UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2009


£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from_________to_________

Commission file number 001-33370

SANTA MONICA MEDIA CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	59-3810312
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)

11845 West Olympic Boulevard, Suite 1125W
Los Angeles, CA	90064
(Address of principal executive offices)	(Zip Code)

(310) 515-3222

(Registrant’s telephone number, including area code)

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

Yes þ No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act).

Yes þ No o

Number of shares of Santa Monica Media Common Stock, $.001 par value, issued and outstanding as of August 15, 2009: 16,038,125.

SANTA MONICA MEDIA CORPORATION

Form 10-Q

Table of Contents

	Page

PART I. FINANCIAL INFORMATION
Item 1 Financial Statements:		3
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3 Quantitative and Qualitative Disclosures About Market Risk		17
Item 4 Controls and Procedures		17

PART II. - OTHER INFORMATION
Item 1. Legal Proceedings		17
Item 1A Risk Factors		18
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		18
Item 3. Defaults upon Senior Securities		18
Item 4 Submission of Matters to a Vote of Security Holders		19
Item 5. Other Information		19
Item 6 Exhibits		19
SIGNATURES		19
INDEX TO EXHIBITS

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Item 1. Financial Statements

SANTA MONICA MEDIA CORPORATION

(a corporation in the development stage)

CONDENSED BALANCE SHEETS

March 31, 2009 and December 31, 2008



	(Unaudited) March 31, 2009		December 31, 2008

ASSETS
CURRENT ASSETS
Cash	$	—	$	15,236
Cash and cash equivalents held in trust		100,699,285		100,698,690
Refundable income taxes		155,569		180,000
Prepaids and other current assets		36,525		87,770
Total current assets		100,891,379		100,981,696

TOTAL ASSETS	$	100,891,379	$	100,981,696

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Note payable-related party	$	310,000	$	—
Accounts payable and accrued expenses		465,073		302,399
Reserve for state franchise tax and interest		409,174		390,844
Deferred interest on funds held in trust		—		462,000
Deferred underwriting liability		—		4,000,000
Total current liabilities		1,184,247		5,155,243

NONCURRENT LIABILITIES:
Common stock subject to conversion, 2,499,999 shares at conversion value		—		19,720,992
TOTAL LIABILITIES		1,184,247		24,876,235

COMMITMENTS

STOCKHOLDERS’ EQUITY:
Preferred Stock, $.001 par value, 25,000,000 shares authorized; none issued or outstanding		—		—
Common stock, $.001 par value, 200,000,000 shares authorized; 16,038,125 issued and outstanding (including 2,499,999 subject to conversion) at March 31, 2009 and December 31, 2008		16,038		16,038
Additional paid-in capital		98,490,936		74,769,944
Retained earnings		1,200,158		1,319,479
Total stockholders’ equity		99,707,132		76,105,461

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	100,891,379	$	100,981,696

See accompanying notes to condensed financial statements.

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SANTA MONICA MEDIA CORPORATION

(a corporation in the development stage)

CONDENSED STATEMENTS OF INCOME (Unaudited)

For the three months ended March 31, 2009 and 2008 and for the period from June 24, 2005 (inception) through March 31, 2009


	Three months ended			Three months ended			For the period from June 24, 2005 (inception) through
	March 31, 2009			March 31, 2008			March 31, 2009
Operating expenses
Professional fees	$	335,237		$	40,439		$	886,656
Rent and facilities		22,500			22,500			180,000
Formation and operating costs		168,940			328,500			1,552,873
Total operating expenses		526,677			391,439			2,619,529

Other income (expense)
Interest income		595			798,030			5,101,926
Interest expense		(4,275	)		(736	)		(37,375	)
Total other income (expense)		(3,680	)		797,294			5,064,551


Income (loss) before provision for income taxes		(530,357	)		405,855			2,445,022

Provision for income taxes
Current		14,964			196,000			1,244,864
Deferred		36,000			(33,000	)		—
		50,964			163,000			1,244,864

Income (loss) before allocation of trust fund interest		(581,321	)		242,855			1,200,158

Allocation of trust fund interest relating to common stock subject to possible conversion		—			174,000			—

Reversal of allocation of trust fund interest relating to common stock subject to possible conversion		(462,000	)		—			—
Net income (loss)	$	(119,321	)	$	68,855		$	1,200,158

Weighted average shares outstanding - basic		16,038,125			16,038,125			10,479,090
Weighted average shares outstanding - fully diluted		16,038,125			18,770,074			13,658,703
Net income per share
Basic	$	(0.01	)	$	0.00		$	0.11
Fully diluted	$	(0.01	)	$	0.00		$	0.09

See accompanying notes to condensed financial statements.

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SANTA MONICA MEDIA CORPORATION

(a corporation in the development stage)

STATEMENT OF STOCKHOLDERS' EQUITY

For the period from June 24, 2005 (inception) through March 31, 2009


	Common Shares			Amount			Additional Paid in Capital			Retained Earnings (Accumulated Deficit)			Total
Common shares issued June 24, 2005 at $.0128 per share		4,687,500		$	4,688		$	55,312		$	—		$	60,000

Net loss											(60,504	)		(60,504	)

Balance at December 31, 2005		4,687,500			4,688			55,312			(60,504	)		(504	)

Shares reacquired		(1,562,500	)		(1,563	)		1,563						—

Net loss											(50,150	)		(50,150	)

Balance at December 31, 2006		3,125,000			3,125			56,875			(110,654	)		(50,654	)

Sale of units in private placement, including conversion of notes payable		413,125			413			3,304,587						3,305,000

Sale of units, net of underwriters' discount and offering costs		12,500,000			12,500			91,107,482						91,119,982

Forgiveness of interest by a related party								21,992						21,992

Proceeds subject to possible conversion of 2,499,999 shares								(19,720,992	)					(19,720,992	)

Net income											1,787,701			1,787,701

Balance at December 31, 2007		16,038,125			16,038			74,769,944			1,677,047			76,463,029

Net loss											(357,568	)		(357,568	)

Balance at December 31, 2008		16,038,125		$	16,038		$	74,769,944		$	1,319,479		$	76,105,461

Reversal of proceeds subject to possible conversion of 2,499,999 shares (unaudited)								19,720,992						19,720,992

Reversal of liability for deferred underwriting fees (unaudited)								4,000,000						4,000,000

Net loss (unaudited)											(119,321	)		(119,321	)

Balance at March 31, 2009 (unaudited)		16,038,125		$	16,038		$	98,490,936		$	1,200,158		$	99,707,132

See accompanying notes to condensed financial statements.

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SANTA MONICA MEDIA CORPORATION

(a corporation in the development stage)

STATEMENTS OF CASH FLOWS (Unaudited)

	Three months ended			Three months ended			For the period from June 24, 2005 (inception) through
	March 31, 2009			March 31, 2008			March 31, 2009
Cash flows from operating activities:
Net income (loss)	$	(119,321	)	$	68,855		$	1,200,158
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Decrease in accretion in fair market value of Treasury Bills held in trust account		9,835			177,923			7,668
Amortization expense		18,665			18,750			152,927
Deferred income tax		36,000			(33,000	)		—
Changes in assets and liabilities:
Increase in other current assets		(3,420	)		(2,506	)		(30,367	)
Decrease (increase) in refundable income taxes		24,431			—			(155,569	)
Increase (decrease) in deferred interest on funds held in trust		(462,000	)		174,000			—
Decrease in income taxes payable		—			(504,000	)		—
Increase in reserve for state franchise tax and interest		18,330			177,750			409,174
Increase (decrease) in accounts payable and accrued expenses		162,674			(21,533	)		327,980
Net cash provided by (used in) operating activities		(314,806	)		56,239			1,911,971

Cash flows from investing activities:
Payment to trust account		—			—			(98,605,000	)
Withdrawals from trust account		—			1,100,000			3,007,642
Proceeds into trust account		(10,430	)		(975,931	)		(5,109,595	)
Net cash provided by (used in) investing activities:		(10,430	)		124,069			(100,706,953	)

Cash flows from financing activities:
Proceeds from notes payable, related party		310,000			—			645,000
Payment on notes payable, related party		—			—			(30,000	)
Proceeds from sale of shares of common stock		—			—			60,000
Proceeds from private placement		—			—			3,000,000
Proceeds from sale of units, net of offering costs		—			—			95,119,982
Net cash provided by financing activities		310,000			—			98,794,982

Net increase (decrease) in cash and cash equivalents at end of period		(15,236	)		180,308			—

Cash and cash equivalents at beginning of period		15,236			41,589			—

Cash and cash equivalents at end of period	$	—		$	221,897		$	—

Supplemental disclosure of cash flow information
Cash paid for -
Income taxes	$	—		$	700,000		$	1,409,100
Interest	$	780		$	736		$	15,587

Supplemental disclosure of non-cash financing activity:

Directors' and officers' liability insurance financed	$	—		$	95,625		$	159,085

For the period from inception (June 24, 2005) through March 31, 2009:

	In connection with the public offering, $305,000 of related party debt was converted to units and interest in the amount of $21,992 was forgiven.

	Shares subject to conversion in the amount of $19,720,992 were recorded as a liability and reduced the additional paid in capital associated with the public offering. This liability was reversed during the three months ended March 31, 2009 as no business combination will be completed.

	Accrued deferred underwriting fees in the amount of $4,000,000 were recorded as a liability and reduced the additional paid in capital associated with the public offering. This liability was reversed during the three months ended March 31, 2009 as no business combination will be completed.

	There was a reduction of the accrual for offering costs in the amount of $150,635.

	Deferred offering costs in the amount of $1,380,018 were charged against additional paid in capital at the time of the offering.

See accompanying notes to condensed financial statements.

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SANTA MONICA MEDIA CORPORATION

(a corporation in its development stage)

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2009

1.	Organization, Business Operations and Significant Accounting Policies

Organization and Business Operations

Santa Monica Media Corporation (the “Company”) was incorporated in Delaware on June 24, 2005. The Company is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business combination with an unidentified operating business.

As of March 31, 2009, the Company had not commenced any business operations. All activity through April 2, 2007 relates to the Company’s formation and a public offering (“Public Offering”) described below and in Note 3. Subsequent to that date, the Company commenced its research and investigation of suitable business combination opportunities. The Company is considered to be in its development stage and is subject to the risks associated with development stage companies.

On April 2, 2007, the Company completed: (i) a private placement of 413,125 units at $8.00 per unit (the “Private Placement”) for $3,000,000 cash and cancellation of a $305,000 loan made to the Company by Santa Monica Capital Partners, LLC, and (ii) the Public Offering of 12,500,000 units for net proceeds of $95,119,982 pursuant to a registration statement declared effective by the Securities and Exchange Commission on March 27, 2007. The proceeds of the Private Placement and a portion of the proceeds of the Public Offering, together totaling $98,605,000, were placed in a trust account (the “Trust Account”). The amount in the Trust Account includes a $4,000,000 contingent underwriting compensation payable to the underwriter if a Business Combination is consummated. The Underwriting Agreement calls for the proceeds to be held in the Trust Account until the earlier of (i) the consummation of a Business Combination or (ii) liquidation of the Company. The remaining net proceeds (not held in the Trust Account) of $100,000 and up to $1,600,000 of interest earned on the Trust Account (net of taxes payable) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. As of March 31, 2009, these amounts have been expended. The Company had one stockholder as of July 31, 2005, Santa Monica Capital Partners LLC (“Initial Stockholder”). During August 2005 and April 2006, Santa Monica Capital Partners, LLC transferred an aggregate of 458,232 units to various parties including the outside directors and advisory board members (“Transferee Stockholders”). (See Note 7.)

The Company’s Certificate of Incorporation, as amended, provides for mandatory liquidation of the Company if the Company does not consummate a Business Combination within 18 months from the date of the consummation of the Public Offering, or 24 months from the consummation of the Public Offering if certain extension criteria have been satisfied. In the event of liquidation, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per share in the Public Offering (assuming no value is attributed to the Warrants contained in the Units offered in the Public Offering discussed in Note 3). As of October 2, 2008, the Company had satisfied the conditions for extension of time to complete the Business Combination to 24 months (April 2, 2009).

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a business combination with an operating business (“Business Combination”). As of April 2, 2009, the Company had not successfully completed a Business Combination and on July 30, 2009 filed a Definitive Proxy with the Securities and Exchange Commission with respect to the holding of a special meeting of stockholders on August 27, 2009 for stockholders of record on August 5, 2009 mainly seeking approval (a) for a plan of liquidation to distribute the amount in the Company’s trust account to the holders of shares of its common stock acquired in its initial public offering and (b) to amend and restate its Certificate of Incorporation to permit the Company to continue as a corporation currently specified in its certificate without the limitations relating to its initial public offering. At that meeting, the stockholders affirmatively voted in favor of these proposals.

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Cash Equivalents and Concentrations

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Such cash and cash equivalents, at times, may exceed federally insured limits. The Company maintains its accounts with financial institutions with high credit ratings. Trust assets are invested principally in U.S. Treasury Bills.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, or SFAS No. 109 “Accounting for Income Taxes.” As such, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial report amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period, if any, and the change during the period in deferred tax assets and liabilities.

Earnings (loss) per Share

The Company utilizes SFAS No. 128, “Earnings per Share.” Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed similarly to basic earnings per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods of operating loss for which no common share equivalents are included because their effect would be anti-dilutive. For the three months ended March 31, 2008 and for the period from June 24, 2005 (inception) through March 31, 2009, there were no securities excluded from the computation because they were anti-dilutive. For the three months ended March 31, 2009, there were 12,913,125 securities excluded from the computation because they were anti-dilutive.

					For the period from June 24, 2005 (inception) through
	March 31, 2009		March 31, 2008		March 31, 2009
Numerator:
Net income (loss)	$	(119,321)	$	68,855	$	1,200,158

Denominator:
Denominator for basic net income per share—weighted average shares		16,038,125		16,038,125		10,479,090
Effect of dilutive securities:
Warrants		—		2,731,949		3,179,614

Denominator for diluted income per share—adjusted weighted average shares		16,038,125		18,770,074		13,658,703
Basic earnings per share	$	(0.01)	$	0.00	$	0.11
Diluted earnings per share	$	(0.01)	$	0.00	$	0.09

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Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying amounts of cash equivalents, money market funds held in trust, prepaid expenses, accounts payable and accrued expenses, deferred underwriting fees payable, and income taxes payable approximate their respective fair values, due to the short-term nature of these items.

Interest on Funds Held In Trust Subject to Common Stock Conversion

Deferred interest on funds held in trust consists of the 20% less one share portion of the interest earned on the funds held in trust, which is the maximum amount, net of permitted withdrawals by the Company and related income taxes, that the Company would be obligated to pay to stockholders who elect to have their stock redeemed by the Company without resulting in a rejection of a business combination. The balance of $462,000 in deferred interest on funds held in trust at December 31, 2008 has been reversed into income during the three months ended March 31, 2009, as stockholders have voted affirmatively to liquidate the trust and distribute the trust assets to holders of its common shares acquired in its public offering.

Common Stock Subject to Conversion/Deferred Underwriting Fees

As a result of the inability to complete a Business Combination transaction by April 2, 2009 and the subsequent vote of the stockholders to liquidate the trust and distribute the trust assets to the IPO shareholders, the liability for 2,499,999 shares of common stock subject to conversion in the amount of $19,720,992 and deferred underwriting fees of $4,000,000 at December 31, 2008 have been reversed into additional paid in capital as of March 31, 2009.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

2.	Going Concern

The Company does not have sufficient funds to allow it to operate through the date of liquidation and distribution of the trust assets. As a result, the Company entered into an unsecured loan facility with Santa Monica Capital Partners II, LLC, an affiliate (“SMCPII”) to provide up to $500,000 in advances at the sole discretion of SMCPII. (See Note 4). If additional funds are required above this amount, or if SMCPII does not make the discretionary advances contemplated under the promissory note, the Company will need to obtain additional funds from its stockholders or another source. None of the Company’s officers, directors or stockholders are required to provide any financing to the Company. In the event the assets held outside the trust account are insufficient to pay the costs associated with dissolution and liquidation of the Company, its three principal executive officers are obligated to provide additional funds required to pay the costs associated with the dissolution and liquidation.

As of the date of this report, the stockholders of the Company have voted affirmatively to liquidate and distribute the amount in the Company’s trust account to the holders of shares of its common stock acquired in its initial public offering and (b) to amend and restate its certificate of incorporation to permit the Company to continue as a corporation currently specified in its certificate without the limitations relating to its initial public offering.

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The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. As a result of the foregoing, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2008 financial statements, expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.

3.	Public Offering

In the Public Offering, the Company issued and sold 12,500,000 units (“Units”) at $8.00 per Unit. The underwriters were paid fees equal to 3.5% of the gross proceeds of the Public Offering, or $3,500,000, at the closing of the Public Offering and agreed to defer an additional $4,000,000 of their underwriting fees until the consummation of a Business Combination. Upon the consummation of a Business Combination, the Company was required to pay such fees out of the proceeds of the Public Offering held in the Trust Account.

Each Unit consists of one share of the Company’s common stock, and one Redeemable Common Stock Purchase Warrant (“Warrant”). Each Warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $6.00 upon the completion of a business combination with a target business, and will expire four years from the effective date of the Public Offering. The Warrants will be redeemable at a price of $.01 per Warrant upon 30 days’ notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $11.50 per share (subject to proportionate adjustment of the warrant price pursuant to the warrant agreement) for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given.

In addition, the Company granted the underwriters an option to purchase up to an additional 1,875,000 Units at the public offering price less the underwriters’ discount and commission to cover any over-allotments for public sale. The underwriters did not exercise any portion of this option.

4. Notes Payable - Related Party

The Company issued an amended and restated $305,000 unsecured promissory note to its Initial Stockholder on February 1, 2007. This note was cancelled and converted into units on April 2, 2007 in connection with the Public Offering. The note was originally issued on June 24, 2005 for the amount of $240,000, and in December 2006, the Initial Stockholder loaned an additional $65,000 to the Company. The note (as amended) bore interest at 5%. In connection with the Public Offering on April 2, 2007, accrued interest in the amount of $21,992 was forgiven and shown as an increase to additional paid-in capital.

On January 15, 2009, the Company entered into an unsecured loan facility with Santa Monica Capital Partners II, LLC, an affiliate (“Lender”), to provide up to $500,000 in funds at the discretion of the Lender. The promissory note provides for interest at the rate of 10% per annum, and that the principal along with all accrued and unpaid interest is due on the earlier of (i) the closing of a business combination, as such term is defined in the Company’s prospectus dated March 27, 2007 as filed with the Securities and Exchange Commission on March 28, 2007, or (ii) the date that the Company liquidates its assets. In the event that the Company is required to and does dissolve and liquidate pursuant to its Certificate of Incorporation, the Lender’s sole recourse shall be against the assets of the Company not held in the trust account, unless the Company’s counsel delivers an opinion that the amounts due under the note may be paid from the trust account. As of March 31, 2009 $310,000 had been advanced to the Company pursuant to this promissory note.

5. Commitments - Related Party

The Company utilizes certain administrative, technology and secretarial services, as well as certain limited office space provided by Santa Monica Capital Corp, and subsequently, Santa Monica Capital Partners II, LLC, an affiliate of Santa Monica Capital Corp. Such affiliate has agreed that it will make such services available to the Company, as may be required by the Company from time to time. The Company agreed to pay such affiliate $7,500 per month for such services commencing as of July 1, 2005 through January 5, 2006. Under the agreement as amended, the Company did not pay or accrue additional fees until October 2, 2007, six months after consummation of the Public Offering of the Company’s securities, upon which the Company began to pay $7,500 per month. The Company will continue to pay such fees until the Company has paid aggregate fees of $180,000, or, if earlier, upon the completion of a Business Combination. As of March 31, 2009 and 2008, the Company had incurred an aggregate of $180,000 and $90,000 respectively, for such services. As of March 31, 2009, $30,000 was unpaid and included in accrued expenses.

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6. Preferred Stock

The Company is authorized to issue 25,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors.

7. Common Stock and Warrants

In July 2005, the Company issued 4,687,500 Units to Santa Monica Capital Partners, LLC for $60,000 in cash, at a purchase price of approximately $0.01 per unit. Mr. Marshall, the Company’s Chairman of the Board and Chief Executive Officer, Mr. Brendlinger, the Company’s Chief Financial Officer and Director, Mr. Pulier, the Company’s Secretary and Director, and Mr. Baradaran, the Company’s Director, are the beneficial owners of Santa Monica Capital Partners, LLC. Each unit consisted of one share of the Company’s common stock and one warrant to purchase one share of the Company’s common stock at an exercise price of $6.00 per share, exercisable upon the consummation of a Business Combination and expiring four years from the consummation of the Public Offering.

During August 2005 and April 2006, Santa Monica Capital Partners, LLC transferred an aggregate of 458,232 units to the Transferee Stockholders, including 217,848 units to persons who are not directors or members of the Company’s advisory board for an aggregate price of $6,625, or $0.03 per unit, and 240,384 units to members of the Company’s board of directors and advisory board for an aggregate price of $4,500, or $0.02 per unit.

These units were not transferred to settle any obligations of the Company or in exchange for services for the Company. Future services provided by any of the transferees will be compensated pursuant to separate agreements.

All units transferred by Santa Monica Capital Partners, LLC were paid for pursuant to the delivery of promissory notes due November 2009 issued to Santa Monica Capital Partners, LLC with interest of 8% per annum payable upon maturity thereof.

In September 2006, in conjunction with the Company’s public offering, the Company’s Board of Directors authorized the Company to enter into an agreement with its shareholders, other than Santa Monica Capital Partners, LLC, to exchange their units for an equal number of shares of the Company’s common stock, and this exchange subsequently was completed in September 2006. Additionally, Santa Monica Capital Partners, LLC exchanged its 4,229,268 units for 2,666,768 shares of the Company’s common stock. As a result, there are no outstanding warrants relating to the originally issued shares. See Note 8.

In April 2006 and March 2007, the Company and Santa Monica Capital Partners, LLC agreed to a private placement of units in connection with the Public Offering. In connection with this agreement Santa Monica Capital Partners, LLC purchased 413,125 units at $8.00 per unit for $3,305,000, which included the cancellation of the $305,000 loan made to the Company by Santa Monica Capital Partners, LLC, prior to the Public Offering. The proceeds of this Private Placement are held in the Trust Account established for the Public Offering (Note 1).

In connection with the Public Offering described in Note 3 and the private placement of Units described above, the Company issued warrants to purchase an aggregate 12,913,125 shares of its common stock, all of which were outstanding as of March 31, 2009. The warrants have a weighted average exercise price of $6.00 per share, and a weighted average remaining term of 24 months.

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8. Registration Rights

The holders of the Company’s 3,538,125 issued and outstanding shares immediately prior to the completion of the offering, including the Initial Shareholder, are entitled to registration rights covering the resale of their shares and the resale of their warrants and shares acquired upon exercise of their warrants. The holders of the majority of these shares are entitled to make up to two demands that the Company register their shares, warrants and shares underlying the warrants any time after the consummation of the initial business combination, subject to transfer restrictions imposed by the lock up agreements. In addition, these stockholders have certain “piggy-back” registration rights on registration statements filed subsequent to the date on which these securities are released from the restrictions imposed by the lock-up agreements. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Pursuant to the registration rights agreement, these stockholders waive any claims to monetary damages for any failure by the Company to comply with the requirements of the registration rights agreement, provided the Company has used its best efforts to do so.

In accordance with the Warrant Agreement related to the warrants, the Company will not be obligated to deliver securities, and there are no contractual penalties for failure to deliver securities, if a registration statement is not effective at the time of exercise. Additionally, in the event that a registration statement is not effective at the time of exercise, the holder of such warrant shall not be entitled to exercise such warrant and in no event will the Company be required to net cash settle the warrant exercise. Consequently, the warrants may expire unexercised.

9. Income Taxes

The following table presents the current and deferred income tax provision for federal and state income taxes:

	March 31, 2009		March 31, 2008			For the period from June 24, 2005 (inception) through March 31, 2009
Current tax provision:
Federal	$	—	$	144,000		$	962,500
State		15,000		52,000			282,400
	$	15,000	$	196,000		$	1,244,900
Deferred tax provision:
Federal		36,000		(17,000	)		—
State		—		(16,000	)		—
		36,000		(33,000	)		—
Total provision for income tax	$	51,000	$	163,000		$	1,244,900

Current income taxes are based upon the year’s income taxable for federal and state tax reporting purposes. Deferred income taxes (benefits) are provided for certain income and expenses, which are recognized in different periods for tax and financial reporting purposes.

Deferred tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income.

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Significant components of the Company’s net deferred tax asset (liability) at March 31, 2009 and December 31, 2008 are as follows:

	March 31, 2009		December 31, 2008
Expenses deductible in future periods	$	(1,000)	$	37,000
Accretion of interest on U.S. Treasury Bills		3,000		(1,000	)
Net operating loss carry-back		255,000		—
Total deferred tax assets		257,000		36,000
Valuation allowance		(257,000)		—
Net deferred tax asset	$	—	$	36,000

In assessing the realizability of deferred tax assets of $257,000 and $36,000 at March 31, 2009 and December 31 2008, respectively, management considered whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these assets become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Management's analysis of the deferred tax asset at December 31, 2008 concluded that the asset can be utilized in future periods against taxes previously paid. Therefore, there is no valuation allowance against this asset as of December 31, 2008. Management’s analysis of the deferred tax asset at March 31, 2009 resulted in a valuation allowance of $257,000.

A reconciliation of the expected tax computed at the U.S. statutory federal income tax rate to the total benefit for income taxes for the three months ended March 31, 2009 and 2008, and the period from June 24, 2005 (inception) through March 31, 2009 is as follows:

						For the period from June 24, 2005 (inception) through
	March 31, 2009			March 31, 2008		March 31, 2009
Expected tax at 34%	$	(180,000	)	$	138,000	$	831,000
Change in valuation allowance		257,000			—		257,000
State income tax, net of federal tax benefit		(33,000	)		24,000		157,000
Other		7,000			1,000		—
Provision for income taxes	$	51,000		$	163,000	$	1,245,000

On July 13, 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes, and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

The Company adopted FIN 48, Accounting for Uncertainty in Income Taxes on January 1, 2007. The Company recognized no cumulative effect adjustment as a result of adopting FIN 48. At March 31, 2009 and December 31, 2008, the Company has no unrecognized tax benefits.

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The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of March 31, 2009 and December 31, 2008, the Company has no accrued interest and penalties related to uncertain tax positions.

The Company is subject to taxation in the U.S. and California. The tax years 2005 to 2008 remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company is currently under examination by the Internal Revenue Service for its 2007 taxable year.

10. Subsequent Events

Unsecured Third Party Borrowing

On June 15, 2009, the Company borrowed $20,000 from an unrelated third party lender pursuant to the terms of a ninety (90) day unsecured promissory note bearing interest at 12 percent per annum with interest and an origination fee equal to ten percent of the loan payable at maturity. On July 31, 2009, the $20,000 note principal along with $302 in interest and the $2,000 origination fee was repaid in full.

Notes Payable – Related Party

As of September 16, 2009 advances to the Company pursuant to the unsecured promissory note with Santa Monica Capital Partners II, LLC described in Note 4 aggregated $345,200.

Definitive Proxy and Stockholder Vote

On July 30, 2009 the Company filed a Definitive Proxy with the Securities and Exchange Commission with respect to the holding of a special meeting of stockholders on August 27, 2009 for stockholders of record on August 5, 2009 mainly for seeking approval (a) for a plan of liquidation to distribute the amount in the Company’s trust account to the holders of shares of its common stock acquired in its initial public offering and (b) to amend and restate its certificate of incorporation to permit the Company to continue as a corporation currently specified in its certificate without the limitations relating to its initial public offering.

The affirmative vote of the stockholders at that meeting approved all proposals contained in the Definitive Proxy and the Trustee is currently in the process of making the distribution of trust assets to shareholders.

The Company will continue in existence without the special purpose acquisition company limitations originally contained in its charter. The Company intends to delist from NYSE:AMEX at the earliest practicable date.

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

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in such statements. All of the statements contained in this Report that are not identified as historical should be considered forward-looking. In connection with certain forward-looking statements contained in this Report and those that may be made in the future by or on behalf of the Company which are identified as forward-looking, the Company notes that there are various factors that could cause actual results to differ materially from those set forth in any such forward-looking statements. Accordingly, there can be no assurance that the forward-looking statements contained in this Report will be realized or that actual results will not be significantly higher or lower. Statements regarding policies and procedures are not intended, and should not be interpreted, to mean that such policies and procedures will not be amended, modified or repealed at any time in the future. The forward-looking statements have not been audited by, examined by or subjected to agreed-upon procedures by independent accountants, and no third party has independently verified or reviewed such statements. Readers of this Report should consider these facts in evaluating the information contained herein. The inclusion of the forward-looking statements contained in this Report should not be regarded as a representation by the Company or any other person that the forward-looking statements contained in this Report will be achieved. In light of the foregoing, readers of this Report are cautioned not to place undue reliance on the forward-looking statements contained herein.

Overview

We were formed on June 24, 2005 for the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business combination with one or more operating businesses. Our efforts in identifying a prospective target business have been focused on acquiring an operating business in the communications, media, gaming and/or entertainment industry. Our initial business combination were to be with a business or businesses whose collective fair market value is at least equal to 80% of our net assets at the time of the acquisition.

On April 2, 2007, we completed: (i) a private placement of 413,125 units at $8.00 per unit for $3,000,000 cash and cancellation of the $305,000 loan made to the Company by Santa Monica Capital Partners, LLC, and (ii) a public offering of 12,500,000 units for net proceeds of $95,119,982 pursuant to a registration statement on Form S-1, which was declared effective by the Securities and Exchange Commission on March 27, 2007. The proceeds of the private placement and a portion of the proceeds of the public offering, together totaling $98,605,000, were placed in a trust account, which are to be held until the earlier of (i) the consummation of a business combination or (ii) liquidation of the company. The amount in the trust account includes $4,000,000 of contingent underwriting compensation that was required to be paid to the underwriter if a business combination is consummated. The remaining net proceeds not held in the trust account of $100,000, together with up to $1,600,000 of interest earned on the trust account (net of taxes payable), were used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Each unit consists of one share of the Company’s common stock, and one warrant to purchase one share of common stock at an exercise price of $6.00 commencing upon the completion of a business combination with a target business and expiring four years from the effective date of the public offering. In the event that the last sale price of the common stock is at least $11.50 per share (subject to proportionate adjustment of the warrant price pursuant to the warrant agreement) for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given the warrants will be redeemable at a price of $.01 per warrant upon 30 days’ notice after the warrants become exercisable. In addition, we granted the underwriters an option to purchase up to an additional 1,875,000 units at the public offering price less the underwriters’ discount and commission, within 30 days of the date of the prospectus, to cover any over-allotments for public sale. The underwriters did not exercise any portion of this option.

The proceeds deposited in the trust account will not be released from the trust account until the earlier of the completion of a business combination or the expiration of the time period during which we may complete a business combination. The proceeds held in the trust account (other than the contingent underwriting discount) may be used as consideration to pay the sellers of a target business with which we complete a business combination.

As of April 2, 2009, the Company had not successfully completed a Business Combination. On July 30, 2009 the Company filed a Definitive Proxy with the Securities and Exchange Commission with respect to the holding of a special meeting of stockholders on August 27, 2009 for stockholders of record on August 5, 2009. At the meeting stockholders voted in favor of three proposals that allowed for the continuation of the existence of the corporation as well as for the distribution of the trust proceeds to the stockholders holding shares of its common stock issued in its initial public offering (“IPO Shares”). There were 14,540,179 common shares present at the meeting represented by proxy, which is 90.7% of the total outstanding shares. Proposal Number One to permit the continuance of the Company as a corporation without the restrictions relating to blank check companies, was approved by a vote of 13,096,144 for and 1,444,035 against the Proposal. Proposal Number Two authorized the Company to enter into an agreement to amend the trust agreement to permit the distribution of assets to holders of IPO Shares. The Proposal was approved by a vote of 13,792,064 for (including 10,599,491 IPO Shares) and 748,115 against. Proposal Number Three, to permit the Company to distribute the assets of the trust account to the holders of IPO Shares, was approved by a vote of 13,952,479 for and 587,700 against. The liquidation value of the trust account is $100,724,231, therefore the holders of record as of September 14, 2009 will receive $8.057938494 per IPO Share held. The Company will be filing a Notification of Removal from Listing on Form 25 with the Securities and Exchange Commission for the purpose of deregistering and delisting its securities under the Securities Exchange Act of 1934. Upon suspension of trading, the Company will also commence voluntary delisting procedures to delist the Company’s securities from NYSE Amex. The Company’s securities will no longer trade on the NYSE Amex.

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Results of Operations

As of March 31, 2009, approximately $100,699,000 (including approximately $7,700 in accreted treasury bill interest) was held in trust and we had no unrestricted cash. As of March 31, 2009, the Company has withdrawn $1,600,000 in interest earned on the funds held in the trust account, the maximum permitted for our activities in connection with identifying and conducting due diligence of a suitable business combination, and for general corporate matters.

Through March 31, 2009, our efforts have been limited to organizational activities, activities relating to our initial public offering, activities relating to identifying and evaluating prospective acquisition candidates, and activities relating to general corporate matters; we have neither engaged in any operations nor generated any revenues, other than interest income earned on the proceeds of our private placement and initial public offering. For the three months ended March 31, 2009, we earned $600 in interest income, offset by $4,300 in interest expense. Consistent with the overall market for U.S. Treasury's, the Company has received markedly lower yields on its Treasury Bill investment in the three months ended March 31, 2009 compared to the three months ended March 31, 2008, and is currently receiving historically low yields of near zero.

The following table shows the total funds held in the trust account through March 31, 2009:

Net proceeds from our initial public offering and private placement of units placed in trust	$	94,605,000
Deferred underwriters’ discounts and compensation		4,000,000
Total interest received to date		5,109,595
Less total interest disbursed to us for working capital		(1,600,000	)
Less total taxes paid		(1,407,642	)
		100,706,953
Treasury Bill interest accreted		(7,668	)
Total funds held in trust account through March 31, 2009	$	100,699,285

For the three months ended March 31, 2009, we paid or incurred an aggregate of $526,677 in expenses for the following purposes:

Premiums associated with our directors and officers liability insurance;

expenses for due diligence and investigation of prospective target businesses;

legal and accounting fees relating to potential acquisitions, SEC reporting obligations and general corporate matters; and

miscellaneous operations related expenses including administrative fees and franchise taxes.

For the period following March 31, 2009 through the date of liquidation, if any, we expect to incur expenses for the following purposes:

payment of premiums associated with our directors’ and officers’ insurance;

payment of estimated income taxes incurred as a result of interest income earned on funds currently held in the trust account;

legal and accounting fees relating to our SEC reporting obligations and general corporate matters;

costs related the filing of a proxy statement and meeting relating to the approval by our stockholders of our plan of liquidation.

other miscellaneous operations related expenses including administrative fees and franchise taxes.

Lack of Funds

We do not have sufficient funds to allow us to operate through the date of liquidation. We depleted all the funds available to us from the trust account. As a result, on January 15, 2009, the Company entered into an unsecured loan facility with Santa Monica Capital Partners II, LLC, an entity owned by Messrs. Marshall, Brendlinger and Pulier (“SMCPII”) to provide up to $500,000 in funds at the discretion of SMCPII. The promissory note provides for interest at the rate of 10% per annum, and that the principal along with all accrued and unpaid interest is due on the earlier of (i) the closing of a business combination, or (ii) the date the Company liquidates its assets. In the event the Company is required to and does liquidate pursuant to its Amended and Restated Certificate of Incorporation, unless counsel to the Company delivers an opinion that the amounts due under the note may be paid from the trust account, no amounts may be paid from such account, it being understood that upon liquidation, SMCPII’s sole recourse shall be against assets of the Company not held in the trust account.

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If additional funds are required above this amount, or if SMCPII does not make the discretionary advances contemplated under the promissory note, the Company will need to obtain additional funds from its stockholders or another source. In the event the assets held outside the trust account are insufficient to pay the costs associated with liquidation of the Company, its three principal executive officers David Marshall, Kurt Brendlinger and Eric Pulier are obligated to provide additional funds required to pay the costs associated with the liquidation.

As of September 16, 2009, the Company has received $345,200 in loan advances under this promissory note. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. As a result of the foregoing, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2008 financial statements, expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market driven rates or prices. We are not presently engaged in any substantive commercial business. To date, our efforts have been limited to organizational activities and activities relating to our initial public offering and the identification of a target business; we have neither engaged in any operations nor generated any revenues. Accordingly, the risks associated with foreign exchange rates, commodity prices, and equity prices are not significant. The net proceeds of our IPO held in the trust fund have been invested only in United States "government securities," defined as any Treasury Bill issued by the United States having a maturity of one hundred and eighty days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940. Given our limited risk in our exposure to U.S. Treasury Bills and such money market funds, we do not view the interest rate risk to be significant. Consistent with the overall market for U.S. Treasury's, the Company is receiving lower yields on its Treasury Bill investments. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

Item 4. Controls and Procedures.

An evaluation of the effectiveness of our disclosure controls and procedures pursuant to Securities and Exchange Commission Rule 13a-15(b), as of the end of the quarter covered by this report was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There was no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Securities Exchange Act of 1934 that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II— OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

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Item 1A. Risk Factors

We did not effect a business combination by April 2, 2009. We will terminate business operations, liquidate the trust account and distribute the trust proceeds to our IPO shareholders, and will continue our existence without the limitations in our corporate charter imposed by the IPO.

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

As of March 31, 2009, we paid offering expenses of approximately $1,380,018, which have been charged to additional paid in capital.

As of March 31, 2009, we have paid or incurred an aggregate of approximately $3,901,768 in expenses, which have been or will be paid out of the proceeds of our initial public offering held in trust and our withdrawal of interest earned on the funds held in the trust account, for the following purposes:

payment of estimated taxes incurred as a result of interest income earned on funds currently held in the trust account;

payment of other state and local taxes and fees;

expenses for due diligence and investigation of prospective target businesses;

legal and accounting fees relating to our SEC reporting obligations and general corporate matters;

	s	Costs related to the liquidation of the trust and distribution of trust assets to the public shareholders; and
	s	miscellaneous expenses, including directors and officers liability insurance.

As of March 31, 2009, after giving effect to our initial public offering and our operations subsequent thereto, including our withdrawal of $1,600,000 of the interest earned on the funds held in the trust account through March 31, 2009, $100,699,285 was held in trust and we had no unrestricted cash available to us for our activities in connection with liquidation of the trust and distribution of the trust assets to public shareholders, and for general corporate matters.

As of June 30, 2009, approximately $100.7 million (approximately $8.06 per IPO Share) was held in the Trust Account.

Item 3. Defaults upon Senior Securities.

Not applicable.

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

Item 5. Other Information.

Refer to Item 4 above.

Item 6. Exhibits

The exhibits listed in the accompanying Index to Exhibits are filed as part of this Quarterly Report on Form 10-Q and incorporated herein by reference.

SIGNATURES

Pursuant to the requirements 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.

	SANTA MONICA MEDIA CORPORATION
	(Registrant)

Date: September 16, 2009	By:	/s/ KURT BRENDLINGER
		Kurt Brendlinger
		Chief Financial Officer
		(Principal Financial Officer)

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INDEX TO EXHIBITS

Exhibit Number		Description
31.1		Certification of Chief Executive Officer Pursuant to 17 CFR 240.13a-14(a)

31.2		Certification of Chief Financial Officer Pursuant to 17 CFR 240.13a-14(a)

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Santa Monica Media CORP 10-Q