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% The Company’s MyStudio units were designed to allow today’s social networking generation, which is comprised of hundreds of millions of young people throughout the world who share ideas, videos, photos, calendars, activities, etc., over their computers and mobile communications devices (e.g., iPhones), to create professional-quality music videos, comedy skits, job interviews, dating/modeling profiles, and digital greetings of up to five minutes in length for a modest $20 fee.  These performances are automatically digitally uploaded to and available for viewing on the MyStudio.net social networking website, or they can be attached to personal profiles on other sites, such as MySpace and Facebook.  The files can also be emailed to friends, talent scouts, reality entertainment producers, prospective employers, etc., anywhere in the world, and a complimentary DVD of the recording is provided to customers upon request.  We believe MyStudio has the potential to expand the social networking “experience” in a revolutionary manner, at a cost that is considered “chump change” to most consumers.  

% Using Hollywood-style “green screen” technology and high-definition video capabilities, combined with custom-engineered acoustics and a proprietary audio signal sequencing process, MyStudio offers consumers a level of quality, ease-of-use and convenience never before available to the public.  Music videos that cost $20 each at a MyStudio location are comparable in quality to those that would cost several thousand dollars if created in professional recording studios.  Users can select from hundreds of HD virtual backgrounds (static and dynamic) and thousands of licensed songs, or they can bring musical instruments and perform their own songs when creating personalized videos at MyStudio.  We urge potential investors to visit the www.MyStudio.net website and compare the quality of music videos with professionally produced videos on the MTV or VH1 television networks.

% MyStudio currently generates revenue from three primary sources:  recording session revenue ($20 per session), advertising on eight 37-inch LCD flat screen monitors that are attached to the exterior of the studio, and website advertising revenue.  In this manner, Studio One has developed a business model that “monetizes” user-generated content (“UGI”), while also generating revenue from on-site and website advertising.  Contrast this with other popular (and unprofitable) social networking sites such as MySpace (valued at $6.5 billion by TechCrunch) and Facebook (which, though unprofitable, was valued at approximately $10 billion when Digital Sky Technologies invested $200 million into the company in May 2009).  Such sites provide consumers “free” access to content and must rely solely upon website advertising for revenue.  We believe MyStudio has the potential to emerge as one of the most profitable long-term business concepts in the social networking space, once SOMD establishes a greater geographical footprint in metropolitan markets in throughout the U.S.

% While the Company has, to date, opened only two MyStudio locations (Scottsdale, Arizona and Hollywood, California), the concept has been enthusiastically received by the public and among music and television industry professionals who recognize the studios’ potential to revolutionize the social networking and reality entertainment industries.  A third MyStudio will soon open in New York, and we expect 15 to 20 additional locations to open in the next 12 to 18 months.  We believe revenues generated by MyStudio will increase dramatically once there are enough locations throughout the U.S. to (1) generate “viral exposure” among users of social networking sites and (2) attract the attention of national advertisers.  On a longer-term basis, we believe several hundred MyStudios could be successfully installed in the U.S., with a similar or greater potential in Asian countries such as Japan and China, where karaoke is embraced with an almost maniacal fervor by teenagers and young adults.

% SOMD has entered into a number of strategic relationships with entertainment brands, including EMI Music Publishing, The GRAMMY Foundation, Mark Burnett Productions (Survivor, Are You Smarter Than A Fifth Grader, The Apprentice), The Gotham Comedy Club, and LA Models.  These brand organizations partner with Studio One to promote events and contests that have been very effective in driving traffic to the Company’s MyStudio locations.  As more studios open in other major cities, we expect MyStudio to become a highly attractive, and cost-effective, partnership alternative to the “live” auditions and interviews currently conducted by reality entertainment television shows, musical recording talent agencies, dating websites, modeling agencies, job search firms, etc.

% Among the Company’s various other subsidiaries and divisions, we believe MyStudio Masters represents a “hidden asset” that could develop into a highly profitable business in the professional music recording industry.  In developing its proprietary audio signal sequencing technology for MyStudio, the Company determined that the process may have significant potential in the “mastering” of professional audio recordings or the “re-mastering” of previously recorded music.  The MyStudio Masters process makes music sound significantly louder, fuller and more exciting than traditionally mastered music, without adding compression distortion or exceeding recording industry limits of “digital zero”.  The writer of this report has compared recordings using the MyStudio Masters process with the same traditionally mastered music, and the dramatic difference gives the listener the impression that he/she is literally “in the room” with the performing artist.  We believe revenue opportunities for MyStudio Masters may include the re-mastering of “catalog albums” for major record labels, thereby allowing the record labels to re-release catalog music with greatly enhanced sound quality.  A low-cost automated process, which re-masters individual songs and albums for consumers, could follow.  This would appeal to the amateur singers, songwriters and musicians who produce an estimated 12 million songs per month worldwide, often using off-the-shelf and ineffective in-home mastering systems.  

% Studio One Media has attracted an extraordinary pool of management talent from the business and entertainment community, as we discuss later in this report.  The CEO of the Studio One Entertainment, Inc. subsidiary (responsible for developing MyStudio), Mr. Lawrence Ryckman, previously co-founded and served as President/CEO of QSound, Ltd., a sound technology company that grew from a start-up to a NASDAQ-listed, internationally recognized participant in the entertainment/technology industry, with a peak market cap approaching $500 million.  The Company’s Vice President of Audio Engineering, Mr. Shelly Yakus, is a renowned music producer, audio engineer/mixer and recording studio designer who has engineered and mixed recordings for some of the world’s best artists, including John Lennon, Stevie Nicks, Alice Cooper, Van Morrison, Dire Straits, Don Henley, U2 and Madonna.  The list of highly successful business and entertainment executives that serve on SOMD’s Advisory Board further supports our thesis as to the Company’s potential shareholder value.

% Forecasting an appropriate valuation for SOMD shares is somewhat problematic, in that the Company has recorded minimal revenues ($141,861 in FY2009) and substantial losses during its five-year corporate history, most of which time SOMD was engaged in the research and development of its proprietary, leading-edge audio and video technologies for the MyStudio concept.  The Company opened its initial MyStudio in the Scottsdale Fashion Square mall in September 2008, and the second studio, in Hollywood, just recently opened its doors to the public.  While losses will likely continue throughout FY2010 (ending 6/30/10), we believe SOMD will progress rapidly over the next twelve months towards building a social networking brand with tremendous revenue and earnings potential.  We believe the Company will achieve profitability in less than 12 months, after which its earnings should grow rapidly.  More importantly, however, is the likelihood that investors and potential strategic buyers will recognize the potential impact of MyStudio upon the social networking world before the Company becomes profitable.  At such time, SOMD’s “market cap” should exceed its current $16.4 million by several hundred percent.  The author of this report recalls the skepticism that greeted his recommendation of Blockbuster Video shares in 1987, when that company had only 19 stores in operation and was unprofitable.  Those investors who waited for profitability before investing in Blockbuster failed to participate in a rise of several hundred percent in its stock price.  Investors who recognized early that Blockbuster was on the threshold of revolutionizing an entire industry (video rentals) potentially made over 100X on their initial investment.  While we are not suggesting that SOMD’s share price will rise by a similar magnitude, we believe the Company can have a revolutionary impact on the social networking industry through its ability to monetize user-generated content. This should allow SOMD shares to appreciate several hundred percent from current levels over the next 12-24 months, and we consider the stock attractive for speculative investors that can assume the risks associated with companies that trade on the OTC Bulletin Board and are not yet profitable.   

% Provide High-Quality Interactive Recording Studios to the Public. Management believes MyStudio offers a service never before available to the public – a professional quality recording experience at an affordable price.

% Connect Talent to Talent Seekers. MyStudio provides the aspiring artist or entertainer with a platform to showcase his or her talent, and the entertainment recruiter with an entirely new method for locating new talent. MyStudio has the ability to set a new standard and create a new marketplace for sellers and buyers of talent.

% Build an Online Community Featuring User-Generated Content. MyStudio.net captures the social networking phenomena of MySpace, Facebook and YouTube and combines it with a superior audio/visual experience. The MyStudio.net website also allows users to create personal profiles, share videos with family and friends, and make their videos available to the public, all of which should encourage user loyalty and viral growth opportunities.

% Expand the MyStudio Concept into New Vertical Industries. The potential utilization of the recording studios extends well beyond the entertainment industry. The studios can facilitate efficiency, personalization and differentiation in many industries, including professional recruitment and staffing, Internet dating, corporate training, online greeting cards and business promotion.

% Barry M. Goldwater, Jr. – Chairman of the Board of Directors. Served as U.S. Congressman for 14 years, where he served on a number of committees. Prior to his service in Congress, Mr. Goldwater was a partner in the Los Angeles securities firm of Noble Cook, Inc. (now Wedbush Securities). Since retiring from Congress, he has been actively involved in private business activities and serves on the Boards of two companies in addition to SOMD.

% Lawrence G. Ryckman – President and CEO, Studio One Entertainment, Inc. Mr. Ryckman, who founded the MyStudio concept, is an award-winning entrepreneur and businessman with notable achievements in the entertainment, technology, and sports industries. He previously co-founded and served as President and CEO of QSound, Ltd., which developed proprietary sound technologies for the entertainment, computer, cell phone and video game industries. QSound grew from a start-up to a NASDAQ-listed, internationally recognized participant in the entertainment/technology industry, with a peak “market cap” approaching $500 million during Mr. Ryckman’s tenure as CEO.

% Preston J. Shea – President and CEO, Studio One Media, Inc. Mr. Shea is an attorney who previously served as Vice President and General Counsel for an international business organization with offices in Canada and the United States, and representative offices in Russia, China, Austria and Mexico. He has practiced international law and business law in Canada, Michigan and Arizona with an emphasis on NAFTA, and was employed by the government of Canada in various positions including Chief of Staff for the Federal Minister of the Environment, Special Assistant to the Federal Minister of International Trade and Senior Investment Advisor in the Los Angeles offices of the Canadian Consulate.

% Shelly Yakus – Vice President of Audio Engineering. Mr. Yakus, a renowned music producer, audio engineer/mixer and recording studio designer, is considered one of the best engineers and mixers in the music industry. He has engineered and mixed recordings for some of the world’s best known artists, including John Lennon, Stevie Nicks, Alice Cooper, Van Morrison, Tom Petty, Dire Straits, Blue Oyster Cult, Bob Seger, Amy Grant, Don Henley, U2 and Madonna. Known as “Golden Ears”, he is also widely respected for his expertise in recording studio design and acoustics. Mr. Yakus co-designed, equipped and supervised construction of the industry-leading A&M music recording studios in Los Angeles and served as Vice President of A&M Studios from 1985 to 1995. The music that he has engineered, produced or mixed has grossed over a billion dollars in sales, and in 1999 he was nominated for induction into the Rock and Roll Hall of Fame.

% Kenneth R. Pinckard – Vice President, Chief Financial Officer, General Counsel. Mr. Pinckard is a member of the State Bar of Arizona with extensive experience in start-up ventures, investments, corporate acquisitions and mergers, turnarounds and reorganizations, corporate finance, tax, commercial real estate development, construction, management and leasing.

% James A. Jacobs, Sr. – Vice President of Corporate Development. Prior to joining Studio One, Mr. Jacobs was a Managing Director at JDB Capital Partners, an Arizona-based merchant bank. He was formerly Senior Vice President – Finance for the Arizona Cardinals Football Club and Portfolio CFO at Texas Pacific Group in San Francisco. Mr. Jacobs, a Certified Public Accountant, has also served as a Senior Manager in the Mergers and Acquisitions Services Practice of KPMG LLC, as well as a Manager in KPMG’s Audit Department.

% Richard Blackstone — Advisory Board Member. Former Chairman and CEO of Warner/Chappell Music, Inc.; former President of Zomba Music Publishing.

% Ted Field – Advisory Board Member. Chairman and CEO of Radar Pictures, media investor and major producer of over 60 feature films, co-founder of Interscope Records, and former owner of Panavision.

% Paul Fisher – Advisory Board Member. Nationally respected modeling agent and specialist in brand management that has represented dozens of internationally recognized models, including Naomi Campbell, Stephanie Seymour and Gabriella Reece. Mr. Fisher founded a modeling agency that billed in excess of $80 million in contracts with such companies as Calvin Klein, Victoria’s Secret and Ralph Lauren.

% Allan Kaplan – Advisory Board Member. Technology venture capitalist, Director of Clearview Capital Partners, co-founder of Entera, Primenet Services and Limelight Networks.

% Andrew Knight – Advisory Board Member. Director of News Corporation, former chairman of News International PLC, and former editor-in-chief of The Economist. Mr. Knight currently serves as Chairman and Director, J. Rothschild Capital Management Limited.

% Paul Oreffice – Advisory Board Member. Former Chairman, President and CEO of Dow Chemical Company, former director of The Coca-Cola Company, Morgan Stanley, Nortel and Cigna.