TBC Global News Network, Inc. – ‘10-Q’ for 6/30/08

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Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      30±   153K 
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10-Q   —   Quarterly Report
Document Table of Contents

       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                  
JUNE 30, 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)      

(270) 598-0385        
(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 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 June 30, 2008, the Company had 1,116,721,500 shares of          
common stock issued and outstanding.                                            

   TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION                                           PAGE   

ITEM 1.  FINANCIAL STATEMENTS                                 

   CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2008
               (UNAUDITED) AND DECEMBER 31, 2007                         4

CONSOLIDATED STATEMENTS OF OPERATIONS       
(UNAUDITED) FOR THE THREE AND SIX MONTHS    
               ENDED JUNE 30, 2008 AND JUNE 30, 2007                     6

CONSOLIDATED STATEMENTS OF CASH FLOWS       
(UNAUDITED) FOR THE SIX MONTHS ENDED        
               JUNE 30, 2008 AND JUNE 30, 2007                           7

               NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS      8

ITEM 2.  MANAGEMIENT'S DISCUSSION AND ANALYSIS OF             
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS            11

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES              
              ABOUT MARKET RISK                                         24

      ITEM 4.  CONTROLS AND PROCEDURES                                  24

      ITEM 4(T).  CONTROLS AND PROCEDURES                               24

PART II - OTHER INFORMATION                                                     

      ITEM 1.  LEGAL PROCEEDINGS                                        25

      ITEM 1A. RISK FACTORS                                             25

ITEM 2.  UNREGISTERED SALES OF EQUITY                         
               SECURITIES AND USE OF PROCEEDS                           26

      ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                          26

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE                      
               OF SECURITY HOLDERS                                      26

      ITEM 5.  OTHER INFORMATION                                        26

      ITEM 6.  EXHIBITS                                                 26

SIGNATURES                                                                 26   

PART I - FINANCIAL INFORMATION                                                  

ITEM 1.  FINANCAL STATEMENTS.                                                   

        GAMEZNFLIX, INC.
       CONSOLIDATED BALANCE SHEETS

                                                        [Enlarge/Download Table]
<CAPTION                                                                                  
                                                         June 30, 2008   December 31, 2007
                                                          (Unaudited)                     
                                           ASSETS                                         
                                                                                          
Current assets                                                                            
Cash                                                     $    28,918     $    24,976      
Accounts receivable                                           76,956          77,235      
Inventory                                                     23,028          23,028      
Prepaid expenses                                              19,800          15,000      
Other assets                                                 143,084         157,013      

Total current assets                                         291,786         297,252      

DVD and video games libraries, net of accumulated                                         
  amortization of $7,362,546 for both periods                295,069         281,361      
Fixed assets, net of accumulated depreciation of                                          
  $500,416 and $405,875, respectively                        473,862         548,806      
Film library, net of accumulated amortization of                                          
  $357,820 and $259,219, respectively                      1,220,769       1,313,531      
Other assets                                                   3,650           3,650      

Total assets                                            $  2,285,136    $  2,444,600      

                              LIABILITIES AND STOCKHOLDERS' DEFICIT                       

Current liabilities                                                                       
Accounts payable and accrued expenses                   $  1,822,330    $  1,778,092      
Bank overdraft                                                 7,618          49,203      
Deferred revenue                                               2,123          30,227      
Current portion of long-term notes payable                   205,061         535,552      
Customer deposits                                                 --                      
Notes payable - related party                                  3,501          16,351      
Notes payable                                                242,443         175,000      
Advance from Golden Gate Investors, Inc.                     603,475         521,298      

Total current liabilities                                  2,886,551       3,105,723      

Notes payable, less current portion of $205,061              430,988         100,497      
Convertible debenture, net of unamortized debt                                            
  discounts of $66,758 and $76,725, respectively              80,627          70,660      

Total liabilities                                          3,398,166       3,276,880      

Stockholders' deficit                                                                     
Common stock; $0.001 par value; 5,000,000,000  shares                                     
authorized, 1,116,721,500 and 185,848,250 issued and                                      
outstanding, respectively                                  1,116,722         185,848      
Additional paid-in capital                                42,237,091      43,091,665      
Stock subscriptions receivable                                    --         (25,000)     
Prepaid fees paid with common stock                           (7,500)             --      
Accumulated deficit                                      (44,459,343)    (44,084,793)     

Total stockholders' deficit                               (1,113,030)       (832,280)     

Total liabilities and stockholders' deficit                2,285,136       2,444,600      

See Accompanying Notes to Consolidated Financial Statements                     

          GAMEZNFLIX, INC.
         CONSOLIDATED STATEMENTS OF OPERATIONS
     (Unaudited)

                                                        [Enlarge/Download Table]

                                         For the Three Months Ended        For the Six Months Ended        
                                                 June 30                          June 30                  
                                         2008               2007           2008              2007          
                                                                                                           
Revenues                                 $   305,797        $   887,181    $   686,063       $  1,841,184  
Cost of revenues                             115,704          2,054,828        288,503          3,557,987  
Gross profit                                 190,093         (1,167,647)       397,560         (1,716,803) 

Operating expenses                                                                                         
Advertising                                   43,696            515,845         61,105          1,097,471  
Consulting and professional fees              16,897            170,817         29,287            325,642  
Depreciation and amortization                 46,871             85,752         94,541            176,109  
Selling, general and administrative          235,182          1,676,910        577,378          3,037,289  

Total operating expenses                     342,646          2,449,324        762,311          4,636,511  

Loss from operations                        (152,553)        (3,616,971)      (364,751)        (6,353,314) 

Other income (expense)                                                                                     
Interest expense                              (9,066)           (12,394)       (14,049)           (13,685) 
Interest income                                   --              4,929          4,250                 --  
Other income                                      --              2,758             --             16,795  

Total other income (expense)                  (9,066)            (4,707)        (9,799)             3,110  

Loss before provision for income taxes      (161,619)        (3,621,678)      (374,550)        (6,350,204) 

Provision for income taxes                        --                 --             --                 --  

Net loss                                    (161,619)        (3,621,678)      (374,550)        (6,350,204) 

Loss per common share - basic and diluted      (0.00)             (0.52)         (0.00)             (0.97) 

Weighted average common shares                                                                             
outstanding - basic and diluted           834,164,833         6,947,726 (1) 626,174,420        6,534,342(1)

(1)  Adjusted for a 1 for 1,000 reverse split of the common stock               
effective on September 6, 2007.                                                 

               See Accompanying Notes to Consolidated Financial Statements

            GAMEZNFLIX, INC.
         CONSOLIDATED STATEMENTS OF CASH FLOWS
             (Unaudited)

                                                        [Enlarge/Download Table]

                                                             For the Six Months Ended June 30,    
                                                                  2008                 2007       
                                                                                                  
Cash flows from operating activities:                                                             
Net loss                                                         $  (374,550)         $(6,350,204)
Adjustments to reconcile net loss to net                                                          
 cash used in operating activities:                                                               
Stock-based compensation                                               8,400              110,000 
Debt discount amortization related to convertible debenture            9,967                9,912 

Depreciation and amortization                                        193,081            2,239,935 
Bad debt expense                                                          --              520,000 
Changes in operating assets and liabilities:                                                      
Change in accounts receivable                                            279               90,780 
Change in inventory                                                       --                4,800 
Change in prepaid expenses                                           (12,300)             406,928 
Change in other assets                                                13,930              161,535 
Change in accounts payable and accrued expenses                       (4,965)           1,691,921 
Change in deferred revenue                                           (28,104)             (59,556)

Net cash used in operating activities                               (194,262)          (1,173,949)

Cash flows from investing activities:                                                             
Purchase of DVD & games libraries                                    (13,708)          (1,135,021)
Purchase of film library                                              (5,778)             (98,114)
Purchase of fixed assets                                             (19,597)             (42,113)

Net cash used in investing activities                                (39,083)          (1,275,248)

Cash flows from financing activities:                                                             
Proceeds on notes payable                                             62,210                   -- 
Proceeds from advances from Golden Gate Investors, Inc.               82,177              665,208 
Proceeds from convertible debenture                                       --               60,000 
Proceeds from stock issuances                                         92,900            1,438,987 

Net cash provided by investing activities                            237,287            2,164,195 

Net change in cash and cash equivalents                                3,942             (285,002)

Cash, beginning of period                                             24,976              342,634 

Cash, end of period                                                   28,918               57,632 

   See Accompanying Notes to Consolidated Financial Statements

              GAMEZNFLIX, INC.
                NOTES TO UNAUDITED
                 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, 2007.                                                        

The interim financial statements present the balance sheets,                    
statements of operations, and statements of 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 June 30, 2008 and the results of operations and cash             
flows for the three and six 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.              

History - The Company provides online digital video disk ("DVD")                
movie and video game rentals to subscribers through its Internet                
website www.gameznflix.com.  Aside from having a comprehensive movie            
library of titles, the Company also provides subscribers with access            
to a comprehensive games library of Xbox, Playstation 2, Playstation,           
and Nintendo Gamecube titles.  Subscribers of the Company are located           
within the United States of America.  The Company maintains its                 
headquarters in Franklin, Kentucky.                                             

2.  SIGNIFICANT ACCOUNTING POLICIES                                             

Use of Estimates - The preparation of consolidated financial                    
statements in conformity with accounting principles generally accepted          
in the United States 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          
consolidated financial statements and the reported amounts of revenue           
and expenses during the reporting period. Actual results could differ           
from those estimates.                                                           

DVD and Video Games Libraries - DVD's and video games are recorded at           
historical cost and depreciated using the straight-line method over a           
twelve-month period.  The Company has no immediate plans to have any            
part of its DVD and video games libraries sold and accordingly no               
salvage value is provided.  However if the Company does sell any of             
its DVD and video games 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 accompanying             
consolidated statement of operations. 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.                                                         

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.                                                     

Revenue Recognition and Cost of Revenue - 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,                    
fulfillment expenses, and postage and packaging expenses related to             
DVD's and video games provided to paying subscribers.  Revenue sharing          
expenses are recorded as DVD's subject to revenue sharing agreements            
are shipped to 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.                                                    

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.                                                                       

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.  The Company has settled this matter for the            
sum of $350,000.  Payment is to be made no later than October 22,               
2008.                                                                           

(b)  On February 15, 2008, an action was filed in the                 
United States District Court, District of Kentucky (Bowling Green               
Division), entitled Peppe v. GameZnFlix Inc. et al.  In this action,            
a past employee of the Company claims damages of approximately                  
$265,000 in connection with an employment agreement with the Company.           
This matter has been resolved with a confidential settlement                    
agreement.                                                                      

4.  STOCK TRANSACTIONS                                                          

During the six months ended June 30, 2008, 287,600,000 stock options            
were exercised at an average strike price of $0.00024 per share for             
total consideration of $67,900. Accordingly, 287,600,000 shares of              
the company's common stock were issued in accordance with this option           
agreement.                                                                      

During the six months ended June 30, 2008, 290,847,000 shares were              
issued for services rendered.  These shares were valued at                      
$34,105  ($0.0001 per share).                                                   

During the six months ended June 30, 2008, the Company issued                   
533,000,000 shares in conjunction with the convertible debenture                
being converted to equity and the related warrant purchase.                     
532,897,101 shares were issued for the conversion of debt of $1,029             
and 102,899 shares were issued for the warrants exercised at a price            
of $1.09 per share or $112,160, which was offset against the advanced           
funds received from the warrant holder.                                         

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, through its websites, www.gameznflix.com and             
www.gnfgames.com, is an online video game and DVD movie rental                  
business dedicated to providing subscribers a quality rental                    
experience. The Company offers subscribers a reliable, web-based                
alternative to traditional store-based DVD and video game rentals on a          
national scale with an extensive library of video game and DVD titles.          
The Company offers subscribers several different subscription plans             
ranging from $8.99 per month to $16.99 per month.  The Company's more           
popular $16.99 per month subscription plan allows subscribers to have           
up to three DVD and video game titles out at the same time with no due          
dates, late fees, or shipping charges. Subscribers select titles at             
the Company's websites, which are then sent via U.S mail with a                 
prepaid return mailer. The Company offers a high level of customer              
service, quality DVD and video game titles, and superior product                
availability.                                                                   

In June 2004, the Company launched its website,                       
www.gameznflix.com, and became fully operational in September 2004. In          
conjunction with the website, the Company runs ad campaigns designed            
to create awareness among our target consumers and generate traffic to          
the website.                                                                    

In October 2005, the Company entered into an agreement with           
Circuit City Stores, Inc. ("Circuit City") that provided for a pilot            
program in 27 retail stores and on the Circuit City website to promote          
services.  On March 23, 2006, the Company entered into a definitive             
co-marketing agreement with Circuit City that specified a scheduled             
rollout of services to all the Circuit City.  Although the overall              
number of subscribers obtained from the initial pilot program was not           
considered significant in relation to the overall number of new                 
subscribers added during the six months ended June 30, 2006, the                
Company believes that its relationship with Circuit City brought more           
prominence and recognition to the Company. The current agreement with           
Circuit City ended in June 2007.                                                

In August 2007, the Company entered into an agreement with the        
U.S. Army & Air Force Exchange ("AAFES") to provide video game and              
movie rentals to all current and retired members of the Army and Air            
Force personnel through the AAFES website.  The agreement with AAFES            
gives the Company access to more than 11 million military personnel,            
retirees and their families.                                                    

During the fall of 2007, the Company further expanded its work        
with AAFES by developing an in store prepaid membership card.  This             
program has been launched in late June 2007 with shipment of the cards          
to the "AAFES" central warehouse for their delivery to its military             
base locations.                                                                 

The Company will continue to seek similar partnerships with           
nationally known companies or agencies to further brand the company name.       

In May 2007, the Company joined Mid-Night Gaming, a McDonald's        
restaurant cross-country tour visiting 10 cities in a motor coach               
"wrapped" in GameZnFlix advertisements (mobile advertising).  At each           
chosen McDonald's location the group of sponsors (Nintendo, Coke Cola,          
1UP, Best Buy, 2K Sports, IPlay and Spike) of the Mid-Night Gaming              
competition setup and allowed the public experience video gaming.               

The Company anticipates running a similar marketing campaign in       
2008 and will strive to secure affiliate partnerships for cross                 
advertisements of each other's products/services.                               

During the first six months of 2007, the Company retained Moroch,     
an advertising and marketing firm, to perform data collection, focus            
groups and market analysis of the current console video game and DVD            
rental market as well as the Company's position within that market.             
The results of this study confirmed management's position that the              
Company has evolved into a gamer-driven source for console video games          
and DVD rentals. The report included a number of strategies to better           
position the Company within its target market, as well as ways to               
better serve and communicate with existing members.                             

For the Company to see an increase growth, this will require it       
to make more significant capital investment in library content.                 
Management continues to seek investment opportunities with the                  
financial community to meet this need.  The Company's current                   
infrastructure will allow it to service approximately 150,000 monthly           
subscribers before such significant investment would be required.  The          
Company closely monitors its monthly growth rate to properly                    
anticipate the timing of additional investment in library content,              
distribution infrastructure, and technology.                                    

During the first six months of 2008, the Company has continued        
using its re-designed  distribution network so that now makes use of            
seven United States Postal Service ("USPS") centers located in                  
California (2), Florida, Maryland, Massachusetts, Texas, and                    
Washington. These USPS postal drop centers, which have been developed           
with the cooperation of the USPS, are strategically located to service          
the subscriber base in each of their respective regions. There are two          
warehousing centers located in Colorado and Kentucky that house the             
inventory of video games and DVD titles for shipment.  During this              
period, this system under went testing and the distribution network             
achieved its goals of 100% order fulfillment on a daily basis, 100%             
processing of returned mailers on a daily basis and overall success             
upgrading the integrity and rental ability of the inventory. The                
results of this redesign have allowed the Company to reduce its                 
employees to 4 employees and reduce related warehouse expenses.                 

During the first six months of 2008, the Company's membership         
continued a steady decrease and has become stable as of the end of              
this period.  Management recognizes that although growth did not                
happen, this was primarily the result of not being able to purchase             
new inventory at the levels demanded by its members.                            

Results of Operations.                                                          

(a)  Revenues.                                                                  

The Company had gross revenues of $305,797 and $686,063 for the       
three and six months ended June 30, 2008 compared to $887,181 and               
$1,841,184 for the three and six months ended June 30, 2007, a                  
decrease of $581,384 and $1,155,121 or approximately 66% and 63%,               
respectively.  Gross revenues decreased significantly during the three          
and six months ended June 30, 2008 compared to the prior periods                
primarily due to a smaller subscriber base compared to the same period          
in 2007 by a monthly subscriber base average of 9,800 compared to               
23,000 in the prior six months period fueled by economic conditions             
and the Company's slower inventory purchasing.                                  

As of June 30, 2008, the Company had approximately 6,300 total        
subscribers. The Company continues to focus on growing its subscriber           
base through marketing and an affiliate partnership program. The                
Company's churn rate is approximately 29% for the six months ended              
June 30, 2008 as compared with the prior period of approximately 16%.           
Churn rate is calculated by dividing customer cancellations in the              
period by the sum of beginning subscribers and gross subscriber                 
additions, and then divided by the number of months in the period.              
Customer cancellations during the six months ended June 30, 2007,               
includes cancellations from gross subscriber additions, which is                
included in the gross subscriber additions in the denominator.                  

(b)  Cost of Revenues.                                                          

The Company had cost of revenues of $115,704 and $288,503 for the     
three and six months ended June 30, 2008 compared to $2,054,828 and             
$3,557,987 for the three and six months ended June 30, 2007, a                  
decrease of $1,939,124 and $3,269,484 or approximately 94% and 92%,             
respectively.  Cost of revenues decreased as a percentage to gross              
revenues during 2008 compared to 2007 primarily due to the Company              
purchasing new inventory in a controlled  fashion to match the                  
membership and the bulk of the inventory had been fully depreciated.            

(c)  Advertising.                                                               

The Company had advertising expenses of $$43,696 and $61,105 for      
the three and six months ended June 30, 2008 compared to $515,845 and           
$1,097,471 for the three and six months ended June 30, 2007, a                  
decrease of $472,149 and $1,036,366 or approximately 92% and 94%,               
respectively. Such advertising consisted of a decrease in direct                
marketing through print, radio and online Internet advertising.                 

(d)  Selling, General and Administrative Expenses.                              

The Company had selling, general and administrative expenses of       
$235,182 and $577,378 for the three and six months ended June 30, 2008          
compared to $1,676,910 and $3,037,289 for the three and six months              
ended June 30, 2007, a decrease of $1,441,728 and $2,459,912 or                 
approximately 86% and 81%, respectively. The decrease in selling,               
general and administrative expenses was principally due to the company          
downsizing compared to the same period in 2007                                  

(e)  Consulting and Professional Fees.                                          

The Company had consulting and professional fees of $16,897 and       
$29,287 for the three and six months ended June 30, 2008 compared to            
$170,817 and $325,642 for the three and six months ended June 30,               
2007, a decrease of $153,920 and $304,775 or approximately 90% and              
94%, respectively.  Decrease in consulting and professional fees                
during the six months ended June 30, 2008 compared to the prior period          
was primarily a result of decreased need of business consultants that           
was widely utilized during 2007. The professional fees for the six              
months ended June 30, 2008 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 $161,619 and $374,550 for the three     
and six months ended June 30, 2008 compared to $3,621,678 and                   
$6,350,204 for the three and six months ended June 30, 2007, a                  
decrease of $3,460,059 and $5,984,055 or approximately 96% and 94%,             
respectively.  The decreases in net loss are the result of the factors          
mentioned above. The Company anticipates having a recurring net loss            
during the remainder of 2008.                                                   

Factors That May Affect Operating Results.                                      

The Company's operating results can vary significantly depending      
upon a number of factors, many of which are outside its control.                
General factors that may affect its operating results include:                  

- market acceptance of and changes in demand for services;            

- a small number of customers account for, and may in future          
periods account for, substantial portions of our revenue, and     
revenue could decline because of delays of customer orders or     
the failure to retain customers;                                  

- gain or loss of clients or strategic relationships;                 

- announcement or introduction of new services by us or by our        
competitors;                                                      

- price competition;                                                  

- the ability to upgrade and develop systems and infrastructure to    
accommodate growth;                                               

- the ability to introduce and market services in accordance with     
market demand;                                                    

- changes in governmental regulation; and                             

- reduction in or delay of capital spending by clients due to the     
effects of terrorism, war and political instability.              

The Company believes that its planned growth and profitability        
will depend in large part on the ability to promote its services,               
gain clients and expand our relationship with current clients.                  
Accordingly, the Company intends to invest in marketing, strategic              
partnerships, and development of its customer base.  If the Company             
is not successful in promoting our services and expanding our                   
customer base, this may have a material adverse effect on our                   
financial condition and our ability to continue to operate our business.        

The Company is also subject to the following specific factors         
that may affect its operations:                                                 

(a)  The Company's Ability to Attract and Retain Subscribers Will               
Affect the Business.                                                            

The Company must continue to attract and retain subscribers.  To      
succeed, the Company must continue to attract subscribers who have              
traditionally used video and game retailers, video and game rental              
outlets, cable channels, such as HBO and Showtime and pay-per-view.             
The Company's ability to attract and retain subscribers will depend             
in part on its ability to consistently provide subscribers a high               
quality experience for selecting, viewing or playing, receiving and             
returning titles.  If consumers do not perceive the service offering            
to be of quality, or if the Company introduces new services that are            
not favorably received by them, the Company may not be able to                  
attract or retain subscribers.  If the efforts to satisfy the                   
Company's existing subscribers are not successful, it may not be able           
to attract new subscribers, and as a result, revenues will be                   
affected adversely.                                                             

The Company must minimize the rate of loss of existing                
subscribers while adding new subscribers.  Subscribers cancel their             
subscription to the service for many reasons, including a perception            
that they do not use the service sufficiently, delivery takes too               
long, the service is a poor value and customer service issues are not           
satisfactorily resolved.  The Company must continually add new                  
subscribers both to replace subscribers who cancel and to grow the              
business beyond the current subscriber base.  If too many subscribers           
cancel the service, or if the Company is unable to attract new                  
subscribers in numbers sufficient to grow the business, operating               
results will be adversely affected.  Further, if excessive numbers of           
subscribers cancel the service, we may be required to incur                     
significantly higher marketing expenditures than currently                      
anticipated to replace these subscribers with new subscribers.                  

Subscribers to the service can view as many titles and/or play        
as many games as they want every month and, depending on the service            
plan, may have out between three and six titles at a time. With the             
Company's use of seven shipping centers and the associated software             
and procedural upgrades, the Company has reduced the transit time of            
DVD's and games.  As a result, subscribers have been able to exchange           
more titles each month, which has increased operating costs.  As the            
Company establishes additional planned shipping centers and further             
refines its distribution process, the Company may see a continued               
increase in usage by subscribers.  If subscriber retention does not             
increase or operating margins do not improve to an extent necessary             
to offset the effect of increased operating costs, operating results            
will be adversely affected.                                                     

Subscriber demand for titles may increase for a variety of other      
reasons beyond the Company's control, including promotion by studios            
and seasonal variations in movie watching. Subscriber growth and                
retention may be affected adversely if the Company attempts to                  
increase monthly subscription fees to offset any increased costs of             
acquiring or delivering titles and games.                                       

The "GameZnFlix" brand is young, and the Company must continue to     
build strong brand identity.  To succeed, the Company must continue             
to attract and retain a number of owners of DVD's and video game                
players who have traditionally relied on store-based rental outlets             
and persuade them to subscribe to the Company's service through its             
website.  The Company may be required to incur significantly higher             
advertising and promotional expenditures than currently anticipated             
to attract numbers of new subscribers.  The Company believes that the           
importance of brand loyalty will increase with a proliferation of DVD           
and game subscription services and other means of distributing                  
titles.  If the Company's efforts to promote and maintain its brand             
are not successful, operating results and ability to attract and                
retain subscribers will be affected adversely.                                  

(b)  The Company's Inability to Use Current Marketing Channels May              
Affect Its Ability to Attract New Subscribers.                                  

The Company may not be able to continue to support the                
marketing of its services by current means if such activities are no            
longer available or are adverse to the business.  In addition, the              
Company may be foreclosed from certain channels due to competitive              
reasons.  If companies that currently promote the Company's services            
decide to enter this line of business or a similar business, the                
Company may no longer be given access to such channels.  If the                 
available marketing channels are curtailed, the Company's ability to            
attract new subscribers may be affected adversely.                              

(c)  Selection of Certain Titles by Subscribers May Affect Costs.               

Certain titles cost the Company more to acquire depending on the      
source from whom they are acquired and the terms on which they are              
acquired.  If subscribers select these titles more often on a                   
proportional basis compared to all titles selected, DVD or game                 
acquisition expenses could increase, and gross margins could be                 
adversely affected.                                                             

(d)  Mix of Acquisition Sources May Affect Subscriber Levels.                   

The Company utilizes a mix of incentive-based and fixed-cost          
marketing programs to promote the service to potential new                      
subscribers.  The Company obtains a portion of its new subscribers              
through online marketing efforts, including third party banner ads,             
direct links and an active affiliate program.  While the Company                
opportunistically adjusts its mix of incentive-based and fixed-cost             
marketing programs, the Company attempts to manage the marketing                
expenses to come within a prescribed range of acquisition cost per              
subscriber.  To date, the Company has been able to manage acquisition           
cost per subscriber; however, if the Company is unable to maintain or           
replace sources of subscribers with similarly effective sources, or             
if the cost of existing sources increases, subscriber levels may be             
affected adversely and the cost of marketing may increase.                      

(e)  Competition May Affect the Business.                                       

The market for on-line rental of DVD's and games is                   
competitive and the Company expects competition to continue to                  
increase.  In addition, the companies with whom the Company has                 
relationships could develop products or services, which compete with            
its services.  Also, some competitors have longer operating                     
histories, significantly greater financial, technical, marketing and            
other resources, and greater brand recognition than the Company does.           
The Company also expects to face additional competition as other                
established and emerging companies enter the market for on-line                 
rentals.  To be competitive, the Company believes that it must, among           
other things, invest resources in developing new products, improving            
current services and maintaining customer satisfaction.  Such                   
investment will increase expenses and may affect profitability.  In             
addition, if the Company fails to make this investment, it may not be           
able to compete successfully with its competitors, which may have a             
material adverse effect on revenue and future profitability.                    

(f)  Any Significant Disruption in Service on the Company's Website             
Could Result in a Loss of Subscribers.                                          

Subscribers and potential subscribers access the Company's            
service through its website, where the title selection process is               
integrated with the delivery processing systems and software. The               
Company's reputation and ability to attract, retain and serve                   
subscribers is dependent upon the reliable performance of the                   
website, network infrastructure and fulfilment processes.                       
Interruptions in these systems could make the website unavailable and           
hinder the Company's ability to fulfil selections.  Service                     
interruptions or the unavailability of the website could diminish the           
overall attractiveness of the subscription service to existing and              
potential subscribers.                                                          

The Company's servers utilize a number of techniques to track,        
deter and thwart attacks from computer viruses, physical or                     
electronic break-ins and similar disruptions, which could lead to               
interruptions and delays in the service and operations as well as               
loss, misuse or theft of data.  The Company currently uses both                 
hardware and software to secure its systems, network and, most                  
importantly, our data from these attacks; this includes several                 
layers of security in place for our protection and that of members'             
data.  The Company also has procedures in place to ensure that the              
latest security patches and software are running on our servers, thus           
maintaining another level of security.                                          

Any attempts by hackers to disrupt the website service or the         
internal systems, if successful, could harm the business, be                    
expensive to remedy and damage our reputation.  The Company does not            
have an insurance policy that covers expenses related to direct                 
attacks on our website or internal systems.  Any significant                    
disruption to the website or internal computer systems could result             
in a loss of subscribers and adversely affect the business and                  
results of operations.                                                          

(g)  Potential Delivery Issues Could Result in a Loss of Subscribers.           

The Company relies exclusively on the USPS to deliver DVD's and       
games from the shipping centers and to return DVD's and games from              
subscribers.  The Company is subject to risks associated with using             
the public mail system to meet shipping needs, including delays                 
caused by bioterrorism, potential labor activism and inclement                  
weather.  The Company's DVD's and games are also subject to risks of            
breakage during delivery and handling by the USPS.  The risk of                 
breakage is also impacted by the materials and methods used to                  
replicate DVD's and games.  If the entities replicating DVD's and               
games use materials and methods more likely to break during delivery            
and handling or the Company fails to timely deliver DVD's and games             
to subscribers, subscribers could become dissatisfied and cancel the            
service, which could adversely affect operating results.  In                    
addition, increased breakage rates for DVD's and games will increase            
the cost of acquiring titles.                                                   

(h)  There May be a Change in Government Regulation of the Internet             
or Consumer Attitudes Toward Use of the Internet.                               

The adoption or modification of laws or regulations relating to       
the Internet or other areas of our business could limit or otherwise            
adversely affect the manner in which we currently conduct our                   
business.  In addition, the growth and development of the market for            
online commerce may lead to more stringent consumer protection laws,            
which may impose additional burdens on the Company.  If the Company             
is required to comply with new regulations or legislation or new                
interpretations of existing regulations or legislation, this                    
compliance could cause the Company to incur additional expenses or              
alter its business model.                                                       

The manner in which Internet and other legislation may be             
interpreted and enforced cannot be precisely determined and may                 
subject either the Company or its customers to potential liability,             
which in turn could have an adverse effect on the business, results             
of operations and financial condition.  The adoption of any laws or             
regulations that adversely affect the popularity or growth in use of            
the Internet could decrease the demand for the subscription service             
and increase the cost of doing business.                                        

In addition, if consumer attitudes toward use of the Internet         
change, consumers may become unwilling to select their entertainment            
online or otherwise provide the Company with information necessary              
for them to become subscribers.  Further, the Company may not be able           
to effectively market its services online to users of the Internet.             
If the Company is unable to interact with consumers because of                  
changes in their attitude toward use of the Internet, subscriber                
acquisition and retention may be affected adversely.                            

(i)  Any Required Expenditures as a Result of Indemnification Will              
Result in Increased Costs.                                                      

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 the Company's 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.                              

(j)  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.                        

(k)  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 $194,262 for the        
six months ended June 30, 2008 compared to $1,173,949 for the six               
months ended June 30, 2007, a decrease of $979,687 or approximately             
83%.  This change is attributed to many changes from period to                  
period, including the reduction in general operating expenses and a             
reduction in accounts receivable payable and accrued expenses.                  

Investing Activities.                                                           

Net cash used in investing activities was $39,083 for the six         
months ended June 30, 2008 compared to $1,275,248 for the six months            
ended June 30, 2007, a decrease of $1,236,165 or approximately 97%.             
This decrease resulted primarily from reduced purchases of DVD's,               
games, and films.                                                               

Liquidity and Capital Resources.                                                

As of June 30, 2008, the Company had total current assets of          
$291,786 and total current liabilities of $2,886,551, resulting in a            
working capital deficit of $2,594,765.  The Company's cash balance as           
of June 30, 2008 totaled $28,918.  Overall, cash and cash equivalents           
for the six months ended June 30, 2008 increased by $3,942.                     

As of December 31, 2007, the Company had total current assets of      
$297,252 and total current liabilities of $3,105,723 resulting in a             
working capital deficit of $2,808,471.  The cash balance as of                  
December 31, 2007 totaled $24,976.  Overall, cash and cash                      
equivalents for the year ended December 31, 2007 decreased by $317,658.         

Net cash provided by financing activities was $237,287 for the        
six months ended June 30, 2008 compared to $2,164,195 for the six               
months ended June 30, 2007, a decrease of $1,926,908 or approximately           
89%.  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 June 30, 2008,            
a total of 45,639 (post reverse split) shares have been 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 June 30, 2008, a total of 105,881 (post reverse split)             
shares have been 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 these 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, the Company 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's and Video Games Libraries.                                           

As of June 30, 2008, the Company has invested approximately           
$6,789,000 in its DVD and video game libraries resulting in                     
approximately 50,000 DVD and video game titles available for rental.            
The Company acquires DVD and video games from distributors through a            
direct purchase agreement.  Such purchases are recorded at the                  
historical cost.  The Company depreciates its DVD and video games               
libraries on a straight-line basis over a twelve-month period. The              
Company has not assigned a salvage value since it is its intention to           
not sell the libraries.  In the event that the Company does sell a              
portion of its libraries as a result of slow moving title rentals, it           
will re-evaluate the policy of depreciation in relation to the                  
salvage value.                                                                  

(c)  Revenue Recognition and Cost of Revenue.                                   

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 fulfillment expenses,       
and postage and packaging expenses related to DVD's and video games             
provided to paying subscribers.  Revenue sharing expenses are                   
recorded as DVD's subject to revenue sharing agreements are shipped             
to 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 sharing agreements.                                                     

(d)  Non-Cash Compensation Valuation.                                           

The Company 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 selling, general and           
administrative expenses 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 June 30, 2008 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.                                                     

There have been no material developments in the legal                 
proceedings as previously disclosed in response to Item 3 of Part I             
of the Company's latest Form 10-K, 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.  The Company has settled this matter for the            
sum of $350,000.  Payment is to be made no later than October 22, 2008.         

(b)  On February 15, 2008, an action was filed in the                 
United States District Court, District of Kentucky (Bowling Green               
Division), entitled Peppe v. GameZnFlix Inc. et al.  In this action,            
a past employee of the Company claims damages of approximately                  
$265,000 in connection with an employment agreement with the Company.           
This matter has been resolved with a confidential settlement agreement.         

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 on June 30, 2008.  There               
were no purchases of the Company's common stock by the Company or its           
affiliates during the three months ended June 30, 2008.                         

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.                                       

Not Applicable.                                                       

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                   

None.                                                                 

ITEM 5.  OTHER INFORMATION.                                                     

None.                                                                 

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: August 12, 2008                 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 (filed herewith).            

4.36     Assignment and Assumption Agreement between Golden Gate                
Investors, Inc., RMD Technologies, Inc., and the Company,     
dated May 29, 2007 (filed herewith).                          

4.37     Addendum to Convertible Debenture and Warrant to Purchase              
Common Stock, dated June 15, 2007 (filed herewith).           

4.38     Rescission Agreement between Golden Gate Investors, Inc.,              
RMD Technologies, Inc., and the Company, dated September      
17, 2007 (filed herewith).                                    

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 (filed herewith).

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).        

23       Consent of Child, Van Wagoner & Bradshaw, PLLC                         
(incorporated by reference to Exhibit 23 of the Form 10-K     
filed on April 15, 2008)                                      

31       Rule 13a-14(a)/15d-14(a) Certification of John Fleming                 
(filed herewith).                                             

32       Section 1350 Certification of John Fleming (filed herewith).           

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing		Date		Other Filings
		10/22/08
Filed on:		8/14/08
		8/12/08
For Period End:		6/30/08
		4/15/08		10-K
		2/15/08
		2/8/08		SC 13G/A
		12/31/07		10-K,  NT 10-K
		9/17/07
		9/6/07
		8/1/07
		6/30/07		10QSB,  NT 10-Q
		6/15/07
		5/29/07
		5/24/07		8-K
		3/16/07		8-K
		2/14/07		S-8
		2/1/07
		8/1/06		8-K
		6/30/06		10QSB
		3/30/06		SB-2
		3/27/06		8-K
		3/23/06
		3/22/06
		3/21/06		8-K
		2/1/06		10KSB,  8-K
		1/17/06		S-8
		1/6/06
		1/5/06		8-K,  8-K/A
		1/2/06
		12/28/05
		10/6/05		8-K
		10/4/05		8-K
		9/28/05		8-K
		9/25/05		8-K
		8/1/05		8-K
		7/22/05		8-K,  SB-2/A
		7/21/05		S-8 POS
		7/19/05		8-K
		7/13/05
		5/5/05		SB-2/A
		4/18/05		S-8 POS
		4/15/05
		4/1/05		10KSB,  NT 10-K
		2/2/05		S-8 POS
		1/28/05		3
		1/18/05		8-K/A
		12/21/04		8-K
		12/17/04
		12/16/04		8-K
		11/30/04		8-K
		11/17/04
		11/11/04		8-K,  8-K/A
		10/8/04		8-K
		10/1/04		3
		8/31/04		4,  S-8 POS
		8/23/04
		7/9/04		3/A
		5/25/04		S-8 POS
		5/20/04
		4/19/04		10KSB
		1/26/04
		1/21/04		8-K/A
		12/9/03		S-8 POS
		11/17/03		NT 10-Q
		10/9/03		8-K
		9/25/03		8-K,  8-K/A
		9/3/03		S-8 POS
		8/20/03		10QSB
		8/17/03
		7/11/03
		5/12/03		8-K/A,  S-8
		4/29/03		8-K/A
		4/25/03
		4/15/03		10KSB
		3/5/03
		11/21/02
		11/13/02		8-K
		11/5/02		8-K/A
		10/31/02		8-K,  8-K/A
		9/23/02		8-K
		9/13/02		8-K,  8-K/A
		7/30/02		S-8
		7/1/02
		3/7/02		8-K/A
		2/6/02		S-8
		12/19/01
		12/1/01
		8/24/01		8-K/A
		7/11/01
		7/1/01
		8/28/00		POS AM
		8/14/00
		6/27/00		SB-2/A
		6/2/00		SB-2
		5/21/00
		5/1/00
		3/21/00		10SB12G
		1/27/00
		1/25/00		10SB12G
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