-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MQL/GFQ7KR+1XVIfKYiMWMba4hP/Oba1dIQgsNa3v+CCo5LUiSRw7dlj/ZWNyYWe FGP2D0pwLVupfrPxgW8gWg== 0001094328-09-000023.txt : 20090422 0001094328-09-000023.hdr.sgml : 20090422 20090422135211 ACCESSION NUMBER: 0001094328-09-000023 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090422 DATE AS OF CHANGE: 20090422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GAMEZNFLIX INC CENTRAL INDEX KEY: 0001099234 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-VIDEO TAPE RENTAL [7841] IRS NUMBER: 541838089 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-29113 FILM NUMBER: 09763431 BUSINESS ADDRESS: STREET 1: 2240 SHELTER ISLAND DRIVE #202 CITY: SAN DIEGO STATE: CA ZIP: 92106 BUSINESS PHONE: 6192263536 FORMER COMPANY: FORMER CONFORMED NAME: POINT GROUP HOLDINGS INCORP DATE OF NAME CHANGE: 20030224 FORMER COMPANY: FORMER CONFORMED NAME: SYCONET COM INC DATE OF NAME CHANGE: 20000119 10-K 1 games10k042209woex.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008 OR [ ] 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: 0-29113 GAMEZNFLIX, INC. (Exact Name of Company as Specified in its Charter) Nevada 90-0224051 (State or Other Jurisdiction of Incorporation (I.R.S. Employer or Organization) Identification No.) 1535 Blackjack Road, Franklin, Kentucky 42134 (Address of Principal Executive Offices) (Zip Code) Company's telephone number: (270) 598-0395 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: common stock, $0.001 par value Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes [ ] No [X]. Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes [ ] No [X]. Indicate by check mark whether the Company (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 Company was required to file such reports), and (2) been subject to such filing requirements for the past 90 days: Yes [X] No [ ]. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Company's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act: Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act: Yes [ ] No [X]. The aggregate market value of the voting stock held by non- affiliates of the Company as of April 9, 2009: $188,172. As of April 9, 2009, the Company had 188,880 shares of common stock issued and outstanding. TABLE OF CONTENTS PART I. PAGE ITEM 1. BUSINESS 5 ITEM 1A. RISK FACTORS 7 ITEM 1B. UNRESOLVED STAFF COMMENTS 17 ITEM 2. PROPERTIES 17 ITEM 3. LEGAL PROCEEDINGS 17 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17 PART II. ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 18 ITEM 6. SELECTED FINANCIAL DATA 19 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 19 ITEM 7A QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 26 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 27 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 27 ITEM 9A. CONTROLS AND PROCEDURES 27 ITEM 9A(T) CONTROLS AND PROCEDURES 27 ITEM 9B OTHER INFORMATION 30 PART III. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 30 ITEM 11. EXECUTIVE COMPENSATION 33 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS 36 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 39 ITEM 14. PRINCIPACCOUNTANT FEES AND SERVICES 40 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 40 SIGNATURES 41 PART I. ITEM 1. BUSINESS. Business Development. GameZnFlix, Inc. ("Company") was formed in Delaware in June 1997 under the name SyCo Comics and Distribution Inc. and is the successor to a limited partnership named SyCo Comics and Distribution formed under the laws of the Commonwealth of Virginia on January 15, 1997, by Sy Robert Picon and William Spears, the co-founders and principal stockholders of the Company. On February 17, 1999, SyCo Comics and Distribution Inc. changed its name to Syconet.com, Inc. With the filing of Articles of Merger with the Nevada Secretary of State on April 12, 2002, the Company was redomiciled from Delaware to Nevada, and its number of authorized common shares was increased to 500,000,000. On November 21, 2002, the Company amended its articles of incorporation changing its name to Point Group Holdings, Incorporated. On March 5, 2003, the Company again amended the articles of incorporation so that (a) an increase in the authorized capital stock of the Company can be approved by the board of directors without shareholder consent; and (b) a decrease in the issued and outstanding common stock of the Company (a reverse split) can be approved by the board of directors without shareholder consent. On July 11, 2003, the Company amended its articles of incorporation to increase the number of authorized common shares to 900,000,000. On January 26, 2004, the name of the Company was changed to "GameZnFlix, Inc" by the filing of amended articles of incorporation. On December 16, 2004, the Company amended the articles of incorporation to increase the authorized common stock of the Company to 2,000,000,000 shares. On July 19, 2005, the articles of incorporation were further amended to increase the number of authorized common shares to 4,000,000,000, and on March 21, 2006 increased to 25,000,000,000. On September 6, 2007, a 1 for 1,000 reverse split of common stock took place. On December 31, 2007, 100,000,000 shares of Series B common stock and 10,000,000 shares of preferred stock were created by an amendment to the articles of incorporation. On April 9, 2009, a 1 for 10,000 reverse split of common stock took place. During the period of July 2002 to September 2002, the Company acquired AmCorp Group, Inc., a Nevada Corporation, and Naturally Safe Technologies, Inc. also a Nevada corporation. Currently, Naturally Safe is current with its incorporation with the State of Nevada, but does not have any business operations. In February 2005, AmCorp amended its articles of incorporation, changing its name to GameZnFlix Racing and Merchandising, Inc. AmCorp provided services to companies that desired to be listed on the OTCBB and Naturally Safe held patents on a product that assisted Christmas trees in retaining water. During the fiscal year ended December 31, 2002, AmCorp generated 26% of revenues and Naturally Safe generated approximately 74% of revenues. During the fiscal year ended December 31, 2003, AmCorp generated 2% of revenues and Naturally Safe generated approximately 88% of revenues. In May 2003, the Company ceased operation of Prima International, LLC, a wholly owned subsidiary of Naturally Safe. In September 2003, the Company acquired Veegeez.com, LLC, a California limited liability company. Business of the Company. As of November 2008, the Company ceased operations as a video game/DVD rental company and is looking for other business ventures to be acquired. Therefore, the Company intends to search for business opportunities, particularly toward small and medium-sized enterprises. The Company does not propose to restrict its search to any particular geographical area or industry, and may, therefore, engage in essentially any business, to the extent of its limited resources. This includes industries such as service, manufacturing, high technology, product development, medical, communications and others. The Company's discretion in the selection of business opportunities is unrestricted, subject to the availability of such opportunities, economic conditions, and other factors. No assurance can be given that the Company will be successful in finding or acquiring a desirable business opportunity, and no assurance can be given that any acquisition, which does occur, will be on terms that are favorable to the Company. Business opportunities may come to the Company's attention from various sources, including professional advisers such as attorneys and accountants, venture capitalists, members of the financial community, and others who may present unsolicited proposals. The Company may pay a finder's fee in connection with any such transaction. The Company will not restrict its search to any specific kind of firm, but may acquire a venture which is in its preliminary or development stage, one which is already in operation, or in a more mature stage of its corporate existence. The acquired business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer. However, the Company does not intend to obtain funds to finance the operation of any acquired business opportunity until such time as the Company has successfully consummated the merger or acquisition transaction. The analysis of business opportunities will be under the supervision of the Company's officers and directors. In analyzing prospective business opportunities, management will consider such matters as available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable, but which then may be anticipated to impact the Company's proposed activities; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors. In many instances, it is anticipated that the historical operations of a specific business opportunity may not necessarily be indicative of the potential for the future because of a variety of factors, including, but not limited to, the possible need to expand substantially, shift marketing approaches, change product emphasis, change or substantially augment management, raise capital and the like. Management intends to meet personally with management and key personnel of the target business entity as part of its investigation. To the extent possible, the Company intends to utilize written reports and personal investigation to evaluate the above factors. Prior to making a decision to participate in a business opportunity, the Company will generally request that it be provided with written materials regarding the business opportunity containing as much relevant information as possible, including, but not limited to, such items as a description of products, services and company history; management resumes; financial information; available projections, with related assumptions upon which they are based; an explanation of proprietary products and services; evidence of existing patents, trademarks, or service marks, or rights thereto; present and proposed forms of compensation to management; a description of transactions between such company and its affiliates during the relevant periods; a description of present and required facilities; an analysis of risks and competitive conditions; a financial plan of operation and estimated capital requirements; audited financial statements, or if they are not available at that time, unaudited financial statements, together with reasonable assurance that audited financial statements would be able to be produced within a required period of time; and the like. The Company will participate in a business opportunity only after the negotiation and execution of appropriate agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require certain representations and warranties of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by the parties prior to and after such closing, outline the manner of bearing costs, including costs associated with the Company's attorneys and accountants, and will include miscellaneous other terms. Employees. The Company currently has 1 employee. The employee operates in the area of general business operations and management. ITEM 1A. RISK FACTORS. Risks Relating to the Business. (a) The Company Has a History of Losses That May Continue. The Company incurred net losses of $1,099,562 for the year ended December 31, 2008 and $10,501,867 for the year ended December 31, 2007. The Company cannot provide assurance that it can achieve or sustain profitability on a quarterly or annual basis in the future. If revenues grow more slowly than anticipated, or if operating expenses exceed expectations or cannot be adjusted accordingly, the Company will continue to incur losses. The Company's possible success is dependent upon the successful development and marketing of a new line of business (which has not been fully established yet). Any future success that the Company might enjoy will depend upon many factors, including factors out of the Company's control or which cannot be predicted at this time. These factors may include changes in or increased levels of competition, including the entry of additional competitors and increased success by existing competitors, changes in general economic conditions, increases in operating costs, including costs of supplies, personnel and equipment, reduced margins caused by competitive pressures and other factors. These conditions may have a materially adverse effect upon the Company or may force it to reduce or curtail operations. (b) Any Required Expenditures as a Result of Indemnification Will Result in an Increase in Expenses. The Company's bylaws include provisions to the effect that it may indemnify any director, officer, or employee. In addition, provisions of Nevada law provide for such indemnification, as well as for a limitation of liability of directors and officers for monetary damages arising from a breach of their fiduciary duties. Any limitation on the liability of any director or officer, or indemnification of any director, officer, or employee, could result in substantial expenditures being made by the Company in covering any liability of such persons or in indemnifying them. (c) The Company's Success Is Largely Dependent on the Abilities of Its Management and Employees. The Company's success is largely dependent on the personal efforts and abilities of its senior management. The loss of certain members of the Company's senior management, including its chief executive officer, could have a material adverse effect on our business and prospects. (d) Risks and Costs of Complying with Section 404 of the Sarbanes- Oxley Act. The Company is required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, which requires it to maintain an ongoing evaluation and integration of the internal control over financial reporting. The Company is required to document and test its internal control and certify that it is responsible for maintaining an adequate system of internal control procedures for the year ended December 31, 2008. In subsequent years, the Company's independent registered public accounting firm will be required to opine on those internal control and management's assessment of those control. In the process, the Company may identify areas requiring improvement, and the Company may have to design enhanced processes and controls to address issues identified through this review. The Company evaluated its existing control for the year ended December 31, 2007. The Company's Chief Executive Officer identified material weaknesses in the Company's internal control over financial reporting and determined that the Company did not maintain effective internal control over financial reporting as of December 31, 2008. The identified material weaknesses did not result in material audit adjustments to the Company's 2008 financial statements; however, uncured material weaknesses could negatively impact the Company's financial statements for subsequent years. The Company cannot be certain that it will be able to successfully complete the procedures, certification and attestation requirements of Section 404 or that the Company's auditors will not have to report a material weakness in connection with the presentation of the Company's financial statements. If the Company fails to comply with the requirements of Section 404 or if the Company's auditors report such material weakness, the accuracy and timeliness of the filing of the Company's annual report may be materially adversely affected and could cause investors to lose confidence in its reported financial information, which could have a negative affect on the trading price of the common stock. In addition, a material weakness in the effectiveness of the Company's internal controls over financial reporting could result in an increased chance of fraud and the loss of customers, reduce the Company's ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on the Company's business, results of operations and financial condition. Further, the Company believes that the out-of-pocket costs, the diversion of management's attention from running the day-to-day operations and operational changes caused by the need to comply with the requirements of Section 404 could be significant. If the time and costs associated with such compliance exceed the Company's current expectations, its results of operations could be adversely affected. Risks Relating to the Financing Arrangements. (a) There are a Large Number of Shares Underlying the Convertible Debenture and Warrants; Sale of These Shares may Depress the Market Price of the Common Stock. On November 11, 2004, the Company entered into a Securities Purchase Agreement with Golden Gate Investors, Inc. (now known as Golden State Investors, Inc. - "Golden State") for the sale of (i) $150,000 convertible debenture and (ii) a warrant to purchase 15,000,000 shares of common stock. The debenture bears interest at 4 3/4%, matures three years from the date of issuance, and is convertible into common stock, at Golden State's option. The debenture is convertible into the number of shares of common stock equal to the principal amount of the debenture multiplied by 110, less the product of the conversion price multiplied by 100 times the dollar amount of the debenture, and the entire foregoing result shall be divided by the conversion price. The conversion price for the debenture is the lesser of (i) $0.20, (ii) 82% of the average of the three lowest volume weighted average prices during the twenty trading days prior to the conversion, or (iii) 82% of the volume weighted average price on the trading day prior to the conversion. The warrant is exercisable into 15,000,000 shares of common stock at an exercise price of $1.09 per share. On January 17, 2006, the Company entered into an Addendum to Convertible Debenture and Warrant to Purchase Common Stock with Golden State in which the debenture was increased to $300,000 and an additional warrant to purchase 15,000,000 shares of common stock was issued (also exercisable at $1.09 per share). La Jolla Cove Investors, Inc. ("LJCI") was a party to a Securities Purchase Agreement and accompanying 7 3/4% Convertible Debenture, Warrant to Purchase Common Stock and Registration Rights Agreement with RMD Technologies, Inc. (collectively, as amended, "RMD Documents"), pursuant to which LJCI had advanced a total of $250,000 to RMD Technologies, Inc. (the "RMD Advance"). LJCI assigned its interest in the RMD Documents and the RMD Advance to Golden State. Under another Addendum to Convertible Debenture and Warrant to Purchase Common Stock, dated May 24, 2007, Golden State agreed to deliver an aggregate of $825,000 in cash and other transferable rights and obligations to the Company ("GGI Prepayment"). The GGI Prepayment represented a prepayment towards the future exercise of warrant shares under the two warrants. Under this Addendum, Golden State delivered to the Company $275,000 of the GGI Prepayment in cash ("First Prepayment"), and upon the earlier to occur of (i) the date that $100,000 or less of the First Prepayment remains outstanding after the application of the remaining amount of the First Prepayment to the exercise of warrant shares under the Warrants pursuant to the terms of this Addendum, or (ii) the date that is thirty days from the date of this Addendum, Golden State transferred the RMD Advance and the RMD Documents to the Company. Such transfer of the RMD Advance from Golden State to the Company is to constitute $250,000 of the GGI Prepayment ("Second Prepayment"). For so long as any amount of the First Prepayment remains outstanding, such sums from the First Prepayment are first applied to any exercise of warrant shares under the warrants by Golden State, as set forth thereunder, until all of the First Prepayment shall be so applied. Upon the earlier to occur of (i) the date that $100,000 or less of the Second Prepayment remains outstanding after the application of the remaining amount of the Second Prepayment to the exercise of the warrant shares under the warrants pursuant to the terms of this Addendum, or (ii) the date that is thirty days from the date hereof, Golden State delivered the remaining $300,000 of the GGI Prepayment in cash ("Third Prepayment") to the Company. Such transfer of the Third Prepayment constituted the final payment due from Golden State to the Company. For so long as any amount of the Second Prepayment remains outstanding, such sums from the Second Prepayment are first applied to any exercise of the warrant shares under the warrants by Golden State prior to any amount of the Third Prepayment being applied to such exercises, until all of the Second Prepayment is so applied. In the event that any portion of the GGI Prepayment remains outstanding and not applied to the exercise of warrant shares by Golden State under the warrants (including any portion of the GGI Prepayment for which warrant shares have not been delivered to GGI upon an exercise by Golden State under the warrants) upon or after the date that is nine months from the date of this Addendum, the Company will, upon written request from Golden State, refund all such outstanding amounts of the GGI Prepayment to Golden State within five days from the date of Golden State's delivery to the Company of the written request of such refund. In connection only with each Conversion under the Debenture that is associated with any of the GGI Prepayment (as defined herein) (such Conversions collectively referred to herein as the "Subsequent Conversions") the Discount Multiplier for the Subsequent Conversions shall be equal to the lesser of (i) $0.20, or (ii) 90% of the average of the 3 lowest Volume Weighted Average Prices during the 20 Trading Days prior to Holder's election to convert, or (iii) 90% of the Volume Weighted Average Price on the Trading Day prior to Holder's election to convert. On May 29, 2007, the Company and Golden State entered into an Assignment and Assumption Agreement in connection with the assignment and transfer to the Company all of RMD's rights, obligations, interests and liabilities under the RMD Transaction. On June 15, 2007, the Company and Golden State entered into another Addendum to Convertible Debenture and Warrant to Purchase Common Stock. Under this Addendum, Golden State delivered an aggregate of $175,000 in cash to the Company within three days of the date of this Addendum ("GGI June Prepayment"). The GGI June Prepayment represents a prepayment towards the future exercise of warrant shares under the warrants. In the event that any portion of the GGI June Prepayment remains outstanding and not applied to the exercise of warrant shares by Golden State under the warrants (including any portion of the GGI June Prepayment for which warrant shares have not been delivered to Golden State upon an exercise by Golden State under the warrants) upon or after the date that is nine months from the date of this Addendum, the Company will, upon written request from Golden State, refund all such outstanding amounts of the GGI June Prepayment to Golden State within five days from the date of Golden State's delivery to the Company of the written request of such refund. This did not occur and since the nine month period has now expired, the Company and Golden State are in the process of renegotiating an extended due date for the debenture. On September 17, 2007, the Company and Golden State entered into a Rescission Agreement in connection with a rescission of the Assignment and Assumption Agreement, dated as of May 29, 2007. This rescission was made due to certain issues that arose in connection with the involvement of RMD Technologies, Inc. in this transaction. As of April 9, 2009, the Company had 188,880 shares of common stock issued and outstanding balance of the debenture as of that date of $146,342 that may be converted into an estimated 230,756,357 shares of common stock based on the closing price of $0.08 on April 9, 2009 (conversion price is 82% of that amount: $0.0656) as of that date, and outstanding warrants to purchase 15,965,900 shares of common stock. In addition, the number of shares of common stock issuable upon conversion of the outstanding debenture may increase if the market price of the common stock declines. All of the shares, including all of the shares issuable upon conversion of the debenture and upon exercise of the warrants, may be sold without restriction. The sale of these shares may adversely affect the market price of the common stock. The continuously adjustable conversion price feature of the debenture could require the Company to issue a substantially greater number of shares, which will cause dilution to existing stockholders. The Company's obligation to issue shares upon conversion of the debenture to Golden State Investors, Inc. is essentially limitless. The following is an example of the amount of shares of common stock that are issuable, upon conversion of the balance of the debenture of $146,342 as of April 9, 2009 (excluding accrued interest), based on market prices 25%, 50% and 75% below the closing market price as of April 9, 2009 of $0.08: Effective Number % of % Below Price Per Conversion of Shares Outstanding Market Share Price Issuable Stock (1) 25% $0.06 $0.0492 312,553,211 99.94% 50% $0.04 $0.0328 476,146,890 99.96% 75% $0.02 $0.0164 966,660,305 99.98% (1) Based on outstanding shares of common stock of 188,880 as of April 9, 2009. As illustrated, the number of shares of common stock issuable upon conversion of the debenture will increase if the market price of the stock declines, which will cause dilution to existing stockholders. (b) The Continuously Adjustable Conversion Price Feature of the Debentures May Encourage Short Selling of the Common Stock. Golden State is contractually required to exercise its warrants and convert its debenture on a concurrent basis, subject to certain conditions. The issuance of shares in connection with the exercise of the warrants and conversion of the debenture results in the issuance of shares at an effective 18% discount to the trading price of the common stock prior to the conversion. The significant downward pressure on the price of the common stock as Golden State converts and sells material amounts of common stock could encourage short sales by investors. This could place further downward pressure on the price of the common stock. Golden State could sell common stock into the market in anticipation of covering the short sale by converting its securities, which could cause the further downward pressure on the stock price. In addition, not only the sale of shares issued upon conversion or exercise of debenture and warrants, but also the mere perception that these sales could occur, may adversely affect the market price of the common stock. (c) The Issuance of Shares upon Conversion of the Debenture and Exercise of the Warrants May Cause Dilution to Existing Stockholders. The issuance of shares upon conversion of the debenture and exercise of the warrants may result in substantial dilution to the interests of other stockholders since Golden State may ultimately convert and sell the full amount issuable on conversion. Although Golden State may not convert the debenture and/or exercise the warrants if such conversion or exercise would cause it to own more than 9.9% of the Company's outstanding common stock, this restriction does not prevent Golden State from converting and/or exercising some of its holdings and then converting the rest of its holdings. In this way, Golden State could sell more than this limit while never holding more than this limit. There is no upper limit on the number of shares that may be issued which will have the effect of further diluting the proportionate equity interest and voting power of holders of the common stock. (d) If the Company is Unable to Issue Shares Upon Conversion of Debenture, Penalties are Required to be Paid to Golden State. If the Company is unable to issue shares of common stock upon conversion of the debenture as a result of the inability to increase the authorized shares of common stock or as a result of any other reason, the Company is required to: - pay late payments to Golden State for late issuance of common stock upon conversion of the debenture, in the amount of $100 per business day after the delivery date for each $10,000 of debenture principal amount being converted. - in the event the Company is prohibited from issuing common stock, or fails to timely deliver common stock on a delivery date, or upon the occurrence of an event of default, then at the election of Golden State, the Company must pay to Golden State a sum of money determined by multiplying up to the outstanding principal amount of the debenture designated by Golden State by 130%, together with accrued but unpaid interest thereon. - if ten days after the date the Company is required to deliver common stock to Golden State pursuant to a conversion, Golden State purchases (in an open market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by Golden State of the common stock which it anticipated receiving upon such conversion (a "Buy-In"), then the Company is required to pay in cash to Golden State the amount by which its total purchase price (including brokerage commissions, if any) for the shares of common stock so purchased exceeds the aggregate principal and/or interest amount of the convertible debenture for which such conversion was not timely honored, together with interest thereon at a rate of 15% per annum, accruing until such amount and any accrued interest thereon is paid in full. In the event that the Company is required to pay penalties to Golden State or redeem the debenture held by Golden State, the Company may be required to curtail or cease its operations. (e) Repayment of Debentures, If Required, Would Deplete Available Capital. Any event of default under the debenture with Golden State could require the early repayment of the debenture at a price equal to 125% of the amount due under the debenture. The Company anticipates that the full amount of the debenture, together with accrued interest, will be converted into shares of its common stock, in accordance with the terms of the debenture. If the Company is required to repay the debenture, it would be required to use its limited working capital and/or raise additional funds. If the Company were unable to repay the debenture when required, Golden State could commence legal action against the Company and foreclose on assets to recover the amounts due. Any such action may require the Company to curtail or cease operations. Risks Relating to the Common Stock. (a) Common Stock Price May Be Volatile. The trading price of the Company's common stock may fluctuate substantially. The price of the common stock may be higher or lower than the price you pay for your shares, depending on many factors, some of which are beyond the Company's control and may not be directly related to its operating performance. These factors include the following: - Price and volume fluctuations in the overall stock market from time to time; - Significant volatility in the market price and trading volume of securities of business development companies or other financial services companies; - Changes in regulatory policies with respect to business development companies; - Actual or anticipated changes in earnings or fluctuations in operating results; - General economic conditions and trends; - Loss of a major funding source; or - Departures of key personnel. Due to the continued potential volatility of the stock price, the Company may be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources from the business. (b) Absence of Cash Dividends May Affect Investment Value of Common Stock. The board of directors does not anticipate paying cash dividends on the common stock for the foreseeable future and intends to retain any future earnings to finance the growth of the Company's business. Payment of dividends, if any, will depend, among other factors, on earnings, capital requirements and the general operating and financial conditions of the Company as well as legal limitations on the payment of dividends out of paid-in capital. (c) No Assurance of a Public Trading Market and Risk of Low Priced Securities May Affect Market Value of Common Stock. The Securities and Exchange Commission ("SEC") has adopted a number of rules to regulate "penny stocks." Such rules include Rule 3a51-1 and Rules 15g-1 through 15g-9 under the Securities Exchange Act of 1934, as amended. Because the securities of the Company may constitute "penny stocks" within the meaning of the rules (as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, largely traded in the Over the Counter Bulletin Board or the Pink Sheets), the rules would apply to the Company and to its securities. The SEC has adopted Rule 15g-9 which established sales practice requirements for certain low price securities. Unless the transaction is exempt, it shall be unlawful for a broker or dealer to sell a penny stock to, or to effect the purchase of a penny stock by, any person unless prior to the transaction: (i) the broker or dealer has approved the person's account for transactions in penny stock pursuant to this rule and (ii) the broker or dealer has received from the person a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stock, the broker or dealer must: (a) obtain from the person information concerning the person's financial situation, investment experience, and investment objectives; (b) reasonably determine that transactions in penny stock are suitable for that person, and that the person has sufficient knowledge and experience in financial matters that the person reasonably may be expected to be capable of evaluating the risks of transactions in penny stock; (c) deliver to the person a written statement setting forth the basis on which the broker or dealer made the determination (i) state in a highlighted format that it is unlawful for the broker or dealer to effect a transaction in penny stock unless the broker or dealer has received, prior to the transaction, a written agreement to the transaction from the person; and (ii) state in a highlighted format immediately preceding the customer signature line that (iii) the broker or dealer is required to provide the person with the written statement; and (iv) the person should not sign and return the written statement to the broker or dealer if it does not accurately reflect the person's financial situation, investment experience, and investment objectives; and (d) receive from the person a manually signed and dated copy of the written statement. It is also required that disclosure be made as to the risks of investing in penny stock and the commissions payable to the broker-dealer, as well as current price quotations and the remedies and rights available in cases of fraud in penny stock transactions. Statements, on a monthly basis, must be sent to the investor listing recent prices for the penny stock and information on the limited market. There has been only a limited public market for the common stock of the Company. This common stock is currently traded on the Over the Counter Bulletin Board ("OTCBB"). As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations of the market value of the common stock. The regulations governing penny stocks, as set forth above, sometimes limit the ability of broker- dealers to sell the Company's common stock and thus, ultimately, the ability of the investors to sell their securities in the secondary market. Potential stockholders of the Company should also be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker- dealers; and (v) wholesale dumping of the same securities by promoters and broker dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. (d) Failure To Remain Current In Reporting Requirements Could Result In Delisting From The Over The Counter Bulletin Board. Companies trading on the OTCBB, such as the Company, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTCBB. If the Company fails to remain current in its reporting requirements, the Company could be delisted from the OTCBB. In addition, the National Association of Securities Dealers, Inc., which operates the OTCBB, has been approved by the SEC to implement a change to its Eligibility Rule. The change makes those OTCBB issuers that are cited for filing delinquency in their Forms 10- K/Form 10-Q three times in a 24-month period and those OTCBB issuers removed for failure to file such reports two times in a 24-month period ineligible for quotation on the OTCBB for a period of one year. Under this proposed rule, a company filing within the extension time set forth in a Notice of Late Filing (Form 12b-25) would not be considered late. This rule would not apply to a company's Current Reports on Form 8-K. As a result of these rules, the market liquidity for Company securities could be severely adversely affected by limiting the ability of broker-dealers to sell the Company's common stock and the ability of stockholders to sell their securities in the secondary market. (e) Failure to Maintain Market Makers May Affect Value of Company's Stock. If the Company is unable to maintain National Association of Securities Dealers, Inc. member broker/dealers as market makers, the liquidity of the common stock could be impaired, not only in the number of shares of common stock which could be bought and sold, but also through possible delays in the timing of transactions, and lower prices for the common stock than might otherwise prevail. Furthermore, the lack of market makers could result in persons being unable to buy or sell shares of the common stock on any secondary market. There can be no assurance the Company will be able to maintain such market makers. (f) Shares Eligible For Future Sale. Most of the shares currently held by management have been issued in reliance on the private placement exemption under the Securities Act of 1933. Such shares will not be available for sale in the open market without separate registration except in reliance upon Rule 144 under the Securities Act of 1933. In general, under Rule 144 a person (or persons whose shares are aggregated) who has beneficially owned shares acquired in a non-public transaction for at least one year, including persons who may be deemed affiliates of the Company (as that term is defined under that rule) would be entitled to sell within any three-month period a number of shares that does not exceed 1% of the then outstanding shares of common stock, provided that certain current public information is then available. If a substantial number of the shares owned by these stockholders were sold pursuant to Rule 144 or a registered offering, the market price of the common stock at that time could be adversely affected. ITEM 1B. UNRESOLVED STAFF COMMENTS. Not Applicable. ITEM 2. PROPERTIES. The Company currently owns $214,777 ($764,304 less depreciation of $549,527) in fixed assets, $281,361 ($7,643,907 less amortization of $7,362,546) of DVD and video game inventory and $1,116,937 ($1,572,750 less amortization of $455813) of film libraries. The Company's corporate office is located in Franklin, Kentucky at the chief executive officer's home-based office; the Company does not pay rent for this office. The Company leases a facility for its prior operations. The Company's leased properties are located at 130 West Kentucky Avenue, Franklin, Kentucky 42134; five year lease (commenced in January 2006), with a rent of $4,150 per month for a 5,600 square foot space. ITEM 3. LEGAL PROCEEDINGS. From time to time, the Company may become party to litigation or other legal proceedings that the Company considers to be a part of the ordinary course of the business. There are no material legal proceedings to report, except as follows: (a) On February 8, 2008, an action was filed in the United States District Court, Western District of Pennsylvania, entitled Mobile Satellite Communications v. GameZnFlix, Inc. et al. In this action, the plaintiff claims that it was damaged as a result of the termination of the agreement covering leased television channels by GNF Entertainment, LLC. A judgment in the amount of $350,000 has been rendered to the Plaintiff. (b) On February 28, 2008, an action was filed in the Simpson Circuit Court, Franklin, Kentucky, entitled CNET Networks, Inc v. GameZnFlix, Inc., D/B/A GameZnFlix.com. In this action, the plaintiff claims that it was damaged as a result of not being paid for online advertising requested by the President Donald Gallent of GameZnFlix, Inc. in the amount of $96,000. A judgment in the amount of $$67,038 has been rendered to the Plaintiff. (c) On July 17, 2008, an action was filed in Simpson Circuit Court, Franklin, Kentucky, entitled Ingram Entertainment, Inc. v. John Fleming D/B/A GameZnFlix, Inc. In this action, the plaintiff claims that it was damaged as a result of not being paid for purchases made in 2007 in the amount of $45,040. A judgement in the amount of $45,940 plus interest until settled was rendered on November 24, 2008. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. PART II. ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information. The Company's common stock began trading on the OTCBB under the symbol "SYCD". With the change in name to "Point Group Holdings, Incorporated", the symbol changed to "PGHI" on December 13, 2002. The symbol was changed to "GZFX" effective on February 6, 2004 with the change in the name of the Company to "GameZnFlix, Inc." With the reverse split of the Company's common stock on September 6, 2007, the symbol was changed to "GMFX." With the reverse split of the Company's common stock on April 9, 2009, the symbol was changed to "GMZN." The range of closing prices shown below is as reported by this market. The quotations shown reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions, and are shown to reflect the 1 for 10,000 reverse split of the common stock that occurred on April 9, 2009. Per Share Common Stock Bid Prices by Quarter For the Fiscal Year Ended on December 31, 2008 High Low Quarter Ended December 31, 2008 $1.00 $1.00 Quarter Ended September 30, 2008 $2.00 $1.00 Quarter Ended June 30, 2008 $4.00 $1.00 Quarter Ended March 31, 2008 $2.00 $2.00 Per Share Common Stock Bid Prices by Quarter For the Fiscal Year Ended on December 31, 2007 High Low Quarter Ended December 31, 2007 $1,000.00 $17.00 Quarter Ended September 30, 2007 $4,000.00 $2,000.00 Quarter Ended June 30, 2007 $8,000.00 $4,000.00 Quarter Ended March 31, 2007 $18,000.00 $7,000.00 Holders of Common Equity. As of April 9, 2009, the Company had approximately 354 stockholders of record of its common stock. The number of registered stockholders excludes any estimate of the number of beneficial owners of common shares held in street name. Dividend Information. The Company has not declared or paid a cash dividend to stockholders since it was organized. The board of directors presently intends to retain any earnings to finance the operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon the Company's earnings, capital requirements and other factors. Equity Securities Sold Without Registration. There were no sales of unregistered (restricted) securities during the three months ended on December 31, 2008. There were no purchases of common stock of the Company by the Company or its affiliates during the three months ended December 31, 2008. ITEM 6. SELECTED FINANCIAL DATA. Not applicable. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following management's discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with, our audited financial statements and related notes included elsewhere in this Form 10-K, which have been prepared in accordance with accounting principles generally accepted in the United States. Overview. The Company closed down its online movie (also referred to as a "DVD") and video game rentals to subscribers through its Internet website www.gameznflix.com in November 2008. Therefore, the Company intends to search for business opportunities, particularly toward small and medium-sized enterprises (as outlined in the Business of the Company section). Results of Operations. (a) Revenues. The Company had gross revenues of $931,205 for the year ended December 31, 2008 compared to $3,597,028 for the year ended December 31, 2007, a decrease of $2,665,823 or approximately 74%. Gross revenues decreased significantly during the year ended December 31, 2008 compared to the prior period primarily due to the closing of operations caused by decreasing subscribers and lack of capital to purchase inventory. During the first quarter of 2007 the operating management made attempt to drive subscriber membership. This campaign while it drove an increase in memberships during the first quarter also depleted the budgets for the entire year of 2007 and has placed the Company in a weak financial position. (b) Cost of Revenues. The Company had cost of revenues of $490,767 for the year ended December 31, 2008 compared to $5,734,261 for the year ended December 31, 2007, a decrease of $5,243,494 or approximately 91%. This decrease was the result in a decrease in available funds for the Company to use for such purposes. (c) Advertising. The Company had advertising expenses of $111,049 for the year ended December 31, 2008 compared to $1,649,739 for the year ended December 31, 2007, a decrease of $1,538,690, or approximately 93%. Such advertising consisted of direct marketing through print, radio and online Internet advertising. (d) Selling, General and Administrative Expenses. The Company had selling, general and administrative expenses of $758,904 for the year ended December 31, 2008 compared to $5,103,844 for the year ended December 31, 2007, a decrease of $4,344,940 or approximately 85%. The decrease in selling, general and administrative expenses was principally due to the lack of working capital after the first quarter advertising campaign of 2007. (e) Consulting Fees and Professional Fees The Company had consulting fees of $513,742 for the year ended December 31, 2008 compared to $1,386,380 for the year ended December 31, 2007, a decrease of $872,638 or approximately 63%. Decrease in consulting fees during the year ended December 31, 2008 compared to the prior period was primarily a result of decreased need of business consultants which was widely utilized during 2007 and legal fees relating to debt collection actions (f) Net Loss. The Company had a net loss of $1,099,562 for the year ended December 31, 2008 compared to $10,501,867 for the year ended December 31, 2007, a decrease of $9,402,305 or approximately 90%. The decreases in net losses are the result of the factors mentioned above. Operating Activities. The net cash used in operating activities was $166,645 for the year ended December 31, 2008 compared to $1,188,150 for the year ended December 31, 2007, a decrease of $1,021,505 or approximately 86%. This decrease is attributed to many changes from period to period, including a decrease in depreciation and amortization, the payment of stock based compensation, and an increase in accounts payable and accrued expenses. Investing Activities. Net cash used in investing activities was $0 for the year ended December 31, 2008 compared to $1,695,514 for the year ended December 31, 2007, a decrease of $1,695,514 or 100%. This decrease resulted from decreased purchases of DVD's and games, film library, and other fixed assets. Liquidity and Capital Resources. As of December 31, 2008, the Company had total current assets of $87,052 and total current liabilities of $3,010,264 resulting in a working capital deficit of $2,923,212. The cash balance as of December 31, 2008 totalled $87,052. The cash flow from financing activities for the year ended December 31, 2008 resulted in a positive cash flow of $228,721. Overall, cash and cash equivalents for the year ended December 31, 2008 increased by $62,076. The net cash provided by financing activities was $228,721 for the twelve months ended December 31, 2008 from proceeds from stock issuances under the financing arrangement with Golden State, as discussed below, and issuances of stock to related parties. The Company's current cash and cash equivalents balance will not be sufficient to fund its operations for the next twelve months. The Company's continued operations, as well as the full implementation of its business plan (including allocating resources to increase library content, distribution infrastructure and technology) will depend upon its ability to raise additional funds through bank borrowings and equity or debt financing. In connection with this need for funding, the Company entered into a financing arrangement with Golden State: A Securities Purchase Agreement with Golden State on November 11, 2004 for the sale of (i) $150,000 in convertible debenture and (ii) a warrant to buy 15,000,000 shares of common stock. The debenture bears interest at 4 3/4%, matures three years from the date of issuance, and is convertible into Company common stock, at Golden State's option. The debenture is convertible into the number of shares of common stock equal to the principal amount of the debenture multiplied by 110, less the product of the conversion price multiplied by 100 times the dollar amount of the debenture, and the entire foregoing result shall be divided by the conversion price. The conversion price for the convertible debenture is the lesser of (i) $0.20, (ii) 82% of the average of the three lowest volume weighted average prices during the twenty trading days prior to the conversion, or (iii) 82% of the volume weighted average price on the trading day prior to the conversion. Accordingly, there is in fact no limit on the number of shares into which the debenture may be converted. However, in the event that the market price of the Company's common stock is less than $0.015, the Company will have the option to prepay the debenture at 150% rather than having the debenture converted. If the Company elects to prepay the debenture, Golden State may withdraw its conversion notice. In addition, Golden State is obligated to exercise the warrant concurrently with the submission of a conversion notice. The warrant is exercisable into 15,000,000 shares of common stock at an exercise price of $1.09 per share. As of December 31, 2008, a total of 711 (after the 10,000 to 1 reverse stock split of April 9, 2009) shares were issued related to the warrant providing the Company approximately $7,884,820. Golden State has contractually agreed to restrict its ability to convert the debentures and/or exercise its warrants and receive shares of the Company's common stock such that the number of shares of common stock held by its and its affiliates after such conversion or exercise does not exceed 9.99% of the then issued and outstanding shares of common stock. The Company filed another registration statement under Form SB-2 during the first quarter of 2006 related to an amendment of the Securities Purchase Agreement with Golden State in which the debenture was increased to $300,000 and an additional warrant for 15,000,000 shares of common stock was issued (also exercisable at $1.09 per share into 20,339,100 shares of common stock, providing future funding of approximately $16,350,000). In connection with the increased debenture, $150,000 was disbursed to the Company in January 2006. As of December 31, 2008, a total of 650 (after the 10,000 to 1 reverse stock split of April 9, 2009) shares were issued related to this new warrant, providing the Company approximately $7,100,000. Under another Addendum to Convertible Debenture and Warrant to Purchase Common Stock, dated May 24, 2007, Golden State agreed to deliver an aggregate of $825,000 in cash and other transferable rights and obligations to the Company ("GGI Prepayment"). The GGI Prepayment represents a prepayment towards the future exercise of warrant shares under the two warrants. Under this Addendum, Golden State delivered to the Company $275,000 of the GGI Prepayment in cash ("First Prepayment"), and upon the earlier to occur of (i) the date that $100,000 or less of the First Prepayment remains outstanding after the application of the remaining amount of the First Prepayment to the exercise of warrant shares under the Warrants pursuant to the terms of this Addendum, or (ii) the date that is thirty days from the date of the Addendum, Golden State is to transfer the RMD Advance and the RMD Documents (as defined under Item 1A) to the Company. Such transfer of the RMD Advance from Golden State to the Company constituted $250,000 of the GGI Prepayment ("Second Prepayment"). For so long as any amount of the First Prepayment remains outstanding, such sums from the First Prepayment are first applied to any exercise of warrant shares under the warrants by Golden State, as set forth thereunder, until all of the First Prepayment shall be so applied. Upon the earlier to occur of (i) the date that $100,000 or less of the Second Prepayment remains outstanding after the application of the remaining amount of the Second Prepayment to the exercise of the warrant shares under the Warrants pursuant to the terms of this Addendum, or (ii) the date that is thirty days from the date hereof, Golden State delivered the remaining $300,000 of the GGI Prepayment in cash ("Third Prepayment") to the Company. Such transfer of the Third Prepayment constituted the final payment due from Golden State to the Company. For so long as any amount of the Second Prepayment remains outstanding, such sums from the Second Prepayment are first applied to any exercise of the warrant shares under the warrants by Golden State prior to any amount of the Third Prepayment being applied to such exercises, until all of the Second Prepayment is so applied. In the event that any portion of the GGI Prepayment remains outstanding and not applied to the exercise of warrant shares by Golden State under the Warrants (including any portion of the GGI Prepayment for which warrant shares have not been delivered to GGI upon an exercise by Golden State under the warrants) upon or after the date that is nine months from the date of this Addendum, the Company will, upon written request from Golden State, refund all such outstanding amounts of the GGI Prepayment to Golden State within five days from the date of Golden State's delivery to the Company of the written request of such refund. In connection only with each Conversion under the Debenture that is associated with any of the GGI Prepayment (as defined herein) (such Conversions collectively referred to herein as the "Subsequent Conversions") the Discount Multiplier for the Subsequent Conversions shall be equal to the lesser of (i) $0.20, or (ii) 90% of the average of the 3 lowest Volume Weighted Average Prices during the 20 Trading Days prior to Holder's election to convert, or (iii) 90% of the Volume Weighted Average Price on the Trading Day prior to Holder's election to convert. On May 29, 2007, the Company and Golden State entered into an Assignment and Assumption Agreement in connection with the assignment and transfer to the Company all of RMD's rights, obligations, interests and liabilities under the RMD Transaction. On June 15, 2007, the Company and Golden State entered into another Addendum to Convertible Debenture and Warrant to Purchase Common Stock. Under this Addendum, Golden State delivered an aggregate of $175,000 in cash to the Company within three days of the date of this Addendum ("GGI June Prepayment"). The GGI June Prepayment represents a prepayment towards the future exercise of warrant shares under the warrants. In the event that any portion of the GGI June Prepayment remains outstanding and not applied to the exercise of warrant shares by Golden State under the warrants (including any portion of the GGI June Prepayment for which warrant shares have not been delivered to Golden State upon an exercise by Golden State under the warrants) upon or after the date that is nine months from the date of this Addendum, the Company will, upon written request from Golden State, refund all such outstanding amounts of the GGI June Prepayment to Golden State within five days from the date of Golden State's delivery to the Company of the written request of such refund. This did not occur and since the nine month period has now expired, the Company and Golden State are in the process of renegotiating an extended due date for the debenture. On September 17, 2007, the Company and Golden State entered into a Rescission Agreement in connection with a rescission of the Assignment and Assumption Agreement, dated as of May 29, 2007. This rescission was made due to certain issues that arose in connection with the involvement of RMD Technologies, Inc. in this transaction. Whereas the Company has been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available to it and/or that demand for equity/debt instruments will be sufficient to meet its capital needs, or that financing will be available on terms favorable to the Company. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of planned product development and marketing efforts, any of which could have a negative impact on business and operating results. In addition, insufficient funding may have a material adverse effect on the Company's financial condition, which could require it to: - curtail operations significantly; - sell significant assets; - seek arrangements with strategic partners or other parties that may require the Company to relinquish significant rights to products, technologies or markets; or - explore other strategic alternatives including a merger or sale of the Company. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on the Company's operations. Regardless of whether cash assets prove to be inadequate to meet the Company's operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing stockholders. Inflation. The impact of inflation on the Company's costs and the ability to pass on cost increases to its customers over time is dependent upon market conditions. The Company is not aware of any inflationary pressures that have had any significant impact on its operations over the past quarter and the Company does not anticipate that inflationary factors will have a significant impact on future operations. Off-Balance Sheet Arrangements. The Company does not maintain off-balance sheet arrangements nor does it participate in non-exchange traded contracts requiring fair value accounting treatment. Critical Accounting Policies. The SEC has issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company's most critical accounting policies include: (a) use of estimates in the preparation of financial statements; (b) DVD and video game libraries; (c) revenue recognition and cost of revenue; and (d) non-cash compensation valuation. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the Company reports in its financial statements. (a) Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates these estimates, including those related to revenue recognition and concentration of credit risk. The Company bases its estimates on historical experience and on various other assumptions that are believed 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. (b) DVD and Video Game Libraries. DVD's and video games are recorded at historical cost and depreciated using the straight-line method over a twelve-month period with a salvage value of $1 per copy. If the Company does sell any of its DVD and video game libraries, the Company will re-evaluate its depreciation policy in terms of the salvage value. Because of the nature of the business, the Company experiences a certain amount of loss, damage, or theft of its DVD's and video games. This loss is shown in the cost of sales section of the Income Statement. Any accumulated depreciation associated with this item is accounted for on a first-in-first-out basis and treated as a reduction to depreciation expense in the month the loss is recognized. (c) Revenue Recognition and Cost of Revenue (all revenues reported in this report reflect the old operations prior to the closing of operations in November 2008). Until November 2008 the subscription revenues are recognized ratably during each subscriber's monthly subscription period. Refunds to subscribers are recorded as a reduction of revenues. Revenues from sales of DVD's and video games are recorded upon shipment. Cost of subscription revenues consists of referral expenses, fulfilment expenses, and postage and packaging expenses related to DVD's and video games provided to paying subscribers. Cost of DVD sales include the net book value of the DVD's sold and, where applicable, a contractually specified percentage of the sales value for the DVD's that are subject to revenue share agreements. DVD sales are considered non-significant and an incidental part of the business. Therefore, sales and related expenses were not separately accounted for. Revenue from proprietary software sales that does not require further commitment from the Company is recognized upon shipment. Consulting revenue is recognized when the services are rendered. License revenue is recognized ratably over the term of the license. The cost of services, consisting of staff payroll, outside services, equipment rental, communication costs and supplies, is expensed as incurred. (d) Non-Cash Compensation Valuation. The Company has issued, and intends to issue, shares of common stock to various individuals and entities for management, legal, consulting, and marketing services. These issuances will be valued at the fair market value of the services provided and the number of shares issued is determined, based upon the open market closing price of common stock as of the date of each respective transaction. These transactions will be reflected as a component of consulting and professional fees in the statement of operations. Forward Looking Statements. Information in this Form 10-K contains "forward looking statements" within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended. When used in this Form 10-K, the words "expects," "anticipates," "believes," "plans," "will" and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements regarding the adequacy of cash, expectations regarding net losses and cash flow, statements regarding growth, the need for future financing, dependence on personnel, and operating expenses. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Audited financial statements as of and for the years ended December 31, 2008 and 2007 are presented in a separate section of this report following Item 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. ITEM 9A. CONTROLS AND PROCEDURES. Not applicable. ITEM 9A(T).CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in its periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer/principal financial officer, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company's management carried out an evaluation, under the supervision and with the participation of the principal executive officer/principal financial officer, of disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon the evaluation, the principal executive officer/principal financial officer concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by it in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. In addition, the principal executive officer/principal financial officer concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance *level to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the principal executive officer/principal financial officer, to allow timely decisions regarding required disclosure. Management's Annual Report on Internal Control over Financial Reporting. The Company's management also is required to assess and report on the effectiveness of its internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") (as codified in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act). This is to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: - pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company. - provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and - provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2008. In making this assessment and preparing its report, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework as required by Section 404. (a) Material Weaknesses. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented (as defined under Public Accounting Oversight Board Auditing Standard No. 5). During their assessment, management has noted the following material weaknesses in the Company's internal control over financial reporting as of December 31, 2008: - the need to hire an in-house accountant trained in U.S. generally accepted accounting principles; - the need to upgrade its accounting software so as to provide for more timely access to financial reports; and - inadequate planning and execution of the Company's Section 404 project to meet the requirements of the Sarbanes-Oxley Act of 2002 on a timely basis. An independent consulting firm assisted management with its assessment of the effectiveness of the Company's internal control over financial reporting, including scope determination, planning, staffing, documentation, testing, remediation and retesting and overall program management of the assessment project. In conclusion, the Company's Chief Executive Officer determined that the Company did not maintain effective internal control over financial reporting as of December 31, 2008. (b) Remedial Measures. The Company is in the process of evaluating its material weaknesses, as outlined above, and has already begun remediation procedures to address these weaknesses. In an effort to remediate the identified material weaknesses and enhance its internal controls, the Company has initiated, or plans to initiate, the following series of measures: - the Company is seeking to identify and hire (when funding will allow) an in-house accountant trained in U.S. generally accepted accounting principles; - the Company is seeking to identify and purchase (when funding will allow) upgraded accounting software so as to provide for more timely access to financial reports; and - the Company is seeking to identify and hire (when funding will allow) personnel that will help with the planning and execution of the Company's Section 404 project to meet the requirements of the Sarbanes-Oxley Act of 2002. The Company continued to have the material weaknesses outlined above throughout 2008 and will do so for at least a period of time during 2009. Notwithstanding the foregoing, the reportable conditions and other areas of the Company's internal control over financial reporting identified by it as needing improvement have not resulted in a material restatement of the financial statements. Nor is management aware of any instance where such reportable conditions or other identified areas of weakness has resulted in a material misstatement or omission in any report the Company has filed with the SEC. However, it is reasonably possible that, if not remediated, one or more of the identified material weaknesses noted above could result in a material misstatement in our reported financial statements that might result in a material misstatement in a future annual or interim period. This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by this firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report. Inherent Limitations of Control Systems. 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, will be or have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of controls also 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; over time, controls may become inadequate because of changes in conditions, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective internal control system, misstatements due to error or fraud may occur and not be detected. Changes in Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2007 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 9B. OTHER INFORMATION. Subsequent Event. On April 9, 2009, the Company affected a 1 for 10,000 reverse split of its common stock. As a result of this reverse split, the number of outstanding shares of common stock as of that date was 188,880. Also, as of that date, the new trading symbol of the Company on the OTCBB was "GMZN." The Company did this reverse split in order to position it for being involved in a new venture, when that venture is located. PART III. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE. Directors and Executive Officers. The names, ages, and respective positions of the directors and executive officers of the Company are set forth below. The directors named below will serve until the next annual meeting of stockholders or until their successors are duly elected and have qualified. Directors are elected for a term until the next annual stockholders' meeting. Officers will hold their positions at the will of the board of directors, absent any employment agreement, of which none currently exist or are contemplated. There are no family relationships between any two or more of the directors or executive officers. There are no arrangements or understandings between any two or more of the directors or executive officers. There is no arrangement or understanding between any of the directors or executive officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management stockholders will exercise their voting rights to continue to elect the current board of directors. There are also no arrangements, agreements or understandings between non-management stockholders that may directly or indirectly participate in or influence the management of the Company's affairs. There are no other promoters or control persons of the Company. There are no legal proceedings involving the executive officers or directors of the Company, except that Mr. Fleming is named in the action discussed in Item 3(a) of this report. John J. Fleming, Chief Executive Officer/Secretary/Director. Mr. Fleming, age 60, was the managing partner of AFI Capital, LLC, a venture capital company, located in San Diego, California for the 5 years before joining the Company in September 2002. Before AFI Capital, Mr. Fleming managed Fleming & Associates, a business- consulting firm that provided services to companies looking to create business plans and/or review current plans in order to move forward with fund raising from both private and public sectors. Mark Crist, Director. Mr. Crist, age 50, a director of the Company since July 2002, has a widely varied background in business development. In 1979, he founded Manufacturer's Revenue Service, a commercial collection agency located in Tustin, California. In 1984 he negotiated the sale of that business to a division of Dunn & Bradstreet and thereafter left to become a partner in the marketing services firm of Jay Abraham & Associates. In 1985, he founded the Computer Trivia Fan User Group (CTFUG) as a public benefit, non-profit organization to promote the playing of online trivia contests. Mr. Crist held the position of chief executive officer and president of GamesGalore.com from 1996 to 2001, a company that among other things supplies trivia contest content to users of America Online. Since May of 2001, he has served as president and director of Diamond Hitts Production, Inc. (Pink Sheets: DHTT). Mr. Crist is an alumnus of California State University at Northridge. Compliance with Section 16(a) of the Securities Exchange Act. Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors, certain officers and persons holding 10% or more of the Company's common stock to file reports regarding their ownership and regarding their acquisitions and dispositions of the Company's common stock with the Securities and Exchange Commission ("SEC"). Such persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company under Rule 16a-3(d) during fiscal 2008, and certain written representations from executive officers and directors, the Company is aware that the following required reports were not timely filed: Form 3 to report the ownership by Flexible Growth & Income Fund LLC of more than 10% of the outstanding common stock of the Company (based on its most recent filed report - September 30, 2007 Form 10-QSB). The Company is unaware that any other required reports were not timely filed. Corporate Governance. (a) Code of Ethics. The Company has not adopted a code of ethics that applies to the Company's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company has not adopted such a code of ethics because all of management's efforts have been directed to building the business of the Company; at a later time, the board of directors may adopt such a code of ethics. (b) Audit Committee. The Company's audit committee consists of Mr. Fleming, who is not an independent director. The audit committee has not adopted a written charter. Currently, the Audit Committee has no "financial expert," as that term is defined in Item 407(d)(5) of Regulation S-K. The primary responsibility of the Audit Committee is to oversee the financial reporting process on behalf of the Company's board of directors and report the result of their activities to the board. Such responsibilities include, but are not limited to, the selection, and if necessary the replacement, of the Company's independent registered public accounting firm, review and discuss with such independent registered public accounting firm: (i) the overall scope and plans for the audit, (ii) the adequacy and effectiveness of the accounting and financial controls, including the Company's system to monitor and manage business risks, and legal and ethical programs, and (iii) the results of the annual audit, including the financial statements to be included in the annual report on Form 10-K. The Company's policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit- related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The audit committee may also pre-approve particular services on a case-by- case basis. (c) Other Committee of the Board of Directors. Other than the Audit Committee, the Company presently does not have a compensation committee, nominating committee, an executive committee of the board of directors, stock plan committee or any other committees. (d) Recommendation of Nominees. There have been no changes to the procedures by which security holders may recommend nominees to the Company's board of directors. ITEM 11. EXECUTIVE COMPENSATION. Summary Compensation Table. The following table presents compensation information for the year ended December 31, 2008 for the persons who served as principal executive officer and each of the two other most highly compensated executive officers whose aggregate salary and bonus was more than $100,000 in such year.
Nonqualified Non-Equity Deferred Name and Stock Option Incentive Plan Compensation All Other Principal Salary Bonus Awards Award(s) Compensation Earnings Compensation Total Position Year ($) ($) ($) ($) ($) ($) ($) ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) John Fleming, CEO (1) 2008 $ 22,083 - - - - - - $ 22,083 2007 $135,833 - - - - - - $135,833 2006 $263,250 - - - - - - $263,250 Donald N. Gallent, former Pres. (2) 2007 $100,625 - - - - - - $100,625 2006 $200,000 - - - - - - $200,000 Arthur De Joya, former CFO (4) 2007 $ 60,000 - - - - - - $ 60,000 2006 $ 46,000 - $82,500 - - - - $128,500
(1) Mr. Fleming was appointed chief executive officer and a director on September 12, 2002. (2) Mr. Gallent was appointed president and a director on February 3, 2005. He resigned both positions on May 24, 2007. (3) On March 11, 2005, the Company issued 200,000 (after the 1 for 10,000 reverse split of April 9, 2009) restricted shares of common stock to Mr. Gallent as an employment incentive. These shares were valued at $140,000 ($0.007 per share). (4) Mr. De Joya was appointed chief financial officer on July 9, 2004. He resigned this position on December 14, 2007. Executive Officer Contracts. John Fleming. On September 25, 2005, the Company entered into a three-year employment agreement with Mr. Fleming in his capacity as chief executive officer (see Exhibit 10.4). Under this agreement, he agrees that he will at all times faithfully, industriously, and to the best of his ability, experience, talents, and training perform all the duties that may be required of and from him pursuant to the express and implicit terms hereof, to the reasonable satisfaction of the Company. The agreement provides a minimum base salary of $200,000 per year with fifteen percent annual increases and participation in other employee benefit plans. Mr. Fleming is entitled to stock options at the discretion of the Company's board of directors. Should the Company's board of directors vote to remove Mr. Fleming from employment by the Company, he will be entitled to receive the following: (a) balance of wages outlined in this agreement from the date of the board's vote to the end of the agreement; (b) 100,000,000 restricted shares of the Company's common stock; and (c) continue health/medical plan insurance benefits for the balance of the agreement under the existing health/medical plan. This agreement may not be terminated by either party, except that the Company may terminate Mr. Fleming for cause in the event any of the following enumerated events occur: (a) he fails to work for the Company at a level of competency satisfactory to the board of directors; (b) he engages in any activity that brings disrepute and harm to the Company; (c) he fails a drug test (that is, he tests positive for the use of illegal drugs or substances); and (d) he has become permanently disabled for a period in excess of six months. As an integral part of this agreement, Mr. Fleming agrees that for a period of three years from the date his employment with the Company is terminated, he will not, directly or indirectly, in any manner or capacity, as principal, agent, partner, officer, director, employee, stockholder, guarantor, consultant, investor, creditor, member of any association, or otherwise, engage in any facet of the business that had been conducted by the Company, anywhere in the United States of America, except with the prior written consent of the Company. This agreement was not renewed in September 2008 as Mr. Fleming wishes to pursue a new direction for the Company before entering into a new employment agreement. Mr. Fleming has not taken any salary from the Company since January 2008. In addition, he has released the Company from any liability for unpaid amounts under the agreement for 2007 and 2008. Outstanding Equity Awards at Fiscal Year-End Table.
John Fleming, CEO 1 - - $0.007 12/31/14 - - - - Donald N. Gallent, Pres. 1 - - $0.007 12/31/14 - - - - Arthur De Joya, CFO 1 - - $0.007 12/31/14 - - - -
(1) Underlying share amounts reduced from 5,000,000 each due to the 1 for 1,000 reverse stock split of the common stock on September 6, 2007 and the 1 for 10,000 reverse split of the common stock on April 9, 2009 (rounded up to 1). Other Compensation. There are no plans that provide for the payment of retirement benefits, or benefits that will be paid primarily following retirement, including but not limited to tax-qualified defined benefit plans, supplemental executive retirement plans, tax-qualified defined contribution plans and nonqualified defined contribution plans. In addition, there are no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payment(s) to a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of the Company or a change in the named executive officer's responsibilities following a change in control, with respect to each named executive officer. Compensation of Directors. The Company provides compensation of $2,500 per quarter to its independent director, Mr. Crist. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS Beneficial Ownership Table. The following table sets forth information regarding the beneficial ownership of shares of the Company's common stock as of April 9, 2009 (188,880 issued and outstanding) by (i) all stockholders known to the Company to be beneficial owners of more than 5% of the outstanding common stock; (ii) each director and executive officer; and (iii) all officers and directors of the Company as a group. Each person has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by him Title of Name and Address of Amount and Nature Percent of Class Beneficial Owner of Beneficial Class Owner (1) Common Stock John Fleming 708 (2) 0.38% 1535 Blackjack Road, Franklin, Kentucky 42134 Common Stock Mark Crist 0 0.00% 1535 Blackjack Road, Franklin, Kentucky 42134 Common Stock Shares of all directors and 708 0.38% executive officers as a group (4 persons) (1) Except as noted below, none of these security holders has the right to acquire any amount of the shares within sixty days from options, warrants, rights, conversion privilege, or similar obligations. Applicable percentage ownership of common stock is based on 188,880 shares issued and outstanding on April 9, 2009 divided into the total common stock for each beneficial owner. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or convertible or exchangeable into such shares of common stock held by that person that are currently exercisable, or exercisable within 60 days, are included. (2) Included within this amount is an option covering 1 share of common stock, exercisable from the date of grant (December 31, 2004) at $0.007 per share (expiring on December 31, 2014) (changed from an option for 5,000,000 shares as a result of the 1 for 1,000 reverse split of the common stock on September 6, 2007 and a 1 for 10,000 reverse split of the common stock on April 9, 2009). Securities Authorized for Issuance under Equity Compensation Plans. The Company has adopted four equity compensation plans (none of which has been approved by the Company's stockholders): (a) Stock Incentive Plan. On April 25, 2003, the Company adopted a Stock Incentive Plan (the Company adopted Amendment No. 4 to this plan on July 13, 2005). This plan is intended to allow directors, officers, employees, and certain non-employees of the Company to receive options to purchase its common stock. The purpose of this plan is to provide these persons with equity-based compensation incentives to make significant and extraordinary contributions to the long-term performance and growth of the Company, and to attract and retain employees. As of December 31, 2004, all 600,000,000 shares of common stock authorized under this plan have been registered as a result of Form S-8's filed with the Securities and Exchange Commission. Options granted under this plan are to be exercisable at whatever price is established by the board of directors, in its sole discretion, on the date of the grant. During 2003, the Company granted options for 25,000,000 shares to two non-employee consultants (one at an exercise price equal to 75% of the market price on the date of exercise and the other at 50% of the market price on the date of exercise), all of which were exercised in 2004. During August 2004, the Company granted options for 42,042,294 shares to three non-employee consultants (at an exercise price equal to 50% of the market price on the date of exercise), all of which were exercised in 2004. During December 2004, the Company granted options for 30,000,000 shares to eight non- employee consultants (at an exercise price equal to 50% of the market price on the date of exercise), none of which have been exercised as of December 31, 2006. During 2005, the Company granted options for 302,957,706 (incorrectly reported in the 2005 Form 10-KSB as 540,000,000) shares to various consultants (at an exercise price equal to 50% of the market price on the date of exercise), all of which were exercised in 2005 resulting in proceeds to the Company of $3,032,000; there were no options remaining to be issued as of that date. As of December 31, 2008, there were options for 3 (30,000 pre split) shares that remain unexercised. There are a total of 30,000,000 shares remaining to be issued under this plan (the registered amount was not reduced by the reverse split). (b) 2006 Non-Employee Directors and Consultants Retainer Stock Plan. On January 6, 2006, the Company adopted the 2006 Non-Employee Directors and Consultants Retainer Stock Plan. The purposes of the plan are to enable the Company to promote the interests of the Company by attracting and retaining non- employee directors and consultants capable of furthering the business of the Company and by aligning their economic interests more closely with those of the Company's stockholders, by paying their retainer or fees in the form of shares of common stock. All 150,000,000 shares of common stock under this plan have been registered as a result of a Form S-8 filed with the SEC. As of December 31, 2008, all shares of common stock registered under this plan have been issued. (c) 2006 Stock Incentive Plan. On January 6, 2006, the Company adopted the 2006 Stock Incentive Plan. This plan is intended to allow directors, officers, employees, and certain non-employees of the Company to receive options to purchase shares of common stock. The purpose of this plan is to provide these persons with equity-based compensation incentives to make significant and extraordinary contributions to the long-term performance and growth of the Company, and to attract and retain employees. All 250,000,000 shares of common stock under this plan have been registered as a result of a Form S-8 filed with the SEC. Options granted under this plan are to be exercisable at whatever price is established by the board of directors, in its sole discretion, on the date of the grant. As of December 31, 2008, all shares of common stock registered under this plan have been issued. (d) 2007 Stock and Option Plan. On February 1, 2007, the Company adopted the 2007 Stock and Option Plan, which registered 400,000,000 shares under a Form S-8 filed on February 14, 2007. This plan is intended to allow designated directors, officers, employees, and certain non-employees, including consultants (all of whom are sometimes collectively referred to herein as "Employees") of the Company and its subsidiaries to receive options to purchase the Company's common stock and to receive grants of common stock subject to certain restrictions. The purpose of this plan is to promote the interests of the Company and its stockholders by attracting and retaining employees capable of furthering the future success of the Company and by aligning their economic interests more closely with those of the Company's stockholders. As of December 31, 2008, all shares of common stock registered under this plan have been issued. Equity Compensation Plan Information December 31, 2005 Number of Securities Remaining Number of available for future securities to be issuance under issued upon Weighted-average equity exercise of exercise price of compensation outstanding outstanding plans (excluding options, warrants options, warrants securities reflected and rights and rights in column (a)) Plan category (a) (b) (c) Equity compensation plans approved by security holders 0 0 0 Equity compensation plans not approved by security holders 3 $0.0075 per share Stock Incentive Plan: 30,000,000 shares 2006 Directors and Consultant's Stock Plan: 0; 2007 Stock Incentive Plan: 0 Total 3 $0.0075 per share Stock Incentive Plan: 30,000,000 shares 2006 Directors and Consultant's Stock Plan: 0; Incentive Plan: 0 2007 Stock and Option Plan 0 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Other than as set forth below, during the last two fiscal years there have not been any relationships, transactions, or proposed transactions to which the Company was or is to be a party, in which any of the directors, officers, or 5% or greater stockholders (or any immediate family thereof) had or is to have a direct or indirect material interest. (a) At the time of the Company entering into the Addendum to Convertible Debenture and Warrant to Purchase Common Stock, dated May 24, 2007, which involved the transfer and assignment of the RMD Technologies Inc. debenture and other documents to the Company, Mr. Fleming was an affiliate stockholder of RMD Technologies. Please see Item 1(A) for a complete description of this transaction, and its subsequent rescission. (b) On August 1, 2007, the Company entered into a new Consulting Services Agreement with De Joya & Company, Inc. (see Exhibit 10.10); this agreement replaces the prior agreement, dated August 1, 2006. This agreement covers the services provided to the Company by Arthur De Joya as chief financial officer of the Company. Under this agreement, the Company agrees to pay $5,000 each month and 1,250,000 free trading shares of common stock to be issued at the end of each quarter for a total of four quarters, both effective on August 1, 2006. The monthly fee is to increase by 10% beginning on each anniversary date of this agreement. No shares have yet been issued under the agreement. The Company accepted the resignation of Mr. De Joya and De Joya and Company, Inc. on December 14, 2007, thereby terminating this agreement. (c) The Company's corporate office is located in Franklin, Kentucky at the chief executive officer's home-based office (which is provided to the Company without cost). For each of the transactions noted above, the transaction was negotiated, on the part of the Company, on the basis of what is in the best interests of the Company and its stockholders. In addition, in each case the interested affiliate did vote in favor of the transaction; however, the full board of directors did make the determination that the terms in each case were as favorable as could have been obtained from non-affiliated parties. Certain of the officers and directors are engaged in other businesses, either individually or through partnerships and corporations in which they have an interest, hold an office, or serve on a board of directors. As a result, certain conflicts of interest may arise between the Company and such officers and directors. The Company will attempt to resolve such conflicts of interest in its favor. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by Child, Van Wagoner & Bradshaw, PLLC and Smith & Company (collectively, "Accountants") for the audit of the Company's annual financial statements, and review of financial statements included in the Company's Form 10-Q's: 2008: approximately $40,000; 2007: approximately $40,000. Audit-Related Fees. The aggregate fees billed in each of the last two fiscal years for assurance and related services by the Accountants that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported under Audit Fees above: $0. Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the Accountants for tax compliance, tax advice, and tax planning: $0. All Other Fees. The aggregate fees billed in each of the last two fiscal years for products and services provided by the Accountants, other than the services reported above: $0. ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. The following documents are being filed as a part of this report on Form 10-K: (a) Audited financial statements as of and for the years ended December 31, 2008 and 2007; and (b) Those exhibits required by Item 601 of Regulation S-K (included or incorporated by reference in this document are set forth in the Exhibit Index). SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GameZnFlix, Inc. Dated: April 21, 2009 By: /s/ John Fleming John Fleming, CEO 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 Company and in the capacities and on the dates indicated: Signature Title Date /s/ John Fleming Chief Executive Officer April 21, 2009 John Fleming (principal financial and accounting officer)/Secretary/Director /s/ Mark Crist Director April 21, 2009 Mark Crist REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors GameZnFlix, Inc. We have audited the accompanying consolidated balance sheets of GameZnFlix, Inc. and Subsidiaries (a Nevada corporation) as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders' equity (deficit), and cash flows for the years ended December 31, 2008 and 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 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 GameZnFlix, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the results of its operations and cash flows for the years ended December 31, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America. /s/ Child, Van Wagoner & Bradshaw, PLLC Child, Van Wagoner & Bradshaw, PLLC Certified Public Accountants Salt Lake City, Utah April 15, 2009 GAMEZNFLIX, INC. CONSOLIDATED BALANCE SHEETS
December 31, 2008 December 31, 2007 ASSETS Current assets Cash $ 87,052 $ 24,976 Accounts receivable -- 77,235 Inventory -- 23,028 Prepaid expenses -- 15,000 Other assets -- 157,013 Total current assets 87,052 297,252 DVD's and video games libraries, net of Accumulated amortization of $7,362,546 for both periods 281,361 281,361 Fixed assets, net of accumulated depreciation of $549,527 and $405,875, respectively 214,777 548,806 Film library, net of accumulated amortization of $455,813 and $259,219, respectively 1,116,937 1,313,531 Other assets 3,650 3,650 Total assets $1,703,777 $2,444,600 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable and accrued expenses $1,784,914 $1,778,092 Bank overdraft -- 49,203 Deferred revenue -- 30,227 Current portion of long-term notes payable 642,427 535,552 Notes payable - related party 40,920 191,351 Advance from Golden State Investors, Inc. 542,003 521,298 Total current liabilities 3,010,264 3,105,723 Note payable, less current portion of $0 and $535,552, respectively -- 100,497 Convertible debenture, net of unamortized debt discounts of $56,681 and $76,725, respectively 89,051 70,660 Total liabilities 3,099,315 3,276,880 Stockholders' equity (deficit) Common stock; $0.001 par value; 5,000,000,000 shares authorized, 188,880 and 18,585 issued and outstanding, respectively (1) 189 19 Additional paid-in capital 43,788,628 43,277,494 Stock subscriptions receivable -- (25,000) Accumulated deficit (45,184,355) (44,084,793) Total Stockholders' Equity (Deficit) ( 1,395,538) (832,280) Total liabilities and stockholders' equity (deficit) $ 1,703,777 $ 2,444,600
(1) Adjusted for a 1 for 1,000 reverse split of the common stock effective on September 6, 2007 and the 1 for 10,000 reverse split of the common stock effective on April 9, 2009. See accompanying Notes to Consolidated Financial Statements GAMEZNFLIX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
December 31, 2008 December 31, 2007 ASSETS Revenues $ 931,205 $ 3,597,028 Cost of revenues 490,767 5,734,261 Gross profit 440,438 (2,137,233) Operating expenses Advertising 111,049 1,649,739 Consulting and professional fees 513,742 1,386,380 Depreciation and amortization 180,606 211,165 Selling, general and administrative 758,904 5,103,844 Total operating expenses 1,564,301 8,351,128 Loss from operations (1,123,863) (10,488,361) Other income (expense) Interest expense (54,204) (30,370) Interest income 4 16,864 Loss on disposition of asset (122,896) -- Gain on cancellation of debt 201,397 -- Total other income (expense) 24,301 (13,506) Loss before provision for income taxes (1,099,562) (10,501,867) Provision for income taxes -- -- Net loss $(1,099,562) $(10,501,867) Loss per common share - basic and diluted (1) $ (7.00) $ (5,048.97) Weighted average common shares outstanding - basic and diluted (1) 157,191 2,080
(1) Adjusted for a 1 for 1,000 reverse split of the common stock effective on September 6, 2007 and the 1 for 10,000 reverse split of the common stock effective on April 9, 2009. See accompanying Notes to Consolidated Financial Statements GAMEZNFLIX, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
Additional Stock Total Common Stock Paid-In Subscriptions Accumulated Stockholders' Shares(1) Amount Capital Receivable Deficit Equity Balance, December 31, 2006 519 $ 1 $ 40,433,970 $(1,000,000) $(33,582,926) $ 5,851,045 Issuance of common stock for services, weighted average price of $0.001 10,970 11 1,371,045 -- -- 1,371,056 Issuance of common stock for cash 4,037 4 176,696 (25,000) -- 151,700 Issuance of common stock related to debt conversion and exercise of related stock warrants - Golden State Investors, Inc. 3,074 3 2,295,783 -- -- 2,295,786 Cancellation of stock subscriptions receivable (15) (0) (1,000,000) 1,000,000 -- -- Net loss -- -- -- -- (10,501,867) (10,501,867) Balance, December 31, 2007 18,585 19 43,277,494 (25,000) (44,084,793) (832,280) Issuance of common stock for services, average price of $0.0005 78,235 78 363,060 -- -- 363,138 Issuance of common stock for cash 28,760 29 42,871 25,000 -- 67,900 Issuance of common stock related to debt conversion and exercise of related stock warrants - Golden State Investors, Inc. 63,300 63 105,203 -- -- 105,266 Net loss -- -- -- -- (1,099,562) (1,099,562) Balance, December 31, 2008 188,880 $ 189 $43,788,628 $ -- $(45,184,355) $ (1,395,538)
(1) Adjusted for a 1 for 1,000 reverse split of the common stock effective on September 6, 2007 and the 1 for 10,000 reverse split of the common stock effective on April 9, 2009. See accompanying Notes to Consolidated Financial Statements GAMEZNFLIX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 2008 December 31, 2007 Cash flows from operating activities: Net loss $ (1,099,562) $(10,501,867) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 363,138 1,371,056 Debt discount amortization related to convertible debenture 20,044 19,989 Depreciation and amortization 377,200 3,916,832 Cancellation of debt (138,897) -- Bad Debts expense -- 520,000 Loss on disposal of assets 122,896 -- Changes in operating assets and liabilities: Change in accounts receivable 14,735 77,159 Change in inventory 40,041 4,800 Change in prepaid expenses 15,000 414,926 Change in other assets 140,000 713,034 Change in accounts payable and accrued expenses 58,190 2,345,616 Change in bank overdraft (49,203) 49,203 Change in deferred revenue (30,227) (118,898) Net cash used in operating activities (166,645) (1,188,150) Cash flows from investing activities: Purchase of DVD's & games library -- (1,551,691) Purchase of film library -- (99,750) Purchase of fixed assets -- (44,073) Net cash used in investing activities -- (1,695,514) Cash flows from financing activities: Proceeds on notes payable 38,000 -- Payments on notes payable (31,623) -- Proceeds from advances from Golden State Investors, Inc. 104,874 54,783 Proceeds from convertible debenture -- 51,020 Proceeds from related party notes payable 24,570 16,351 Proceeds from stock issuances 92,900 2,443,852 Net cash provided by investing activities 228,721 2,566,006 Net change in cash and cash equivalents 62,076 (317,658) Cash, beginning of period 24,976 342,634 Cash, end of period $ 87,052 $ 24,976
See accompanying Notes to Consolidated Financial Statements GAMEZNFLIX, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies of GameZnFlix, Inc. and subsidiaries ("Company") is presented to assist in understanding the Company's consolidated financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. Organization. The Company was originally formed under the laws of the State of Delaware in June 1997 under the name SyCo Comics and Distribution Inc. and is the successor to a limited partnership named SyCo Comics and Distribution, formed under the laws of the Commonwealth of Virginia on January 15, 1997. On February 17, 1999, SyCo Comics and Distribution Inc. changed its name to Syconet.com, Inc. On April 12, 2002 the Company adopted an Agreement and Plan of Merger for the purpose of redomiciling the Company to the State of Nevada. The Company then discontinued its operations as Syconet.com, Inc. and changed its name to Point Group Holding, Incorporated effective November 21, 2002. On November 21, 2003, the Company changed its name to GameZnFlix, Inc. Nature of Business. In November 2008, the Company halted its previous operations of providing online movie (also referred to as a "DVD") and video game rentals to subscribers through its Internet website www.gameznflix.com. The Company is now working on additional business plans for its future operations. Basis of Presentation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries that include Naturally Safe Technologies, Inc. ("NSTI"), GameZnFlix Entertainment, Inc. and GameZnFlix Racing and Merchandising, Inc. All intercompany balances and transactions have been eliminated. All common stock share numbers reflect the 1 for 10,000 reverse split of the Company's common stock on April 9, 2009. Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates. Reclassifications. Certain amounts reported in previous years have been reclassified to conform to the current year presentation. Fair Value of Financial Instruments. The fair value of the Company's cash, accounts receivable, accounts payable, accrued expenses and notes payable approximates their carrying value due to their short maturity. Cash and Cash Equivalents. The Company maintains cash balances in non-interest-bearing accounts that currently do not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2008. Inventory. Inventory consists of DVD and video game products for sale. All inventory items are stated at the lower of cost (first-in, first-out) or market value. Property, Plant, and Equipment. Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the shorter of the estimated useful lives of the respective assets, generally from three years to five years, and forty years for a building. Impairment of Long-Lived Assets. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long- Lived Assets," long-lived assets such as property and equipment and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group. DVD and Video Game Libraries. DVD's and video games are recorded at historical cost and depreciated using the straight-line method over a twelve-month period with a salvage value of $1 per copy. If the Company does sell any of its DVD and video game libraries, the Company will re-evaluate its depreciation policy in terms of the salvage value. Because of the nature of the business, the Company experiences a certain amount of loss, damage, or theft of its DVD's and video games. This loss is shown in the cost of sales section of the Income Statement. Any accumulated depreciation associated with this item is accounted for on a first-in-first-out basis and treated as a reduction to depreciation expense in the month the loss is recognized. Revenue Recognition and Cost of Revenue (all revenues reported in this report reflect the old operations prior to the closing of operations in November 2008). Until November 2008 the subscription revenues are recognized ratably during each subscriber's monthly subscription period. Refunds to subscribers are recorded as a reduction of revenues. Revenues from sales of DVD's and video games are recorded upon shipment. Cost of subscription revenues consists of referral expenses, fulfilment expenses, and postage and packaging expenses related to DVD's and video games provided to paying subscribers. Cost of DVD sales include the net book value of the DVD's sold and, where applicable, a contractually specified percentage of the sales value for the DVD's that are subject to revenue share agreements. DVD sales are considered non-significant and an incidental part of the business. Therefore, sales and related expenses were not separately accounted for. Revenue from proprietary software sales that does not require further commitment from the Company is recognized upon shipment. Consulting revenue is recognized when the services are rendered. License revenue is recognized ratably over the term of the license. The cost of services, consisting of staff payroll, outside services, equipment rental, communication costs and supplies, is expensed as incurred. Fulfilment Expenses (all fulfilment centers have been closed as of the date of this report). Fulfilment expenses represent those costs incurred in operating and staffing the Company's fulfilment and customer service centers, including costs attributable to receiving, inspecting and warehousing the Company's DVD and video game libraries. Advertising Costs The Company expenses all costs of advertising as incurred. Advertising costs for the years ended December 31, 2008 and 2007 were approximately $111,049 and $1,649,739, respectively. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. At December 31, 2008, the Company has net operating loss carry forwards totalling approximately $45,184,000. The carry forwards begin to expire in fiscal year 2017. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization. Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of outstanding shares of common stock during the period. Diluted net income (loss) per share is computed by dividing the weighted-average number of outstanding shares of common stock, including any potential common shares outstanding during the period, when the potential shares are dilutive. Potential common shares consist primarily of incremental shares issuable upon the assumed exercise of stock options and warrants to purchase common stock using the treasury stock method. The calculation of diluted net income (loss) per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is antidilutive, as they were during 2008 and 2007. During 2008 and 2007, the number of potential common shares excluded from diluted weighted- average number of outstanding shares was 3 and 3, respectively. Dividends The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception. Segment Reporting The Company follows SFAS No. 130, "Disclosures About Segments of an Enterprise and Related Information." The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations. Stock-Based Compensation Up through December 31, 2008, the Company accounted for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations and has adopted the disclosure-only alternative of SFAS No. 123R, "Accounting for Stock-Based Compensation." Options granted to consultants, independent representatives and other non- employees are accounted for using the fair value method as prescribed by SFAS No. 123R. Recent Pronouncements In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141R, "Business Combinations". SFAS No. 141R amends SFAS No. 141 and provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree. It also provides disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination. It is effective for fiscal years beginning on or after December 15, 2008 and will be applied prospectively. We are currently evaluating the impact of adopting SFAS No. 141R on our consolidated financial statements. In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51." SFAS No. 160 requires that ownership interests in subsidiaries held by parties other than the parent, and the amount of consolidated net income, be clearly identified, labeled, and presented in the consolidated financial statements. It also requires once a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value. Sufficient disclosures are required to clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. It is effective for fiscal years beginning on or after December 15, 2008 and requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements shall be applied prospectively. We are currently evaluating the impact of adopting SFAS No. 160 on our consolidated financial statements. In March 2008, FASB issued SFAS No. 161, "Disclosure about Derivative Instruments and Hedging Activities - an amendment to FASB Statement No. 133." The use and complexity of derivative instruments and hedging activities have increased significantly over the past several years. Constituents have expressed concerns that the existing disclosure requirements in SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," do not provide adequate information about how derivative and hedging activities affect an entity's financial position, financial performance, and cash flows. Accordingly, this Statement requires enhanced disclosures about an entity's derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles." This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This statement is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "the Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60." The premium revenue recognition approach for a financial guarantee insurance contract links premium revenue recognition to the amount of insurance protection and the period in which it is provided. For purposes of this statement, the amount of insurance protection provided is assumed to be a function of the insured principal amount outstanding, since the premium received requires the insurance enterprise to stand ready to protect holders of an insured financial obligation from loss due to default over the period of the insured financial obligation. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008. In April 2008, the FASB issued FASB Staff Position ("FSP") No. 142-3, "Determination of the Useful Life of Intangible Assets." FSP No. 142- 3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, "Goodwill and Other Intangible Assets". FSP No. 142-3 is effective for fiscal years beginning after December 15, 2008. The Company does not expect the adoption of FSP No. 142-3 will have a material impact on the Company's consolidated financial position, results of operations and cash flows. In June 2008, the FASB ratified Emerging Issues Task Force ("EITF") No. 08-3, "Accounting for Lessees for Maintenance Deposits Under Lease Arrangements." EITF No. 08-3 provides guidance for accounting for nonrefundable maintenance deposits. It also provides revenue recognition accounting guidance for the lessor. EITF No. 08-3 is effective for fiscal years beginning after December 15, 2008. The Company does not expect the adoption of EITF No. 08-3 will have a material impact on the Company's consolidated financial position, results of operations and cash flows. NOTE 2 - DVD'S AND VIDEO GAME LIBRARIES DVD and video game libraries as of December 31, 2008 consisted of the following: DVD and video games libraries $ 7,643,907 Less accumulated amortization (7,362,546) DVD and video games libraries, net $ 281,361 NOTE 3 - FIXED ASSETS Fixed assets as of December 31, 2008 consisted of the following: Computers and software $ 318,318 Furniture and fixtures 53,119 Vehicles 245,665 Office building 337,579 954,579 Less accumulated depreciation (739,904) Fixed assets, net $ 214,777 NOTE 4 - FILM LIBRARY Film library at December 31, 2008 consists of various films acquired throughout 2006. The Company amortizes the film library over the estimated useful life of eight years. The film library consisted of the following: Film library $ 1,572,750 Less accumulated amortization (455,813) Film library, net $ 1,116,937 NOTE 5 - NOTE PAYABLE - RELATED PARTY Note payable - related party as of December 31, 2008 consists of a $40,920 to the Company's Chief Executive Officer, due on demand, unsecured and bearing no interest. NOTE 6 - CONVERTIBLE DEBENTURES On November 1, 2006, the Company entered into a convertible debenture totalling $100,000 that matures November 2011, is unsecured and bears an annual interest rate of 4.75%. The convertible debenture is convertible into shares of common stock equal to the principal amount of the debenture being converted multiplied by 110, less the product of the conversion price multiplied by 100 times the dollar amount. The conversion price is based on the lesser of $0.20 per share or 82% of the average of the lowest volume weighted average prices during the 20 trading days prior to the debt holder's election to convert such unpaid balances. Additionally, the debt holder is entitled to a warrant to purchase 10,000 shares of common stock at an exercise price of $1.09 per share. The debt holder does not have the right and the Company does not have the obligation to convert any portion of the convertible debenture that will cause the debt holder to be a deemed beneficial owner of more than 9.99% of the then outstanding shares of the Company's common stock. In accordance with EITF No. 00-27, the Company has determined the value of the convertible debenture and the fair value of the detachable warrant issued in connection with this debt. The estimated value of the warrants of $12,567 was determined using the Black- Scholes option pricing model under the following assumptions: life of 1 year, risk free interest rate of 5.15%, a dividend yield of 0% and volatility of 349%. The face amount of the debt of $100,000 was proportionately allocated to the convertible debt and the warrant in the amounts of $88,836 and $11,164, respectively. The value of the note was then allocated between the debt and the beneficial conversion feature, which the entire portion of $88,836 was allocated towards the beneficial conversion feature. The combined total discount is $100,000, which is being amortized over the term of the convertible debt using the effective interest method. For the years ended December 31, 2008 and 2007, the Company has amortized a total of $43,319 and $17,581, respectively. NOTE 7 - ADVANCE FROM GOLDEN STATE INVESTORS, INC. An advance from Golden Gate Investors, Inc. (now know as Golden State Investors, Inc. - "Golden State") totalling $542,003 at December 31, 2008 relates to funds advanced to the Company for future exercise of warrants as discussed in Note 6. NOTE 8 - COMMON STOCK On September 6, 2007, the Company implemented a 1,000-to-1 reverse stock split which has been applied to the accompanying financial statements on a retroactive basis. During 2008, the Company issued 109,695,034 free trading shares of common stock for services with a weighted average of $0.001 per share. $1,371,056 in expenses were recorded for these services. During 2008, the Company issued 287,600,000 free trading shares of common stock for cash of $67,900. During 2008, the Company issued 633,000,000 free trading shares of common stock relating to the debt conversion and exercise of related stock warrants to Golden State Investors, Inc. NOTE 9 - STOCK COMPENSATION PLANS (a) Stock Incentive Plan. On April 25, 2003, the Company adopted a Stock Incentive Plan (the Company adopted Amendment No. 4 to this plan on July 13, 2005). This plan is intended to allow directors, officers, employees, and certain non-employees of the Company to receive options to purchase its common stock. The purpose of this plan is to provide these persons with equity-based compensation incentives to make significant and extraordinary contributions to the long-term performance and growth of the Company, and to attract and retain employees. As of December 31, 2004, all 600,000,000 shares of common stock authorized under this plan have been registered as a result of Form S-8's filed with the Securities and Exchange Commission. Options granted under this plan are to be exercisable at whatever price is established by the board of directors, in its sole discretion, on the date of the grant. During 2003, the Company granted options for 25,000,000 shares to two non-employee consultants (one at an exercise price equal to 75% of the market price on the date of exercise and the other at 50% of the market price on the date of exercise), all of which were exercised in 2004. During August 2004, the Company granted options for 42,042,294 shares to three non-employee consultants (at an exercise price equal to 50% of the market price on the date of exercise), all of which were exercised in 2004. During December 2004, the Company granted options for 30,000,000 shares to eight non-employee consultants (at an exercise price equal to 50% of the market price on the date of exercise), none of which have been exercised as of December 31, 2006. During 2005, the Company granted options for 302,957,706 (incorrectly reported in the 2005 Form 10-KSB as 540,000,000) shares to various consultants (at an exercise price equal to 50% of the market price on the date of exercise), all of which were exercised in 2005 resulting in proceeds to the Company of $3,032,000; there were no options remaining to be issued as of that date. As of December 31, 2008, there were options for 3 (30,000 pre split) shares that remain unexercised, which result in all 30,000,000 shares remaining to be issued under this plan (the registered amount was not reduced by the reverse split). (b) 2006 Non-Employee Directors and Consultants Retainer Stock Plan. On January 6, 2006, the Company adopted the 2006 Non-Employee Directors and Consultants Retainer Stock Plan. The purposes of the plan are to enable the Company to promote the interests of the Company by attracting and retaining non- employee directors and consultants capable of furthering the business of the Company and by aligning their economic interests more closely with those of the Company's stockholders, by paying their retainer or fees in the form of shares of common stock. All 150,000,000 shares of common stock under this plan have been registered as a result of a Form S-8 filed with the SEC. As of December 31, 2008, all shares have been issued under this plan. (c) 2006 Stock Incentive Plan. On January 6, 2006, the Company adopted the 2006 Stock Incentive Plan. This plan is intended to allow directors, officers, employees, and certain non-employees of the Company to receive options to purchase shares of common stock. The purpose of this plan is to provide these persons with equity-based compensation incentives to make significant and extraordinary contributions to the long-term performance and growth of the Company, and to attract and retain employees. All 250,000,000 shares of common stock under this plan have been registered as a result of a Form S-8 filed with the SEC. Options granted under this plan are to be exercisable at whatever price is established by the board of directors, in its sole discretion, on the date of the grant. As of December 31, 2008, all shares of common stock under this plan been used. (d) 2007 Stock and Option Plan. On February 1, 2007, the Company adopted the 2007 Stock and Option Plan, which registered 400,000,000 shares under a Form S-8 filed on February 14, 2007. This plan is intended to allow designated directors, officers, employees, and certain non-employees, including consultants (all of whom are sometimes collectively referred to herein as "Employees") of the Company and its subsidiaries to receive options to purchase the Company's common stock and to receive grants of common stock subject to certain restrictions. The purpose of this plan is to promote the interests of the Company and its stockholders by attracting and retaining employees capable of furthering the future success of the Company and by aligning their economic interests more closely with those of the Company's stockholders. As of December 31, 2008, all the shares have been issued under this plan. NOTE 10 - SUBSEQUENT EVENT On April 9, 2009, the Company affected a 1 for 10,000 reverse split of its common stock. As a result of this reverse split, the number of outstanding shares of common stock as of that date was 188,880. Also, as of that date, the new trading symbol of the Company on the OTCBB was "GMZN." The Company did this reverse split in order to position it for being involved in a new venture, when that venture is located. EXHIBIT INDEX 2.1 Agreement and Plan of Merger between the Registrant (formerly known as Syconet.com, Inc., a Nevada corporation) and Syconet.com, Inc., a Delaware corporation, dated December 1, 2001 (incorporated by reference to Exhibit 2.1 of the Form 10-KSB filed on April 15, 2003). 2.2 Acquisition Agreement between the Registrant and shareholders of AmCorp Group, Inc., dated September 13, 2002 (incorporated by reference to Exhibit 2 of the Form 8-K filed on September 23, 2002). 2.3 Acquisition Agreement between the Registrant and shareholders of Naturally Safe Technologies, Inc., dated October 31, 2002 (incorporated by reference to Exhibit 2 of the Form 8-K filed on November 13, 2002). 2.4 Acquisition Agreement between the Registrant and shareholders of Veegeez.com, LLC, dated September 25, 2003 (incorporated by reference to Exhibit 2 of the Form 8-K filed on October 9, 2003). 3.1 Articles of Incorporation, dated December 19, 2001 (incorporated by reference to Exhibit 3.1 of the Form 10-KSB filed on April 15, 2003). 3.2 Certificate of Amendment to Articles of Incorporation, dated November 21, 2002 (incorporated by reference to Exhibit 3.2 of the Form 10-KSB filed on April 15, 2003). 3.3 Certificate of Amendment to Articles of Incorporation, dated March 5, 2003 (incorporated by reference to Exhibit 3.3 of the Form 10-KSB filed on April 15, 2003). 3.4 Certificate of Amendment to Articles of Incorporation, dated July 11, 2003 (incorporated by reference to Exhibit 3.4 of the Form 10-QSB filed on August 20, 2003). 3.5 Certificate of Amendment to Articles of Incorporation, dated January 26, 2004 (incorporated by reference to Exhibit 3.5 of the Form 10-KSB filed on April 19, 2004). 3.6 Certificate of Amendment to Articles of Incorporation, dated December 16, 2004 (incorporated by reference to Exhibit 3 of the Form 8-K filed on December 21, 2004) 3.7 Certificate of Amendment to Articles of Incorporation, dated July 19, 2005 (incorporated by reference to Exhibit 3 of the Form 8-K filed on July 22, 2005). 3.8 Certificate of Amendment to Articles of Incorporation, dated March 21, 2006 (incorporated by reference to Exhibit 3 of the Form 8-K filed on March 27, 2006). 3.9 Bylaws (incorporated by reference to Exhibit 3.2 of the Form 10-SB filed on January 25, 2000). 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4 of the Form 10-SB/A filed on March 21, 2000). 4.2 1997 Incentive Compensation Program, as amended (incorporated by reference to Exhibit 10.1 of the Form SB-2 POS filed on August 28, 2000). 4.3 Common Stock Purchase Warrant issued to Alliance Equities, Inc., dated May 21, 2000 (incorporated by reference to Exhibit 4.1 to the Form SB-2 filed on June 2, 2000). 4.4 Form of Redeemable Common Stock Purchase Warrant to be issued to investors in the private placement offering, dated January 27, 2000 (incorporated by reference to Exhibit 4.2 to the Form SB-2/A filed on June 27, 2000). 4.5 Redeemable Common Stock Purchase Warrant issued to Diversified Leasing Inc., dated May 1, 2000 (incorporated by reference to Exhibit 4.3 of the Form SB-2/A filed on June 27, 2000). 4.6 Redeemable Common Stock Purchase Warrant issued to John P. Kelly, dated August 14, 2000 (incorporated by reference to Exhibit 4.4 of the Form SB-2 POS filed on August 28, 2000). 4.7 Redeemable Common Stock Purchase Warrant for Frank N. Jenkins, dated August 14, 2000 (incorporated by reference to Exhibit 4.5 of the Form SB-2 POS filed on August 28, 2000). 4.8 Redeemable Common Stock Purchase Warrant for Ronald Jenkins, dated August 14, 2000 (incorporated by reference to Exhibit 4.6 of the Form SB-2 POS filed on August 28, 2000). 4.9 Non-Employee Directors and Consultants Retainer Stock Plan, dated July 1, 2001 (incorporated by reference to Exhibit 4.1 of the Form S-8 filed on February 6, 2002). 4.10 Consulting Services Agreement between the Registrant and Richard Nuthmann, dated July 11, 2001 (incorporated by reference to Exhibit 4.2 of the Form S-8 filed on February 6, 2002). 4.11 Consulting Services Agreement between the Registrant and Gary Borglund, dated July 11, 2001 (incorporated by reference to Exhibit 4.3 of the Form S-8 filed on February 6, 2002). 4.12 Consulting Services Agreement between the Registrant and Richard Epstein, dated July 11, 2001 (incorporated by reference to Exhibit 4.4 of the Form S-8 filed on February 6, 2002). 4.13 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan, dated July 1, 2002 (incorporated by reference to Exhibit 4 of the Form S-8 filed on July 30, 2002). 4.14 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan (Amendment No. 2), dated April 25, 2003 (incorporated by reference to Exhibit 4.1 of the Form S-8 filed on May 12, 2003). 4.15 Stock Incentive Plan, dated April 25, 2003 (incorporated by reference to Exhibit 4.2 of the Form S-8 filed on May 12, 2003). 4.16 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan (Amendment No. 3), dated August 17, 2003 (incorporated by reference to Exhibit 4 of the Form S-8 POS filed on September 3, 2003). 4.17 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan (Amendment No. 4), dated November 17, 2003 (incorporated by reference to Exhibit 4 of the Form S-8 POS filed on December 9, 2003). 4.18 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan (Amendment No. 5), dated May 20, 2004 (incorporated by reference to Exhibit 4 of the Form S-8 POS filed on May 25, 2004). 4.19 Amended and Restated Stock Incentive Plan, dated August 23, 2004 (incorporated by reference to Exhibit 4 of the Form S-8 POS filed on August 31, 2004). 4.20 Securities Purchase Agreement between GameZnFlix and Golden Gate Investors, Inc., dated November 11, 2004 (incorporated by reference to Exhibit 4.1 of the Form 8-K filed on November 30, 2004). 4.21 4 3/4 % Convertible Debenture issued to Golden Gate Investors, Inc., dated November 11, 2004 (incorporated by reference to Exhibit 4.25 of The Form SB-2 filed on May 5, 2005). 4.22 Warrant to Purchase Common Stock issued in favor of Golden Gate Investors, Inc., dated November 11, 2004 (incorporated by reference to Exhibit 4.2 of the Form 8-K filed on November 30, 2004). 4.23 Registration Rights Agreement between the Company and Golden Gate Investors, Inc., dated November 11, 2004 (incorporated by reference to Exhibit 4.3 of the Form 8-K filed on November 30, 2004). 4.24 Addendum to Convertible Debenture and Securities Purchase Agreement between GameZnFlix and Golden Gate Investors, Inc., dated November 17, 2004 (incorporated by reference to Exhibit 4.4 of the Form 8-K filed on November 30, 2004). 4.25 Addendum to Convertible Debenture and Securities Purchase Agreement between GameZnFlix and Golden Gate Investors, Inc., dated December 17, 2004 (incorporated by reference to Exhibit 4.5 of the Form 8-K/A filed on January 18, 2005). 4.26 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan (Amendment No. 6), dated January 28, 2005 (incorporated by reference to Exhibit 4.1 of the Form S-8 POS filed on February 2, 2005). 4.27 Amended and Restated Stock Incentive Plan (Amendment No. 2), dated January 28, 2005 (incorporated by reference to Exhibit 4.2 of the Form S-8 POS filed on February 2, 2005). 4.28 Amended and Restated Stock Incentive Plan (Amendment No. 3), dated April 15, 2005 (incorporated by reference to Exhibit 4 of the Form S-8 POS filed on April 18, 2005 ). 4.29 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan (Amendment No. 7), dated July 13, 2005 (incorporated by reference to Exhibit 4.1 of the Form S-8 POS filed on July 21, 2005 ). 4.30 Amended and Restated Stock Incentive Plan (Amendment No. 4), dated July 13, 2005 (incorporated by reference to Exhibit 4.2 of the Form S-8 POS filed on July 21, 2005 ). 4.31 2006 Non-Employee Directors and Consultants Retainer Stock Plan, dated January 6, 2006 (incorporated by reference to Exhibit 4.1 of the Form S-8 fled on January 17, 2006. 4.32 2006 Stock Incentive Plan, dated January 6, 2006 (incorporated by reference to Exhibit 4.2 of the Form S-8 filed on January 17, 2006). 4.33 Addendum to Convertible Debenture and Warrant to Purchase Common Stock, dated January 17, 2006 (incorporated by reference to Exhibit 4.26 of the Form SB-2 filed on March 30, 2006). 4.22 Warrant to Purchase Common Stock issued in favor of Golden Gate Investors, Inc., dated November 11, 2004 (incorporated by reference to Exhibit 4.2 of the Form 8-K filed on November 30, 2004). 4.23 Registration Rights Agreement between the Company and Golden Gate Investors, Inc., dated November 11, 2004 (incorporated by reference to Exhibit 4.3 of the Form 8-K filed on November 30, 2004). 4.24 Addendum to Convertible Debenture and Securities Purchase Agreement between GameZnFlix and Golden Gate Investors, Inc., dated November 17, 2004 (incorporated by reference to Exhibit 4.4 of the Form 8-K filed on November 30, 2004). 4.25 Addendum to Convertible Debenture and Securities Purchase Agreement between GameZnFlix and Golden Gate Investors, Inc., dated December 17, 2004 (incorporated by reference to Exhibit 4.5 of the Form 8-K/A filed on January 18, 2005). 4.26 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan (Amendment No. 6), dated January 28, 2005 (incorporated by reference to Exhibit 4.1 of the Form S-8 POS filed on February 2, 2005). 4.27 Amended and Restated Stock Incentive Plan (Amendment No. 2), dated January 28, 2005 (incorporated by reference to Exhibit 4.2 of the Form S-8 POS filed on February 2, 2005). 4.28 Amended and Restated Stock Incentive Plan (Amendment No. 3), dated April 15, 2005 (incorporated by reference to Exhibit 4 of the Form S-8 POS filed on April 18, 2005 ). 4.29 Amended and Restated Non-Employee Directors and Consultants Retainer Stock Plan (Amendment No. 7), dated July 13, 2005 (incorporated by reference to Exhibit 4.1 of the Form S-8 POS filed on July 21, 2005 ). 4.30 Amended and Restated Stock Incentive Plan (Amendment No. 4), dated July 13, 2005 (incorporated by reference to Exhibit 4.2 of the Form S-8 POS filed on July 21, 2005 ). 4.31 2006 Non-Employee Directors and Consultants Retainer Stock Plan, dated January 6, 2006 (incorporated by reference to Exhibit 4.1 of the Form S-8 fled on January 17, 2006. 4.32 2006 Stock Incentive Plan, dated January 6, 2006 (incorporated by reference to Exhibit 4.2 of the Form S-8 filed on January 17, 2006). 4.33 Addendum to Convertible Debenture and Warrant to Purchase Common Stock, dated January 17, 2006 (incorporated by reference to Exhibit 4.26 of the Form SB-2 filed on March 30, 2006). 4.34 2007 Stock and Option Plan, dated February 1, 2007 (incorporated by reference to Exhibit 4 of the Form S-8 filed on February 14, 2007). 4.35 Addendum to Convertible Debenture and Warrant to Purchase Common Stock, dated May 24, 2007 (incorporated by reference to Exhibit 4.35 of the Form 10-K filed on April 15, 2008). 4.36 Assignment and Assumption Agreement between Golden Gate Investors, Inc., RMD Technologies, Inc., and the Company, dated May 29, 2007 (incorporated by reference to Exhibit 4.36 of the Form 10-K filed on April 15, 2008). 4.37 Addendum to Convertible Debenture and Warrant to Purchase Common Stock, dated June 15, 2007 (incorporated by reference to Exhibit 4.37 of the Form 10-K filed on April 15, 2008). 4.38 Rescission Agreement between Golden Gate Investors, Inc., RMD Technologies, Inc., and the Company, dated September 17, 2007 (incorporated by reference to Exhibit 4.38 of the Form 10-K filed on April 15, 2008). 10.1 Consulting Services Agreement between the Company and De Joya & Company, Inc., dated July 9, 2004 (incorporated by reference to Exhibit 10.1 of the Form 10-KSB filed on February 1, 2006). 10.2 Employment Agreement between the Company and Gary Hohman, dated October 1, 2004 (incorporated by reference to Exhibit 10 of the Form 8-K filed on October 8, 2004). 10.3 Consulting Services Agreement between the Company and De Joya & Company, Inc., dated August 1, 2005 (incorporated by reference to Exhibit 10 of the Form 8-K filed on February 1, 2006). 10.4 Employment Agreement between the Company and John J. Fleming, dated September 25, 2005 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on September 28, 2005). 10.5 Employment Agreement between the Company and Donald N. Gallent, dated September 25, 2005 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on September 28, 2005). 10.6 Services Agreement between the Company and Circuit City Stores, Inc., dated October 4, 2005 (including Exhibit A: Standard Terms and Conditions; and Exhibit C: Test Locations) (excluding Exhibit B: Service and Fee Schedule) (incorporated by reference to Exhibit 10 of the Form 8-K filed on October 6, 2005). 10.7 Amendment #1 to Services Agreement between the Company and Circuit City Stores, Inc., dated December 28, 2005 (incorporated by reference to Exhibit 10.2 of the Form 8-K/A filed on January 5, 2006). 10.8 Co-Marketing Agreement between the Company and Circuit City Stores, Inc., dated March 22, 2006 (including Exhibit B: Rollout Schedule) (excluding Exhibit A: Description of Services and Fee Schedule; Exhibit C: GNF Licensed Marks; and Exhibit D: Circuit City Licensed Marks) (incorporated by reference to Exhibit 10 of the Form 8-K filed on March 27, 2006). 10.9 Consulting Services Agreement between the Company and De Joya & Company, Inc., dated August 1, 2006 (incorporated by reference to Exhibit 10 of the Form 8-K filed on March 16, 2007). 10.10 Consulting Services Agreement between the Company and De Joya & Company, Inc., dated August 1, 2007 (incorporated by reference to Exhibit 10.10 of the Form 10-K filed on April 15, 2008). 16.1 Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K/A filed on August 24, 2001). 16.2 Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K/A filed on March 7, 2002). 16.3 Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K/A filed on November 5, 2002). 16.4 Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K/A filed on April 29, 2003). 16.5 Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K/A filed on January 21, 2004). 16.6 Letter on Change in Certifying Accountant, dated January 2, 2006 (incorporated by reference to Exhibit 16 of the Form 8-K filed on January 5, 2006). 21 Subsidiaries of GameZnFlix (incorporated by reference to Exhibit 21 of the Form 10-KSB filed on April 1, 2005). 31 Rule 13a-14(a)/15d-14(a) Certification of John Fleming (filed herewith). 32 Section 1350 Certification of John Fleming (filed herewith).
EX-31 2 gamesex31042209.txt EX-31 RULE 13a-14(a)/15d-14(a) CERTIFICATION OF JOHN FLEMING RULE 13a-14(a)/15d-14(a) CERTIFICATION I, John Fleming, certify that: 1. I have reviewed this annual report on Form 10-K of GameZnFlix, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's independent registered public accounting firm and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: April 21, 2009 /s/ John Fleming John Fleming, Chief Executive Officer (principal executive and financial officer) EX-32 3 gamesex32042209.txt EX-32 SECTION 1350 CERTIFICATION OF JOHN FLEMING SECTION 1350 CERTIFICATION In connection with the annual report of GameZnFlix, Inc. ("Company") on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission ("Report"), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) that to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: April 21, 2009 /s/ John Fleming John Fleming, Chief Executive Officer (principal executive and financial officer)
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