AfterMaster (AFTM) 10-Q 2009 Q3 Quarterly report

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2009

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

For the transition period from _______ to __________

Commission file number 001-10196

STUDIO ONE MEDIA, INC. 

(Exact name of registrant as specified in its charter)

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

7650 E. Evans Rd., Suite C

Scottsdale, Arizona  85260

(Address of principal executive offices) (Zip Code )

(480) 556-9303

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    

Yes  x  No  o

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

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

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

Yes   o  No   x

 Transitional Small Business Disclosure Format (check one):

Yes   o  No  x

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

1

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

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

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

3

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

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

4

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

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

5

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

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

6

STUDIO ONE MEDIA, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2009 AND JUNE 30, 2008

Note 1: Summary of Significant Accounting Policies

DESCRIPTION OF BUSINESS, FINANCING AND BASIS OF

FINANCIAL STATEMENT PRESENTATION

Studio One Media, Inc., (the “Company” or “SOMD”) was originally organized in Delaware on May 12, 1988, as Dimensional Visions Group, Ltd. The name was changed on January 15, 1998 to Dimensional Visions Incorporated. On February 8, 2006, it changed its name to Elevation Media, Inc., and on March 28, 2006 the Company’s name was changed to Studio One Media, Inc., as part of its overall plan to implement its revised business plan.

Historically, the Company produced and marketed lithographically printed stereoscopic and animation print products.  The volume of business was not sufficient to support the Company's cost structure. Accordingly during April 2002 the Company ceased its prior operations and was reclassified as a development stage company.  Since becoming a Development Stage Company in 2002, the Company has financed its operations primarily through the sale of its securities.

The Company recorded its initial revenues during the three months ended December 31, 2008.

Effective May 6, 2004, the Company's stockholders approved a one-for-sixty Reverse Split of its common stock ("The Reverse Split"). The effect of the Reverse Split has been retroactively reflected as of July 1, 2002 in the financial statements. All references to number of shares issued conversions to common stock, per share amounts and stock option data have been restated to reflect the effect of the Reverse Split for the period presented.

In March 2006, the Company entered into an agreement to purchase Studio One Entertainment, Inc., a private Scottsdale, Arizona based company that is engaged in the design and manufacturing of a proprietary (patents pending), self contained interactive audio/video recording and conferencing studio designed for installation in shopping malls and other high traffic public areas (the “Studio One Entertainment Agreement”). The Studio One ® studio will enable the public, for a fee, to record their video and voice images in a portable state-of-the-art recording studio environment and enter their performances in music, modeling and other talent related contests.

On April 17, 2007, the Company announced that it had finalized the purchase of Studio One Entertainment, Inc., (SOE) through an all-stock transaction. The purchase is pursuant to an agreement entered into by the companies dated March 29, 2006. The purchase includes the exchange of 7,000,000 restricted common shares of Studio One Media, Inc. for 100% of the issued and outstanding shares of Studio One Entertainment, Inc.   The purchase includes all right, title and interest to Studio One Entertainment's proprietary interactive recording studios, business plan and intellectual property, including pending patents, foreign patent rights and federal trademark applications.  Studio One Entertainment, Inc. will operate as a wholly owned subsidiary of Studio One Media, Inc.  Accordingly, the financial statements present on a consolidated basis the operations of SOMD and SOE.

UNAUDITED INTERIM FINANCIAL INFORMATION

The accompanying Consolidated Balance Sheet as of March 31, 2009, the Consolidated Statements of Operations for the three months and nine months ended March 31, 2009 and 2008, and the Consolidated Statements of Cash Flows for the nine months ended March 31, 2009 and 2008 are unaudited. These unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles. In our opinion, the unaudited interim Consolidated Financial Statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of March 31, 2009, our results of operations for the nine months ended March 31, 2009 and 2008, and our cash flows for the nine months ended March 31, 2009 and 2008. The results of operations for the nine months ended March 31, 2009 are not necessarily indicative of the results to be expected for the year ending June 30, 2009. These unaudited interim Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in our 2008 Annual Report on Form 10-K filed on September 29, 2008.

7

STUDIO ONE MEDIA, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2009 AND JUNE 30, 2008

Note 1: Summary of Significant Accounting Policies - continued

GOING CONCERN

The Company has incurred losses since inception of $20,292,270 and has minimal revenues which raises substantial doubt about its ability to continue as a going concern. The future of the Company as an operating business will depend on its ability to (1) obtain sufficient capital contributions and/or financing as may be required to sustain its operations and (2) ultimately achieve revenues from its personal recording studio business. Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, and (c) place in service its personal recording studios.

The financial statements have been prepared on a going concern basis, which contemplates the realization and settlement of liabilities and commitments in the normal course of business. The available funds at March 31, 2009, are not sufficient to satisfy the present cost structure. Management recognizes that the Company must obtain additional funding to enable it to continue operations. Unless the Company is able to secure additional financing it may not be able to continue as a going concern.

Further, there can be no assurances, that the Company will secure additional financing. In the event the Company is not able to secured additional financing or otherwise accomplish a sale, merger, or other business combination with another entity, it may cease its operations and/or seek protection under the bankruptcy laws.

INCOME TAXES

The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

LOSS PER SHARE

Basic and diluted loss per common share is calculated using the weighted average number of common shares outstanding during the period. The effects of outstanding options, warrants and convertible preferred stock are excluded from the computation of diluted loss per share because they would be anti-dilutive.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

STOCK-BASED COMPENSATION

In December 2004, the FASB issued FAS No. 123R, “Share-Based Payment.” This statement is a revision to FAS No. 123, “Accounting for Stock-Based Compensation,” and it supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends FAS No. 95, “Statement of Cash Flows.” FAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.  The Company uses the Black-Scholes pricing model for determining the fair value of stock based compensation.

Equity instruments issued to non-employees for goods or services are accounted for at fair value and are marked to market until service is complete or a performance commitment date is reached.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

8

STUDIO ONE MEDIA, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2009 AND JUNE 30, 2008

Note 2: Accounts Payable, Accrued Expenses

A summary of Accounts Payable and Accrued Expenses Follows:

	March, 31, 2009		June 30, 2008
Accounts Payable	$	529,402	$	180,000
Outstanding Manufacturing Orders		623,731		127,921
Accrued Interest		29,481		35,438
Other Accrued Expenses		984		15,000
Total	$	1,183,598	$	358,359

Note 3: Short-Term Borrowings

During July of 2001 the Company borrowed $25,000 and issued a 14% convertible debenture for $25,000 due in October 2001.  The debenture is in default under the terms of the debenture agreement.  The Company only recently obtained a current address for the debenture holder who has never made a demand on the Company or given notice of intent to convert.  The Company continues to accrue interest on this obligation.  The debenture is convertible into 6,000 shares of the Company's common stock at $7.50 per share after giving effect for the 1 to 60 share reverse split that occurred in May 2004.

As of June 30, 2008, the Company owed $108,319 for funds borrowed from related parties including accrued interest of $11,053. The loans are unsecured, accrue interest at 10% per annum and are due upon demand.   At March 31, 2009 the amount owed to related parties was $201,591 including accrued interest.

During 2008, the Company purchased equipment under a capital lease. The lease is secured by the equipment and due in monthly payments of $808.

A summary of Short Term Borrowings follows:

	Rates			3-31-09		6-30-08
Related Party Loan		10%	$	201,591	$	108,319
Convertible Debenture		14%		50,000		42,049
Equipment Lease		12%		-		7,336
Total			$	251,591	$	157,704

Note 4: Commitments and Contingencies

There are no legal proceedings, which the Company believes will have a material adverse effect on its financial position.

The Company has not declared dividends on Series A or B Convertible Preferred Stock. The cumulative dividends in arrears through June 30, 2008 were approximately $158,625.

The Company leases certain office facilities pursuant to a one-year lease that commenced February 2006, for approximately 5,400 square feet of office space located in Scottsdale, Arizona.  The lease was extended for an additional year ending January 31, 2007 and subsequently extended to August 31, 2008.   On June 15, 2008, the Company expanded into and also occupies approximately 5,400 square feet adjoining the original premises.  Under the terms of the extended, expanded lease, the Company occupies the premises on a month-to-month basis.  The total lease expense is $12,000 per month, payable in cash and common stock of the Company

In anticipation of implementation of its business plan, the Company has also leased an additional 9,400 feet of office space in another building located in Scottsdale, Arizona, at a monthly cost of $12,225.   The Company has not yet occupied this space.

9

STUDIO ONE MEDIA, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2009 AND JUNE 30, 2008

Note 5: Common Stock

During the nine months ended March 31, 2009, the Company issued 1,114,041 common shares for $2,077,785 in cash  and  758,059 shares of the Company’s common stock for consulting services rendered to the Company valued at $1,402,868.

Note 6: Preferred Stock

The Company has authorized 10,000,000 shares of $.001 par value per share Preferred Stock, of which the following were issued outstanding:

	Allocated		Outstanding
Series A Preferred		100,000		15,500
Series A-1 Preferred		1,000,000		275,000
Series B Preferred		200,000		3,500
Series C Preferred		1,000,000		13,404
Series D Preferred		375,000		130,000
Series E Preferred		375,000		275,000
Series P Preferred		600,000		86,640
Total Preferred Stock		3,700,000		799,044

The preferred shares are convertible into 564,814 shares of common stock.

The Company's Series A Convertible 5% Preferred Stock ("Series A Preferred"), 100,000 shares authorized, is convertible into common stock at the rate of .027 share of common stock for each share of the Series A Preferred. Dividends from date of issue, are payable from retained earnings, and have been accumulated on June 30 each year, but have not been declared or paid.

The Company's Series A-1 Convertible 6% Preferred Stock ("Series A Preferred"), 1,000,000 shares authorized, is convertible into common stock at the rate of 2 shares of common stock for each share of the Series A Preferred. Dividends from date of issue, are payable from retained earnings, and have been accumulated on June 30 each year, but have not been declared or paid.

The Company's Series B Convertible 8% Preferred Stock ("Series B Preferred") is convertible at the rate of .067 share of common stock for each share of Series B Preferred. Dividends from date of issue are payable on June 30 from retained earnings at the rate of 8% per annum and have not been declared or paid.

The Company's Series C Convertible Preferred Stock ("Series C Preferred") is convertible at a rate of .007 share of common stock per share of Series C Preferred.

The Company's Series D Convertible Preferred Stock ("Series D Preferred") is convertible at a rate of .034 share of Common stock per share of Series D Preferred.

The Company's Series E Convertible Preferred Stock ("Series E Preferred") is convertible at a rate of .034 share of Common stock per share of Series E Preferred.

The Company's Series P Convertible Preferred Stock ("Series P Preferred") is convertible at a rate of .007 share of common stock for each share of Series P Preferred.

10

STUDIO ONE MEDIA, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2009 AND JUNE 30, 2008

Note 7: Stock Option Plan and Equity Incentive Plan

On November 15, 1999, the Board of Directors of the Company adopted the 1999 Stock Option Plan (the "1999 Plan"). This plan was approved by a majority of our stockholders at our January 28, 2000, stockholders' meeting. The purpose of the 1999 Plan is to advance the interests of the Company by encouraging and enabling acquisition of a financial interest in the Company by its officers and other key individuals. The 1999 Plan is intended to aid the Company in attracting and retaining key employees, to stimulate the efforts of such individuals and to strengthen their desire to remain with the Company. A maximum of 1,500,000 shares of the Company's common stock are available to be issued under the 1999 Plan. The option exercise price will be 100% of the fair market value of the Company's common stock on the date the option is granted and will be exercisable for a period not to exceed 10 years from the date of grant. As of December 31, 2008, no stock options have been granted under this plan.

On October 13, 2006 the Company adopted an employee stock incentive plan setting aside 100,000 shares of the Company’s common stock for issuance to officers, employees, directors and consultants for services rendered or to be rendered. The proposed maximum offering price of such shares is $1.00 per share.  A compensation committee appointed by the Board of Directors who shall have the right to grant awards or stock options administers the plan. On October 13, 2006, the Company filed a Registration on Form S-8 with the Securities Exchange Commission covering shares provided by this plan. As of December 31, 2008, all of the shares authorized by the 2006 Stock Incentive Plan have been issued.  The value of shares issued pursuant to this Plan was computed using the Black-Scholes model as prescribed by FAS No. 123R.

During the year ended June 30, 2008, the estimated value of the compensatory common stock purchase warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions: expected term of 2 years, a risk free interest rate of 2.35% to 5.35%, a dividend yield of 0% and volatility of 26% to 70%. The amount of the expense charged to operations for compensatory options and warrants granted in exchange for services was $3,012,052.

During the nine months ended March 31, 2009, the estimated value of the compensatory common stock purchase warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions: expected term of 1 to 2 years, a risk free interest rate of 1.35% to 2.35%, a dividend yield of 0% and volatility of 55% to 92%. The amount of the expense charged to operations for compensatory options and warrants granted in exchange for services was $2,277,011.

The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to employees and non-employees of the Company. These warrants were granted in lieu of cash compensation for services performed.

	Number of Shares			Weighted Average Exercise Price
Outstanding as of July 1, 2007		850,163		$	3.18
Options Granted		1,677,706			3.83
Exercised		(54,507	)		2.91
Cancelled/forfeited		-			0.00
Outstanding as of June 30, 2008		2,473,362		$	3.63
Options Granted		1,498,721			2.57
Exercised		(244,999)			1.24
Cancelled/forfeited		(454,996	)		2.90
Outstanding at March 31, 2009		3,272,088		$	3.14

11

STUDIO ONE MEDIA, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2009 AND JUNE 30, 2008

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

The following table summarizes the warrants outstanding and the related exercise prices for the shares of the Company’s common stock issued to non-employees of the Company.

	Warrants Outstanding						Warrants Exercisable
Fiscal Year Issued	Exercise Price		Number Shares Outstanding		Weighted Average Contractual Life (Years)		Number Exercisable		Weighted Average Exercise Price
2007	$	3.62		355,167		0.00		355,167	$	3.62
2008	$	3.63		1,472,443		1.00		1,472,443	$	3.86
2009	$	2.52		1,444,478		1.50		1,444,478	$	2.53
Total				3,272,088				3,272,088	$	3.14

Note 8: Income Taxes

SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is calculated by multiplying a 35% marginal tax rate by the cumulative NOL. The total valuation allowance is equal to the total deferred tax asset.

The tax effects of significant items comprising the Company's net deferred taxes as of March 31, 2009 and June 30, 2008 were as follows:

		3-31-09			6-30-08
Deferred tax assets:
Intangible assets	$	251,944		$	251,944
Net operating loss carry forwards		10,168,448			8,994,974
	$	10,420,392		$	9,246,918
Net deferred tax asset	$	10,420,392		$	9,246,918
Valuation allowance		(10,420,392	)		(9,246,918	)
Net deferred tax asset reported	$	--		$	--

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 35% to pretax income from continuing operations for the nine months ended March 31, 2009 and the year ended June 30, 2008 due to the following:

		3-31-09			6-30-08
Book loss from operations	$	(2,608,627	)	$	( 3,015,941	)
Options and warrants issued for services		888,034			1,054,218
Common stock issued for services		547,119			978,249
Valuation allowance		1,173,474			983,474
	$	--		$	--

The federal net operating loss carry forwards of approximately $26,073,000 expire in various years through 2029. In addition the Company has state carry forwards of approximately $13,150,000.

The Company has had numerous transactions in its common stock.  Such transactions may have resulted in a change in the Company's ownership, as defined in the Internal Revenue Code Section 382.  Such change may result in an annual limitation on the amount of the Company's taxable income that may be offset with its net operating loss carry forwards.  The Company has not evaluated the impact of Section 382, if any, on its ability to utilize its net operating loss carry forwards in future years.

12

STUDIO ONE MEDIA, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2009 AND JUNE 30, 2008

Note  9.  The Effect of Recent Account Standards

In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our consolidated financial positionand results of operations if adopted.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60 ”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles ”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

Note  10.  Restated Financial Statements

The Company has restated its balance sheet as of June 30, 2008. The restatement was to correct the presentation of Studio One Entertainment, Inc. (SOE) as a recapitalization. The acquisition was originally recorded as a purchase. However it was determined that since the shareholders of SOE became the controlling shareholders of the Company that the transaction should be accounted for as a reverse merger.  Accordingly, the historical financial statements of SOE are presented as those of the combined company and no goodwill or other intangible assets are recorded in the transaction. A comparison of the summarized financial statements as revised and as originally presented is a follows:

	June 30,			June 30,
	2008			2008
	(original)			(restated)
ASSETS
Total Current Assets	$	673,715		$	673,715
Property and Equipment, Net		548,070			548,070
Other Assets
Deposits		29,630			29,630
Intangible Assets, net		857,923			138,084
Total Other Assets		887,553			167,714
Total Assets	$	2,109,338		$	1,389,499
LIABILITIES AND STOCKHOLDERS' EQUITY
Total Liabilities	$	516,063		$	516,063
Stockholders' Equity
Preferred Stock, authorized 10,000,000 shares, par value $0.001;
issued and outstanding is 524,544 shares at June 30,2008		524			524
Common Stock, authorized 100,000,000 shares, par value $0.001;
issued and outstanding is 13,212,398 shares at
June 30, 2008		13,212			13,212
Additional Paid in Capital		40,672,472			14,463,184
Accumulated Deficit		(39,092,933	)		(13,603,484	)
Total Stockholders' Equity		1,593,275			873,436
Total Liabilities and Stockholders' Equity	$	2,109,338		$	1,389,499

13

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

The discussion and financial statements contained herein are for the nine months ended March 31, 2009 and 2008. The following discussion regarding the financial statements of the Company should be read in conjunction with the financial statements of the Company included herewith.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

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

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

Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements.  We urge you not to place undue reliance on these forward-looking statements.

These statements include, among other things, statements concerning our expectations regarding:

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

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

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

· our future stock-based compensation charges;

· our dilution related to all equity grants to employees;

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

· that we will continue to make investments and acquisitions;

· the sufficiency of our existing cash, cash equivalents, marketable securities and cash generated from operations;

· the increase of research and development, sales and marketing and general and administrative expenses in the future;

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

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

· general economic conditions.

as well as other statements regarding our future operations, financial condition and prospects and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Report, and in particular, the risks discussed under the heading “Risk Factors” in Part II, Item 1A of this Report and those discussed in other documents we file with the Securities and Exchange Commission. We undertake no obligation to evise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

14

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

FORWARD-LOOKING AND CAUTIONARY STATEMENTS - continued

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

GENERAL

CORPORATE BACKGROUND

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

On March 28, 2006, the Company changed its name to Studio One Media, Inc.  On March 29, 2006, the Company entered into an agreement to purchase 100% of Studio One Entertainment, Inc., (“SO Entertainment”) of Scottsdale, Arizona, in a one-for-one, stock-for-stock transaction.  SO Entertainment owns proprietary audio/video recording technology, patent and trademark applications, studio design, methods and related concepts for MyStudio®.  

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

The Company's office and principal place of business is located at 7650 E. Evans Rd., Suite C, Scottsdale, Arizona 85260, and its telephone number is (480) 556-9303.

OVERVIEW

Studio One is a leading edge entertainment company utilizing start of the art technology.  Over the past several years, Studio One has developed MyStudio, a self contained, high definition (HD) interactive audio/video recording studio designed for installation in shopping malls and other pedestrian high traffic areas.  MyStudio offers groundbreaking HD audio and video quality from a proprietary (22 patents pending), stand alone recording studio.  MyStudio and its accompanying website, www.MyStudio.net, uniquely incorporate the best elements of some of the world’s leading internet and entertainment properties: the video sharing of YouTube, the social networking capabilities of MySpace and Facebook and talent based contests made popular by American Idol, in a single entertainment venue.  MyStudio offers a “bricks and clicks” combination of hardware and software drivers which is unique in the entertainment and internet industries.

The MyStudio facility has a hexagon-shaped footprint and, at its widest points, is 10 ft by 10 ft.  Its height is 8 ft.  Its size permits installation as a self-contained kiosk in a wide variety of possible locations.  Its physical appearance and exterior features have been designed to attract attention with a high technology look and project a feeling of quality and value.  The exterior of the studio contains eight 37” LCD flat screen monitors that are used to promote MyStudio and for advertising by third parties as a revenue generator.  The Company plans to own, install and operate the MyStudio units.

The studios enable the public, for a $20 fee, to record up to a 5 minute video in a stand alone, state-of-the-art recording studio and enter their MyStudio performances in music, modeling, comedy and other talent related contests.  MyStudio can also be used to record video resumes, dating profiles and personal messages.  The Company believes its MyStudio methods, processes and business model are proprietary and a unique opportunity in the entertainment industry.

Users can personalize their videos by choosing from over a thousand backdrops, which appear through the use of Hollywood green-screen technology and thousands of pre-licensed karaoke songs. The self-contained MyStudio recording studios can be used by amateurs and professionals alike to record original compositions or popular songs. Each MyStudio contains 5 plug-in ports for electrical instruments such as guitars, DJ turntables, bass, drums, pianos or violins. The studios provide professional recording studio-quality sound from their specially engineered acoustic design, combined with a proprietary audio signal sequencing process.  Minutes after creating a video, users can upload their videos and view them online at www.mystudio.net, share them with their friends and family, and view them to their cell phone.

The Company installed and opened its first MyStudio in Scottsdale Fashion Square, Scottsdale, Arizona, on September 29, 2008.  It has four more units in production and subject to adequate financing, plans to install those units in strategic locations in the second and third quarters of calendar year 2009. Following the launch of the initial 5 studios, but subject to the ability to raise additional capital for expansion, the Company plans to install additional studios at other locations in the U.S., before it expands internationally.

15

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

OVERVIEW - continued

As a companion feature of the studio, Studio One has developed the MyStudio website. At www.mystudio.net, users can become part of a unique experience by creating their own MyStudio profile pages with their videos, music, photos and personal information. They an also share their video with their friends as well as view publically posted videos created by others. Users can also print high quality pictures directly from their video on MyStudio.net.

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

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

COMPANY HISTORY

FISCAL YEARS 2003-2008

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

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

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

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

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

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

FISCAL YEAR 2009

COMMENCEMENT OF OPERATIONS

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

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

16

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

COMMENCEMENT OF OPERATIONS - continued

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

RECENT DEVELOPMENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

17

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

COMPETITIVE ADVANTAGES

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

TECHNOLOGICAL ADVANTAGES

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

FINANCIAL IMPACT

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

PATENTS, TRADEMARKS AND PROPRIETARY PROTECTION

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

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

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

 EMPLOYEES

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

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

FACILITIES

Pursuant to a lease originally dated January, 2006, we currently occupy approximately 5,400 square feet of office space located at 7650 E. Evans Rd., Suite C, Scottsdale, Arizona 75260.  On June 15, 2008, we expanded into and also occupy approximately 5,400 square feet adjoining the original premises on a month-by month basis.  Under the terms of the extended, expanded lease, we occupy the premises on a month-to-month basis.  The total lease expense is $12,000 per month, payable in cash, common stock of the Company and on-studio advertising.

18

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

FACILITIES - continued

In anticipation of implementation of our business plan, we had also leased an additional  9,400 feet of office space in another building located at 7812 E. Acoma, Scottsdale, Arizona, at a monthly cost of $12,225.   We have not occupied this space and, subsequent to March 31, 2009, have entered into a termination agreement with the landlord pursuant to which the Company will pay the sum of $50,000 over a period of ten months in exchange for terminating future obligations under the lease.

RESULTS OF OPERATIONS

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

The Company’s business plan calls for the establishment of regular events and contests to drive traffic to its studios and this assumption was confirmed by a marked increase in studio traffic when contests and promotions have been offered. In late December, the Company finalized two important multiyear partnerships with Mark Burnett Productions for reality TV casting and The GRAMMY Foundation to do auditions for various GRAMMY Foundation programs. The Company expects to continue to align itself and enter into partnerships with other high profile entertainment companies, so it can offer consumers an ongoing variety of contests to ensure steady studio traffic.  In the quarter ended March 31, 2009 the Company hosted a variety of contests and auditions.

Revenues:

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

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

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

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

· User fees from customers who utilize the entertainment studios to create an audio/video recording.

· Advertising revenue from the external monitors located on each MyStudio facility.

· Advertising revenue from its website.

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

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

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

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

Cost of Sales:

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

19

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

RESULTS OF OPERATIONS- continued

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

General and Administrative Expenses:

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

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

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

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

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

Research and Development Expenses:

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

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

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

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

20

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

RESULTS OF OPERATIONS- continued

Total Operating Expenses:

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

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

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

Net Income/(Loss):

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

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

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

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

NET OPERATING LOSSES

We have accumulated approximately $26,073,000 of federal net operating loss carryforwards as of March 31, 2009, which the Company believes may be offset against future taxable income through 2028.  The use of these losses to reduce future income taxes will depend on several factors including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards.  In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carryforwards which can be used.  No tax benefit has been reported in the financial statements for the year ended June 30, 2008 or the nine months ended March 31, 2009, because the potential tax benefits of the loss carryforward is offset by valuation allowance of the same amount.

LIQUIDITY AND CAPITAL RESOURCES

The Company had minimal revenue collections during the nine months ended March 31, 2009, and none for the nine months ended March 31, 2008.  The Company has incurred losses since inception of $20,292,270.  At March 31, 2009, the Company has a working capital deficit of $1,028,516, attributable primarily to outstanding manufacturing orders for additional studios expected to be delivered in the fourth quarter of the current fiscal year. The future of the Company as an operating business will depend on its ability to obtain sufficient capital contributions and/or financing as may be required to sustain its operations.  Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, and (c) aggressively pursing its plan to launch additional studios in the current fiscal year.  Subsequent to the quarter ending March 31, 2009, the Company has raised approximately $200,000 by way of equity financing and loans and has engaged two investment banking firms on a non-exclusive basis to raise additional capital for the Company.

21

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

LIQUIDITY AND CAPITAL RESOURCES - continued

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

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

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

In addition, the Company will require substantial additional funds to continue production of the MyStudio kiosks which are expected to be installed in locations around the country, and to fully implement its marketing plans.  

As of March 31, 2009, the existing capital and anticipated funds from operations were not sufficient to sustain Company operations or the business plan over the next twelve months.  We anticipate substantial increases in our cash requirements which will require additional capital generated from the sale of common stock, the sale of preferred stock, equipment financing, debt financing and bank borrowings, to the extent available, or other forms of financing to the extent necessary to augment our working capital.  In the event we cannot obtain the necessary capital to pursue our strategic business plan, we may have to significantly curtail our operations.  This would materially impact our ability to continue operations. There is no assurance that the Company will be able to obtain additional funding when needed, or that such funding, if available, can be obtained on terms acceptable to the Company.  

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

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4T.  CONTROLS AND PROCEDURES

(a)           Evaluation of Disclosure Controls and Procedures

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

 (b)           Internal Control over Financial Reporting

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

22

ITEM 4T.  CONTROLS AND PROCEDURES - continued

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

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

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

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

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

Risks Related to Our Business and Industry

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

History of Operations and Dependence on Future Developments.

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

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

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

23

ITEM 1A. RISK FACTORS - continued

History of Operations and Dependence on Future Developments. - continued

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

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

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

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

New Business Model.

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

Limited Capital and Need for Additional Financing.

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

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

Lack of Diversification.

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

Competition.

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

24

ITEM 1A. RISK FACTORS - continued

Competition. - continued

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

Performance - - Market Acceptance.

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

Dependence on Intellectual Property - Design and Proprietary Rights.

Our success and ability to compete depends to a degree on our intellectual property.  We will rely on copyright, trademark and patent filings as well as confidentiality arrangements, to protect our intellectual property locally and internationally.  Studio One Entertainment, Inc., has filed 22 patent applications relating to MyStudio and related technologies and processes, and while the Company believes the technologies, methods and processes merit patent protection, there is no assurance that any patent will be issued.  If circumstances make it impossible to try to adequately protect our intellectual property that intellectual property could be used by others without our consent and there could be material adverse consequences to the Company.

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

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

Economic Downturn.

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

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ITEM 1A. RISK FACTORS - continued

Some of Our Markets are Cyclical.

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

Disaster.

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

Dependency on Foreign Components for our Products.

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

Exposure to Product Liability Lawsuits.

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

Dependency on Key Suppliers and Product Availability.

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

Dependency on Long Supply Chains.

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

Fluctuations in Cost of Raw Materials.

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

Regulatory Factors.

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

26

ITEM 1A. RISK FACTORS - continued

Terms of Subsequent Financing.

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

Rapid Technological Change.

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

Effect of Fluctuations in Operations on Price of Common Stock.

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

● ability to commercialize MyStudio;

● changes in entertainment technology;

● price and availability of alternative entertainment available to the public;

● availability and cost of technology and marketing personnel;

● our ability to establish and maintain key relationships with industry partners;

● the amount and timing of operating costs and capital expenditures relating to maintaining our business, operations, and infrastructure;

● general economic conditions and economic conditions specific to the entertainment industry; and

● the ability to maintain a product margin on sales, given the early stage of our market for our products.

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

Our Common Stock is Subject to Penny Stock Regulations.

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

Uncertainty as a Going Concern.

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

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ITEM 1A. RISK FACTORS - continued

Dilution; Dilutive Effect of Future Transactions.

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

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

Restrictions on Transfer - No Public Market for Restricted Shares.

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

Expect to Incur Losses for the Foreseeable Future.

We expect to incur losses for the foreseeable future and we may never become profitable.  Although our current revenue model contemplates revenues from MyStudio sufficient to break-even within twelve months, there is no assurance that these revenues will occur.  In addition, we expect our expenses to increase significantly as we develop the infrastructure necessary to implement our business strategy.  Our expenses will continue to increase as we: hire additional employees; pursue research and development; expand our information technology systems; and lease and purchase more space to accommodate our operations.

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

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

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

Business Plans and Operational Structure May Change.

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

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ITEM 1A. RISK FACTORS - continued

Reliance on Management.

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

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

Inability to Attract and Retain Qualified Personnel.

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

Inability to Manage Rapid Growth.

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

● rapidly improve, upgrade and expand its business infrastructures;

● deliver its product and services on a timely basis;

● maintain levels of service expected by clients and customers;

● maintain appropriate levels of staffing;

● maintain adequate levels of liquidity; and

● expand and upgrade its technology, transaction processing systems and network hardware or software or find third parties to provide these services.

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

Effects of Amortization Charges.  

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

Dividend Policy.

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

Conflicts of Interest.

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

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ITEM 1A. RISK FACTORS - continued

Voting Control.

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

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

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

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

(a) On May 6, 2004, the Registrant amended its Articles of Incorporation to authorize the Registrant to reverse its issued and outstanding shares, giving one (1) new share for each sixty (60) existing shares issued and outstanding. The Registrant now has 15,084,498 post-reverse shares of common stock outstanding. In addition, the Company has 799,044 shares of preferred stock issued and outstanding as of March 31, 2009.  The preferred shares are convertible into 564,814 shares of common stock.

(b) During the nine months ended March 31, 2009, we closed various private placements and issued 758,330shares of restricted common stock for total of approximately $1,687,500 in proceeds, issued 275,000 shares of preferred stock for $550,000 in proceeds, and granted warrants to various security holders and others to acquire an additional 1,498,721 shares at an average exercise price of $2.57 at any time within two years after the dates of their respective investments.  During this period, warrantholders having the right to purchase 245,000 shares of the Company’s common stock exercised their right and we received an additional $305,000 in proceeds from the exercise of those warrants.  The average warrant exercise price was $1.24.  All shares issued were subject to the restrictions set forth in Section 144 of the Securities Exchange Act of 1933.  We believe that the sale of the units was exempt from registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Sections 4(2), and/or Regulation D, Rule 506. The units were sold directly by us to accredited investors and did not involve a public offering or general solicitation. The purchasers of the units were afforded an opportunity for effective access to files and records of our company that contained the relevant information needed to make their investment decision, including our financial statements and 34 Act reports. We reasonably believed that the purchasers, immediately prior to selling the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investment. The purchasers had the opportunity to speak with our management on several occasions prior to their investment decision.  All proceeds from the sale of these securities were used to continue the Company’s research and development program and to manufacture the initial production model of the MyStudio interactive recording studio, as well as for working capital and general corporate purposes.

(c) During the nine months ended March 31, 2009, the Company also issued 868,771shares of the Company’s common stock for employment, consulting and other services rendered to the Company valued at $1,487,952  The Company uses the Black-Scholes pricing model for determining the fair value of stock based compensation. We believe the issuance of the shares listed in this Item 2 are exempt from the registration and prospectus delivery requirement of the Securities Act of 1933 by virtue of Section 4(2). The shares were issued directly by us and did not involve a public offering or general solicitation. The recipients of the shares were afforded an opportunity for effective access to our files and records that contained the relevant information needed to make their investment decision, including our financial statements and reports filed under the Securities Exchange Act of 1934. We reasonably believed that the recipients had such knowledge and experience in the Company’s financial and business matters that they were capable of evaluating the merits and risks of their investment.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

(a) On May 6, 2004, the Registrant (f/k/a Dimensional Visions Incorporated) filed a Certificate of Amendment of Certificate of Incorporation with the Secretary of State for the State of Delaware. The number of shares common stock of the Registrant outstanding and entitled to vote on an amendment to the Articles of Incorporation was 61,771,510. The May 6, 2004 amendment was consented to and approved by a majority vote of the stockholders holding a majority of the stock entitled to vote thereon. The amendment authorized the Registrant to reverse its issued and outstanding shares, giving one (1) new share for each sixty (60) existing shares issued and outstanding. The Registrant now has 15,084,498 post-reverse shares outstanding.  

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

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

(c) During the nine months ended March 31, 2009, no matters were submitted to the shareholders for a vote.

ITEM 5. OTHER INFORMATION

Change of Name

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

Shell Company Status

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

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

On May 19, 2008, the Company filed a Form 8-K concerning the change of its status as a shell company. The disclosure made under that Form 8-K is incorporated by reference herein.

Subsequent Events:

None

ITEM 6. EXHIBITS

a) The following Exhibits are filed herein:

NO. TITLE

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

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

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

31

SIGNATURES

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

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

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

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

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

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