Onstream Media - Unaudited Consolidated Balance Sheet at June 30,...

Onstream Media - Recent Material Event

Item 1 - Financial Statements

Unaudited Consolidated Balance Sheet at June 30, 2008 and Consolidated Balance Sheet at September 30, 2007

Unaudited Consolidated Statements of Operations for the Nine and Three Months Ended June 30, 2008 and 2007

Unaudited Consolidated Statement of Stockholders’ Equity for the Nine Months Ended June 30, 2008

Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2008 and 2007	6 –7

Notes to Unaudited Consolidated Financial Statements	8 – 48

Item 2 - Management’s Discussion and Analysis or Plan of Operations	49 – 61

Item 3 - Controls and Procedures

PART II – OTHER INFORMATION
Item 1 – Legal Proceedings

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

Item 3 – Defaults upon Senior Securities

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

Item 5 – Other Information

Item 6 - Exhibits

Signatures

ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30,			September 30,

	(unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	874,834		$	560,230
Accounts receivable, net of allowance for doubtful accounts of $48,257 and $65,254, respectively		2,598,499			2,620,177
Prepaid expenses		471,755			565,649
Inventories		80,580			85,459
Other current assets		108,596			137,632
Total current assets		4,134,264			3,969,147

PROPERTY AND EQUIPMENT, net		4,501,855			5,551,026
INTANGIBLE ASSETS, net		4,077,745			5,108,604
GOODWILL, net		21,696,948			21,696,948
OTHER NON-CURRENT ASSETS		462,576			157,931

Total assets	$	34,873,388		$	36,483,656

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	2,713,756		$	2,266,134
Amounts due to shareholders and officers		109,419			109,419
Deferred revenue		115,717			215,400
Notes and leases payable – current portion, net of discount		1,719,610			138,629
Total current liabilities		4,658,502			2,729,582

Notes and leases payable, net of current portion		183,856			255,329
Convertible debentures, net of discount		732,618			-

Total liabilities		5,574,976			2,984,911

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Series A-10 Convertible Preferred stock, par value $.0001 per share, authorized 700,000 shares, 74,841 and 69,196 issued and outstanding, respectively
Common stock, par value $.0001 per share; authorized 75,000,000 shares, 42,577,491 and 41,880,707 issued and outstanding, respectively		4,258			4,188
Additional paid-in capital		130,227,899			129,090,403
Unamortized discount		(39,842	)		(98,491	)
Accumulated deficit		(100,893,911	)		(95,497,362	)
Total stockholders’ equity		29,298,412			33,498,745
Total liabilities and stockholders’ equity	$	34,873,388		$	36,483,656

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

ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Nine Months Ended June 30,				Three Months Ended June 30,

REVENUE:
DMSP and hosting	$	1,085,279	$	508,905	$	356,383	$	209,087
Network usage		1,714,638		1,594,048		570,032		522,261
Webcasting		4,459,077		3,556,047		1,569,679		1,478,106
Audio and web conferencing		5,427,288		1,338,563		1,828,831		1,338,563
Other		534,776		1,017,497		157,522		227,199
Total revenue		13,221,058		8,015,060		4,482,447		3,775,216

COSTS OF REVENUE:
DMSP and hosting		463,448		206,662		219,790		107,531
Network usage		708,665		666,151		236,468		223,472
Webcasting		1,505,132		1,168,799		539,820		479,001
Audio and web conferencing		1,088,091		220,767		387,922		220,767
Other		517,586		627,182		160,031		190,687
Total costs of revenue		4,282,922