AFTERMASTER, INC. - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - AFTERMASTER, INC.	Financial_Report.xls
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, RULES 13A-14 AND 15D-14, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - AFTERMASTER, INC.	exhibit_31-2.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND 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 - AFTERMASTER, INC.	exhibit_32-1.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, RULES 13A-14 AND 15D-14, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - AFTERMASTER, INC.	exhibit_31-1.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2015

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

For the transition period from _______ to __________

Commission file number 001-10196

STUDIO ONE MEDIA, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE	23-2517953
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

7650 E. Evans Rd., Suite C

Scottsdale, Arizona 85260

(Address of principal executive offices) (Zip Code)

(480) 556-9303

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

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 during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

x Yes o No (Not required)

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

Large accelerated filer	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).

o Yes x No

At May 15, 2015, the number of shares outstanding of Common Stock, $0.001 par value, was 88,733,382 shares.

	STUDIO ONE MEDIA, INC.

	INDEX
	PART I - FINANCIAL INFORMATION
		PAGE NUMBER
Item 1.	Condensed Financial Statements	3

	Condensed Consolidated Balance Sheets – March 31, 2015 (unaudited) and June 30, 2014	3

	Condensed Consolidated Statements of Operations - For the three and nine months ended March 31, 2015 and 2014 (unaudited)	4

	Condensed Consolidated Statements of Cash Flows - For the three months ended March 31, 2015 and 2014 (unaudited)	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosure About Market Risks	28

Item 4T.	Controls and Procedures	28
	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3.	Defaults Upon Senior Securities	29

Item 4.	Submission of Matters to a Vote of Security Holders	29

Item 5.	Other Information	30

Item 6.	Exhibits	30

	SIGNATURES	31

STUDIO ONE MEDIA, INC.
Consolidated Balance Sheets

	March 31,				June 30,
	2015				2014
	(Unaudited)
ASSETS

Current Assets
Cash		$	402,477			$	77,876
Accounts receivable			43,225				3,400
Other current assets			31,193				20,499

Total Current Assets			476,895				101,775

Property and equipment, net			91,349				133,730
Property and equipment, yet to be placed in service			93,750				31,250

Intangible assets, net			32,855				11,990

Other Assets
Deposits			124,807				107,057
Other assets			39,606				-

Total Other Long-term Assets			164,413				107,057

Total Assets		$	859,262			$	385,802

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable and other accrued expenses		$	602,556			$	951,563
Accrued interest			111,460				74,483
Deferred revenue			6,000				3,500
Consulting services - related party			82,267				278,568
Lease payable			30,768				30,768
Derivative Liability			393,534				-
Notes payable - related party			625,000				610,000
Notes payable			40,488				40,488
Convertible notes payable - related party, net of discount of $0 and $1,761 , repectively			3,925,000				3,932,239
Convertible notes payable, net of discount of $35,005 and $161,043, repectively			827,748				764,705

Total Current Liabilities			6,644,821				6,686,314

Long-Term Liabilities
Lease Payable, net of current portion			16,390				55,374

Total Liabilities			6,661,211				6,741,688

Stockholders' Deficit
Convertible preferred stock, Series A; $0.001 par value; 100,000 shares authorized, 15,500 shares issued and outstanding			16				16
Convertible preferred stock, Series A-1; $0.001 par value; 3,000,000 shares authorized, 641,000 and 696,000 shares issued and outstanding, respectively			641				696
Convertible preferred stock, Series B; $0.001 par value; 200,000 shares authorized, 3,500 shares issued and outstanding			3				3
Convertible preferred stock, Series C; $0.001 par value; 1,000,000 shares authorized, 13,404 shares issued and outstanding			13				13
Convertible preferred stock, Series D; $0.001 par value; 375,000 shares authorized, 130,000 shares issued and outstanding			130				130
Convertible preferred stock, Series E; $0.001 par value; 1,000,000 shares authorized, 275,000 shares issued and outstanding			275				275
Convertible preferred stock, Series P; $0.001 par value; 600,000 shares authorized, 86,640 shares issued and outstanding			87				87
Convertible preferred stock, Series S; $0.001 par value; 50,000 shares authorized, -0- shares issued and outstanding			-				-
Common stock, authorized 100,000,000 shares,
par value $0.001; 88,542,654 and 70,296,203 shares issued
and outstanding, respectively			88,550				70,297
Additional paid In capital			46,872,263				40,557,726
Accumulated Deficit			(52,763,927	)			(46,985,129	)

Total Stockholders' Deficit			(5,801,949	)			(6,355,886	)

Total Liabilities and Stockholders' Deficit		$	859,262			$	385,802

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

STUDIO ONE MEDIA, INC.
Consolidated Statements of Operations (Unaudited)

	For the Three Months Ended							For the Nine Months Ended
	March 31,							March 31,
	2015				2014			2015			2014

REVENUES
Session Revenues		$	5,300		$	3,000		$	9,030		$	29,922
AfterMaster Revenues			218,680			28,171			270,925			99,064
Total Revenues			223,980			31,171			279,955			128,986

COSTS AND EXPENSES
Cost of Revenues (Exclusive of Depreciation and Amortization)			70,872			78,201			238,493			286,058
Depreciation and Amortization Expense			9,809			26,201			53,702			80,995
General and Administrative Expenses			992,784			675,547			3,494,376			2,261,121

Total Costs and Expenses			1,073,465			779,949			3,786,571			2,628,174

Loss from Operations			(849,485	)		(748,778	)		(3,506,616	)		(2,499,188	)

Other Expense
Interest Expense			(252,341	)		(308,884	)		(2,342,338	)		(1,107,141	)
Change in Fair Value of Derivative			98,673			-			98,673			-
Gain (Loss) on Extinguishment of Debt			-			(53,500	)		(28,517	)		(25,787	)
Impairment of assets			-			-			-			(45,676	)

Total Other Expense			(153,668	)		(362,384	)		(2,272,182	)		(1,178,604	)

Loss Before Income Taxes			(1,003,153	)		(1,111,162	)		(5,778,798	)		(3,677,792	)

NET LOSS		$	(1,003,153	)	$	(1,111,162	)	$	(5,778,798	)	$	(3,677,792	)

Preferred Stock Accretion and Dividends			(15,880	)		(17,016	)		(48,777	)		(51,048	)

NET LOSS AVAILABLE TO COMMON SHAREHOLDERS		$	(1,019,033	)	$	(1,128,178	)	$	(5,827,575	)	$	(3,728,840	)

Basic and Diluted Loss Per Share of Common Stock		$	(0.01	)	$	(0.02	)	$	(0.07	)	$	(0.06	)

Weighted Average Number of Shares Outstanding			86,878,895			62,498,968			81,235,026			57,775,047

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

STUDIO ONE MEDIA, INC.
Consolidated Statements of Cash Flows (Unaudited)

	For the Nine Months Ended
	March 31,
	2015				2014

OPERATING ACTIVITIES

Net Loss		$	(5,778,798	)	$	(3,677,792	)
Adjustments to reconcile net loss to cash from operating activities:
Depreciation and amortization			53,702			80,995
Share-based compensation - Common Stock			720,333			537,870
Share-based compensation - warrants			1,329,791			259,212
Common stock issued for services and rent			146,017			398,777
Common stock issued as incentive with Convertible debt			10,261			-
Common stock issued for preferred dividends			8,613			-
Common stock issued to extend the maturity dates on debt			15,750			-
Amortization of debt discount and issuance costs			659,803			423,394
(Gain)/Loss on extinguishment of debt			28,517			50,000
Gain (loss) on derivative			(98,673	)		-
Impairment on long lived assets and intangibles			-			45,676
Changes in Operating Assets and Liabilities:
Other receivables			(49,858	)		(3,581	)
Other assets			(48,050	)		106,719
Accounts payable and accrued expenses and deferred revenue			1,051,838			536,571

Net Cash Used in Operating Activities			(1,950,754	)		(1,242,159	)

INVESTING ACTIVITIES

Purchase of property and equipment			(94,686	)		(9,836	)

Net Cash Used in Investing Activities			(94,686	)		(9,836	)

FINANCING ACTIVITIES

Common Stock issued for cash, net of offering costs of $20,125 and $15,935, respectively			1,876,025			699,065
Proceeds from notes payable - related party			50,000			35,000
Proceeds from convertible notes payable			527,000			385,000
Repayments of convertible notes payable			(9,000	)		(8,000	)
Repayments of notes payable			(35,000	)
Lease Payable			(38,984	)		-

Net Cash Provided by Financing Activities			2,370,041			1,111,065

NET INCREASE (DECREASE) IN CASH			324,601			(140,930	)
CASH AT BEGINNING OF PERIOD			77,876			165,258

CASH AT END OF PERIOD		$	402,477		$	24,328

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

CASH PAID FOR:
Interest		$	6,221		$	918

NON CASH FINANCING ACTIVITIES:
Conversion of notes and Interest into common stock		$	2,152,668			-
Conversion of warrants for common stock		$	10,000		$	-
Conversion of preferred stock for common stock		$	100		$	-
Common Stock and warrants issued for prepaid services		$	-		$	28,000
Common Stock and warrants issued for interest		$	527,000		$	28,100
Derivative Liability		$	492,207		$	-
Warrants and beneficial conversion feature on issuance of convertible debt		$	-		$	575,723

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

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 1 – CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2015, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 2014 audited financial statements. The results of operations for the periods ended March 31, 2015 and June 2014 are not necessarily indicative of the operating results for the full years.

NOTE 2 – GOING CONCERN

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred losses since inception of $52,763,927 and currently has revenues which are insufficient to cover its operating costs which raises substantial doubt about its ability to continue as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.

The future of the Company as an operating business will depend on its ability to (1) obtain sufficient capital contributions and/or financing as may be required to sustain its operations and (2) to achieve adequate revenues from its AfterMaster and ProMaster businesses. Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, and (c place in service the AfterMaster Chips and software in consumer products.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates are made in relation to the allowance for doubtful accounts and the fair value of certain financial instruments.

Principles of Consolidation

The consolidated financial statements include the accounts of Studio One Media, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated.

Notes and Other Receivables

Notes and other receivables are stated at amounts management expects to collect. An allowance for doubtful accounts is provided for uncollectible receivables based upon management's evaluation of outstanding accounts receivable at each reporting period considering historical experience and customer credit quality and delinquency status. Delinquency status is determined by contractual terms. Bad debts are written off against the allowance when identified.

Loss Per Share

Basic earnings (loss) per Common Share is computed by dividing losses attributable to Common shareholders by the weighted-average number of shares of Common Stock outstanding during the period. The losses attributable to Common shareholders was increased for accrued and deemed dividends on Preferred Stock during the periods ended March 31, 2015 and 2014 of $48,777 and $51,048, respectively.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Diluted earnings per Common Share is computed by dividing income (loss) attributable to Common shareholders by the weighted-average number of Shares of Common Stock outstanding during the period increased to include the number of additional Shares of Common Stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding convertible Preferred Stock, stock options, warrants, and convertible debt. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s Common Stock can result in a greater dilutive effect from potentially dilutive securities.

For the periods ended March 31, 2015 and 2014, all of the Company’s potentially dilutive securities (warrants, options, convertible preferred stock, and convertible debt) were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive Common Shares that were excluded were 21,174,420 and 12,200,097 at March 31, 2015 and 2014, respectively.

Fair Value Instruments

Cash is the Company’s only financial asset or liability required to be recognized at fair value and is measured using quoted prices for active markets for identical assets (Level 1 fair value hierarchy). The carrying amounts reported in the balance sheets for notes receivable and accounts payable and accrued expenses approximate their fair market value based on the short-term maturity of these instruments.

The fair value of the Company’s notes payable at March 31, 2015 is approximately $5,418,236. Market prices are not available for the Company’s loans due to related parties or its other notes payable, nor are market prices of similar loans available. The Company determined that the fair value of the notes payable based on its amortized cost basis due to the short term nature and current borrowing terms available to the Company for these instruments.

Derivative Liabilities

In connection with the private placement of certain convertible instruments beginning in December 31, 2014, the Company became contingently obligated to issue shares of common stock in excess of the 100 million authorized under the Company's certificate of incorporation. Consequently, the ability to settle these obligations with common shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to December 9, 2014 are derivative liabilities.

The Company values these convertible notes payable using the multinomial lattice method that values the derivative liability within the notes based on a probability weighted discounted cash flow model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.

Income Taxes

There is no income tax provision for the nine months ended March 31, 2015 and 2014 due to net operating losses for which there is no benefit currently available.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

At March 31, 2015, the Company had deferred tax assets associated with state and federal net operating losses. The Company has recorded a corresponding full valuation allowance as it is more likely than not that some portion of all of the deferred tax assets will not be realized.

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.

Reclassification

Certain amounts disclosed in prior periods have been reclassified to conform to current presentation. Such reclassifications are for presentation purposes only and have no effect on the Company’s net loss or financial position in any of the periods presented. The Company has made adjustments to the Income Statement and Cash flows Statement in impairment of assets and disposal of assets, respectively.

NOTE 4 – NOTES PAYABLE

Convertible Notes Payable

In accounting for its convertible notes payable, proceeds from the sale of a convertible debt instrument with Common Stock purchase warrants are allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portions of the proceeds allocated to the warrants are accounted for as paid-in capital with an offset to debt discount. The remainder of the proceeds are allocated to the debt instrument portion of the transaction as prescribed by ASC 470-25-20. The Company then calculates the effective conversion price of the note based on the relative fair value allocated to the debt instrument to determine the fair value of any beneficial conversion feature (“BCF”) associated with the convertible note in accordance with ASC 470-20-30. The BCF is recorded to additional paid-in capital with an offset to debt discount. Both the debt discount related to the issuance of warrants and related to a BCF is amortized over the life of the note.

Convertible Notes Payable – Related Parties

Convertible notes payable due to related parties consisted of the following as of March 31, 2015 and June 30, 2014, respectively:

Convertible Notes Payable – Related Parties
	March 31,			June 30,
	2015			2014

Various term notes with total face value of $3,925,000 issued from February 2010 to April 2013, interest rates range from 10% to 15%, net of unamortized discount of $0 and $1,761 as of March 31, 2015 and June 30, 2014, respectively.		$	3,925,000		$	3,924,439
$9,000 face value,of which $9,000 has been paid back.			-			7,800
Total convertible notes payable – related parties			3,925,000			3,932,239
Less current portion			3,925,000			3,932,239
Convertible notes payable – related parties, long-term		$	-		$	-

The notes were amended on June 30, 2014 to extend the maturity date to September 30, 2014, amended again on September 30, 2014 to December 31, 2014, and amended again on December 31, 2014 to June 30, 2015. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 4 – NOTES PAYABLE - continued

Convertible Notes Payable - Non-Related Parties

Convertible notes payable due to non-related parties consisted of the following as of March 31, 2015 and June 30, 2014, respectively:

Convertible Notes Payable - Non-Related Parties
	March 31,		June 30,
	2015		2014

$100,000 face value, of which $100,000 has been converted.	$	-	$	100,000
$15,000 face value, issued in October 2011, interest rate of 10%, matures in June 2012, net of unamortized discount of $0 and $0 as of March 31, 2015 and June 30, 2014, respectively.		15,000		15,000
$75,000 face value, of which $75,000 has been converted.		-		75,000
$50,000 face value, issued in August 2012, interest rate of 10%, matures in February 2013, net of unamortized discount of $0 and $0 as of March 31, 2015 and June 30, 2014, respectively.		50,000		50,000
$10,000 face value, issued in September 2012, interest rate of 10%, matures in March 2013, net of unamortized discount of $0 and $0 as of March 31, 2015 and June 30, 2014, respectively.		10,000		10,000
$50,000 face value of which $9,600 was converted leaving a $40,400 face value, issued in November 2012, interest rate of 10%, matures in November 2013 and an additional penalties were added to the principal of $120,348 bringing the face value to $160,748, net of unamortized discount of $0 and $0 as of March 31, 2015 and June 30, 2014, respectively.		160,748		160,748
$30,000 face value, issued in February 2013, interest rate of 0%, matures in November 2013, net of unamortized discount of $0 and $0 as of March 31, 2015 and June 30, 2014, respectively.		30,000		30,000
$20,000 face value, issued in April 2013, interest rate of -0-%, matures in October 2013, net of unamortized discount of $0 and $0 as of March 31, 2015 and June 30, 2014, respectively.		20,000		20,000
$100,000 face value, of which $100,000 has been converted.		-		100,000
$50,000 face value, of which $50,000 has been converted.		-		50,000
$50,000 face value, of which $50,000 has been converted.		-		50,000
$50,000 face value, of which $50,000 has been converted.		-		46,132
$30,000 face value, issued in March 2014, interest rate of 0%, matures in September 2014, net of unamortized discount of $0 and $7,011 as of March 31, 2015 and June 30, 2014, respectively.		30,000		22,989
$20,000 face value, of which $20,000 has been converted.		-		20,000
$25,000 face value, of which $25,000 has been converted.		-		9,563
$15,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $6,557 and $14,098 as of March 31, 2015 and June 30, 2014, respectively.		15,000		902
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $8,743 and $18,798 as of March 31, 2015 and June 30, 2014, respectively.		20,000		1,202
$30,000 face value, of which $30,000 has been converted.		-		1,967
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $8,743 and $18,798 as of March 31, 2015 and June 30, 2014, respectively.		20,000		1,202
$25,000 face value, issued in June 2014, interest rate of 6%, matures September 2014, net unamortized discount of $0 and $25,000 as of March 31, 2015 and June 30, 2014, respectively.		25,000		-
$15,000 face value, of which $15,000 has been converted.		-		-

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 4 – NOTES PAYABLE - continued

$10,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,087 as of March 31, 2015.		10,000		-
$10,000 face value, of which $10,000 was converted.		-		-
$7,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,065 as of March 31, 2015.		7,000		-
$5,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $978 as of March 31, 2015.		5,000		-
$10,000 face value, of which $10,000 was converted.		-		-
$25,000 face value, of which $25,000 was converted.		-		-
$10,000 face value, of which $10,000 was converted.		-		-
$30,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $23,023 as of March 31, 2015.		30,000		-
$100,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $79,121 as of March 31, 2015.		100,000		-
$100,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $87,912 as of March 31, 2015.		100,000		-
$40,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $40,000 as of March 31, 2015.		40,000		-
$40,000 face value, issued in October 2014, interest rate of 6%, matures December 2014, net unamortized discount of $40,000 as of March 31, 2015.		40,000		-
$40,000 face value, issued in October 2014, interest rate of 6%, matures January 2015, net unamortized discount of $40,000 as of March 31, 2015.		40,000		-
$25,000 face value, of which $25,000 has been converted.		-		-
$25,000 face value, issued in October 2014, interest rate of 6%, matures January 2015, net unamortized discount of $25,000 as of March 31, 2015.		25,000		-
$35,000 face value, issued in November 2014, interest rate of 6%, matures January 2015, net unamortized discount of $35,000 as of March 31, 2015.		35,000		-
Total convertible notes payable – non-related parties		827,748		764,705
Less current portion		827,748		764,705
Convertible notes payable – non-related parties, long-term	$	-	$	-

On August 15, 2014, the Company amended the convertible notes dated September 29, 2011 for $100,000 and January 6, 2012 for $75,000 to extend the maturity date to November 15, 2014 and issued 50,000 shares of the Company’s common stock valued at $15,750, as well as 50,000 warrants valued at $12,767. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did result in significant and consequential changes to the economic substance of the debt. The Company recorded a loss on extinguishment of debt of $28,517. On October 20, 2014, the note holder elected to convert the entire note of $175,000.

On September 30, 2013, the Company issued a convertible note to an unrelated individual for $100,000 that matures on February 28, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $100,000. On August 14, 2014, the note holder elected to convert the entire note of $100,000.

On October 17, 2013, the Company issued a convertible note to an unrelated individual for $50,000 with an original maturity date of November 17, 2013, the note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the original BCF recorded was $50,000. The note was amended on November 17, 2013 to extend the maturity date to May 17, 2014 and issued 25,000 common stock and 25,000 warrants as incentive to extending the maturity date. Under ASC 470-60-55-12, the debt was deemed to be extinguished and the company recognized a loss on extinguishment of debt $25,787. On August 14, 2014, the note holder elected to convert the entire note of $50,000.

On February 3, 2014, the Company issued a convertible note to an unrelated individual for $50,000 that matures on April 10, 2014. The note bears an interest rate of 10% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. On July 19, 2014, the note holder elected to convert the entire note of $50,000 and $3,041 in accrued interest.

On February 21, 2014, the Company issued a convertible note to an unrelated individual for $50,000 that matures on August 21, 2014. The note bears an interest rate of 6% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. On August 14, 2014, the note holder elected to convert the entire note of $50,000.

On March 31, 2014, the Company issued a convertible note to an unrelated individual for $20,000 that matures on June 28, 2014. The note bears an interest rate of 10% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. On July 19, 2014, the note holder elected to convert the entire note of $20,000 and $603 in accrued interest.

On April 21, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on October 21, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On August 14, 2014, the note holder elected to convert the entire note of $25,000.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 4 – NOTES PAYABLE - continued

On June 18, 2014, the Company issued a convertible note to an unrelated individual for $30,000 that matures on December 18, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On August 14, 2014, the note holder elected to convert the entire note of $30,000.

On July 9, 2014, the Company issued a convertible note to an unrelated individual for $15,000 that matures on October 10, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On March 31, 2015, the note holder elected to convert the entire note of $15,000 and $653 in accrued interest.

In conjunction with the note, the Company issued to the holder 7,500 shares of restricted Common Stock. The value of the BCF recorded was $13,333 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,667, for a total debt discount of $15,000.

On July 10, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on October 10, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share.

In conjunction with the note, the Company issued to the holder 5,000 shares of restricted Common Stock. The value of the BCF recorded was $8,889 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,111, for a total debt discount of $10,000.

On July 14, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on October 14, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On March 31, 2015, the note holder elected to convert the entire note of $10,000 and $427 in accrued interest.

In conjunction with the note, the Company issued to the holder 5,000 shares of restricted Common Stock. The value of the BCF recorded was $8,929 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,071, for a total debt discount of $10,000.

On July 14, 2014, the Company issued a convertible note to an unrelated individual for $7,000 that matures on October 14, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share.

In conjunction with the note, the Company issued to the holder 3,500 shares of restricted Common Stock. The value of the BCF recorded was $6,222 and the debt discount related to the attached relative fair value of the restricted Common Stock was $778, for a total debt discount of $7,000.

On July 18, 2014, the Company issued a convertible note to an unrelated individual for $5,000 that matures on October 18, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share.

In conjunction with the note, the Company issued to the holder 2,500 shares of restricted Common Stock. The value of the BCF recorded was $4,444 and the debt discount related to the attached relative fair value of the restricted Common Stock was $556, for a total debt discount of $5,000.

On August 18, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on November 18, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On February 16, 2015, the note holder elected to convert the entire note of $10,000 and $299 in accrued interest.

In conjunction with the note, the Company issued to the holder 5,000 shares of restricted Common Stock. The value of the BCF recorded was $8,529 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,471, for a total debt discount of $10,000.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 4 – NOTES PAYABLE - continued

On August 22, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on September 22, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.15 per share. On September 30, 2014, the note holder elected to convert the entire note of $25,000 and $160 in accrued interest.

In conjunction with the note, the Company issued to the holder 12,500 shares of restricted Common Stock. The value of the BCF recorded was $21,393 and the debt discount related to the attached relative fair value of the restricted Common Stock was $3,607, for a total debt discount of $25,000.

On September 5, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on December 5, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $10,000. On March 5, 2015, the note holder elected to convert the entire note of $10,000 and $281 in accrued interest.

On September 10, 2014, the Company issued a convertible note to an unrelated individual for $30,000 that matures on December 5, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $30,000.

On September 11, 2014, the Company issued a convertible note to an unrelated individual for $100,000 that matures on December 11, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $100,000.

On September 19, 2014, the Company issued a convertible note to an unrelated individual for $100,000 that matures on December 19, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $100,000.

On September 30, 2014, the Company issued a convertible note to an unrelated individual for $40,000 that matures on December 29, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $40,000.

On October 3, 2014, the Company issued a convertible note to an unrelated individual for $40,000 that matures on December 2, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $40,000.

On October 6, 2014, the Company issued a convertible note to an unrelated individual for $40,000 that matures on January 6, 2015. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $40,000.

On October 20, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on April 20, 2015. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $25,000. On October 24, 2014, the note holder elected to convert the entire note of $25,000.

On October 16, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on January 16, 2015. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $25,000.

On November 24, 2014, the Company issued a convertible note to an unrelated individual for $35,000 that matures on May 24, 2015. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.35 per share. The company valued a BCF related to the note valued at $35,000.

Notes Payable – Related Parties

Notes payable due to related parties consisted of the following as of March 31, 2015 and June 30, 2014, respectively:

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 4 – NOTES PAYABLE - continued

Notes Payable – Related Parties

	March 31,			June 30,
	2015			2014

Various term notes with total face value of $610,000 issued from April 11 to January 2014, interest rates range from 0% to 15%, net of unamortized discount of $0 as of March 31, 2015 and June 30, 2014, respectively, of which $35,000 has been paid.		$	575,000		$	610,000
Face value of $50,000, issued in December 2014, matures in January 2015, note bears interest at 0%.			50,000			-
Total notes payable – related parties			625,000			610,000
Less current portion			625,000			610,000
Notes payable - related parties, long term		$	-		$	-

Notes Payable – Non-Related Parties

Notes payable due to non-related parties consisted of the following as of March 31, 2015 and June 30, 2014, respectively:

Notes Payable – Non-Related Parties
	March 31,			June 30,
	2015			2014
Various term notes with total face value of $40,488 due upon demand, interest rates range from 0% to 14%.		$	40,488		$	40,488
Total note payable – non-related parties			40,488			40,488
Less current portion			40,488			40,488
Notes payable – non-related parties, long-term		$	-		$	-

NOTE 5 – CONVERTIBLE PREFERRED STOCK

The Company has authorized 10,000,000 shares of $0.001 par value per share Preferred Stock, of which the following were issued outstanding:

	Shares		Shares		Liquidation
	Allocated		Outstanding		Preference
Series A Convertible Preferred		100,000		15,500		-
Series A-1 Convertible Preferred		2,762,931		641,000		712,021
Series B Convertible Preferred		200,000		3,500		79,099
Series C Convertible Preferred		1,000,000		13,404		-
Series D Convertible Preferred		375,000		130,000		130,000
Series E Convertible Preferred		1,000,000		275,000		275,000
Series P Convertible Preferred		600,000		86,640		-
Series S Convertible Preferred		50,000		-		-
Total Preferred Stock		6,087,931		1,165,044	$	1,196,021

The Company's Series A Convertible Preferred Stock ("Series A Preferred") is convertible into Common Stock at the rate of 0.025 share of Common stock for each share of the Series A Preferred. Dividends of $0.50 per share annually from date of issue, are payable from retained earnings, but have not been declared or paid.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 5 – CONVERTIBLE PREFERRED STOCK - continued

The Company’s Series A-1 Senior Convertible Redeemable Preferred Stock (“Series A-1 Preferred”) is convertible at the rate of 2 shares of Common Stock per share of Series A-1 Preferred. The dividend rate of the Series A-1 Senior Convertible Redeemable Preferred Stock is 6% per share per annum in cash, or commencing on June 30, 2009 in shares of the Company’s Common Stock (at the option of the Company).

Due to the fact that the Series A-1 Preferred has certain features of debt and is redeemable, the Company analyzed the Series A-1 Preferred in accordance with ASC 480 and ASC 815 to determine if classification within permanent equity was appropriate. Based on the fact that the redeemable nature of the stock and all cash payments are at the option of the Company, it is assumed that payments will be made in shares of the Company’s Common Stock and therefore, the instruments are afforded permanent equity treatment.

The Company's Series B Convertible 8% Preferred Stock ("Series B Preferred") is convertible at the rate of 0.067 share of Common Stock for each share of Series B Preferred. Dividends from date of issue are payable on June 30 from retained earnings at the rate of 8% per annum but have not been declared or paid.

The Company's Series C Convertible Preferred Stock ("Series C Preferred") is convertible at a rate of 0.007 share of Common Stock per share of Series C Preferred. Holders are entitled to dividends only to the extent of the holders of the Company’s Common Stock receive dividends.

The Company's Series D Convertible Preferred Stock ("Series D Preferred") is convertible at a rate of 0.034 share of Common Stock per share of Series D Preferred. Holders are entitled to a proportionate share of any dividends paid as though they were holders of the number of shares of Common Stock of the Company into which their shares of are convertible as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.

The Company's Series E Convertible Preferred Stock ("Series E Preferred") is convertible at a rate of 0.034 share of Common Stock per share of Series E Preferred. Holders are entitled to a proportionate share of any dividends paid as though they were holders of the number of shares of Common Stock of the Company into which their shares of are convertible as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.

The Company's Series P Convertible Preferred Stock ("Series P Preferred") is convertible at a rate of 0.007 share of Common Stock for each share of Series P Preferred. Holders are entitled to dividends only to the extent of the holders of the Company’s Common Stock receive dividends.

In the event of a liquidation, dissolution or winding up of the affairs of the Company, holders of Series A Preferred Stock, Series P Convertible Preferred Stock, Series C Convertible Preferred Stock have no liquidation preference over holders of the Company’s Common Stock. Holders of Second Series B Preferred Stock have a liquidation preference over holders of the Company’s Common Stock and the Company’s Series A Preferred Stock. Holders of Series D Preferred Stock are entitled to receive, before any distribution is made with respect to the Company’s Common Stock, a preferential payment at a rate per each whole share of Series D Preferred Stock equal to $1.00. Holders of Series E Preferred Stock are entitled to receive, after the preferential payment in full to holders of outstanding shares of Series D Preferred Stock but before any distribution is made with respect to the Company’s Common Stock, a preferential payment at a rate per each whole share of Series E Preferred Stock equal to $1.00. Holders of Series A-1 Preferred Stock are superior in rank to the Company’s Common Stock and to all other series of Preferred Stock heretofore designated with respect to dividends and liquidation.

The activity surrounding the issuances of the Preferred Stock is as follows:

During the six months ended March 31, 2015 and the fiscal year ended June 30, 2014, the Company issued -0- shares of Series A-1 Preferred Stock for $-0- in cash, net of $-0- of issuance costs, respectively. The Company had two conversions of 55,000 shares of Series A-1 Preferred Stock for 110,000 shares of Common Stock, and issued 41,987 shares of Common Stock of payment of $12,922 in accrued dividends.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 5 – CONVERTIBLE PREFERRED STOCK - continued

During the nine months ended March 31, 2015, the outstanding Preferred Stock accumulated $48,777 in dividends; nine months ended March 31, 2014 it accumulated $51,048 in dividends on outstanding Preferred Stock. The cumulative dividends in arrears through nine months ended March 31, 2015 were approximately $638,938.

NOTE 6 – COMMON STOCK

The Company has authorized 100,000,000 shares of $0.001 par value per share Common Stock, of which 88,542,654 and 70,296,203 were issued outstanding as of nine months ended March 31, 2015 and June 30, 2014, respectively. The activity surrounding the issuances of the Common Stock is as follows:

For the Nine Months Ended March 31, 2015

The Company issued 7,268,858 common shares for net cash proceeds of $1,876,025. The Company paid as offering costs $153,075 in cash offering costs. Offering costs have been recorded as reductions to additional paid-in capital from common stock proceeds and an increase in professional fees. Attached to the Common Shares, the Company issued 1,855,000 warrants to purchase shares of the Company’s Common Stock of which 215,000 warrants were issued to the placement agent. The Company recognized $1,329,758 for the amortization of warrants issued in prior periods.

The Company also issued 43,500 shares of Common Stock as incentive to notes valued at $10,261 to extend terms on two convertible notes payable and recorded $527,000 in beneficial conversion features related to new issuances of debt.

The Company also issued 5,190,947 shares of Common Stock for the conversion of notes and accrued interest valued at $603,455.

The Company also issued 110,000 shares of Common Stock for the conversion of 55,000 shares of Series A-1 Preferred Stock and issued 41,987 shares of Common Stock of payment of $37,130 in accrued dividends.

The Company also issued 50,000 shares of Common Stock for the conversion warrants.

The Company issued 356,375 shares of Common Stock as payment for services and rent valued at $146,017.

As share-based compensation to employees and non-employees, the Company issued 2,760,221 shares of common stock valued at $720,333, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 2,424,563 shares of common stock valued at $1,549,213 based on the market price on the date of issuance.

For the Nine Months Ended March 31, 2014

The Company issued 7,150,000 common shares for net cash proceeds of $699,065. The Company paid as offering costs $15,935 in cash offering costs and 97,000 in common stock offering costs. Offering costs paid in cash have been recorded as reductions to additional paid-in capital from common stock proceeds and common stock issued for offering costs have been expensed as compensation expenses. Attached to the Common Shares, the Company issued 196,804 warrants to purchase shares of the Company’s Common Stock. The Company recognized $259,212 in employee stock option expense and for the amortization of warrants issued in prior periods.

The Company also issued 612,500 shares of Common Stock as incentive to notes for $164,349 to convertible notes payable and recorded $461,000 in beneficial conversion features related to new issuances of debt.

As share-based compensation to employees and non-employees, the Company issued 2,033,349 shares of common stock valued at $547,870, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 2,199,095 shares of common stock valued at $575,723 based on the market price on the date of issuance.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 7 – STOCK PURCHASE OPTIONS AND WARRANTS

The Board of Directors on June 10, 2009 approved the 2009 Long-Term Stock Incentive Plan. The purpose of the 2009 Long-term Stock Incentive Plan is to advance the interests of the Company by encouraging and enabling acquisition of a financial interest in the Company by employees and other key individuals. The 2009 Long-Term Stock Incentive Plan is intended to aid the Company in attracting and retaining key employees, to stimulate the efforts of such individuals and to strengthen their desire to remain with the Company. A maximum of 1,500,000 shares of the Company's Common Stock is reserved for issuance under stock options to be issued under the 2009 Long-Term Stock Incentive Plan. The Plan permits the grant of incentive stock options, nonstatutory stock options and restricted stock awards. The 2009 Long-Term Stock Incentive Plan is administered by the Board of Directors or, at its direction, a Compensation Committee comprised of officers of the Company.

Stock Purchase Options

During the nine months ended March 31, 2015, the Company did not issue any stock purchase options.

During the fiscal year ended June 30, 2014, the Company issued 25,000 stock purchase options for a value of $6,045. The Company did recognize $10,713 in employee stock option expense during the fiscal year ended June 30, 2014 for options vested during the period that were issued in prior periods.

The following table summarizes the changes in options outstanding of the Company during the nine months ended March 31, 2015.

Date Issued	Number of Options			Weighted Average Exercise Price			Weighted Average Grant Date Fair Value		Expiration Date (yrs)		Value if Exercised
Balance June 30, 2014		381,429		$	0.55		$	0.12		0.62	$	209,643
Granted		-			-			-		-		-
Exercised		-			-			-		-		-
Cancelled/Expired		(301,429	)		(0.52	)		-		-		(156,743	)
Outstanding as of March 31, 2015		80,000		$	0.66		$	0.59		1.94	$	52,900

The following table summarizes the changes in options outstanding of the Company during the fiscal year ended June 30, 2014.

Date Issued	Number of Options			Weighted Average Exercise Price			Weighted Average Grant Date Fair Value		Expiration Date (yrs)		Value if Exercised
Balance June 30, 2013		613,429		$	0.85		$	1.20		1.95	$	522,843
Granted		25,000			0.15			0.24		5.00		3,750
Exercised		-			-			-		-		-
Cancelled/Expired		(257,000	)		(1.23	)		-		-		(316,950	)
Outstanding as of June 30, 2014		381,429		$	0.55		$	0.12		0.62	$	209,643

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 7 – STOCK PURCHASE OPTIONS AND WARRANTS - continued

Stock Purchase Warrants

During the nine months ended March 31, 2015, the Company issued 7,821,133 warrants. The Company issued 50,000 warrants in conjunction to extended two convertible note payables and issued 4,456,133 warrants in conjunction to a consulting agreement entered into in July 2014 and 150,000 warrants issued in conjunction with a financial advisory agreement entered into on January 2015. The Company also issued 1,000,000 warrants related to the B Booth agreements which were expensed during the current year. The company also issued 2,200,000 warrants as part of a private placement to extend the terms during the period, which were converted for cash proceed of $150,000 in exchange for 750,000 shares of common stock. The warrants were valued using the Black-Scholes pricing model under the assumptions noted below. The Company apportioned value to the warrants based on the relative fair market value of the Common Stock and warrants.

During the fiscal year ended June 30, 2014, the Company issued warrants to purchase a total of 1,366,016 and expired 498,500 shares of the Company’s Common Stock. The Company issued 29,400 warrants in conjunction to a default clause in a convertible note payable and issued 311,616 warrants in conjunction to a consulting agreement entered into in July 2013. The Company also issued 500,000 warrants in conjunction to a consulting agreement entered into in October 2013.The Company issued 25,000 warrants in conjunction to an extension in a convertible note payable in conjunction with 50,000 shares of common stock. The Company issued 100,000 warrants in conjunction with a consulting agreement entered into January 2014. The Company issued 300,000 warrants in conjunction with an employment agreement entered into January 2014. The Company also issued 100,000 warrants as compensation for references purchased. The warrants were valued using the Black-Scholes pricing model under the assumptions noted below. The Company apportioned value to the warrants based on the relative fair market value of the Common Stock and warrants.

The following table presents the assumptions used to estimate the fair values of the stock warrants and options granted:

	December 31,	June 30,
	2014	2014
Expected volatility	103-125%	113-132%
Expected dividends	0%	0%
Expected term	.25-5 Years	2-10 Years
Risk-free interest rate	0.02-1.75%	0.35-1.75%

The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the nine months ended March 31, 2015.

Date Issued	Number of Warrants			Weighted Average Exercise Price			Weighted Average Grant Date Fair Value		Expiration Date (yrs)		Value if Exercised
Balance June 30, 2014		8,332,579		$	0.76		$	0.70		2.96	$	6,370,432
Granted		7,821,133			0.44			0.24		4.58		2,097,367
Exercised		(800,000	)		(0.20	)		0.18		-		(160,000	)
Cancelled/Expired		(1,970,000	)		(0.50	)		-		-		(2,393,001	)
Outstanding as of March 31, 2015		13,383,712		$	0.44		$	0.47		3.05	$	5,914,798

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 7 – STOCK PURCHASE OPTIONS AND WARRANTS - continued

The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the fiscal year ended June 30, 2014.

Date Issued	Number of Warrants			Weighted Average Exercise Price			Weighted Average Grant Date Fair Value		Expiration Date (yrs)		Value if Exercised
Balance June 30, 2013		7,530,063		$	0.67		$	2.45		4.17	$	4,770,713
Granted		1,366,016			1.30			0.23		5.00		1,774,467
Exercised		(65,000	)		(0.25	)		0.14		-		(16,250	)
Cancelled/Expired		(498,500	)		(0.70	)		-		-		(158,498	)
Outstanding as of June 30, 2014		8,332,579		$	0.76		$	0.70		2.96	$	6,370,432

NOTE 8 – FINANCIAL INSTRUMENTS

The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a multinomial lattice model as of March 31, 2015, and December 31, 2014. The fair values of the derivative instruments are measured each quarter, which resulted in a gain (loss) of 484,041 and $0 during the nine months ended March 31, 2015 and 2014, respectively. As of March 31, 2015, and June 30, 2014, the fair market value of the derivatives aggregated $386,966 and $0, respectively, using the following assumptions: estimated 5-1.76-year term, estimated volatility of 110.10-99.86%, and a discount rate of 1.75-0.26%.

NOTE 9 – FAIR VALUE MEASUREMENTS

For asset and liabilities measured at fair value, the Company uses the following hierarchy of inputs:

●	Level one — Quoted market prices in active markets for identical assets or liabilities;

●	Level two — Inputs other than level one inputs that are either directly or indirectly observable; and

●	Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 9 – FAIR VALUE MEASUREMENTS - continued

Liabilities measured at fair value on a recurring basis at March 31, 2015, are summarized as follows:

		Level 1				Level 2				Level 3				Total
Fair value of derivatives		$	-			$	393,534			$	-			$	393,534

Liabilities measured at fair value on a recurring basis at June 30, 2014, are summarized as follows:

Level 1

Level 2

Level 3

Total

Fair value of derivatives

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company may become involved in certain legal proceedings and claims which arise in the normal course of business. In addition, from time to time, third parties may assert intellectual property infringement claims against the Company in the form of letters and other forms of communication. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the Company’s results of operations, prospects, cash flows, financial position and brand.

In November 2012, the Company’s former Chief Financial Officer, Joseph Desiderio, signed a promissory note (“Note”) on behalf of the Company in favor of private finance company or its Assignees. The Note provided, among other things, for the right on the part of the Lender to convert part of the debt to stock. Subsequently, the parties have disagreed on the validity and terms of the agreement. The Lender has filed suit in the state court in Dade County, Florida, seeking to enforce the agreement. The Company disputes the Lender’s position on the grounds that (1) the Note contains provisions that violate Florida’s usury laws, (2) there has been no default by Company under the Note, and (3) some provisions of the Note are void and unenforceable. The Company expects the matter to be resolved to its satisfaction. Except as described in the preceding paragraph, to the best knowledge of our management, there are no material litigation matters pending or threatened against us.

Lease Agreements

Pursuant to a lease originally dated January 2006, we currently occupy approximately 11,800 square feet of office space located at 7650 E. Evans Rd., Suite C, Scottsdale, Arizona on a month-to-month basis. The total lease expense is approximately $9,600 per month, payable in cash and Common Stock of the Company.

We also lease an office in Los Angeles for use by our audio team in connection with our AfterMaster product under a lease expiring on December 31, 2017. The total lease expense is approximately $5,600 per month, and the total remaining obligations under these leases at March 31, 2015 were approximately $285,975.

Rent expense for the nine months ended March 31, 2015 was $195,200, of which $131,371 was paid in cash and $63,829 was paid in Common Stock. Rent expense for the nine months March 31, 2014 was $205,934, of which $146,275 was paid in cash and $59,659 was paid in Common Stock.

STUDIO ONE MEDIA, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2015 and June 30, 2014

NOTE 10 – COMMITMENTS AND CONTINGENCIES - continued

Below is a table summarizing the annual operating lease obligations over the next 5 years:

Year	Lease Payments
2015	$	89,539
2016		96,235
Thereafter		100,200
Total	$	285,974

Other

The Company has not declared dividends on Series A or B Convertible Preferred Stock or its Series A-1 Convertible Preferred Stock. The cumulative dividends in arrears through March 31, 2015 were approximately $638,938.

As of the date of this filing, the Company has not filed its tax return for the fiscal year ended 2013 and 2014.

NOTE 11 - SUBSEQUENT EVENTS

On April 10, 2015, the issuer of a $25,000 convertible note agreed to convert the full amount of the principal of $25,000 and accrued interest totaling $719 at a conversion rate of $.20 per share for a total of 128,596 shares of the Company’s common stock.

On April 15, 2015, the holder of a 25,000 shares of the Company’s Series A-1 Senior Convertible Preferred Stock into 50,000 shares of 144 restricted common stock plus accrued dividends of $6,066 for 12,132 shares of 144 restricted common stock.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

This Quarterly Report (the “Report”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended, and as contemplated under the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to such matters as the Company’s (and its subsidiaries) business strategies, continued growth in the Company’s markets, projections, and anticipated trends in the Company’s business and the industry in which it operates anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance and similar matters. All statements herein contained in this Report, other than statements of historical fact, are forward-looking statements.

When used in this Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “budget,” “budgeted,” “believe,” “will,” “intends,” “seeks,” “goals,” “forecast,” and similar words and expressions are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. These forward-looking statements are based largely on the Company’s expectations and are subject to a number of risks and uncertainties, certain of which are beyond the Company’s control. We caution our readers that a variety of factors could cause our actual results to differ materially from the anticipated results or other matters expressed in the forward looking statements, including those factors described under “Risk Factors” and elsewhere herein. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this Report will in fact transpire or prove to be accurate. These risks and uncertainties, many of which are beyond our control, include:

●

the sufficiency of existing capital resources and our ability to raise additional capital to fund cash requirements for future operations;

●

uncertainties involved in growth and growth rate of our operations, business, revenues, operating margins, costs, expenses and acceptance of any products or services;

●

volatility of the stock market, particularly within the technology sector;

●

our dilution related to all equity grants to employees and non-employees;

●

that we will continue to make significant capital expenditure investments;

●

that we will continue to make investments and acquisitions;

●

the sufficiency of our existing cash and cash generated from operations;

●

the increase of sales and marketing and general and administrative expenses in the future;

●

the growth in advertising revenues from our websites and studios will be achievable and sustainable;

●

that seasonal fluctuations in Internet usage and traditional advertising seasonality are likely to affect our business; and

●

general economic conditions.

Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report.

All references in this report to “we,” “our,” “us,” the “Company” or “Studio One” refer to Studio One Media, Inc. and its subsidiaries and predecessors.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Corporate Background

We are a Delaware public company traded on the Over-The-Counter Bulletin Board (ticker symbol: SOMD). As of March 31, 2015, there were 88,542,654 shares of Common Stock issued and outstanding. From April 2006 to March 2015, we have raised approximately $23.5 million in the form of equity for purposes of research and development, the launch of AfterMaster and MyStudio and general corporate purposes. The Company's office and principal place of business is located at 7650 E. Evans Road, Suite C, Scottsdale, Arizona 85260 USA, and its telephone number is (480) 556-9303. The Company also operates research, recording and mastering studios located at 6671 Sunset Blvd., Suite 1520, Hollywood, CA 90028, and its telephone number is (310) 657-4886.

Business Update

Business

Studio One Media, Inc. ("the Company") is a diversified media and technology company located in Hollywood, California and Scottsdale, Arizona. The Company's wholly-owned subsidiaries include AfterMaster HD Audio Labs, Inc. and MyStudio, Inc.

The Company and its subsidiaries are engaged in the development and commercialization of proprietary (patents issued and pending), leading-edge audio and video technologies for professional and consumer use, including AfterMasterTM HD Audio, ProMaster HDTM and MyStudio® HD Recording Studios.

Business Update

Summary

For the three months ending March 31, 2015, the Company generated record quarterly revenue of $223,980.00 primarily from the licensing of Intellectual Property (IP). The Company believes that revenues will begin growing on a quarterly basis as its audio products are introduced in the coming months. During the quarter, the Company's Accounts payables declined significantly while its net cash position increased substantially over the prior year comparable.

In November of 2014, entertainment superstar Justin Timberlake joined the Company as a co-owner and consultant. Mr. Timberlake is an internationally recognized actor, businessman and recording artist who enjoys recognition and credibility with consumers worldwide. The Company believes that Mr. Timberlake's involvement can maximize product value and accelerate the roll out of its audio products.

Through its joint development agreement with ON Semiconductor, the Company's AfterMaster technology has been converted to an algorithm which can be loaded into semiconductor chips or utilized in software applications. ON Semiconductor has successfully loaded the algorithm into a proprietary semiconductor chip which can greatly enhance the audio in consumer and industrial electronics products such as cell phones, headphones, TV's, stereos and speakers. The ON BelaSigna 300 AM chips became available for consumer electronics product manufacturers as of April 29, 2015.

The Company enjoyed a very successful demonstration of its technology during the 2015 Consumer Electronics Show (CES). The Company is party to numerous mutual non-disclosure agreements with major consumer electronics and industrial companies to pursue the licensing of its software and sale of semiconductor chips.

AfterMaster HD Audio

AfterMaster audio technology was created and developed pursuant to a multi-year, multi-million dollar development effort to make digital audio sound substantially better. The Company's AfterMaster Audio Labs team is comprised of a unique group of award-winning leaders in music, technology and audio engineering including Rodney Jerkins, Larry Ryckman, Justin Timberlake, Paul Wolff and Shelly Yakus. www.AfterMasterHD.com/team.

AfterMaster is an internally-developed, proprietary (patents-pending) mastering, remastering and audio processing technology which makes any audio source sound significantly louder, fuller, deeper and clearer. AfterMaster is a groundbreaking technology which eliminates the weaknesses found in other audio enhancement and processing technologies while offering a much superior audio experience.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

We believe that our AfterMaster audio technology is one of the most significant breakthroughs in digital audio processing technology and has the potential to create significant revenues for the Company. The feedback from music and consumer electronic products companies has been exceptional. The broad commercialization of this technology is a top priority for the Company.

AfterMaster technology can be incorporated into any audio capable device through the addition of an AfterMaster DSP chip or AfterMaster software. AfterMaster can dramatically improve the quality of virtually any audio source including music, radio, motion pictures, television and VoIP. The technology has also been used to master music created by such artists as Lady Gaga, Nick Cannon, Janet Jackson, and many others. Further information on AfterMaster Audio Labs and AfterMaster products can be found at www.AfterMasterHD.com.

ON Semiconductor/AfterMaster Audio Chip

In April of 2014, the Company entered into a multi-year joint development and marketing agreement with ON Semiconductor ("ON") of Phoenix, Arizona to commercialize its technology through audio semiconductor chips. ON is a multi-billion dollar, multi-national semiconductor designer and manufacturer.

The agreement calls for ON to implement our AfterMaster technology in a Digital Signal Processor (DSP) semiconductor chip that will be marketed to their current OEM customers, distributors and others. We selected ON for its technical capabilities, sales support and deep customer pool.

In conjunction with ON, we completed the development of an AfterMaster software algorithm that is designed to be used in semiconductor chips or as a standalone software product. We believe the sound quality from our algorithm provides a superior audio experience relative to other products on the market.

On April 29, 2015, ON and the Company announced the availability of an AfterMaster encoded semiconductor chip based on the ON BelaSigna 300 DSP chip. Now branded the BelaSigna 300 AM chip, it is one of the smallest, high power/low voltage DSP chips available It is small enough to fit into a hearing aid but equally effective in any size device with audio capability.

Since entering into the agreement, both the Company and ON have identified a large number of prospective customers that will be key targets for this new and unprecedented technology. We have also received strong indications of interest in the AfterMaster chip since the announcement of the partnership and are developing a joint marketing plan with ON.

The Consumer Audio Products Market

As the convergence of features on consumer electronics continues, it is becoming more difficult for leading consumer electronics companies to differentiate their products. We believe that AfterMaster provides a unique and significant competitive advantage for consumer electronics manufacturers by offering their customers a superior audio experience. Such uses are intended to include phones (mobile, home, business and VoIP); headphones; televisions; stereo speakers; stereos (home, portable, commercial and automobile); and computers (desktop, laptop and tablets).

The algorithm and chips allow consumer product manufacturers an opportunity to offer a significantly improved and differential audio experience in their products without having to significantly change hardware and form factor designs. Through the combined relationships of the Company and ON, we hope to generate significant revenues for both parties through the sale of the ON/AfterMaster chips and software licensing in 2015.

AfterMaster Consumer Hardware Products

The Company intends to compliment its ON/AfterMaster DSP chips, ProMasterHD service and the licensing of its AfterMaster software with the design, manufacturing and marketing of unique consumer electronics hardware products branded as AfterMaster products. The Company expects that prototypes for its first consumer electronic hardware product will be completed and unveiled in the second calendar quarter of 2015.

ProMasterHD

ProMaster HD is an online music mastering, streaming, and storage service designed for independent artists which utilizes proprietary audio technologies developed by AfterMaster. ProMaster HD will master the user’s uploaded music and allow them to compare up to 90 seconds of their original to the newly mastered songs so they can make a decision to purchase.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

The Independent Music Market

Millions of songs are produced, distributed, played on the Internet each month around the world by independent artists. However, many of these artists lack the financial and technical means to master, or “finish” their composition, as a professional mastering can cost over $500 per song. Now, with the ProMaster online platform, musicians can transmit their music directly to the ProMaster HD website, where it can be mastered with AfterMaster Technology for $49.99 per song. ProMaster creates a compelling offering for those seeking to significantly enhance the quality of their music for personal use, or with intent to showcase their music in hopes of advancing their career aspirations. Based on the enormous addressable market for this product, we believe that ProMaster has the potential to generate significant revenues for the Company.

The new ProMasterHD.com will be launched in the second calendar quarter of 2015.

MyStudio HD Recording Studios

On September 30th, 2014, the Company entered into a licensing and option agreement for the licensing of its MyStudio related Intellectual Property for a total consideration of $1,250,000 in cash and $300,000 in stock of bBooth, Inc., payable over 18 months. The agreement also provides an option to purchase certain studio assets in the future. bBooth is a Los Angeles-based public company which intends to install interactive recording booths in the U.S. and internationally and capitalize on the content created therein.

Corporate

The Company has been awarded five patents with other patent applications pending. The Company has an aggressive intellectual property strategy to protect the technologies it has developed. We expect to continue raising capital through both equity and debt financing's as needed, to further our corporate objectives.

Employees

As of March 31, 2015 we employed eight full-time and one part-time employees. We expect to seek additional employees in the next year to handle anticipated potential growth.

We believe that our relationship with our employees is good. None of our employees are members of any union nor have they entered into any collective bargaining agreements.

The Company has continued to embark on several key initiatives, which included redefining our existing products, engaging in research and development for new products, analyzing pricing models based on market analysis, and defining our target demographics. In addition, the Company experienced a decline in studio revenues as it was not able to launch studios in strategic locations until it fulfilled among other things existing lease arrangements.

The information collected through the various initiatives has led the company to a new operational plan for its recording studio business unit as well as its audio technology unit.

Facilities

RESULTS OF OPERSATIONS

Revenues
	Three Months Ended
	March 31,
	2015			2014
Session Revenues		$	5,300		$	3,000
AfterMaster Revenues			218,680			28,171
Total Revenues		$	223,980		$	31,171

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Revenues
	Nine Months Ended
	March 31,
	2015			2014
Session Revenues		$	9,030		$	29,922
AfterMaster Revenues			270,925			99,064
Total Revenues		$	279,955		$	128,986

Our business model currently generates revenues from two primary sources:

ProMaster HD online music mastering service designed for independent artists.

AfterMaster mastering, remastering and audio processing technology that makes music and other audio files sound significantly louder, fuller and clearer.

Revenues from AfterMaster Services resulted primarily from audio services provided to producers and artists on a contract basis. This source of revenue is expected to grow in coming years, and the Company is expecting to generate additional revenues from pay-per-play downloads.

The revenue for the three months ended March 31, 2015 increased to $223,980 from $31,171 over the comparable three month period ended March 31, 2014 due primarily to licensing of the AfterMaster and MyStudio technology and a decreased use of the MyStudio Studios and mobile studio to prepare for the Bbooth merger of the MyStudio operations.

The revenue for the Nine months ended March 31, 2015 increased to $279,955 from $128,986 over the comparable nine month period ended March 31, 2014 due primarily to licensing of the AfterMaster and MyStudio technology and increase in AfterMastering Services at the Hollywood Studios.

Cost of sales consists primarily of cloud computing services for online mastering site, studio rent, studio consultant and excludes depreciation and amortization on the studios. The decrease in cost of sales for the three and nine months ended March 31, 2015, over the comparable period for the prior fiscal year, is attributable, primarily, to the Company opening no longer operating the MyStudio in the current year.

Cost of Sales

	Three Months Ended
	March 31,
	2015			2014
Cost of Sales (excluding depreciation and amortization)		$	70,872		$	78,201

Cost of Sales

	Nine Months Ended
	March 31,
	2015		2014
Cost of Sales (excluding depreciation and amortization)	$	238,493	$	286,058

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Other Operating Expenses

	Three Months Ended
	March 31,
	2015			2014
Depreciation and Amortization Expense		$	9,809		$	26,201
General and Administrative Expenses			992,784			675,547
Total		$	1,002,593		$	701,748

Other Operating Expenses

	Nine Months Ended
	March 31,
	2015			2014
Depreciation and Amortization Expense		$	53,702		$	80,995
General and Administrative Expenses			3,494,376			2,261,121
Total		$	3,548,078		$	2,342,116

General and administrative expenses consist primarily of compensation and related costs for our finance, legal, human resources, and information technology personnel; advertising expenses; rent and facilities; and expenses related to the issuance of stock compensation.

The overall increase in general and administrative expenses are primarily a result of increased operational expenses such as legal services, professional services, consulting, research and development and trade show expense due to the development of the AfterMaster Chip and ProMaster web services.

The increase in operational expenses is primarily attributable the development of the AfterMaster HD and ProMaster HD business units.

Other Income and Expenses

	Nine Months Ended
	March 31,
	2015				2014
Interest Expense		$	(2,342,338	)		$	(1,107,141	)
Change in Fair Value of Derivative			98,673				-
Loss on Extinguishment of Debt			(28,517	)			(25,787	)
Impairment of assets			-				(45,676	)
Total		$	(2,272,182	)		$	(1,178,604	)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Other Income and Expenses

	Three Months Ended
	March 31,
	2014				2013
Interest Expense		$	(252,341	)		$	(308,884	)
Change in Fair Value of Derivative			98,673				-
Loss on Extinguishment of Debt			-				(53,500	)
Impairment of assets			-				-
Total		$	(153,668	)		$	(362,384	)

The other income and expenses during the three and nine ended March 31, 2015, totaling $(153,701) and $(362,384) of net expenses, which consists of interest expense, change in fair value of derivative, and loss on extinguishment of debt. During the comparable period in 2014, other income and expenses totaled $(2,272,215) and $(1,178,604). Interest has increased due to additional borrowings used to develop AfterMaster HD and ProMaster HD, as well as change in fair value of derivative due to the company triggering a derivative in convertible instruments due to lack of available unissued common shares to satisfy the instruments.

Net Loss

	Three Months Ended
	March 31,
	2015				2014
Net Loss		$	(1,003,153	)		$	(1,102,874	)

Net Loss

	Nine Months Ended
	March 31,
	2015			2014
Net Loss	$	(5,778,798	)	$	(3,677,792	)

Due to the Company’s cash position, we use our Common Stock as currency to pay many employees, vendors and consultants. Once we have raised additional capital from outside sources, as well as generated cash flows from operations, we expect to reduce the use of Common Stock as a significant means of compensation. Under FASB ASC 718, “ Accounting for Stock-Based Compensation” , these non-cash issuances are expensed at the equity instruments fair market value.

LIQUIDITY AND CAPITAL RESOURCES

The Company had revenues of $223,980 during the three months ended March 31, 2015 as compared to $31,171 in the comparable quarter of 2014. The Company has incurred losses since inception of $52,763,927. At March 31, 2015, the Company has negative working capital of $6,167,926, which was an increase in working capital of $416,613 from June 30, 2014.

The future of the Company as an operating business will depend on its ability to obtain sufficient capital contributions and/or financing as may be required to sustain its operations. Management’s plan to address these issues includes a continued exercise of tight cost controls to conserve cash and obtaining additional debt and/or equity financing.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

As we continue our activities, we will continue to experience net negative cash flows from operations, pending receipt of significant revenues that generate a positive sales margin.

The Company expects that additional operating losses will occur until net margins gained from sales revenue is sufficient to offset the costs incurred for marketing, sales and product development. Until the Company has achieved a sales level sufficient to break even, it will not be self-sustaining or be competitive in the areas in which it intends to operate.

As of March 31, 2015, the existing capital and anticipated funds from operations were not sufficient to sustain Company operations or the business plan over the next twelve months. We anticipate substantial increases in our cash requirements which will require additional capital to be generated from the sale of Common Stock, the sale of Preferred Stock, equipment financing, debt financing and bank borrowings, to the extent available, or other forms of financing to the extent necessary to augment our working capital. In the event we cannot obtain the necessary capital to pursue our strategic business plan, we may have to significantly curtail our operations. This would materially impact our ability to continue operations. There is no assurance that the Company will be able to obtain additional funding when needed, or that such funding, if available, can be obtained on terms acceptable to the Company.

Recent global events, as well as domestic economic factors, have recently limited the access of many companies to both debt and equity financings. As such, no assurance can be made that financing will be available or available on terms acceptable to the Company, and, if available, it may take either the form of debt or equity. In either case, any financing will have a negative impact on our financial condition and will likely result in an immediate and substantial dilution to our existing stockholders.

Although the Company intends to engage in a subsequent equity offering of its securities to raise additional working capital for operations and studio manufacturing, the Company has no firm commitments for any additional funding, either debt or equity, at the present time. Insufficient financial resources may require the Company to delay or eliminate all or some of its development, marketing and sales plans, which could have a material adverse effect on the Company’s business, financial condition and results of operations. There is no certainty that the expenditures to be made by the Company will result in a profitable business proposed by the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer, President, and Chief Financial Officer (the “Certifying Officers”) are responsible for establishing and maintaining disclosure controls and procedures for the Company. The Certifying Officers have designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which this Report was prepared.

The Certifying Officers responsible for establishing and maintaining adequate internal control over financial reporting for the Company used the “Internal Control over Financial Reporting Integrated Framework” issued by Committee of Sponsoring Organizations (“COSO”) to conduct an extensive review of the Company’s “disclosure controls and procedures” (as defined in the Exchange Act, Rules 13a-15(e) and 15-d-15(e)) as of the end of each of the periods covered by this Report (the “Evaluation Date”). Based upon that evaluation, the Certifying Officers concluded that, as of March 31, 2015 and June 30, 2014, our disclosure controls and procedures were not effective in ensuring that the information we were required to disclose in reports that we file or submit under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms.

The Certifying Officers based their conclusion on the fact that the Company has identified material weaknesses in controls over financial reporting, detailed below. In order to reduce the impact of these weaknesses to an acceptable level, hawse have contracted with consultants with expertise in U.S. GAAP and SEC financial reporting standards to review and compile all financial information prior to filing that information with the SEC. However, even with the added expertise of these consultants, we still expect to be deficient in our internal controls over disclosure and procedures until sufficient capital is available to hire the appropriate internal accounting staff and individuals with requisite GAAP and SEC financial reporting knowledge. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 4T. CONTROLS AND PROCEDURES - continued

Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Management used the “Internal Control over Financial Reporting Integrated Framework” issued by COSO to conduct an extensive review of the Company’s internal controls over financial reporting to make that evaluation. As of March 31, 2015and June 30, 2014, the Company had identified deficiencies in internal controls that constituted material weaknesses in internal controls. Due to these material weaknesses, management concluded that internal controls over financial reporting as of March 31, 2015 and June 30, 2014were ineffective, based on COSO’s framework.

The deficiencies are attributed to the fact that the Company does not have adequate resources to address complex accounting issues, as well as an inadequate number of persons to whom it can segregate accounting tasks within the Company so as to ensure the segregation of duties between those persons who approve and issue payment from those persons who are responsible to record and reconcile such transactions within the Company’s accounting system. These control deficiencies will be monitored and attention will be given to the matter as we continue to accelerate through our current growth stage.

Management has concluded that these control deficiencies constitute a material weakness that continued throughout fiscal year 2014. In order to reduce the impact of these weaknesses to an acceptable level, we have contracted with consultants with expertise in U.S. GAAP and SEC financial reporting standards to review and compile all financial information prior to filing that information with the SEC. However, even with the added expertise of these consultants, we still expect to be deficient in our internal controls over disclosure and procedures until sufficient capital is available to hire the appropriate internal accounting staff and individuals with requisite GAAP and SEC financial reporting knowledge. There were no significant changes in our internal control over financial reporting or in other factors that occurred during our most recent fiscal year that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Legal Proceedings

ITEM 1A - RISK FACTORS

Not required.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the three months ended March 31, 2015, no matters were submitted to the shareholders for a vote.

ITEM 5. OTHER INFORMATION

Subsequent Events

None

ITEM 6. EXHIBITS

a) The following Exhibits are filed herein:

NO.

TITLE

31.1	Certification of Chief Executive Officer pursuant to the Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer pursuant to the Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Chief Executive Officer and 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

101.INS*	XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase

101.DEF*	XBRL Taxonomy Extension Definition Linkbase

101.LAB*	XBRL Taxonomy Extension Label Linkbase

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	STUDIO ONE MEDIA, INC.

Date: May 15, 2015	By:	/s/ Preston J. Shea
		Preston J. Shea,
		Title: President and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


	STUDIO ONE MEDIA, INC.

Date: May 15, 2015	By:	/s/ Preston J. Shea
		Preston J. Shea,
		Title: Director, President, Chief Executive Officer, Secretary


	STUDIO ONE MEDIA, INC.

Date: May 15, 2015	By:	/s/ Mirella Chavez
		Mirella Chavez
		Title: Chief Financial Officer

Attached files

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