UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-K

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Options Media Group Holdings, Inc.

(Exact name of registrant as specified in its charter)

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123 NW 13th Street, Suite 300, Boca Raton, Florida 33432

(Address of Principal Executive Office) (Zip Code)

(561) 368-5067

(Registrant’s telephone number, including area code)

240 Old Federal Highway, Suite 100, Hallandale, Florida 33009

(Former name or former address, if changed since last report)

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INDEX

PART I

Item 1.

Business

Company Overview

Options Media Group Holdings, Inc. (“Options Media”) is a multi-channel marketing firm specializing in the acquisition and retention of customers through direct and digital marketing programs. Options Media does business through its two wholly-owned subsidiaries: 1Touch Marketing, LLC (“1 Touch”) and Options Acquisition Sub, Inc. (“Acquisition Sub”).

Options Media enables marketers to reach new prospects through a multichannel database of over 150-million consumer and 21-million business records for opt-in e-mail, SMS and postal marketing. Additionally, Options Media offers web-based customized lead generation. Options Media is one of the first companies in the nation to offer Video Search Engine Optimization (“SEO”) with SMS keyword marketing. This technology enables marketers to obtain prime positioning in organic web searches and then provide an immediate interactive response mechanism.

Option Media’s e-mail service provider (“ESP”) platform provides marketers with the ability to create, send and track e-mail messages to their subscriber database text messaging.

Options Media Group- Email Service Provider Platform

Options Media’s ESP services provide a platform for marketers to communicate with subscribers within their customer database.

Options Media provides three levels of ESP services:

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Features of the Options Media ESP service:

:: Account Services

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Flexible service packages (full service, self service & hybrid plans available)

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Hosted & non-hosted solutions available

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Dedicated account management team

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24/7 customer support

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Training & ongoing product education

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Deliverability support & list hygiene

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Best practice recommendations

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Integration & API customization

:: Data Management

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State of the art data security

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Database/list management

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Real-time data imports

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Suppression list management

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Global bounce merge/purge

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E-mail & data cleansing

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List segment parameters

:: Deliverability

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Automated unsubscribe/bounce management

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Complaint management

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Dedicated IPs & domains

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E-mail best practice implementation:

:: SPF, Sender ID, DKIM

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Feedback loop enrollment

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Personalization & dynamic content deployment

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Compliance education

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Auto responder & trigger

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Based e-mail capabilities

:: Analytics

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Market segmenting

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Targeting capabilities

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Extensive tracking & reporting

:: Customizable Parameters

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Image hosting

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Forward-a-friend

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Template library

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Schedule a one time email drop, or schedule recurring targeted messaging

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Customized creative and design services

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Suppression list management

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Global bounce merge/purge

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E-mail & data cleansing

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List segment parameters

Database Services

Options Media offers matching records for e-mail, postal and SMS Mobile Marketing. Our database comprises 150-million records for consumers and 20-million records for businesses.

Options Media enables marketers to micro-target their prospect universes with over 700 lifestyle, and demographic factors for consumer marketing and over 18,000 SIC codes and 600+ job titles for businesses.

Opt-in Email

Options Media offers full-service opt-in e-mail marketing from creative design to custom list creation to deployment and tracking.

To promote our list rental services, we place list information on our website as well as onto the three major list engines: Nextmark, SRDS and MIN. To further enhance incoming interest in list rentals, we have contracted to become a Preferred Provider on Nextmark thus ensuring priority placement in list search results.

Options Media has received press coverage on our lists in both DM News and Direct Marketing Magazine in both e-newsletters and print editions.

eMarketer estimates e-mail ad spending will reach $488 million in 2009, up from $472 million in 2008.

SMS Mobile Marketing

Options Media offers two types of SMS Mobile Marketing:

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SMS Mobile Marketing PUSH

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SMS Mobile Marketing PULL

SMS Mobile Marketing PUSH- This is a message sent to a list similar to that of opt-in email. These recipients have agreed to receive advertising on their cell phones for messages of interest. The message is broadcast, or pushed out, to cell phone numbers on our SMS database.

In SMS Mobile Marketing there are two types of messaging:

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Text messaging

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WAP messaging

Text messaging is informational only with no live links.

WAP (or wireless web) messaging offers live web links or click to talk interactivity.

SMS Mobile Marketing PULL- This type of messaging is initiated by the user in response to an advertising prompt to text in a specific keyword a short code phone number. Most people will recognize this type of messaging to be similar to that of the TV show “American Idol” or similar shows where viewers text in to vote. Once a respondent has texted in, they receive an auto-responder message with discount, promotional or other information on their cell phones.

In an article published January 12, 2009 in Ad Age Magazine they reported, “according to estimates, mobile marketing will grow from $708 million in overall revenue this year to $2.2 billion in 2012 -- a compound annual growth rate of 26%.”

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Appending

Options Media can append postal customer files for e-mail or SMS contact information. Our appending service accurately matches usable, deliverable e-mail and SMS addresses to an existing customer database. Appending rapidly and cost-effectively expands the reach of a customer database and lowers the cost per contact. A customer database is matched to our database of 200 million names. When a match is found it is flagged.  A comprehensive Welcome Program is embarked upon over a 3-week time frame, in which e-mail, post card or text messages are sent to the new database of flagged records. All undeliverable and unsubscribed are no longer used. Once the file is determined to be usable and deliverable, the append is complete.

Lead Generation

Options Media offers custom lead generation programs. These programs are custom-created for each advertiser to accomplish their specific lead generation goals. Parameters are set by which leads are screened and only those matching the set criteria are sent to each advertiser.

Our lead generation programs focus primarily on two industry sectors:

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Consumer products & services

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Educational products & services

Within each sector, we work with a very diverse universe of advertisers each looking to expand its prospecting via web-based advertising.

To generate these leads, we work with web publishers to place banner ads and also build out web portals that take a prospect through a lead generation path from banner to data capture form.

The Interactive Advertising Bureau and PricewaterhouseCoopers LLP (“PWC”) announced that Internet advertising revenues reached almost $5.9 billion for the third quarter of 2008, representing an 11 percent increase over the same period in 2007. David Silverman, a partner at PWC, added that, "a weakening economy will continue to be a challenge to all forms of advertising-supported media. However, the Internet should be better poised to withstand the storm given its ability to combine performance-based advertising along with broad-based branding."

Video Search Engine Optimization

Unlike SEO for one specific website, Video SEO places up to 20 separate custom-created videos for a company onto the major search engines such as Google Video, Yahoo video, AOL Video, MSN Video, MediaCafe, You Tube and others. Each video is optimized with specific keywords according to a proprietary software analytic that seeks out the best performing keywords for industry sectors. The result is that an advertiser can achieve top placements in online search engines multiple times for specific keywords. This enables an advertiser to literally own or dominate their industry in organic searches for their keywords.

While other companies offer Video SEO, Options Media is one of the very few to additionally offer advertisers the ability to tag their online videos with SMS keyword, or PULL marketing. This merging of technologies enables advertisers to achieve a great deal of visibility and then provide an instantaneous response mechanism for interactivity with prospects.

eMarketer estimates that online-video advertising will increase 44.9% to $850 million in 2009, a growth rate that promises to stay strong through 2013, when the market is expected to be $4.6 billion.

4

Competition

We face intense competition in the Internet advertising market from other online advertising and direct marketing networks in competing for client advertising budgets. We expect that this competition will continue to intensify in the future as a result of industry consolidation, the maturation of the industry and low barriers to entry. We compete with a diverse and large pool of advertising, media, and Internet companies.

Our ability to compete depends upon several factors, including the following:

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The timing and market acceptance of our new solutions and enhancements to existing solutions developed by us;

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Our customer service and support efforts;

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Our sales and marketing efforts;

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The ease of us, performance, price and reliability of solutions provided by us; and

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Our ability to remain price competitive.

Customers

Our customers are primarily direct marketers, advertising agencies and brand marketers. Our customers range from fortune 500 companies, the federal government, and small to mid size companies.  

Sales and Marketing

We acquire our clients principally though the efforts of our dedicated in-house sales team and through the sponsorship and attendance of various trade shows and conferences. In addition, our general brand awareness, word of mouth client referrals, press and general brand awareness initiative drive prospects to us.

Employees

As of March 27, 2008, we employed a total of 64 employees all of which are full time employees. None of our employees are represented by a labor union and we believe that our relations with our employees are good.

Research and Development

We had no research and development expenses in 2007 and 2008.

Government Regulation

The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or CAN-SPAM Act, establishes requirements for commercial e-mail and specifies penalties for commercial e-mail that violates the Act. In addition, the CAN-SPAM Act gives consumers the right to require e-mailers to stop sending them commercial e-mail.

The CAN-SPAM Act covers e-mail sent for the primary purpose of advertising or promoting a commercial product, service, or Internet website. The Federal Trade Commission, a federal consumer protection agency, is primarily responsible for enforcing the CAN-SPAM Act, and the Department of Justice, other federal agencies, State Attorneys General, and Internet service providers also have authority to enforce certain of its provisions.

The CAN-SPAM Act’s main provisions include:

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Prohibiting false or misleading e-mail header information;

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Prohibiting the use of deceptive subject lines;

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Ensuring that recipients may, for at least 30 days after an e-mail is sent, opt out of receiving future commercial e-mail messages from the sender;

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Requiring that commercial e-mail be identified as a solicitation or advertisement unless the recipient affirmatively permitted the message; and

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Requiring that the sender includes a valid postal address in the e-mail message.

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The CAN-SPAM Act also prohibits unlawful acquisition of e-mail addresses, such as through directory harvesting and transmission of commercial e-mails by unauthorized means, such as through relaying messages with the intent to deceive recipients as to the origin of such messages.

Violations of the CAN-SPAM Act’s provisions can result in criminal and civil penalties, including statutory penalties that can be based in part upon the number of e-mails sent, with enhanced penalties for commercial e-mailers who harvest e-mail addresses, use dictionary attack patterns to generate e-mail addresses, and/or relay e-mails through a network without permission.

The CAN-SPAM Act acknowledges that the Internet offers unique opportunities for the development and growth of frictionless commerce, and the CAN-SPAM Act was passed, in part, to enhance the likelihood that wanted commercial e-mail messages would be received.

The CAN-SPAM Act preempts, or blocks, most state restrictions specific to e-mail, except for rules against falsity or deception in commercial e-mail, fraud and computer crime. The scope of these exceptions, however, is not settled, and some states have adopted e-mail regulations that, if upheld, could impose liabilities and compliance burdens in addition to those imposed by the CAN-SPAM Act.

Moreover, some foreign countries, including the countries of the European Union, have regulated the distribution of commercial e-mail and the online collection and disclosure of personal information. Foreign governments may attempt to apply their laws extraterritorially or through treaties or other arrangements with U.S. governmental entities.

Our clients may be subject to the requirements of the CAN-SPAM Act, and/or other applicable state or foreign laws and regulations affecting e-mail marketing. If our clients’ e-mail campaigns are alleged to violate applicable e-mail laws or regulations and we are deemed to be responsible for such violations, or if we were deemed to be directly subject to and in violation of these requirements, we could be exposed to liability.

Our standard terms and conditions require our clients to comply with laws and regulations applicable to their e-mail marketing campaigns and to implement any required regulatory safeguards.

Corporate History and Acquisitions

Heavy Metal, Inc. was incorporated in the State of Nevada on June 27, 2007 to serve as a mineral exploration company focused on the acquisition and development of a portfolio of uranium properties.  On June 19, 2008, Heavy Metal changed its name to Options Media Group Holdings, Inc.  On June 23, 2008, Options Media acquired Acquisition Sub., which contained the business of Options Newsletter, Inc. (“Options Newsletter”).  All of the pre-merger assets and liabilities of Options Media were transferred to David Harapiak, the prior president of Options Media, in exchange for the cancellation of his ownership in Options Media.  Customer Acquisition Network Holdings, Inc., now known as interCLICK, Inc., the former parent of Acquisitions Sub, received 12,500,000 shares of Options Media common stock and is Option Media’s largest shareholder.  

Options Newsletter is the predecessor of Acquisition Sub and was formed in Florida on February 22, 2000. Options Newsletter was acquired by interCLICK, Inc. on January 4, 2008.

On September 19, 2008, Options Media acquired 1 Touch for 10,000,000 shares of common stock of Options Media and $1,500,000. Additionally, the former owners of 1 Touch acquired the right to receive a maximum earn-out payment of 6,000,000 shares of Options Media common stock based on 1 Touch achieving specific performance milestones.  

Item 1A.

Risk Factors.

Not applicable for smaller reporting companies.

Item 1B.

Unresolved Staff Comments.

Not applicable.

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Item 2.

Properties.

Our corporate headquarters, including our principal administrative, marketing, technical support and research and development departments, are presently located in Boca Raton, Florida in a leased office building of approximately 10,400 square feet. The monthly cost of the lease is approximately $17,000, and the lease expires in December 2010.

Item 3.

Legal Proceedings.

We are not currently subject to any legal proceedings. From time to time, we have been party to litigation matters arising in connection with the normal course of our business, none of which has or is expected to have a material adverse effect on us.

Item 4.

Submission of Matters to a Vote of Security Holders

None.

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PART II

Item 5.

Stockholder Market for Registrant’s Common Equity, Related Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock is quoted on the Over-the-Counter Bulletin Board under the symbol “OPMG”. The last reported sale price of our common stock as reported by the Bulletin Board on March 30, 2009 was $0.36 per share. As of that date, there were 149 holders of record. The following table provides the high and low bid price information for our common stock for the periods indicated as reported by the Bulletin Board.

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(1)

Our common stock began trading on the Bulletin Board on July 11, 2008.

Dividend Policy

We have not paid any cash dividends on our common stock and do not plan to pay any such dividends in the foreseeable future. We currently intend to use all available funds to develop our business. We can give no assurances that we will ever have excess funds available to pay dividends.

Recent Sales of Unregistered Securities

In 2008, we have sold securities without registration under the Securities Act of 1933 in reliance upon the exemption provided in Section 4(2) and Rule 506 thereunder which have not been previously reported, as described below.

Item 6.

Selected Financial Data.

Not applicable to smaller reporting companies.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Overview  

Options Media is an e-mail services provider for on-demand e-mail marketing to create, send, and track professional and permission-based e-mail marketing campaigns. Options Media provides clients with access to software, hardware, bandwidth, and exclusive domains and IP addresses, as well as the ability to upload and manage subscribers, and review and upload campaigns and track results for a 360-degree full-service customer marketing solution. Additionally, we are a leading provider of precision direct marketing solutions including e-mail marketing, SMS/mobile marketing, SMS/keyword marketing, custom lead generation and creative services. Our vast array of services and technologies enable marketers to identify, target, reach and build relationships with both consumers and businesses.

During 2008, we have accomplished significant milestones, including:

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On June 23^rd, we acquired the business for $3,000,000, a $1,000,000 note and 12,500,000 shares of common stock. The seller retained a 31.1% interest in us which has been reduced to approximately 14.4%. We also paid the $1,000,000 note;

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We have raised $5,824,000, net off offering costs in equity, providing us with the funds to complete two acquisitions and operate our business;

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On September 19^th, we completed the acquisition of 1 Touch in exchange for $1,500,000 and 10,000,000 shares of common stock; and

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We hired a management team with a successful track record.

Critical Accounting Estimates

This discussion and analysis of our financial condition presented in this section is based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, consider these to be our critical accounting policies. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, allowance for accounts receivable, purchase price fair value allocation for business combinations, valuation and amortization periods of intangible assets, valuation of goodwill, and the valuation of stock based compensation. We based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Stock Based Compensation

We adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share Based Payment (“SFAS No. 123R”). SFAS No. 123R establishes the financial accounting and reporting standards for stock-based compensation plans. As required by SFAS No. 123R, we recognize the cost resulting from all stock-based payment transactions including shares issued under our stock option plans in the financial statements. Stock based compensation is measured at fair value at the time of the grant.

Valuation of Long-Lived and Intangible Assets and Goodwill

Pursuant to Statement of Financial Accounting Standards, Goodwill and Other Intangible Assets (“SFAS”) No. 142 and Statement of Financial Accounting Standards Accounting for the Impairment or Disposal of Long-lived Assets (“SFAS”) No. 144, we assess the impairment of identifiable intangibles, long-lived assets and goodwill annually or whenever events or circumstances indicate that the carrying value of these assets may not be recoverable. Factors we consider include and are not limited to the following:

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Significant changes in performance relative to expected operating results

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Significant changes in the use of the assets or the strategy of our overall business

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Significant industry or economic trends

As determined in accordance with SFAS No. 142, if the carrying amount of goodwill of a reporting unit exceeds its fair value, the impairment loss is measured as the amount by which the goodwill carrying amount exceeds the implied fair value of goodwill.  In accordance with SFAS No. 144, in determining if impairment of a long-lived asset exists, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.  The impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair market value of the assets.

Revenue Recognition

We recognize revenue when the following criteria have been met: persuasive evidence of an arrangement exists, the fees are fixed or determinable, no significant company obligations remain, and collection of the related receivable is reasonably assured.

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We, in accordance with Emerging Issues Task Force (“EITF”) Issue 99-9 “Reporting Revenue Gross as a Principal vs. Net as an Agent,” report revenues for transactions in which we are the primary obligor on a gross basis and revenues in which we act as an agent on and earn a fixed percentage of the sale on a net basis, net of related costs. Credits or refunds are recognized when they are determinable and estimable.

The following policies reflect specific criteria for our various revenue streams:

Revenues for sending direct e-mails of customer advertisements to our owned database of email addresses are recognized at the time the customer’s advertisement is emailed to recipients by us.

Revenues from ESP activities which allow the customer to send the emails themselves, to our database of e-mail addresses include a monthly fee charged for the customer’s right to send a fixed number of emails per month. ESP revenues are generally collected upfront from customers for service periods of one to six months. Thus, ESP revenues are deferred and recognized over the respective service period. Overage charges apply if the customer sends more emails in one month than is allowed per the contract. Accordingly, overage charges are accrued in the month of occurrence.

Revenue from list management services, which principally includes e-mail transmission services of third party promotional and e-commerce offers to a licensed email list, is recognized when Internet users visit and complete actions at an advertiser’s website. Revenue consists of the gross value in accordance with EITF 99-19 of billings to clients. We report these revenues gross because we are responsible for fulfillment of the service, have substantial latitude in setting price and assume the credit risk for the entire amount of the sale, and are responsible for the payment of all obligations incurred with advertiser email list owners. Cost of revenue from list management services are cost incurred to the email list owners with whom we have licensed such e-mail list.

Results of Operations

Since our inception on June 27, 2007 to December 31, 2007, we had never generated any revenues and we have incurred losses totaling $68,533. Prior to June 23, 2008, we were in the development stage since our formation, without material assets or activities. Upon the consummation of the June 23, 2008 business combination discussed earlier, we exited the development stage. Because we had no material operations in 2007, the following discussion relates to our results of operations beginning with our acquisition on June 23, 2008. See Item 8, “Financial Statements and Supplementary Data, Note 1” for certain information relating to our pro forma revenues.

Revenue:

Our revenue for the year ended 2008, was $3,370,790. 1 Touch’s revenue after the acquisition date September 19, 2008 to December 31, 2008 was $1,978,390 after adjusting for inter-company revenue of approximately $69,000. Acquisition Sub’s revenues after the acquisition date June 23, 2008 to December 31, 2008 was $1,392,400. Our revenue by product is shown in the table below.

In the future, we expect our revenue to grow substantially. In 2009, we will begin reporting a full 12 months of revenue for both Acquisition Sub and 1Touch. Additionally, we expect year over year growth in all our product lines. However, we expect larger growth in the SMS product line, and the Video SEO product will start producing revenue in 2009. We anticipate that the lead products and list management will be a lesser percentage of total revenue in the future.

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Cost of Revenue

The cost of revenue for the year ended December 31, 2008, was $1,308,753, which was 39% of revenue. The cost of revenue include fees due to list owners for the use of their data in list management advertising campaigns, outsourced leads, and outsourced data and data services. The cost of revenue will increase in the future as we grow our revenue. However, we expect the cost of revenue as a percentage of revenue will remain at approximately 39%

Operating Expenses:

Sever hosting and technology services for the year ended December 31, 2008, were $573,432 which consist of outsourced hosting, outsourced server costs, and other technology costs required to operate our ESP and list management product lines. These costs will increase as our combined list management and ESP revenue increase. During 2008, these costs averaged 41% of ESP and list management revenue. In the future, we anticipate that these costs as a percentage of combined list management and ESP revenue may show slight improvements as our revenue grows for these products.

Compensation and related costs for the year ended December 31, 2008 were $2,611,622.and include salaries and related costs such as payroll taxes. In addition, this expense includes non-cash stock base compensation of $1,114,840 (including $4,500 recorded as a liability at December 31, 2008). The stock compensation represents expenses for Director fees of $150,000, expenses for services of approximately $679,500, employee restricted stock grants for services of $32,650 and the fair value of options grants of $252,689 for employee services.

Commission expense for the year ended December 31, 2008, was $397,756 which represent the amounts we incurred for sales commissions on the sales we made for the year ended December 31, 2008. This expense will increase as we grow our revenues.

Advertising expense for the year ended December 31, 2008, was $84,419. This expense primarily consists of expenses to attend trade shows which include travel expenses and trade show fees. We expect this expense to increase as we will incur a full 12 months of expenses in the future.

Rent expense for the year ended December 31, 2008 was $75,975. During 2008, we rented an office in Hallendale, Florida and two office facilities in Boca Raton, Florida. At December 31, 2008, we consolidated our operations into one facility in Boca Raton at a monthly rental cost of approximately $17,000.

Bad debt expense for the year ended December 31, 2008, was $136,451. The Company reviews the accounts receivable which are 30 days or more past due in order to identify specific customers with known disputes or collectability issues.  During the year ended December 31, 2008, the Company determined that a bad debt provision was required.

Loss on disposal of assets for the year ended December 31, 2008, was $36,585. The Company’s headquarters were relocated from Hallendale, Florida to Boca Raton, Florida. Leasehold improvements and certain furniture and fixtures were disposed.

Other general and administrative expense for the year ended December 31, 2008, was $1,764,113. The major items included in other general and administrative expense are approximately $650,000 for consulting and professional services, (which includes $90,000 of stock-based fees) an asset impairment charge of approximately $283,000 and amortization of intangible assets of $289,961.

Other income (expense) for the year ended December 31, 2008, was ($32,179). This included $2,363 for interest income and $34,542 of interest expense on notes and capital leases.

The Company recognized an income tax benefit of $213,597 relating to the book-tax basis differences of certain acquired assets and assumed liabilities of the 1 Touch business acquisition.

The net loss for the year ended December 31, 2008, was $3,436,898, and the net loss per share basic and diluted was $0.08.

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Liquidity and Capital Resources

In 2008, we used $935,235 in cash for operations. The cash used consisted of our net loss $3,436,898 offset by certain larger non-cash  items including stock for services to employees of $765,000, stock grants to directors of $150,000, stock options expense of $252,689, amortization of intangibles of $289,961, impairment of intangibles of  $283,462 and bad debt expense of $136,451. In addition, changes in operating assets and liabilities offset our net loss by $718,669. We also used $4,699,727 of cash in investing activities primarily to acquire our existing subsidiaries. In 2008, we were provided $5,709,882 of cash in financing activities including $5,824,111 received from the sale of common stock and $1,455,000 in loan proceeds, offset by $1,525,000 repayment of debt.

In December 2008, the Company borrowed $230,000 from three shareholders including its President represented by 6% notes. Additionally, on January 13, 2009, we refinanced $680,000 of our outstanding loans and received $400,000 is cash issuing $1,080,000 in secured 6% notes to two investors.  The new notes are due July 13, 2009. On March 13, 2009, we borrowed an additional $300,000 from another investor issuing him a 7% secured note due June 30, 2009. The January lenders subordinated their security interest to the March lender who has a security interest in substantially all of our assets.

As of March 30, 2009, we have approximately $272,000 in available cash. We owe $1,380,000 in secured notes which come due on June 30^th and July 13^th as well as an additional $50,000 unsecured note due on June 5 ^th, 2009.  We are currently seeking to raise additional money to meet our working capital needs including paying the loans described above. If we are not able to raise at least $2,000,000, we may not be able to remain operational.

RISK FACTORS

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment.

Risk Factors Relating to Our Company

Our ability to continue as a going concern is in substantial doubt absent obtaining adequate new debt or equity financing and achieving sufficient sales levels.

We incurred net losses of approximately $3.4 million in 2008. We anticipate these losses will continue for the foreseeable future. We have a significant working capital deficiency, and have not reached a profitable level of operations, all of which raise substantial doubt about our ability to continue as a growing concern. Our continued existence is dependent upon generating working capital. Working capital limitations continue to impinge on our day-to-day operations, thus contributing to continued operating losses.

Because of the severity of the global economic recession, our customers may delay in paying us or not pay us at all. This would have a material and adverse effect on our future operating results and financial condition.

One of the effects of the severe global economic recession is that businesses are tending to maintain their cash resources and delay in paying their creditors whenever possible. As a trade creditor, we lack leverage unlike secured lenders and providers of essential services. As the economy continues to deteriorate, we may find that publishers may delay in paying us. Additionally, we may find that advertisers will reduce Internet advertising which would reduce our future revenues. These events will result in a number of adverse effects upon us including increasing our borrowing costs, reducing our gross profit margins, reducing our ability to borrow under our line of credit, and reducing our ability to grow our business. These events would have a material and adverse effect upon us.

If we do not raise additional debt or equity capital, we may not be able to pay all of our indebtedness.

At December 31, 2008, we had a working capital deficit of approximately $1.9 million.  Additionally, we have borrowed $1,380,000 in secured loans in 2009 ($680,000 of which were loaned in 2008 and refinanced in 2009) in addition to $50,000 we borrowed in December 2008.  The loans are due in June 2009 and July 2009. Our management has devoted a substantial amount of time speaking with potential investors but has not reached any agreement upon terms. Because of the continuing decline in the economy, the substantial reduction in available credit and the decline in the stock market and our stock price, we have been hampered in our ability to raise the necessary working capital.  If we do not raise the necessary working capital, we may not be able to remain operational.  

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If we are unable to integrate the acquisition of 1 Touch or future acquisitions, our revenues and profitability will decrease and our business could suffer.

Our success will depend in part on the ability of Options Media to manage the integration of 1 Touch, which is larger than we were prior to the acquisition and has substantially more revenues. Integrating two diverse businesses poses a variety of challenges, which we must meet.

The process of integrating 1 Touch and Options Media and any future acquired businesses may be disruptive to our business and may cause an interruption of, or a loss of momentum in, our business as a result of the following factors, among others:

·

Loss of key employees or customers;

·

Possible inconsistencies in standards, controls, procedures and policies among the combined companies and the need to implement company-wide financial, accounting, information and other systems;

·

Failure to maintain the quality of services that the companies have historically provided; and

·

The diversion of management’s attention from our day-to-day business as a result of the need to deal with any disruptions and difficulties and the need to add management resources to do so.

These disruptions and difficulties, if they occur, may cause us to fail to realize the cost savings, revenue enhancements and other benefits that we currently expect to result from that integration and may cause material adverse short and long-term effects on our operating results and financial condition. If we are not able to integrate the two businesses and continue their patterns of revenue growth and profitability, our future results of operations may reflect declining revenue growth and reduced profitability.

Even if we are able to integrate the operations of acquired businesses into our operations, we may not realize the full benefits of the cost savings, revenue enhancements or other benefits that we anticipate. If we achieve the expected benefits, they may not be achieved within the anticipated time frame. Also, the cost savings and other synergies from these acquisitions may be offset by costs incurred in integrating the companies, increases in other expenses, operating losses or problems in the business unrelated to these acquisitions.

If we are unable to attract new customers and retain existing customers on a cost-effective basis, our business and results of operations will be affected adversely.

To continue to grow our business, we will need to attract and retain new customers on a cost-effective basis, many of whom have not previously used our marketing services. We rely on a variety of methods to attract new customers, such as sponsoring industry trade shows. In addition, we are committed to providing our customers with a high level of support. As a result, we believe many of our new customers are referred to us by existing customers. If we are unable to use any of our current marketing initiatives or the costs of such initiatives were to significantly increase or our efforts to satisfy our existing customers are not successful, we may not be able to attract new customers or retain existing customers on a cost-effective basis and, as a result, our revenue and results of operations would be affected adversely.

In the event we are unable to minimize our loss of existing customers or to grow our customer base by adding new customers, our operating results will be adversely affected.

Our growth strategy requires us to minimize the loss of our existing customers and grow our customer base by adding new customers. Customers cancel their accounts for many reasons, including a perception that they do not use our product effectively, the service is a poor value and they can manage their e-mail campaigns without our services. In some cases, we terminate an account because the customer fails to comply with our standard terms and conditions. We must continually add new customers to replace customers whose accounts are cancelled or terminated, which may involve significantly higher marketing expenditures than we currently anticipate. If too many of our customers cancel our service, or if we are unable to attract new customers in numbers sufficient to grow our business, our operating results would be adversely affected.

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As we expand our customer base through our marketing efforts, our new customers may use our services differently than our existing customers and, accordingly, our business model may not be as efficient at attracting and retaining new customers.

As we expand our customer base, our new customers may use our services differently than our existing customers. If our new customers are not as loyal as our existing customers, our attrition rate will increase and our customer referrals will decrease, which would have an adverse effect on our results of operations. In addition, as we seek to expand our customer base, we expect to increase our marketing budget in order to attract new customers, which will increase our operating costs. There can be no assurance that these marketing efforts will be successful.

Any efforts we may make in the future to promote our services to market segments other than large organizations or to expand our product offerings beyond our existing services may not succeed.

Any efforts to expand beyond the large organization market or to introduce new services beyond our existing services may not result in significant revenue growth, may divert management resources from our existing operations and require us to commit significant financial resources to an unproven business, which may harm our financial performance.

Our customers’ use of our services to transmit negative messages or website links to harmful applications could damage our reputation, and we may face liability for unauthorized, inaccurate or fraudulent information distributed via our services.

Our customers could use our marketing services to transmit negative messages or website links to harmful applications, reproduce and distribute copyrighted material without permission, or report inaccurate or fraudulent data. Any such use of our services could damage our reputation and we could face claims for damages, copyright or trademark infringement, defamation, negligence or fraud. Moreover, our customers’ promotion of their services and services through our e-mail marketing product may not comply with federal, state and foreign laws. We cannot predict whether our role in facilitating these activities would expose us to liability under these laws.

Even if claims asserted against us do not result in liability, we may incur substantial costs in investigating and defending such claims. If we are found liable for our customers’ activities, we could be required to pay fines or penalties, redesign business methods or otherwise expend resources to remedy any damages caused by such actions and to avoid future liability.

Our existing general liability insurance may not cover all potential claims to which we are exposed or may not be adequate to indemnify us for all liabilities that may be imposed. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage would increase our operating losses and reduce our net worth and working capital.

If we fail to enhance our existing services or develop new services, our services may become obsolete or less competitive and we could lose customers.

If we are unable to enhance our existing services or develop new services that keep pace with rapid technological developments and meet our customers’ needs, our business will be harmed. Creating and designing such enhancements and new services entail significant technical and business risks and require substantial expenditures and lead-time, and there is no guarantee that such enhancements and new services will be completed in a timely fashion. Nor is there any guarantee that any new product offerings will gain widespread acceptance among our e-mail marketing customers or by the broader market. For example, our existing e-mail marketing customers may not view any new product as complementary to our e-mail product offerings and therefore decide not to purchase such product. If we cannot enhance our existing services or develop new services or if we are not successful in selling such enhancements and new services to our customers, we could lose customers or have difficulty attracting new customers, which would adversely impact our financial performance.

If we fail to retain our key personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.

Our future depends, in part, on our ability to attract and retain key personnel. Our future also depends on the continued contributions of our executive officers and other key technical personnel, each of whom would be difficult to replace. In particular, Scott Frohman, Chief Executive Officer and Chairman of the Board, Daniel Lansman, President, Dale Harrod, Chief Technology Officer and Anthony Bumbaca, Senior Vice President are

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critical to the management of our business and operations and the development of our strategic direction. The loss of the services of Messrs. Frohman, Lansman, Harrod, Bumbaca or other executive officers or key personnel and the process to replace any of our key personnel would involve significant time and expense and may significantly delay or prevent the achievement of our business objectives.

Competition for our employees is intense, and we may not be able to attract and retain the highly skilled employees whom we need to support our business.

Competition for highly skilled technical and marketing personnel is extremely intense, and we continue to face difficulty identifying and hiring qualified personnel in many areas of our business. We may not be able to hire and retain such personnel at compensation levels consistent with our existing compensation and salary structure. Many of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In particular, candidates making employment decisions, particularly in high-technology industries, often consider the value of any equity they may receive in connection with their employment. Any significant volatility in the price of our stock may adversely affect our ability to attract or retain highly skilled technical and marketing personnel.

In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements and the quality of our services and our ability to serve our customers could diminish, resulting in a material adverse effect on our business.

The market in which we participate is competitive and, if we do not compete effectively, our operating results could be harmed.

The market for our services is competitive and rapidly changing, and the barriers to entry are relatively low. With the introduction of new technologies and the influx of new entrants to the market, we expect competition to persist and intensify in the future, which could harm our ability to increase sales and maintain our prices.

The market for our services is competitive and rapidly changing, and the barriers to entry are relatively low. We expect this competition to continue to increase, in part because there are no significant barriers to entry to our industry. Increased competition may result in price reductions, reduced margins and loss of market share. Our failure to adapt successfully to these changes could harm our business.

We compete with several companies in each segment of our business. Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their products. Our potential competitors may have more extensive customer bases and broader customer relationships than we have. In addition, these companies may have longer operating histories and greater name recognition than we have. These competitors may be better able to respond quickly to new technologies and to undertake more extensive marketing campaigns. If we are unable to compete with such companies, the demand for our services could substantially decline.

Because the CAN-SPAM Act imposes certain obligations on the senders of commercial e-mails, it could minimize the effectiveness of our e-mail marketing product, and establishes financial penalties for non-compliance, which could increase the costs of our business.

The CAN-SPAM Act, which establishes certain requirements for commercial e-mail messages and specifies penalties for the transmission of commercial e-mail messages that are intended to deceive the recipient as to source or content. In addition, some states have passed laws regulating commercial e-mail practices that are significantly more punitive and difficult to comply with than the CAN-SPAM Act, particularly Utah and Michigan, which have enacted do-not-e-mail registries listing minors who do not wish to receive unsolicited commercial e-mail that markets certain covered content, such as adult or other harmful products. Some portions of these state laws may not be preempted by the CAN-SPAM Act. The ability of our customers’ constituents to opt out of receiving commercial e-mails may minimize the effectiveness of our e-mail marketing product. Moreover, non-compliance with the CAN-SPAM Act carries significant financial penalties. If we were found to be in violation of the CAN-SPAM Act, applicable state laws not preempted by the CAN-SPAM Act, or foreign laws regulating the distribution of commercial e-mail, whether as a result of violations by our customers or if we were deemed to be directly subject to and in violation of these requirements, we could be required to pay penalties, which would adversely affect our financial performance and significantly harm our reputation and our business. We also may be required to change

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one or more aspects of the way we operate our business, which could impair our ability to attract and retain customers or increase our operating costs.

Evolving regulations concerning data privacy may restrict our customers’ ability to solicit, collect, process and use data necessary to conduct e-mail marketing campaigns or to send surveys and analyze the results or may increase their costs, which could harm our business.

Federal, state and foreign governments have enacted, and may in the future enact, laws and regulations concerning the solicitation, collection, processing or use of consumers’ personal information. Such laws and regulations may require companies to implement privacy and security policies, permit users to access, correct and delete personal information stored or maintained by such companies, inform individuals of security breaches that affect their personal information, and, in some cases, obtain individuals’ consent to use personal information for certain purposes. Other proposed legislation could, if enacted, prohibit the use of certain technologies that track individuals’ activities on web pages or that record when individuals click through to an Internet address contained in an e-mail message. Such laws and regulations could restrict our customers’ ability to collect and use e-mail addresses, page viewing data, and personal information, which may reduce demand for our services.

As Internet commerce develops, federal, state and foreign governments may draft and propose new laws to regulate Internet commerce, which may negatively affect our business.

As Internet commerce continues to evolve, increasing regulation by federal, state or foreign governments becomes more likely. Our business could be negatively impacted by the application of existing laws and regulations or the enactment of new laws applicable to e-mail marketing. The cost to comply with such laws or regulations could be significant and would increase our operating expenses, and we may be unable to pass along those costs to our customers in the form of increased subscription fees. In addition, federal, state and foreign governmental or regulatory agencies may decide to impose taxes on services provided over the Internet or via e-mail. Such taxes could discourage the use of the Internet and e-mail as a means of commercial marketing, which would adversely affect the viability of our services.

If the delivery of our customers’ e-mails is limited or blocked, the fees we may be able to charge for our e-mail marketing product may not be accepted by the market and customers may cancel their accounts.

Internet service providers (“ISPs”) can block e-mails from reaching their users. Recent releases of ISP software and the implementation of stringent new policies by ISPs make it more difficult to deliver our customers’ e-mails. If ISPs materially limit or halt the delivery of our customers’ e-mails, or if we fail to deliver our customers’ e-mails in a manner compatible with ISPs’ e-mail handling or authentication technologies, then the fees we charge for our e-mail marketing product may not be accepted by the market, and customers may cancel their accounts.

If our e-mail activities are blacklisted by ISPs or others, our ability to conduct business and future revenue and income will be adversely affected.

We depend on e-mail to market to and communicate with our customers, and our customers rely on e-mail to communicate with their constituents. Various private entities attempt to regulate the use of e-mail for commercial solicitation. These entities often advocate standards of conduct or practice that significantly exceed current legal requirements and classify certain e-mail solicitations that comply with current legal requirements as spam. Some of these entities maintain “blacklists” of companies and individuals, and the websites, ISPs and Internet protocol addresses associated with those entities or individuals that do not adhere to those standards of conduct or practices for commercial e-mail solicitations that the blacklisting entity believes are appropriate. If a company’s Internet protocol addresses are listed by a blacklisting entity, e-mails sent from those addresses may be blocked if they are sent to any Internet domain or Internet address that subscribes to the blacklisting entity’s service or purchases its blacklist.

Some of our Internet protocol addresses currently are listed with one or more blacklisting entities and, in the future, our Internet protocol addresses may also be listed with these and other blacklisting entities. There can be no guarantee that we will not continue to be blacklisted or that we will be able to successfully remove ourselves from those lists. Blacklisting of this type could interfere with our ability to market our services and services and communicate with our customers and could undermine the effectiveness of our customers’ e-mail marketing campaigns, all of which could have a material negative impact on our business and results of operations.

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If we experience any significant disruption in service or in our computer systems or in our customer support services, it could reduce the attractiveness of our services and result in a loss of customers.

The satisfactory performance, reliability and availability of our technology and our underlying network infrastructure are critical to our operations, level of customer service, reputation and ability to attract new customers and retain existing customers. Our system hardware is co-located at third-party hosting facilities throughout the United States. None of the operators of these co-located facilities guarantees that our customers’ access to our services will be uninterrupted, error-free or secure. Our operations depend on the ability of the operators of these facilities to protect their and our systems in their facilities against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity and other environmental concerns, computer viruses or other attempts to harm our systems, criminal acts and similar events. In the event that our arrangement with any of the operators of our co-located facilities is terminated, or there is a lapse of service or damage to their facilities, we could experience interruptions in our service as well as delays and additional expense in arranging new facilities. In addition, our customer support services, which are currently located only at our two Florida offices, would experience interruptions as a result of any disruption of electrical, phone or any other similar facility support services. Any interruptions or delays in access to our services or customer support, whether as a result of third-party error, our own error, natural disasters or security breaches, whether accidental or willful, could harm our relationships with customers and our reputation. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors could damage our brand and reputation, divert our employees’ attention, reduce our revenue, subject us to liability and cause customers to cancel their accounts, any of which could adversely affect our business, financial condition and results of operations.

If the security of our customers’ confidential information stored in our systems is breached or otherwise subjected to unauthorized access, our reputation may be harmed, we may be exposed to liability and we may lose the ability to offer our customers a credit card payment option.

Our system stores our customers’ proprietary e-mail distribution lists and other critical data. Any accidental or willful security breaches or other unauthorized access could expose us to liability for the loss of such information, time-consuming and expensive litigation and other possible liabilities as well as negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our software are exposed and exploited, and, as a result, a third party obtains unauthorized access to any of our customers’ data, our relationships with our customers will be severely damaged, and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we and our third-party hosting facilities may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, many states, including Massachusetts, have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach often lead to widespread negative publicity, which may cause our customers to lose confidence in the effectiveness of our data security measures. Any security breach, whether actual or perceived, would harm our reputation, and we could lose customers.

If we fail to maintain compliance with the data protection policy documentation standards adopted by the major credit card issuers, we could lose our ability to offer our customers a credit card payment option. Any loss of our ability to offer our customers a credit card payment option would make our services less attractive to many customers by negatively impacting our customer experience and significantly increasing our administrative costs related to customer payment processing.

If we are unable to protect the confidentiality of our unpatented proprietary information, processes and know-how and our trade secrets, the value of our technology and services could be adversely affected.

We rely upon unpatented proprietary technology, processes and know-how and trade secrets. Although we try to protect this information in part by executing confidentiality agreements with our employees, consultants and third parties, such agreements may offer only limited protection and may be breached. Any unauthorized disclosure or dissemination of our proprietary technology, processes and know-how or our trade secrets, whether by breach of a confidentiality agreement or otherwise, may cause irreparable harm to our business, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise be independently developed by our competitors or other third parties. If we are unable to protect the confidentiality of our proprietary information,

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processes and know-how or our trade secrets are disclosed, the value of our technology and services could be adversely affected, which could negatively impact our business, financial condition and results of operations.

Our use of open source software could impose limitations on our ability to commercialize our services.

We incorporate open source software into our services. Although we monitor our use of open source software closely, the terms of many open source licenses to which we are subject have not been interpreted by United States or foreign courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our services. In such event or in the event there is a significant change in the terms of open source licenses in general, we could be required to seek licenses from third parties in order to continue offering our services, to re-engineer our services or to discontinue sales of our services, or to release our software code under the terms of an open source license, any of which could materially adversely affect our business.

Given the nature of open source software, there is also a risk that third parties may assert copyright and other intellectual property infringement claims against us based on our use of certain open source software programs. The risks associated with intellectual property infringement claims are discussed immediately below.

If a third party asserts that we are infringing its intellectual property, whether successful or not, it could subject us to costly and time-consuming litigation or require us to obtain expensive licenses, and our business may be adversely affected.

The software and Internet industries are characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. Third parties may assert patent and other intellectual property infringement claims against us in the form of lawsuits, letters or other forms of communication. These claims, whether or not successful, could:

·

Divert management’s attention;

·

Result in costly and time-consuming litigation;

·

Require us to enter into royalty or licensing agreements, which may not be available on acceptable terms, or at all;

·

In the case of open source software-related claims, require us to release our software code under the terms of an open source license; or

·

Require us to redesign our software and services to avoid infringement.

As a result, any third-party intellectual property claims against us could increase our expenses and adversely affect our business. In addition, many of our agreements with our channel partners require us to indemnify them for third-party intellectual property infringement claims, which would increase the cost to us resulting from an adverse ruling on any such claim. Even if we have not infringed any third parties’ intellectual property rights, we cannot be sure our legal defenses will be successful, and even if we are successful in defending against such claims, our legal defense could require significant financial resources and management time. Finally, if a third party successfully asserts a claim that our services infringe their proprietary rights, royalty or licensing agreements might not be available on terms we find acceptable, or at all.

Risks Related to Our Common Stock

Because the market for our common stock is limited, persons who purchase our common stock may not be able to resell their shares at or above the purchase price paid by them.

Our common stock trades on the Over-the-Counter Bulletin Board which is not a liquid market. There is currently only a limited public market for our common stock. We cannot assure you that an active public market for our common stock will develop or be sustained in the future. If an active market for our common stock does not develop or is not sustained, the price may continue to decline.

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Because we are subject to the “penny stock” rules, brokers cannot generally solicit the purchase of our common stock which adversely affects its liquidity and market price.

The Securities and Exchange Commission or SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock on the Bulletin Board has been substantially less than $5.00 per share and therefore we are currently considered a “penny stock” according to SEC rules. This designation requires any broker-dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker-dealers to solicit purchases of our common stock and therefore reduce the liquidity of the public market for our shares.

Due to factors beyond our control, our stock price may be volatile.

Any of the following factors could affect the market price of our common stock:

·

Our failure to generate increasing revenues;

·

Short selling activities;

·

Our failure to become profitable;

·

Our failure to raise working capital;

·

Our public disclosure of the terms of any financing which we consummate in the future;

·

Actual or anticipated variations in our quarterly results of operations;

·

Announcements by us or our competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments;

·

The loss of major customers or product or component suppliers;

·

The loss of significant business relationships;

·

Our failure to meet financial analysts’ performance expectations;

·

Changes in earnings estimates and recommendations by financial analysts; or

·

Changes in market valuations of similar companies.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.

We may issue preferred stock without the approval of our shareholders, which could make it more difficult for a third party to acquire us and could depress our stock price.

Our Board of Directors may issue, without a vote of our shareholders, one or more additional series of preferred stock that have more than one vote per share. This could permit our Board of Directors to issue preferred stock to investors who support Options Media and our management and give effective control of our business to Options Media and our management. Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in our stock price and a decline in interest of our common stock. This could make it more difficult for shareholders to sell their common stock. This could also cause the market price of our common stock shares to drop significantly, even if our business is performing well.

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An investment in the Company may be diluted in the future as a result of the issuance of additional securities, the exercise of options or warrants or the conversion of outstanding preferred stock.

In order to raise additional capital to meet its working capital needs, Options Media expects to issue additional shares of common stock or securities convertible, exchangeable or exercisable into common stock from time to time, which could result in substantial dilution to investors. Investors should anticipate being substantially diluted based upon the current condition of the capital and credit markets.

Since we intend to retain any earnings for development of our business for the foreseeable future, you will likely not receive any dividends for the foreseeable future.

We have not and do not intend to pay any dividends in the foreseeable future, as we intend to retain any earnings for development and expansion of our business operations. As long as our three-year senior convertible debentures remain outstanding, we cannot pay any dividends. As a result, you will not receive any dividends on your investment for an indefinite period of time.

Because we may not be able to attract the attention of major brokerage firms, it could have a material impact upon the price of our common stock.

It is not likely that securities analysts of major brokerage firms will provide research coverage for our common stock since the firm itself cannot recommend the purchase of our common stock under the penny stock rules referenced in an earlier risk factor. The absence of such coverage limits the likelihood that an active market will develop for our common stock. It may also make it more difficult for us to attract new investors at times when we acquire additional capital.

Forward-Looking Statements

The statements in this Report relating to opportunities presented by the e-mail marketing market our ability to differentiate our video SEO product/services , our ability to obtain financing and meet our working capital needs and our expectation of growing our business through acquisitions are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Additionally, words such as “expects,” “anticipates,” “intends,” “believes,” “will” and similar words are used to identify forward-looking statements.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements are contained in the Risk Factors below. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. For more information regarding some of the ongoing risks and uncertainties of our business, see the Risk Factors which follow and our other filings with the Securities and Exchange Commission.

Item 7A.

Quantitative and Qualitative Discourses About Market Risk.

Not applicable to smaller reporting companies.

Item 8.

Financial Statements and Supplementary Data.

Our financial statements are contained in pages F-1 through F-23, which appear at the end of this Report.  We have also included the audited financial statements of our predecessor company for the period from January 1, 2008 to June 23, 2008.

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A.

Controls and Procedures.

Not applicable.

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Item 9A(T).

Controls and Procedures.

Disclosure Controls

We carried out an evaluation required by Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (or the “Exchange Act”) under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in an issuer's reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The evaluation of our disclosure controls and procedures included a review of our objectives and processes and effect on the information generated for use in this Report. This type of evaluation is done quarterly so that the conclusions concerning the effectiveness of these controls can be reported in our periodic reports filed with the SEC. We intend to maintain these controls as processes that may be appropriately modified as circumstances warrant.

Based on their evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them to material information which is required to be included in our periodic reports filed with the SEC as of the filing of this Report.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) or 15d-15(f). Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2008 based on the criteria set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the criteria set forth in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2008.

However, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Management necessarily applied its judgment in assessing the benefits of controls relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected.

This Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we engaged our independent registered public accounting firm to perform, an audit on our internal control over financial reporting pursuant to the rules of the SEC that permit us to provide only management’s report in this Report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fourth quarter of 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.

Other Information.

None.

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PART III

Item 10.

Directors, Executive Officers and Corporation Governance.

Directors and Executive Officers

The following is a list of our directors and executive officers. All directors serve one-year terms or until each of their successors are duly qualified and elected. The officers are elected by the Board of Directors.

Biographies

Scott Frohman has served as our Chief Executive Officer and Chairman of the Board since June 23, 2008 and served as our President until the appointment of Daniel Lansman on September 19, 2008. Since July 2008, Mr. Frohman has served as the Chairman of the Board of Money4Gold Holdings, Inc. From February 2004 through December 2006, Mr. Frohman co-founded and served as the Chief Executive Officer and a director of Health Benefits Direct Corporation. From May 2003 through October 2003, Mr. Frohman was a consultant for Verid Identification, where he supervised a web-based identity verification process and implemented sales force and marketing procedures.

Daniel Lansman was appointed as President and to our Board of Directors on September 19, 2008. From 2003 through September 2008, Mr. Lansman co-founded 1 Touch and has been a manager since that date. Prior to 2003, Mr. Lansman was an Account Executive at Equifax Marketing Services, an information and marketing services company.

Steven Stowell has served as our Chief Financial Officer since September 18, 2008. From 2005 until September 2008, Mr. Stowell served as the Chief Financial Officer for Come and Stay, Inc., an international direct marketing and data services business with operations in 13 countries. From 2003 until 2005, Mr. Stowell was the Chief Financial Officer of Marlin Capital Partners. Prior to 2003, Mr. Stowell was the Vice President of Finance and Chief Financial Officer at Equifax Marketing Services, an information and marketing services company.

Dale Harrod has served as our Chief Technology Officer since October 6, 2008.  From 2007 until 2008, Mr. Harrod served as the Director of Operations at Vayan Marketing, a multi-channel marketing company.  From 2005 until 2006, he served as the Chief Technology Officer of Topdot Mortgage, a national mortgage bank.  From 2005 until 2006, he served as the Vice President of email marketing at The Useful LLC, a performance-based interactive marketing company.  Prior to that, Mr. Harrod served as the vice President of Technology for Blue Frog Solutions, Inc., a software solutions company.

Anthony Bumbaca has served as our Senior Vice President since September 19, 2008. From 2003 through September 2008, Mr. Bumbaca co-founded 1 Touch in 2003. Prior to 2003, Mr. Bumbaca was a Senior Account Executive at Equifax Marketing Services, an information and marketing services company.

Hakan Koyuncu has served as a director since June 23, 2008. Mr. Koyuncu is the co-founder and Chief Executive Officer of LeadCreations.com, LLC, an Internet marketing and online lead generation company with a focus on technology and innovative strategy. Mr. Koyuncu founded LeadCreations.com, LLC in 2003. LeadCreations developed its own proprietary technology platform that brings online publishers and advertisers together and tracks and reports campaign performance. Mr. Koyuncu has also been the Chief Executive Officer of Money4Gold Holdings, Inc. since July 2008.  

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Ronald Levine has served as our director since November 11, 2008.  From 2004 until 2006, Mr. Levine served as Chairman of the board of directors for Universal Insurance Services. Since 2006, Mr. Levine has been a private investor.

There are no family relationships among any of our directors and executive officers.

Key Employees

In addition to our executive officers, we have two key employees:

Committees of the Board of Directors

We expect our Board of Directors, in the future, to appoint an audit committee, nominating committee and compensation committee, and to adopt charter relative to each such committee. We intend to appoint such persons to committees of the Board of Directors as are expected to be required to meet the corporate governance requirements imposed by a national securities exchange, although we are not required to comply with such requirement until we elect to seek listing on a national securities exchange.

Code of Ethics

Our Board has adopted a Code of Ethics that applies to all of our employees, including our Chief Executive Officers and Chief Financial Officer. Although not required, the Code of Ethics also applies to our Board. The Code provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure and compliance with laws, rules and regulations, including insider trading, corporate opportunities and whistle-blowing or the prompt reporting of illegal or unethical behavior. We will provide a copy of the Code of Ethics to any person without charge, upon request. The request for a copy can be made in writing to Options Media Group Holdings, Inc., 123 NW 13^th Street, Suite 300, Boca Raton, Florida 33432, Attention: Marnie Goldberg.

Shareholder Communications

Although we do not have a formal policy regarding communications with the Board, shareholders may communicate with the Board by writing to us at Options Media Group Holdings, Inc., 123 NW 13^th Street, Suite 300, Boca Raton, Florida 33432, Attention: Marnie Goldberg or by facsimile (561) 892-2678. Shareholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.

Director Independence

Our Board of Directors has determined that Hakan Koyuncu and Ronald Levine are independent and that Scott Frohman and Daniel Lansman are not independent in accordance with Nasdaq Marketplace Rule 4200(a)(15).

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Item 11.

Executive Compensation.

The following information is related to the compensation paid, distributed or accrued by us for 2008 and 2007 to our Chief Executive Officer (Principal Executive Officer). No other executive officers serving at the end of the last fiscal year had compensation which exceeded $100,000.  

2008 Summary Compensation Table

———————

(1)

The amounts represent the compensation costs of awards that are paid in options and shares of the Company’s common stock.  The amounts do not reflect the actual amounts that may be realized by the named executive officer.  A discussion of the assumptions used in calculating these values may be found in Note 8 to the consolidated audited financial statements.   

(2)

The options vest monthly over a 24 month period and are exercisable at $0.30 per share. The total value of the options at the time of grant was $724, 248. These amounts are being amortized over a 24 month period.

Outstanding Equity Awards at Fiscal Year-End

Listed below is information with respect to outstanding equity awards held by our named executive officer as of December 31, 2008:

Outstanding Equity Awards At 2008 Fiscal Year-End

———————

(1)

The options vest monthly over a 24 month period and are exercisable at $0.30 per share.

Employment Agreements

Effective June 23, 2008, we entered into an employment agreement with Scott Frohman, our Chief Executive Officer. The current term of the agreement expires on June 23, 2010 but will be automatically renewed for additional one-year periods until either we or Mr. Frohman gives the other party written notice of its intent not to renew at least 60 days prior to the end of the then current term. Mr. Frohman’s present base salary is $180,000 per year, which shall increase to $240,000 per year and $300,000 per year on December 23, 2008 and June 23, 2009, respectively. At signing, Mr. Frohman was granted 2,250,000 vested shares of common stock and a 10-year option to purchase 2,500,000 shares of common stock at an exercise price of $0.30 per share, vesting in 24 equal monthly installments.

On September 19, 2008, we entered into an employment agreement with Daniel Lansman and Anthony Bumbaca, our president and senior vice president, respectively. The current term of their agreements expire on September 30, 2010 but will be automatically renewed for additional one-year periods unless either we or either executive gives the other party written notice of its intent not to renew at least their respective agreements 60 days prior to the end of the then current term. Each receive (i) an annual base salary of $240,000, (ii) 5% commission from all revenues received by Options Media from parties introduced to Options Media by them and prior customers of 1 Touch and (iv) a performance bonus based on 1 Touch achieving specific performance milestones.

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Effective October 1, 2008, we entered into an employment agreement with Steven Stowell, our Chief Financial Officer. The current term of the agreement expires on September 29, 2010 but will be automatically renewed for additional one-year periods unless either we or Mr. Stowell gives the other party written notice of its intent not to renew at least 30 days prior to the end of the then current term. Pursuant to the agreement, we are paying him an annual salary of $185,000, issued him 200,000 shares of restricted stock vesting annually in three equal increments and paid him a signing bonus of $19,000 upon commencement of employment with the Company.

Effective July 11, 2008, we entered into an employment agreement with Steve Siccone, our Chief Information Officer. The current term of the agreement expires on July 11, 2009 but will be automatically renewed for additional one-year periods until either we or Mr. Siccone gives the other party written notice of its intent not to renew at least 30 days prior to the end of the then current term. Pursuant to the agreement, we are paying him an annual base salary of $150,000, granted him five-year options to purchase 100,000 shares of common stock at an exercise price of $0.50 per share, of which (i) 25,000 vest within three months of employment and (ii) 75,000 options vest in equal quarterly increments over a three-year period. We also granted Mr. Siccone five-year options to purchase 200,000 shares of common stock at an exercise price of $0.50 per share vesting in 100,000 increments based upon Options Media achieving specific milestones. Additionally, Mr. Siccone was paid a signing bonus of $10,000 upon the commencement of his employment however the signing bonus is reimbursable to Options Media if he receives his commissions from his previous place of employment.  

Effective September 22, 2008, we entered into an employment agreement with Brandon Rosen, 1 Touch’s Vice-President of Sales and Marketing. The current term of the agreement expires on September 30, 2010 but will be automatically renewed for additional one-year periods unless either we or Mr. Rosen gives the other party written notice of its intent not to renew at least 30 days prior to the end of the then current term. We are paying him an annual base salary of $175,000, 2-3% sales bonus based on 1 Touch’s monthly revenues and a performance bonus based on 1 Touch’s quarterly gross profit. Mr. Rosen will also receive six months base salary if he is terminated without cause.

Messrs. Frohman, Lansman, Bumbaca, Stowell, Siccone and Harrod are entitled to severance in the event that they are dismissed without cause or they resign for Good Reason as defined in their Employment Agreements, including upon a change of control. In any such events, Messrs. Frohman, Lansman and Bumbaca will receive 18 months base salary, Mr. Stowell will receive six months base salary, Mr. Siccone will receive four months base salary if terminated prior to one year and six months base salary if terminated after one year of employment and Mr. Harrod will receive six months base salary if terminated prior to two years and nine months if terminated after one year of employment.  Additionally, all of their restricted stock and stock options will immediately vest, where applicable.

Director Compensation

We do not pay cash compensation to our directors for service on our Board of Directors. Non-employee members of our Board of Directors were compensated with 500,000 shares of common stock in 2008 for services as a director as follows:

———————

(1)

The amounts reflect the accounting charge taken in 2008 for awards granted in 2008.  Accounting costs are determined, as required, under SFAS No. 123(R), “Share-Based Payment.” For a more detailed discussion on the valuation model and assumptions used to calculate the fair value of our options, refer to Note 8 to the consolidated financial statements.

(2)

Shares are fully vested.

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Equity Compensation Plan Information

The following chart reflects the number of options granted and the weighted average exercise price as of December 31, 2008.

2008 Equity Incentive Plan

On June 23, 2008, our Board of Directors adopted the 2008 Equity Incentive Plan (the “Plan”) under which we may issue up to 8,000,000 shares of restricted stock and stock options to our directors, employees and consultants.

The Plan is to be administered by a Committee of two or more independent directors, or in their absence by the Board. The identification of individuals entitled to receive awards, the terms of the awards, and the number of shares subject to individual awards, are determined by our Board or the Committee, in their sole discretion. The total number of shares with respect to which options or stock awards may be granted under the Plan and the purchase price per share, if applicable, shall be adjusted for any increase or decrease in the number of issued shares resulting from a recapitalization, reorganization, merger, consolidation, exchange of shares, stock dividend, stock split, reverse stock split, or other subdivision or consolidation of shares.

The Plan provides for the grant of non-qualified stock option and incentive stock options (“ISOs”) as defined by the Internal Revenue Code. For any ISOs granted, the exercise price may not be less than 110% of the fair market value in the case of 10% shareholders. Options granted under the Plan shall expire no later than 10 years after the date of grant, except for ISOs granted to 10% shareholders which must expire not later than five years from grant. The option price may be paid in United States dollars by check or other acceptable instrument including wire transfer or, at the discretion of the Board or the Committee, by delivery of shares of our common stock having fair market value equal as of the date of exercise to the cash exercise price, or a combination thereof.

Our Board or the Committee may from time to time alter, amend, suspend, or discontinue the Plan with respect to any shares as to which awards of stock rights have not been granted. However no rights granted with respect to any awards under the Plan before the amendment or alteration shall not be impaired by any such amendment, except with the written consent of the grantee.

Under the terms of the Plan, our Board or the Committee may also grant awards which will be subject to vesting under certain conditions. In the absence of  a determination by the Board or Committee, options shall vest and be exercisable at the end of one, two and three years, except for ISOs, which are subject to a $100,000 per calendar year limit on  becoming first exercisable. The vesting may be time-based or based upon meeting performance standards, or both. Recipients of restricted stock awards will realize ordinary income at the time of vesting equal to the fair market value of the shares. We will realize a corresponding compensation deduction. Upon the exercise of stock options other than ISOs, the holder will have a basis in the shares acquired equal to any amount paid on exercise plus the amount of any ordinary income recognized by the holder. For ISOs which meet certain requirements, the exercise is not taxable upon sale of the shares, the holder will have a capital gain or loss equal to the sale proceeds minus his or her basis in the shares.

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The following chart reflects the number of stock options we have awarded under the Plan to our executive officers and directors.  

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth the number of shares of our common stock beneficially owned as of March 30, 2009 by (i) those persons known by us to be owners of more than 5% of our common stock, (ii) each director, (iii) our named executive officer, (iv) our former chief executive officer and (v) all of our executive officers and directors as a group:

———————

*

Less than 1%

(1)

Except where indicated in other footnotes, each of the persons listed above has the address c/o Options Media Group Holdings, Inc., 123 NW 13^th Street, Suite 300, Boca Raton, FL 33432.

(2)

Applicable percentages are based on 58,457,999 shares outstanding adjusted as required by rules of the SEC. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days after the date of this Report are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated in the footnotes to this table, the Company believes that each of the shareholders named in the table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them.

(3)

An executive officer.

(4)

A director.

(5)

Includes 2,250,000 shares of restricted common stock and non-qualified stock options to purchase 2,500,000 shares of common stock exercisable at $0.30 per share vesting monthly over a 24-month period, subject to continued employment on each applicable vesting date. As of the date of this Report, 1,145,833 of the options have vested or vest within 60 days.

(6)

These shares were granted for service on the board and are fully vested.

(7)

Does not include 3,000,000 shares of common stock issuable if 1 Touch achieves specific performance milestones.

(8)

Address is 20155 N.E. 38^th Court, Apt. 1804, Aventura, FL 33180.

27

(9)

Represents shares acquired in the sale of Options Acquisition Sub.  Address is 257 Park Avenue South, Suite 602, New York, NY 10010.

(10)

Includes 1,666,667 shares of common stock issuable upon the exercise of warrants exercisable at $0.50 per share. Address is 4400 Biscayne Blvd., Suite 1500, Miami, FL 33137.

(11)

Includes 1,300,000 shares of common stock issuable upon the exercise of warrants exercisable at $0.50 per share.  Address is 160 Summit Avenue, Montvale, NJ 07645.

(12)

Includes 1,650,000 shares of common stock issuable upon the exercise of warrants exercisable at $0.50 per share. Address is 610 Park Avenue New York, NY 10065

(13)

Former Chief Executive Officer.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

During this year and the last two fiscal years, we have engaged in certain transactions in which some of our directors, executive officers and 10% shareholders had a direct or indirect material interest, in which the amount involved exceeded the lesser of $120,000 or 1% of the average of our total assets for the last two completed fiscal years (not including employment agreements with our management). These transactions are described below.

On December 5, 2008, we borrowed $50,000 from Mr. Daniel Lansman, our President and a director, and issued him 50,000 warrants exercisable at $0.75 per share. Mr. Nat Bumbaca, the brother of Mr. Anthony Bumbaca, our Senior Vice President, is employed by us as a sales representative and receives a salary of $48,000 per year and commissions which is comparable to the amounts paid to our other salespeople.  We believe that the compensation payable to Mr. Nat Bumbaca is comparable to what would have been obtained in an arm’s-length transaction.

Director Independence

Our Board of Directors has determined that Hakan Koyuncu and Ronald Levine are independent and that Scott Frohman and Dan Lansman are not independent made in accordance with Nasdaq Marketplace Rule 4200(a)(15).

Item 14.

Principal Accountant Fees and Services.

Salberg & Company, P.A. serves as our current independent registered public accounting firm. All of the services provided and fees charged were approved by the Board of Directors.  Manning Elliott LLP, served as our independent registered public accounting firm in 2007 through June 23, 2008. All of the services provided and fees charged were approved by the Board of Directors.

———————

(1)

Consists of fees for the audit of the transition period from August 1, 2007 through December 31, 2007.

(2)

Consists of fees for the year-end audit from June 27, 2007 (Inception) through July 31, 2007.

Our Board of Directors has not adopted a procedure for pre-approval of all fees charged by our independent auditors. The Board approves the engagement letter with respect to audit, tax, review services and other services.

28

PART IV

Item 15.

Exhibits, Financial Statement Schedules.

(1)

Financial Statements:

(2)

Exhibits:

Certain material agreements contain representations and warranties, which are qualified by the following factors: (1) the representations and warranties contained in any agreements filed with this Report were made for the purposes of allocating contractual risk between the parties and not as a means of establishing facts; (2) the agreement may have different standards of materiality than standards of materiality under applicable securities laws; (3) the representations are qualified by a confidential disclosure schedule that contains some nonpublic information that is not material under applicable securities laws; (4) facts may have changed since the date of the agreements; and (5) only parties to the agreements and specified third-party beneficiaries have a right to enforce the agreements.

29

30

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 31, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

31

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of:

Options Media Group Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Options Media Group Holdings, Inc. as of December 31, 2008 and 2007 and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the year ended December 31, 2008 and for the period from June 27, 2007 (inception) to December 31, 2007.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  The financial statements for the period from June 27, 2007 (inception) to July 31, 2007 were audited by other auditors whose report dated September 21, 2007 on those statements included an explanatory paragraph describing conditions that raised substantial doubt about the Company’s ability to continue as a going concern.  The financial statements for the period June 27, 2007 (inception) through December 31, 2007 include total revenues and net loss of $0 and $17,791, respectively through July 31, 2007.  Our opinion on the statements of operations, changes in stockholders’ equity, and cash flows for the period June 27, 2007 (inception) through December 31, 2007, insofar as it relates to amounts for periods through July 31, 2007, is based solely on the report of other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Options Media Group Holdings, Inc. as of December 31, 2008 and 2007 and the consolidated results of its operations and its cash flows for the year ended December 31, 2008 and for the period from June 27, 2007 (inception) to December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company reported a net loss of $3,436,898 and used cash in operating activities of $935,235 during the year ended December 31, 2008 and at December 31, 2008 had a working capital deficiency of $1,919,811, which includes $730,000 of secured notes payable with maturing dates in June 2009 and July 2009.  Additionally, at December 31, 2008, the Company had an accumulated deficit of $3,505,431.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  Management's plans as to these matters are also described in Note 1.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

SALBERG & COMPANY, P.A.

Boca Raton, Florida

March 27, 2009

F- 1

Options Media Group Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

See notes to consolidated financial statements.

F- 2

Option Media Group Holdings Inc. and Subsidiaries

Consolidated Statements of Operations

See notes to consolidated financial statements.

F- 3

Options Media Group Holding, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the Year Ended December 31, 2008 and for the Period From June 27, 2007 (inception) to December 31, 2007

See notes to consolidated financial statements.

F- 4

Options Media Group Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

See notes to consolidated financial statements.

F- 5

OPTIONS MEDIA GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2008 and 2007

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Description of Business

Options Media Group Holdings, Inc. (the “Company”), formerly Heavy Metal, Inc., was incorporated in the state of Nevada on June 27, 2007.  On July 27, 2007, the Company acquired a mineral claim for the purpose of exploring for economic deposits of uranium in the Athabasca Basin, Saskatchewan, Canada.  Prior to June 23, 2008, the Company was in the development stage since its formation, without material assets or activities.  Upon the consummation of the June 23, 2008 business combination discussed below, the Company exited the development stage.

On June 19, 2008, the Company effected a 1-for 1.81481481481 forward stock split pursuant to an Amended and Restated Articles of Incorporation filed with the Secretary of State of the State of Nevada.  The Amended and Restated Articles of Incorporation were approved by stockholders on June 18, 2008. All share and per share data in the accompanying consolidated financial statements has been retroactively adjusted to reflect the stock split.

On June 23, 2008, the Company completed a merger with Options Acquisition Sub, Inc., a Delaware corporation (“Options”) which is described below.

In connection with this merger, the Company discontinued its former business and succeeded to the business of Options as its sole line of business. The merger is being accounted for as a purchase method acquisition pursuant to Statement of Financial Accounting Standards No. 141 “Business Combinations”. Accordingly, the purchase price was allocated to the fair value of the assets acquired and the liabilities assumed. The Company is the acquirer for accounting purposes and Options is the acquired company.

Options was originally formed in Florida on February 22, 2000 under the name Options Newsletter, Inc. and is engaged in the design of custom email delivery solutions for commercial customers. On January 4, 2008, Options Newsletter, Inc. merged with and into Options Acquisition Sub, Inc., a newly formed, wholly-owned Delaware subsidiary of Customer Acquisition Network Holdings, Inc., a Delaware company (“CAN”), with Options being the surviving corporation. Options began selling advertising space within free electronic newsletters that it published and emailed to subscribers. Options also generated leads for customers by emailing its customers’ advertisements to various email addresses from within its database. Options is also an email service provider (“ESP”) and offers customers an email delivery platform to create, send and track email campaigns. Options also manages and markets its customers’ lists and makes them available to advertisers who are trying to reach customers similar to theirs. During the year ended December 31, 2008, the majority of Options’ revenue was derived from being an ESP, but it continues to publish newsletters as well as email customer advertisements on a cost per lead generated basis.

On September 19, 2008, the Company completed a merger with 1 Touch Marketing, LLC (“1 Touch”). 1 Touch is an online direct marketing and data services company. 1 Touch was formed on October 23, 2003 as a Limited Liability Corporation, in the State of Florida. 1 Touch offers its products and services to traditional advertising agencies and online marketing agencies. These resellers/agencies offer the 1 Touch’s products and services to their clients as a stand-alone marketing effort or as part of a larger multi-channel marketing campaign. 1 Touch also offers its products and services to a network of list brokers.  These organizations market postal lists and offer its email marketing lists. 1 Touch generates revenue from its product lines, which include email marketing campaigns, lead generation and direct mail and postal lists.

Merger with Options

On June 23, 2008, the Company entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) by and among the Company, Options, Options Acquisition Corp., a newly formed, wholly owned Delaware subsidiary of the Company (“Acquisition Sub”) and CAN. Upon closing of the merger transaction contemplated under the Merger Agreement (the “Merger”), on June 23, 2008 Acquisition Sub merged with and into Options, and Options, as the surviving corporation, became a wholly-owned subsidiary of the Company.

F-6

OPTIONS MEDIA GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2008 and 2007

The Merger consideration included $3 million in cash, a $1 million senior secured promissory note and 12.5 million shares of the Company’s stock valued at $0.30 per share based on  the then recent contemporaneous offering price for a private placement of $0.30 per share (applying EITF 99-12 “Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination”).The total purchase price was $7,798,089 and includes the cash of $3,000,000, common stock valued at $3,750,000, legal fees of $48,089, and the $1,000,000 promissory note.

The Company accounted for the Merger utilizing the purchase method of accounting in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations”. The Company is the acquirer for accounting purposes and Options is the acquired company. Accordingly, the Company applied push–down accounting and adjusted to fair value all of the assets and liabilities directly on the financial statements of Options. The net purchase price, including acquisition costs paid by the Company, was allocated to assets acquired and liabilities assumed on the records of the Company as follows:

The Purchase price allocation adjustments from June 23, 2008 to December 31, 2008 include a decrease to current assets of $30,902.

The Purchase price adjustment from June 23, 2008 to December 31, 2008 includes additional acquisition costs of $6,089.

Accordingly goodwill has increased by $36,991 as a result of the above adjustments.

Intangible assets acquired include Customer Relationships valued at $475,123, email data base valued at $340,154 and $37,500 for a covenant not to compete.

Goodwill is expected not to be deductible for income tax purposes.

Unaudited pro forma results of operations data as if the Company and Options had occurred as of June 27, 2007, the inception date, are as follows:

Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at inception date or June 27, 2007 and is not intended to be a projection of future results.

Merger with 1 Touch

On August 27, 2008, the Company entered into an Agreement and Plan of Merger with 1 Touch Marketing, LLC (the “1 Touch Merger Agreement”). The acquisition closed on September 19, 2008. Pursuant to the 1 Touch Merger Agreement, Options Media acquired all of the membership interests of 1 Touch in exchange for common stock of the Company and cash. The two owners of 1 Touch received their proportionate share of (i) $1,500,000 in cash, (ii) 10,000,000 shares of the Company’s common stock of which 1,000,000 shares have piggy-back

F-7

OPTIONS MEDIA GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2008 and 2007

registration rights, and (iii) the right to receive a maximum earn-out payment of 6,000,000 shares of the Company’s common stock based on 1 Touch achieving specific performance milestones. As of December 31, 2008 the earn-out payment was not earned.  Additionally, Daniel Lansman and Anthony Bumbaca, the owners of 1 Touch, became president and senior vice president of the Company, respectively, and each will receive (i) an annual base salary of $240,000, (ii) 5% commission from all revenues, less related expenses, received by the Company from parties introduced to the Company by them and prior customers of 1 Touch and (iii) a performance bonus based on 1 Touch achieving specific performance milestones. Furthermore, Mr. Lansman and Mr. Bumbaca will receive 18 months base salary in the event they are terminated without cause or for Good Reason as defined by their employment agreements. Mr. Lansman was appointed to the Company’s Board of Directors. In connection with the 1 Touch Merger Agreement, the Company issued 10,000,000 unregistered shares of common stock valued at $3,000,000. The shares were valued at the then recent contemporaneous offering price for a private placement of $0.30 per share (applying EITF 99-12 “Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination”). The total purchase price was $4,655,382 and includes the cash of $1,500,000, common stock valued at $3,000,000, and the total direct costs of $155,382.

The Company accounted for the 1 Touch Merger utilizing the purchase method of accounting in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations”. The Company is the acquirer for accounting purposes and 1 Touch is the acquired company. Accordingly, the Company applied push–down accounting and adjusted to fair value all of the assets and liabilities directly on the financial statements of 1 Touch. The net purchase price, including acquisition costs paid by the Company, was allocated to assets acquired and liabilities assumed on the records of the Company as follows:

The Purchase price allocation adjustment from September 19, 2008 to December 31, 2008 includes a decrease to current assets of $57,551, and an increase to liabilities of $213,597 for a deferred tax liability related to the book-tax basis differences at the acquisition date for certain assets acquired and liabilities assumed.

The Purchase price adjustment from September 19, 2008 to December 31, 2008 includes additional costs of $58,173.

Accordingly, goodwill has increased by $330,915 as a result of the above adjustments.

Intangible assets acquired include Customer Relationships valued at $296,000 and email data base valued at $292,000.

Goodwill is expected not to be deductible for income tax purposes.

Unaudited pro forma results of operations data as if the Company and 1 Touch had occurred as of June 27, 2007, the inception date, are as follows: