UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly period ended November 30, 2008

o   TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transitional period from ______ to ______

Commission File No. 0-32923

(Exact name of registrant as specified in its charter)

Nevada	33-0198542
(State or other jurisdiction of incorporation of organization)	(I.R.S. Employer Identification Number)

18952 MacArthur Blvd, Suite 210, Irvine, CA 92612

(Address of principal executive office) (Zip code)

(949) 486-3990

(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   No  

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

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

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

As of January 13, 2009, there were 67,043,794 shares of registrant’s common stock outstanding.

FINANCIAL MEDIA GROUP, INC.

TABLE OF CONTENTS

Report on Form 10-Q

for the quarter ended November 30, 2008

	Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at November 30, 2008 (Unaudited) and August 31, 2008	3
Consolidated Statements of Operations for the Three Month Periods ended                 November 30, 2008 and 2007 (Unaudited)	4
Consolidated Statements of Cash Flows for the Three Month Periods ended                 November 30, 2008 and 2007 (Unaudited)	5
Notes to the Consolidated Financial Statements (Unaudited)	6 – 17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4T. Controls and Procedures	22
PART II OTHER INFORMATION
Item 1. Legal Proceedings	22
Item 1A. Fisk Factors	23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3. Defaults upon Senior Securities	23
Item 4. Submission of Matters to Vote of Security Holders	23
Item 5. Other Information	23
Item 6. Exhibits	23
Signatures	23

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PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	November 30, 2008			August 31, 2008
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash & cash equivalents	$	4,994		$	73,312
Accounts receivable, net		55,577			53,718
Marketable securities		1,538,841			2,217,852
Other current assets		2,543			1,793
Total current assets		1,601,955			2,346,675
PROPERTY & EQUIPMENT, Net		67,431			82,566
DEPOSIT		28,521			34,671
Total assets	$	1,697,907		$	2,463,912
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	746,667		$	613,929
Accrued expenses		830,905			806,639
Deferred revenue		304,500			424,832
Due to officers		922,929			820,729
Notes payable		650,000			650,000
Total current liabilities		3,455,001			3,316,129
Commitment & contingencies		-			-
STOCKHOLDERS' DEFICIT:
Common stock, $0.001 par value, 300,000,000 shares authorized, 66,758,866 and 65,726,873 shares issued and outstanding at November 30, 2008 and August 31, 2008, respectively		66,759			65,727
Paid in capital		11,796,400			11,339,465
Unrealized loss on marketable securities		(33,145	)		279,130
Accumulated deficit		(13,587,106	)		(12,536,538	)
Total stockholders' deficit		(1,757,092	)		(852,216	)
Total liabilities and stockholders' deficit	$	1,697,907		$	2,463,912

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three month periods ended
	November 30,
	2008			2007
Net revenues	$	834,787		$	1,878,893
Operating expenses
Selling, general & administrative		1,010,478			1,583,629
Depreciation		15,135			10,616
Impairments		629,245			861,903
Total operating expenses		1,654,858			2,456,148
Loss from operations		(820,071	)		(577,255	)
Non-Operating Income (Expense):
Interest expense		(7,511	)		(47,540	)
Interest income		50			-
Loss on sale of marketable securities		(218,238	)		(1,724	)
Total non-operating expense		(225,699	)		(49,264	)
Loss from operations before income taxes		(1,045,770	)		(626,519	)
Provision for income tax		4,800			4,800
Net Loss		(1,050,570	)		(631,319	)
Other comprehensive gain (loss):
Unrealized gain (loss) on marketable securities		(515,850	)		(63,523	)
Reclassification Adjustment		203,575			(25,203	)
Comprehensive loss	$	(1,362,845	)	$	(720,045	)
Basic & diluted net loss per share	$	(0.02	)	$	(0.02	)
*Weighted average shares of share capital outstanding - basic & diluted		66,098,358			35,052,538

* Weighted average diluted number of shares are considered the same as basic weighted average number of shares as the effect of diluted securities is anti-dilutive.

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the three month periods ended November 30,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,050,570	)	$	(631,319	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debts		-			35,215
Depreciation and amortization		15,135			10,616
Revenues in form of marketable securities		(762,332	)		(1,312,153	)
Impairment of marketable securities		629,245			861,903
Loss on sale of marketable securities		218,238			1,724
Issuance of common stock for services		74,152			-
Issuance of options for services		84,397			-
Issuance of warrants for services		-			13,675
(Increase) decrease in current assets:
Receivables		(1,859	)		(17,335	)
Other current assets		5,400			(200,185	)
Increase (decrease) in current liabilities:
Accounts payable		132,738			73,417
Accrued expenses and other liabilities		126,466			194,330
Deferred revenues		2,040			(200,586	)
Net cash used in operating activities		(526,951	)		(1,170,699	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property & equipment		-			(17,977	)
Cash received from disposal (acquisition) of marketable securities-net		159,215			537,750
Net cash provided by investing activities		159,215			519,773
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		299,418			640,261
Net cash provided by financing activities		299,418			640,261
NET DECREASE IN CASH & CASH EQUIVALENTS		(68,318	)		(10,665	)
CASH & CASH EQUIVALENTS, BEGINNING BALANCE		73,312			172,013
CASH & CASH EQUIVALENTS, ENDING BALANCE	$	4,994		$	161,348

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1    NATURE OF BUSINESS AND BASIS OF PRESENTATION

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

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

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

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

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

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

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

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

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for the presentation of interim financial information, but do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The audited financial statements for the year ended August 31, 2008 were filed on December 12, 2008 with the Securities and Exchange Commission and is hereby incorporated by reference. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three months period ended November 30, 2008 are not necessarily indicative of the results that may be expected for the year ended August 31, 2009.

Principles of Consolidation

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

Use of Estimates

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

Cash and Cash Equivalents

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

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. Allowance for doubtful debts amounted to $201,872 as of November 30, 2008 and August 31, 2008.

Marketable Securities

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

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

Property and Equipment

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Revenue Recognition Policy

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

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

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

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

Fair Value of Financial Instruments

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

Concentration of Credit Risk

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

Reporting Segments

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Segments (cont.)

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

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

Stock-Based Compensation

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

Issuance of Shares for Services

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

Comprehensive Income

Statement of financial accounting standards No. 130, Reporting comprehensive income (SFAS No. 130), establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity, except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS No. 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in financial statements that are displayed with the same prominence as other financial statements.

Recent Accounting Pronouncements

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

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements (cont.) 

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

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

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

Reclassifications

Certain comparative amounts have been reclassified to conform to the current period’s presentation.

NOTE 3     MARKETABLE SECURITIES

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

Marketable securities classified as available for sale consisted of the following as of November 30, 2008 (Unaudited):

Equity Securities Name and Symbol	No. Shares Held at November 30, 2008	Cost		Market Value at November 30, 2008		Accumulated Unrealized Loss			Accumulated Unrealized Gain		Traded on Pink Sheets (PK) or Bulletin Board (BB)
CEO America, Inc. (CEOA)	1,000,000	$	9,000	$	15,000	$	-		$	6,000	PK
CytoDyn, Inc. (CYDY)	142,857		8,571		57,143		-			48,571	PK
Exousia Advanced Mat (EXOU)	401,538		261,000		172,661		88,339			-	PK
FIMA, Inc (FIMA)	357,000		14,994		18,921		-			3,927	PK
GENCO Corp (GNCC)	294,118		17,647		17,647		-			-	PK
GeneThera Inc (GTHR)	50,000		139,661		12,500		127,161			-	PK
Ifinix Corp (INIX)	34,500,000		315,000		276,000		39,000				BB
International Food Products Group, Inc. (IFDG)	4,000,000		22,000		17,600		4,400			-	BB
Nexplore Corp. (NXPC)	200,000		108,000		254,000		-			146,000	PK
NutriPure Beverages, Inc. (NUBV)	250,033,333		10,000		25,003		-			15,003	PK
PPJ Enterprise Inc (PPJE)	3,810,000		70,980		70,980		-			-	PK
PSM Holdings, Inc. (PSMH)	157,895		63,158		63,158		-			-	PK
Raven Moon Entertainment, Inc. (RVENE)	2,500,624,843		250,000		250,062		-			62	BB
Signature Devices, Inc. (SDVI)	2,400,000		21,120		12,000		9,120			-	PK
Sunrise Consulting Group (SNRS)	1,015,000,000		101,500		101,500		-			-	PK
VidShadow Inc (VSHD)	147,052		102,936		102,936		-			-	PK
VOIP PAL.com, Inc. (VPLM)	2,500,000		15,000		37,500		-			22,500	PK
WayPoint Biomedical Holdings, Inc. (WYPH)	715,000		10,725		7,150		3,575			-	PK
Others - Less than $10,000 Cost	79,774,669		30,695		27,080		8,145			4,530	PK
Total		$	1,571,987	$	1,538,842	$	(279,739	)	$	246,594

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3     MARKETABLE SECURITIES (CONT.)

As of November 30, 2008, the Company evaluated its marketable securities holdings by valuing the securities according to the quoted price of the securities on the stock exchange.

It is the Company’s policy to assess its marketable securities for impairment on a quarterly basis, or more frequently if warranted by circumstances. The Company recognized an impairment loss on the marketable securities of $629,245 for the three months ended November 30, 2008 compared to $861,903 for the same period in 2007.

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

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

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

The Company sold marketable securities during the three months ended November 30, 2008 and 2007 and recorded a realized loss of $218,238 and $1,724, respectively.

NOTE 4    PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	November 30, 2008			August 31, 2008
		(Unaudited)
Office and computer equipment	$	191,652		$	191,652
Less accumulated depreciation:		(124,221	)		(109,086	)
	$	67,431		$	82,566

Depreciation expense for the three months ended November 30, 2008 and 2007 was $15,135 and $10,616, respectively.

NOTE 5     OTHER ASSETS

Other assets consist of the following:

	November 30, 2008		August 31, 2008
	(Unaudited)
Other Current Assets:
Employee advances	$	2,300	$	-
Advances to third parties		-		1,550
Prepaid expenses		243		243
Total Other Current Assets	$	2,543	$	1,793
Other Assets:
Rent deposit	$	28,521	$	34,671
Total Other Assets	$	28,521	$	34,671

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 6    DEFERRED REVENUES

The Company receives marketable securities and cash for services to be provided in future periods. The Company recognizes revenue on a pro-rata basis over the term of the agreement. The Company recorded $304,500 and $424,832 in deferred revenues at November 30, 2008 and at August 31, 2008, respectively, which will be recognized over the next 12 months.

NOTE 7    ACCRUED EXPENSES

Accrued expenses consist of the following:

	November 30, 2008		August 31, 2008
		(Unaudited)
Accrued consulting fees	$	87,982	$	98,649
Accrued interest		38,707		36,457
Accrued salaries and payroll taxes		489,716		376,038
Advances from third parties		214,500		295,495
	$	830,905	$	806,639

NOTE 8    DUE TO OFFICERS

Due to officers consist of the following at November 30, 2008:

	November 30, 2008		August 31, 2008
		(Unaudited)
Accrued officer’s compensation	$	642,174	$	539,974
Accrued consulting fees		32,382		32,382
Accrued interest		248,373		248,373
	$	922,929	$	820,729

The Company recorded an expense of $92,188 and $92,188 for the three months ended November 30, 2008 and 2007 for compensation and benefits provided to the Chief Executive Officer of the Company.

NOTE 9    NOTE PAYABLE

In August 2004, the Company executed a promissory note of $100,000 from a third party, unsecured, interest at 9% per annum and due on demand. The Company recorded an interest expense of $2,250 and $2,250 in the accompanying financial statements for the three months ended November 30, 2008 and 2007, respectively.

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 10     EQUITY TRANSACTIONS

Common Stock

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

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

On June 28, 2007, the Company entered into a Stock Purchase Agreement with an investor for private placement of shares under Regulation S as promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended. During the three months ended November 30, 2008, the Company sold 300,785 shares of common stock to the investors and received cash proceeds of $28,830. As of November 30, 2008, the Company sold 15,448,394 shares of its common stock under Regulation S to the investors and received cash proceeds of $1,463,182 which amounted to approximately 34% of the total proceeds from such sale of its shares. These shares were sold at a price equal to the previous day's last bid price as traded on the Over the Counter Bulletin Board.

On June 12, 2008, the Company initiated a Private Placement Memorandum offering to sell 250 units for a total cash consideration of $5,000,000. Each Unit consisted of 40,000 shares of Common Stock, par value $0.001 per share and 40,000 Class A Common Stock Purchase Warrants, 40,000 Class B Common Stock Purchase Warrants and 40,000 Class C Common Stock Purchase Warrants. The offering entitles the registered investor redeemable Class A Warrants, redeemable Class B Warrants and redeemable Class C Warrants to purchase, at any time until the 9-month, 12-month and 18-month anniversary of the date of purchase of shares, at an exercise price of $0.75, $1.50 and $3.00, respectively, subject to adjustment. The Class A, Class B and Class C Warrants (collectively, the “Warrants”) are redeemable by the Company, at a redemption price of $0.05 per share, upon at least 30 days’ prior written notice, commencing on the effective date of a registration statement registering the common stock underlying the Warrants (the “Warrant Shares”) for resale or 12 months after the date of issuance of the Warrant, whichever is earlier, if the market price per share of the common stock for any five consecutive trading days prior to a notice of redemption shall exceed $1.50 per share for Class A Warrants, $3.00 per share for the Class B Warrants and $5.00 per share for Class C Warrants. During the three months ended November, 30, 2008, the Company sold 13 units to investors for a cash consideration of $260,000. As of November 30, 2008, the Company sold 44 units to investors and raised $880,000 pursuant to the June 12, 2008 Private Placement.

During the three months ended November 30, 2008, the Company issued 73,249 shares to consultants valued at $12,485 in full settlement of their services, 71,500 shares to an employee valued at $12,500 in full settlement of their services, and  66,677 shares to directors valued at $36,667 for their services. The shares were valued at their fair value on the date of issuance.

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Outstanding Warrants:

Following is a summary of the various classes of warrants outstanding at November 30, 2008:

Description of Warrants	Exercise Price	Expiration Date	Warrants Outstanding at August 31, 2008	Warrants Issued during the period	Warrants Exercised during the period	Warrants Expired during the period		Warrants Outstanding at August 31, 2008
Class E Warrant	$3.75	01/25/2009	165,000	-	-	-		165,000
Class A2 Warrant	$3.50	09/01/2008	244,667	-	-	(244,667	)	-
			409,667	-	-	(244,667		165,000

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

	Number of Warrants			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding August 31, 2008		409,667		$	3.60	$	-
Issued during the period		-			-		-
Expired		(244,667	)		-		-
Exercised		-			-		-
Outstanding November 30, 2008		165,000		$	3.75	$	-

Following is a summary of the status of warrants outstanding at November 30, 2008:

Range of Exercise Prices	Total Warrants Outstanding	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price	Warrants Exercisable	Weighted Average Exercise Price of Exercisable Warrants
$3.75	165,000	0.15	$3.75	165,000	$3.75
	165,000	0.15	$3.75	165,000	$3.75

Outstanding Stock Options:

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

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

- 14 -

FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The number and weighted average exercise prices of options granted by the Company at November 30, 2008 are as follows:

	Options Outstanding			Weighted Average Exercise Price			Aggregate Intrinsic Value
Outstanding August 31, 2008		2,235,000		$	0.23		$	-
Granted		-			-			-
Exercised		-			-			-
Expired/forfeited		(235,000	)		(0.30	)		-
Outstanding November 30, 2008		1,925,000		$	0.21		$	-

Following is a summary of the status of stock options outstanding at November 30, 2008:

Range of Exercise Prices	Total Options Outstanding	Weighted Average Remaining Life (Years)	Total Weighted Average Exercise Price	Options Exercisable	Weighted Average Exercise Price
$0.01 - $0.30	2,000,000	9.06	$0.15	134,444	$0.21
	2,000,000	9.06	$0.15	134,444	$0.21

The Company issued 2,000,000 options to officers and consultants at the exercise prices ranging from $0.10 to $0.30 with the fair value of the options valued at $0 calculated using the Black-Scholes option pricing model using the assumptions of risk free interest rate of 3.50%, volatility of 148%, ten (10) years term, and dividend yield of 0%. The stock option expense for the three months ended November 30, 2008 and November 30, 2007 was $33,763 and $0, respectively.

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

On July 2, 2008, the Company adopted the 2008 Non-Qualified Plan and the Board of Directors approved the reservation of 2,000,000 shares of the Company’s authorized but unissued common stock for issuance under the plan. As of November 30, 2008, no options have been granted under the 2008 Non-Qualified Plan.

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

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

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The number and weighted average exercise prices of stock Options granted by the Company at November 30, 2008 are as follows:

	Options Outstanding			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding August 31, 2008		2,375,000		$	0.30	$	-
Granted		-			-		-
Exercised		-			-		-
Expired/forfeited		(450,000	)		0.30		-
Outstanding November 30, 2008		1,925,000		$	0.30	$	-

Following is a summary of the status of stock Options outstanding at November 30, 2008:

Range of Exercise Prices	Total Options Outstanding	Weighted Average Remaining Life (Years)	Total Weighted Average Exercise Price	Options Exercisable	Weighted Average Exercise Price
$0.01 - $0.30	1,925,000	9.06	$0.30	285,007	$0.30
	1,925,000	9.06	$0.30	285,007	$0.30

The Company has issued 1,925,000 stock options to employees at the exercise prices of $0.30 with the fair value of the options of $472,577 calculated using the Black-Scholes option pricing model using the assumptions of risk free interest rate of 3.5%, volatility of 148%, ten (10) years term, and dividend yield of 0%. The stock option expense for the three months ended November 30, 2008 and November 30, 2007 was $50,633 and $0, respectively.

NOTE 11    BASIC AND DILUTED NET LOSS PER SHARE

Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), “Earnings per share.” SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive.

NOTE 12    SUPPLEMENTAL DISCLOSURES OF CASH FLOWS

The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95. The Company paid $5,005 for interest and $0 for income taxes during the three months ended November 30, 2008. The Company paid $140 for interest and $0 for income taxes during the three months ended November 30, 2007.

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FINANCIAL MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 13    COMMITMENTS

Operating Lease

The Company leases its corporate office facilities in California from a third party under an operating lease that terminates on February 28, 2010. Rent expense under the operating lease for the three months ended November 30, 2008 and 2007 was $103,958 and $122,105, respectively. The Company has future minimum lease obligations as follows:

Twelve months ending November 30,	Amount
2009	$	316,526
2010		79,564
	$	396,090

Employment Agreement

On January 26, 2007, the Company entered into an employment agreement with its Chief Financial Officer for a three year period, to provide salary, bonuses, and other fringe benefits. The Company recorded a compensation expense of $43,125 and $37,500 in general and administrative expenses for the three months ended November 30, 2008 and 2007, respectively. The Company has future minimum salary commitments as follows:

Twelve months ending November 30,	Amount
2009	$	194,063
2010		33,063
	$	227,126

Contingencies

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

NOTE 14GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. This basis of accounting contemplates the recovery of the Company's assets and the satisfaction of its liabilities in the normal course of business. The Company had an accumulated deficit of $13,587,106 as of November 30, 2008 and has incurred net loss of $1,050,570 for the three months ended November 30, 2008. In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. Management devoted considerable effort during the period ended August 31, 2007 towards (i) obtaining additional equity financing, (ii) evaluation of its distribution and marketing methods, and (iii) further streamlining and reducing costs.

- 17 -

Item 2. Management’s Discussion and Analysis of Financial Condition

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

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

Overview

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

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

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

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

Results of Operations

Our consolidated results of operations for the three months ended November 30, 2008 and 2007 include our wholly-owned subsidiaries WallStreet, Financial Filings, Corp., My WallStreet, Inc., and The Wealth Expo Inc.

We reported a net loss of $1,050,570 for the three months ended November 30, 2008 compared to a loss of $631,319 for the same period ended November 30, 2007. The increase in loss was principally attributable to the reduced valuation of market securities in our portfolio and increase in selling, general & administrative expenses, as more fully explained in "Operating Expenses" below.

Revenues

Revenues for the three months period ended November 30, 2008 were $834,787 compared to $1,878,893 for the same period in 2007. Revenues decreased by $1,044,106 (56%) during the three months period due to decrease in advertisements on our website due to current economic conditions and recent downturn in financial markets, resulting in clients not spending on advertising dollars.

- 18 -

Impairment of marketable securities for the three months period ended November 30, 2008 was $629,245 compared to $861,903 for the same period ended in 2008. Impairment expense was recorded because the market value of the securities we received as compensation for services declined in excess of 50% of their market value. This reduction in our judgment appeared to be other than temporary reduction in the fair value of the marketable securities. Therefore, we took a conservative approach of recording the impairment expense. Furthermore, to safeguard us with impairments of marketable securities, we have revised our contractual terms on agreements with our clients which provides that, in the event during the term of the agreement, the share bid price of client securities decline by more than 10% of the share bid price on the date of execution of the agreement, the client agrees to issue additional shares of their common stock to us in order to make up the deficiency caused by the reduction in the value of their stock. Implementation of this policy further helped us reduce our impairment expense during the three months period ended November 30, 2008.

Depreciation expense for the three months period ended November 30, 2008 was $15,135 compared to $10,616 for the same period in 2007.

Interest expense for the three months period ended November 30, 2008 was $7,511 compared to $47,540 for the same period in 2007. Interest expense decreased by $40,029 (84%) resulting from the conversion in January 2008 of the $3,000,000 promissory notes due to an officer into 15,000,000 shares of common stock. Interest is charged on the $3,000,000 promissory notes we executed in January 2005 due and payable in January 2010.

Realized loss on sale of marketable securities for the three months period ended November 30, 2008 was $218,238 compared to $1,724 for the same period in 2007. We sold non-performing marketable securities held in our possession and realized losses on their sale to better manage our portfolio. Unrealized loss for the three months ended November 30, 2008 was $515,850 compared to unrealized loss of $63,523 for the same period in 2007. Unrealized loss resulted due to the decrease in market value of the marketable securities held at November 30, 2008 and 2007, respectively.

Liquidity and Capital Resources

Cash and cash equivalents were $4,994 at November 30, 2008. As shown in the accompanying consolidated financial statements, we recorded a loss of $1,050,570 for the three months period ended November 30, 2008 compared to loss of $631,319 for the same period in 2007. Our current liabilities exceeded our current assets by $1,853,046 at November 30, 2008 and net cash used in operating activities for the three months ended November 30, 2008 was $526,951. These factors and our ability to meet our debt obligations from current operations, and the need to raise additional capital to accomplish our objectives raises doubt about our ability to continue as a going concern.

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

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

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

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

- curtail operations significantly;

- sell significant assets;

- seek arrangements with strategic partners or other parties that may require the company to relinquish significant rights to products, technologies or markets; or

- explore other strategic alternatives including a merger or sale of our company.

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

Operating Activities

Net cash used in operating activities for the three months period ended November 30, 2008 was $526,951 resulted due to an increase in receivables of $1,859, decrease in other current assets and deposits of $5,400, increase in accounts payable of $132,738, increase in accrued expenses and other liabilities of $126,466, and increase in deferred revenues of $2,040.

Investing Activities

Net cash provided by investing activities for the three months period ended November 30, 2008 was $159,215. We received $159,215 in net cash proceeds from sale and purchase of marketable securities.

Financing Activities

Net cash provided by financing activities for the three months period ended November 30, 2008 was $299,418 due to cash received from sale of securities amounting to $299,418.

As a result of the above activities, we experienced a net decrease in cash of $68,318 for the three months period ended November 30, 2008. Our ability to continue as a going concern is still dependent on our success in obtaining additional financing from investors through the sale of our securities.

Application of Critical Accounting Policies

Marketable Securities and Impairments

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

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

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

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

Revenue Recognition

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

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

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

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

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

Stock-Based Compensation

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

Issuance of Shares for Service

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

Recent Accounting Pronouncements

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

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

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

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

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

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4T. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of November 30, 2008. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes. There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Matthew Turner, Dutch Dewaard vs. Financial Media Group, Inc., Digital WallStreet, Inc., WallStreet Direct, Inc. and Albert Aimers, Superior Court of the State of California, Orange County, Case No. 00115406

On November 26, 2008, a complaint was filed against us for the unpaid compensation for consulting services provided to us in the amount of $66,239.24. The complaint alleges that we entered into an oral agreement with the Plaintiffs on or about August 2006, whereby Plaintiffs provided consulting and sales services to us for compensation and $66,239.24 of the compensation remains due to the Plaintiffs. We have filed an answer to the complaint and no discovery has commenced as of date. We intend to vigorously defend this action.

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Item 1A. Risk Factors

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

Item 2. Changes in Securities

During the three months ended November 30, 2008, the Company sold 820,605 shares of restricted common stock to investors pursuant to an exemption from registration under Regulation S and Private Placement Memorandum dated June 12, 2008. The shares were sold to investors at a price ranging from $0.03 to $0.50 per share for total proceeds of $299,418 after issuing expenses.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

	FINANCIAL MEDIA GROUP, INC.
Date:  January 16, 2009	By: /s/ ALBERT AIMERS
	Albert Aimers
	Chief Executive Officer

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