-----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, Cs++bDl46dbf4Mdrf75NuIg8dkd1aQGlEtvlz+EfA5Ie2forPqgL1qaLR+tBYiZa B9FS/TBKIWt80ssKXMyp/g== 0001094328-09-000040.txt : 20090515 0001094328-09-000040.hdr.sgml : 20090515 20090515125019 ACCESSION NUMBER: 0001094328-09-000040 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20090331 FILED AS OF DATE: 20090515 DATE AS OF CHANGE: 20090515 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-29113 FILM NUMBER: 09830864 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-Q 1 gamez10q051409woex.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009 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) (270) 598-0395 (Company's Telephone Number) ______________________________________________________________ (Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report) 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) has been subject to such filing requirements for the past 90 days. Yes X No . Indicate by check mark whether the Company has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No X . 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 Company is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No X. As of April 9, 2009, the Company had 188,880 shares of common stock issued and outstanding. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2009 (UNAUDITED) AND DECEMBER 31, 2008 4 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND MARCH 31, 2008 6 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND MARCH 31, 2008 7 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 8 ITEM 2. MANAGEMIENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 17 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 26 ITEM 4. CONTROLS AND PROCEDURES 26 ITEM 4(T) CONTROLS AND PROCEDURES 26 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 27 ITEM 1A. RISK FACTORS 28 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 28 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 28 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 28 ITEM 5. OTHER INFORMATION 28 ITEM 6. EXHIBITS 29 SIGNATURE 30 PART I - FINANCIAL INFORMATION ITEM 1. FINANCAL STATEMENTS. GAMEZNFLIX, INC. CONSOLIDATED BALANCE SHEETS
March 31, 2009 December 31, 2008 (Unaudited) ASSETS Current assets Cash $ 34,922 $ 87,052 Total current assets 34,922 87,052 DVD and video game libraries, net of accumulated amortization of $7,362,546 for both periods 281,361 281,361 Fixed assets, net of accumulated depreciation of $582,745 and $549,527, respectively 181,559 214,777 Film library, net of accumulated amortization of $504,961 and $455,813, respectively 1,067,789 1,116,937 Other assets 3,650 3,650 Total assets $1,569,281 $ 1,703,777 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable and accrued expenses $1,781,488 $ 1,784,914 Current portion of long-term notes payable 642,427 642,427 Notes payable - related party 6,205 40,920 Advance from Golden Gate Investors, Inc. 542,003 542,003 Total current liabilities 2,972,123 3,010,264 Note payable, less current portion of $0 for both periods -- -- Convertible debenture, net of unamortized debt discounts of $56,681 and $76,725, respectively 93,980 89,051 Total liabilities 3,066,103 3,099,315 Stockholders' equity (deficit) Common stock; $0.001 par value; 5,000,000,000 shares authorized, 188,880 and 188,880 issued and outstanding, respectively (1) 189 189 Additional paid-in capital 43,788,628 43,788,628 Accumulated deficit (45,285,639) (45,184,355) Total stockholders' equity (deficit) (1,496,822) (1,395,538) Total liabilities and stockholders' equity (deficit) $ 1,569,281 $ 1,703,777
(1) Adjusted for a 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 (Unaudited)
For the Three Months Ending March 31, 2009 March 31, 2008 Revenues $ -- $ 380,266 Cost of revenues 49,148 172,799 Gross profit (49,148) 207,467 Operating expenses Advertising -- 17,409 Consulting and professional fees -- 12,390 Depreciation and amortization 33,218 47,670 Selling, general and administrative 13,989 342,196 Total operating expenses 47,207 419,665 Loss from operations (96,355) (212,198) Other income (expense) Interest expense (4,929) (4,983) Interest income -- 4,250 Total other income (expense) (4,929) (733) Loss before provision for income taxes (101,284) (212,931) Provision for income taxes -- -- Net loss $ (101,284) $ (212,931) Loss per common share - basic and diluted $ (0.54) $ (5.17) Weighted average common shares outstanding - basic and diluted 188,880 (1) 41,197 (1) (1) Adjusted for a 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 (Unaudited)
For the Three Months Ending March 31, 2009 March 31, 2008 Cash flows from operating activities: Net loss $ (101,284) $ (212,931) Adjustments to reconcile net loss to net cash provided by operating activities: Debt discount amortization related to convertible debenture 4,929 4,983 Depreciation and amortization 82,366 65,334 Changes in operating assets and liabilities: Change in accounts receivable -- 48 Change in prepaid expenses -- (27,300) Change in other assets -- 17,013 Change in accounts payable and accrued expenses (3,426) 37,416 Net cash used in operating activities (17,415) (115,437) Cash flows from investing activities: Purchase of DVD and video game libraries -- (13,708) Net cash used in investing activities -- (13,708) Cash flows from financing activities: Proceeds on notes payable -- 10,047 Proceeds from advances from Golden Gate Investors, Inc. -- 50,688 Payments of related party notes payable (34,715) -- Proceeds from stock issuances -- 54,000 Net cash provided by (used in) investing activities (34,715) 114,735 Net change in cash and cash equivalents (52,130) (14,410) Cash, beginning of period 87,052 24,976 Cash, end of period $ 34,922 $ 10,566
See Accompanying Notes to Consolidated Financial Statements GAMEZNFLIX, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of GameZnFlix, Inc., A Nevada Corporation ("Company"), have been prepared in accordance with Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the Form 10-K of the Company for the year ended December 31, 2008. The interim financial statements present the balance sheet, statements of operations, stockholders' equity, and cash flows of the Company. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The interim financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of March 31, 2009 and the results of operations, stockholders' equity, and cash flows for the three and nine months then ended. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results of operations for the full year. 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. 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. 2. SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies of the 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. 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 March 31, 2009. 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 three months ended March 31, 2009 and 2008 were approximately $0 and $17,409, 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 March 31, 2009, the Company had net operating loss carry forwards totaling approximately $45,286,000. 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 anti-dilutive, as they were during 2009 and 2008. During 2009 and 2008, 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 March 31, 2009, 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. 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, the 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 3 - DVD AND VIDEO GAME LIBRARIES DVD and video game libraries as of March 31, 2009 consisted of the following: DVD and video game libraries $ 7,643,907 Less accumulated amortization (7,362,546) DVD and video game libraries, net $ 281,361 NOTE 4 - FIXED ASSETS Fixed assets as of March 31, 2009 consisted of the following: Computers and software $ 297,902 Furniture and fixtures 73,508 Vehicles 183,314 Office building 209,579 764,303 Less accumulated depreciation (582,745) Fixed assets, net $ 181,558 NOTE 5 - FILM LIBRARY Film library at March 31, 2009 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 (504,961) Film library, net $ 1,067,789 NOTE 6 - NOTE PAYABLE - RELATED PARTY Note payable - related party as of March 31, 2009 consists of a $6,205 to the Company's Chief Executive Officer, due on demand, unsecured and bearing no interest. NOTE 7 - CONVERTIBLE DEBENTURES On November 1, 2006, the Company entered into a convertible debenture totaling $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 period ended March 31, 2009, the Company had amortized a total of $48,248. NOTE 8 - ADVANCE FROM GOLDEN STATE INVESTORS, INC. An advance from Golden Gate Investors, Inc. (now know as Golden State Investors, Inc. - "Golden State") totaling $542,003 at March 31, 2009 relates to funds advanced to the Company for future exercise of warrants as discussed in Note 6. NOTE 9 - COMMON STOCK During 2008, the Company issued 782,347,000 free trading shares of common stock for services with a weighted average of $0.0005 per share. $363,138 in expenses was recorded for these services. During 2008, the Company issued 287,600,000 free trading shares of common stock upon the exercise of stock options granted under the Company's 2007 Stock and Option Plan, realizing 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 10 - STOCK COMPENSATION PLANS 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 March 31, 2009, 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). NOTE 11 - SUBSEQUENT EVENTS (a) 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. (b) On April 22, 2009, the Company issued 500,000 restricted shares of common stock to the Company's chief executive office, John Fleming. This stock was valued at $5,000 ($0.01 per share) and was issued upon approval of the Company's board of directors for services rendered to the Company). As of that date, the total issued and outstanding common stock of the Company was 688,880. (c) On April 22, 2009, the Company adopted a new 2009 Stock and Option Plan, which registered 500,000 shares under a Form S-8 registration statement filed with the SEC on April 27, 2009. 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. (d) On April 30, 2009, the Company entered into an Acquisition Agreement with TBC Today, Inc., a Nevada corporation ("TBC"), where the Company will acquire all of the outstanding common stock of TBC. Under this agreement, all 11,000,000 shares of TBC common stock issued and outstanding will be acquired by the Company for 11,000,000 shares of restricted common stock of the Company. Marty Schiff, the current President of TBC, will remain in that position with TBC. John Fleming, Chief Executive Officer of the Company, is also a stockholder of TBC. When the restricted shares of Company common stock are actually issued, an amended Form 8-K will be filed. TBC is intended to provide a fresh new viewing experience in the world of business news, focusing on high quality programming as it pertains to Over the Counter Bulletin Board (OTCBB) companies and companies quoted on the Pink OTC Markets. The goal of TBC will be to provide each of the potential cable affiliates with outstanding programming and support as TBC strives to introduce a powerful insight into the "Small Cap" world of business. By building quality relationships and executing its intended objectives, it is intended that TBC Today will develop into a highly viewed business channel. On April 30, 2009, subsequent to the execution of the Acquisition Agreement, Marty Schiff, the President and a stockholder of TBC, was appointed to the board of directors of the Company. Mr. Schiff is expected to be named to the Company's Audit Committee. There is no arrangement or understanding between the new director and any other persons pursuant to which such director was selected as a director. ITEM 2. 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 unaudited financial statements and related notes included elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. Overview. The Company currently has no operations. In November 2008 the Company shutdown its website and discontinued offering its video game and DVD rental service to the public. In addition, as of November 2008 the Company closed all of its warehouses, accept for Kentucky that houses the entire inventory. At this time the Company is looking for possible other business ventures or partnerships to acquire or merge with. 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. .. Results of Operations. (a) Revenues. The Company had gross revenues of $0 for the three months ended March 31, 2009 compared to $380,266 for the three months ended March 31, 2008, a decrease of $380,266 or 100%. Gross revenues decreased due to the company closing operations in November 2008 (b) Cost of Revenues. The Company had cost of revenues of $49,148 for the three months ended March 31, 2009 compared to $172,799 for the three months ended March 31, 2008, a decrease of $123,651 or approximately 72%. Cost of revenues decreased as the Company had no current operations but did continued to depreciate the rental library. (c) Advertising. The Company had advertising expenses of $0 for the three months ended March 31, 2009 compared to $17,409 for the three months ended March 31, 2008, a decrease of $17,409 or 100%. The decrease was caused by the Company closing its operations in November 2008. (d) Selling, General and Administrative Expenses. The Company had selling, general and administrative expenses of $13,989 for the three months ended March 31, 2009 compared to $342,196 for the three months ended March 31, 2008, a decrease of $328,207 or approximately 96%. The decrease in selling, general and administrative expenses was principally due to the company closing operations in November 2008. (e) Professional/Consultant Fees. The Company had professional fees of approximately $0 for the three months ended March 31, 2009 compared to $12,390 for the three months ended March 31, 2008, a decrease of $12,390 or 100%. Decrease in professional fees during the three months ended March 31, 2009 compared to the prior period was primarily a result of decreased need of business consultants. The professional fees for the three months ended are for securities and legal fees. Currently there are no outside consultants under agreement with the Company. (f) Net Loss. The Company had a net loss of $101,284 for the three months ended March 31, 2009 compared to $212,931 for the three months ended March 31, 2008, a decrease of $111,647 or approximately 52 %. The decreases in net losses are the result of the factors mentioned above. The Company anticipates having a recurring net loss during the remainder of 2009. Factors That May Affect Operating Results. The Company is also subject to the following specific factors that may affect its operations: (a) 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. (b) 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. (c) 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. (d) The Inability to Issue Shares Upon Conversion of Debentures Would Require the Company to Pay Penalties to Golden Gate. If the Company is unable to issue common stock, or fails to timely deliver common stock on a delivery date, the Company would be required to: - pay late payments to Golden Gate for late issuance of common stock upon conversion of the convertible debenture, in the amount of $100 per business day after the delivery date for each $10,000 of convertible debenture principal amount being converted or redeemed. - at the election of Golden Gate, the Company must pay Golden Gate a sum of money determined by multiplying up to the outstanding principal amount of the convertible debenture designated by Golden Gate 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 Gate pursuant to a conversion, Golden Gate purchases (in an open market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by Golden Gate 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 Gate 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 Gate or redeem the convertible debentures held by Golden Gate, it may be required to curtail or cease operations. (e) Repayment of Debentures, If Required, Would Deplete Available Capital. The convertible debenture issued to Golden Gate is due and payable, with 4 3/4% interest, three years from the date of issuance, unless sooner converted into shares of common stock. In addition, any event of default could require the early repayment of the convertible debentures at a price equal to 125% of the amount due under the debentures. The Company anticipates that the full amount of the convertible debentures, together with accrued interest, will be converted into shares of common stock, in accordance with the terms of the debenture. If the Company were 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 debentures when required, the debenture holder could commence legal action against it and foreclose on assets to recover the amounts due. Any such action may require the Company to curtail or cease operations. Operating Activities. The net cash used in operating activities was $17,415 for the three months ended March 31, 2009 compared to $115,437 for the three months ended March 31, 2008, a decrease of $98,002 or approximately 85%. This decrease is attributed to many changes from period to period, including an increase in depreciation and amortization. Investing Activities. Net cash used in investing activities was $0 for the three months ended March 31, 2009 compared to $13,708 for the three months ended March 31, 2008, a decrease of $13,708 or 100%. This decrease resulted primarily from reduced purchases of DVD's, games, and films. Liquidity and Capital Resources. As of March 31, 2009, the Company had total current assets of $34,922 and total current liabilities of $2,972,123, resulting in a working capital deficit of $2,937,201. The Company's cash balance as of March 31, 2009 totaled $34,922. Overall, cash and cash equivalents for the three months ended March 31, 2009 decreased by $52,130. 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 totaled $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. Net cash used in financing activities was $34,715 for the three months ended March 31, 2009 compared to cash provided by financing activities of $114,735 for the three months ended March 31, 2009, a decrease of $149,450 or approximately 130%. This decrease resulted from a reduction of funds provided by Golden Gate Investors, Inc. as a result of the Addendum to Convertible Debenture and Warrant to Purchase Common Stock, between that firm and the Company (as discussed below) The Company's current cash and cash equivalents balance will not be sufficient to fund its operations for the next twelve months. Therefore, 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 addition to the financing arrangement with Golden Gate. In connection with this need for funding, the Company entered into a financing arrangement with Golden Gate: A Securities Purchase Agreement with Golden Gate 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 shares underlying these securities were registered under a Form SB-2 registration statement filed in January 2005. The warrant is exercisable into 15,000,000 shares of common stock at an exercise price of $1.09 per share. As of March 31, 2009, 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. 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 Gate 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 March 31, 2009, 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. 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 costs and the ability to pass on cost increases to the Company's customers over time is dependent upon market conditions. The Company is not aware of any inflationary pressures that have had any significant impact on 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) non-cash compensation valuation; (c) revenue recognition; and (d) impairment of long-lived assets. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results it reports in the 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-Q 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-Q, 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 risks and uncertainties include, but are not limited to, those discussed above as well as the risks set forth above under "Factors That May Affect Operating Results." 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 expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 4. CONTROLS AND PROCEDURES. Not applicable. ITEM 4(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. 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 three months ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. 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 1A. RISK FACTORS. There have been no material changes in the risk factors as previously disclosed in response to Item 1A.of Part I of the Company's latest Form 10-K. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. There were no unregistered sales of the Company's equity securities during the three months ended March 31, 2009. There were no purchases of the Company's common stock by the Company or its affiliates during the three months ended March 31, 2009. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. Corrections. A portion of Note 8 to the financials statements contained in the Form 10-K for the year ended December 31, 2008 should be amended to read: "During 2008, the Company issued 782,347,000 free trading shares of common stock for services with a weighted average of $0.0005 per share. $363,138 in expenses was recorded for these services. During 2008, the Company issued 287,600,000 free trading shares of common stock upon the exercise of stock options granted under the Company's 2007 Stock and Option Plan, realizing cash of $67,900." Subsequent Events. (a) 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. (b) On April 22, 2009, the Company issued 500,000 restricted shares of common stock to the Company's chief executive office, John Fleming. This stock was valued at $5,000 ($0.01 per share) and was issued upon approval of the Company's board of directors for services rendered to the Company). As of that date, the total issued and outstanding common stock of the Company was 688,880. (c) On April 22, 2009, the Company adopted a new 2009 Stock and Option Plan, which registered 500,000 shares under a Form S-8 registration statement filed with the SEC on April 27, 2009. 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. (d) On April 30, 2009, the Company entered into an Acquisition Agreement with TBC Today, Inc., a Nevada corporation ("TBC"), where the Company will acquire all of the outstanding common stock of TBC. Under this agreement, all 11,000,000 shares of TBC common stock issued and outstanding will be acquired by the Company for 11,000,000 shares of restricted common stock of the Company. Marty Schiff, the current President of TBC, will remain in that position with TBC. John Fleming, Chief Executive Officer of the Company, is also a stockholder of TBC. When the restricted shares of Company common stock are actually issued, an amended Form 8-K will be filed. TBC is intended to provide a fresh new viewing experience in the world of business news, focusing on high quality programming as it pertains to Over the Counter Bulletin Board (OTCBB) companies and companies quoted on the Pink OTC Markets. The goal of TBC will be to provide each of the potential cable affiliates with outstanding programming and support as TBC strives to introduce a powerful insight into the "Small Cap" world of business. By building quality relationships and executing its intended objectives, it is intended that TBC Today will develop into a highly viewed business channel. On April 30, 2009, subsequent to the execution of the Acquisition Agreement, Marty Schiff, the President and a stockholder of TBC, was appointed to the board of directors of the Company. Mr. Schiff is expected to be named to the Company's Audit Committee. There is no arrangement or understanding between the new director and any other persons pursuant to which such director was selected as a director. ITEM 6. EXHIBITS. Exhibits included or incorporated by reference herein are set forth in the Exhibit Index. SIGNATURE 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: May 14, 2009 By: /s/ John Fleming John Fleming, Chief Executive Officer (principal financial and accounting officer) EXHIBIT INDEX Number Description 2.1 Agreement and Plan of Merger between the Company 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 Company and stockholders 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 Company and stockholders 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 Company and stockholders 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 Company 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 Company 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 Company 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 the Company 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 the Company 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 the Company 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). 10.11 Acquisition Agreement between the Company and TBC Today, Inc., dated April 30, 2009 (incorporated by reference to Exhibit 10 of the Form 8-K filed on May 4, 2009). 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 the Company (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-31.1 2 gaamezex311051409.txt EX-31.1 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 quarterly report on Form 10-Q 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: May 14, 2009 By: /s/ John Fleming John Fleming, Chief Executive Officer (principal financial and accounting officer) EX-32 3 gamezex32051409.txt EX-32 SECTION 1350 CERTIFICATION OF JOHN FLEMING SECTION 1350 CERTIFICATION In connection with the quarterly report of GameZnFlix, Inc. ("Company") on Form 10-Q for the quarter ended March 31, 2009 as filed with the Securities and Exchange Commission ("Report"), the undersigned, in the capacities and on the dates indicated below, hereby certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to their 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: May 14, 2009 By: /s/ John Fleming John Fleming, Chief Executive Officer (principal financial and accounting officer) -----END PRIVACY-ENHANCED MESSAGE-----