UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

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

For the quarterly period ended ~~April~~July 3031, 2009

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

For the transition period from ______to______.

MEGA MEDIA GROUP, INC.

(Exact name of registrant as specified in Charter)

Nevada		000-28881		88-0403762
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

1122 Coney Island Avenue

Brooklyn, NY 11235

(Address of Principal Executive Offices)

_______________

(718) 947-1100

(Issuer Telephone number)

_______________

(Former Name or Former Address if Changed Since Last Report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of ~~June~~September 1921, 2009: ~~304~~305,~~753~~331,~~677shares~~407 shares of common stock.

Mega Media Group, Inc.

FORM 10-Q

~~April 30~~July 31, 2009

INDEX

PART I-- FINANCIAL INFORMATION

Item 1.	Financial Statements	43
Item 2.	Management’s Discussion and Analysis of Financial ~~Condition~~Conditions and Results of Operations	2427
Item 3	Quantitative and Qualitative Disclosures About Market Risk	2630
Item 4T.	Controls and Procedures	2630

PART II-- OTHER INFORMATION

Item 1	Legal Proceedings	2730
Item 1A.	Risk Factors	2831
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2832
Item 3.	Defaults Upon Senior Securities	2832
Item 4.	Submission of Matters to a Vote of Security Holders	2832
Item 5.	Other Information	2832
Item 6.	Exhibits ~~and Reports on Form 8-K~~	2932

SIGNATURE

Except as otherwise required by the context, all references in this report to "we", "us”, "our", “MMDA”, “Mega Media Group”, “MMG” or "Company" refer to the consolidated operations of Mega Media Group, Inc., a Nevada corporation, and its wholly-~~owned subsidiaries.~~2-

Forward-Looking Statements and Associated Risks

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Some of the statements contained in this annual report of the Company discuss future expectations, contain projections of our operations or financial condition or state other forward-looking information. Some statements contained in this quarterly report on Form 10-QSB that are not historical facts (including without limitation statements to the effect that we "believe," "expect," "anticipate," "plan," "intend," "foresee," or other similar expressions) and are forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those anticipated by us. All comments concerning our expectations for future revenue and operating results are based on our forecasts of our plan of operation and do not include the potential impact of any future acquisitions or operations. These forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MEGA MEDIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(Under Creditor Protection Proceedings as of August 10, 2009 – Notes 1 and 2)
	April 30,			January 31,
	July 31,			January 31,
ASSETS	2009			2009
Current Assets	(Unaudited)
Cash	$	~~38,061~~-		$	13,877
Accounts receivable, net (Note 3)		134,273			137,855
Accounts receivable, net (Note 4)		197,584			137,855
Prepaid Expenses		-			13,~~307~~306
Note Receivable		10,000			10,000
Total Current Assets		~~182~~207,~~334~~584			175,038
Fixed assets, net (Note 4)		186,202			227,785
Fixed assets, net (Note 5)		156,398			227,785
Master records, net (Note 5)		-			-
Master records, net (Note 6)		-			-
Other intangible assets, net		-			-
Advances		20,000			20,000
Deposits		13,486			13,486
Other		16,010			16,010
TOTAL ASSETS	$	~~418~~413,~~032~~478		$	452,319
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	~~538~~575,~~149~~377		$	1,138,976
Sales tax payable		616			616
Payroll taxes payable (Note 12)		1,200,853			1,112,966
Bank Overdraft		4,525			-
Accrued Offices' Compensation		512,093			504,893
Payroll taxes payable (Note 13)		1,383,722			1,112,966
Equipment loan - current portion (Note 9)		7,248			7,248
Accrued Offices' Compensation		490,454			504,893
Equipment lease - current portion (Note 10)		19,440			19,440
Equipment loan - current portion (Note 10)		6,656			7,248
Loans payable (Note 7)		496,000			496,000
Equipment lease - current portion (Note 11)		19,440			19,440
Due to related party (Note 6)		69,328			69,328
Loans payable (Note 8)		496,000			496,000
Judgement Payable (Note 14)		266,955			296,955
Due to related party (Note 7)		69,328			69,328
Deferred revenues		164,194			135,920
Judgement Payable (Note 15)		241,983			296,955
Accrued expenses		49,679			57,478
Deferred revenues		157,150			135,920
Payable to shareholders (Note 6)		90,148			12,148
Accrued expenses		280,106			57,478
Settlement Payable (Note 10)		125,000			125,000
Payable to shareholders (Note 7)		268,198			12,148
Settlement Payable (Note 11)		110,000			125,000
Stock Payable		-			10,000
Total Current Liabilities		34,~~539~~103,~~704~~555			3,986,968
Equipment Loan Payable (Note 9)		692			2,767
Equipment Loan Payable (Note 10)		-			2,767
Equipment Lease Payable (Note 10)		6,480			12,960
Equipment Lease Payable (Note 11)		1,620			12,960
TOTAL LIABILITIES		34,~~546~~105,~~875~~175			4,002,695
Commitments and contingencies		-			-
Stockholders' Deficit
Preferred stock, $.001 par value, 20,000,000 shares authorized, 0 shares issued and outstanding as of 04/30/09 and 01/31/09 (Note 8)		-			-
Preferred stock, $.001 par value, 20,000,000 shares authorized, 0 shares issued and outstanding as of 07/31/09 and 01/31/09 (Note 9)		-			-
Common stock, $.001 par value, 500,000,000 shares authorized, 297,081,407 shares issued and outstanding as of 04/30/09 and 261,348,938 shares issued and outstanding as of 01/31/09 (Note 8)		297,081			261,349
Common stock, $.001 par value, 500,000,000 shares authorized, 305,331,407 shares issued and outstanding as of 07/31/09 and 261,348,938 shares issued and outstanding as of 01/31/09 (Note 9)		305,331			261,349
Additional paid-in capital		11,~~637~~796,~~553~~596			10,426,270
Deferred compensation		(136,241	)		(194,681	)
Deferred compensation (Note 12)		(75,830	)		(194,681	)
Accumulated Deficit		(1415,~~927~~717,~~238~~794	)		(14,043,314	)
Total Stockholders' Deficit		(3,~~128~~691,~~843~~697	)		(3,550,376	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	~~418~~413,~~032~~478		$	452,319

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

4-3-

MEGA MEDIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(Under Creditor Protection Proceedings as of August 10, 2009 – Notes 1 and 2)
	Three Months Ended April 30,
	Six Months Ended July 31,						Three Months Ended July 31,
	2009			2008			2009			2008
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues:
				(Restated)						(Restated)
Advertising revenues	$	361,116		$	237,250
Revenues:
Other revenues		11,292			7,964
Advertising revenues	$	820,039		$	606,547		$	458,923		$	369,297
Total Revenues		372,409			245,214
Other revenues		55,213			46,158			43,921			38,194
Operating expenses		383,823			770,632
Total Revenues		875,252			652,705			502,844			407,491
Selling, general and administrative		746,114			609,369
Operating expenses		722,841			1,541,013			339,018			770,380
Depreciation and amortization		41,583			54,423
Selling, general and administrative		1,514,916			1,332,689			768,802			723,320
		1,171,519			1,434,424
Depreciation and amortization		71,387			105,513			29,804			51,090
Net loss from operations		(799,110	)		(1,189,210	)
		2,309,144			2,979,215			1,137,624			1,544,790
Other Expenses:
Net loss from operations		(1,433,892	)		(2,326,510	)		(634,780	)		(1,137,299	)
Interest expense		47,797			81,677
Other Expenses:
Beneficial conversion expense		37,016			525,640
Loss on sale of intangible assets		-			40,168			-			40,168
Net loss before tax benefit		(883,924	)		(1,796,526	)
Interest expense		158,029			175,526			110,231			93,851
Tax benefit		-			-
Beneficial conversion expense		82,559			619,628			45,543			93,986
Net loss	$	(883,924	)	$	(1,796,526	)
Net loss before tax benefit		(1,674,480	)		(3,161,832	)		(790,554	)		(1,365,304	)
Basic and diluted loss per share		(0.003	)		(0.023	)
Tax benefit		-			-			-			-
Weighted-Average shares used in computation of basic and diluted loss per share		269,140,866			79,750,352
Net loss	$	(1,674,480	)	$	(3,161,832	)	$	(790,554	)	$	(1,365,304	)
Basic and diluted loss per share		(0.006	)		(0.039	)		(0.003	)		(0.017	)
Weighted-Average shares used in computation of basic and diluted loss per share		287,012,481			81,637,155			303,897,341			82,605,441

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

5-4-

MEGA MEDIA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(Under Creditor Protection Proceedings as of August 10, 2009 - Notes 1 and 2)
	April 30,			April 30,
	July 31,			July 31,
	2009			2008
	(Unaudited)			(Unaudited)
				(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(~~883~~1,~~924~~674,480	)	$	(13,~~796~~161,~~526~~832	)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization		4171,~~583~~387			54105,~~423~~513
Beneficial conversion of loans from shareholders		37,016			525,640
Loss on sale of intangible assets		-			40,168
Beneficial conversion of loans from shareholders		82,559			619,628
Stock options issued to officers for services		-			6,720
Stock compensation for consulting services		58,440			59,097
Stock issued to lenders in exchange for loans		-			6,250
Stock compensation for legal services		20,000			-
Stock compensation for consulting services		118,851			128,508
Stock issued for airlease rent		98,000			92,000
Stock compensation for legal services		24,750			-
Stock issued to officers for services		20,000			-
Stock issued to employees for services		19,000			-
Changes in operating assets and liabilities:
(Increase) in accounts receivable		3,582			(78,150	)
(Increase) in note receivable		-			(10,000	)
(Increase) in accrued revenues					(3,222	)
(Increase) in accounts receivable		(59,729	)		(81,364	)
(Increase) in prepaid expenses		13,307			22,995
(Increase) in accrued revenues					(20,137	)
Increase in bank overdraft		-			14,178
(Increase) in prepaid expenses		13,306			36,302
Increase in accounts payable		417,841			302,640
Increase in bank overdraft		4,525			-
Increase in stock payable					44,000
Increase in accounts payable		455,068			837,235
Increase in accrued officers' compensation		7(14,~~200~~439	)		18(4,~~021~~724	)
Increase in accrued expenses		63293,~~533~~960			3292,~~521~~398
Increase in deferred revenue		2821,~~274~~230			(1549,~~792~~497	)
Increase in payroll liabilities		87270,~~887~~756			~~133~~222,~~988~~712
Total adjustments		~~798~~1,~~665~~419,224			12,~~117~~021,~~059~~712
NET CASH USED BY OPERATING ACTIVITIES		(85255,~~260~~256	)		(~~679~~1,~~467~~140,120	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Master records		-			-
Fixed assets		-			-(10,646	)
CASH PROVIDED (USED) BY INVESTING ACTIVITIES		-			-(10,646	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan proceeds		-			~~465~~875,000
Equipment loan repayments		(2,076	)		(1,384	)
Equipment loan repayments-current portion		(592	)		-
Proceeds from loans from shareholders		78,000			125,000
Equipment loan repayments		(2,767	)		(3,460	)
Proceeds from loans from shareholders		256,050			175,000
Repayments of loans from shareholders		-			(5,000	)
Repayments of loans from related parties		-			(12,500	)
Repayments of judgement payable		(30,000	)		-
Repayments of judgment payable		(54,972	)		-
Equipment lease repayments		(6,480	)		(4,860	)
Repayments of settlement payable		(15,000	)
Capital Contributions		-			52,719
Equipment lease repayments		(11,340	)		(9,720	)
Capital Contributions		-			88,228
Sale of common stock		70,000			-
Options exercised by officers		-			55,096
CASH PROVIDED BY FINANCING ACTIVITIES		~~109~~241,~~444~~379			~~679~~1,~~071~~162,644
NET INCREASE IN CASH		24(13,~~184~~877	)		~~(396~~11,877	)
CASH: Beginning of period		13,877			396
End of period	$	~~38,061~~-		$	-12,274	)
Supplemental disclosure of noncash financing and investing activities:
Cash paid during the period for income taxes	$	-		$	2,275
Cash paid during the period for interest	$	712,~~362~~180		$	1627,~~674~~945
Non Cash Financing and Investing Activities:
Stock issued in exchange for debt		1,090,000			-
Stock issued in exchange for accounts payable and accrued expenses	$	1,090,000		$	-
Stock issued for conversions of loans payable	$	10,000		$	-
Increase in note receivable	$	-		$	(1,400,000	)
Increase in note receivable	$	-		$	1,400,000
Increase in note payable	$	-		$	1,400,000
Stock issued for conversions of loans payable	$	10,000		$	450,000

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

6-5-

MEGA MEDIA GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts and Disclosures at and for the three and six months

Ended ~~April~~ 30July 31, 2009 and 2008 Are Unaudited)

~~NOTE~~ (Under 1Creditor ~~- ORGANIZATION~~Protection ~~AND~~Proceedings ~~NATURE~~as OFof ~~BUSINESS~~August 10, 2009 – Notes 1 and 2)

~~Mega Media~~NOTE ~~Group,~~1 ~~Inc. (the “MMG”) was incorporated in New York State on February 3, 2004. The Company is a multi~~-~~media~~ ~~holding~~ORGANIZATION ~~company~~AND ~~with~~BASIS ~~five~~OF ~~wholly owned subsidiaries. The Company’s focus is mainstream entertainment and media. The corporate headquarters is located in Brooklyn, NY.~~PRESENTATION

~~As reflected~~Nature ~~in the accompanying combined financial statements, the Company has an accumulated deficit~~ of $14,043,314 at January 31, 2009 that includes losses of $4,737,845 for the year ended January 31, 2009 and a working deficit of $3,811,930 at January 31, 2009. Also, as reflected in the accompanying combined financial statements, the Company has an accumulated deficit of $14,927,238 and $11,101,995 at April 30, 2009 and 2008 respectively that includes losses of $883,924 and $1,796,526 for three months ended April 30, 2009 and 2008 respectively and a working deficit of $3,357,370 and $4,252,026 at April 30, 2009 and 2008 respectively. The Company’s shareholders have funded the losses and cash shortfalls allowing management to develop sales and contingencies plans. The Company’s also arranging for additional funding. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.Operations

Mega Media Group, Inc. (the “MMG”) was incorporated in New York State on February 3, 2004. The Company is a multi-media holding Company with five wholly owned subsidiaries. The Company’s focus is mainstream entertainment and media. The corporate headquarters is located in Brooklyn, NY.

Financial statements

As reflected in the accompanying combined financial statements, the Company has an accumulated deficit of $14,043,314 at January 31, 2009 that includes losses of $4,737,845 for the year ended January 31, 2009 and a working deficit of $3,811,930 at January 31, 2009. Also, as reflected in the accompanying combined financial statements, the Company has an accumulated deficit of $15,717,794 and $12,467,301 at July 31, 2009 and 2008 respectively that includes losses of $1,674,480 and $3,161,832 for six months ended July 31, 2009 and 2008 respectively and a working deficit of $3,895,971 and $4,646,182 at July 31, 2009 and 2008 respectively. The Company’s shareholders have funded the losses and cash shortfalls allowing management to develop sales and contingencies plans. The Company’s also arranging for additional funding. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursing additional funding and a potential merger or acquisition candidate and strategic partners, which would enhance stockholders’ investment. Management believes that the above actions will allow the Company to continue operations through the next fiscal year.

~~NOTE-2~~Creditor ~~– SUMMARY~~Protection ~~OF SIGNIFICANT ACCOUNTING POLICIES~~Proceedings

On August 10, 2009, Mega Media Group Inc and certain of its subsidiaries filed voluntary petitions (collectively, the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Eastern District of New York (the “U.S. Court”) for relief under the provisions of Chapter 11 of the United States Bankruptcy Code, as amended (“Chapter 11”).

Basis of presentation and going concern issues

Our unaudited interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, the commencements of the Creditor Protection Proceedings, which are discussed further in Note, “Creditor Protection Proceedings,” raise substantial doubt about our ability to continue as a going concern.

The Creditor Protection Proceedings and our debtor in possession financing arrangements, provide us with a period of time to stabilize our operations and financial condition and develop a comprehensive restructuring plan. Management believes that these actions make the going concern basis of presentation appropriate. However, it is not possible to predict the outcome of these proceedings and as such, the realization of assets and discharge of liabilities are each subject to significant uncertainty. Further, our ability to continue as a going concern is dependent on market conditions and our ability to successfully develop and implement a comprehensive restructuring plan and improve profitability, obtain alternative financing to replace our debtor in possession financing arrangements and restructure our obligations in a manner that allows us to obtain confirmation of a plan of reorganization by the U.S. Court. However, it is not possible to predict whether the actions taken in our restructuring will result in improvements to our financial condition sufficient to allow us to continue as a going concern. If the going concern basis is not appropriate, adjustments will be necessary to the carrying amounts and/or classification of our assets and liabilities.

-6-

Further, a comprehensive restructuring plan could materially change the carrying amounts and classifications reported in our consolidated financial statements. The assets and liabilities in our unaudited interim consolidated financial statements do not reflect any adjustments related to the Creditor Protection Proceedings, which arose subsequent to July 31, 2009. In addition, our unaudited interim consolidated financial statements do not purport to reflect or provide for the consequences of the Creditor Protection Proceedings, such as (i) the realizable value of our assets on a liquidation basis or their availability to satisfy liabilities, (ii) the amounts of pre-petition liabilities that may be allowed for claims or contingencies or the status and priority thereof, (iii) the effect of any changes in our shareholders’ deficit that may be made in our recapitalization or (iv) the effect on our Consolidated Statements of Operations regarding any changes made to our business resulting from our comprehensive restructuring plan.

Beginning in the third quarter of 2009, we will apply the American Institute of Certified Public Accountants’ Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization under the Bankruptcy Code,” in preparing the consolidated financial statements. SOP 90-7 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Creditor Protection Proceedings will be recorded in reorganization items in the Consolidated Statements of Operations. In addition, pre-petition obligations that may be impaired by the reorganization process will be classified in the Consolidated Balance Sheets as liabilities subject to compromise. These liabilities will be reported at the amounts expected to be allowed by the U.S. Court, even if they may be settled for lesser amounts.

NOTE 2 – CREDITOR PROTECTION PROCEEDINGS

As discussed in Note 1, “Organization and Basis of Presentation — Creditor Protection Proceedings,” Mega Media Group Inc and certain of its subsidiaries commenced Creditor Protection Proceedings on August 10, 2009. We initiated the Creditor Protection Proceedings in order to enable us to pursue reorganization efforts under the protection of Chapter 11. The Creditor Protection Proceedings will allow us to reassess our business strategy with a view to developing a comprehensive financial and business restructuring plan. We remain in possession of our assets and properties and will continue to operate our business and manage our properties as “debtors in possession” under the jurisdiction of the U.S. Court and in accordance with the applicable provisions of Chapter 11. In general, we and our subsidiaries are authorized to continue to operate as ongoing businesses, but may not engage in transactions outside the ordinary course of business without the approval of the court.

The commencement of the Creditor Protection Proceedings constituted an event of default under substantially all of our pre-petition debt obligations, and those debt obligations became automatically and immediately due and payable, although any actions to enforce such payment obligations are stayed as a result of the commencement of the Creditor Protection Proceedings.

Reorganization process

The Court has issued a variety of orders on either a final or interim basis intended to support our business continuity throughout the restructuring process. These orders include, among other things, authorization to: (i) make payments relating to certain employees’ pre-petition wages, salaries and benefit programs in the ordinary course; (ii) ensure the continuation of existing cash management systems; (iii) honor certain ongoing customer obligations. We have retained legal and financial professionals to advise us on the Creditor Protection Proceedings. From time to time, we may seek court approval for the retention of additional professionals.

Shortly after the commencement of the Creditor Protection Proceedings, we began notifying all known current or potential creditors regarding these filings. Subject to certain exceptions under Chapter 11 automatically enjoined, or stayed, the continuation of any judicial or administrative proceedings or other actions against us or our property to recover, collect or secure a claim arising prior to the filing of the Creditor Protection Proceedings. Thus, for example, most creditor actions to obtain possession of property from us, or to create, perfect or enforce any lien against our property, or to collect on monies owed or otherwise exercise rights or remedies with respect to a pre-petition claim, are enjoined unless and until the courts lift such stay.

-7-

Under Section 365 and other relevant sections of Chapter 11, we may assume, assume and assign, or reject certain executory contracts and unexpired leases, including leases of real property and equipment, subject to the approval of the U.S. Court and certain other conditions. Any description of an executory contract or unexpired lease in these Notes to our Unaudited Consolidated Financial Statements, including, where applicable, our express termination rights or a quantification of our obligations, must be read in conjunction with, and is qualified by, any overriding rejection rights we have under Section 365 of Chapter 11.

In order to successfully exit Chapter 11, we will need to propose and obtain approval by affected creditors and confirmation by the Courts of a plan of reorganization that satisfies the requirements of Chapter 11. A plan of reorganization would resolve our pre-petition obligations, set forth the revised capital structure of the newly reorganized entity and provide for corporate governance subsequent to our exit from Chapter 11.

In the United States, Chapter 11 provides that we have the exclusive right for 120 days after the filing of the Creditor Protection Proceedings to file a plan of reorganization with the U.S. Court. We will likely file one or more motions to request extensions of this exclusivity period, which are routinely granted up to 18 months in cases of this size and complexity. If our exclusivity period were to lapse, any party in interest would be able to file a plan of reorganization. In addition to being voted on by holders of impaired claims and equity interests, a plan of reorganization must satisfy certain requirements of Chapter 11 and must be approved or confirmed by the U.S. Court in order to become effective.

The timing of filing a plan of reorganization by us will depend on the timing and outcome of numerous other ongoing matters in the Creditor Protection Proceedings. There can be no assurance at this time that a plan of reorganization will be supported and approved by affected creditors and confirmed by the Courts or that any such plan will be implemented successfully.

Under the priority scheme established by Chapter 11, unless creditors agree otherwise, pre-petition liabilities and post-petition liabilities must be satisfied in full before stockholders are entitled to receive any distribution or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or stockholders, if any, will not be determined until confirmation of a plan or plans of reorganization. No assurance can be given at this time as to what values, if any, will be ascribed to each of these constituencies or what types or amounts of distributions, if any, they will receive. A plan of reorganization could result in holders of our liabilities and/or securities, including our common stock, receiving no distribution on account of their interests and cancellation of their holdings. A plan of reorganization could also result in holders of our common stock being materially diluted.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of the Mega Media Group Inc., and its subsidiary Mega Media Film, Inc., Mega Media Studios, Inc., Mega Media Records, Inc., VSE Magazine, Inc., and Echo Broadcasting Group, Inc. All significant intercompany balances and transactions have been eliminated.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effects the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the of the combined financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates.

Cash and Cash Equivalents

Short-term investments with an original maturity of three months or less are considered to be cash equivalents.

Depreciation and Amortization

The cost of furniture and equipment is depreciated over the estimated useful lives of the related assets. The cost of leaseholds improvements is amortized over the lesser of the length of the related lease or the estimated useful life of the assets. Depreciation is computed on a straight line basis, with lives ranging from 3 to 7 years. Leasehold improvements are amortized over the life of the lease.

7-8-

Master Records

The Company records the cost of a record master borne by the Company as an asset if the past performance and current popularity of the artist provides a sound basis for estimating that the cost will be recovered from future sales. Otherwise, that cost is charged to expense. The amount recognized as an asset is amortized over the estimated life of the recorded performance.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollected amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for bad debts and a credit to accounts receivable.

Revenue Recognition

The Company recognizes revenue for broadcast advertising when the commercial is broadcast and is reported, net of agency and outside sales representative commissions, in accordance with Staff Accounting Bulletin (“SAB”) No. 104, Topic 13, “Revenue Recognition, Revised and Updated.” Agency and outside sales representative commissions are calculated based on a stated percentage applied to gross billing. Generally, clients remit the gross billing amount to the agency or outside sales representative, and the agency or outside sales representative remits the gross billing, less their commission, to the Company.

Financial Instruments

Due to their short maturity, the carrying amounts of accounts and notes receivable, accounts payable, accrued liabilities, and short-term borrowings approximated their fair values at ~~April~~July 3031, 2009 and January 31, 2009.

Income Taxes

The Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by valuation allowances if the Company believes it is more likely than not that some portion or all of the assets will not be realized.

Barter Transactions

The Company provides broadcast advertising time in exchange for advertising time in other media, as well as certain goods and services. The terms of the exchanges generally permit the Company to preempt such broadcast time in favor of advertisers who purchase time in exchange for cash. The Company includes the value of such exchanges in both broadcasting net revenues and station operating expenses. The valuation of barter time is based upon the fair value of the advertising time provided and goods and services received. For the year ended January 31, 2009, barter transactions reflected in net broadcast revenue, operating expenses and selling, general and administrative expenses were approximately $134,931. For the ~~three~~six months ended ~~April~~July 3031, 2009 and 2008, barter transactions reflected in net broadcast revenue, operating expenses and selling, general and administrative expenses were approximately $46,~~000~~500 and $2184,~~268~~396 respectively.

8-9-

Recently Adopted Accounting Principles

In ~~December~~In ~~2007~~May 2009, the FASB issued SFAS No. ~~141 (revised 2007)~~165, ~~Business~~"Subsequent ~~Combinations (“SFAS No~~Events." ~~141R”). SFAS~~This ~~No.~~standard ~~141R~~incorporates isinto aauthoritative ~~revision~~accounting toliterature ~~SFAS~~certain ~~No.~~guidance ~~141~~that ~~and includes~~already ~~substantial~~existed ~~changes~~within togenerally ~~the~~accepted ~~acquisition~~auditing ~~method~~standards, ~~used~~with ~~to account for business combinations (formerly~~ the ~~“purchase~~requirements ~~accounting”~~concerning ~~method),~~recognition ~~including broadening~~and ~~the~~disclosure ~~definition~~ of asubsequent ~~business,~~events asremaining ~~well~~essentially asunchanged. ~~revisions to accounting~~This ~~methods~~guidance ~~for~~addresses ~~contingent~~events ~~consideration~~which ~~and~~occur ~~other~~after ~~contingencies related to~~ the ~~acquired~~ ~~business,~~balance ~~accounting~~sheet ~~for~~date ~~transaction~~but ~~costs,~~before ~~and~~the ~~accounting~~issuance ~~for adjustments~~of tofinancial ~~provisional~~statements. ~~amounts~~Under ~~recorded in connection with acquisitions.~~ SFAS No.165, ~~141R~~as ~~retains~~under ~~the~~previous ~~fundamental~~practice, ~~requirement~~an ~~of SFAS~~entity ~~No.~~must ~~141~~record ~~that~~ the ~~acquisition~~effects ~~method~~ of ~~accounting~~subsequent beevents ~~used~~that ~~for~~provide ~~all~~evidence ~~business combinations~~about ~~and~~conditions ~~for~~that anexisted ~~acquirer~~at tothe bebalance ~~identified~~sheet ~~for~~date ~~each~~and ~~business combination. SFAS~~must ~~No.~~disclose ~~141R~~but isnot ~~applied~~record ~~prospectively~~the toeffects ~~business combinations~~of ~~for~~subsequent events which ~~the~~provide ~~acquisition~~evidence ~~date~~about isconditions onthat ordid ~~after~~not ~~the~~exist ~~beginning~~at of the ~~first~~ ~~annual~~balance ~~reporting~~sheet ~~period~~date. ~~beginning~~This onstandard oradded ~~after~~an ~~December~~additional ~~15, 2008. We~~required ~~adopted~~disclosure ~~SFAS~~relative ~~No.~~to the ~~141R~~date ~~effective~~through ~~February~~which ~~1, 2009. The~~subsequent ~~adoption~~events ofhave ~~SFAS~~been ~~No.~~evaluated ~~141R~~and ~~did~~whether ~~not~~that ~~have~~is athe ~~material~~date ~~impact~~ on ~~our~~ ~~consolidated~~which the financial statements ~~for~~were ~~the~~issued. ~~three~~For ~~months~~the ~~ended April 30~~Company, ~~2009 because~~this westandard ~~did~~was ~~not~~effective ~~complete~~beginning ~~any~~April ~~business~~1, ~~combinations in the first quarter of~~ 2009.

On In December 4, 2007, ~~the~~ FASB issued SFAS No. ~~160~~141 (revised 2007), ~~“Noncontrolling~~Business ~~Interest~~Combinations ~~in Consolidated~~(“SFAS ~~Financial~~No. ~~Statements~~141R”). SFAS No. ~~160~~141R ~~requires~~is ~~all entities~~a revision to ~~report~~SFAS ~~noncontrolling~~No. 141 and includes substantial changes to the acquisition method used to account for business combinations (~~minority~~formerly the “purchase accounting” method), ~~interests~~including broadening inthe ~~subsidiaries~~definition of a business, as ~~equity in~~well as revisions to accounting methods for contingent consideration and other contingencies related to the ~~consolidated~~acquired ~~financial~~business, ~~statements~~accounting for transaction costs, and accounting for adjustments to provisional amounts recorded in connection with acquisitions. ~~The~~SFAS ~~statement~~No. ~~establishes~~141R ~~a single~~retains the fundamental requirement of SFAS No. 141 that the acquisition method of accounting be used for ~~changes~~all inbusiness acombinations ~~parent’s~~and ~~ownership~~for ~~interest~~an inacquirer ato be identified for each business combination. SFAS ~~subsidiary~~No. ~~that~~141R dois ~~not~~applied ~~result~~prospectively into ~~deconsolidation~~business ~~and~~combinations ~~expands~~for ~~disclosures~~which inthe acquisition date is on or after the ~~consolidated~~ ~~financial~~beginning ~~statements~~of the first annual reporting period beginning on or after December 15, 2008. We adopted SFAS No. ~~160~~141R effective February 1, 2009. The adoption of SFAS No. ~~160~~141R did not have a material impact on our consolidated financial statements ~~for the three months ended April 30, 2009~~.

On December 4, 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements”. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. The statement establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation and expands disclosures in the consolidated financial statements. We adopted SFAS No. 160 effective February 1, 2009. The adoption of SFAS No. 160 did not have a material impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. We adopted SFAS No. 160 effective February 1, 2009. The adoption of SFAS 161 did not have a material impact on the Financial Statements.

In April 2008, the FASB issued Staff Position FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3”) which amends the factors an entity should consider in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS No. 142, “Goodwill and Other Intangible Assets” (“FAS No. 142”). FSP FAS 142-3 applies to intangible assets that are acquired individually or with a group of assets and intangible assets acquired in both business combinations and asset acquisitions. It removes a provision under FAS No. 142, requiring an entity to consider whether a contractual renewal or extension clause can be accomplished without substantial cost or material modifications of the existing terms and conditions associated with the asset. Instead, FSP FAS 142-3 requires that an entity consider its own experience in renewing similar arrangements. An entity would consider market participant assumptions regarding renewal if no such relevant experience exists. We adopted SFAS No. 142-3 effective February 1, 2009. The adoption of FSP FAS 142-3 had no impact on the Financial Statements.

In June 2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 concludes that unvested share-based payment awards that contain rights to receive non-forfeitable dividends or dividend equivalents are participating securities, and thus, should be included in the two-class method of computing earnings per share (“EPS”). We adopted EITF 03-6-1 effective February 1, 2009. The adoption of FSP EITF 03-6-1 did not have a material impact on the Financial Statements

In December 2008, the FASB issued FSP 132(R)-1 "Employers' Disclosurers about Postretirement Benefit Plan Assets" (FSP 132(R)-1). FSP 132(R)-1 requires additional disclosure for plan assets of defined benefit pension or other postretirement plans. The required disclosures include a description of our investment policies and strategies, the fair value of each major category of plan assets, the imputs and valuation techniques used to measure the fair value of plan assets, the effect of fair value measurements using significant unobservable imputs on changes in plan assets, and the significant concentrations of risk within plan assets. FSP 132(R)-1 does not change the accounting treatment for postretirement benefits plans. The adoption of FSP132(R)-1 did not have a material effect on the consolidated financial statements.

-10-

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairment” (FSP 115-2/124-2). FSP 115-2/124-2 amends the requirements for the recognition and measurement of other-than-temporary impairments for debt securities by modifying the pre-existing “intent and ability” indicator. Under FSP 115-2/124-2, another-than-temporary impairment is triggered when there is an intent to sell the security, it is more likely than not that the security will be required to be sold before recovery, or the security is not expected to recover the entire amortized cost basis of the security. Additionally, FSP 115-2/124-2 changes the presentation of another-than-temporary impairment in the income statement for those impairments. The adoption of this standard did not have a material impact on the Company's financial statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosure about Fair Value of Financial Instruments” (FSP 107-1/APB 28-1). FSP 107-1/APB 28-1 requires interim disclosures regarding the fair values of financial instruments that are within the scope of FAS 107, “Disclosures about the Fair Value of Financial Instruments.” Additionally, FSP 107-1/APB 28-1 requires disclosure of the methods and significant assumptions used to estimate the fair value of financial instruments on an interim basis as well as changes of the methods and significant assumptions from prior periods. FSP 107-1/APB 28-1 does not change the accounting treatment for these financial instruments and is effective for us beginning in the second quarter of fiscal year 2009. The adoption of this standard did not have a material impact on the Company’s financial statements. The adoption of this standard did not have a material impact on the Company's financial statements.

In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP 157-4). FSP 157-4 provides guidance on how to determine the fair value of assets and liabilities when the volume and level of activity for the asset/liability has significantly decreased. FSP 157-4 also provides guidance on identifying circumstances that indicate a transaction is not orderly. In addition, FSP 157-4 requires disclosure in interim and annual periods of the inputs and valuation techniques used to measure fair value and a discussion of changes in valuation techniques. FSP 157-4 is effective for us beginning in the second quarter of fiscal year 2009. The adoption of FSP 157-4 did not have a significant impact on our consolidated financial statements.

New Accounting Pronouncements

In ~~December 2008~~In June 2009, the FASB issued ~~FSP~~SFAS ~~132~~No. 168, "The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles a replacement of FASB Statement No. 162," and approved—the FASB Accounting Standards CodificationTM (RCodification) as the single source of authoritative nongovernmental US GAAP. The Codification does not change current US GAAP, but is intended to simplify user access to all authoritative US GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. For the Company, the Codification is effective July 1, ~~“Employers’~~2009 ~~Disclosures~~and ~~about~~will require ~~Postretirement~~future ~~Benefit~~references ~~Plan~~to ~~Assets”~~authoritative ~~(FSP~~US ~~132(R)-1)~~GAAP to coincide with the appropriate section of the Codification. ~~FSP~~Accordingly, ~~132~~this standard will not have an impact on the Company's consolidated results of operations or financial condition. In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)-1," ~~requires additional~~which ~~disclosures~~revised the consolidation guidance for ~~plan~~variable-interest ~~assets~~entities. The modifications include the elimination of ~~defined~~the ~~benefit~~exemption ~~pension~~for orqualifying ~~other~~special purpose entities, a new approach for determining who should consolidate a variable-interest ~~postretirement~~entity, ~~plans~~and changes to when it is necessary to reassess who should consolidate a variable-interest entity. For the Company, this standard is effective January 1, 2010. The ~~required~~Company ~~disclosures~~is ~~include~~currently aevaluating ~~description~~the impact of ~~our investment~~this ~~policies~~standard, ~~and~~but ~~strategies,~~would not expect it to have a material impact on the ~~fair~~Company's ~~value~~consolidated results of ~~each~~operations ~~major~~or ~~category~~financial ofcondition. ~~plan~~ In ~~assets~~June 2009, the ~~inputs~~FASB ~~and~~issued ~~valuation~~SFAS ~~techniques~~No. ~~used~~166, to“Accounting ~~measure~~for Transfers of Financial Assets-an amendment of FASB Statement No. 140,” amending the ~~fair~~guidance ~~value~~ on transfers of ~~plan~~financial assets to, among other things, eliminate the ~~effect~~qualifying special purpose entity concept, include a new unit of ~~fair~~account ~~value~~definition ~~measurements~~that ~~using~~must ~~significant~~be ~~unobservable~~met ~~inputs~~for ontransfers ~~changes~~of inportions ~~plan~~of financial assets to be eligible for sale accounting, clarify and change the derecognition criteria for a transfer to be accounted for as a sale, and require significant ~~concentrations~~ ofadditional ~~risk~~disclosure. For ~~within~~the ~~plan~~Company, this standard is effective for new transfers of financial assets. ~~FSP~~beginning ~~132~~January ~~(R)-~~1, 2010. Because the Company historically does not ~~change~~have ~~the accounting~~significant ~~treatment~~transfers ~~for~~of ~~postretirement~~financial ~~benefits~~assets, ~~plans.~~the ~~FSP~~adoption ~~132(R)-1~~of this standard is not expected to have a material impact ~~effective~~on ~~for~~the usCompany’s ~~for~~consolidated ~~fiscal~~results ~~year~~of ~~2009~~operations or financial condition.

~~In April 2009, the FASB issued FSP FAS 157~~-~~4, “Determining Fair Value When Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP 157~~11-4). FSP 157-4 provides guidance on how to determine the fair value of assets and liabilities when the volume and level of activity for the asset/liability has significantly decreased. FSP 157-4 also provides guidance on identifying circumstances that indicate a transaction is not orderly. In addition, FSP 157-4 requires disclosure in interim and annual periods of the inputs and valuation techniques used to measure fair value and a discussion of changes in valuation techniques. FSP 157-4 is effective for us beginning in the second quarter of fiscal year 2009. The adoption of FSP 157-4 is not expected to have a significant impact on our consolidated financial statements.

9NOTE 4 – ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:	July 31, 2009			January 31, 2009
Accounts receivable-trade	$	210,584		$	150,855
Allowance for doubtful accounts		(13,000	)		(13,000	)
		197,584		$	137,855

InNOTE ~~April 2009,~~5 ~~the~~– ~~FASB~~FIXED issued FSP FAS 107-1 and APB 28-1, “Interim Disclosure about Fair Value of Financial Instruments” (FSP 107-1/APB 28-1). FSP 107-1/APB 28-1 requires interim disclosures regarding the fair values of financial instruments that are within the scope of FAS 107, “Disclosures about the Fair Value of Financial Instruments.” Additionally, FSP 107-1/APB 28-1 requires disclosure of the methods and significant assumptions used to estimate the fair value of financial instruments on an interim basis as well as changes of the methods and significant assumptions from prior periods. FSP 107-1/APB 28-1 does not change the accounting treatment for these financial instruments and is effective for us beginning in the second quarter of fiscal year 2009.ASSETS

NOTE 3 – ACCOUNTS RECEIVABLE

	July 31,			January 31,
	2009			2009
Fixed Assets consist of the following:

Equipment	$	518,210		$	518,210
Leasehold		230,969			230,969
Furniture		38,162			38,162
Trucks		41,188			41,188
Computer software		45,940			45,940
		874,469			874,469
Less accumulated depreciation		(718,071	)		(646,684	)
	$	156,398		$	227,785

Accounts receivable consist of the following:	April 30, 2009			January 31, 2009
Accounts receivable-trade	$	147,273		$	150,855
Allowance for doubtful accounts		(13,000	)		(13,000	)
	$	134,273		$	137,855

Depreciation expense was $71,387 and $88,846 for the six months ended July 31, 2009 and 2008 respectively.

~~NOTE 4 – FIXED ASSETS~~-12-

	April 30, 2009		January 31, 2009
Fixed Assets consist of the following:
Equipment	$	518,210	$	518,210
Leasehold		230,969		230,969
Furniture		38,162		38,162
Trucks		41,188		41,188
Computer software		45,940		45,940
		874,469		874,469
Less accumulated depreciation		688,267		646,684
	$	186,202	$	227,785

NOTE 6 – INTANGIBLE ASSETS

Depreciation expense was $41,583 and $44,423 for the three months ended April 30, 2009 and 2008 respectively.

	July 31,			January 31,
	2009			2009

Intangible Assets consist of the following:

Master records (Note 3)	$	320,676		$	320,676
Other intangible assets
Less accumulated amortization		(320,676	)		(320,676	)
	$	-		$	-

10Amortization expense was $0 and $16,667 for the six months ended July 31, 2009 and 2008.

NOTE 57 – ~~INTANGIBLE~~ ~~ASSETS~~LOANS FROM SHARESHOLDERS AND RELATED PARTY TRANSACTIONS

	April 30, 2009			January 31, 2009
Intangible Assets consist of the following:
Master records	$	320,676		$	320,676
Other intangible assets (see Notes 2 & 15)		-			-
Less accumulated amortization		(320,676	)		(320,676	)
	$	-		$	-

Amortization expense was $0 and $10,000 for the three months ended April 30, 2009 and 2008.

NOTE 6 – LOANS FROM SHARESHOLDERS AND RELATED PARTY TRANSACTIONS

During the year ended January 31, 2009, the Company borrowed from its shareholders five loans of $50,000, $50,000, $75,000 ($5,000 was repaid), $50,000 and $150,000 a total of $375,000.

On January 16, 2009 the Company issued to certain shareholders 63,651,~~741~~741common shares in exchange for satisfaction of the loans from shareholders for the principles of $596,999 and accrued interest of $39,518, at conversion prices of $0.01 per share.

At January 31, 2009 total loans payable to shareholders of $12,148 and due to related party of $69,328.

During the ~~three~~six month ended ~~April 30~~July 31,2009, the Company borrowed from its shareholders ~~three~~seven loans of $100,000, $47,050, $40,000, $21,000, $20,000, $18,000 and $1810,000, for a total of $78256,~~000~~050. Each loan has interest payable on the unpaid balance at the rate of 9% with the initial maturity date as of October 1, 2009. Each loan has a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.05 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, for each loan, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $41,403, $0, $15,249, $0, $7,624, ~~and~~ $14,143 and $4,140 respectively at the date of issuance of each loan.

At ~~April 30~~July 31, 2009 total loans payable to shareholders of $90268,~~148~~198 and due to related party of $69,328.

NOTE 78 - LOANS PAYABLE

During fiscal 2006, the Company ~~borrows~~borrowed two loans of $ 220,000 each., Aa total of $440,000 payable on June 7, 2008,. Loan ~~with~~was ~~the maturity date subsequently~~ extended ~~June~~ 7,for ~~2009~~12 months. The interest rate is the ~~ubs~~UBS ~~rate~~Rate plus 5.5%.

During 2007, the Company borrowed $250,000 from First Capital Invest Corp (“FCIC”), Swiss-based financial institution. Loan is payable in six months from the inception.

On July 15, 2008, the Company issued to FCIC 2,729,014 common shares in exchange for satisfaction of the Loan Agreement dated March 14, 2007, for the principal of $250,000 and accrued interest of $29,301, at conversion price $0.10 per share.

In August 2007, the Company borrowed $105,000 from Ocean Bridge, Inc. Loan has interest payable on the unpaid balance at the rate of 12%.

On January 16, 2009, the Company issued a credit for radio advertising to satisfy in part the Loan Agreement dated August 17, 2007, for principle of $25,000.

On January 16, 2009 the Company issued to Ocean Bridge, Inc. 9,794,220 shares to satisfy in part the Loan Agreement dated August 17, 2007, for outstanding principle of $80,000 and accrued interest of $17,942, at a conversion price 0.01 per share.-13-

~~In February~~On ~~2008~~January ~~the Company borrowed $90~~16,~~000~~ ~~from~~2009 ~~ESJA Enterprises Inc. Loan has interest payable on~~ the ~~unpaid~~Company ~~balance~~issued atto ~~the~~Ocean ~~rate~~Bridge, ~~of 9%~~Inc. ~~Loan matures on August 20~~9,794,220 ~~2008. Loan has a beneficial conversion clause providing the option that the loan can be converted into the company’s~~ common shares ~~at a discount of 20%~~ to ~~market~~ ~~value,~~satisfy ~~with a conversion price limit not to exceed $.40 per share. The company recognizes beneficial conversion features~~ in ~~accordance~~part ~~with~~ the ~~FASB Emerging~~Loan ~~Issues~~Agreement ~~Task~~dated ~~Force~~August ~~Issue~~17, ~~98-5. Accordingly~~2007, ~~the~~for ~~company~~outstanding ~~fully~~principle ~~amortized the~~of ~~discount~~$80,000 ~~through~~and ~~the~~accrued interest ~~expense in the amount~~ of $7517,~~894~~942, at ~~the~~a ~~date of~~conversion ~~issuance~~price of$0.01 ~~the~~per ~~loan~~share.

11In February 2008 the Company borrowed $90,000 from ESJA Enterprises Inc. Loan has interest payable on the unpaid balance at the rate of 9%. Loan matures on August 20, 2008. Loan has a beneficial conversion clause providing the option that the loan can be converted into the Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.40 per share. The Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the Company fully amortized the discount through the interest expense in the amount of $75,894 at the date of issuance of the loan.

On January 16, 2009 the Company issued to ESJA Enterprises, Inc. 9,000,000 common shares to satisfy in part the Loan Agreement dated February 21, 2008, for principle of $90,000, at a conversion price $0.01 per share.

In February 2008 the Company borrowed $100,000 from FD Import & Export Corp. Loan has interest payable on the unpaid balance at the rate of 9%. Loan matures on September 28, 2008. Loan has a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.40 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~ Company fully amortized the discount through the interest expense in the amount of $100,000 at the date of issuance of the loan.

On August 29, 2008 the Company issued to FD Import & Export Corp. 3,519,308 common shares to satisfy in part the Loan Agreement dated February 28, 2008, for principle of $71,512, at a conversion price $0.02032 per share.

In March 2008 the Company borrowed another $100,000 from FD Import & Export Corp. Loan has interest payable on the unpaid balance at the rate of 9%. Loan matures on September 28, 2008. Loan has a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a ~~discount~~ discount of 20% to market value, with a conversion price limit not to exceed $.40 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~ Company fully amortized the discount through the interest expense in the amount of $64,031 at the date of issuance of the loan.

On January 16, 2009 the Company issued to FD Import & Export Corp 14,176,742 ~~shares~~ common to satisfy the Loan Agreement dated February 28, 2008, for outstanding principle of $28,487~~.67~~ and Loan Agreement dated March 10, 2008, for principle of $100,000 and total accrued interest of $13,279, at a conversion price $0.01 per share.

On March 25, 2008 the Company borrowed $75,000 from Tangiers Investors LP. Loan has interest payable on the unpaid balance at the rate of 9.9%. Loan matures on March 24, 2010. Loan has a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 30% to market value, with a conversion price limit not to exceed $.50 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $0 at the date of issuance of the loan.

On October 2, 2008, the Company issued to Tangiers Investors LP 443,656 common shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $5,000, at conversion price $0.01127 per share.

On January 5, 2009, the Company issued to Tangiers Investors LP 350,878 common shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $2,000, at conversion price $0.0057 per share.

On January 16, 2009, the Company issued to Tangiers Investors LP 571,428 common shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $2,000, at conversion price $0.0035 per share.

On May 29, 2008 the Company borrowed $100,000 from Jaworek Capital LLC. Loan had interest payable on the unpaid balance at the rate of 9% with the initial maturity date as of May 28, 2009. Loan had a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.40 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $24,309 at the date of issuance of the loan.

On July 2, 2008, the Company issued to Jaworek Capital LLC 1,229,435 shares in exchange for satisfaction of the Loan Agreement dated May 29, 2008, for the principal of $100,000 and accrued interest of $814, at conversion price 0.0820 per share.-14-

12On July 2, 2008, the Company issued to Jaworek Capital LLC 1,229,435 common shares in exchange for satisfaction of the Loan Agreement dated May 29, 2008, for the principal of $100,000 and accrued interest of $814, at conversion price $0.0820 per share.

On June 16, 2008 the Company borrowed another $100,000 from Jaworek Capital LLC. Loan had interest payable on the unpaid balance at the rate of 9% with the initial maturity date as of June 15, 2009. Loan had a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.40 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $14,679 at the date of issuance of the loan.

On July 2, 2008, the Company issued to Jaworek Capital LLC 1,224,023 common shares in exchange for satisfaction of the Loan Agreement dated June 16, 2008, for the principal of $100,000 and accrued interest of $370, at conversion price $0.0820 per share.

On July 1, 2008 the Company borrowed another $100,000 from Jaworek Capital LLC. Loan had interest payable on the unpaid balance at the rate of 9% with the initial maturity date as of June 30, 2009. Loan had a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.40 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $34,804 at the date of issuance of the loan.

Also, the Company entered into a Stock Purchase Agreement with the lender which entitles the lender to purchase 500,000 shares of the Company's common stock at a price of $0.11 ~~cents~~ per share for a period of 12 months from the time of the agreement. The total cost of the stock options granted was $4,350.

On August 6, 2008, the Company issued to Jaworek Capital LLC 3,241,099 common shares in exchange for satisfaction of the Loan Agreement dated July 1, 2008, for the principal of $100,000 and accrued interest of $863~~.01,~~ at conversion price $0.0311 per share.

On July 31, 2008 the Company borrowed another $100,000 from Jaworek Capital LLC. Loan had interest payable on the unpaid balance at the rate of 9% with the initial maturity date as of June 30, 2009. Loan had a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.40 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $20,192 at the date of issuance of the loan.

Also, the Company entered into a Stock Purchase Agreement with the lender which entitles the lender to purchase 150,000 shares of the Company's common stock at a price of $0.075 ~~cents~~ per share for a period of 12 months from the time of the agreement. The total cost of the stock options granted was $0.

On August 8, 2008, the Company issued to Jaworek Capital LLC 3,138,239 common shares in exchange for satisfaction of the Loan Agreement dated July 31, 2008, for the principal of $100,000 and accrued interest of $173, at conversion price $0.0319 per share.

On August 29, 2008 the Company borrowed $110,000 from Steven Fruman. Loan had interest payable on the unpaid balance at the rate of 9% with the initial maturity date as of June 25, 2009. Loan had a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.20 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~ Company fully amortized the discount through the interest expense in the amount of $0 at the date of issuance of the loan.

Also, the Company entered into a Stock Purchase Agreement with the lender which entitles the lender to purchase 1,000,000 shares of the Company's common stock at a price of $0.05 cents per share for a period of 12 months from the time of the agreement. The total cost of the stock options granted was $0.-15-

~~On January 16~~Also, ~~2009,~~ the Company ~~issued~~entered tointo ~~Steven~~a ~~Fruman~~Stock ~~12,450,000~~Purchase ~~shares~~Agreement ~~in exchange~~with ~~for~~the ~~satisfaction~~lender ofwhich entitles the ~~Loan~~lender ~~Agreement~~to ~~dated~~purchase ~~August 29~~1, ~~2008~~000,000 ~~for~~shares of the ~~principal~~ Company's common stock at a price of $~~110,000~~0.05 ~~and~~per ~~Loan~~share ~~Agreement~~for ~~dated~~a ~~May~~period of 12, ~~2008,~~months ~~for~~from the ~~principle~~ time of ~~$10,000~~the ~~and~~agreement. aThe total ~~accrued~~cost ~~interest~~ of ~~$4,500,~~the atstock ~~conversion~~options ~~price~~granted was $0.~~01 per share.~~

13On January 16, 2009, the Company issued to Steven Fruman 12,450,000 common shares in exchange for satisfaction of the Loan Agreement dated August 29, 2008, for the principal of $110,000 and Loan Agreement dated May 12, 2008, for the principle of $10,000 and a total accrued interest of $4,500, at conversion price $0.01 per share.

On September 11, 2008 the Company borrowed $62,000 from Jaworek Capital LLC. Loan had interest payable on the unpaid balance at the rate of 9% with the initial maturity date as of September 25, 2009. Loan had a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.20 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $26,571 at the date of issuance of the loan.

Also, the Company entered into a Stock Purchase Agreement with the lender which entitles the lender to purchase 85,000 shares of the Company's common stock at a price of $0.05 ~~cents~~ per share for a period of 12 months from the time of the agreement. The total cost of the stock options granted was $0.

On January 16, 2009, the Company issued to Jaworek Capital LLC 6,322,301 common shares in exchange for satisfaction of the Loan Agreement dated September 11, 2008, for the principal of $62,000 and accrued interest of $1,223, at conversion price $0.01 per share.

On October 24, 2008 the Company borrowed $50,000 from Inga Fruman. Loan had interest payable on the unpaid balance at the rate of 9% with the initial maturity date as of November 24, 2008.

On January 16, 2009, the Company issued to Inga Fruman 5,108,493 common shares in exchange for satisfaction of the Loan Agreement dated October 24, 2008, for the principal of $50,000 and accrued interest of $1,085, at conversion price $0.01 per share.

On December 1, 2008 the Company borrowed $250,000 from Robert Catell. Loan had interest payable on the unpaid balance at the rate of 10% with the initial maturity date as of June 1, 2009. Loan had a beneficial conversion clause providing the option that the loan can be converted into the ~~company~~Company’s common shares at a discount of 20% to market value, with a conversion price limit not to exceed $.20 per share. The ~~company~~Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $82,447 at the date of issuance of the loan.

On January 16, 2009, the Company issued to Robert Catell 25,335,616 common shares in exchange for satisfaction of the Loan Agreement dated December 1, 2008, for the principal of $250,000 and accrued interest of $3,356, at conversion price $0.01 per share.

On March 11, 2009, the Company issued to Tangiers Investors LP 1,452,855 common shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $10,000, at conversion price $0.006883 per share.

NOTE 89 - PREFERRED AND COMMON STOCK

During the fiscal year ended January 31, 2008:

In April 2007 the Company sold 50,000 of its $.001 par value common shares to unrelated investors in private placements for $1.00 per share for proceeds of $50,000.

In June 2007 the company entered into stock conversion agreements with company's shareholders according to which all preferred shares issued to shareholders in the amount of $14,417 shall be converted into shares of common stock at the par value of 0.001 per share. These conversion agreements were part of the exchange agreement between the company and Family Healthcare Solutions, Inc., a Nevada Corporation (see Note 6).

In June 2007 as discussed, in Note 6, the company entered into debt conversion agreements with company's shareholders according to which loans from shareholders and certain loans from related party in the amount of $877,000 shall be converted into shares of common stock at the conversion prices of $0.30 and 0.25 per share.

In July 2007 the Company sold 1,000,000 of its $.001 par value common shares to unrelated investors for $0.30 per share for proceeds of $300,000. Market value of the stock at the time of sale was $0.60 per share.

In August 2007 the Company sold 166,667 of its $.001 par value common shares to unrelated investors for $0.30 per share for proceeds of $50,000. Market value of the stock at the time of sale was $0.35 per share.

On November 1, 2007, the Company issued to its attorney 177,420 unrestricted shares of common stock in pay of past and future legal services. Market value of the stock at the time of agreement was $0.31 per share.

On November 9, 2007, the Company issued to Island Broadcasting Company 3,000,000 restricted shares of common stock as a part of new Time Brokerage Agreement (see Note 10). Market value of the stock at the time of agreement was $0.30 per share.

On November 23, 2007, the Company issued to Ronn Torrossian, an independent consultant, 3,000,000 restricted shares of common stock as a part of new Consulting Agreement (see Note 11). Market value of the stock at the time of agreement was $0.16 per share.

On January 16, 2008, the Company issued to its attorney 229,473 unrestricted shares of common stock in pay of past and future legal services. Market value of the stock at the time of agreement was $0.18 per share.

During the year ended January 31, 2009:

On February 6, 2008 certain officers and directors of the Company were granted a total of 3,200,000 stock options to purchase ~~company~~Company’s $.001 par value common shares for $0.31 per share. The total cost of the stock options granted was $6,720.

In March 2008 certain officers of the Company exercised their options and purchased a total of 177,730 of the ~~company~~Company’s $.001 par value common shares for $0.31 per share for a total of $55,096.

~~In May 2008 the Company issued 100,000 shares to its contractor in exchange for consulting services worth $20,000. Market value of the stock at the time of agreement was $0.09 per share.~~-16-

OnIn ~~July 1,~~May 2008 the Company issued 100,000 ascommon ~~discussed~~shares into ~~the~~its ~~Note~~contractor ~~10,~~in ~~the~~exchange ~~Company~~for ~~issued~~consulting toservices ~~Island~~worth ~~Broadcasting~~$20, ~~Inc 1,~~000~~,000~~. Market value of the ~~company’s~~stock ~~$.001~~at ~~shares~~the ~~for~~time of agreement was $0.1109 per share ~~for satisfaction of the payment postponement agreement~~.

On July 1, 2008, as discussed in the Note 11, the Company issued to Island Broadcasting, Inc 1,000,000 of the Company’s $.001 common shares for $0.11 per share for satisfaction of the payment postponement agreement. On July 2, 2008, as discussed in the Note 78, the Company issued to Jaworek Capital LLC 1,224,023 common shares in exchange for satisfaction of the Loan Agreement dated May 29, 2008, for the principal of $100,000 and accrued interest of $370, at conversion price $0.0820 per share. On July 2, 2008, as discussed in the Note 8, the Company issued to Jaworek Capital LLC 1,224,023 common shares in exchange for satisfaction of the Loan Agreement dated June 16, 2008, for the principal of $100,000 and accrued interest of $370, at conversion price $0.0820 per share. During the year ended January 31, 2009 Dr. Paukman, a director of the Company made capital contributions in the amount of $88,228 to VSE Magazine, Inc as additional paid-in capital. No common stock issued. On July 15, 2008, as discussed in the Note 8, the Company issued to FCIC 2,729,014 common shares in exchange for satisfaction of the Loan Agreement dated March 14, 2007, for the principal of $250,000 and accrued interest of $29,301, at conversion price $0.10 per share. On August 6, 2008, as discussed in the Note 8, the Company issued to Jaworek Capital LLC 3,241,099 common shares in exchange for satisfaction of the Loan Agreement dated July 1, 2008, for the principal of $100,000 and accrued interest of $863, at conversion price $0.0311 per share. On August 8, 2008, as discussed in the Note 8, the Company issued to Jaworek Capital LLC 3,138,239 common shares in exchange for satisfaction of the Loan Agreement dated July 31, 2008, for the principal of $100,000 and accrued interest of $173, at conversion price $0.0319 per share. On August 29, 2008, as discussed in the Note 8, the Company issued to FD Import & Export Corp. 3,519,308 common shares to in partial satisfaction of the Loan Agreement dated February 28, 2008, for principle of $71,512, at a conversion price $0.02032 per share. On October 2, 2008, as discussed in the Note 8, the Company issued to Tangiers Investors LP 443,656 common shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $5,000, at conversion price $0.01127 per share. On October 13, 2008, as discussed in the Note 14, the Company issued to Golden Gate Investors, Inc 131,579 common shares in exchange for partial satisfaction of the Loan Agreement dated April 18, 2008, for the principal of $1,000, at conversion price $0.0076 per share. On November 11, 2008, as discussed in the Note 14, the Company issued to Golden Gate Investors, Inc 500,000 common shares in exchange for partial satisfaction of the Loan Agreement dated April 18, 2008, for the principal of $2,000, at conversion price $0.004 per share. On January 16, 2009, as discussed in the Note 8, the Company issued to Tangiers Investors LP 571,428 common shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $2,000, at conversion price $0.0035 per share. On January 16, 2009, as discussed in the Note 8, the Company issued to Jaworek Capital LLC 6,322,301 common shares in exchange for satisfaction of the Loan Agreement dated July 31, 2008, for the principal of $62,000 and accrued interest of $1,223, at conversion price $0.01 per share.

On July 2, 2008, as discussed in the Note 7, the Company issued to Jaworek Capital LLC 1,224,023 shares in exchange for satisfaction of the Loan Agreement dated June 16, 2008, for the principal of $100,000 and accrued interest of $370, at conversion price 0.0820 per share.-17-

~~During~~ On January 16, 2009, as discussed in the ~~year~~Note ~~ended~~8, the Company issued to FD Import & Export Corp 14,176,742 common shares to satisfy the Loan Agreement dated February 28, 2008, for outstanding principle of $28,488 and Loan Agreement dated March 10, 2008, for principle of $100,000 and total accrued interest of $13,280, at a conversion price $0.01 per share. On January 3116, 2009, Dras discussed in the Note 8, the Company issued to ESJA Enterprises Inc 9,000,000 common shares in exchange for satisfaction of the Loan Agreement dated February 21, 2008, for the principal of $90,000, at conversion price $0.01 ~~Paukman~~per share. On January 16, 2009, as discussed in the Note 8, the Company issued to Ocean Bridge, Inc 9,794,220 common shares in exchange for satisfaction of the Loan Agreement dated August 17, 2008, for the outstanding principal of $80,000 and accrued interest of $17,942, at conversion price $0.01 per share. On January 16, 2009, as discussed in the Note 8, the Company issued to Steven Fruman 12,450,000 common shares in exchange for satisfaction of the Loan Agreement dated August 29, 2008, for the principal of $110,000 and Loan Agreement dated May 12, 2008, for the principle of $10,000 and a ~~director~~total accrued interest of $4,500, at conversion price $0.01 per share. On January 16, 2009, as discussed in the Note 8, the Company ~~made~~issued to Inga Fruman 5,108,493 common shares in exchange for satisfaction of the Loan Agreement dated October 24, 2008, for the principal of $50,000 and accrued interest of $1,085, at conversion price $0.01 per share. ~~capital~~ On ~~contributions~~January 16, 2009, as discussed in the ~~amount~~Note 8, the Company issued to Robert Catell 25,335,616 common shares in exchange for satisfaction of the Loan Agreement dated December 1, 2008, for the principal of $88250,~~228~~000 and accrued interest of $3,356, at conversion price $0.01 per share. On January 16, 2009, as discussed in the Note 7, the Company issued to ~~VSE~~certain ~~Magazine~~shareholders 63,651,741 ~~Inc~~common shares in exchange for satisfaction of the loans from shareholders for the principles of $596,999 and accrued interest of $39,518, at conversion prices of $0.01 per share. In January 2008 the Company sold 7,700,000 of its $.001 par value common shares to unrelated investors at $0.01 per share for proceeds of $77,000. On January 16, 2009, the Company issued 8,901,182 common shares at $0.01 per share to satisfy its rent obligations for a total of $89,012. During the six months ended July 31, 2009: On February 12, 2009 the Company sold 7,000,000 of its $.001 par value common shares to unrelated investor at $0.01 per share for proceeds of $70,000. On March 11, 2009, as discussed in the Note 8, the Company issued to Tangiers Investors LP 1,452,855 common shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $10,000, at conversion price $0.006883 per share. ~~additional~~ On ~~paid-~~April 27, 2009, the Company issued to its attorney 1,000,000 unrestricted shares of common stock in ~~capital~~pay of current legal services. NoMarket value of the common stock at the time of agreement was $0.02 per share. On April 27, 2009, The Company issued 25,279,614 unrestricted common shares to Island Broadcasting Company to satisfy unpaid airlease fees of $1,090,000. On April 27, 2009, the Company issued to its officer 1,000,000 unrestricted shares of common stock in pay for past services. Market value of the common stock at the time of agreement was $0.02 per share. On May 15, 2009, as discussed in the Note 11, the Company issued to Signal Above LLC 7,000,000 of the Company’s $.001 common shares at $0.014 per share in pay for air lease expenses. On May 27, 2009, the Company issued to its employees and legal consultant 1,250,000 unrestricted shares of common stock in pay of past services. Market value of the common stock at the time of agreement was $0.019 per share.

On July 15, 2008, as discussed in the Note 7, the Company issued to FCIC 2,729,014 shares in exchange for satisfaction of the Loan Agreement dated March 14, 2007, for the principal of $250,000 and accrued interest of $29,301, at conversion price 0.10 per share.-18-

OnNOTE ~~August 6,~~10 ~~2008,~~– asEQUIPMENT ~~discussed~~LOANS in the Note 7, the Company issued to Jaworek Capital LLC 3,241,099 shares in exchange for satisfaction of the Loan Agreement dated July 1, 2008, for the principal of $100,000 and accrued interest of $863, at conversion price 0.0311 per share.PAYABLE

~~On August 8, 2008, as discussed in the Note 7, the Company issued to Jaworek Capital LLC 3,138,239 shares in exchange for satisfaction of the Loan Agreement dated~~ July 31, January ~~2008~~31, ~~for the principal of $100,000 and accrued interest of $173, at conversion price 0.0319 per share.~~

On August 29, 2008, as discussed in the Note 7, the Company issued to FD Import & Export Corp. 3,519,308 shares to in partial satisfaction of the Loan Agreement dated February 28, 2008, for principle of $71,512, at a conversion price 0.02032 per share. 2009 2009

15Equipment loans consist of the following:

~~On October~~Chrysler 2,Credit ~~2008~~("CC") $ 6, ~~as discussed in the Note 7, the Company issued to Tangiers Investors LP 443,~~656 ~~shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of~~ $5 10,~~000, at conversion price 0.01127 per share.~~015

~~On October~~Less ~~13,~~current ~~2008~~portion (6, ~~as discussed in the Note 14~~656) (7, the Company issued to Golden Gate Investors, Inc 131,579 shares in exchange for partial satisfaction of the Loan Agreement dated April 18, 2008, for the principal of $1,000, at conversion price 0.0076 per share.248)

On November 11, 2008, as discussed in the Note 14, the Company issued to Golden Gate Investors, Inc 500,000 shares in exchange for partial satisfaction of the Loan Agreement dated April 18, 2008, for the principal of $ - $ 2,~~000, at conversion price 0.004 per share.~~767

On January 16, 2009, as discussed in the Note 7, the Company issued to Tangiers Investors LP 571,428 shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $2,000, at conversion price 0.0035 per share.

On January 16, 2009, as discussed in the Note 7, the Company issued to Jaworek Capital LLC 6,322,301 shares in exchange for satisfaction of the Loan Agreement dated July 31, 2008, for the principal of $62,000 and accrued interest of $1,223, at conversion price 0.01 per share.

On January 16, 2009, as discussed in the Note 7, the Company issued to FD Import & Export Corp 14,176,742 shares to satisfy the Loan Agreement dated February 28, 2008, for outstanding principle of $28,488 and Loan Agreement dated March 10, 2008, for principle of $100,000 and total accrued interest of $13,280, at a conversion price 0.01 per share.

On January 16, 2009, as discussed in the Note 7, the Company issued to ESJA Enterprises Inc 9,000,000 shares in exchange for satisfaction of the Loan Agreement dated February 21, 2008, for the principal of $90,000, at conversion price 0.01 per share.

On January 16, 2009, as discussed in the Note 7, the Company issued to Ocean Bridge, Inc 9,794,220 shares in exchange for satisfaction of the Loan Agreement dated August 17, 2008, for the outstanding principal of $80,000 and accrued interest of $17,942, at conversion price 0.01 per share.

On January 16, 2009, as discussed in the Note 7, the Company issued to Steven Fruman 12,450,000 shares in exchange for satisfaction of the Loan Agreement dated August 29, 2008, for the principal of $110,000 and Loan Agreement dated May 12, 2008, for the principle of $10,000 and a total accrued interest of $4,500, at conversion price 0.01 per share.

On January 16, 2009, as discussed in the Note 7, the Company issued to Inga Fruman 5,108,493 shares in exchange for satisfaction of the Loan Agreement dated October 24, 2008, for the principal of $50,000 and accrued interest of $1,085, at conversion price 0.01 per share.

On January 16, 2009, as discussed in the Note 7, the Company issued to Robert Catell 25,335,616 shares in exchange for satisfaction of the Loan Agreement dated December 1, 2008, for the principal of $250,000 and accrued interest of $3,356, at conversion price 0.01 per share.

On January 16, 2009, as discussed in the Note 6, the Company issued to certain shareholders 63,651,741 shares in exchange for satisfaction of the loans from shareholders for the principles of $596,999 and accrued interest of $39,518, at conversion prices of $0.01 per share.

In January 2008 the Company sold 7,700,000 of its $.001 par value common shares to unrelated investors at $0.01 per share for proceeds of $77,000.

On January 16, 2009, the Company issued 8,901,182 shares at $0.01 per share to satisfy its rent obligations for a total of $89,012.

On February 12, 2009 the Company sold 7,000,000 of its $.001 par value common shares to unrelated investor at $0.01 per share for proceeds of $70,000.

On March 11, 2009, as discussed in the Note 7, the Company issued to Tangiers Investors LP 1,452,855 shares in exchange for partial satisfaction of the Loan Agreement dated March 25, 2008, for the principal of $10,000, at conversion price 0.006883 per share.

On April 27, 2009, the Company issued to its attorney 1,000,000 unrestricted shares of common stock in pay of current legal services. Market value of the stock at the time of agreement was $0.02 per share.

On April 27, 2009, the Company issued to its officer 1,000,000 unrestricted shares of common stock in pay for past services. Market value of the stock at the time of agreement was $0.02 per share.

NOTE 9 – EQUIPMENT LOANS PAYABLE

	April 30, 2009		January 31, 2009
Equipment loans consist of the following:
Chrysler Credit ("CC")		7,940		10,015
		7,940		10,015
Less current portion		7,248		7,248
	$	692	$	2,767

The loan payable CC is payable in 60 monthly payments of $782 which includes principal and interest at 6.75% per annum and matures on July 9, 2010. The loan is secured by the truck purchased.

NOTE 1011 - COMMITMENTS AND CONTINGENCIES

Airtime Agreement (Lease) with Island Broadcasting Company

The Company has an agreement (the "Agreement") with Island Broadcasting Company (the "Licensee") for airtime. Pursuant to the Agreement the Company has purchased airtime for the period November 1, 2005 to July 1, 2010. However, after July 1, 2006 the Licensee may terminate the Agreement upon 90 days notice to the Company. Per the Agreement the airtime is paid monthly.

On November 7, 2007, Echo Broadcasting Group, Inc. ("Echo "), a subsidiary of the Company, amended its Time Brokerage Agreement, originally dated November 1, 2005, with Island Broadcasting Company. In particular, Echo extended the term of the Time Brokerage Agreement through December 31, 2012 at 12:00 a.m. EST, modified the events of defaults for both Echo and Island Broadcasting Company, and converted the $170,000 escrow amount currently being held by Island Broadcasting Company into a payment from Echo to Island Broadcasting Company. Additionally, Company issued to Island Broadcasting Company 3,000,000 restricted shares of common stock, at the price of $0.30 per share.

Finally, the amended Time Brokerage Agreement now requires Echo to pay Island Broadcasting Company five percent of the gross receipts received by or credited to Echo and derived from advertising payments, sponsorships and other sources relating to the Station's activities. Echo must make such payments within sixty days following the close of each of Echo's full fiscal quarter from October 1, 2008 through December 31, 2012.

On April 28, 2008 Echo Broadcasting made a payment postponement agreement with Island Broadcasting Company. According to this provision, Echo Broadcasting will pay an annual interest rate charge of 8% on all outstanding monthly balances. In addition Echo Broadcasting will pay a fee of 200,000 restricted shares of the Company’s common stock per month for each month for which payment is not made. All shares are due to be issued on July 1, 2008. Accordingly, on ~~Julyt1~~July 1, 2008 the Company issued 1,000,000 of its $.001 par value common shares Island Broadcasting. Market value of the stock at the time when additional provision to the Time Brokerage Agreement was adopted was $0.11 per share.

17On January 9, 2009, Echo Broadcasting amended its Time Brokerage Agreement (the "Amendment Agreement"), originally dated November 1, 2005 and amended November 7, 2007, with Island Broadcasting Company ("Island"). Pursuant to the Amendment Agreement, Echo shall make payments of $150,000 to Island on the following dates: February 1, March 1, April 1 and May 1, 2009. In addition, the amount that was due on December 31, 2008 which is approximately $1,640,000 shall be reduced by half, and paid $500,000 on March 1, 2009 and $320,000 on May 15, 2009. The $250,000 that was due on January 1, 2009 and the additional $100,000 due on February 1, March 1, April 1 and May 1, 2009 shall be waived. Payments of $250,000 per month, per the November 7, 2007 agreement, as disclosed in our Form 8-K on November 15, 2008, will commence on June 1, 2009 and continue thereafter. Additionally, the revenue sharing fees of the November 7, 2007 agreement shall be waived up to June 1, 2009 and continue thereafter. Effective June 1, 2009, Echo will adhere to the original agreement and its amendment date November 7, 2007.

On January 9, 2009, Echo Broadcasting amended its Time Brokerage Agreement (the "Amendment Agreement"), originally dated November 1, 2005 and amended November 7, 2007, with Island Broadcasting Company ("Island"). Pursuant to the Amendment Agreement, Echo shall make payments of $150,000 to Island on the following dates: February 1, March 1, April 1 and May 1, 2009. In addition, the amount that was due on December 31, 2008 which is approximately $1,640,000 shall be reduced by half, and paid $500,000 on March 1, 2009 and $320,000 on May 15, 2009. The $250,000 that was due on January 1, 2009 and the additional $100,000 due on February 1, March 1, April 1 and May 1, 2009 shall be waived. Payments of $250,000 per month, per the November 7, 2007 agreement, as disclosed in our Form 8-K on November 15, 2008, will commence on June 1, 2009 and continue thereafter. Additionally, the revenue sharing fees of the November 7, 2007 agreement shall be waived up to June 1, 2009 and continue thereafter. Effective June1, 2009, Echo will adhere to the original agreement and its amendment date November 7, 2007.19-

Both parties also agreed that the Amendment Agreement will be terminated at 5PM on the above due dates if any of the amounts stated above are not paid to Island on or before the due dates

During the year ended January 31, 2009, the Company paid $1,635,910 for airtime.

On April 27, 2009, the Company, Echo Broadcasting Group, Inc., a subsidiary of the Company, entered into certain amended time brokerage agreement (the "Amended and Restated TBA"), originally dated November 1, 2005, as amended November 7, 2007, and further amended January 9, 2009 (collectively, the "Original TBA"), with Island Broadcasting Company ("Island"), pursuant to which we issued 25,279,614 shares of our common stock to Island to satisfy an unpaid fees of $1,090,000 under the Original TBA owned by Echo on April 27, 2009. Both parties agreed that the Amended and Restated TBA shall satisfy the obligation of Echo and Island shall have no obligation to provide any other consideration for the shares issued above. ~~There are 297,081,407 shares of our common stock outstanding as of to date.~~ Upon issuance of 25,279,614 shares of common stock, Island holds a total of 29,279,614 shares, ~~which represent 9.9%~~ of ~~the~~our ~~Company's~~ common stock. Also under the terms of Amended and Restated TBA, Echo shall pay to the Island fifty percent (50%) of all gross receipts received from advertising or sponsorship for programming, less only third party commissions to advertising agencies and/or sales representatives.

During the ~~three~~six months ended ~~April~~July 3031, 2009 and ~~April~~July 3031, 2008, the Company incurred $~~300~~398,000 and $~~664~~1,292,243 in airtime expense respectively.

During the ~~three~~six months ended ~~April~~July 3031, 2009, under the revenue sharing agreement with Island Broadcasting Company described above, the Company incurred $48270,~~544~~202 in commission expense.

Airtime Agreement (Lease) with Signal Above LLC

On May 15, 2009, we entered into a Time Brokerage Agreement (the "TBA") with Signal Above, LLC, a Virginia limited liability Company ("Signal Above"). Signal Above is the holder of the license issued by the Federal Communications Commission for analog Low Power Television Station WDCN-LP. The effective date of the TBA is June 1, 2009. The station is currently licensed to operate on channel 6 and is currently operating with an analog signal. Under the TBA, we were to supply music-oriented, predominantly English audio programming to the audio service until May 31, 2014. On the same day, we entered into an amendment to TBA with Signal Above pursuant to which we were to pay $50,000 to Signal Above and 7,000,000 shares of common stock of the Company, which is equal to $100,000, as license fee on or before May 19, 2009.

On May 15, 2009, the Company issued 7,000,000 shares to Signal Above. The Company was unable to pay the remaining balance of $50,000 and the TBA was never effective.

Premises and Equipment

The Company has entered into lease agreements for office space and equipment, which expire at various times through April 2009. The Company continues to rent the office space on the month-to-month basis. During the year ended January 31, 2009 the Company paid $156,140 in rent expense. During ~~three~~six months ended ~~April 30~~July 31, 2009 and ~~April 30~~July 31, 2008 the Company paid $3977,~~075.60~~289 and $3371,~~018~~159 in rent expense respectively.

Capital Lease

On October 4, 2006 the Company has entered into a lease agreement of the equipment, which expire on April 30, 2011. During the year ended January 31, 2009 the Company paid $17,820 in lieu of the lease. During the ~~three~~six months ended ~~April 30~~July 31, 2009 and ~~April~~July 3031, 2008, the Company paid $611,~~480~~340 and $49,~~860~~720 in lieu of the lease respectively. The commitments under the lease agreement mature as follows:

18 Year Ending January 31,

Year Ending January 31,
2010	$	14,580
2011		11,340
	$	25,920

2010 $ 8,100

2011 11,340

$ 19,440

-20-

Legal Contingencies

On October 7, 2008, the Company and our CEO Aleksandr Shvarts (collectively, the "Defendants") were served with a summons and complaint filed by AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC, and New Millennium Capital Partners II, LLC (collectively, the "Plaintiffs"). The complaint alleged that the Company has failed to make payments due on a series of notes from 2004 to 2006 issued by the Company, and failed to make payments of interest due on these notes, and other unlawful conducts by the Company. The case was filed in the Supreme Court of the State of New York, County of New York. The plaintiffs seek all sums due from the notes and other agreements, prejudgment interest, compensatory damages, punitive damages, and attorneys' fees to be in excess of $650,000.

The Company and Mr. Shvarts deny the allegations made in the complaint and intend to vigorously contest the allegations. We believe that we did not enter into any of the above referenced notes with the Plaintiffs and none of the notes or related legal documents were signed or executed on behalf of the Company or our CEO. We are in the process of retaining counsel to represent us in this matter and to file a counterclaim for damages based on breach of contract by the Plaintiffs.

On February 27, 2009, Mega Media Group, Inc. the Company and Aleksandr Shvarts, President and CEO of the Company (collectively, the "Third-Party Defendants"), were served with a third-party summons and counterclaim filed by Eric Schwartz, the original defendant (the "Third-Party Plaintiff"). The counterclaim is grounded in the Third-Party Defendants' failure to repay certain loan agreement. The Third-Party Plaintiff alleged: (i) fraudulent representations against the Third-Party Defendants stemming from alleged representations that common stock of the Company will be issued to plaintiff when the Company becomes a public ~~company~~ Company and said shares of common stock will satisfy the amount owed under the loan agreement, and (ii) that the Company has been unjustly enriched in the amount of not less than $425,000 by virtue of its receipt of $425,000 from plaintiff. The case was filed in the Supreme Court of the State of New York, County of New York. The Third-Party Plaintiff seeks indemnification of not less than $1,000,000 from the fraudulent representations and not less than $425,000 plus accrued interest because of unjustified enrichment, all in the sum of not less than $1,425,000.

~~The~~ On June 1, 2009 the Company, Skeleton Key Entertainment, a wholly-owned subsidiary of the Company (“Skeleton”), Alexander Shvarts, President and MrCEO of the Company, and David Kokakis, former director of the Company (collectively, the “defendants”) were served with a summon and complaint filed by Aleksandr S. ~~Shvarts~~Cherny ~~deny~~(the “Plaintiff”). The complaint alleged that we defrauded plaintiff into investing approximately $150,000 to fund certain albums in connection with an agreement dated June 15, 2007. The case was filed in the Supreme Court of The State of New York, County of Kings. The plaintiff seeks a sum of not less than $250,000 plus interest. The Company denies the allegations made in the ~~counterclaim~~complaint and ~~intend~~intends to vigorously contest the allegations. On WeJune ~~have~~16,2009, ~~retained~~the ~~Nesenoff~~Company &and Alexander Shvarts, President and CEO of the Company (collectively the “Defendants”) were served with a summon and complaint filed by Tangiers Investors, L.P., a Delaware limited Partnership (the “Plaintiff”). The complaint alleged that the Defendants (1) breached certain written ~~Miltenberg~~contract (the”Note”) entered into March 24, ~~LLP~~2008 asbetween ~~our~~the ~~legal~~Company ~~counsel~~and thr Plaintiff, by refusing to honor the Plaintiff’s election to convert certain amounts under the Note; (2) made false representations with the intention to deceive and defraud the Plaintiff under Note; and (3) make fraudulent misrepresentations of material fact in ~~this~~connection ~~matter~~with the purchase of securities and thereby in violation of Rule 10b-5 under the Securities Exchange Act of 1934. The case was filed in the United States District Court, Central District of California. The Plaintiff seeks a sum of not less than $135,004 plus interest, punitive damages and attorney’s fees. The Company denies the allegations made in the complaint and intends to vigorously contest the allegations. In the event the Company loses any of the above lawsuits, it would have a material adverse effect on its financial position and results of operations. NOTE 12 - STOCK-BASED COMPENSATION

On ~~March 16~~November 23, ~~2009~~2007, the Company ~~(the~~has ~~"Defendant")~~issued 3,000,000, ~~was~~$.001 ~~served~~par ~~with~~value, acommon ~~summons~~shares ~~and~~for ~~complaint filed~~future byconsulting ~~Golden~~services ~~State~~performed ~~Equity~~by ~~Investors,~~Ronn ~~Inc.,~~Torrosian over a ~~California~~period ~~corporation~~two ~~(the "Plaintiff")~~years. ~~The~~Market ~~complaint~~value isof ~~grounded~~the instock at the ~~Defendant's~~time ~~breach~~ of aagreement ~~certain investment~~was ~~agreements~~$0.16 byper ~~failing~~share ~~and~~for ~~refusing~~a tototal ~~(i)~~cost ~~pay~~of to$480,000. ~~Plaintiff~~At ~~the interest~~July ~~prepayment~~31, ~~required~~2009, ~~under~~Ronn ~~the~~Torrosian ~~terms~~earned ofconsulting ~~certain~~fees ~~debenture,~~in ~~and (ii)~~the ~~deliver~~amount ~~shares~~ of ~~common~~$404,487. ~~stock~~The ofremaining ~~the~~value ~~Defendant in connection with a conversion~~ of the ~~debenture.~~Ronn ~~The~~Torrosian’s ~~case~~future ~~was~~services ~~filed~~ in the ~~Superior~~amount ~~Court~~ of ~~the State of California~~$75,513 ~~County~~are ofincluded ~~San~~in ~~Diego.~~deferred ~~The~~compensation ~~Plaintiff~~in ~~seeks~~the ~~$511,967~~equity ~~plus~~section ~~accrued interest~~of ~~for~~ the ~~cause~~balance ofsheets ~~action~~at ~~stated~~July ~~above~~31, ~~and costs of suit including reasonable attorneys' fees~~2009.

~~NOTE 11~~ - ~~STOCK~~21-~~BASED COMPENSATION~~

~~On November~~NOTE ~~23,~~13 ~~2007,~~- ~~the~~PAYROLL Company has issued 3,000,000, $.001 par value, common shares for future consulting services performed by Ronn Torrosian over a period two years. Market value of the stock at the time of agreement was $0.16 per share for a total cost of $480,000. At April 30, 2009, Ronn Torrosian earned consulting fees in the amount of $344,076.61. The remaining value of the Ronn Torrosian’s future services in the amount of $135,923.39 are included in deferred compensation in the equity section of the balance sheets at April 30, 2009.TAXES

~~NOTE~~The 12Company ~~- PAYROLL~~has ~~TAXES~~outstanding payroll taxes payable as of January 31, 2009 and January 31, 2008. As of January 31, 2009 the Company has recorded an estimate for interest and penalties that are due to the Company’s failure to timely pay payroll taxes for prior periods. The outstanding payroll tax liability is as following:

~~The~~ July ~~company has outstanding payroll taxes payable as of January~~ 31, ~~2009 and~~ January ~~31,~~ ~~2008. As of January~~ 31, 2009 the company has recorded an estimate for interest and penalties that are due to the company’s failure to timely pay payroll taxes for prior periods. The outstanding payroll tax liability is as following:

19 2009 2009

	April 30, 2009		January 31, 2009
Payroll taxes payable	$	1,065,424	$	997,152
Penalties and interest		135,429		115,814
Accrued payroll and payroll taxes	$	1,200,853	$	1,112,966

Payroll taxes payable $1,294,484 $997,152

Penalties and interest 89,238 115,814

Accrued payroll and payroll taxes $1,383,722 $1,112,966

The Company implemented a payment plan with Internal Revenue Service.

NOTE 1314 – ~~NOTE~~ ~~PAYABLE~~SETTLEMENT ~~AND NOTE RECEIVABLE~~PAYABLE

On April 18, 2008, the Company entered into a Securities Purchase Agreement with Golden Gate Investors, Inc. The aggregate purchase price was $1,500,000 for the initial tranche and the investment was as follows:

The Securities Purchase Agreement includes two tranches. The initial tranche consists of a 7.00% convertible debenture (the "Debenture") issued by the Company, in exchange for $100,000 in cash and a 7.25% Secured Promissory Note for $1,400,000 issued by the Golden Gate Investors, Inc which matures on May 31, 2012. The Promissory Note contains a prepayment provision which requires the Golden Gate Investors, Inc to make prepayments of interest and principal of $200,000 monthly upon satisfaction of certain conditions. One of the conditions to prepayment is that shares of the Company's common stock issued pursuant to the conversion rights under the debenture must be freely tradable under Rule 144 of the Securities Act of 1933, as amended. Pursuant to the terms of the debenture, the Golden Gate Investors, Inc shall have the right from time to time, and at any time on or prior to maturity to convert all or any part of the outstanding and unpaid principal amount of this debenture into fully paid and non-assessable shares of the Company's Common Stock, $.001 par value per share. The number of shares of Common Stock to be issued upon each conversion of the debenture shall be determined by dividing the amount of principal and accrued interest to be converted ("Conversion Amount") by the applicable conversion price then in effect on the date specified in the notice of conversion, as set forth in Exhibit A to the Debenture (the "Notice of Conversion"). The conversion price shall be equal to the lesser of: (i) $0.50 or (ii) the average of the lowest three (3) volume weighted average prices of the Company's Common Stock as reported on the OTC Bulletin Board (the "Volume Weighted Average Price") during the twenty (20) trading days prior to the date of the Conversion Notice (the "Conversion Date") multiplied by .75. As described in the respective instruments, the Debenture provides for an upward adjustment of the interest rate under certain circumstances and the Promissory Note provides for a downward adjustment of the interest rate under certain circumstances. In addition the Golden Gate Investors, Inc is required to prepay $250,000 of the Promissory Note issued on April 18, 2008 on the five month anniversary of the purchase of the Debenture that occurred on April 18, 2008, provided that certain conditions set forth in the Securities Purchase Agreement are satisfied.

Provided that no event of default exists, as defined in the Debenture, the second tranche of the financing consists of the Company selling and the Golden Gate Investors, Inc purchasing a Debenture in the principal amount of $1,500,000 in exchange for a purchase price of $1,500,000 (the "Second Debenture"), with such purchase price paid via a cash payment of $250,000 and the issuance of a promissory note in the principal amount of $1,250,000 (the "Second Promissory Note"), with the form of and terms of the Second Debenture and the Second Promissory Note and payment of the purchase price subject to the same terms and conditions of the Securities Purchase Agreement, the Debenture and the Promissory Note, provided that the Discount Multiplier (as defined in the Second Debenture) for the Second Debenture shall be 90%, and when the Second Debenture is issued, the term "Debenture" as used in the Securities Purchase Agreement shall be deemed to include the Second Debenture in all respects and when the Second Promissory Note is issued, the term "Promissory Note" as used in the Securities Purchase Agreement shall be deemed to include the Second Promissory Note in all respects. Pursuant to the Securities Purchase Agreement, the Golden Gate Investors, Inc may eliminate the requirement to purchase the Second Debenture by a payment to the Company of $25,000, which payment shall be reduced under certain conditions to $5,000 or $0. As also set forth in the Securities Purchase Agreement, the Company has the right, during a specified ten trading day period prior to the Golden Gate Investors, Inc's purchase of the Second Debenture, subject to the satisfaction of certain conditions set forth in the Securities Purchase Agreement, to terminate the right of the Golden Gate Investors, Inc to purchase the Second Debenture.

20-22-

If the Golden Gate Investors, Inc elects to convert a portion of the Debenture and, on the day that the election is made, the Volume Weighted Average Price per share of the Company's Common Stock is below $0.04 per share, the Company shall have the right to prepay that portion of the Debenture that the Golden Gate Investors, Inc elected to convert, plus any accrued and unpaid interest, at 125% of such amount. In the event that the Company elects to prepay that portion of the Debenture, the Golden Gate Investors, Inc shall have the right to withdraw its Conversion Notice. Pursuant to its terms, the Golden Gate Investors, Inc may not convert the principal amount of the Debenture to the extent that, following such conversion, the Golden Gate Investors, Inc would beneficially own in excess of 4.99% of the Company's outstanding Common Stock, which cap may be increased to 9.99% or entirely removed by the Investor on not less than 61 days' prior notice.

Finally, in the event that the Company obtains a commitment for any other financing (either debt, equity, or a combination thereof) which is to close during the term of the Debenture, Golden Gate Investors shall be entitled to a right of first refusal to enable it to, at Golden Gate Investors, Inc’s option, either: (i) match the terms of the other financing, or (ii) add additional principal to the Debenture, in the amount of such other financing, on the same terms and conditions as the Debenture.

Pursuant to the terms of the Securities Purchase Agreement, the Golden Gate Investors, Inc does not have any registration rights.

Other than their relationship as a result of the Securities Purchase Agreement, there is no material relationship between the Company and the Golden Gate Investors, Inc.

The ~~company~~ Company recognizes beneficial conversion features in accordance with the FASB Emerging Issues Task Force Issue 98-5. Accordingly, the ~~company~~Company fully amortized the discount through the interest expense in the amount of $285,715 at the date of issuance of the loan.

The Company’s Common stock as of August 15, 2008 had traded on the Trading Market (as defined in the Debenture) for ten consecutive days at a price per share that was less than 0.039. Therefore, the interest rate was increased to 9.75 % as of August 15, 2008. In addition, under the terms of the Note, the interest rate applicable to the Note was decreased to 4.75 % effective as of August 15, 2008.

On October 13, 2008, the Company issued to Golden Gate Investors, Inc 131,579 common shares in exchange for partial satisfaction of the Loan Agreement dated April 18, 2008, for the principal of $1,000, at conversion price 0.0076 per share.

~~NOTE~~On 14March –16, 2009, the Company (the "Defendant"), was served with a summons and complaint filed by Golden State Equity Investors, Inc., a California corporation (the "Plaintiff"). The complaint is grounded in the Defendant's breach of a certain investment agreements by failing and refusing to (i) pay to Plaintiff the interest prepayment ~~JUDGMENT~~required ~~PAYABLE~~under the terms of certain debenture, and (ii) deliver shares of common stock of the Defendant in connection with a conversion of the debenture. The case was filed in the Superior Court of the State of California, County of San Diego. The Plaintiff seeks $511,967 plus accrued interest for the cause of action stated above, and costs of suit including reasonable attorneys' fees.

GSEI alleged that the Company was liable for breach of certain investment agreements by failing and refusing to (i) pay to GSEI the interest prepayment required under the terms of certain debenture, and (ii) deliver shares of common stock of the Company in connection with a conversion of the debenture. The Settlement Agreement will settle approximately $511,967 plus accrued interest. It also terminates such investment agreements and releases all liabilities of the Company under the investment agreements.

The Company and Mr. Shvarts deny the allegations made in the counterclaim and intend to vigorously contest the allegations. We have retained Nesenoff & Miltenberg, LLP as our legal counsel in this matter.

On May 13, 2009, the Company and Golden State Equity Investors, Inc., f/k/a Golden Gate Investors, Inc., a California corporation ("GSEI") entered into a Settlement Agreement and Mutual General Release (the "Settlement Agreement") to settle that certain lawsuit filed by GSEI against the Company on March 16, 2009 in the Superior Court of the State of California, County of San Diego. Under the Settlement Agreement, we agreed to pay GSEI an aggregate of $250,000 in installments from June 1, 2009 to November 1, 2010 (the "Settlement Amount"), and in return GSEI has agreed to dismiss the lawsuit.

However, in the event that (i) the Company has satisfied all of the payments through February 1, 2010, for an aggregate payment amount of $125,000, on or prior to February 1, 2010, and (ii) an Event of Default has not occurred under the Settlement Agreement on or prior to February 1, 2010, then the Settlement Amount shall be deemed paid in full. Should any payment described above not be timely received by GSEI, such that an Event of Default exists under the Settlement Agreement, the outstanding Settlement Amount shall accrue interest from the date hereof at a rate of 9.75% per annum

As of July 31,2009, the Company’s total settlement payable is $110,000.

-23-

NOTE 15 – JUDGMENT PAYABLE

On September 3, 2008, we were served with a Notice of Motion for Summary Judgment in Lieu of Complaint filed by David Kokakis (the “Plaintiff”). In this Motion, filed in Supreme Court of the State of New York on September 3, 2008, David Kokakis alleged that the Company has filed to make payments due on a series of notes issued by the Company, and filed to make payments of interest due on these notes. David Kokakis asked the court to enter judgment in his favor in the total amount of $329,500 allegedly due under the notes, plus accrued interest.

On November 11, 2008, the Company settled this litigation and entered into a settlement agreement (the "Stipulation of Settlement") with Plaintiff. The Company signed two (2) confessions of judgment (the "Confession of Judgment") which is in favor of Plaintiff. Pursuant to the first Confession of Judgment, in the event of default of the Stipulation of Settlement, the Company agrees to pay Plaintiff a total of $388,810, consisting of a principal amount of $329,500 plus accrued interests of $59,310. Pursuant to the second Confession of Judgment, in the event of default of the Stipulation of Settlement , the Company agreed to pay Plaintiff deferred compensation in the sum of $125,962. The second claim would be the basis of a second action brought by Plaintiff against the Company, which Plaintiff was about to commence.

Both Confessions of Judgment will be held in escrow by Plaintiff's counsel pending the Company's compliance with its agreement pursuant to the schedule detailed in the Stipulation of Settlement. The payments have a maximum of a five (5) day grace period, that is, they must be in Plaintiff's attorney's possession by no later than the 6th day of the month.

If the Company makes all of the payments, which is $316,955 in total, pursuant to the payment schedule, the two (2) Confessions of Judgment will not be filed and will be waived and returned to the Company's attorney. Failing to make the payments, or failing to pay on time, as a fore described, will be deemed a default and permit Plaintiff's counsel to file both Confessions of Judgment and Affidavits of Confession of Judgments with the Clerk of the Court without further notice.

At As of ~~April~~ 30July 31, 2009 the Company’s total judgment payable is $~~266~~241,~~955~~983.

21NOTE 16 - SEGMENT DATA

NOTE 15 - SEGMENT DATA

Currently the Company has three reportable segments, which it believes best reflects how the Company is currently managed – radio broadcasting, recorded music and corporate divisions. The category “other” includes audio & video recording studios, METRO magazine and other general support services and initiatives. Revenue and expenses earned and charged between segments are recorded at fair value and eliminated in consolidation.

Year Ended January 31, 2009

	Radio			Recorded Music			Corporate			Metro			Other			Total
Revenue	$	1,314,528		$	3,213		$	7,786		$	101,338		$	0		$	1,426,865
Direct operating expenses		1,838,048			0			0			131,529			0			1,969,577
Selling, general and administrative expenses		1,769,631			417			995,630			31,480			837			2,797,995
Depreciation and amortization		64,317			134,560			104,315			16,667			363			320,222
Loss on sale of intangible assets		0			0			0			40,168			0			40,168
Interest expenses		95,893			0			212,213			0			0			308,106
Beneficial Conversion		0			0			728,642			0			0			728,642
Net loss before tax benefit	$	(2,453,361	)	$	(131,764	)	$	(2,033,014	)	$	(118,506	)	$	(1,200	)	$	(4,737,845	)

				Recorded
	Radio			Music			Corporate			Metro			Other			Total
Revenue	$	1,314,528		$	3,213		$	7,786		$	101,338		$	-		$	1,426,865
Direct operating expenses		1,838,048			-			-			131,529			-			1,969,577
Selling, general and
administrative expenses		1,769,631			417			995,630			31,480			837			2,797,995
Depreciation and amortization		64,317			134,560			104,315			16667			363			320,222
Loss on sale of intangible assets		-			-			-			40,168			-			40,168
Interest expense		95,893			-			212,213			-			-			308,106
Beneficial Conversion		-			-			728,642			-			-			728,642


Net loss before tax benefit	$	(2,453,361	)	$	(131,764	)	$	(2,033,014	)	$	(118,506	)	$	(1,200	)	$	(4,737,845	)

~~Three~~Six Months Ended ~~April 30~~July 31, 2009

	Radio			Recorded Music			Corporate			Metro		Other			Total
				Recorded
Revenue	$	372,409		$	0		$	0		$	0	$	0		$	372,409
	Radio			Music			Corporate			Metro		Other			Total
Direct operating expenses		383,823			0			0			0		0			383,823
Revenue	$	875,252		$	-		$	-		$	-	$	-		$	875,252
Selling, general and administrative expenses		513,702			0			232,411			0		0			746,114
Direct operating expenses		722,841			-			-			722,841
Depreciation and amortization		13,821			2,390			25,281			0		91			41,583
Selling, general and
Interest expenses		20,071			0			27,727			0		0			47,797
administrative expenses		1,005,108			-509,808			509,808			-		-			1,514,916
Beneficial Conversion		0			0			37,016			0		0			37,016
Depreciation and amortization		28,038			4,780			38,387			-182		-182			71,387
Net loss before tax benefit	$	(559,008	)	$	(2,390	)	$	(322,435	)	$	0	$	(91	)	$	(883,924	)
Interest expense		61,964			-			96,065			-		-			158,029
Beneficial Conversion		-			-			82,559			-		-			82,559
Net loss before tax benefit	$	(942,699	)	$	(4,780	)	$	(726,819	)	$	-	$	(182	)	$	(1,674,480	)

~~NOTE 16 – SUBSEQUENT EVENTS~~-24-

OnThree ~~May~~Months ~~1, 2009,~~Ended weJuly ~~entered into 9% convertible promissory notes (the "Notes") with certain investors (the "Holders") for an aggregate of $115~~31,~~000.~~ ~~The maturity date of these Notes is October 1,~~ 2009. Pursuant to the terms of the Notes, the Holders shall have the right from time to time, and at any time on or prior to maturity to convert all or any part of the outstanding and unpaid principal amount of these Notes into fully paid and non-assessable shares of Common Stock, $.001 par value per share. The number of shares of Common Stock to be issued upon each conversion of these Notes shall be determined by dividing the amount of principal and accrued interest to be converted ("Conversion Amount") by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the "Notice of Conversion"). The Conversion Price shall be equal to the average closing bid price of the Common Stock (as reported by Bloomberg L.P.) on the OTC Bulletin Board for the ten (10) trading days prior to the date of the Conversion Notice (the "Conversion Date") multiplied by .80 provided that the Notice of Conversion is submitted by to our company before 6:00 p.m., New York, New York time on such Conversion Date. However, the Conversion Price shall not exceed $0.05.

	Radio			Recorded Music			Corporate			Metro		Other			Total
Revenue	$	502,844		$	-		$	-		$	-	$	-		$	502,844
Direct operating expenses		339,018			-			-			-		-			339,018
Selling, general and
administrative expenses		491,406			-			277,396			-		-			768,802
Depreciation and amortization		14,217			2,390			13,106			-		91			29,804
Interest expense		41,892						68,339			-		-			110,231
Beneficial Conversion		-			-			45,543			-		-			45,543


Net loss before tax benefit		(383,689	)	$	(2,390	)	$	(404,384	)	$	0	$	(91	)	$	(790,554	)

On NOTE ~~May~~17 – SUBSEQUENT EVENTS 13 As discussed in Notes 1 & 2, on August 10, 2009, the Company and ~~Golden~~Echo ~~State~~Broadcasting ~~Equity~~Group ~~Investors~~(“Echo”), ~~Inc.,~~its ~~f/k/a~~wholly-owned ~~Golden~~subsidiary ~~Gate Investors~~(collectively, ~~Inc.~~the “Debtors”), afiled ~~California~~voluntary ~~corporation~~petitions (~~"GSEI")~~the ~~entered~~“Chapter ~~into~~11 aCases”) ~~Settlement Agreement~~for ~~and~~relief ~~Mutual~~under ~~General~~Chapter ~~Release~~11 (of the ~~"Settlement~~United ~~Agreement")~~States toBankruptcy ~~settle~~Code ~~that~~(the “Bankruptcy ~~certain~~Code”) ~~lawsuit~~in ~~filed~~the byUnited ~~GSEI~~States ~~against~~Bankruptcy ~~the~~Court ~~Company~~for onthe ~~March~~Eastern ~~16,~~District ~~2009~~of inNew York (the ~~Superior~~ “Bankruptcy Court”). ofThe ~~the~~Chapter ~~State~~11 ofCases ~~California,~~No. ~~County~~are of09-46811 ~~San~~(MMG) ~~Diego~~and 009-46813 (Echo). ~~Under~~The ~~the Settlement~~Debtors ~~Agreement,~~are wewaiting ~~agreed~~for the judge to ~~pay~~be ~~GSEI~~assigned. anThe ~~aggregate~~Debtors ofwill ~~$250,000~~continue ~~in installments~~to ~~from~~operate ~~June~~their 1,businesses ~~2009~~as to“debtors-in-possession” ~~November~~under 1,the ~~2010~~jurisdiction (of the ~~"Settlement~~Bankruptcy ~~Amount"),~~ Court and in ~~return~~accordance ~~GSEI~~with ~~has~~the ~~agreed~~applicable toprovisions ~~dismiss~~of the ~~lawsuit~~Bankruptcy Code and orders of the Bankruptcy Court.

As disclosed in our Form 8-K filed on March 16, 2009, in this lawsuit, GSEI alleged that the Company was liable for breach of certain investment agreements by failing and refusing to (i) pay to GSEI the interest prepayment required under the terms of certain debenture, and (ii) deliver shares of common stock of the Company in connection with a conversion of the debenture. The Settlement Agreement will settle approximately $511,967 plus accrued interest. It also terminates such investment agreements and releases all liabilities of the Company under the investment agreements.

On May 15, 2009, we entered into a Time Brokerage Agreement (the "TBA") with Signal Above, LLC, a Virginia limited liability company ("Signal Above"). Signal Above is the holder of the license issued by the Federal Communications Commission for analog Low Power Television Station WDCN-LP. The effective date of the TBA is June 1, 2009. The station is currently licensed to operate on channel 6 and is currently operating with an analog signal. Under the TBA, we will supply music-oriented, predominantly English audio programming to the audio service until May 31, 2014. On the same day, we entered into an amendment to TBA with Signal Above pursuant to which we will pay $50,000 to Signal Above and 7,000,000 shares of common stock of the Company, which is equal to $100,000, as license fee on or before May 19, 2009.

The foregoing is a summary of the material features of the Settlement Agreement and TBA and its amendment. This summary does not purport to be complete and is qualified in its entirety by reference to the terms of the agreements, which are filed as exhibit to this Current Report on Form 8-K, and incorporated herein by reference.

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

Forward-Looking Statements

The discussion in this section contains certain statements of a forward-looking nature relating to future events or our future performance. Words such as “anticipates,” “believes,” “expects,” “intends,” “future,” “may” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the only means of identifying forward-looking statements. Such statements are only predictions and that actual events or results may differ materially. In evaluating such statements, you should specifically consider various factors identified in this report, including the matters set forth under the caption “business risks,” which could cause actual results to differ materially from those indicated by such forward-looking statements.

The following discussion is provided to afford the reader an understanding of the material matters of the Company's financial condition, results of operation, capital resources and liquidity. It should be read in conjunction with the financial statements and notes thereto and other information appearing elsewhere in this report.

Background

On June 20, 2007, Mega Media Group, Inc., a Nevada corporation, (formerly named Family Healthcare Solutions, Inc.) (“the Company”), entered into a Stock Purchase and Share Exchange Agreement (the “Exchange Agreement”) pursuant to which the Company acquired 100% of the issued and outstanding capital stock of Mega Media Group, Inc., a New York corporation ("MMG-NY"), and its wholly owned subsidiaries, making MMG-NY a wholly owned subsidiary of the Company, and converted into equity $877,000 in convertible debentures from the MMG-NY Note Holders, in exchange for the issuance by the company to the MMG-NY Shareholders and MMG-NY Group Note Holders of 49,990,406 shares of MMDA common stock, par value $0.001 per share, which constituted 68.50% of the Company’s issued and outstanding fully diluted common stock after the transaction closed. As additional consideration, the Company’s Shareholders agreed to cancel 13,161,033 shares of common stock. The Company’s stockholders immediately prior to the Closing Date owned 28.50% of the issued and outstanding fully diluted common stock of MMDA after the transaction closed. After the closing of the Share Exchange Agreement, the Company succeeded to the business of MMG-NY and MMG-NY's wholly-owned subsidiaries as its sole business. The transaction was accounted for as a reverse acquisition.

RESULTS OF OPERATIONS

Results of ~~Operations~~operations for the Three Months Ended ~~April~~July 3031, 2009 Compared with the Three Months Ended ~~April~~July 3031, 2008

	Three Months Ended April 30,
	Three Months Ended July 31,
	2009			2008
	(Unaudited)			(Unaudited)
Revenues:
Advertising revenues	$	~~361~~458,~~116~~923		$	~~237~~369,~~250~~297
Other revenues		1143,~~292~~921			738,~~964~~194
Total Revenues		~~372~~502,~~409~~844			~~245~~407,~~214~~491
Operating expenses		~~383~~339,~~823~~018			770,~~632~~380
Selling, general and administrative		~~746~~768,~~114~~802			~~609~~723,~~369~~320
Depreciation and amortization		4129,~~583~~804			5451,~~423~~090
		1,171,519			1,434,424
		1,137,624			1,544,790
Net loss from operations		(~~799~~634,~~110~~780	)		(1,~~189~~137,~~210~~299	)
Other Expenses:
Interest expense		47,797			81,677
Loss on sale of intangible assets		-			40,168
Beneficial conversion expense		37,016			525,640
Interest expense		110,231			93,851
Net loss before tax benefit		(883,924	)		(1,796,527	)
Beneficial conversion expense		45,543			93,986
Net loss before tax benefit		(790,554	)		(1,365,304	)
Tax benefit		-			-
Net loss	$	(~~883~~790,~~924~~554	)	$	(1,~~796~~365,~~527~~304	)

24-26-

Revenue

We derive revenue from sales of advertisements and program sponsorships to local advertisers, independent promotion agreements, ticket and other revenue related to special events we sponsor throughout the year and management fees from our subsidiaries. Advertising revenue is affected primarily by the advertising rates our radio stations and magazine are able to charge as well as the overall demand for radio advertising time in a market. For the three months ended ~~April~~ 30July 31, 2009 our revenue increased by $ ~~127~~95,~~195~~353 to $~~372~~502,~~409~~844 as compared to $ ~~245~~407,~~214~~491 for the three months ended ~~April~~July 3031, 2008. The increase results primarily from increase radio advertising revenues.

Operating Expenses

Our significant operating expenses are broadcast expenses, consisting of (i) employee salaries and commissions, (ii) programming expenses, (iii) advertising and promotion expenses, (iv) rental of premises for studios, (v) rental of transmission tower space and (vi) freelance consultants. We strive to control these expenses by centralizing certain functions such as finance, accounting, legal, human resources and management information systems and the overall programming management function. For the three months ended ~~April~~July 3031, 2009 operating expenses decreased by $ ~~386~~431,~~809~~362 to $~~383~~339,~~823~~018 as compared to $ 770,~~632~~ 380 for the three months ended ~~April~~July 3031, 2008. The decrease is principally attributable to decreased broadcasting expenses.

Selling, General and Administrative Expenses

Selling, General and Administrative expenses increased by $~~136~~45,~~745~~482 to $~~746~~768,~~114for~~ 802 for the three months ended ~~April~~July 3031, 2009 from $~~609~~723,~~369~~320 in 2008. The increase is attributable to higher corporate expenses. Selling expenses are a significant part of our expenditures and relate directly to the marketing and development of products. We anticipate similar expenditures for the foreseeable future.

Depreciation and Amortization Expenses

Depreciation and Amortization expenses decreased by $ 1221,~~840~~286 to $ 4129,~~583~~804 for the three months ended ~~April~~July 3031, 2009 from $ 5451,~~423~~090 in 2008 due to the decrease in ~~fixed assets~~the write off of the impaired master records.

Loss on Sale of Intangible Assets

Loss on sale of intangible assets decreased by $40,168 to $0 for the three months ended July 31, 2009 from $40,168 in 2008 as result of the sale of business assets of VSE Magazine, a whole-owed subsidiary.

Interest Expense

Interest expense ~~decreased~~ increased by $3316,~~830~~380 to $47110,~~797~~231 for the three months ended ~~April~~July 3031, 2009 from $8193,~~677~~851 in 2008 due to the ~~decrease~~additional in borrowings in second quarter of 2008.

Beneficial Conversion Expense

Beneficial conversion expense decreased by $ ~~488~~48,~~624~~443 to $ 3745,~~016~~543 for the three months ended ~~April~~July 3031, 2009 from $~~525~~93,~~640~~986 in 2008 due to the decrease of borrowings with the attached beneficial conversion provisions.

Net Loss

We have a net loss of $ ~~883~~790,~~924~~555 for three months ended ~~April~~July 3031, 2009 as compared to a net loss of $1,~~796~~365,~~526~~304 for the three months ended ~~April~~July 3031, 2008. The decrease in net loss is primarily attributable to the increase in our ~~operating~~ ~~expenses~~ revenues and decrease in ~~interest expense~~operating expenses.

~~LIQUIDITY AND CAPITAL RESOURCES~~-27-

AsResults of ~~April~~ 30operations for the Six Months Ended July 31, 2009, ~~our~~Compared ~~Working~~with ~~Capital~~the ~~deficiency~~Six isMonths $Ended 3July 31,~~357,370.~~ 2008

Cash used in operating activities was $85,260 for the three months ended April 30, 2009 as compared to $ 679,467 during the three months ended April 30, 2008. The decrease in cash used in operating activities reflects the reduced outlays necessary to achieve the growth in revenues, which should ultimately result in positive operating cash flow.

	Six Months Ended July 31,
	2009			2008
	(Unaudited)			(Unaudited)
Revenues:
Advertising revenues	$	820,039		$	606,547
Other revenues		55,213			46,158
Total Revenues		875,252			652,705
Operating expenses		722,841			1,541,013
Selling, general and administrative		1,514,916			1,332,689
Depreciation and amortization		71,387			105,513
		2,309,144			2,979,215
Net loss from operations		(1,433,892	)		(2,326,510	)
Other Expenses:
Loss on sale of intangible assets		-			40,168
Interest expense		158,029			175,526
Beneficial conversion expense		82,559			619,628
Net loss before tax benefit		(1,674,480	)		(3,161,832	)
Tax benefit		-			-
Net loss	$	(1,674,480	)	$	(3,161,832	)

Cash provided by financing activities was $109,444 for the three months period ended April 30, 2009 as compared to $679,071 for the six months ended April 30, 2008. The increase in cash provided by financing activities is primarily due to the additional borrowings.Revenue

25We derive revenue from sales of advertisements and program sponsorships to local advertisers, independent promotion agreements, ticket and other revenue related to special events we sponsor throughout the year and management fees from our subsidiaries. Advertising revenue is affected primarily by the advertising rates our radio stations and magazine are able to charge as well as the overall demand for radio advertising time in a market. For the six months ended July 31, 2009 our revenue increased by $222,547 to $875,252 as compared to $652,705 for the six months ended July 31, 2008. The increase results primarily from increase radio advertising revenues.

Operating Expenses

Our significant operating expenses are broadcast expenses, consisting of (i) employee salaries and commissions, (ii) programming expenses, (iii) advertising and promotion expenses, (iv) rental of premises for studios, (v) rental of transmission tower space and (vi) freelance consultants We strive to control these expenses by centralizing certain functions such as finance, accounting, legal, human resources and management information systems and the overall programming management function. For the six months ended July 31, 2009 operating expenses decreased by $818,172 to $722,841 as compared to $1,541,013 for the six months ended July 31, 2008. The decrease is principally attributable to decreased broadcasting expenses.

Selling, General and Administrative Expenses

Selling, General and Administrative expenses increased by $182,227 to $1,514,916 for the six months ended July 31, 2009 from $1,332,689 in 2008. The increase is attributable to higher corporate expenses. Selling expenses are a significant part of our expenditures and relate directly to the marketing and development of products. We anticipate similar expenditures for the foreseeable future.

Depreciation and Amortization Expenses

Depreciation and Amortization expenses decreased by $34,126 to $71,387 for the six months ended July 31, 2009 from $105,513 in 2008 due to the decrease in the write off of the impaired master records.

Loss on Sale of Intangible Assets

Loss on sale of intangible assets decreased by $40,168 to $0 for the six months ended July 31, 2009 from $40,168 in 2008 as result of the sale of business assets of VSE Magazine, a whole-owed subsidiary.

Interest Expense

Interest expense decreased by $17,497 to $158,029 for the six months ended July 31, 2009 from $175,526 in 2008 due to the decrease in borrowings in 2009.

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Beneficial Conversion Expense

Beneficial conversion expense decreased by $537,069 to $82,559 for the six months ended July 31, 2009 from $619,628 in 2008 due to the decrease of borrowings with the attached beneficial conversion provisions.

Net Loss

We have a net loss of $1,674,480 for six months ended July 31, 2009 as compared to a net loss of $3,161,832 for the six months ended July 31, 2008. The decrease in net loss is primarily attributable to the increase in our revenues and decrease in operating expenses.

Liquidity and Capital Resources

As of July 31, 2009, our Working Capital deficiency is $3,895,971.

Cash used in operating activities was $255,256 for the six months ended July 31, 2009 as compared to $1,140,120 during the six months ended July 31, 2008. The decrease in cash used in operating activities reflects the reduced outlays necessary to achieve the growth in revenues, which should ultimately result in positive operating cash flow.

Cash used in investing activities was $0 for the six months period ended July 31, 2009 as compared to $10,646 cash provided by investing activities for the six months period ended July 31, 2008. The decrease in cash provided by investing activities is primarily due to reduction in acquisition of fixed assets.

Cash provided by financing activities was $241,379 for the six months period ended July 31, 2009 as compared to $1,162,644 for the six months ended July 31, 2008. The decrease in cash provided by financing activities is primarily due to the decrease in borrowings.

Going Concern

As reflected in the Company’s Financial Statements which accompany this report, our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities and commitments in the normal course of business. In the near term, we expect operating costs to continue to exceed funds generated from operations. As a result, we expect to continue to incur operating losses and we may not have sufficient funds to grow our business in the future. We can give no assurance that we will achieve profitability or be capable of sustaining profitable operations. As a result, operations in the near future are expected to continue to use working capital.

To successfully grow the individual segments of the business, we must decrease our cash burn rate, improve our cash position and the revenue base of each segment, and succeed in our ability to raise additional capital through a combination of public or private debt and equity offerings or strategic alliances. We also depend on certain third party contractors and our executives.

We incurred net losses of $~~833~~1,~~924~~674,480 and $13,~~796~~161,~~526~~832 for the ~~three~~six months ended ~~April 30~~July, 31 2009 and 2008, respectively, and have an accumulated deficit of $1415,~~927~~717,~~238~~ 794 at ~~April~~July 3031, 2009. As of ~~April~~July 3031, 2009, we had total current assets of $~~182~~207,~~334~~ 584 and total current liabilities of $34,~~539~~103,~~704~~555 creating a working capital deficiency of $ 3,~~557~~895,~~370.~~ 971 The Company currently has bank overdraft of ~~approximately~~ ~~$3,981 as of April 30, 2009. The Company currently has~~ approximately $384,~~061~~525 as of ~~April~~July 3031, 2009 ~~in cash~~.

On August 10, 2009, the Company and Echo Broadcasting Group (“Echo”), its wholly-owned subsidiary (collectively, the “Debtors”), filed voluntary petitions (the “Chapter 11 Cases”) for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy Court”). The Chapter 11 Cases No. are 09-46811 (MMG) and 009-46813 (Echo). The Debtors are waiting for the judge to be assigned. The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

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CRITICAL ACCOUNTING POLICIES

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in the summary “Background and Significant Accounting Policies” accompanying our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting companies.

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There have been no changes in the Company’s internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Except as stated below, neither the Company nor any of its subsidiaries is a party to any pending or threatened legal proceedings.

As disclosed in our Form 8-K filed on August 10, 2009, on August 10, 2009, the Company and Echo Broadcasting Group (“Echo”), our wholly-owned subsidiary (collectively, the “Debtors”), filed voluntary petitions (the “Chapter 11 Cases”) for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy Court”). The Chapter 11 Cases No. are 09-46811 (MMG) and 009-46813 (Echo). The Debtors are waiting for the judge to be assigned. The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

As disclosed in our Form 8-K filed on May 15, 2009, on May 13, 2009, we entered into a Settlement Agreement and Mutual General Release (the “Settlement Agreement”) with Golden State Equity Investors, Inc., f/k/a Golden Gate Investors, Inc., a California corporation (“GSEI”) to settle that certain lawsuit filed by GSEI against the Company on March 16, 2009 in the Superior Court of the State of California, County of San Diego. Under the Settlement Agreement, we agreed to pay GSEI an aggregate of $250,000 in installments from June 1, 2009 to November 1, 2010 (the “Settlement Amount”), and in return GSEI has agreed to dismiss the lawsuit.

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As disclosed in our Form 8-K filed on March 16, 2009, in this lawsuit, GSEI alleged that the Company was liable for breach of certain investment agreements by failing and refusing to (i) pay to GSEI the interest prepayment required under the terms of certain debenture, and (ii) deliver shares of common stock of the Company in connection with a conversion of the debenture. The Settlement Agreement will settle approximately $511,966.53 plus accrued interest. It also terminates such investment agreements and releases all liabilities of the Company under the investment agreements.

As disclosed in our Form 8-K filed on March 16, 2009, on February 27, 2009, the Company and Aleksandr Shvarts, President and CEO of the Company (collectively, the “Third-Party Defendants”), were served with a third-party summons and counterclaim filed by Eric Schwartz, the original defendant (the “Third-Party Plaintiff”). The counterclaim is grounded in the Third-Party Defendants’ failure to repay certain loan agreement. The Third-Party Plaintiff alleged: (i) fraudulent representations against the Third-Party Defendants stemming from alleged representations that common stock of the Company will be issued to plaintiff when the Company becomes a public company and said shares of common stock will satisfy the amount owed under the loan agreement, and (ii) that the Company has been unjustly enriched in the amount of not less than $425,000 by virtue of its receipt of $425,000 from plaintiff. The case was filed in the Supreme Court of the State of New York, County of New York. The Third-Party Plaintiff seeks indemnification of not less than $1,000,000 from the fraudulent representations and not less than $425,000 plus accrued interest because of unjustified enrichment, all in the sum of not less than $1,425,000. We deny the allegations made in the complaint and have retained Nesenoff & Miltenberg, LLP as our legal counsel in this matter.

As disclosed on our Form 8-K filed on October 14, 2008, on October 7, 2008, we, the Company, and our CEO Aleksandr Shvarts (collectively, the “Defendants”) were served with a summons and complaint filed by AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC, and New Millennium Capital Partners II, LLC (collectively, the “Plaintiffs”). The complaint alleged that the Company has failed to make payments due on a series of notes from 2004 to 2006 issued by the Company, and failed to make payments of interest due on these notes, and other unlawful conducts by the Company. The case was filed in the Supreme Court of the State of New York, County of New York. The Plaintiffs seek all sums due from the notes and other agreements, prejudgment interest, compensatory damages, punitive damages, and attorneys' fees to be in excess of $650,000. The Company and Mr. Shvarts deny the allegations made in the complaint and intend to vigorously contest the allegations. We believe that we did not enter into any of the above referenced notes with the Plaintiffs and none of the notes or related legal documents were signed or executed on behalf of the Company or our CEO. We deny the allegations made in the complaint and have retained Nesenoff & Miltenberg, LLP as our legal counsel in this matter.

As disclosed in our Form 8-K filed on November 21, 2008, on September 3, 2008, we were served with a Notice of Motion for Summary Judgment in Lieu of Complaint filed by David Kokakis (“Plaintiff”). On November 11, 2008, the Company settled this litigation and entered into a settlement agreement (the “Stipulation of Settlement”) with Plaintiff. The Company signed two (2) confessions of judgment (the “Confession of Judgment”) which is in favor of Plaintiff. Pursuant to the first Confession of Judgment, in the event of default of the Stipulation of Settlement, the Company agrees to pay Plaintiff a total of $388,810, consisting of a principal amount of $329,500 plus accrued interests of $59,310. Pursuant to the second Confession of Judgment, in the event of default of the Stipulation of Settlement, the Company agreed to pay Plaintiff deferred compensation in the sum of $125,962. The second claim would be the basis of a second action brought by Plaintiff against the Company, which Plaintiff was about to commence. If the Company makes all of the payments, which is $329,500 in total, pursuant to the payment schedule, the two (2) Confessions of Judgment will not be filed and will be waived and returned to the Company’s attorney. Failing to make the payments, or failing to pay on time, as aforedescribed, will be deemed a default and permit Plaintiff’s counsel to file both Confessions of Judgment and Affidavits of Confession of Judgments with the Clerk of the Court without further notice.

On October 9, 2008, the Company and Echo (collectively, the “Defendants”) were served with a summons and complaint filed by Eric Schwartz, the former Director and Vice President of the Company until January 27, 2008 (“Plaintiff”). The complaint alleged that during Plaintiff’s employment by the Company and Echo, Plaintiff is owed the sum of not less than $119,621 plus accrued interest with respect to the unpaid base salary for 2006, 2007 and January 2008. The case was filed in the Supreme Court of the State of New York, County of Kings. The plaintiffs seek all sums for the unpaid base salary plus interest, compensation, liquidated damages equal to 25% of the total amount of wages due, attorneys’ fees, and a sum not exceeding $50 for expenses which may be taxed as costs, all in the sum of not less than $149,526.25. The Company and Echo deny the allegations made in the complaint and intend to vigorously contest the allegations. We deny the allegations made in the complaint and have retained Nesenoff & Miltenberg, LLP as our legal counsel in this matter and have filed a counterclaim against Eric Schwartz.

Item 1A. Risk Factors.

Not applicable to smaller reporting companies.

-31-

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The description of unregistered sales of securities is incorporated in our Current Report Form 8-K.

As disclosed on our current report Form 8-K filed on July 29, 2009, on July 23, 2009, we entered into 9% convertible promissory notes with certain investors for an aggregate of $68,050. The maturity date of these Notes is October 1, 2009.

As disclosed on our current report Form 8-K filed on May 18, 2009, on May 15, 2009, we issued 7,000,000 shares of our common stock to Signal Above, LLC pursuant to certain Amendment to Time Brokerage Agreement.

As disclosed on our current report Form 8-K filed on May 1, 2009, on April 27, 2009, we issued 25,279,614 shares of our common stock to Island Broadcasting Company pursuant to certain Amendment to Time Brokerage Agreement.

From April 27, 2009 to ~~April~~July 3031, 2009, we entered into 9% convertible promissory notes ~~(the “Notes”)~~ with certain investors ~~(the “Holders”)~~ for an aggregate of $193,000. The maturity date of these Notes is October 1, 2009.

As disclosed on our current report Form 8-K filed on February 27, 2009, on February 10, 2009, we issued 7,000,000 shares of our common stock to Robert Catell for a total of $70,000 pursuant to certain Share Purchase Agreement.

These securities are issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended (the “Act”). These securities qualified for exemption under Section 4(2) of the Securities Act of 1933 since the issuance securities by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these shareholders had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act of 1933 for this transaction.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits.


Exhibit No.	Title of Document	Location

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934	Filed herewith

31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934	Filed herewith

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

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

29-32-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	MEGA MEDIA GROUP, INC.
Date: June 19, 2009	By:	/s/ Aleksandr Shvarts
Dated: September 21, 2009	By:	/s/ Alex Shvarts
		ALEKSANDR SHVARTS
		Alex Shvarts
		Chief Executive Officer and Director

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