GENERAL

Financial Media Group, Inc. (the “Company,” "We," or "FMG") is a full service financial media company focused on applications that enables the retail investment and financial communities to collaborate directly with publicly traded companies. The Company provides Internet based media and advertising services through its financial website and the Company’s newspaper “WallSt.net Digest.” The Company provides full array of customized investor awareness programs such as audio and video of senior management interviews; press releases; newsletter and editorials; small cap conferences and seminars; email mailings and forums.

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

Digital WallStreet, Inc. was incorporated in Nevada on June 12, 2002, and commenced its operations during the first quarter of 2003. Wallstreet is a full service financial media company focused on applications that enables the retail investors and financial communities to collaborate directly with publicly traded companies. The company provides internet based media and advertising services through its financial website “Wallst.net” and the through its business newspaper “WallSt.net Digest.”

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

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

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

On June 13, 2006, Financial Media Group, Inc. established another wholly owned subsidiary MyWallStreet, Inc. MyWallStreet, Inc. is presently in the development stage and will offer a social networking platform that allows members to collaborate with one another, build personalized WebPages, exchange ideas, access financial content, and build social networks comprised of other members, targeted to the financial community.

CORPORATE HISTORY

The Company was incorporated in Nevada in 1984 as Southern Development Company, Inc. ("SDC"). In December 1994, SDC merged with Integrated Communications Access Network, Inc. ("ICAN"). In March 1996, the Company was renamed SDC, and in September 1998, the Company changed its name to EssxSport Corp. At that time, the Company had no assets and no liabilities. From September 1998 until August 31, 2004, the Company was primarily engaged in the manufacture and distribution of athletic equipment, primarily for pole vaulting and other track and field activities. The Company's major operation was the sale of several lines of sporting gear and equipment under the brand name EssxSport. The Company produced and manufactured it own brand products and private labeled products for others in the Sports Industry. The Company also contracted with manufacturers for the production of other sports equipment and various other lines, primarily targeting the track and field market, with products used in Baseball, Basketball, Volleyball, and Soccer, marketing directly to end users via the internet, catalog sales, and trade shows. Effective August 31, 2004, the Company sold, transferred, and delivered all of its assets relating to its pole vault and sports business to its former President and director. The assets sold included names, logos, trademarks, and endorsements relating to name “EssxSport,” all the equipment, tools, inventory  and ownership of a wholly-owned subsidiary, Eonlinesports.com, Inc.

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On June 30, 2004, the Company filed with the Securities and Exchange Commission ("SEC") to become a business development company ("BDC") under the 1940 Act and on September 1, 2004 it began its BDC operations. On June 1, 2005, the Company terminated its BDC status and on August 1, 2005, the Company’s shareholders approved an amendment to the Articles of Incorporation changing the Company’s name to “Financial Media Group, Inc.”

On June 1, 2005, shareholders of Financial Media Group, Inc. (formerly “Giant Jr. Investments Corp.”, “Giant Jr.”), voted to terminate the Company’s legal status as a Business Development Company (“BDC”) as defined under Section 2(a) (48) of the Investment Company Act of 1940 (The “1940 Act”), as amended. After the termination of such status, the Company has been governed by the rules and regulations promulgated under the Securities Act of 1933 and the Securities and Exchange Act of 1934.

Business Segment

Financial Media Group, Inc. is a fully integrated financial brand builder focusing on developing better tools and education for both the retail investor and small to medium size public companies. Management analyzes its client's operations by reviewing financial information regarding products and services that are aggregated into a single operating segment, investor awareness.

General Business Plan

The Company’s has established itself as specializing in financial news, tools and original, compelling content for the global investment community. WallStreet Direct’s flagship website, wallst.net, features information on thousands of publicly traded companies through exclusive executive management interviews, original articles, financial tools, and community driven applications.

The Company is an end-destination website for retail investors, investment professionals, and executives from around the world. The Company’s Financial Filings Inc. subsidiary was initiated to leverage WallStreet Direct, Inc.’s existing client base, by offering Edgarization services to small and mid-sized public companies. With the establishment of My WallStreet, Inc. an all-new social networking website, an eCommerce platform, proprietary branded products, and a financial education platform, all of which will be vertically integrated with the Company’s existing web properties, and brands.

Market

Regulation Fair Disclosure and The Sarbanes Oxley Act have changed the landscape of investor relations ("IR") dramatically, forcing companies to re-evaluate the methods they use to communicate with investors. These regulations have also put the spotlight on Web-based disclosure and have turned web casting and Web sites into mission-critical applications. In the wake of these regulatory changes, investors are looking to get more of their information directly from the company.

Small and medium size public companies do not receive the same coverage as large public companies. Over the last few years, the Internet has become a cost-effective solution to enhance the profile of public companies, but many small and mid cap companies have lacked the skills and knowledge to take full advantage of this opportunity. This had led to the outsourcing of Internet related services. Requirements of small and mid cap companies are broad and range from the design, development, and maintenance of investor relations oriented websites to the creation of effective on-line advertising campaigns.

The recent wake of corporate scandals has resulted in declining investor confidence and heightened demands to make publicly traded companies more transparent. Investors today expect more financial and non-financial data than ever before. With the widespread use of the web as a timely, low-cost means of disseminating information, both regulatory bodies and investors have grown more aggressive in their demands for fair and timely access to unfiltered company information.

Many companies have fewer sell-side analysts covering their stock. Since most investors use some formal analysis to make investment decisions, sell-side coverage is valuable for attracting investors who might not otherwise find an emerging company on their radar screen. The staff reductions at Wall Street securities firms in the last few years have resulted in thinner coverage by sell-side analysts and brokers, opening the way for companies to use the Internet to communicate directly with investors and the media. Gone are the days when a company can rely exclusively on their sell-side analysts to deliver their message to the buy side. In this new environment, companies need to find ways to communicate directly to investors. Web-based communications can play an important role in providing tools for companies to reach buy side investors with your company’s message.

Competition

Generally, competitive factors within the investor awareness market include the range and depth of financial tools and dimensions of email offerings, the quality of web site content, and the reliability of reference information provided in connection with the sundry active campaigns. We are aware of several companies which are much larger and have greater name recognition, that provide some level of investor awareness in similar delivery formats. However, we believe that: (i) the depth and quality of our information, (ii) the assortment of the Company’s financial tools, (iii) and the Company’s Web site, provide us with a competitive advantage compared to other investor awareness providers.

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RISK FACTORS

The Diminution or loss, misappropriation or legal claims on the brand name "WALLST.NET" would have a material adverse affect on our business.

 

The Company is highly dependent on our brand name "Wallst.net" for the success of our venture. It believes the diminution or loss, misappropriation of our existing proprietary rights or claims of infringement or legal actions related to intellectual property of "Wallst.net" brand name, or any other negative market or industry perception arising from these, would have a material adverse effect on our business.

The Company currently relies on contractual rights, copyrights, trademarks, and trade secrets to protect our intellectual property rights. The Company does not hold any patents. There can be no assurance that the Company means of protecting its proprietary rights will be adequate or that our competitors will not independently develop comparable or superior technologies or obtain unauthorized access to its proprietary technologies.

The Company holds the Internet domain name www.wallst.net. Under current domain name registration practices, no one else can obtain an identical domain name, but someone might obtain a similar name, or the identical name with a different suffix, such as ".org,” or with a country designation. The regulation of domain names in the United States and in foreign countries is subject to change, and the Company would be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our domain names.

Our operating results may fluctuate significantly in the future as a result of a variety of factors, many of which are outside our control. These factors include:

In early stage of the Company’s development and traffic levels on the Company’s web site, commerce may fluctuate significantly as a result of business and financial news events; the demand for advertising on its web site as well as on the web in general; changes in rates paid for web advertising resulting from competition or other factors; the Company’s ability to enter into or renew key agreements; the amount and timing of our costs related to the Company’s marketing efforts or other initiatives; fees paid for distribution or content agreements or other costs incurred as the Company expands its operations; new services introduced by the Company or our competitors; competitive factors; technical difficulties or system downtime affecting the web generally or the operation of the Company’s web site; or economic conditions specific to the web as well as general economic conditions.

The Company expects that over time its revenues will come from a mix of investor awareness work, advertising, content licensing, membership driven e-commerce, and newspaper subscription service fees. However, the Company expects to be substantially dependent on investor awareness work and advertising revenues for the foreseeable future. Therefore, the Company’s revenues and operating results are likely to be particularly affected by the level of its ability to win various investor awareness mandates and advertising proposals going forward. The Company’s cost structure could also change dramatically as it scales up its operations in each business segment. Any shortfall in the Company’s revenues would have a direct impact on its operating results going forward and these fluctuations could negatively affect the value of common stock in a manner unrelated to the Company’s long-term operating performance.

We could experience seasonal and cyclical factors including but not limited to economy, stock market conditions, and geo-political risks on our business.

The Company believes that investor relations budget and advertising sales generally tend to be limited during economic downturn, recession, bear market, decline in consumer confidence and increase in geo-political risks. Financial media industry follows the same seasonal patterns as those in the traditional media; the Company may experience lower revenues subject to deteriorating economic and market conditions. Furthermore, traffic levels on the Company’s web site typically fluctuate with the occurrence of significant events in the business and financial news, such as fluctuations in the stock markets, changes in geo-political situations, major news and events related to business, companies that could cause changes in the Company’s audience size.

There is intense competition for web-based business and financial content and the Company may not be able to compete successfully.

Many web sites compete for consumers' and advertisers' attention and spending, particularly in the business and financial information and news area. The Company expects this competition to continue to increase. The Company competes for investor relation campaign, advertisers, users, and content providers with many types of companies:

Publishers and distributors of traditional media, including television, radio and print, such as The WallStreet Journal, CNN and CNBC; general purpose consumer online services such as America Online and Microsoft Network; Online services or web sites targeted to business, finance and investing needs, such as TheStreet.com and Motley Fool; and web retrieval and other web "portal" companies, such as Excite, Infoseek, Lycos, Yahoo! and America Online.

Increased competition could result in price reductions, reduced margins, or loss of market share, any of which would adversely affect the Company’s business.

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We will need to establish and maintain strategic relationships with other web sites to attract users, advertisers, and content.

The Company depends on establishing and maintaining distribution relationships with high-traffic web sites for a significant portion of our traffic. There is intense competition for placements on these sites, and the Company may not be able to enter into such relationships on commercially reasonable terms or at all. Even if the Company enters into distribution relationships with these web sites, they themselves may not attract significant numbers of users. Therefore, the Company’s web site may not receive additional users from these relationships. Moreover, the Company may have to pay significant fees to establish these relationships.

Occasionally the Company enters into agreements with advertisers, content providers or other high traffic web sites that require us to exclusively feature these parties in certain sections of the Company’s web site. Existing and future exclusivity arrangements may prevent the Company from entering into other content agreements, advertising or sponsorship arrangements, or other strategic relationships. Many companies that the Company pursues for a strategic relationship also offer competing services. As a result, these competitors may be reluctant to enter into strategic relationships with the Company. The Company’s business could be adversely affected if the Company does not establish and maintain additional strategic relationships on commercially reasonable terms or if any of the Company’s strategic relationships do not result in increased use of its web site.

We are significantly influenced by our officers, directors and entities affiliated with them.

In the aggregate, ownership of Financial Media Group, Inc. shares by management represents approximately 67% of issued and outstanding shares of common stock. These shareholders, if acting together, will be able to significantly influence all matters requiring approval by shareholders, including the election of directors and the approval of mergers or other business combinations transactions. The Company’s future performance is dependent on the ability to retain key personnel. The Company’s performance is substantially dependent on the performance of senior management and key technical personnel. In particular, the Company's success depends on the continued efforts of its senior management team.

The loss of the services of any of its executive officers or other key employees could have a material adverse effect on the Company's business, results of operations and financial condition.

Future success also depends on the continuing ability to retain and attract highly qualified technical, editorial, and managerial personnel. The Company anticipates that the number of employees will increase in the next 12 months. Wages for managerial and technical employees are increasing and are expected to continue to increase in the foreseeable future due to the competitive nature of this job market. The Company has experienced difficulty from time to time in attracting the personnel necessary to support the growth of its business, and there can be no assurance that it will not experience similar difficulty in the future. The inability to attract and retain the technical and managerial personnel necessary to support the growth of its business could have a material adverse effect upon the Company's business, results of operations and financial condition.

The Company depends on our direct sales force to sell advertising on our Web site.

The Company has created its own internal sales force. Presently the sales group has thirteen (13) members. The Company depends on its sales force to sell advertising on its Web site. This involves a number of risks, such as a) t hese sales personnel have only worked for the Company for a short period of time; b) the Company needs to further increase the size of its sales force; c) its ability to hire, retain, integrate and motivate additional sales and sales support personnel; d) the length of time it takes new sales personnel to become productive; and, e) the competition the Company faces from other companies in hiring and retaining sales personnel.

 

The Company depends on advertisers from the financial industry and may not succeed in attracting advertisers from other industries.

Publicly traded companies have accounted for the substantial majority of the Company’s advertising revenues. The Company will need to sell advertising to customers outside our client base in order to increase its revenues. To date, relatively few advertisers from industries other than publicly traded companies and financial industries have devoted a significant portion of their advertising budgets to web advertising. If the Company does not attract advertisers from other industries, its business could be adversely affected.

The Company systems may not be able to accommodate increases in the number of users of the Company’s services.

In the past, the Company’s Web site has experienced significant increases in traffic when there is noteworthy business or financial news stories. In addition, the number of the Company’s users has continued to increase over time as the Company continues to seek further increases in its user base. Consequently, the Company’s Web site must accommodate a high volume of traffic and deliver frequently updated information. The Company’s Web site has in the past and may in the future experience slower response times or other problems for a variety of reasons.

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The Company’s web site could experience disruptions or interruptions in service due to the failure or delay in the transmission or receipt of this information. In addition, the Company’s users depend on Internet service providers, online service providers and other web site operators for access to the Company’s Web site. Each of them has experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to the Company’s systems. These types of occurrences could cause users to perceive the Company’s Web site as not functioning properly and therefore cause them to use other methods to obtain their business and financial news and other information.

If the Company does not develop new and enhanced services and features for its Web site, the Company may not be able to attract and retain a sufficient number of users.

The Company believes that its Web site will be more attractive to advertisers if the Company develops a larger audience comprised of demographically favorable users. Accordingly, the Company intends to introduce additional or enhanced services in the future in order to retain its current users and attract new users. If the Company introduces a service that is not favorably received, the current users may not continue using the Company’s service as frequently. New users could also choose a competitive service over the Company’s.

The Company may also experience difficulties that could delay or prevent the Company from introducing new services. Furthermore, these services may contain errors that are discovered after the services are introduced. The Company may need to significantly modify the design of these services on its Web site to correct these errors. The Company’s business could be adversely affected if it experiences difficulties in introducing new services or if users do not accept these new services.

The Company needs and may be unable to obtain additional funding on satisfactory terms, which could dilute its shareholders or impose burdensome financial restrictions on its business.

The supplementary development of the Company’s product offerings will require a commitment of substantial funds. The Company’s future capital requirements will depend on the costs of its research and development programs for the continuance of updating the Company’s services.

The Company will need to raise substantial additional capital to fund its future operations. The Company cannot be certain that additional financing will be available on acceptable terms, or at all. In recent years, it has been difficult for companies to raise capital due to a variety of factors, which may or may not continue. To the extent the Company raises additional capital through the sale of equity securities; the ownership position of our existing stockholders could be substantially diluted. If additional funds are raised through the issuance of preferred stock or debt securities, these securities are likely to have rights, preferences, and privileges senior to the Company’s common stockholders. Fluctuating interest rates could also increase the costs of any debt financing the Company may obtain.

Failure to successfully address ongoing liquidity requirements will have a material adverse effect on the Company’s business. If the Company is unable to obtain additional capital on acceptable terms when needed, the Company may be required to take actions that harm its business and the Company’s ability to achieve positive cash flows in the future, including possibly the surrender of its rights to some technologies or product opportunities, delaying the Company’s development strategies or curtailing or even ceasing operations.

The Company’s failure to manage growth effectively could impair its business.

The Company’s business strategy envisions a period of rapid growth that may put a strain on its administrative, operational resources and funding requirements. The Company’s ability to effectively manage growth will require them to continue to expand the capabilities of its operational and management systems and to attract, train, manage and retain qualified editors, technicians, salespersons and other personnel. There can be no assurance that the Company will be able to do so, particularly if losses continue and the Company is unable to obtain sufficient financing. If the Company is unable to successfully manage growth, its business, prospects, financial condition, and results of operations could be adversely affected.

The Company does not anticipate paying cash dividends on its common stock.

The Company does not anticipate paying any cash dividends on the common stock in the foreseeable future

RISKS RELATED TO OUR INDUSTRY

The Company depends on the continued growth in the use of the web, particularly for financial news and information.

The Company’s business depends on consumers continuing to increase their use of the web for obtaining news and financial information as well as for conducting commercial transactions. The rapid growth and use of the Internet is a recent phenomenon. As a result this acceptance and use may not continue to develop at historical rates. Web usage may be inhibited for a number of reasons, such as:

Inadequate network infrastructure; security concerns; inconsistent quality of service; and availability of cost-effective, high-speed service.

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If web usage grows, the Internet infrastructure may not be able to support the demands placed on it by this growth or its performance and reliability may decline. In addition, web sites have experienced interruptions in their service as a result of outages and other delays occurring throughout the Internet network infrastructure. If these outages or delays frequently occur in the future, web usage, as well as usage of our web site, could grow more slowly or decline.

The Company depends on the sale of advertisements on its Web site and if web advertising does not become accepted, the Company’s business would be harmed.

The Company expects to derive a substantial amount of its revenues from advertising for the foreseeable future. No standards have been widely accepted to measure the effectiveness of web advertising. If such standards do not develop, existing advertisers may not continue their current levels of web advertising. Furthermore, advertisers that have traditionally relied upon other advertising media may be reluctant to advertise on the web. Advertisers that already have invested substantial resources in other advertising methods may be reluctant to adopt a new strategy. The Company’s business would be adversely affected if the market for web advertising fails to develop or develops more slowly than expected. Different pricing models are used to sell advertising on the web. It is difficult to predict which, if any, will emerge as the industry standard. This makes it difficult to project our future advertising rates and revenues. For example, advertising rates based on the number of "click throughs," or user requests for additional information made by clicking on the advertisement, instead of rates based solely on the number of impressions, or times an advertisement is displayed, could adversely affect our revenues because impression-based advertising comprises a substantial majority of our current advertising revenues. The Company’s advertising revenues could be adversely affected if it is unable to adapt to new forms of web advertising. Moreover, "filter" software programs that limit or prevent advertising from being delivered to a web user's computer are available. Widespread adoption of this software could adversely affect the commercial viability of web advertising.

Government regulation and legal uncertainties relating to the web could hinder the popularity of the worldwide web.

There are currently few laws or regulations that specifically regulate communications or commerce on the web. However, laws and regulations may be adopted in the future that address issues such as user privacy, pricing, and the characteristics and quality of products and services. For example, the telecommunications act sought to prohibit transmitting certain types of information and content over the web. Several telecommunications companies have petitioned the federal communications commission to regulate Internet service providers and online services providers in a manner similar to long distance telephone carriers and to impose access fees on these companies. This could increase the cost of transmitting data over the Internet. Moreover, it may take years to determine the extent to which existing laws relating to issues such as property ownership, libel and personal privacy are applicable to the web. Any new laws or regulations relating to the web could adversely affect the Company’s business.

Web security concerns could hinder Internet commerce.

The need to securely transmit confidential information over the Internet has been a significant barrier to electronic commerce and communications over the web. Any well-publicized compromise of security could deter more people from using the web or from using it to conduct transactions that involve transmitting confidential information, such as stock trades or purchases of goods or services. Since many of the Company’s advertisers seek to advertise on the Company’s Web site to encourage people to use the web to purchase goods or services, the Company’s business could be adversely affected. The Company may also incur significant costs to protect against the threat of security breaches or to alleviate problems caused by such breaches.

The Company could face liability for the information displayed on its Web site.

The Company may be subjected to claims for defamation, negligence, and copyright or trademark infringement or based on other theories relating to the information the Company publishes on its web site. These types of claims have been brought, sometimes successfully, against online services as well as other print publications in the past. The Company could also be subjected to claims based upon the content that is accessible from its Web site through links to other web sites.

 

EMPLOYEES

As of August 31, 2006, we employed 30 people on a full-time basis. Management consists of four (4) people, the sales department consists of thirteen (13) people, the editorial staff consists of four (4) people, our technology department consists of four (4) people and we have an administration staff of five (5) people.

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