiostocks, Inc.





Prior to
September 30th, 2008
the Company’s primary business operations were focused around Audiostocks.com, a
financial media and technology business for publicly traded small and micro
capitalization companies, providing the latest fact-based information to current
and prospective shareholders. Audiostocks.com content is available online to
individuals, financial professionals, investment research professionals and
portfolio managers.   All readers of Audiostocks content receive
Audiostocks content because they have filled out a user request form and have
requested to receive Audiostocks content.  Audiostocks.com does not
offer investment advice, nor is Audiostocks.com a broker or dealer in
securities.  All information posted on the Audistocks.com website is
provided by the client companies or is originated by Audiostocks.com in direct
cooperation with a client company and approved by the client company before
posting. The results from operations of the Audiostocks.com business division
have been restated in the financial statements as discontinued
operations.





In the
third calendar quarter of 2008, we concluded that the Audiostocks.com business
was underperforming and that our efforts would be better focused on adopting a
new strategy – to develop our StockVert.com business and to aggressively seek
business candidates to acquire or merge with.





Stockvert.com
is a vertical search engine in the financial information space. It collects and
indexes information from thousands of sources.  The information
managed by the platform includes profiles for publicly traded companies and
their executives and directors. All information is correlated to allow a richer
search experience.  The objective of the site is to provide its users
with a platform through which they can perform due diligence on companies (and
their executives) before investing on them.





The
platform also works as a tool through which executives can make their profiles
available for recruiters and potential employers.





The
revenue model for this platform is similar to that of typical search engines
such as Google and Yahoo.  Companies interested in marketing with
Stockvert.com would pay for higher rankings and better positioning in search
results.








b.  Accounting
Method





The
Company's policy is to use the accrual method of accounting to prepare and
present financial statements, which conform to generally accepted accounting
principles ("GAAP'). The company has elected a December 31,
year-end.





c.
Revenues





Service
revenue was recognized on a straight-line basis, over the contractual term of
the arrangement. Revenues related to contracts paid with restricted stock were
booked at fair market value.  Revenue on services described above is
recognized when the four revenue recognition requirements of SAB 104 have been
met. The company’s revenue recognition policy is consistent with the
requirements of Statement of Position (SOP) 97-2, Software Revenue Recognition
and Staff Accounting Bulletin 104 (SAB 104). In general, the company records
revenue when it is realized, or realizable and earned. The company considers
revenue to be realized or realizable and earned when the following revenue
recognition requirements are met: persuasive evidence of an arrangement exists,
which is a customer contract; the products or services have been provided to the
customer; the sales price is fixed or determinable within the contract; and
collectability is probable. Recognition of revenues that do not meet the four
criteria mentioned above is deferred to future periods.





d.
Licensing Expense and Licensing Fees Payable – Related Party





All
software and intellectual property previously used by Audiostocks, Inc belonged
to BCGU, LLC a related party. A Licensing Agreement between the Company and
BCGU, LLC was executed in consideration for the use of Licensor’s software used
by the Audiostocks, Inc.  The Licensing Expense consists of 59.5% of
contract revenues, with rare exceptions. These Licensing Expenses are pursuant
to the Company’s Licensing Agreement with BCGU, LLC and exceptions are
documented through a contract addendum. Whenever the contract is paid with
restricted stock, the Licensing Expense is booked using the stock’s fair market
value. Payment of the licensing fees are made in the form of restricted stock
and therefore mark to market adjustments are necessary related to the expense
and the associated liabilities as well.  Licensing Expenses were
deferred to reflect the length of the contract using the same criteria described
in the Revenues section, above.  Operations related to this expense
were discontinued during the year ended December 31, 2008, as part of the asset
sale agreement.  As part of the Asset Sale Agreement, BCGU, LLC signed
a licensing consent agreement and received 4 million shares of Preferred stock
valued at $3,000,000 (see note 4 for further disclosure).





e.  Marketable
Securities and Other Comprehensive Income





A
significant portion of payments for the service contracts is received in form of
restricted stock from those companies purchasing our services.  The
restriction of all stock received is typically one year for non-reporting
companies and six months for reporting companies. Before such securities are
sold in the marketplace, they must either be registered with the SEC or they
must be exempted from the SEC’s registration requirements by meeting the
requirements of Rule 144. Rule 144 allows public resale of restricted and
control securities if a number of conditions are met. Our
accounting policy is to book all restricted and publicly tradable securities
under Securities Available for Sale and, as such, are carried at fair value
based on quoted market prices.





Unrealized
holding gains and losses for Securities Available for Sale are excluded from
earnings and reported as a separate component of stockholder’s equity as Other
Comprehensive Income. Realized and unrealized gains and losses for securities
classified as available-for-sale are included in the statement of operations and
cash flow statement, respectively.  The change in value of marketable
securities is included in the operating portion of the Cash Flow statement
because of the nature of our business in which we receive stock as compensation
and make payments of liabilities in the same form.  Therefore, the
changes to marketable securities that we receive as compensation is not
reflected in the investing portion of our Cash Flow statement.  All
restricted stock received in exchange for services are marked to market at the
end of the accounting period.  Likewise, licensing fees recorded in
conjunction with revenues are also marked to market. The adjustment to the value
of such restricted stock takes into consideration the value of the stock as of
the last day of the accounting period in question and a Discount Factor
(“Discount”). The factors that are considered when calculating the Discount are:
Trading Market, Liquidity, Volatility and Financial Performance.





As of
December 31, 2008, the company owned $0 in form of Restricted Stock and $211,294
as of December 31, 2007, based upon the fair value of the marketable securities,
all of which was received in consideration for services rendered by the
Company.





The
balance of $0 in Securities Available for sale on the Balance Sheet reflects a
$0 mark to market adjustment. Without such adjustment, the ending balance in
Securities Available for Sale would have been $0.





Changes
in value of restricted securities are accounted for in other comprehensive
income, without impacting the income statement, until the securities are
disposed of. Upon disposal, the changes accumulated in other comprehensive
income are to be recognized in income.








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





Marketable
      Securities
            Cost
            Accumulated
      Unrealized Gain/Loss
            Gain
      (Loss) on Sale of Securities
            Market
      ValueBalance
      as of 12/31/2007
            $     1,961,935
            $    (1,092,116)
            $                (658,625)
            $          211,194Market
      Adjustments 12/31/08
            -
            (431,330)
            -
            (431,330)Minus
      Securities Sold
            875,676
            (1,613,384)
            -
            (737,708)Gain(Loss)
      on Sale of Securities
            
            
            (164,476)
            (164,476)Securities
      Purchased
            -
            -
            -
            -Securities
      Received
            449,325
            (426,109)
            -
            23,216Minus
      Payments in Form of Securities
            712,483
            (336,171)
            -
            376,312Positions
      as of 12/31/08
            $       823,101
            $                      -
            $                (823,101)
            $                      -





f.  Cash
and Cash Equivalents





The
Company considers all highly liquid investments with maturities of three months
or less when purchased to be cash equivalents.





g.  Property,
Plant and Equipment





Property,
plant and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over estimated useful
lives of the asset.





In
accordance with American Institute of Certified Public Accountants Statement of
Position 98-1, “Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use,” the Company capitalizes certain costs incurred in
connection with developing or obtaining internal use software. Costs incurred in
the preliminary project stage are expensed. All direct external costs incurred
to develop internal-use software during the development stage are capitalized
and amortized using the straight-line method over the remaining estimated useful
lives. Costs such as maintenance and training are expensed as
incurred.





2008
            2007Property
      Plant and Equipment, net:Computer
      Software and Hardware
            180,726
            174,508Furniture
      and Equipment
            30,735
            20,105Building
      and Improvements
            2,508
            2,508Work
      in Progress
            -
            5,661213,969
            202,782Accumulated
      Depreciation
            (48,403)
            (5,869)$       165,566
            $       196,913





h.  Earnings
Per Share





Net
earnings (loss) per share is calculated in accordance with the Statement of
financial accounting standards No. 128 (SFAS No. 128), “Earnings per share.”
Basic net earnings per share is based upon the weighted average number of common
shares outstanding. Fully diluted earnings per share are 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.





There are
two convertible securities in the Company’s books as of December 31, 2008 and
2007.


For the
year ended December 31, 2007 the stock equivalents for these convertible
securities is 250,000 shares.  The common stock equivalents resulting
from the issuance of these stock options have not been included in the per share
calculations in 2008 because such inclusion would be anti-dilutive.





2008
            2007Numerator
      - Loss
            $(4,423,626)
            $         3,661DenominatorDenominator
      - weighted average      number of shares
      outstanding
            17,950,291
            17,127,449Dilutive
      stock options and warrants - treasury stock method
            -
            250,000Denominator
      for diluted earnings per share - weighted average shares
            17,950,291
            17,377,449Net
      income per common shareBasic
            $       (0.25)
            $         0.00Diluted
            $       (0.25)
            $         0.00








i.  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








j.  Provision
for Income Taxes





We
account for income taxes according to the provisions of SFAS No. 109, Accounting
for Income Taxes ("SFAS 109"). SFAS 109 requires recognition of deferred tax
assets and liabilities to reflect the expected future tax consequences of
temporary differences between the financial statement and tax basis of assets
and liabilities. Financial Interpretation No. 48, Accounting for Uncertainty in Income
Taxes(“FIN 48”)is an interpretation of
SFAS 109.  FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in a company’s financial statements in accordance with SFAS
109.  FIN 48 requires a company to determine whether it is more likely
than not that the tax position will be sustained, will be sustained upon
examination based upon the technical merits of the position.  If the
more-likely-than-not threshold is met, a company must measure the tax position
to determine the amount to recognize in the financial statements.  As
a result of the implementation of FIN 48, the Company performed a review of its
material tax positions in accordance with recognition and measurement standards
established by FIN 48.





The
components of income tax expense are as follows:








2008
            2007Federal
      taxes
            -
            1,771State
      taxes
            -
            473Benefit
      of utilization of operating loss carryforward
            44,467
            -Change
      in Valuation Allowance
            (44,467)
            -Income
      Tax Expense
            -
            2,244








As of
December 31, 2008 we had a NOL carryforward of $130,784.





Deferred
tax assets and the valuation account are as follows at December 31, 2008 and
2007:





2008
            2007NOL
      Carryforward
            44,467
            -Valuation
      Allowance
            (44,467)
            -Net
      deferred tax assets
            -
            -








k.  Recent Accounting
Pronouncements





In May
2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60." Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under FASB Statement No. 60, Accounting and Reporting by
Insurance Enterprises. This results in inconsistencies in the recognition and
measurement of claim liabilities. This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting
and disclosure requirements of the Statement will improve the quality of
information provided to users of financial statements. SFAS 163 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. The adoption of FASB 163 is not
expected to have a material impact on the Company's financial
position.





In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles." SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in conformity
with GAAP. The current GAAP hierarchy has been criticized because it is directed
to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the GAAP hierarchy should be
directed to entities because it is the entity (not its auditors) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP. SFAS 162 is effective 60 days following
the SEC's approval of PCAOB Auditing Standard No. 6, Evaluating Consistency of
Financial Statements (AS/6). The adoption of FASB 162 is not expected to have a
material impact on the Company's financial position.





In March
2008, the FSAB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.”  SFAS 161 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.  SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged.  We do not anticipate a material impact upon
adoption.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS
160”).  SFAS 160 will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and
classified as a component of equity. This new consolidation method will
significantly change the accounting for transactions with minority interest
holders. We do not anticipate a material impact upon adoption.





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
141(R), “Business Combinations” (“SFAS 141R”).  SFAS 141R establishes
the principles and requirements for how an acquirer recognizes and measures in
its financial statements the identifiable assets acquired, the liabilities
assumed, any noncontrolling interest in the acquiree, and the goodwill
acquired.  SFAS 141R also establishes disclosure requirements to
enable the evaluation of the nature and financial effects of the business
combination.  We do not anticipate a material impact upon
adoption.








In
February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB Statement No.
115” (“SFAS 159”).  SFAS 159 permits companies to choose to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value, and establishes presentation
and disclosure requirements designed to facilitate comparisons between companies
that choose different measurement attributes for similar types of assets and
liabilities. We do not anticipate a material impact upon adoption.





k.  Use
of Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting period.  In these financial statements
assets and liabilities involve extensive reliance on management’s
estimates.  Actual results could differ from those
estimates.





l.  Financial
Instruments





The
Company has adopted SFAS No. 157, “Fair Value Measurements”, for financial
assets and liabilities.  FSP No. FAS 157-2, “Effective Date of FASB
Statement No. 157”, delays, for one year, the effective date of SFAS No. 157 for
non-financial assets and liabilities, except those that are recognized or
disclosed in the financial statements on at least an annual
basis.  SFAS No. 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value
measurements.  Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.  SFAS
No. 157 establishes a fair value hierarchy which prioritizes the inputs used in
measuring fair value into three broad levels as follows:





·
            Level
      1 - Quoted prices in active markets for identical assets or
      liabilities.


·
            Level
      2 - Inputs, other than the quoted prices in active markets, that are
      observable either directly or
indirectly.


·
            Level
      3 - Unobservable inputs based on the Company’s
  assumptions.





SFAS No.
157 requires the use of observable market data if such data is available without
undue cost and effort.  The Company’s adoption of SFAS No. 157 did not
result in any changes to the accounting for its financial assets and
liabilities.





The
recorded amounts of financial instruments, including cash equivalents accounts
payable and accrued expenses, and long-term debt approximate their market values
as of December 31, 2008 and  2007.








m.  Commitments





The
Company does not have any rental commitments or operating leases.





At the
time of the Asset Sale Agreement (see Note 4), the company assigned $418,089 in
liabilities to Dao Information Systems, Inc.  These liabilities
consisted of promissory notes, accounts payable and other accrued
liabilities.  Pursuant to the asset sale these liabilities were removed
from our balance sheet, however the legal obligation to satisfy these debts
remained with the company.





n.  Convertible
Notes




In
accordance with EITF 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features of Contingently
Adjustable,” we calculated the value of the beneficial conversion feature
embedded in the Convertible Notes.  Since the note is contingently
convertible, the intrinsic value of the beneficial conversion feature is not
recorded until the note becomes convertible.






Convertible
notes are split into two components: a debt component and a component
representing the embedded derivatives in the debt. The debt component represents
the Company’s liability for future interest coupon payments and the redemption
amount. The embedded derivatives represent the value of the option that
debtholders have to convert into ordinary shares of the Company.  Due
to the number of shares that may be required to be issued upon conversion of the
Convertible Notes is indeterminate, the embedded conversion option of the
Convertible Notes are accounted for as a derivative instrument liabilities
rather than equity debt as in accordance with EITF 00-19, “Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled In, a Company’s Own Common
Stock.






The debt
component of the convertible note is measured at amortized cost and therefore
increases as the present value of the interest coupon payments and redemption
amount increases, with a corresponding charge to finance cost – other than
interest. The debt component decreases by the cash interest coupon payments
made. The embedded derivatives are measured at fair value at each balance sheet
date, and the change in the fair value is recognized in the income
statement.




o.
Investments







The
Company determines the appropriate classification of its investments at the time
of acquisition and reevaluates such determination at each balance sheet date.
Trading securities are carried at quoted fair value, with unrealized gains and
losses included in earnings. Available-for-sale securities are carried at quoted
fair value, with unrealized gains and losses reported in shareholders’ equity as
a component of accumulated other comprehensive income. Other investments that do
not have readily determinable fair values are stated at cost and are reported in
other assets. Realized gains and losses are determined using the specific
identification method and are included in interest and other income,
net.







p.
Accounts Receivable





We must
make judgments about the collectability of our accounts receivable to be able to
present them at their net realizable value on the balance sheet. We analyze the
aging of our customer accounts and review historical bad debt problems. From
this analysis, we record an estimated allowance for receivables that we believe
will ultimately become uncollectible. As of December 31, 2008, we had no
allowance for bad debts since we deemed that 100% of the amount in Accounts
Receivable is collectible.





q.
Deferred Costs





Deferred fees are intangible assets
that are accounted for under SFAS 142.  These deferred fees are the
deferral of the expenses in order to reflect the length of contracts. The
deferral criterion is described in the Revenues section, above.





r.
Concentration of Risk





Financial
instruments which potentially subject the Company to concentrations of credit
risk are cash 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 securities are determined based on market quotations.





NOTE
2.                      GOING
CONCERN





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company has a significant
working capital deficit in past years and is dependant upon outside financing to
continue operations. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.  It is
management’s plans to raise necessary funds from shareholders to satisfy the
expense requirements of the Company and eventually derive revenues there
from.





NOTE
3.                      CONVERTIBLE
DEBENTURE





In
accordance with Emerging Issues Task Force No. 98-5, Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios, and No. 00-27, Application of Issue No. 98-5 to
Certain Convertible Instruments, we recognize the advantageous value of
conversion rights attached to convertible debt. Such rights give the debt holder
the ability to convert his debt into common stock at a price per share that is
less than the trading price to the public on the day the loan is made to the
Company. The beneficial value is calculated as the intrinsic value (the market
price of the stock at the commitment date in excess of the conversion rate) of
the beneficial conversion feature of debentures and related accruing interest
is recorded as a discount to the related debt and an addition to additional paid
in capital. The discount is amortized over the remaining outstanding period of
related debt using the interest method.





On July
1, 2007 a $50,000 8% Convertible Debenture was issued in exchange of cash to a
related party.  The note and accrued interest is due and payable at
the option of the holder: (i) on January 1, 2008; or (ii) upon the successful
completion of Audiostocks, Inc corporate financing exceeding three hundred
thousand dollars.  The note is convertible into common stock at the
price of $0.15 per share.  The conversion price is subject to
proportional adjustment for reclassification, stock splits, combinations and
dividends.  At the time of the note agreement date, there was no
determinable stock price, therefore there is no beneficial conversion feature
that applies to this debenture.  This convertible debenture was
assigned to a related party on September 30, 2008 as part of an asset sale (see
Note 4 for further disclosure related to the transaction).





On July
1, 2007 a $25,000 0% Convertible Debenture was issued in exchange of cash, which
was used to purchase and retire shares from a shareholder.  This note
was amended on July 1, 2008, to reflect a 10% interest rate and maturity date of
December 31, 2008.  The note is due and payable on December 31,
2008.  It is convertible into common stock at the price of $0.15 per
share.  The conversion price is subject to proportional adjustment for
reclassification, stock splits, combinations and dividends.  At the
time of the note agreement date, there was no determinable stock price,
therefore there is no beneficial conversion feature that applies to this
debenture.





On March
17, 2008 a $7,500 8% Convertible Debenture was issued in exchange of cash to a
related party.  The note and accrued interest is due and payable at
the option of the holder: (i) on September 17, 2008; or (ii) upon the successful
completion of Audiostocks, Inc corporate financing exceeding three hundred
thousand dollars.  The note is convertible into common stock at the
price of $0.15 per share.  The conversion price is subject to
proportional adjustment for reclassification, stock splits, combinations and
dividends.  At the time of the note agreement date, the Company
recorded a $7,500 discount, which represents the intrinsic value of the
beneficial conversion feature.  The discount of $7,500 was amortized
over the life of the note. This convertible debenture was assigned to a related
party on September 30, 2008 as part of an asset sale (see Note 4 for further
disclosure related to the transaction).





On June
1, 2008 a $19,000 8% Convertible Debenture was issued in exchange of cash to a
related party.  The note and accrued interest is due and payable at
the option of the holder: (i) on December 1, 2008; or (ii) upon the successful
completion of Audiostocks, Inc. corporate financing exceeding three hundred
thousand dollars.  The note is convertible into common stock at the
price of $0.15 per share.  The conversion price is subject to
proportional adjustment for reclassification, stock splits, combinations and
dividends.  At the time of the note agreement date, the Company
recorded a $12,667 discount, which represents the intrinsic value of the
beneficial conversion feature.  The discount of $12,667 was amortized
over the life of the note.  This convertible debenture was assigned to
a related party on September 30, 2008 as part of an asset sale (see Note 4 for
further disclosure related to the transaction).





On July
1, 2008, we consolidated all obligations due and owing to The Baum Law Firm PC
and Mark L. Baum, Esq.,a related party, for legal services rendered to the
Company, and issued to Meaux Street Partners LP, a related party, a 10%
promissory note for $25,000. The note is due and payable on December 31,
2008.  It is convertible into common stock at the price of $0.15 per
share.  The conversion price is subject to proportional adjustment for
reclassification, stock splits, combinations and dividends.  At the
time of the note agreement date, the Company recorded a $16,667 discount, which
represents the intrinsic value of the beneficial conversion
feature.  The discount of $16,667 is being amortized over the life of
the note.  For full disclosure of related party transactions please
see Note 10.





NOTE
4.                                                                  ASSET
SALE, ASSIGNMENT OF DEBT AND DISCONTNUED OPERATIONS – RELATED PARTY
TRANSACTION





On
September 30, 2008 the Company entered into an asset sale agreement (the “Asset
Sale Agreement”) with a related party, Dao Information Systems, Inc (the
“Buyer”). The Buyer purchased all assets associated with the Company’s
Audiostocks.com business division (the “AudioStocks Business”) which includes
the existing licensing rights and all interests associated with the Audiostocks
Business and related software. As consideration for the sale of AudioStocks
Business, the Company assigned certain liabilities, receivables and securities
available for sale associated with the AudioStocks Business to the buyer and
recorded a loss on the sale of assets of $2,641,226.   This loss
consisted of liabilities assigned to the Buyer in the amount of $418,089, assets
valued at $59,315 and the issuance of preferred stock valued at $3,000,000 to
the license holder BCGU, LLC for the transfer of the license agreement to the
Buyer.  The Company also agreed to sell its rights to the proceeds
from the eventual sale of certain shares of stock held by the Company related to
the AudioStocks Business division (the “AudioStocks
Shares”).  Pursuant to the terms of the Asset Sale Agreement, the
proceeds from the eventual sale of the AudioStocks Shares will be used by the
Buyer to pay down the liabilities that were assigned to the Buyer in the Asset
Sale Agreement.





The sale
of the Audiostocks Business will impact future cash flows, as the company will
no longer rely on any cash inflows from that business
division.  Management’s plan to generate future cash flow will come
from raising additional capital through equity or debt instruments and relying
on revenues generated from the StockVert.com business division.  The
ongoing development of StockVert.com is our primary opportunity for cash flow
and profits.  There are no significant past, present or expected
upcoming cash uses as a result of the sale of the Audiostocks
Business.





The
Company has Accounts Payable to Related Parties consisting of monies borrowed
during the year of 2008 to the Company from Dao Information Systems, Inc. in the
amount of $14,833.  The Company has made $7,376 in payments to or on
behalf of Dao Information Systems, Inc. related to the monies borrowed for the
years ended December 31, 2008.  At December 31, 2008 $7,457 was due to
Dao Information Systems, Inc.  Dao Information Systems, Inc is 100%
owned by Dao Information Systems, LLC of which the managing member is Luis
Leung, Mr. Leung is our President.





The
accompanying pro-forma balance sheet and statement of operations for the year
ended December 31, 2008 and 2007 presents the results of the Company excluding
the operations of its Audiostocks.com business division, as if such operations
had been disposed of at the beginning of the period.





Pro-forma
information is not necessarily indicative of what the financial condition of
Audiostocks, Inc would have been had the sale of the Audiostocks.com business
division had been completed on the date assumed, nor is such information
necessarily indicative of the future financial condition or results of
operations of Audiostocks, Inc.





The
following pro-forma condensed balance sheet has been prepared assuming the sale
took place as of January 1, 2007.





AUDIOSTOCKS,
      INCCONDENSED
      PRO-FORMA BALANCE SHEETSDecember
      31,
            December
      31,2008
            2007ASSETSCurrent
      assetsCash
            $           4,389
            $         27,181Total
      current assets
            4,389
            27,181Fixed
      AssetsProperty,
      Plant and Equipment
            213,969
            202,782Less:
      Accumulated Depreciation
            (48,403)
            (5,869)Total
      Fixed Assets
            165,566
            196,913Other
      AssetsSecurities
      Available for Sale
            -
            19,865Deposits
            -
            3,296Employee
      Receivable
            -
            22,095Total
      Other Assets
            -
            45,256TOTAL
      ASSETS
            $        169,955
            $        269,350LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      Payable and Accrued Liabilities
            $         12,042
            $        166,675Convertible
      Debentures - Short Term
            50,000
            50,000Total
      Current Liabilities
            62,042
            216,675Long
      Term LiabilitiesConvertible
      Debentures
            -
            25,000Total
      Long Term Liabilities
            -
            25,000TOTAL
      LIABILITIES
            62,042
            241,675TOTAL
      STOCKHOLDERS' EQUITY
            107,913
            12,041TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
            $        169,955
            $        269,350











The
following pro-forma condensed statement of operations represents the approximate
pro-forma effect assuming the sale of the business division had occurred on
January 1, 2007.








AUDIOSTOCKS,
      INCCONDENSED
      PRO-FORMA STATEMENTS OF OPERATIONSFor
      the years endedDecember
      31,
            December
      31,2008
            2007RevenuesOperating
      expenses
            $      1,283,827
            $            13,869Other
      Income (Expense)
            (44,757)
            (1,839)Net
      loss
            (1,328,584)
            (15,708)Weighted
      average shares outstanding
            17,950,291
            17,127,449Loss
      per share, as reported
            $            (0.07)
            $               (0.00)








NOTE
5.                                                                  PRIVATE
OFFERING MEMORANDUM





On
January 1, 2008, the Company entered into a Private Offering (the “PPM”) with
certain investors for the private purchase of Convertible Debentures and
associated detachable Series A Warrants.  The Warrants are exercisable
at the date of issuance, have an exercise price of $0.90 per shares and have a
two (2) year term.





During
January 2008, 10% Convertible Debentures were issued for $22,500, in exchange of
cash as part of the PPM.  The notes are due and payable one year from
their issuance.  They are convertible into common stock at the price
of $0.75 per share.  The conversion price is subject to proportional
adjustment for reclassification, stock splits, combinations and
dividends.  We believe no beneficial conversion feature applies to
these debentures.





The
Series A Warrants associated with the Convertible Debentures are exercisable for
the purchase of 30,000 shares.  The warrants have a fair market value
of $11,070.  The warrants were valued using the Black-Scholes model
with the following assumptions:








Risk
      free interest rate
            
            3.22%Expected
      life of conversion feature in years
            
            2Expected
      volatility
            
            100%Dividend
      per share
            
            $0.00





On
September 30, 2008 the Company cancelled the convertible debentures and warrants
related to the PPM and agreed to the issuance of 30,001 shares of common stock
pursuant to a settlement with the PPM investors.








NOTE
6.                      COMMON
STOCK





During
July 2007, the Company reacquired and immediately retired 800,000 shares of
common stock valued at $0.03 per share.





During
July 2007, the Company reacquired and immediately retired 24,281 shares of
common stock at no value.





During
July 2007, the Company issued 420,308 shares of common stock as officer
compensation valued at $0.001 per share.





During
October 2007, the Company issued 1,000 shares of common stock in exchange of
cash valued at $0.75 per share.





During
October 2007, the Company issued 609,755 shares of common stock as a stock
exchange agreement valued at $0.22 per share.





During
April of 2008, the company issued 80,000 shares of common stock as a result of a
conversion of officer compensation to common stock valued at $0.50 per
share.





During
September 2008, the Company agreed to the issuance of 92,687 shares of common
stock as settlement of certain debts for services provided valued at
$92,687.





During
September 2008, the Company agreed to the issuance of 30,001 shares of common
stock pursuant to a settlement of certain convertible promissory notes issued to
two separate noteholders valued at a total of $22,500. As part of the
conversion, outstanding warrants to purchase up 30,001 shares were
cancelled.





During
September 2008, the Company agreed to the issuance of 1,750,309 shares of common
stock as a conversion of accrued officer salary of $94,010 and additional stock
based compensation expense of $1,218,722.





NOTE
7.      PREFERRED STOCK





During
November of 2008, the Company issued 4,000,000 shares of Series A Preferred
stock as part of a licensing consent agreement valued at $0.75 a
share.





During
November of 2008, the Company issued 100 shares of Series B Preferred stock as
part of a licensing consent agreement.








NOTE
8.      CAPITAL STRUCTURE





The
stockholders' equity section of the Company contains the following classes of
capital stock as of December 31, 2008:





Common
stock, $0.001 par value; 50,000,000 shares authorized: 19,376,087 shares issued
and outstanding.





Preferred
stock, $0.001 par value; 5,000,000 shares authorized, 4,000,100 shares issued
and outstanding.





The
Preferred Series A shares (“Series A”) provide the holder of the same with
certain voting rights, among other rights, that may equal, when cast, a majority
of the votes which could be cast at a meeting of the Company’s
shareholders.  The Series A holders have such number of votes as is
determined by multiplying (a) the number of shares of Series A held by such
holder, (b) the number of issued and outstanding shares of the Company’s Series
A and common stock on a fully diluted basis as at the record date for the vote
and (c) .0000002.  Series A have no express dividend right, and are
convertible into common shares at a ratio of 1:1.





The
Preferred Series B shares provide the holder with a significant dividend right
(59.5% of gross revenues), among other rights, which in the case of the issuance
related to the execution of the First Amended License Consent Agreement, was
designed to equal the percentage due to BCGU from revenues the Company generated
from assets BCGU had licensed to the Company and which were being assigned to
Dao Information Systems, Inc. under the First Amended License Consent
Agreement.  These shares carry no voting rights and are not
convertible into common shares.





NOTE
9.     ISSUANCE OF SHARES FOR SERVICES – STOCK
OPTIONS





The
company has a nonqualified stock option plan, which provides for the granting of
options to key employees, consultants, and non-employee's directors of the
Company. These issuances shall be accounted for based on the fair value of the
consideration received or the fair value of the equity instruments issued, or
whichever is more readily determinable. The Company has elected to account for
the stock option plan in accordance with paragraph 30 of SFAS 123R where the
compensation to employees should be recognized over the period(s) in which the
related employee services are rendered. In accordance with paragraph 19 of SFAS
123R the fair value of a stock option granted is estimated using an
option-pricing model. As of December 31, 2008 and 2007  no stock
options were outstanding.








NOTE
10.   RELATED PARTY TRANSACTIONS





See Note
4 and this First Amended Form 10-K Report for related party disclosures
throughout.





The
Company has a liability to Related Parties consisting of Convertible Debentures
issued Meaux Street Partners, LP in the amount of $25,000 and $0 for the years
ended December 31, 2008 and 2007 respectively.  Mark Baum, our
attorney and a significant shareholder, is the administrative
manager of the general partner of Meaux Street Partners, LP.  During
the year end December 31, 2008 and 2007, no payments were made to Meaux Street
Partners, LP or to Mark L. Baum.





At
December 31, 2007, the Company had Accounts Payable to Related Parties
consisting of monies borrowed to the Company from Luis Leung in the amount of
$15,000, no payments were made during the year ended December 31, 2007 to
satisfy this accounts payable balance.  During the year ended December
31, 2008 the company was loaned an additional $26,241 from Mr. Leung that was
used to pay for miscellaneous operating expenses.  During the year
ended December 31, 2008 the Company paid a total of $22,736 to Mr. Leung to
satisfy a portion of these debts, the remaining amount due to Mr. Leung,
$18,505, was assigned to a related party as a result of the asset sale agreement
(see Note 4 for further disclosure).  At December 31, 2008 no Accounts
Payable were due to Mr. Leung.  Mr. Leung is our
President.





The
Company has Accounts Payable to Related Parties consisting of licensing fees
payable to BCGU, LLC in the amount of $0 and $267,362 as at December 31, 2008
and 2007 respectively.  During the years ended December 31, 2008 and
2007 the Company made payments in the form of available for sale securities and
cash to BCGU, LLC in the amount of $5,130 and $639,593
respectively.  As a result of the asset sale agreement (see Note 4 for
further disclosure), these payables have been assigned to another related party
and 4,000,000 million shares of Series A preferred stock valued at $3,000,000
was issued to BCGU along with 100 shares of Series B Preferred
stock.  The software platform previously used by the Company is
licensed from BCGU, LLC and BCGU, LLC is the majority shareholder in the
Company.





As a
result of a cash investment, the Company had a liability to Related Parties
consisting of Convertible Debentures issued to Black Forest International, LLC
(“BFI”) in the amount of $0 and $50,000 as at December 31, 2008 and 2007
respectively.  During the years ended December 31, 2008 and 2007 the
Company made no payments to BFI.  As a result of the asset sale
agreement (see Note 4 for further disclosure), these notes have been assigned to
another related party.  We remain legally indebted to BFI, and its
assignee, Noctua Fund LP, for the notes.  The notes are in
default.  BFI is managed by BCGU, LLC.  The software
platform previously used by the Company is licensed from BCGU, LLC and BCGU, LLC
is the majority shareholder in the Company.





During
the year ended December 31, 2008 the Company entered into an asset sale
agreement with a related party, Dao Information Systems, Inc (“Dao”). Dao
purchased all assets associated with the Company’s Audiostocks.com business
division which includes the existing licensing rights and all interests
associated with the Audiostocks.com business and related software. As
consideration for the sale of AudioStocks.com business, the Company assigned
liabilities to Dao in the amount of $418,089 and assets valued at
$59,315.  See Note 4 for further disclosure regarding this
transaction.  The Company has Accounts Payable to Dao consisting of
monies borrowed during the year of 2008 to the Company from Dao in the amount of
$14,833.  The Company has made $7,376 in payments to or on behalf of
Dao related to the monies borrowed for the years ended December 31,
2008.  At December 31, 2008 $7,457 was due to Dao Information Systems,
Inc.  Dao Information Systems, Inc is 100% owned by Dao Information
Systems, LLC of which the managing member is Luis Leung, Mr. Leung is our
President.





NOTE
11.   SUBSEQUENT EVENTS





The
following events occurred subsequent to December 31, 2008.





On
January 15, 2009, BCGU, the holder of our Series B Preferred stock, agreed to
exchange it’s Series B Preferred stock for 3,624,888 of our common
shares.





On
February 27, 2009, Noctua Fund LP acquired an option to purchase a total of
2,250,617 Company common shares from Luis Leung, president, for
$40,000.  This option expires on February 27, 2012.





As a
result of the January 15, 2009 transaction with BCGU involving the exchange of
our Series B Preferred stock for common stock, and due to a provision in the
designation of our Series B Preferred stock, on March 19, 2009, our board of
directors (the “Board”) voted to cancel our Series B Preferred stock and amend
our Article of Incorporation (the “Articles”) to reflect this
cancellation.  A copy of the amendment to our Articles is included as
Exhibit 11.1.5 to this First Amended Form 10-K Report.





On March
6, 2009, we had approximately $162 in cash on hand.  We required
significantly more cash to pay our auditors in order to file this First Amended
Form 10-K Report.  On March 6, 2009, we were able to reach an
agreement with Noctua Fund LP whereby Noctua Fund LP agreed to purchase $10,000
in Preferred shares in a class which was to be called our Series C Preferred
class of stock.  In order to designate a Series C Preferred class of
stock, we sought and received consent from our Series A Preferred stock
owners.





On March
19, 2009, pursuant to Article 6.3 of our Articles of Incorporation, our Board
voted to designate a Series C class of Preferred stock.





On March
23, 2009, the Secretary of State of the State of Delaware received an amendment
to our Articles of Incorporation to designate a Series C class of Preferred
stock.  A total of 150 shares of the Series C Preferred stock are to
be designated, and in consideration of a $10,000 investment made on March 6,
2009, Noctua Fund LP is to be issued 100 of our Series C Preferred stock once
the State of Delaware has accepted our newly amended Articles of
Incorporation.  A copy of the designation of the Series C Preferred
class of stock is included as Exhibit 11.1.6 to this First Amended Form 10-K
Report.  It is important that one carefully read the Series C
Preferred stock designation and the newly amended Articles as the Series C
Preferred stock provides the holder of the Series C Preferred stock with a
priority dividend and other certain rights with are superior to other holders of
our equity.   As of the date of this Report, the Series C
Preferred stock has not been recorded and our Articles do not reflect the
addition of these shares to our capital.








Item
8.  Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.





None.





Item
8A.  Controls and Procedures.





Under the
supervision and with the participation of our management, currently consisting
of Luis J. Leung, we have evaluated the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period
covered by this annual report, and based on their evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that these
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company required to be included in the
Company’s periodic SEC filings. There were no significant changes in our
internal control over financial reporting that could significantly affect this
control since our last fiscal quarter.




Disclosure
controls and procedures are the controls and other procedures that are designed
to ensure that information required to be disclosed by us in the reports we file
or submit under the Exchange Act is recorded, processed, summarized, and
reported, within the time periods specified in the Securities and Exchange
Commission’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file under the Exchange
Act 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.





Item
8A(T).  Management’s Report on Internal Control Over Financial
Reporting.





Internal
control over financial reporting refers to the process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer, and
effected by our Board, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles, and includes those policies and procedures
that:





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





·
            Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorization of our management and
      directors; and





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





Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent
limitations.  It is a process that involves human diligence and
compliance and is subject to lapses in judgment and breakdowns resulting from
human failures.  It also can be circumvented by collusion or improper
management override.





Because
of such limitations, there is a risk that material misstatements may not be
prevented or detected on a timely basis by internal control over financial
reporting.  However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process certain safeguards to reduce, though not eliminate, this
risk.





The
Company’s management is responsible for establishing and maintaining effective
internal control over financial reporting (as defined in Rule 13a-15(f) of
the Securities Exchange Act). Management assessed the effectiveness of the
Company’s internal control over financial reporting as of December 31,
2008. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based
on that assessment, management believes that, as of December 31, 2008, the
Company’s internal control over financial reporting was effective based on the
COSO criteria, with the exception of the following:





There is
a lack of segregation of duties relating to cash, receivables and safeguarding
of assets.





Several
of our procedures require additional documentation.  It is our belief
that those control procedures are being performed, however documentation of
their execution is not available.





The
Company intends to take a number of corrective actions to address the above
mentioned material weakness as promptly as practicable.





During
the year ended December 31, 2008, there were no changes in the Company’s
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.





Item
8B.  Other Information.





None.





PART
III





Item
9.                        Directors,
Executive Officers, Promoters And Control Persons; Compliance With Section 16(A)
Of The Exchange Act





Executive
Officer, Directors and Control Persons





The
following table sets forth, as of the date of this Report, the name, age and
position of our directors, executive officers and other significant
employees:





Officer
and Director





NAME
            AGE
            SINCE
            POSITIONLuis
      Leung
            38
            2006
            President,
      Chief Executive Officer, Chief Financial Officer, Secretary and
      Director





The
backgrounds of our directors, executive officers and significant employees are
as follows:





Luis
Leung, President, Chief Executive Officer, Chief Financial Officer, Secretary
and Director





Mr. Leung
is our President, Chief Executive Officer, Chief Financial Officer, Secretary
and one of our Directors. Mr. Leung began his career in São Paulo, Brazil in
1988 with Smar Equipamentos Industrias Ltd as a Research and Development
Software Engineer. In 1991 he was helped establish the company’s operations in
the United States and was promoted to CIO and Comptroller.  From 1994 to
1997 Mr. Leung helped structure operations and systems for the company’s
headquarters as well as for its subsidiaries in Germany, France and Singapore.
In 2004, Mr. Leung co-founded Scitus Corporation, a Microsoft VAR and ISV, and
the Alba Spectrum Group a consulting company. The Alba Spectrum Group has
operations in Chicago, Houston and São Paulo, Brazil. Its line of products
includes Microsoft, SAP and Oracle. In 2001, Mr. Leung co-founded Advent
Corporation, a software development company and Microsoft Partner. The company
merged with Enterlogix Corporation in 1992. Enterlogix Corporation, after the
merger, was the largest Microsoft Great Plains implementation practice in the
state of Texas.  In 1997, Mr. Leung started his consulting career at Hein +
Associates LLP in Houston, TX as a Project Manager. In 1999 he was hired by
Grant Thornton, LLP as a Consulting Manager and participated in several
multi-country systems implementations. In 2000, he worked at eParners Inc as a
CRM Practice Leader.  Mr. Leung holds a Bachelors of Science from Instituto
Tecnologico Aerospacial, Brazil





Audit
Committee





We do not
have an audit committee at this time.








Code
of Ethics





Effective
February 10, 2006, our Board adopted the Audiostocks, Inc. Code of Business
Conduct and Ethics (see Exhibit 11.1.7 to this First Amended Form 10-K
Report).  The Board believes that our Code of Business Conduct and
Ethics provides standards that are reasonably designed to deter wrongdoing and
to promote the following: (1) honest and ethical conduct, including
the ethical handling of actual or apparent conflicts of interest between
personal and professional relationships;(2) full, fair,
accurate, timely, and understandable disclosure in reports and documents that we
file with, or submits to, the Securities and Exchange Commission; (3) compliance with applicable governmental laws, rules and
regulations;the prompt internal reporting of violations of the
Code of Business Conduct and Ethics to an appropriate person or persons; and(4) accountability for adherence to the Code of Business Conduct
and Ethics.  We will provide a copy of our Code of Business Conduct
and Ethics by mail to any person without charge upon written request to us
at:  2038 Corte Del Nogal, Suite 110, Carlsbad, CA
92011.





Section
16(a) Beneficial Ownership Reporting Compliance





Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our directors,
executive officers, and stockholders holding more than 10% of our outstanding
common stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in beneficial ownership of our
common stock.  Executive officers, directors and greater-than-10%
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) reports they file.  As of the date of this Report
we believe our Directors, Officers and Stockholders holding more than 10% of our
outstanding common stock have filed these reports.





Item
10. Executive Compensation





The
following table sets forth the compensation paid to the Chief Executive Officer
and to all other executive officers for services rendered, and to be rendered,
for 2008.





Annual
      Compensation
            
            Long-Term
      CompensationCommonSharesUnderlying
            
            AllRestricted
            
            Options
            
            OtherOther
      Annual
            
            Stock
            
            Granted
            
            CompensationName
      and Position
            
            Year
            
            Salary
            
            Bonus
            
            Compensation
            
            Awards
            
            (#
      Shares)Luis
      Leung (1)
            
            2008
            
            $103,511
            
            -0-
            
            -0-
            
            1,218,722
            
            -0-
            
            -0-President,
      ChiefExecutive
      Officer, Chief
            
            2007
            
            $120,000
            
            -0-
            
            -0-
            
            420,308
            
            -0-
            
            -0-Financial
      Officer andSecretary





(1)           Mr.
Luis Leung was appointed to the positions of President, Chief Executive Officer,
Chief Financial Officer and Secretary on December 20, 2006.  On
October 1, 2008, Mr. Leung agreed to settle any and all amounts due and owing to
him for a one-time payment of cash.  Additionally, on February 27,
2009, Mr. Leung, for consideration, agreed to provide Noctua Fund LP with a four
year demand option to purchase all of his shares in the Company for
$40,000.








Aggregated
Option Exercise In Last Fiscal Year And Fiscal Year End Option
Values





Our
executive officers were not issued any options which could have been exercised
during the fiscal year ended December 31, 2008.





Directors'
Compensation





All
directors receive reimbursement for reasonable out-of-pocket expenses in
attending Board meetings and for promoting our business.  From time to
time we may engage certain members of the Board to perform services on our
behalf.  In such cases, we compensate the members for their services
at rates no more favorable than could be obtained from unaffiliated
parties.





Compensation
Committee





We have
not formed an independent compensation committee.





Item
11.   Security Ownership of Certain Beneficial Owners and
Management.





The
following table sets forth certain information regarding the beneficial
ownership of the 23,000,975 issued and outstanding shares of our common stock as
of the date of this Report by the following persons:





Each
      person who is known to be the beneficial owner of more than five percent
      (5%) of our issued and outstanding shares of common
  stock;Each
      of our Directors and executive Officers; andAll
      of our Directors and Officers as a
group





Name
      And Address
            Number
      Of Shares Beneficially Owned
            Percentage
      OwnedBCGU
      LLC *
            15,284,479
            66.45%Mark
      L. Baum **
            2,346,706
            10.2%Luis
      Leung +
            2,250,617
            9.78%James
      B. Panther II ***
            1,776,195
            7.72%Noctua
      Fund LP****
            2,250,617
            --Total
            21,657,997
            94.15%++





*The
address for BCGU is 2038 Corte Del Nogal, Suite 110, Carlsbad, California
92011.  BCGU LLC is owned equally by entities controlled by TBLF, LLC
and Devkom International, LLC.  TBLF, LLC is owned and controlled by
Mark L. Baum and Devkom International, LLC is owned and controlled by James B.
Panther, II and another minority individual owner.


**The
address for Mark L. Baum is 1302 Waugh Drive, Suite 618, Houston, Texas
77019.  This excludes Mr. Baum’s beneficial ownership of shares owned
by BCGU, LLC.


*** These
shares are held in the name of Devkom International, LLC, which is in part
beneficially owned by James B. Panther II.  Devkom International LLC’s
address is 2785 Pacific Coast Hwy. Suite 105, Torrance, California
90505.  This ownership interest excludes beneficial ownership of
shares owned by BCGU, LLC.


+ The
address for Luis Leung is 15818 Sweetrose Place, Houston,
Texas  77095.









Beneficial
ownership is determined in accordance with the rules and regulations of the
SEC.  The number of shares and the percentage beneficially owned by
each individual listed above include shares that are subject to options held by
that individual that are immediately exercisable or exercisable within 60 days
from the date of this Report and the number of shares and the percentage
beneficially owned by all officers and directors as a group includes shares
subject to options held by all officers and directors as a group that are
immediately exercisable or exercisable within 60 days from the date of this
Report.








Item
12. Certain Relationships and Related Transactions.





In our
Form 10-Q filed on November 19, 2008, we stated that the managing member of Dao
Information Systems, LLC was Luis Leung, the president of Audiostocks,
Inc.  We also believe it is important to disclose that there were
additional related parties in the Asset Sale Transaction and the transactions
that were related to the sale of the AudioStocks Business.





Dao’s
managing member and 60% owner is Luis Leung, the president of Audiostocks,
Inc.





Dao is
40% owned by Noctua Fund LP.  Mark L. Baum and James B. Panther II are
limited partners in Noctua Fund LP, and through Noctua Fund Manager LLC, manage
the investments of Noctua Fund LP.







As was
previously disclosed in Schedule 13D filings dated December 4, 2006, entities
owned and controlled by Mark L. Baum and James B. Panther II each own and
control 50% of BCGU LLC, which directly owns 15,284,479 of our common shares or
approximately 66.45% of our common shares.





Mark L.
Baum individually or through entities he beneficially owns and controls owns
2,346,706 or just over 10% of our common shares.  Mark L. Baum is a
licensed attorney in the State of California and through The Baum Law Firm PC,
from time-to-time over the past four years, has provided the Company with
certain legal services.  Mark L. Baum is also the administrative
manager of the general partner of Meaux Street Partners LP, a holder of
approximately $25,000 in our debt, incurred by the Company from legal services
rendered by Mr. Baum.





Devkom
International, LLC, which is in part beneficially owned and controlled by James
B. Panther II, owns 1,812,444 of our common shares.





Item
13. Exhibits.





The
following Exhibits have been previously filed in the below referenced filings or
have been attached hereto, and in any case, as is stated on the cover of this
Report, all of the below Exhibits are incorporated herein by
reference.





Form
      10-SB
            10/19/20063.1.1
            Certificate
      of Incorporation3.1.2
            Amended
      and Restated Certificate of Incorporation3.2
            BylawsForm
      8-K
            8/24/200710.1
            Lock-Up
      and Leak Out Agreement with BCGU LLC10.2
            Lock-Up
      and Leak Out Agreement with Luis LeungAmended
      Form 8-K
            9/5/200710.1
            Lock-Up
      and Leak Out Agreement with BCGU LLC10.2
            Lock-Up
      and Leak Out Agreement with Luis LeungForm
      10-QSB
            11/14/20073.1.3
            Certificate
      of Designation (Series A and B Preferred Stock)Form
      10-Q
            11/19/200810.1
            Asset
      Purchase Agreement10.2
            Meaux
      Street Partners LP 10% Convertible Promissory Note10.3
            The
      Sonkei Trust Amended 10% Convertible Promissory Note10.4
            September
      30, 2008 Settlement Agreements with Peer and SixTech10.5
            September
      30, 2008 Settlement Agreements with David F. Rubin and John
      Burkett10.6
            September
      30, 2008 Settlement Agreement with Luis LeungForm
      8-K
            1/21/200910.1
            License
      Consent Agreement10.2
            First
      Amended License Consent AgreementForm
      10-K Report, and the First Amended Form 10-K
            4/14/2009,
      and 4/20/2009, respectively11.1.1
            September
      30, 2008 Settlement Agreements with For Goodness11.1.2
            September
      30, 2008 Settlement Agreements with Mathew Luchak11.1.3
            October
      1, 2008 Omnibus Settlement Agreement with Luis Leung11.1.4
            November
      30, 2008 Second Amended License Consent Agreement with
  BCGU11.1.5
            March
      19, 2009 Amendment to the Articles of Incorporation11.1.6
            March
      19, 2008 Designation of Series C Preferred Stock11.1.7
            Code
      of Ethics adopted on February 10, 200611.1.8
            Share
      Exchange Agreement with BCGU11.1.9
            Luis
      Leung Share Option Agreement








Item
14.  Principal Accountant Fees and Services.





Appointment
of Auditors




Our Board
selected Chisholm, Bierwolf, Nilson & Morrill, LLC as our auditors for the
year ended December 31, 2008 and 2007.





Audit
Fees





Chisholm,
Bierwolf, Nilson & Morrill, LLC billed us $20,500 in fees for review of our
quarterly financial statements and annual audit for the year ended December 31,
2008.





Our
present account balance with Chisholm, Bierwolf, Nilson & Morrill, LLC is
$8,886.





Chisholm,
Bierwolf, Nilson & Morrill, LLC billed us $18,000 in fees for review of our
quarterly financial statements and annual audit for the year ended December 31,
2007.





Audit-Related
Fees




We did
not pay any fees to Chisholm, Bierwolf, Nilson & Morrill, LLC for assurance
and related services that are not reported under Audit Fees above, during our
fiscal years ending December 31, 2008 or December 31, 2007.





Taxes
and All Other Fees




We did
not pay any fees to Chisholm, Bierwolf, Nilson & Morrill, LLC for tax
compliance, tax advice, tax planning or other work during our fiscal years
ending December 31, 2008 or December 31, 2007.





On March
19, 2009, we paid $406 to the State of Delaware in order to (i) revive our
corporate charter, (ii) amend our article of incorporation and (iii) designate a
Series C Preferred class of stock.





Pre-Approval
Policies and Procedures





We have
implemented pre-approval policies and procedures related to the provision of
audit and non-audit services.  Under these procedures, our Board
pre-approves all services to be provided by Chisholm, Bierwolf, Nilson &
Morrill, LLC and the estimated fees related to these services.





With
respect to the audit of our financial statements as of December 31, 2008, and
for the year then ended, none of the hours expended on Chisholm, Bierwolf,
Nilson & Morrill, LLC’a engagement to audit those financial statements were
attributed to work by persons other than Chisholm, Bierwolf, Nilson &
Morrill, LLC’s full-time, permanent employees.








Signatures





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.





AUDIOSTOCKS,
INC.








By:  /s/ Luis
Leung


Luis
Leung


Chief
Executive Officer and Chief Financial Officer








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





Signatures                                                      Title                                                                           Date








/s/ Luis
Leung                                President, Chief Executive
Officer,                      April
09, 2009


Luis
Leung                                                   
  Chief Financial Officer and Director