UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington~~SECURITIES ~~D.C.~~AND ~~20549~~EXCHANGE COMMISSION

~~______________~~Washington, D.C. 20549

———————

FORM 10-Q

~~______________~~———————

ý QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~ December 31, 2008

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from: ____________ to ____________

Commission File Number 0-15949

~~______________~~———————

BROADCASTER, INC.

(Exact name of small business issuer as specified in its charter)

~~______________~~———————




Delaware	94-2862863
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

~~9201~~353 ~~Oakdale~~Bel ~~Avenue~~Marin Keys Boulevard, Suite ~~200~~9, ~~Chatsworth~~Novato, California ~~91311~~94949

(Address of principal executive offices)

(~~818~~415) ~~206~~883-~~9274~~8369

(Issuer’s telephone number)

~~N/A~~9201 Oakdale Avenue, Suite 200, Chatsworth, California 91311

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



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

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of ~~May 12~~February 13, ~~2008~~2009, 5155,~~342~~797,~~453~~379 shares of the issuer’s common stock, par value of $0.001 per share, were outstanding.

BROADCASTER, INC.

AND SUBSIDIARIES

TABLE OF CONTENTS

~~Part~~PART I – ~~Financial~~FINANCIAL ~~Information~~INFORMATION 1 Item 1. Condensed Consolidated Financial Statements 1 Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations and Comprehensive Income / (Loss) 2 Consolidated Statements of Shareholders' ~~Equity~~Deficiency 34 Condensed Consolidated Statements of Cash Flows 45 Notes to Condensed Consolidated Financial Statements 56 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 1415 Item 4T. Controls and Procedures 1920 ~~Part~~PART II –- ~~Other~~OTHER ~~Information~~INFORMATION 20 Item 1. Legal Proceedings 2021 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 2122 Item 3. Defaults Upon Senior Securities 2122 Item 4. Submission of Matters to a Vote of Security Holders 2122 Item 5. Other Information 2122 Item 6. Exhibits 2123 ~~Signatures~~SIGNATURES 2224 ~~Index~~INDEX toTO ~~Exhibits~~EXHIBITS

PART I – FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

BROADCASTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	March 31, 2008			June 30, 2007
	December 31, 2008				June 30, 2008
	Unaudited
ASSETS	Unaudited
ASSETS
Current assets:
Current assets:
Cash and cash equivalents	$	631			$	1,829
Cash and cash equivalents	$	3,016		$	9,059
Receivables, less allowances for doubtful accounts, discounts and returns of $0 as of December 31, 2008 and $0 as of June 30, 2008.		354				—
Receivables, less allowances for doubtful accounts, discounts and returns of $16 as of March 31, 2008 and $11 as of June 30, 2007.		114			437
Notes receivable		—				1,700
Notes receivable		1,000			500
Other current assets		183				13
Other current assets		130			228
Assets related to discontinued operations		61				181
Assets related to discontinued operations		737			1,007
Total current assets		1,229				3,723
Total current assets		4,997			11,231
Fixed assets, net		29				—
Fixed assets, net		38			64
Intangible assets
Long term notes receivable, net		1,850			2,350
Goodwill		1,458				—
Intangible assets
Assets related to Discontinued Operations		253				289
Goodwill		—			68,192
Total assets	$	2,969			$	4,012
Other intangible assets, net		3,156			12,920
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
Total intangible assets		3,156			81,112
Current liabilities:
Total assets	$	10,041		$	94,757
Trade accounts payable	$	1,064			$	647
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accrued and other liabilities		1,137				986
Current liabilities:
Liabilities related to discontinued operations		3,125				2,701
Short term debt – related party	$	1,725		$	1,725
Total current liabilities		5,326				4,334
Trade accounts payable		387			393
Long-term debt		314				—
Accrued and other liabilities		1,096			1,261
Total liabilities		5,640				4,334
Liabilities related to discontinued operations		640			1,462
Shareholders’ deficiency
Deferred revenues		—			308
Common stock, no par value; 300,000,000 authorized; 55,797,000 issued and outstanding as of December 31, 2008 and 51,342,000 issued and outstanding as of June 30, 2008.		56				51
Total current liabilities		3,848			5,149
Additional paid-in capital		129,605				128,751
Unearned contract fees		28			68
Accumulated deficit		(132,631	)			(129,426	)
Deferred tax		4,746			5,264
Accumulated other comprehensive income		299				302
Total liabilities		8,622			10,481
Total shareholders’ deficiency		(2,671	)			(322	)
Shareholders’ equity
Total liabilities and shareholders’ deficiency	$	2,969			$	4,012
Common stock, par value $.001; 300,000,000 authorized; 51,342,453 issued and outstanding as of March 31, 2008 and 51,152,490 issued and outstanding as of June 30, 2007.		51			51
Additional paid-in capital		128,751			128,402
Accumulated deficit		(127,685	)		(44,476	)
Accumulated other comprehensive income		302			299
Total shareholders’ equity		1,419			84,276
Total liabilities and shareholders’ equity	$	10,041		$	94,757

See Notes to Condensed Consolidated Financial Statements

BROADCASTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)

(In ~~Thousands~~thousands, ~~Except~~except ~~Per~~per ~~Share~~share ~~Amounts~~amounts)

(Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	Three months ended December 31,
	2008			~~2007~~	2007		~~2008~~			~~2007~~
Net revenues	$	~~156~~411		$	~~1,226~~$	—	$	~~924~~		$	~~6,068~~
Product costs		21280			~~2,473~~	—		~~273~~			~~5,076~~
Gross margin		~~135~~131			~~(1,247~~	)—		~~651~~			~~992~~
Costs and expenses
Sales and marketing		04			~~210~~	—		4			~~3,454~~
General and administrative		1,~~405~~195			~~2,300~~	636		~~12,740~~			~~6,439~~
Research and development		02			~~105~~	—		0			~~105~~
Total operating expenses		1,~~405~~201			~~2,615~~	636		~~12,744~~			~~9,998~~
Operating loss		(1,~~270~~070	)		~~(3,862~~	)(636	)	~~(12,093~~	)		~~(9,006~~	)
Other income and (expense)
Interest and other, net		(28	)			27
Interest and other, net		(3	)		63			76			263
Impairment		—				(62,992	)
Impairment		0			0			(68,192	)		—
Loss before income tax		(1,098	)			(63,601	)
Loss on disposal of assets		—			(104	)		—			(104	)
Income tax (benefit) provision		60				(259	)
Loss before income tax		(1,273	)		(3,903	)		(80,209	)		(8,847	)
Loss from continuing operations		(1,158	)			(63,342	)
Income tax (benefit) provision		0			203			(518	)		(241	)
Income (loss) from discontinued operations, net of tax		(97	)			(9,982	)
Loss from continuing operations		(1,273	)		(4,106	)		(79,691	)		(8,606	)
Net income (loss)		(1,255	)			(73,324	)
Income (loss) from discontinued operations, net of income tax		(363	)		(12	)		(3,521	)		(773	)
Other comprehensive income (loss)
Income (loss) from the sale of discontinued operations, net of income tax		—			997			—			997
Foreign currency translation adjustments		(3	)			—
Net (loss) income		(1,636	)		(3,121	)		(83,212	)		(8,382	)
Comprehensive (loss) Income	$	(1,258	)		$	(73,324	)
Other comprehensive income (loss)
Basic and diluted earnings (loss) per share
Foreign currency translation adjustments		—			—			3			—
Loss from continuing operations	$	(0.02	)		$	(1.24	)
Comprehensive (loss) Income	$	(1,636	)	$	(3,121	)	$	(83,209	)	$	(8,382	)
Income (loss) from discontinued operations, net of income tax		(0.00	)			(0.19	)
Basic and diluted earnings (loss) per share
Net income (loss)		(0.02	)			(1.43	)
Loss from continuing operations	$	(0.03	)	$	(.06	)	$	(1.56	)	$	(.13	)
Shares used in computing basic earnings (loss) per share		55,732				51,186
Income (loss) from discontinued operations, net of income tax	$	(0.01	)	$	—		$	(0.07	)	$	(.01	)
Shares used in computing diluted earnings (loss) per share		55,732				51,186
Gain (loss) from the sale of discontinued operations, net of income tax		—			.01			—			.01
Net Income (loss)	$	(0.04	)	$	(.05	)	$	(1.63	)	$	(.13	)
Shares used in computing basic earnings (loss) per share		51,186			70,820			51,128			66,731
Shares used in computing diluted earnings (loss) per share		51,186			70,820			51,128			66,731

See Notes to Condensed Consolidated Financial Statements

BROADCASTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS'~~OPERATIONS ~~EQUITY~~AND COMPREHENSIVE INCOME / (LOSS)

~~Nine~~(In ~~months~~thousands, ~~ended~~except ~~March~~per ~~31,~~share ~~2008~~amounts)

(~~In thousands, except share amounts~~Unaudited)

	Shares			Common Stock Amount			APIC Amount		Accumulated Deficit			Accumulated Other Comprehen- sive Loss		Total
	Six months ended December 31,
Balance at July 1, 2007		51,152,490		$	51		$	128,402	$	(44,476	)	$	299	$	84,276
	2008				2007
Issuance of common stock related to:
Net revenues	$	618			$	—
Stock options exercised		189,963			—			349		—			—		349
Product costs		333				—
Net (loss) Income		—			—			—		(83,209	)		—		(83,209	)
Gross margin		285				—
Foreign currency translation adjustment, net of income tax		—			—			—		—			3		3
Costs and expenses
Balance at March 31, 2008		51,342,453		$	51		$	128,751	$	(127,685	)	$	302	$	1,419
Sales and marketing		5				—
General and administrative		3,057				1,373
Research and development		3				—
Total operating expenses		3,065				1,373
Operating loss		(2,780	)			(1,373)
Interest and other, net		5				76
Impairment		—				(68,192	)
Loss before income tax		(2,775	)			(69,489	)
Income tax (benefit) provision		60				(518	)
Loss from continuing operations		(2,835	)			(68,971	)
Income (loss) from discontinued operations, net of tax		(370	)			(12,605	)
Net income (loss)		(3,205	)			(81,576	)
Other comprehensive income (loss)
Unrealized loss on restricted securities
Foreign currency translation adjustments		(3	)			3
Comprehensive (loss) Income		(3,208	)			(81,573	)
Basic and diluted earnings (loss) per share
Loss from continuing operations	$	(0.05	)		$	(1.35	)
Income (loss) from discontinued operations, net of income tax		(0.01	)			(0.25	)
Net income (loss)		(0.06	)			(1.60	)
Shares used in computing basic earnings (loss) per share		53,795				51,128
Shares used in computing diluted earnings (loss) per share		53,795				51,128

See Notes to Condensed Consolidated Financial Statements

BROADCASTER, INC. AND SUBSIDIARIES

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~CASH~~SHAREHOLDERS' ~~FLOWS~~EQUITY

~~(In~~Six ~~thousands)~~months ended December 31, 2008

(~~Unaudited~~In thousands, except share amounts)

	Nine Months Ended March 31,
	Shares				Common Stock Amount		APIC Amount		Accumulated Deficit			Accumulated Other Comprehen- sive Loss			Total
	2008			2007
Balance at July 1, 2008		51,342,453			$	51	$	128,751	$	(129,426	)	$	302		$	(322	)
Cash flows from operating activities:
Issuance of common stock related to:
Net cash used in operating activities	$	(6,723	)	$	(7,481	)
Acquisitions		4,455,000				5		854		—			—			859
Cash flows from investing activities:
Net loss		—				—		—		(3,205	)		—			(3,205	)
Proceeds from sale of discontinued operations		—			1,500
Foreign currency translation adjustment, net of income tax		—				—		—		—			(3	)		(3	)
Acquisition of intangible assets		—			(500	)
Balance at December 31, 2008		55,797,453			$	56	$	129,605	$	(132,631	)	$	299		$	(2,671	)
Purchase of equipment and software		—			730
Net cash provided by investing activities		—			1,730
Cash flows from financing activities:
Repayments of notes		—			(50	)
Proceeds from warrants and options exercised		349			1,023
Net cash provided by financing activities		349			973
Effect of exchange rate change on cash and cash equivalents		3			(125	)
Net increase (decrease) in cash and cash equivalents		(6,371	)		(4,903	)
Cash and cash equivalents at beginning of period		9,387			12,508
Cash and cash equivalents at end of the period	$	3,016		$	7,605
SUPPLEMENTAL DISCLOURE OF CASH FLOW INFORMATION
Interest paid	$	68		$	38
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
Capital stock issued in conjunction with acquisition of intangible assets		—			47,187

See Notes to Condensed Consolidated Financial Statements

BROADCASTER, INC. AND SUBSIDIARIES

~~NOTES TO~~ CONDENSED CONSOLIDATED ~~FINANCIAL~~ STATEMENTS OF CASH FLOWS

~~1. SUMMARY~~(In ~~OF SIGNIFICANT ACCOUNTING POLICIES~~thousands)

~~Basis~~(Unaudited) ~~of Presentation~~

The interim condensed consolidated financial statements have been prepared from the records of Broadcaster, Inc., a Delaware corporation, and subsidiaries (“Broadcaster,” “we” or the “Company”) without audit. All significant inter-company balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments, which consist of only normal recurring adjustments, to present fairly the financial position at March 31, 2008 and the results of operations and cash flows for the three and nine months ended March 31, 2008 and 2007, have been made. The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-KSB for the fiscal year ended June 30, 2007. The results of operations for the three months and nine months ended March 31, 2008 are not necessarily indicative of the results to be expected for any other interim period or for the full year.



	Six months ended December 31,
	2008			Restated 2007
Cash flows from operating activities:
Net cash used in operating activities	$	(2,674	)	$	(3,405	)
Cash flows from investing activities:
Acquisition of subsidiaries		26			—
Net cash provided by investing activities		26			--
Cash flows from financing activities:
Repayments of notes		1,450			—
Proceeds from warrants and options exercised		—			217
Net cash provided by financing activities		1,450			217
Effect of exchange rate change on cash and cash equivalents		—			3
Net (increase) decrease in cash and cash equivalents		(1,198	)		(3,185	)
Cash and cash equivalents at beginning of period		1,829			9,387
Cash and cash equivalents at end of the period	$	631			6,202


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	34		$	27

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
Capital stock issued in conjunction with acquisition of intangible assets		—			984
Capital stock issued in conjunction with acquisition of subsidiary companies		859			—

~~Use~~See ofNotes ~~Estimates~~to Condensed Consolidated Financial Statements

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of our condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.5

~~Reclassifications~~BROADCASTER, INC. AND SUBSIDIARIES

~~Reclassifications~~NOTES ~~have~~TO ~~been~~CONDENSED ~~made~~CONSOLIDATED toFINANCIAL the amounts reported for the three months and nine months ended March 31, 2008 and for the year ended June 30, 2007 to conform to the current period’s presentation. The amounts reported for the three months and nine months ended March 31, 2008 present results of operations of the discontinued operations due to the sale of Houseplans, Inc. (“Houseplans”) on May 2, 2007 and the shutdown of Broadcaster Interactive Group (“BIG”).STATEMENTS

~~Reverse~~1. SUMMARY ~~Stock~~OF ~~Split~~SIGNIFICANT ACCOUNTING POLICIES

~~All~~Basis ~~references to shares~~ of ~~common stock including per share amounts have been adjusted to give effect to a one-for-two reverse stock split in June 2007.~~Presentation

2The interim condensed consolidated financial statements have been prepared from the records of Broadcaster, Inc. ~~STOCK~~, ~~BASED~~a ~~AWARDS~~Delaware corporation, and subsidiaries (“Broadcaster,” “we” or the “Company”) without audit. All significant inter-company balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments, which consist of only normal recurring adjustments, to present fairly the financial position at December 31, 2008 and the results of operations and cash flows for the three and six months ended December 31, 2008 and 2007, have been made. The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008. The results of operations for the three and six months ended December 31, 2008 are not necessarily indicative of the results to be expected for any other interim period or for the full year.

OnUse ~~July 1, 2006, the Company adopted Statement~~ of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123(R)”) which requires the measurement and recognition of compensation expense in the statement of operations for all share-based payment awards made to employees and directors including employee stock options based on estimated fair values. SFAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R). Using the modified prospective transition method of adopting SFAS 123(R), the Company began recognizing compensation expense for stock-based awards granted or modified after June 30, 2006 and awards that were granted prior to the adoption of SFAS 123(R) but were still unvested at June 30, 2006. Under this method of implementation, no restatement of prior periods is required or has been made. Stock-based compensation expense Estimates

5Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of our condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.

~~BROADCASTER,~~Revenue ~~INC. AND SUBSIDIARIES~~Recognition

~~NOTES~~Revenue TOis ~~CONDENSED~~recognized ~~CONSOLIDATED~~in ~~FINANCIAL~~accordance ~~STATEMENTS~~with American Institute of Certified Public Accountants Statement of Position SOP 97-2, Software Revenue Recognition , and SOP 98-9, Modification of SOP 97-2, With Respect to Certain Transactions . Revenue is recognized when persuasive evidence of an arrangement exists (~~CONTINUED~~generally a purchase order), product has been delivered, the fee is fixed and determinable, and collection of the resulting account is probable.

~~2. STOCK~~Revenues ~~BASED~~from ~~AWARDS~~art ~~(Continued)~~services are recognized when invoiced

recognized under SFAS 123(R) in the unaudited condensed consolidated statement of operations for the three months and nine months ended March 31, 2008 related to stock options was $0 and $0 respectively. At December 31, 2007, $610,000 was expensed but was reversed to reflect an increase in the forfeiture rate in the second quarter.·

~~The~~Revenues estimated fair value of the Company’s stock-based awards, less expected forfeitures, is amortized over the awards’ vesting period on a straight-line basis. As a result of adopting SFAS 123(R), the Company’s loss before income taxes and net loss for the nine months ended March 31, 2008 was increased by $610,000. The implementation of SFAS 123(R) reduced basic and diluted earnings per share by $0.00 for the three months and $0.01 for the nine months ended March 31, 2008. The implementation of SFAS 123(R) did not have an impact on cash flows from ~~operations~~art ~~during~~services ~~the~~are three months and nine months ended March 31, 2008. SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized aswhen expense over the requisite service periods in the Company’s statements of operations. Prior to July 1, 2006, the Company measured compensation expense for its employee stock-based compensation plans using the intrinsic value method under APB 25 and related interpretations. Stock-based compensation expense recognized in the Company’s statement of operations for the three months and nine months ended March 31, 2008 included compensation expense for share-based payment awards granted prior to, but not yet vested as of June 30, 2006, based on the grant date fair value estimated in accordance with the pro forma provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Effective July 1, 2006, as new grants occur, our stock-based compensation expense will also include compensation expense for the share-based payment awards granted subsequent to June 30, 2006 based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). As stock-based compensation expense recognized in the consolidated statement of operations for the three months and nine months ended March 31, 2008 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. On November 10, 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. FAS 123(R)-3 “Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards.” This FSP provides a practical transition election related to the accounting for the tax effects of share-based payment awards to employees, as an alternative to the transition guidance for the additional paid-in capital pool (“APIC pool”) in paragraph 81 of SFAS 123(R). The alternative transition method includes simplified methods to establish the beginning balance of the APIC pool related to the tax effects of employee stock-based compensation, and to determine the subsequent impact on the APIC pool and statements of cash flows of the tax effects of employee stock-based compensation awards that are outstanding upon adoption of SFAS 123(R). invoiced

~~3. DISCONTINUED OPERATIONS~~·

~~Sale~~For ofsoftware ~~Houseplans~~and content delivered via the Internet, revenue is recorded when the customer downloads the software, activates the subscription account or is shipped the content. For online media, revenue is recorded when payment is collected.

On May 2, 2007, we sold 100% of the issued and outstanding capital stock of Houseplans to Kransco Houseplans, LLC, for $8 million. The sale price was composed of $5 million in cash that we received on closing and a note receivable of $2.85 million paid in installments over a three year period. The note receivable consists of eight quarterly payments of $250,000 commencing on March 31, 2008, and a final net payment of $850,000 payable on March 31, 2010. Subsequent to the quarter the first payment of the Note plus accrued interest was received. The final payment is net of an offset of $150,000 subject to the contract of sale. The note receivable bears interest at a rate of 5% and any accrued interest will be paid on each installment.·

~~Shutdown~~Revenue offrom ~~Broadcaster~~post ~~Interactive~~contract ~~Group~~customer ~~Inc.~~support ~~“BIG”~~(PCS) is recognized ratably over the contract period.

~~On December 13th 2007, the board decided to substantially reduce the Company’s operations and as a result, BIG has been reclassified as a discontinuing operation.~~·

6Subscription revenue is recognized ratably over the contract period.

~~BROADCASTER, INC. AND SUBSIDIARIES~~·

~~NOTES~~We TOuse ~~CONDENSED~~the ~~CONSOLIDATED~~residual ~~FINANCIAL~~method ~~STATEMENTS~~to recognize revenue when a license agreement includes one or more elements to be delivered at a future date. If there is an undelivered element under the license arrangement, we defer revenue based on vendor-specific objective evidence (~~CONTINUED~~VSOE) of the fair value of the undelivered element, as determined by the price charged when the element is sold separately. If VSOE of fair value does not exist for all undelivered elements, we defer all revenue until sufficient evidence exists or all elements have been delivered.

~~4. ACQUISITIONS~~·

~~AccessMedia~~Revenue ~~Acquisition~~from software licensed to developers, including amounts in excess of non-refundable advanced payments, is recorded as the developers ship products containing the licensed software.

~~On June 1, 2006, Broadcaster completed its acquisition of AccessMedia, Inc. Broadcaster accounted for the business combination as a purchase.~~6

~~The~~BROADCASTER, ~~purchase price for accounting purposes of approximately $79~~INC.~~3 million~~ ~~was~~AND ~~comprised as follows:~~SUBSIDIARIES

(In thousands)
Description	Amount
Fair value of common stock	$	75,607
Direct transaction costs		3,690
Total	$	79,297

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~The calculation is based on the issuance of 14,500,000 shares of Broadcaster common stock to the shareholders of AccessMedia on June~~ 1~~, 2006 and 17,500,000 shares issued for the quarter ending March 31, 2007 as a result of attainment of the earn-outs pursuant to the amended merger agreement~~. SUMMARY ~~The~~OF ~~purchase~~SIGNIFICANT ~~price~~ACCOUNTING ~~included~~POLICIES $32.1 million on June 1, 2006, $9.6 million on December 31, 2006 and $37.6 million in the quarter ended March 31, 2007. We also issued 1,250,000 and 875,000 shares of our common stock to Baytree Capital Associates, LLC on June 1, 2006 and the quarter ending March 31, 2007 respectively. Baytree is controlled by a former AccessMedia shareholder. For the shares Baytree received on June 1, 2006, 725,000 shares were a financial advisory fee and 500,000 shares were for consulting services. For the shares Baytree received in the quarter ended March 31, 2007, 875,000 shares were a financial advisory fee and related to the earn-out. (CONTINUED)

The value of AccessMedia’s net tangible and intangible assets is based upon their estimated fair value as of the date of the completion of the business combination. The estimated fair value is independent of the preliminary values historically recorded on the books and records of AccessMedia. The allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values was as follows:·

(In thousands)
Description	Amounts (unaudited)
Cash acquired	$	134
Other tangible assets acquired		719
Amortizable intangible assets
Software		9,800
Domain names		80
Media content		5,800
Goodwill		73,089
Liabilities assumed		(3,944	)
Deferred tax liability		(6,381	)
Total	$	79,297

Revenue related to the display of advertisements on its Internet properties as impressions (the number of times that an advertisement appears in pages viewed by users) are delivered, as long as no significant obligations remain at the end of the period. To the extent that significant obligations remain at the end of the period, the Company defers recognition of the corresponding revenue until the remaining guaranteed amounts are achieved.

~~$15,680,000 has been allocated to amortizable intangible assets with useful lives of 5 or 10 years as follows: software – 5 years, domain names and content – 10 years.~~·

~~The~~Revenue ~~residual~~from ~~purchase~~the ~~price~~display of ~~$73,089,000~~text-based ~~had~~links ~~been~~to ~~recorded as goodwill. Goodwill represents~~ the ~~excess~~websites of ~~the~~its ~~purchase~~advertisers ~~price~~is ~~over~~recognized ~~the~~as ~~fair value of~~ the ~~net~~click-throughs tangible and intangible assets acquired. In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” goodwill will not be amortized and will be tested for impairment at least annually. The acquisition agreement provided that 17.5 million additional shares may be earned and awarded to (the ~~shareholders~~number of ~~AccessMedia.~~times ~~Any additional shares earned would be~~ a ~~future~~user ~~addition~~clicks toon ~~goodwill.~~an ~~All~~advertiser's oflisting) ~~the 17~~occur.~~5 million earn-out shares were earned in the quarter ended~~

7In accordance with our revenue recognition policy, we have recorded deferred revenues of $0 and $0 as of December 31, 2008 and June 30, 2008, respectively.

~~BROADCASTER, INC. AND SUBSIDIARIES~~Concentrations

~~NOTES~~Financial TOinstruments ~~CONDENSED~~that ~~CONSOLIDATED~~potentially ~~FINANCIAL~~subject ~~STATEMENTS~~us ~~(CONTINUED)~~to concentrations of credit risk consist of cash and cash equivalents and receivables. At times, cash balances held at financial institutions are in excess of federally insured limits.

~~4. ACQUISITIONS~~During the six months ended December 31, 2008 three customers individually accounted for more than 10% of revenues (~~Continued~~50%, 16% and 14%).

~~March 31,~~Cash ~~2007.~~and InCash addition, as part of its consulting agreement, Baytree Capital was to receive 5% of the earn-out shares issued to former AccessMedia shareholders. Therefore, we issued Baytree 875,000 shares in the quarter ended March 31, 2007.Equivalents

~~During~~We ~~the~~consider ~~quarter~~all ~~ended~~highly ~~December 31,~~liquid ~~2006,~~investments ~~our~~purchased ~~Board~~with ofan ~~Directors~~original ~~had~~maturity ~~agreed~~of tothree ~~amend~~months ~~the~~or ~~definitive~~less ~~merger agreement~~ to ~~include,~~be ~~unique~~cash ~~visitors~~equivalents. inIn ~~the~~September 2008 ~~calculation~~we ofentered ~~the~~into ~~earn-out~~a ofPrepayment ~~the~~Agreement ~~additional~~and ~~shares.~~Mutual ~~The~~Release ~~earn-out~~with isHouseplans ~~based~~LLC onwhereby ~~revenues~~the ~~from~~payments ~~AccessMedia’s~~owed ~~broadcaster.com~~to ~~website~~us ~~and~~by isHouseplans ~~not~~LLC ~~related~~under ~~to earnings. Under~~ the ~~amendment,~~note ~~each~~were ~~unique~~accelerated ~~visitor~~and isHouseplans, ~~equal~~LLC toprepaid $1~~.00.~~,450,000 ~~Each~~as ~~earn-out~~payment ~~issuance~~in ~~received~~full ~~the~~of ~~further~~all ~~approval~~principal ofand ~~Broadcaster’s~~interest ~~Board~~due ofunder ~~Directors~~the note.

~~AccessMedia’s~~Fair ~~acquired~~Value ~~technology includes certain additional products with market opportunities. These opportunities were significant contributing factors to the establishment~~ of ~~the~~Financial purchase price, resulting in the recognition of a significant amount of goodwill. In addition, the acquisition provided an experienced workforce, development of certain technology assets permitting the Company to deliver content to consumers over the Internet, existing business knowledge and practice supporting the proposed products and services, marketing programs and a base level of customers.Instruments

AsOn July 1, 2008, we adopted Statement of ~~December~~Financial 31Accounting Standard (“SFAS”) No. 157, ~~2007~~“Fair Value Measurements" , weexcept ~~determined~~as ~~the~~it ~~software~~applies ~~intangible~~to the nonfinancial assets ~~related~~and nonfinancial liabilities that are subject to ~~the~~Financial ~~AccessMedia~~Accounting ~~acquisition~~Standards ~~have~~Board (“FASB”) Staff Position (“FSP”) Financial Accounting Standard (“FAS”) 157-2, “ Effective Date of FASB Statement No. 157 ”. These nonfinancial items include assets and liabilities such as a reporting unit measured at fair value ofin ~~approximately~~a $3goodwill impairment test and nonfinancial assets acquired and liabilities assumed in a business combination.1 ~~million~~SFAS No. 157 defines fair value, establishes a framework for measuring fair value and weexpands ~~have~~disclosure ~~written~~requirements ~~off~~regarding $8fair value measurements.6 ~~million~~SFAS ofNo. 157 ~~AccessMedia’s~~establishes ~~intangible~~a three-tier hierarchy that draws a distinction between market participant assumptions based on (1) observable quoted prices in active markets for identical assets or liabilities (Level 1), (2) inputs other than ~~goodwill~~quoted prices in active markets that are observable either directly or indirectly (Level 2), and (3) unobservable inputs that require us to use other valuation techniques to determine fair value (Level 3).

~~As of December 31, 2007, we determined that all of the goodwill related to the AccessMedia acquisition has no value and the full amount has been written off.~~Reclassifications

~~Acquisition~~Reclassifications ofhave ~~America~~been made to the amounts reported for the three and six months ended December 31, 2007 to conform to the current period’s ~~Biggest~~presentation. The amounts reported for the three months ended December 31, ~~Inc.~~2007 ~~Assets~~and 2008 present results of operations of the discontinued operations of Broadcaster Interactive Group (“BIG”) and AccessMedia.

OnReverse ~~September 29,~~Stock 2006, Broadcaster completed the acquisition of 100% of the assets of America’s Biggest, Inc. The consideration paid to America’s Biggest consisted of 500,000 shares of Broadcaster stock and $500,000 in cash. Americas Biggest failed to and later refused to deliver a list of assets, and Broadcaster accordingly did not complete delivery of the 500,000 shares of common stock. This disagreement led to Americas Biggest filing a lawsuit against Broadcaster and its principal shareholders.Split

~~The~~All ~~allocation~~references to shares of ~~the~~common ~~purchase~~stock ~~price~~including toper ~~the~~share ~~assets~~amounts ~~acquired~~have ~~based~~been onadjusted ~~their~~to ~~estimated~~give ~~fair~~effect ~~values~~to ~~was~~a asone-for-two ~~follows:~~reverse stock split in June 2007.

(In thousands)
Description	Amounts (unaudited)
Amortizable intangible assets
Domain names	$	525
Software		350
Customer lists		250
Trademark		150
Marketing materials		209
Goodwill		65
Total	$	1,549

~~As of June 30~~BROADCASTER, ~~2007,~~INC. weAND ~~determined the assets of America’s Biggest have no value and the full amount has been written off.~~SUBSIDIARIES

~~5. FAIR~~NOTES ~~VALUE~~TO OFCONDENSED CONSOLIDATED FINANCIAL ~~INSTRUMENTS~~STATEMENTS (CONTINUED)

~~The~~2. STOCK ~~fair~~BASED ~~value of cash and cash equivalents, trade receivables, trade payables and debt approximates carrying value due to the short maturity of such instruments.~~AWARDS

8The Company accounts for stock based compensation expense in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123(R)”) which requires the measurement and recognition of compensation expense in the statement of operations for all share-based payment awards made to employees and directors including employee stock options based on estimated fair values. Stock-based compensation expense recognized under SFAS 123(R) in the unaudited condensed consolidated statement of operations was $0 and $610,000 for the three months ended December 31, 2008 and three months ended December 31, 2007 respectively.

~~BROADCASTER~~The estimated fair value of the Company’s stock-based awards, ~~INC~~less expected forfeitures, is amortized over the awards’ vesting period on a straight-line basis. ~~AND~~SFAS ~~SUBSIDIARIES~~123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s statements of operations. Our stock-based compensation expense also includes compensation expense for the share-based payment awards granted based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). As stock-based compensation expense recognized in the consolidated statement of operations for the three months December 31, 2008 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

~~NOTES~~3. DISCONTINUED ~~TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~OPERATIONS

6Shutdown of Broadcaster Interactive Group Inc. ~~FIXED~~ ~~ASSETS~~(“BIG”) and discontinued operations of AccessMedia

~~Fixed~~In ~~assets~~December 2007 ~~are~~we ~~stated~~shut atdown ~~cost.~~BIG ~~Depreciation~~due ofto ~~furniture~~poor ~~and equipment is computed using the straight-line method over the estimated useful lives of the respective assets of 3 years~~performance. ~~Depreciation~~BIG ~~of software~~ and ~~computer~~AccessMedia ~~equipment~~have isbeen ~~computed~~accounted ~~using~~for ~~the~~as ~~straight-line~~discontinued ~~method over an estimated useful life of 3 years~~operations.

74. ~~INTANGIBLE ASSETS~~ ACQUISITIONS

~~Software~~Lamplighter ~~Development Costs and License Fees~~Acquisition

~~Costs~~On ~~incurred in the initial design phase of software development are expensed as incurred in research and development. Once the point of technological feasibility is reached~~August 28, ~~direct production costs are capitalized in compliance with Statement of Financial Accounting Standards (“SFAS”) No. 86~~2008, ~~Accounting~~Broadcaster ~~for~~completed ~~the~~its ~~Costs~~acquisition of ~~Computer Software to be Sold, Leased or Otherwise Marketed~~Lamplighter. WeBroadcaster ~~cease~~accounted ~~capitalizing~~for ~~computer software costs when~~ the ~~product~~business iscombination ~~available~~as ~~for~~a ~~general release to customers~~purchase. ~~Costs associated with acquired completed software are capitalized.~~

~~We amortize capitalized software development costs and visual content license fees on a product-by-product basis.~~ The ~~amortization~~purchase price for ~~each~~accounting ~~product~~purposes ~~is the greater~~ of ~~the~~approximately ~~amount computed using (a) the ratio of current gross revenues to the total of current and anticipated future gross revenues for the product or (b) 18~~$319,000 ~~36,~~was orcomprised 60as months, depending on the product. We evaluate the net realizable value of each software product at each balance sheet date and record write-downs to net realizable value for any products for which the carrying value is in excess of the estimated net realizable value.follows:

Other Intangible Assets



(In thousands)
Description	Amount

Fair value of common stock	$	319
Direct transaction costs		—
Total	$	319

~~Other~~The ~~intangible~~calculation ~~assets~~is ~~other~~based ~~than~~upon ~~goodwill~~the ~~represent~~issuance ~~Internet~~of ~~domain names~~1, ~~acquired customer lists and contracts~~455,000 ~~distribution~~shares ~~rights~~of ~~and~~Broadcaster ~~relationships,~~stock ~~trade~~on ~~names~~August ~~and trademarks and media content. These assets are amortized using the straight-line method over the estimated useful lives~~28, ~~generally~~2008 ~~three~~in toconnection ~~ten~~with ~~years. The software intangible assets acquired from~~ the ~~Accessmedia~~ acquisition ~~have been written down by an additional $8~~.~~6 million as of March 31, 2008 based on the inability to gain traction in sales from this software.~~

~~Impairment of Long-Lived Assets~~8

We review long-lived assets and identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. We assess these assets for impairment based on estimated undiscounted future cash flows from these assets. If the carrying value of the assets exceeds the estimated future undiscounted cash flowsBROADCASTER, ~~a loss is recorded for the excess of the asset's carrying value over the fair value~~INC. AND SUBSIDIARIES

~~Goodwill~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~In accordance with SFAS No~~4. ACQUISITIONS 142, Goodwill and Intangible Assets, goodwill is being assessed for impairment on a quarterly basis. We have no goodwill as of March 31, 2008. We have recognized $0 of goodwill impairment during the three months ending March 31, 2008 and $68,192,000 for the nine months ended March 31, 2008 related to the Accessmedia acquisition. We have recognized $68,192,000 of impairment related to the valuation of AccessMedia in fiscal 2007 based on the inability to gain traction in sales from this acquisition.(CONTINUED)

9The value of Lamplighter’s net tangible and intangible assets was based upon their estimated fair value as of the date of the completion of the business combination. The estimated fair value was independent of the preliminary values historically recorded on the books and records of Lamplighter. The allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values was as follows:

BROADCASTER, INC. AND SUBSIDIARIES



(In thousands)
Description	Amounts (unaudited)

Cash acquired	$	26
Other tangible assets acquired		112
Goodwill		904
Liabilities assumed		(723	)
Total	$	319

~~NOTES~~EyeCandy ~~TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~Acquisition

8On October 1, 2008, Broadcaster completed the purchase of Eyecandy, Inc. ~~DEBT~~ (“Eyecandy”). Broadcaster will account for the business combination as a purchase.

The ~~following~~purchase ~~table~~price ~~details~~for ~~our~~accounting ~~outstanding~~purposes ~~debt as~~ of ~~March~~approximately 31$540,000 ~~2008~~was comprised as follows:

(In thousands)
			As of March 31, 2008
Description	Amount
Short-term
Fair value of common stock	$	540
Demand notes payable to related party			$	1,725
Direct transaction costs		—
Subtotal short-term			$	1,725
Total	$	540
Grand total			$	1,725

~~Demand~~The ~~notes~~calculation ~~payable~~is ~~consisted~~based ofupon athe 4%issuance ~~secured~~of ~~note payable to Mr. Nolan Quan~~3,000,000 ~~one~~shares of ~~our~~Broadcaster ~~principal~~stock ~~shareholders,~~on ~~and~~October ~~are~~1, ~~secured~~2008 byin ~~the~~connection ~~assets~~with of the ~~Company~~acquisition.

95. ~~EARNINGS~~ FAIR ~~PER~~VALUE ~~SHARE~~OF –FINANCIAL ~~POTENTIALLY DILUTIVE SECURITIES~~INSTRUMENTS

~~Basic~~The ~~earnings~~fair ~~per~~value ~~share are computed using the weighted average number~~ of ~~common~~cash ~~shares~~and ~~outstanding~~cash ~~during~~equivalents, ~~the~~trade ~~period.~~receivables, ~~Diluted~~trade ~~earnings~~payables ~~per share are computed using the weighted average number of common~~ and ~~potentially~~debt ~~dilutive~~approximates ~~securities~~carrying ~~outstanding~~value ~~during~~due ~~the~~to ~~period. Potentially dilutive securities consist of~~ the ~~incremental~~short ~~common~~maturity ~~shares issuable upon on exercise~~ of ~~stock~~such ~~options and warrants (using the treasury stock method)~~instruments. ~~Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. The following table summarizes the weighted average shares outstanding (In thousands):~~

	Three Months Ended March 31,
	2008			2007
Basic weighted average shares outstanding		51,186			35,410
Total stock options outstanding		4,120			4,365
Less: anti dilutive stock options due to loss		(4,120	)		(4,365	)
Total warrants outstanding		1,349			2,090
Less: anti dilutive warrants due to loss		(1,349	)		(2,090	)
Diluted weighted average shares outstanding		51,186			35,410

6. FIXED ASSETS

	Nine Months Ended March 31,
	2008			2007
Basic weighted average shares outstanding		51,128			33,365
Total stock options outstanding		4,120			4,365
Less: anti dilutive stock options due to loss		(4,120	)		(4,365	)
Total warrants outstanding		1,349			2,090
Less: anti dilutive warrants due to loss		(1,349	)		(2,090	)
Diluted weighted average shares outstanding		51,128			33,665

Fixed assets are stated at cost. Depreciation of furniture and equipment is computed using the straight-line method over the estimated useful lives of the respective assets of 3 years. Depreciation of software and computer equipment is computed using the straight-line method over an estimated useful life of 3 years.

107. INTANGIBLE ASSETS

~~BROADCASTER,~~Impairment ~~INC.~~of ~~AND~~Long-Lived ~~SUBSIDIARIES~~Assets

~~NOTES~~We TOreview ~~CONDENSED~~long-lived ~~CONSOLIDATED~~assets ~~FINANCIAL~~and ~~STATEMENTS~~identifiable ~~(CONTINUED)~~intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. We assess these assets for impairment based on estimated undiscounted future cash flows from these assets. If the carrying value of the assets exceeds the estimated future undiscounted cash flows, a loss is recorded for the excess of the asset's carrying value over the fair value.

~~10. STOCK-BASED AWARDS~~9

~~The Company has two stock option plans~~BROADCASTER, ~~The 2004 Incentive Stock Option Plan (the “2004 Plan”) adopted during fiscal 2004 and the 1993 Incentive Option Plan adopted on June 30, 1993 (the “1993 Plan”)~~INC. ~~The~~AND purpose of the 2004 and the 1993 Plans was to further the growth and general prosperity of Broadcaster by enabling our employees to acquire our common stock, increasing their personal involvement in the Company and thereby enabling Broadcaster to attract and retain our employees. The 1993 Plan is no longer usedSUBSIDIARIES

~~Broadcaster~~NOTES ~~believes~~TO ~~that~~CONDENSED ~~the~~CONSOLIDATED ~~ability~~FINANCIAL toSTATEMENTS grant incentive stock options to its employees is critically important. We hope to offer incentive compensation to such employees on par with those provided by our competition and others in the high-tech industry. In addition, tax laws and incentive compensation policies have changed since adoption of the 1993 Plan. As a result, our Board of Directors has adopted and our shareholders approved the 2004 Plan to permit Broadcaster to offer a wide range of incentives, including incentive and non-statutory stock options and stock purchase rights.(CONTINUED)

~~Stock options are granted at an exercise price equivalent to the closing fair market value on the date of grant~~7. INTANGIBLE ~~All~~ASSETS options are granted at the discretion of the Company’s Board of Directors and have a term of not greater than 10 years from the date of grant. Options are exercisable when vested. Vesting requires continuous employment up to the vesting date and the vesting schedule is determined by the Board of Directors at the time of each option grant.(CONTINUED)

~~The 2004 Plan~~Goodwill

~~The~~In ~~2004~~accordance ~~Plan~~with ~~provides~~SFAS ~~for~~No. 142, ~~the~~Goodwill ~~granting~~and ofIntangible ~~options~~Assets, togoodwill ~~purchase~~is upbeing toassessed anfor ~~aggregate~~impairment ofon ~~10,500,000~~a ~~shares~~quarterly ofbasis. ~~common~~We ~~stock~~recognized to$0 ~~employees, directors~~ and ~~other~~$62,992,000 ~~service providers~~ of ~~Broadcaster.~~goodwill ~~Any~~impairment ~~options~~during ~~that~~the ~~expire~~three ~~prior~~months toended ~~exercise~~December 31, ~~will~~2008 ~~become~~and ~~available~~the ~~for~~three ~~new~~months ~~grants~~ended ~~from~~December 31, ~~the~~2007 ~~“pool”~~respectively ofand ~~options.~~$0 ~~Options~~and ~~that~~$68,192,000 ~~are~~during ~~granted under~~ the ~~2004~~six ~~Plan~~months ~~may~~ended beDecember 31, ~~either~~2008 ~~options~~and ~~that~~the ~~qualify~~six asmonths ~~incentive~~ended ~~stock~~December 31, ~~options~~2007 ~~under~~respectively. ~~the~~Goodwill ~~Internal~~impairment ~~Revenue~~during ~~Code~~the ~~(“Incentive~~three ~~Options”),~~months orended ~~those~~and ~~that~~six domonths ~~not~~ended ~~qualify~~December 31, as2007 ~~such~~related ~~incentive~~to ~~stock~~the ~~options~~AccessMedia ~~(“Non-Qualified Options”)~~acquisition.

~~The~~At ~~Incentive~~December 31, ~~Options~~2008 ~~may~~and ~~not be granted at a purchase price less than the fair market value of the common stock on the date of the grant (or~~June 30, ~~for~~2008 anwe ~~option~~reported ~~granted~~goodwill ~~to a person holding more than 10%~~ of ~~the Company’s voting stock~~$1,458,000 ~~at less than 110% of fair market value)~~ and ~~Non-Qualified Options may not be granted at a purchase price less than 85% of fair market value on the date of grant. As a matter of policy~~$904,000 ~~Broadcaster’s Board of Directors will not grant options at less than fair market value~~respectively. ~~The~~All ~~term~~ of ~~each option, under~~ the ~~2004~~goodwill ~~Plan, which is fixed~~ at ~~the date of grant~~June 30, ~~may~~2008 ~~not~~related ~~exceed 10 years from the date the option is granted (by law, an Incentive Option granted~~ to ~~a person holding more than 10% of~~ the ~~Company’s~~acquisition ~~voting stock may be exercisable only for five years). As~~ of ~~the date of this Report, 826,233 options remain available for grant~~LampLighter.

~~The following table summarizes options at March 31, 2008~~8. DEBT

	Number of Shares		Weighted Average Exercise Price
Outstanding, June 30, 2007		4,752,041	$	2.36
Granted		25,000		2.30
Exercised		189,963		1.99
Cancelled		2,244,146		2.81
Outstanding, March 31, 2008		2,292,932	$	1.96

The following table details our outstanding debt as of December 31:



(In thousands)
	As of December 31, 2008		As of December 31, 2007
Short-term
Demand notes payable to related party	$	1,725	$	1,725
Subtotal short-term	$	1,725	$	1,725
Grand total	$	1,725	$	1,725

~~BROADCASTER~~Demand notes payable consisted of a 4% secured note payable to Mr. Nolan Quan, ~~INC~~one of our principal shareholders, and are secured by the assets of the Company. ~~AND~~As ~~SUBSIDIARIES~~of December 30, 2008, the demand note payable was accounted for in Liabilities Related to Discontinued Operations,

~~NOTES~~9. EARNINGS TOPER ~~CONDENSED~~SHARE ~~CONSOLIDATED~~– ~~FINANCIAL~~POTENTIALLY ~~STATEMENTS~~DILUTIVE ~~(CONTINUED)~~SECURITIES

10Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. ~~STOCK~~ Diluted earnings per share are computed using the weighted average number of common and potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon on exercise of stock options and warrants (using the treasury stock method). Potentially dilutive securities are excluded from the computation if their effect is anti-~~BASED~~dilutive. ~~AWARDS~~The following table summarizes the weighted average shares outstanding (~~Continued~~In thousands):

The following table summarizes options at March 31, 2008.



	Three Months Ended December 31,
	2008			2007
Basic weighted average shares outstanding		55,732			51,186
Total stock options outstanding		2,305			4,120
Less: anti dilutive stock options due to loss		(2,305	)		(4,120	)
Total warrants outstanding		1,122			1,349
Less: anti dilutive warrants due to loss		(1,122	)		(1,349	)
Diluted weighted average shares outstanding		55,732			51,186

	Number of Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value ($000’s)
Outstanding	2,292,932	$1.96	8.37	—
Vested and Expected to Vest	2,291,574	$1.96	8.36	—
Exercisable	2,271,057	$1.96	8.36	—

~~At March 31~~BROADCASTER, ~~2008, the Company had $14,831 of unrecognized compensation expense, net of forfeitures, related to stock options that may be recognized over the weighted average remaining vesting period of 3~~INC.25 ~~years.~~AND SUBSIDIARIES

~~Warrants~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~Warrants have been granted from time to time in conjunction with financings, debt settlements, Board of Directors and employee compensation and consulting arrangements~~9. EARNINGS ~~The~~PER ~~following~~SHARE ~~table~~– ~~summarizes~~POTENTIALLY ~~warrant~~DILUTIVE ~~activity~~SECURITIES ~~for the nine months ended March 31, 2008.~~(CONTINUED)

		Number of Warrants			Average Exercise Price
	Six Months Ended December 31,
Outstanding, June 30, 2007			1,982,941		$	3.71
	2008			2007
Granted			—			—
Basic weighted average shares outstanding		53,795			51,128
Exercised			—			—
Total stock options outstanding		2,305			4,120
Exercised – cashless			—			—
Less: anti dilutive stock options due to loss		(2,305	)		(4,120	)
Expired			788,500			—
Total warrants outstanding		1,122			1,349
Outstanding, March 31, 2008			1,194,441		$	4.69
Less: anti dilutive warrants due to loss		(1,122	)		(1,349	)
Diluted weighted average shares outstanding		53,795			51,128

~~Other~~10. STOCK-BASED ~~Information Regarding Stock Options and Warrants~~AWARDS

~~Additional~~The ~~information~~Company ~~regarding~~has two stock ~~options~~option ~~and~~plans ~~warrants~~with outstanding asawards, the 2004 Incentive Stock Option Plan (the “2004 Plan”) adopted during fiscal 2004 and the 2008 Long Term Incentive Plan (the “2008 Plan”) adopted at the annual meeting of ~~March~~shareholders 31on August 19, 2008. The purpose of the 2004 and the 2008 Plans are to further the growth and general prosperity of Broadcaster by enabling our employees, directors and consultants to acquire our common stock, increasing their personal involvement in the Company and thereby enabling Broadcaster to attract, motivate and retain our employees, directors and consultants. We had a 1993 Incentive Option Plan which is asno ~~follows:~~longer used.

Options Outstanding					Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Avg. Remaining Life	Weighted Avg. Exercise Price	Number Exercisable		Weighted Avg. Exercise Price
$0-$2.97		2,217,932	8.5	$2.01		2,196,057	$1.98
$2.9701-$5.94		75,000	8.8	$3.31		75,000	$3.42
$5.9401-$8.94		—	—	$ —		—	$0.00
		2,292,932	5.6	$1.97		2,271,057	$1.96

Broadcaster believes that the ability to grant incentive awards to its employees, directors and consultants is critically important. We hope to offer incentive compensation to such individuals on par with those provided by our competition and others in the high-tech industry. Stock options are granted at an exercise price equivalent to the closing fair market value on the date of grant. All options are granted at the discretion of the Company’s Board of Directors and have a term of not greater than 10 years from the date of grant. Options are exercisable when vested. Vesting requires continuous employment up to the vesting date and the vesting schedule is determined by the Board of Directors at the time of each option grant.

Warrants Outstanding				Warrants Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Avg. Exercise Price	Number Exercisable		Weighted Avg. Exercise Price
$0.0-$2.97		697,295	$ 1.69		699,295	$ 1.69
$2.97-$5.94		300,000	$ 3.95		300,000	$ 3.95
$8.91-$11.88		62,500	$10.00		62,500	$10.00
$11.8801-$14.85		62,500	$12.96		62,500	$12.96
$26.73-$29.70		72,146	$29.56		72,146	$29.56
		1,194,441	$ 4.69		1,196,441	$ 4.96

The Plans

12The 2004 Plan provided for the granting of options to purchase up to an aggregate of 10,500,000 shares of common stock to employees, directors and other service providers of Broadcaster. The 2008 Plan provides for the granting of awards in the form of stock options, restricted stock, restricted stock units and other stock-based awards to purchase up to an aggregate of 10,000,000 shares of common stock to employees, directors and consultants. Any awards that expire prior to exercise will become available for new grants from the “pool” of options. Options that are granted under the 2004 Plan or 2008 Plan may be either options that qualify as incentive stock options under the Internal Revenue Code (“Incentive Options”), or those that do not qualify as such incentive stock options (“Non-Qualified Options”).

~~BROADCASTER~~The Incentive Options may not be granted at a purchase price less than the fair market value of the common stock on the date of the grant (or, ~~INC~~for an option granted to a person holding more than 10% of the Company’s voting stock, at less than 110% of fair market value) and Non-Qualified Options may not be granted at a purchase price less than 85% of fair market value on the date of grant. ~~AND~~As ~~SUBSIDIARIES~~a matter of policy, Broadcaster’s Board of Directors will not grant options at less than fair market value. The term of each option, under the 2004 Plan and 2008 Plan , which is fixed at the date of grant, may not exceed 10 years from the date the option is granted (by law, an Incentive Option granted to a person holding more than 10% of the Company’s voting stock may be exercisable only for five years). As of the date of this Report, 8,194,568 options remain available for grant under the 2004 Plan and 10,000,000 awards remain available for issuance under the 2008 Plan.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~11

10BROADCASTER, INC. ~~STOCK-BASED~~ ~~AWARDS~~AND ~~(Continued)~~SUBSIDIARIES

~~The~~NOTES ~~fair~~TO ~~value~~CONDENSED ofCONSOLIDATED ~~each~~FINANCIAL ~~option~~STATEMENTS ~~granted was estimated on the date of the grant using the Black-Scholes option-pricing model using the following weighted average assumptions:~~(CONTINUED)

	Three Months Ended March 31,
	2008		2007
Risk-free interest rates		—		4.7	%
Expected dividend yields		—		—
Expected volatility		—		72	%
Expected option life (in years)		—		5.0

10. STOCK-BASED AWARDS (CONTINUED)

	Nine Months Ended March 31,
	2008		2007
Risk-free interest rates		—		4.7	%
Expected dividend yields		—		—
Expected volatility		—		79	%
Expected option life (in years)		—		5.0

The following table summarizes outstanding options at December 31, 2008.

There were no grants made during the quarter ended March 31, 2008. The weighted average fair value as of the grant date for grants made during the quarter ended March 31, 2007 was $1.70.



	Number of Shares		Weighted Average Exercise Price
Outstanding, June 30, 2008		2,305,432	$	1.96
Granted		—		—
Exercised		—		—
Cancelled		—		—
Outstanding, December 31, 2008		2,305,432	$	1.96

13The following table summarizes options outstanding, vested and expected to vest and exercisable at December 31, 2008.

Item 2



	Number of Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value ($000’s)

Outstanding	2,305,432	2.39	7.9	—
Vested and Expected to Vest	2,305,432	2.39	7.9	—
Exercisable	2,305,432	2.39	7.9	—

~~Management’s~~At ~~Discussion~~December 31, ~~and~~2008, ~~Analysis~~the Company had $0 of ~~Financial~~unrecognized ~~Condition~~compensation ~~and~~expense, ~~Results~~net of ~~Operations~~forfeitures, related to stock options.

~~The following discussion should be read together with the information contained in the Financial Statements and related notes included elsewhere in this Form 10-QSB.~~Warrants

~~Overview~~Warrants have been granted from time to time in conjunction with financings, debt settlements, Board of Directors and employee compensation and consulting arrangements. The following table summarizes warrant activity for the three months ended December 31, 2008.

Prior to November 2006, AccessMedia’s business model consisted of an online entertainment portal that charged users a monthly subscription fee. In November 2006, we decided to focus our efforts and resources related to building a user base. Because of this, we incorporated Broadcaster Interactive Group, Inc.(“BIG”), which focused on building innovative products online and offering our community numerous content offerings. AccessMedia’s business ceased marketing new subscriptions and no more support was required for its website. However, Accessmedia continues to operate and earn revenue based on recurring subscriptions.



	Number of Warrants		Average Exercise Price
Outstanding, June 30, 2008		1,145,477	$	5.07
Expired		23,334		0.75
Outstanding, December 31, 2008		1,122,143	$	5.82

Revenues in BIG have not met projections which has required us to shut down the operations of BIG, but we continue to support www.broadcaster.com with the remaining staff. Because, we stopped marketing for new subscriptions for Accessmedia we have written down the value of the AcceesMedia acquisition. As a result on December 13th 2007, the board of directors decided to cease operations of BIG on December 31st 2007.12

~~Highlights for the nine months ended March 31~~BROADCASTER, ~~2008~~INC. ~~consisted~~AND ~~of:~~SUBSIDIARIES

·NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~We incurred a non~~10. STOCK-~~cash~~BASED ~~impairment~~AWARDS ~~charge of $68,192,000 relating to the AccessMedia acquisition.~~(CONTINUED)

·Other Information Regarding Stock Options and Warrants

WeAdditional ~~incurred~~information aregarding ~~non-cash~~stock ~~impairment~~options ~~charge~~and ofwarrants ~~$8,600,000~~outstanding ~~relating~~as toof ~~the~~December 31, ~~write-down~~2008 ofis ~~AccessMedia’s~~as ~~intangible assets~~follows:



Options Outstanding					Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Avg. Remaining Life	Weighted Avg. Exercise Price	Number Exercisable		Weighted Avg. Exercise Price
$0.0-$2.97		2,230,432	7.8	1.91		2,230,432	1.91
$2.9701-$5.94		75,000	7.8	3.50		75,000	3.50
		2,305,432		1.96		2,305,432	1.96

We have reduced the number of full-time employees from 47 to 4, in an effort to preserve cash.



Warrants Outstanding				Warrants Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Avg. Exercise Price	Number Exercisable		Weighted Avg. Exercise Price
$0.0-$2.97		625,000	1.66		625,000	1.66
$2.97-$5.94		300,000	3.95		300,000	3.95
$8.91-$11.88		62,500	10.00		62,500	10.00
$11.88-$14.85		62,500	19.96		62,500	19.96
$26.73-$29.70		72,143	29.56		72,143	29.56
		1,122,143	5.18		1,122,143	5.18

~~Critical~~The ~~Accounting~~fair ~~Estimates~~value of each option granted was estimated on the date of the grant using the Black-Scholes option-pricing model using the following weighted average assumptions:

Our significant accounting policies are more fully described in the notes to our consolidated financial statements. The policies discussed immediately below, are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.


	Three Months Ended December 31,
	2008		2007
Risk-free interest rates		—		4.26	%
Expected dividend yields		—		—
Expected volatility		—		85	%
Expected option life (in years)		—		5.0

Those material accounting estimates that we believe are the most critical to an investor’s understanding of our financial results and condition are discussed below.




	Six Months Ended December 31,
	2008		2007
Risk-free interest rates		—		4.26	%
Expected dividend yields		—		—
Expected volatility		—		85	%
Expected option life (in years)		—		3.3

~~Revenue~~On ~~Recognition~~October 1, 2008, the Board of Directors authorized the grant of options to purchase 1.4 million shares of common stock. At December 31, 2008 these options had not been granted. On December 18, 2008, the Board of Directors authorized the grant of 3,200,000 shares of restricted stock. At December 31, 2008 the restricted stock had not been granted. There were no grants made during the quarter ended December 31, 2007.

Revenues are recognized in accordance with American Institute of Certified Public Accountants Statement of Position (“SOP”) 97-2, Software Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, With Respect to Certain Transactions. Revenue is recognized when persuasive evidence of an arrangement exists, product or service has been delivered, the fee is fixed and determinable, and collection of the resulting account is probable.13

·BROADCASTER, INC. AND SUBSIDIARIES

~~Revenues~~NOTES ~~related~~TO toCONDENSED ~~the~~CONSOLIDATED ~~display~~FINANCIAL ofSTATEMENTS ~~advertisements on the Internet as impressions~~ (~~the number of times that an advertisement appears in pages viewed by users~~CONTINUED) are delivered, as long as no significant obligations remain at the end of the period. To the extent that significant obligations remain at the end of a period, the Company will defer recognition of the corresponding revenues until the remaining guaranteed amounts are achieved.

·11. SEGMENT INFORMATION

~~Revenues~~We ~~from~~have ~~the~~two ~~display~~operating ofsegments: ~~text-based~~Art ~~links~~Services, towhich ~~the~~comprises ~~websites~~Lamplighter ofStudios ~~our~~and ~~advertisers~~Telecommunications, ~~are~~which ~~recognized~~comprises Eyecandy. The table below also includes as ~~the~~segment ~~click-throughs~~called ~~(the~~Corporate ~~number~~and ofDiscontinued, ~~times~~which acontains ~~user~~revenues, ~~clicks~~expenses onand assets which cannot be specifically attributed to an ~~advertiser’s~~operating ~~listing)~~segment ~~occur.~~as well as the revenues, expenses and assets of discontinued operations


	Six Months ended December 31, 2008			Six Months ended December 31, 2007
	Art Services	Tele- communications	Corporate and Discontinued	Art Services	Tele- communications	Corporate and Discontinued
Net Revenues	612	—	6	—	—	—
Gross Margin	299	—	(14)	—	—	—
Operating Loss	(15)	(116)	(2,649)	—	—	(1,373)
Total Assets	1,302	1,471	196	—	—	4,012

~~Subscription revenues are recognized ratably over the contract period~~12. SUBSEQUENT EVENT

On January 15, 2009, Lamplighter Studios Inc entered into a receivables financing agreement with an unrelated third party. Under the terms of the agreement, the lender will advance Lamplighter 90% of approved accounts receivable. The monies advanced under this agreement carry an annualized interest rate of 18%. Repayment of the amounts advanced to Lamplighter is guaranteed by Broadcaster, Inc. Marty Wade, III, the CEO of Broadcaster, and Gordon Landies, the Chairman of the Board of Directors of Lamplighter, are each participants in the financing in the amount of $12,500 and $25,000, respectively, of the total amount loaned in connection with the financing. The terms of their participation agreement provide that their loans will bear interest at a rate of 14% per annum which will be paid from the lender (as opposed to 18% which the lender will receive on the total loan amount), payable monthly upon collection.

~~Results of Operations~~14

~~The~~Item following tables set forth our results of operations that have been adjusted to reflect the sale of Houseplans and the shutdown of BIG and include only results from continuing operations for the three months ended March 31, 2008 and 20072.

~~Three~~Management’s ~~months~~Discussion ~~ended~~and ~~March~~Analysis ~~31,~~of ~~2008~~Financial ~~compared~~Condition toand ~~the~~Results ~~Three~~of ~~months ended March 31, 2007.~~Operations

(In Thousands)
	Three Months Ended March 31,
	2008						2007						$ Change from
	$			As % of sales			$			As % of sales			Variance			%
Net revenues	$	156			100	%	$	1,226			100	%	$	(1,070	)		-87	%
Product cost		21			13	%		2,473			202	%		(2,452	)		-99	%
Gross margin		135			87	%		(1,247	)		-102	%		1,382			-111	%
Research and Development								105			9	%		(105	)		-100	%
Sales and marketing		0			0	%		210			17	%		(210	)		-100	%
General and administrative		1,405			901	%		2,300			188	%		(895	)		-37	%
Total operating Expenses		1,405			901	%		2,615			213	%		(1,210	)		-46	%
Loss		(1,270	)		-814	%		(3,862	)		-315	%		2,592			-67	%
Other income (expenses)
Interest and other, net		(3	)		-2	%		63			-5	%		66			-105	%
Realized/unrealized gain (loss) on marketable securities		—			0	%		—			0	%		0			0	%
Loss on disposal of assets								(104	)		8	%		(104	)		-100	%
Impairment		0			0	%		—			—			0			—
Total other income (loss)		(3	)		-2	%		(41	)		3	%		38			-93	%
Loss before income tax benefit		(1,273	)		-816	%		(3,903	)		-318	%		2,630			-67	%
Income tax benefit		0			0	%		203			17	%		(203	)		-100	%
Loss from continuing operations		(1,273	)		-816	%		(4,106	)		-335	%		2,833			-68	%
Loss from discontinued operations, net of income tax		(363	)		-233	%		(12	)		1	%		(351	)		-2,925	%
Gain from the sale of discontinued operations								997			85	%		(997	)		-100	%
Net loss		(1,636	)		-1,049	%		(3,121	)		255	%		1,485			-48	%

The following discussion should be read together with the information contained in the Financial Statements and related notes included elsewhere in this Form 10-Q.

15Overview

~~The~~We ~~following~~are ~~tables~~primarily ~~set~~engaged ~~forth~~in two new lines of business, the game development business and the telecommunications business. During the six months ended December 30, 2008, all of our ~~results~~revenue was derived from our subsidiary, LampLighter Studios, Inc that was acquired in August 2008 and is an art service company that provides graphic art for online games, cell phone games, video games and commercial projects. In October 2008, we entered into the telecommunications business in China with our acquisition of Eyecandy Media, Inc., a company focused on providing video technology and value added services for interactive media. Until recently, we were solely engaged in the operation of a Social Video Network over the Internet which business has been discontinued. All of our revenue derived for the quarter ended December 31, 2007 was derived from our discontinued operations as an Internet based business which included the operation of a Social Video Network over the Internet through our wholly owned subsidiary BIG and an Internet based business which provided entertainment content and old television shows and other media through our other subsidiary, Access Media. We have not added new content to the website and have not derived revenue from this site and so it is being reflected as a discontinued operation despite the fact that we still have ~~been~~registered ~~adjusted~~users that continue to ~~reflect~~use the ~~sale~~website. Prior to November 2006, AccessMedia’s business model consisted of ~~Houseplans~~an online entertainment portal that charged users a monthly subscription fee. In November 2006, we decided to focus our efforts and ~~the~~resources ~~shutdown~~related to building a user base. Because of ~~BIG~~this, we incorporated Broadcaster Interactive Group, Inc., which focused on building innovative products online and ~~include~~offering ~~only~~our ~~results~~community ~~from~~numerous ~~continuing~~content ~~operations~~offerings. AccessMedia’s business ceased marketing new subscriptions and no more support was required for its website. In December 2007 we substantially reduced the ~~nine~~operations ~~months~~of ~~ended~~BIG ~~March~~and 31as of June 30, 2008 ~~and~~the ~~2007~~operations of BIG have been reflected as discontinued operations.

~~Nine~~Highlights ~~months~~for ~~ended March 31, 2008 compared to~~ the ~~Nine~~six months ended ~~March~~ December 31, ~~2007.~~2008 consisted of:

(In Thousands)
	Nine Months Ended March 31,
	2008						2007						$ Change from
	$			As % of sales			$			As % of sales			Variance			%
Net revenues	$	924			100	%	$	6,068			100	%	$	(5,144	)		-85	%
Product cost		273			30	%		5,076			84	%		(4,803	)		-95	%
Gross margin		651			70	%		992			16	%		(341	)		-34	%
Research and development								105			2	%		(105	)		-100	%
Sales and marketing		4			0	%		3,454			57	%		(3,450	)		-100	%
General and administrative		12,740			1,379	%		6,439			106	%		6,301			99	%
Total operating Expenses		12,744			1,379	%		9,998			165	%		2,746			27	%
Loss		(12,093	)		-1,309	%		(9,006	)		-148	%		(3,087	)		34	%
Other income (expenses)
Interest and other, net		76			8	%		263			4	%		(187	)		-71	%
Loss on disposal of assets								(104	)		-2	%		104
Impairment		(68,192	)		-7,380	%		—			—			(68,192	)		-65669	%
Total other income (loss)		(68,116	)		-7,372	%		159			3	%		(67,957	)		42740	%
Loss before income tax benefit		(80,209	)		-8,681	%		(8,847	)		-146	%		(71,362	)		807	%
Income tax benefit		518			56	%		(241	)		4	%		277			115	%
Loss from continuing operations		(79,691	)		-8,625	%		8,606			-142	%		(71,085	)		826	%
Loss from discontinued operations, net of income tax		(3,521	)		-380	%		(773	)		-13	%		(2,748	)		355	%
Gain from sale of discontinued operations								997			16	%		(997	)		100	%
Foreign Currency Translation		3			0	%		0						3			100	%
Net loss		(83,209	)		-9,005	%		(8,382	)		-138	%		(74,827	)		893	%

~~Loss~~Revenue of $618,000 substantially all of which was derived from our game development business

Loss from the continuing operations for the three and nine months ended March 31, 2008 was $1,273,000 and $79,691,000 as compared to loss of $4,106,000 and $8,606,000 for the three and nine months ended March 31, 2007. The increase in the loss for the nine months ended March 31, 2008 is attributed to a decrease in net revenues and an increase in operating expenses. Net loss for the three and nine months ended March 31, 2008 was $1,636,000 and 83,212,000 as compared to net loss of $3,121,000 and $8,382,000 for the three and nine months ended March 31, 2007. The increase in net loss for the nine months ended March 31, 2008 is primarily attributed to the recognition of impairment relating to the valuation of AccessMedia, and the costs of operating BIG, which is classified as a discontinued operation.·

16Increase in intangible assets of $1,458,000 all of which is due to the goodwill derived from the acquisition of LampLighter Studios, Inc and Eyecandy

~~Net Revenues~~ ·

~~With~~Gross ~~the~~margin ~~sale~~ of ~~Houseplans and cessation of BIG’s free model, during the quarter ended March 31, 2008 we had one operating subsidiary, AccessMedia generated revenues of~~ $~~156~~285,000 and $924,000 for the three and nine months ended March 31, 2008 as compared to $1,226,000 and $6,068,000 for the three and nine months ended March 31, 2007. The decrease in revenue is attributed to a decrease in sales of AccessMedia products resulting from ~~the~~continuing fact that we had ceased marketing efforts for AccessMedia subscriptions. Revenues include software sales, Internet media advertising sales and the sale of text-based Internet links. Sales of downloaded products are recognized ratably over the term of the license sold. Sales of advertisements are recognized upon the delivery of the impressions guaranteed. Sales of click-throughs are recognized upon delivery of the click-throughs guaranteed.operations

~~Gross Margin~~·

~~Our~~General ~~consolidated~~and ~~gross~~administrative ~~margin~~expenses ~~was~~of $~~135~~3,~~000 and $651~~057,000 ~~for~~comprised ~~the~~primarily ~~three and nine months ended March 31, 2008. AccessMedia’s cost~~ of ~~revenues~~legal ~~consists of costs related to the products and services AccessMedia provided to customers. These costs include materials, salaries and related~~ expenses ~~for product support personnel, depreciation and maintenance of equipment used~~ in ~~providing~~connection ~~services~~with ~~to customers and facilities expenses~~litigation. The gross margin as a percentage of sales for the three and nine months ended March 31, 2008 as compared to the three and nine months ended March 31, 2008 has increased due to the decrease in product costs, including marketing costs, resulting from Access Media product being sold only as a recurring subscriptionSee. AsItem a1 ~~result,~~“Legal ~~a recurring subscription requires no additional costs~~Proceedings.”

~~Sales~~Critical ~~and~~Accounting ~~Marketing~~Estimates

~~Sales~~Our ~~and~~significant ~~marketing~~accounting ~~expenses~~policies $0are ~~and~~more $4fully described in the notes to our consolidated financial statements. The policies discussed immediately below,~~000,~~ ~~and~~are ~~for~~particularly important to the ~~three~~portrayal of our financial position and ~~nine~~results ~~months~~of ~~ended~~operations ~~March 31,~~and ~~2008,~~require ~~respectively.~~the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.

~~Due~~Those tomaterial accounting estimates that we believe are the ~~decision~~most critical to ~~stop~~an ~~marketing~~investor’s ~~the~~understanding ~~AccesMedia~~of ~~product~~our ~~the~~financial ~~sales~~results and ~~marketing~~condition ~~expenses~~ are ~~minimal~~discussed below.

~~General~~Revenue ~~and Administrative~~Recognition

~~General~~Revenues ~~and~~are ~~administrative~~recognized ~~expense~~in ~~consists~~accordance ~~primarily~~with American Institute of ~~salaries~~Certified ~~and~~Public ~~related~~Accountants ~~expenses~~Statement ~~for~~of ~~administrative,~~Position ~~finance,~~(“SOP”) ~~legal~~97-2, ~~human~~Software ~~resources~~Revenue ~~and~~Recognition ~~executive personnel~~, ~~fees~~and ~~for~~SOP ~~professional~~98-9, ~~services~~Modification ~~and costs~~ of ~~accounting~~SOP ~~and~~97-2, ~~internal~~With ~~control~~Respect ~~systems~~ to ~~support~~Certain ~~its~~Transactions ~~operations~~. ~~Expenses~~Revenue ~~have~~is ~~increased~~recognized ~~primarily~~when ~~due~~persuasive toevidence ~~amortization~~ of ~~assets.~~an ~~Amortization~~arrangement ~~expenses were $55~~exists,~~306~~ ~~and~~product ~~$9,819,000~~or ~~for~~service ~~the~~has ~~three~~been ~~and~~delivered, ~~nine~~the ~~months~~fee ~~ended~~is ~~March~~fixed ~~31, 2008. Legal~~ and ~~professional fees were $1~~determinable,~~209,085~~ and ~~$1,885,779~~collection ~~for~~of the ~~three~~resulting ~~and~~account ~~nine~~is ~~months ended March 31, 2008~~probable.

~~Research and Development~~·

WeRevenues ~~had~~from noart ~~research~~services ~~and~~are ~~development~~recognized ~~costs~~when ~~for the three and nine months ended March 31, 2008~~invoiced.

~~Interest and other, net~~15

Interest and other, net, changed from a net gain of $263,000 to a net gain of $73,000 for the nine months ended March 31, 2007 and March 31, 2008 respectively. This was due to a decrease in cash balances. Our interest expenses included $17,000 and $51,000 for the three and nine months ended March 31, 2008, related to a loan from Mr. Nolan Quan.·

~~Provision~~Revenues ~~for~~related ~~State~~to ~~and~~the ~~Federal~~display ~~Income~~of ~~Taxes~~advertisements on the Internet as impressions (the number of times that an advertisement appears in pages viewed by users) are delivered, as long as no significant obligations remain at the end of the period. To the extent that significant obligations remain at the end of a period, the Company will defer recognition of the corresponding revenues until the remaining guaranteed amounts are achieved.

Accounting for Uncertainty in Income Taxes - In June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 requires recognition of tax benefits that satisfy a greater than 50% probability threshold. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 was effective for us beginning July 1, 2007. ·

17Revenues from the display of text-based links to the websites of our advertisers are recognized as the click-throughs (the number of times a user clicks on an advertiser’s listing) occur.

We recorded income tax benefit of 0 and $518,000 for the three and nine months ended March 31, 2008. The tax benefit for the quarter ended March 31, 2008 primarily represented the release of deferred tax provision on amortization of intangible assets.·

WeSubscription ~~have~~revenues not recorded a tax benefit for domestic tax losses because of the uncertainty of realization. We adhere to SFAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Valuation allowances are ~~established~~recognized ~~when~~ratably ~~necessary~~over ~~to reduce deferred tax assets to~~ the ~~amount~~contract ~~expected to be realized~~period. ~~Consistent with our past practice, we have recorded a full valuation allowance at March 31, 2008 as the realizability of our net operating loss carry-forwards is not determinable.~~

~~Discontinued~~Results of Operations

~~(Loss)~~The ~~from~~following ~~discontinued~~tables set forth our results of operations, ~~net~~that have been adjusted to reflect the operations of ~~income~~BIG ~~tax~~and AccessMedia as discontinued.

~~Sale~~Three ofmonths ~~Houseplans~~ended December 31, 2008 compared to the Three months ended December 31, 2007.

On May 1, 2007, we sold 100% of the issued and outstanding capital stock of Houseplans to Kransco Houseplans, LLC, for $8 million. The sale price was composed of $5 million in cash on closing and a note receivable of $3 million, paid in installments over a three year period. The note receivable consists of eight quarterly payments of $250,000 commencing on March 31, 2008, and a final payment of $850,000 payable on March 31, 2010. The note receivable bears interest at a rate of 5% and any accrued interest will be paid on each installment. Subsequent to the quarter the first payment of the Note plus accrued interest was received The results of operations for the quarter ended March 31, 2007 have been revised to eliminate the operations of Houseplans.


(In Thousands)
	Three Months Ended December 31,
	2008						2007					$ Change from
	$			As % of sales			$			As % of sales		Variance			%


Net revenues	$	411			100	%	$	—			—	$	411			—	%
Product cost		280			68	%		—			—		280			—	%
Gross margin		131			32	%		—			—		131			—	%

Research and Development		2			—	%		—			—		2			—	%
Sales and marketing		4			1	%		—			—		4			—	%
General and administrative		1,195			291	%		636			—		559			88	%
Total operating Expenses		1,201			292	%		636			—		565			89	%

Operating Loss		(1,070	)		(260	)%		(636	)		—		(434	)		68	%

Other income (expenses)
Interest and other, net		(28	)		(7	)%		27			—		(55	)		204	%
Impairment		—			—	%		(62,992	)				62,992			(100	)
Total other income (loss)		(28	)		(7	)%		(62,965	)		—		62,937			(99	)%

Loss before income tax benefit		(1,098	)		(267	)%		(63,601	)		—		62,503			(98	)%

Income tax (benefit) provision		60			(15	)%		(259	)		—		319			(123	)%

Loss from continuing operations		(1,158	)		(282	)%		(63,342	)		—		62,184			(98	)%

Loss from discontinued operations, net of income tax		(97	)		(23	)%		(9,982	)		—		9,885			99	%
											—
Net loss		(1,255	)		(305)	%		(73,324	)		—		72,069			(98	)%

~~Shutdown of Broadcaster Interactive Group Inc. “BIG”~~16

OnSix ~~December~~months ~~13th~~ended ~~2007~~December 31, ~~the~~2008 ~~board~~compared ~~decided~~ to ~~substantially reduce~~ the ~~company’s~~Six ~~operations~~months ~~and~~ended ~~as a result~~December 31, ~~BIG has been reclassified as a discontinuing operation~~2007.

As a result of BIG being disclosed as a discontinued operation certain amounts paid to Alchemy Communications, Inc., a company controlled by Mr. Nolan Quan, one of our principal shareholders, have been reclassified to discontinued operations. During the three and nine months ended March 31, 2008, amounts paid to Alchemy included Internet connectivity, hosting services, programming services and equipment and office facilities (to October 31, 2007), as well as sales and marketing and general and administrative. The amounts paid for the three and nine months ended March 31, 2008 were $0 and $778,000.



(In Thousands)
	Six Months Ended December 31,
	2008						2007					$ Change from
	$			As % of sales			$			As % of sales		Variance			%

Net revenues	$	618			100	%	$	—			—	$	618			—	%
Product cost		333			54	%		—			—		333			—	%
Gross margin		285			46	%		—			—		285			—	%

Research and Development		3			—	%		—			—		3			—	%
Sales and marketing		5			1	%		—			—		5			—	%
General and administrative		3,057			495	%		1,373			—		1,684			122	%
Total operating Expenses		3,065			496	%		1,373			—		1,692			123	%

Operating Loss		(2,780	)		(450	)%		(1,373	)		—		(1,407	)		102	%

Other income (expenses)
Interest and other, net		5			1	%		76			—		(71	)		(93	)%
Impairment		—			—	%		(68,192	)		—		68,192			(100	)%
Total other income (loss)		5			1	%		(68,116	)		—		68,121			(99	)%

Loss before income tax benefit		(2,775	)		(449	)%		(69,489	)		—		66,714			(96	)%

Income tax (benefit) provision		60			(10	)%		(518	)		—		(578	)		(112	)%

Loss from continuing operations		(2,835	)		(459	)%		(68,971	)		—		66,136			(96	)%

Loss from discontinued operations, net of income tax		(370	)		(60	)%		(12,605	)		—		12,235			(97	)%

Net loss		(3,205	)		(519	)%		(81,576	)		—		78,371			(96	)%

~~Liquidity and Capital Resources~~Loss

~~Net~~Operating ~~cash~~loss ~~used~~for inthe ~~operating~~three ~~activities~~months and six months ended December 31, 2008 was $61,~~723~~070,000 and $2,780,000 as compared to loss of $636,000 and $1,373,000 for the ~~nine~~three months and six months ended ~~March~~December 31, 2007. The increase in the operating loss for the three months and six months ended December 31, 2008 as compared with the three and six months ended December 31,2007 is primarily attributed to an increase in ~~contrast~~general and administrative expenses in Broadcaster Inc as well as to a lesser extent operating losses in Lamplighter and Eyecandy. Net loss for the three months and six months ended December 31, 2008 was $71,~~481~~255,000 and $3,205,000 as compared to net loss of $73,324,000 and $81,576,000 for the ~~nine~~three months and six months ended ~~March~~December 31, 2007. The decrease in net loss for the three months and six months ended December 31, 2008 as compared to the three and six months ended December 31, 2007 is primarily attributed to the recognition in 2007 of impairment relating to the valuation of AccessMedia, and to a lesser extent the costs of operating BIG, which is classified as a discontinued operation. We also incurred operating losses of $15,000 in Lamplighter and $116,000 in Eyecandy during the six months ended December 31, 2008.

Net cash provided by investing activities was $0 for the nine months ended March 31, 2008 in contrast to $1,730,000 in the nine months ended March 31, 2007. The cash provided by investment activities during the nine months ended March 31, 2007 primarily was attributable to $1,500,000 received from the sale of Precision Design during the nine months ended March 31, 2007.Revenues

~~Our~~We ~~net~~acquired ~~cash~~Lamplighter ~~provided~~on ~~by financing activities was $349~~August 28,~~000~~ ~~for~~2008. During the ~~nine~~six months ended ~~March~~ December 31, 2008 insubstantially ~~contrast~~all toof ~~$973,000~~our ~~for~~revenue ~~the~~was ~~nine~~derived ~~months~~from ~~ended~~Lamplighter’s ~~March~~operations. ~~31,~~Lamplighter’s ~~2007~~net ~~respectively,~~revenues ~~reflecting~~from the ~~proceeds from options and warrants exercises.~~

To achieve our growth objectives, we are considering different strategies, including growth through acquisitions. As a result, we are evaluating and we will continue to evaluate other companies and businesses for potential synergies that would add value to our existing operations. 17

Atdate ~~May~~of 12acquisition until December 31, 2008, weamounted ~~had~~to $2612,~~839,~~000. Revenues infrom ~~cash~~BIG ~~which~~and isAccessMedia ~~projected~~have tobeen ~~meet~~included ~~all~~in ofdiscontinued ~~our~~operations. ~~working~~Eyecandy ~~capital~~did ~~needs~~not ~~for~~generate revenues in the ~~next~~period ~~twelve~~from ~~months.~~acquisition to December 31, 2008.

18Gross Margin

~~Notwithstanding~~Our ~~our~~consolidated ~~current~~gross ~~negative~~margin ~~cash~~for ~~flow~~continuing operations was $131,000 ~~based~~or on32% ~~cash~~of onnet ~~hand~~revenues and ~~cost reductions~~$285,000 weor ~~expect~~46% weof ~~will~~net ~~have~~revenues ~~sufficient capital~~ for the ~~next~~three ~~twelve~~ months. ~~However,~~ended ifand wesix ~~use~~months ~~our~~ended ~~cash for acquisitions~~December 31, ~~we will require additional financing~~2008. WeProduct ~~expect~~costs ~~that~~primarily ~~any~~represent ~~financing~~personnel ~~will~~related ~~be of common stock, convertible debt or convertible preferred stock, which will dilute our existing shareholders~~costs. We believe that we will be able to obtain any additional financing required on competitive terms particularly if we are successful in improving our financial performance. In addition, we will continue to seek opportunities and discussions with third parties concerning the sale or license of certain product lines and/or the sale or license of a portion of our assets.

WeSales ~~have~~and ~~no material commitments for capital expenditures except for those required to support the normal operating activities.~~ Marketing

~~Related~~Sales ~~Person~~and ~~Transactions~~marketing expenses for continuing operations were $4,000 and $5,000 for the three months ended and the six months ended December 31, 2008. Sales and marketing expenses for the three months ended and six months ended December 31, 2007 amounted to $4,000 and $4,000. The 2007 expenses all relate to discontinued operations and have been included in the loss from discontinued operations.

WeGeneral ~~receive services from Alchemy, a company controlled by Mr. Nolan Quan, one of our principal shareholders. For the three~~ and nine months ended March 31, 2008 we incurred $0 and $778,000 of expenses related to Alchemy. For the three and nine months ended March 31, 2008 $17,000 and $51,000 in interest related to a loan from Mr. Quan and for the three and nine months ended March 31, 2008 we incurred consulting fees of $0 and $6,000 payable to Mr. Quan. The company also owes Mr. Quan $1,725,000 evidenced by demand promissory notes bearing 4% per annum interest and secured by the company’s assets. During the three and nine months ended March 31, 2008, we incurred $0 and $14,000 in legal fees from Ms. Elaine Rosen. In addition, for the three and nine months ended March 31, 2008, we paid Mr. Kevin Rosen-Quan $0 and $28,000 as our Executive Producer. Ms. Rosen and Mr. Rosen-Quan are the wife and son of Mr. Nolan Quan, one of our principal shareholders. Administrative

~~Forward-Looking~~General ~~Statements~~and administrative expense consists primarily of salaries and related expenses for administrative, finance, legal, human resources and executive personnel, fees for professional services and costs of accounting and internal control systems to support its operations. Expenses have increased primarily as a result of increased legal expenses and costs associated with Lamplighter and Eyecandy, both acquired during fiscal 2008. Offsetting the increase was a reduction in stock based compensation expense.

~~This~~Interest ~~quarterly report on Form 10-QSB contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our future operations~~ and ~~our liquidity. These forward-looking statements are subject to a number of risks and uncertainties~~other, many of which are beyond our control. When used in this report, the words “will,” “believe,” “anticipate,” “plan,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we cannot assure you that these plans, intentions, or expectations will be achieved. Actual results may differ materially from those stated in these forward-looking statements as a result of a variety of factors including acceptance by consumers of our current and future products, including our new business model, the repeated usage of our free website, the acceptance by advertisers of our website metrics, and our ability to complete development of new products. Investors should also review the risk factors contained herein and in our Form 10-KSB for the year ended June 30, 2007 and the additional risk factors contained in this Report. We do not undertake any duty to update these forward-looking statements.net

~~Item~~Interest 4Tand other, net, changed from a net gain of $76,000 to a net gain of $5,000 for the six months ended December 31, 2007 and December 31, 2008 respectively. This was due to a decrease in cash balances. Our interest expenses included $17,000 for the three months ended December 31, 2008, related to a loan from Mr. Nolan Quan.

~~Controls~~Provision ~~And~~for ~~Procedures~~State and Federal Income Taxes

(Accounting for Uncertainty in Income Taxes - In June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. The interpretation prescribes a) recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 requires recognition of tax benefits that satisfy a greater than 50% probability threshold. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 was effective for us beginning July 1, 2007.

~~Under~~We ~~the~~did ~~supervision~~not ~~and~~record ~~with~~an ~~the~~income ~~participation~~tax ofbenefit ~~our~~for ~~management,~~the ~~including~~three ~~our~~months ~~principal~~ended ~~executive officer~~ and ~~principal~~six ~~financial~~months ~~officer~~ended December 31, 2008; however we ~~conducted~~did anrecord ~~evaluation~~a oftax ~~our~~benefit ~~disclosure~~of ~~controls~~$259,000 and ~~procedures~~$518,000 asfor ~~such~~the ~~term~~three ismonths ~~defined~~ended ~~under~~and ~~Rule 13a-14(c) promulgated under~~ the ~~Securities~~six ~~Exchange~~months ~~Act~~ended ~~of 1934, as of March~~ December 31, ~~2008~~2007, ~~the~~respectively. ~~end~~The oftax ~~the~~benefit ~~period~~for ~~covered~~the bysix ~~this~~months ~~quarterly~~ended ~~report. Based on their evaluation~~December 31, ~~our~~2007 ~~principal~~primarily ~~executive~~represented ~~officer~~the ~~and~~release ~~principal~~of ~~financial~~deferred ~~officer~~tax ~~concluded~~provision ~~that~~on ~~our~~amortization ~~disclosure~~of ~~controls~~intangible ~~and procedures are effective~~assets.

~~(b)~~We have not recorded a tax benefit for domestic tax losses because of the uncertainty of realization. We adhere to SFAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Consistent with our past practice, we have recorded a full valuation allowance at December 31, 2008 as the realizeability of our net operating loss carry-forwards is not determinable.

We have evaluated our accounting procedures and control processes in place as of March 31, 2008 related to material transactions to ensure they are recorded timely and accurately in the financial statements. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in paragraph (a) above.18

19Discontinued Operations

~~PART~~(Loss) IIfrom –discontinued ~~OTHER~~operations, ~~INFORMATION~~net of income tax

~~Item~~Access 1Media and BIG

~~Legal~~Access ~~Proceedings~~Media and BIG ceased operations in December 2007. The results of operations for the three months ended and six months ended December 31, 2007 have been revised to reflect Access Media and BIG as discontinued operations.

As ~~previously~~a ~~reported,~~result ~~Broadcaster~~of ~~filed~~BIG ~~suit~~being ~~against~~disclosed ~~former~~as ~~officers~~a ~~Paul~~discontinued A.operation, ~~Jakab~~certain ~~and~~amounts ~~Gordon~~paid ~~Landies,~~to ~~each~~Alchemy ofCommunications, ~~whom~~Inc., ~~filed~~a ~~counterclaims~~company ~~against~~controlled ~~Broadcaster~~by Mr. Nolan ~~The~~Quan, ~~lawsuit~~one ~~against~~of ~~Gordon~~our ~~Landies~~principal ~~and~~shareholders, ~~Paul Jakab~~ have been ~~resolved~~reclassified byto ~~Broadcaster~~discontinued ~~making~~operations ~~payments~~(see toRelated ~~Mr.~~Person ~~Landies~~Transactions ~~and Mr~~below). ~~Jakab.~~

~~Also~~Liquidity asand ~~previously reported, America’s Biggest, Inc. filed suit against Broadcaster, Baytree~~ Capital Associates, LLC, Michael Gardner, and Nolan Quan. Management believes that the claims are without merit and intends to defend the actions vigorously. Due to the uncertainty surrounding the litigation process, and the early stage of this matter, no reasonable estimate of loss is currently available.Resources

~~The~~At Company and/or its officers and directors are named as defendants in four related actions which appear to relate to certain actions taken by the Company’s shareholders with regard to the composition of the Board of DirectorsDecember 31, ~~On December 21~~2008, ~~2007~~we ~~shareholders~~had ~~of Broadcaster representing 58% of the voting power of the outstanding voting stock of Broadcaster executed and delivered~~ a ~~written~~working ~~consent~~capital ~~removing~~deficit ~~Dr. Vincent Orza and Paul Goodman from the board~~ of ~~directors of Broadcaster effective March 5~~($4, ~~2008. On December 21~~097,000) ~~2007, the Company filed with the Securities~~ and ~~Exchange Commission~~ an ~~Information~~accumulated ~~Statement~~deficit on Schedule 14C describing the action taken by such shareholders to remove Messrs. Orza and Goodman. On February 13, 2008 the Securities and Exchange Commission authorized the mailing to the shareholders of ~~the Company of the definitive Information Statement~~($132, ~~and on February 14~~631, ~~2008, a definitive Information Statement was mailed to the shareholders of Broadcaster advising them that Messrs~~000). ~~Orza~~Net ~~and~~cash ~~Goodman~~used ~~would~~in beoperating ~~removed~~activities ~~from~~was ~~the Board of Directors on March 5~~$2,674,000 ~~2008~~for ~~by reason of~~ the ~~consents~~six ~~from~~months aended ~~majority of the shareholders on~~ December 21 31, ~~2007,~~2008 ~~without~~in ~~any~~contrast ~~further~~to ~~action. On March~~ $3, ~~2008~~405,000 infor ~~connection with an action he commenced against~~ the ~~Company~~six ~~and~~months ~~others~~ended ~~(discussed below)~~December 31, Mr2007. Goodman sought and obtained an ex parte Temporary Restraining Order against his removal as a director of Broadcaster. Broadcaster believes that the removal was effected in compliance with all state and securities regulations and is vigorously defending such removal.

OnDuring ~~January~~the ~~16,~~six ~~2008,~~months ~~Mr.~~ended ~~Goodman commenced an action in New York State Court against Broadcaster and certain of its officers~~December 31, ~~directors,~~2008 ~~and~~cash ~~shareholders,~~provided ~~seeking~~by ~~monetary~~investing ~~damages~~activities ~~“in~~amounted ~~an amount~~ to ~~be determined but not less than~~ $~~10 million plus other special~~26, ~~punitive and compensatory damages” for alleged defamation contained in a Company filing with the SEC. Mr. Goodman sought and obtained an ex parte temporary restraining order~~000, ~~which~~being ~~was vacated by~~ the ~~Court~~net ~~upon~~cash ~~hearing argument~~ from the ~~defendants.~~acquisition ~~This~~of ~~action~~Lamplighter. ~~has~~During ~~been removed to Federal District Court for~~ the ~~Southern~~six ~~District~~months ofended ~~New~~December 31, ~~York~~2007 ~~and~~there itwas isno ~~anticipated~~cash ~~that~~provided aby ~~motion~~investing toactivities. ~~transfer~~Our ~~this~~net ~~case~~cash toprovided ~~United~~by ~~States~~financing ~~District~~activities ~~Court~~was $1,450,000 for the ~~Central~~six ~~District~~months ofended ~~California~~December 31, ~~will~~2008 bereflecting ~~filed at~~ the ~~end~~repayment of ~~May.~~a ~~Management~~loan ~~believes~~note ~~that~~by ~~the~~Houseplans, ~~action is without merit and intends to defend the action vigorously~~Inc. ~~Due~~For to the ~~uncertainty~~six ~~surrounding~~months ~~the~~ended ~~litigation process~~December 31,2007, ~~and~~our ~~the~~cash ~~early~~provided ~~stage~~by offinancing ~~this~~was ~~matter~~$217,000 no, ~~reasonable~~reflecting ~~estimate~~the ofproceeds ~~loss~~from isoptions ~~currently~~and ~~available~~warrants exercises.

OnTo ~~February~~achieve ~~15 2008, one of~~ our ~~shareholders~~growth ~~and former advisors~~objectives, ~~Baytree~~we ~~Capital~~are ~~Associates,~~considering ~~LLC,~~different ~~(“Baytree”) filed a shareholders derivative action in Federal Court in the Southern District of New York against the Company and certain of its officers and directors~~strategies, asincluding ~~well~~growth asthrough ~~several other individual and corporate defendants~~acquisitions. ~~The~~As ~~Complaint~~a ~~seeks monetary damages in “an amount to be established at trial but not less than $22~~result,~~630,000”~~ ~~for~~we ~~allegations~~are ofevaluating ~~breaches of fiduciary duties, waste of corporate assets, self-dealing, conversion, restitution~~ and ~~disgorgement,~~we ~~violations~~will ofcontinue ~~the~~to ~~securities~~evaluate ~~laws.~~other ~~Additionally,~~companies ~~the Complaint alleges violations of RICO~~ and ~~seeks~~businesses ~~treble damages~~ for ~~those~~potential ~~violations.~~synergies Baytree sought and obtained an ex parte Temporary Restraining Order restraining Defendants from transferring assets. That Order was thereafter modified by the Court. Upon motion made by the Company, this case was transferred to the United States District Court for the Central District of California. Management believes that ~~the~~would ~~action~~add isvalue ~~without merit and intends~~ to ~~defend~~our ~~the~~existing ~~action vigorously~~operations. ~~Due to the uncertainty surrounding the litigation process, and the early stage of this matter, no reasonable estimate of loss is currently available~~

OnAt ~~March 3~~December 31, 2008, ~~Mr.~~we ~~Goodman~~had ~~commenced an action in the New York State Court against Broadcaster~~$631,000 ~~Martin Wade, Nolan Quan and Blair Mills. The Complaint contains allegations similar to those set forth~~ in ~~the~~cash ~~Baytree action~~ and ~~also~~cash ~~seeks~~equivalents awhich ~~declaration~~together ~~that~~with ~~the~~anticipated ~~shareholders’~~revenue ~~removal~~from ofoperations ~~Mr. Goodman as a director was unlawful. This~~ is ~~the~~projected ~~matter referred~~ to ~~above~~meet inall ~~which Mr. Goodman sought and obtained an ex parte Temporary Restraining Order against his removal as a director~~ of ~~Broadcaster.~~our ~~The~~working ~~Company~~capital ~~removed~~needs ~~this~~for ~~action to Federal District Court and, upon motion made by~~ the ~~Company;~~next ~~this~~twelve ~~case was transferred to the United States District Court~~ months.

20At February 13, 2008, we had $925,000 in cash and cash equivalents which together with anticipated revenue from operations is projected to meet all of our working capital needs for the next twelve months.

Notwithstanding our current negative cash flow, based on cash on hand, anticipated revenue from new continuing operations and cost reductions, we expect we will have sufficient capital for the ~~Central~~next ~~District~~twelve ofmonths. ~~California~~However, if we use our cash for acquisitions or our newly acquired businesses require funding in addition to or at times not anticipated, we may require additional financing. ~~Management~~We ~~believes~~expect that ~~the~~any ~~action~~additional isfinancing ~~without~~will ~~merit~~require ~~and~~us ~~intends~~to issue common stock, convertible debt or convertible preferred stock, which will dilute our existing shareholders. We also expect that we will attempt to ~~defend~~use ~~the~~securities ~~action~~as ~~vigorously~~consideration for future acquisitions as opposed to cash. ~~Due~~We believe that we will be able to ~~the~~obtain ~~uncertainty~~any ~~surrounding~~additional ~~the~~financing ~~litigation~~required ~~process~~on competitive terms particularly if we are successful in improving our financial performance. In addition, we will continue to seek opportunities and discussions with third parties concerning the ~~early~~sale ~~stage~~or license of ~~this~~certain ~~matter,~~product nolines ~~reasonable~~and/or ~~estimate~~the sale or license of ~~loss~~a isportion ~~currently~~of ~~available~~our assets.

~~Michael~~We ~~Gardner,~~have ano ~~principal~~material ofcommitments shareholder Baytree Capital Associates, LLC, filed a Complaint on March 3, 2008, in New York State Court against the Company’s CEO Martin Wade III. Mr. Gardner seeks monetary damages “in an amount to be determined but believed to be not less than ten million dollars ($10,000,000.00) plus interest together with costs of this action and attorneys fees” and punitive damages “in an amount not less than thirty million dollars ($30,000,000.00) for ~~alleged~~capital ~~defamation~~expenditures ~~set~~except forth in a letter Mr. Wade wrote and Broadcaster then filed as an exhibit to its Current Report on Form 8-K filed with the SEC. The Company is not named in the suit. This action has also been removed to Federal District Court for ~~the~~those ~~Southern~~required ~~District of New York and it is anticipated that a motion~~ to ~~transfer~~support ~~this case to United States District Court for~~ the ~~Central~~normal ~~District~~operating ~~of California will be filed at the end of May~~activities.

~~Item~~Related 2Person Transactions

~~Unregistered~~During ~~Sales~~the first three months ended December 31, 2007 we received services from Alchemy, a company controlled by Mr. Nolan Quan, one of ~~Equity~~our ~~Securities~~principal shareholders. We did not receive any such services during the three months ended December 31, 2008. For the three months ended December 31, 2007, we incurred $409,000 of expenses related to Alchemy, which have been reflected in discontinued operations.. For the three months ended December 31, 2008 and ~~Use~~2007, we incurred $17,000 in interest related to a loan from Mr. Quan and for the three months ended September 30, 2007 we incurred consulting fees of ~~Proceeds~~$6,000 payable to Mr. Quan. The interest relates

~~Not Applicable~~ 19

~~Item~~to 3a debt owed to Mr. Quan in the principal amount of $1,725,000 evidenced by demand promissory notes bearing 4% per annum interest and secured by the company’s assets. During the three months ended December 31, 2007, we incurred $14,000 in legal fees from Ms. Elaine Rosen. In addition, for the three months ended December 31, 2007, we paid Mr. Kevin Rosen-Quan $14,800 as our Executive Producer. Ms. Rosen and Mr. Rosen-Quan are the wife and son of Mr. Nolan Quan, one of our principal shareholders.

~~Defaults~~Shared ~~Upon Senior Securities~~Services

~~Not~~During ~~Applicable~~the six months ended December 31, 2008 and 2007, the Company shared office space with several companies associated with Alchemy and certain of the defendants named in our recent litigation in which we are also named as a defendant. In addition, these same individuals and entities utilized common consultants for the provision of certain services. Regardless of these commonalities, the Company does not believe that these entities or individuals fall within the definition of a related party.

~~Item~~Forward-Looking 4Statements

~~Submission~~This quarterly report on Form 10-Q contains forward-looking statements within the meaning of ~~Matters~~the Private Securities Litigation Reform Act of 1995, including our future operations and our liquidity. These forward-looking statements are subject to a ~~Vote~~number of ~~Security~~risks ~~Holders~~and uncertainties, many of which are beyond our control. When used in this report, the words “will,” “believe,” “anticipate,” “plan,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we cannot assure you that these plans, intentions, or expectations will be achieved. Actual results may differ materially from those stated in these forward-looking statements as a result of a variety of factors including acceptance by consumers of our current and future products, including our new business lines, and our ability to complete development of new products. Investors should also review the risk factors contained herein and in our Form 10-K for the year ended June 30, 2008 and the additional risk factors contained in this Report. We do not undertake any duty to update these forward -looking statements.

~~Not~~Item ~~Applicable~~4T.

~~Item~~Controls 5And Procedures

~~Other Information~~(a)

~~Not~~Under ~~Applicable~~the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of 1934, as of December 31, 2008, the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective.

~~Item 6~~(b)

~~Exhibits~~We have evaluated our accounting procedures and control processes in place as of December 31, 2008 related to material transactions to ensure they are recorded timely and accurately in the financial statements. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in paragraph (a) above.

~~Exhibits~~20

~~The~~PART ~~following~~II ~~exhibits~~– ~~are~~OTHER ~~filed as part of, or incorporated by reference into this Report:~~INFORMATION

Exhibit Number		Exhibit Title
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Item 1.

21Legal Proceedings

~~SIGNATURES~~As previously reported, America’s Biggest, Inc. filed suit against Broadcaster, Baytree Capital Associates, LLC, Michael Gardner, and Nolan Quan. A trial is currently scheduled for August 24, 2009. Management believes that the claims are without merit and intends to defend the actions vigorously. Due to the uncertainty surrounding the litigation process, and the early stage of this matter, no reasonable estimate of loss is currently available.

~~Pursuant~~The Company and/or its officers and directors are named as defendants in four actions (described below) which appear to relate to certain actions taken by the ~~requirements~~Company’s shareholders with regard to the composition of the Board of Directors. On December 21, 2007 shareholders of Broadcaster representing 58% of the voting power of the outstanding voting stock of Broadcaster executed and delivered a written consent removing Dr. Vincent Orza and Paul Goodman from the board of directors of Broadcaster effective March 5, 2008. On December 21, 2007, the Company filed with the Securities and Exchange ~~Act~~Commission ofan ~~1934~~Information Statement on Schedule 14C describing the action taken by such shareholders to remove Messrs. Orza and Goodman. On February 13, 2008 the ~~Registrant~~Securities ~~has~~and ~~duly~~Exchange ~~caused~~Commission ~~this~~authorized ~~report~~the mailing to the shareholders of the Company of the definitive Information Statement, and on February 14, 2008, a definitive Information Statement was mailed to the shareholders of Broadcaster advising them that Messrs. Orza and Goodman would be ~~signed~~removed from the Board of Directors on ~~its~~March 5, ~~behalf~~2008 by reason of the ~~undersigned~~consents ~~thereunto~~from ~~duly~~a ~~authorized~~majority of the shareholders on December 21, 2007, without any further action.

~~Date:~~On ~~May 20~~January 16, 2008, Mr. Goodman commenced an action in New York State Court against Broadcaster and certain of its officers, directors, and shareholders, seeking monetary damages “in an amount to be determined but not less than $10 million plus other special, punitive and compensatory damages” for alleged defamation contained in a Company filing with the SEC. Mr. Goodman moved for a preliminary injunction and sought and obtained an ex parte temporary restraining order. Several days later, following oral argument, this order was vacated by the Court. Goodman’s preliminary injunction was denied. A motion to dismiss this action has been filed by Broadcaster. Broadcaster believes that the action is without merit and intends to defend the action vigorously. Due to the uncertainty surrounding the litigation process, and the early stage of this matter, no reasonable estimate of loss is currently available.

~~BROADCASTER~~On February 15, ~~INC~~2008, one of our shareholders and former advisors, Baytree Capital Associates, LLC, (“Baytree”) filed a shareholders derivative action in Federal Court in the Southern District of New York against the Company and certain of its officers and directors, as well as several other individual and corporate defendants. ~~By:~~The ~~/s/~~Complaint ~~MARTIN~~sought ~~WADE~~monetary damages on behalf of the Company in “an amount to be established at trial but not less than $22,630,000” ~~III~~for ~~Martin~~allegations ~~Wade~~of breaches of fiduciary duties, ~~III~~waste ~~Chief~~of ~~Executive~~corporate ~~Officer~~assets, ~~By:~~self-dealing, /conversion, restitution and disgorgement, and violations of the securities laws. Additionally, the Complaint alleges violations of RICO and seeks treble damages for those violations. Baytree sought and obtained an ex parte Temporary Restraining Order restraining Defendants from transferring assets. That Order was thereafter modified by the Court. Upon motion made by the Company, this case was transferred to the United States District Court for the Central District of California. On August 18, 2008, the Court issued an order denying Baytree’s/ ~~BLAIR~~motion ~~MILLS~~for ~~Blair~~a ~~Mills~~preliminary ~~Chief~~injunction, ~~Financial~~and, ~~Officer~~as ~~(Principal~~a ~~Accounting~~result ~~Officer)~~of this order, the TRO was terminated. Subsequently, a motion to dismiss the complaint for failure to state a claim was granted on September 29, 2008. Baytree was given leave to amend and filed an amended complaint on October 20, 2008 continuing to allege violations of the securities laws and breaches of fiduciary duties and seeking the same monetary relief as requested in the original Complaint but eliminating all of the previously asserted RICO claims. Broadcaster continues to believe that the action is without merit and intends to defend the action vigorously. Due to the uncertainty surrounding the litigation process, and the early stage of this matter, no reasonable estimate of loss is currently available.

22On March 3, 2008, Mr. Goodman commenced an action in the New York State Court against Broadcaster, Martin Wade, Nolan Quan and Blair Mills. The Complaint contains allegations similar to those set forth in the Baytree action and also seeks a declaration that the shareholders’ removal of Mr. Goodman as a director was unlawful. Mr. Goodman sought and obtained an ex parte Temporary Restraining Order against his removal as a director of Broadcaster. The Company removed this action to Federal District Court and, upon motion made by the Company, this case was transferred to the United States District Court for the Central District of California. On

~~INDEX TO EXHIBITS~~21

Exhibit Number		Exhibit Title
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

August 18, the Court issued an order denying Goodman’s motion for a preliminary injunction and, as a result of this order, the Temporary Restraining Order was terminated. On that date, on its own motion, the Court also dismissed the action with thirty days leave to amend. No amended pleading was filed as of the Court’s deadline for refiling or as of the present time.

On August 19, 2008, Broadcaster reconvened its annual meeting of shareholders, which had been previously adjourned pending the outcome of the TRO and preliminary injunction sought by Paul Goodman. At the annual meeting of shareholders, the following individuals were named on the slate as candidates to serve as directors: Martin Wade III, Richard Berman, Blair Mills, Arthur Camiolo, Lawrence Johnson and Paul Goodman and the following individuals were elected to serve as directors: Martin Wade III, Richard Berman, Blair Mills, Arthur Camiolo and Lawrence Johnson.

An additional action was also commenced by Michael Gardner, a principal of shareholder Baytree Capital Associates, LLC, who filed a Complaint on March 3, 2008 in New York State Supreme Court against the Company’s CEO Martin Wade III. Mr. Gardner seeks monetary damages “in an amount to be determined but believed to be not less than ten million dollars ($10,000,000.00) plus interest together with costs of this action and attorneys fees” and punitive damages “in an amount not less than thirty million dollars ($30,000,000.00)” for alleged defamation set forth in a letter Mr. Wade wrote and Broadcaster then filed as an exhibit to its Current Report on Form 8-K filed with the SEC. The Company was not named in the suit. This action was also removed to Federal District Court for the Southern District of New York and on June 27, 2008, the Court granted Mr. Wade’s motion to dismiss the action for lack of personal jurisdiction.

On September 19, 2008, we filed in the United States District Court for the Central District of California, a claim for rescission against Baytree Capital Associates LLC and cross claim defendants Software People, LLC, Broadcaster, LLC, Trans Global Media, LLC, AccessMedia Technologies, LLC and Michael Gardner requesting return of various shares issued by the Company to those parties.

In addition, we are subject to legal proceedings, claims, and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable

Item 3.

Defaults Upon Senior Securities

Not Applicable

Item 4.

Submission of Matters to a Vote of Security Holders

Not Applicable

Item 5.

Other Information

Not Applicable

Item 6.

Exhibits

The following exhibits are filed as part of, or incorporated by reference into this Report:


Exhibit Number		Exhibit Title
10.1		Loan and Security Agreement between Lamplighter Studios, Inc. and Remington Partners, Inc. dated January 9, 2009
10.2		Guaranty between Lamplighter Studios, Inc. and Remington Partners, Inc. dated January 9, 2009
10.3		Participation Certificate between Remington Partners, Inc. and Martin Wade dated January 9, 2009
10.4		Participation Certificate between Remington Partners, Inc. and Gordon Landies dated January 9, 2009
31.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: February 17, 200 9




	BROADCASTER, INC.


	By:	/s/ MARTIN W ADE , III
		Martin Wade, III
		Chief Executive Officer (Principal Executive Officer)
		Chief Financial Officer (Principal Accounting Officer)

INDEX TO EXHIBITS


Exhibit Number		Exhibit Title
10.1		Loan and Security Agreement between Lamplighter Studios, Inc. and Remington Partners, Inc. dated January 9, 2009
10.2		Guaranty between Lamplighter Studios, Inc. and Remington Partners, Inc. dated January 9, 2009
10.3		Participation Certificate between Remington Partners, Inc. and Martin Wade dated January 9, 2009
10.4		Participation Certificate between Remington Partners, Inc. and Gordon Landies dated January 9, 2009
31.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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