UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009


o	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 33-20783-D

GOTTAPLAY INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)


NEVADA	20-1645637
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization	Identification No.)

64 Commercial Avenue
Garden City, New York 11530
(Address of principal executive offices, including ZIP code)

(800) 826-2379
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange act.


Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

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

Yes o No x

As of May 8, 2009, the registrant had 44,187,035 shares of its $0.001 par value common stock outstanding.

Gottaplay Interactive, Inc.

Table of Contents


		Page


	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3
	Consolidated Condensed Balance Sheets	3
	Consolidated Condensed Statements of Operations	4
	Consolidated Condensed Statement of Stockholders’ Deficit	5
	Consolidated Condensed Statements of Cash Flows	6
	Notes to Consolidated Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures of Market Risk	20
Item 4.	Controls and Procedures	20


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Submission of Matters to a Vote of Security Holders	22
Item 5.	Other Information	22
Item 6.	Exhibits	22

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Gottaplay Interactive, Inc.
and Its Wholly Owned Subsidiary
Consolidated Condensed Balance Sheets


	March 31, 2009 (Unaudited)			September 30, 2008 (1)

Assets

Current assets
Cash and cash equivalents	$	14,062		$	28,663
Account receivable		158,420			295,450
Prepaid expenses and other current assets		800			1,991
Amount held in escrow, net of $126,900 for doubtful realization		—			—

Total current assets		173,282			326,104


Property and equipment
Fixed assets, net		375,675			442,197
Video game library, net		14,983			14,911

Total property and equipment		390,658			457,108


Other assets
Deposits		1,480			3,614


Total assets	$	565,420		$	786,826


Liabilities and Stockholders’ Deficit


Current liabilities
Accounts payable	$	687,268		$	762,699
Accrued liabilities		796,896			611,441
Deferred revenues		6,554			10,993
Notes payable		1,365,000			1,365,000
Convertible notes payable, net of discounts		1,157,873			1,238,234
Convertible notes payable – related parties, net of discounts		—			24,880

Total current liabilities		4,013,591			4,013,247


Stockholders’ deficit
Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value, 100,000,000 shares authorized, 44,187,035 and 33,307,898, respectively, shares issued and outstanding		44,187			33,307
Additional paid-in capital		8,512,725			7,869,107
Common stock authorized, but unissued		—			231,470
Accumulated deficit		(12,005,083	)		(11,360,305	)

Total stockholders’ deficit		(3,448,171	)		(3,226,421	)


Total liabilities and stockholders’ deficit	$	565,420		$	786,826

The accompanying notes are an integral part of these consolidated condensed financial statements.

(1) Amounts were derived from audited consolidated financial statements for the year ended September 30, 2008.

Gottaplay Interactive, Inc.
and Its Wholly Owned Subsidiary
Consolidated Condensed Statements of Operations
(Unaudited)


	Three months ended March 31,						Six months ended March 31,

	2009			2008			2009			2008


Revenues	$	46,131		$	612,591		$	100,009		$	791,394
Cost of revenues		8,712			493,719			15,609			605,971

Income before operating expenses		37,419			118,872			84,400			185,423


Operating expenses
General and administrative		84,350			378,758			236,695			631,755
Fulfillment		33,797			87,198			77,842			178,227
Advertising, marketing and web content		—			300			1,561			11,675
Technology and development		—			31,502			—			65,504
Officers’ compensation		—			28,204			—			59,204

Total operating expenses		118,147			525,962			316,098			946,365


Loss from operations		(80,728	)		(407,090	)		(231,698	)		(760,942	)


Other income (expense)
Interest income and other income		—			—			5			80
Interest expense and financing costs		(227,090	)		(97,059	)		(413,085	)		(330,101	)

Total other income (expense)		(227,090	)		(97,059	)		(413,080	)		(330,021	)


Loss from operations before provision for income taxes		(307,818	)		(504,149	)		(644,778	)		(1,090,963	)

Provision for income taxes		—			—			—			—


Net Loss	$	(307,818	)	$	(504,149	)	$	(644,778	)	$	(1,090,963	)


Weighted average number of common shares outstanding		43,800,683			33,307,898			40,802,684			33,162,015


Net loss per common shares outstanding, basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.03	)

The accompanying notes are an integral part of these consolidated condensed financial statements.

Gottaplay Interactive, Inc.
and Its Wholly Owned Subsidiary
Consolidated Condensed Statement of Stockholders’ Deficit
Six months ended March 31, 2009 (unaudited)


	Common Stock				Additional Paid In		Common Stock Authorized but			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Unissued			Deficit			Deficit

Balance at September 30, 2008 (1)		33,307,898	$	33,307	$	7,869,107	$	231,470		$	(11,360,305	)	$	(3,226,421	)


Issuance of shares of common stock previously authorized but unissued		5,432,676		5,433		226,037		(231,470	)		—			—

Issuance of common stock for services		500,000		500		14,500		—			—			15,000

Issuance of common stock for debt		4,946,461		4,947		179,744		—			—			184,691

Valuations of warrants per grants made in conjunction with notes payable and related extensions		—		—		223,337		—			—			223,337

Net Loss for the six months ended, March 31, 2009		—		—		—		—			(644,778	)		(644,778	)


Balance at March 31, 2009		44,187,035	$	44,187	$	8,512,725	$	—		$	(12,005,083	)	$	(3,448,171	)

The accompany notes are an integral part of these consolidated condensed financial statement.

(1) Amounts were derived from audited consolidated financial statements for the year ended September 30, 2008.

Gottaplay Interactive, Inc.
and Its Wholly Owned Subsidiary
Consolidated Condensed Statements of Cash Flows (Unaudited)


	Six months ended March 31,
	2009			2008


Net loss from continuing operations	$	(644,778	)	$	(1,090,963	)
Adjustments to reconcile net loss to cash (used) in operating activities:
Depreciation and amortization		67,936			193,352
Valuation and discount amortization of warrants		244,995			204,653
Share–based compensation for services		15,000			32,250
Basis of assets sold		381			—

Changes in assets and liabilities:
Account receivable		137,030			(465,450	)
Accounts payable		(18,999	)		67,468
Accrued liabilities		188,949			5,220
Deferred revenue		(4,439	)		(16,403	)
Prepaid expenses and other current assets		1,191			13,724

Net cash (used) in operating activities		(12,734	)		(1,056,149	)


Cash flows from investing activities:
Purchase of video game library		(1,867	)		(28,792	)

Net cash (used) in investing activities		(1,867	)		(28,792	)


Cash flows from financing activities:
Proceeds from notes and loans payable		—			1,192,500
Payments on notes payable		—			(183,500	)

Net cash provided by financing		—			1,009,000


Net (decrease) in cash		(14,601	)		(75,941	)
Cash at beginning of period		28,663			149,355


Cash at end of period	$	14,062		$	73,414

Supplemental disclosures and non-cash investing and financing activities - see Note 10.

The accompanying notes are an integral part of these consolidated condensed financial statements.

Gottaplay Interactive, Inc. and Its Wholly Owned Subsidiary
Notes to Consolidated Condensed Financial Statements
March 31, 2009 ( Unaudited)

Note 1 – Nature of Business and Basis of Presentation

Nature of Business

Gottaplay Interactive, Inc. (“Gottaplay”) is an on-line video game rental subscription service, which began operations in October 2004. The operation provides subscribers access to a comprehensive library of titles via the internet as an alternative to store based gaming rentals. The Company primarily offers three different monthly service plans with price points at: (a) $12.95, (b) $20.95 and (c) $28.95. Each plan allows active subscribers the right to have in their possession a certain number of games at any one time. Subscribers select titles at the Company’s website, aided by its proprietary recommendation service, and generally receive the DVD game selected within two to three business days via the U.S. Postal Service. Gamers may return a game at their convenience using the Company’s prepaid mailers. After a title has been mailed, the Company mails a title from the subscriber’s game queue. All of the Company’s subscription revenues are generated in the United States of America.

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and applicable United States Securities and Exchange Commission (“SEC”) Regulations for interim financial information. These interim financial statements are unaudited and, in the opinion of management, include all recurring adjustments and normal accruals necessary for a fair statement of the Company’s financial position and results of operations and cash flows for the dates and periods presented. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current fiscal year or for any future period. All significant intercompany accounts and transactions have been eliminated in consolidation.

These unaudited consolidated condensed financial statements should be read in conjunction with the more detailed audited consolidated financial statements as of the fiscal year ended September 30, 2008, included in our Annual Report on Form 10-KSB as filed with the SEC. Accounting policies used in the preparation of these unaudited consolidated condensed financial statements are consistent in all material aspects with the accounting policies described in the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-KSB, except where discussed below.

The Company and its wholly owned subsidiary adopted September 30th as its fiscal year end and are domiciled in Nevada.

Management’s Use of Estimates and Assumptions

The preparation of the consolidated condensed financial statements, in conformity with generally accepted accounting principles in the United States of America, requires management to make estimates, judgments and assumptions that affect the reported amounts of the assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements, and the reported amounts of revenue and expense during the reporting periods. Examples, though not exclusive, include estimates and assumptions of: loss contingencies; depreciation or amortization of the economic useful life of an asset; stock-based compensation forfeiture rates; estimating the fair value and impairment; potential outcome of future tax consequences of events that have been recognized in our financial statements or tax returns; and determining when investment impairments are other-than temporary. The Company bases its estimates on historical experience and on various assumptions that the Company believes 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 materially differ from these estimates under different assumptions and conditions.

Reclassifications

Certain amounts reported in previous periods have been reclassified to conform to the Company’s current period presentation.

Revenue Recognition

In accordance with the SEC’s Staff Accounting Bulletin No. 104, “Revenue Recognition”, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable.

Loss per Common Share

Basic loss per common share is provided in accordance with SFAS 128, “Earnings Per Share.” Basic loss per common share is computed by dividing the net loss available to the shareholders of common stock by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing the net loss by the weighted average number of common shares including the dilutive effect of common share equivalents then outstanding. Common stock equivalents are not included in the computation of diluted net loss per common share because the effect would be anti-dilutive.

The following securities were not included in the computation of diluted net loss per share of common stock as their effect would have been anti-dilutive:


	March 31, 2009		September 30, 2008


Options to purchase common stock		2,207,000		2,207,000
Warrants to purchase common stock		58,869,546		8,076,396
Secured notes payable convertible into common stock		2,315,746		2,315,746
Unsecured notes payable convertible into common stock		—		4,230,000
Stock authorized, but unissued		—		5,432,676

		63,392,292		22,261,818

Dividends

The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception.

Share-Based Payments

The Company adopted Statement of Financial Accounting standards (“SFAS”) No. 123 (Revised December 2004), “Share-Based Payment” (SFAS No. 123R), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including stock options, employee stock purchases related to an employee stock purchase plan and restricted stock units based on estimated fair values of the awards over the requisite employee service period. Under SFAS No. 123R, stock-base compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized on a straight-line basis as expense over the employee’s requisite service period. The measurement of the stock-based compensation cost is based on several criteria including, but not limited, the valuation model used and associated input factors such as expected term of the award, stock price volatility, dividend rate, risk-free interest rate and award cancellation rate. The input factors used in the valuation model are based on subjective future expectations combined with management judgment. If there is a difference between the assumptions used in determining stock-based compensation, costs and the actual factors, which become known over time, we may change the future input factors used in determining stock-base compensation costs. These changes may materially impact the results of operations in the periods over which such costs are expensed.

Recent Authoritative Accounting Pronouncements

In May 2008, the FASB released SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that presented in conformity with generally accepted accounting principles in the United States of America. SFAS No. 162 will be effective 60 days following the SEC’s approval of the PCAOB amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The FASB has stated that it does not expect SFAS No. 162 will result in a change in current practice. The Company does not believe the application of SFAS 162 will have a significant impact, if any, on the Company’s consolidated financial statements.

May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts--an interpretation of FASB Statement No. 60” (“SFAS No. 163”). SFAS No. 163 interprets Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement. SFAS No. 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS No. 163 on its financial statements but does not expect it to have an effect on the Company’s financial position, results of operations or cash flows.

In May 2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt Instruments that may be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 applies to convertible debt securities that, upon conversion, may be settled by the issuer fully or partially in cash. FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years after December 15, 2008, and must be applied on a retrospective basis. Early adoption is not permitted. The Company is assessing the potential impact of this FSP on the convertible debt issuances.

In June 2008, the FASB issued FASB Staff Position (“FSP”) EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings per Share. Under the guidance of FSP EITF 03-6-1, unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings-per-share pursuant to the two-class method. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and all prior-period earnings per share data presented shall be adjusted retrospectively. Early application is not permitted. The Company is assessing the potential impact of this FSP on the earnings per share calculation.

In June 2008, the FASB ratified EITF No. 07-5, “Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. EITF 07-5 is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early application is not permitted. The Company is assessing the potential impact of this EITF 07-5 on the financial condition and results of operations.

In December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities” (“FSP FAS 140-4 and FIN 46(R)-8”). FSP FAS 140-4 and FIN 46(R)-8 amends FAS 140 and FIN 46(R) to require additional disclosures regarding transfers of financial assets and interest in variable interest entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for interim or annual reporting periods ending after December 15, 2008. FSP FAS 140-4 and FIN 46(R)-8 did not have any impact on the Company’s financial statements.

In April 2009, the FASB issued FSP 107-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP 107-1”), which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP 107-1 also amends APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting. FSP 107-1 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company is currently evaluating the potential impact of FSP 107-1 on its consolidated financial statement presentation and disclosures.

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

Note 2 - Going Concern and Management’s Plan

The Company’s consolidated condensed financial statements as of and for the six months ended March 31, 2009 have been prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company recorded a net loss of $644,778 from continuing operations and $12,734 of negative cash flows from operating activities for the six months ended March 31, 2009. At March 31, 2009, the Company had a working capital deficit of $3,840,309 and a stockholders’ deficit of $3,448,171. The accompanying consolidated condensed financial statements do not include any adjustments that might result from the ultimate outcome of these risks and uncertainties. As of March 31,2009 and as of the date of this report, the Company’s working capital deficit and cash flow projections, would not enable it to meet the due dates of certain financial obligations and operating objectives as presently structured.

The rate at which the Company expends it financial resources is variable, may be accelerated, and will depend on many factors. In order to obtain the necessary operating and working capital, the Company is seeking public or private equity investors and/or private debt financing. There can be no assurance that such additional funding, if any, will be available on acceptable terms. The Company’s continued existence as a going concern is completely dependent upon its ability to: (a.) grow sales and (b.) secure additional equity investments (c.) secure new debt financing and (d.) restructure existing debt. There is no assurance that the Company will be successful in any of these endeavors. Without sufficient, immediate, short-term financing, it will be unlikely for the Company to continue as a going concern.

Note 3 – Account Receivable

At March 31, 2009 and September 30, 2008, the Company was owed $158,420 and $295,450, respectively, from one customer. This asset is unsecured and without terms.

Note 4 – Amount Held in Escrow

Between June and July 2008, the Company entered into an agreement with a stockholder/investor and controlling party of certain note holders (“Stockholder”), of the Company whereby the Stockholder and the Company, together, would attempt, among other things, to achieve settlements with certain creditors for less than the amount owed to them. Each party to this agreement was to contribute approximately $125,000 to an escrow account of an entity controlled by the Stockholder (the “Entity”). In July 2008, the Company raised $126,900 from investors in the form of 6% convertible notes. To facilitate and expedite the transfer of funds, the Company authorized these investors to deposit their funds directly into the escrow account controlled by the Stockholder. In accordance with the terms of the agreement, the Stockholder was to pay into the escrow account a matching amount. The Stockholder failed to match the Company’s contribution. Accordingly, the Company has requested from the Stockholder and the Entity, a full accounting of, and the immediate return of the $126,900 because of a breach of the agreement. On December 26, 2008, the Board of Directors authorized the officers of the Company to consult with legal counsel to determine what action should be taken to recover these funds.

Because of the high level of uncertainty with the realization of this asset, the Company has reserved the entire amount of $126,900 on the accompanying Consolidated Condensed Balance Sheets.

Note 5 – Accrued Liabilities

The following table is a summary of accrued liabilities at:


	March 31, 2009		September 30, 2008


a. Interest	$	400,286	$	236,193
b. Other liabilities		285,153		284,148
c. Wages and related burden		103,739		84,356
d. Business taxes		6,718		6,744
e. Amount due subscribers		1,000		—

	$	796,896	$	611,441

Note 6 – Notes Payable

The Company has the following promissory notes due as of March 31, 2009 and September 30, 2008. All notes are classified as a current liability. Pertinent details of the notes are summarized as follows:


					Principal

	Collateral	Rate of Interest	Number of Notes	Due Dates	March 31, 2009		September 30, 2008


1.	No	14%	11	Extended to 6-30-2009	$	1,255,000	$	1,255,000
2.	No	18%	1	In default		95,000		95,000
3.	No	18%	1	In default		15,000		15,000

					$	1,365,000	$	1,365,000

Note 7 – Convertible Notes Payable

The following is a summary of the convertible notes payable:


						Principal

	Collateral	Related Party	Rate of Interest	Number of Notes	Due Dates	March 31, 2009		September 30, 2008


1.	Yes	No	9%	8	In default	$	1,157,873	$	1,157,873
2.	No	No	6%	16	—		—		96,900
2.(a)	No	Yes	6%	2	—		—		30,000

							1,157,873		1,284,773
	Less unamortized discount						—		(21,659	)

						$	1,157,873	$	1,263,114


					Unrelated parties	$	1,157,873	$	1,238,234
					Related Parties		—		24,880

					Total	$	1,157,873	$	1,263,114

Secured Convertible Notes Payable

The Company has eight secured convertible notes payable and total $1,157,873. These notes are in default. The notes, bearing interest at 9% per annum, were due on August 15, 2008. At March 31, 2009, related accrued interest totaled $66,712. Each investor was granted a pro-rata security interest in all the Company’s assets.

Unsecured Convertible Notes Payable

In July 2008, the Company raised $126,900 from eighteen investors in the form of convertible notes payable, bearing interest at 6% per annum, and due within one year from the date of issuance. On December 26, 2008, these notes, plus $3,494 of related accrued interest, were authorized by the Board to be converted into 4,346,461 shares of $0.001 par value common stock. These shares were issued in January 2009.

As of September 30, 2008, the investors were granted a total of 1,269,000 warrants in connection with their convertible notes discussed above. However, on December 26, 2008, the Board authorized an additional 41,031,000 warrants to be granted to the investors because the original warrant calculation was based on proceeds from the investment and not on shares of stock issued and as per the underlying agreement and board minutes. A total of 42,300,000 warrants have been granted to these investors.

For the six months ended March 31, 2009, the Company recognized as interest expense, discounts, on these unsecured convertible notes payable totaling $101,195, which equaled the estimated fair value of the warrants granted, as determined using the Black-Scholes Option Pricing Model. The unamortized balance at March 31, 2009 is zero. Discounts were recognized and amortized ratably over the term of each convertible note payable.

Note 8 – Options and Warrants

Under FASB Statement 123R, the Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model. The Company estimates the expected stock price volatility and the expected life of the awards based on historical data and representative peer group data. The risk-free interest rate for periods within the contractual life of the award is based on U.S. Treasury Constant Maturity yields with similar expected lives. The values of awards granted during the six months ended March 31, 2009 were estimated at the date of grant using the following weighted average assumptions:


Expected life (years)		.76
Risk-free interest rate		.43%
Stock price volatility		261.93%
Dividend yield		0.0%

On February 27, 2009, the holders of $1,255,000 of promissory notes extended the due dates of their notes to June 30, 2009. In consideration for this extension, the Company granted 9,480,000 warrants to the note holders. These warrants carried an exercise price of $0.005 and an expiration date of June 30, 2009. The Company recognized $143,800 as interest expense, the estimated fair value of these warrants, as determined using the Black-Scholes Option Pricing Model.

A summary of the Company’s stock options and warrants, as of and for the six months ended March 31, 2009, is presented below:


	Options and Warrants			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value

Balance at September 30, 2008		10,283,396		$	1.12	$	1.12

Granted		53,229,896			.02		.02
Exercised		—			—		—
Expired/Cancelled/Forfeited		(2,436,746	)		0.64		0.64

Balance at March 31, 2009		61,076,546		$	0.21	$	0.21

Vested and Exercisable, March 31, 2009		61,076,546		$	0 .21	$	0.21

The following table summarizes information about the Company’s outstanding stock options and warrants at March 31, 2009:


Range of Exercise Prices		Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Number Exercisable		Weighted Average Exercise Price


$	.00 - 0.03		51,780,000	$	.02		.46		51,780,000	$	.02
	.04 - 0.50		2,207,000		.50		6.89		2,207,000		.50
	.51 – 1.00		2,590,746		.73		.66		2,590,746		.73
	1.01 – 1.50		2,444,000		1.48		.37		2,444,000		1.48
	1.51 – 2.50		2,054,800		2.50		1.24		2,054,800		2.50

			61,076,546				.71		61,076,546

Note 9 - Authorized Capital

The Company is authorized is issue 100,000,000 shares of its $0.001 par value common stock. As of March 31, 2009 and as of the date of this report, if the above equity instruments were all exercised on March 31, 2009 and as of the date of this report, and the holders of convertible notes exercised their right to convert their debt into shares of common stock on the same date, the company would not have enough authorized shares of common stock to facilitate these actions. The Company exceeds the authorized number of shares by approximately 7.6 million shares. In the opinion of management, it is highly unlikely that the holders of these equity instruments would all exercise their positions simultaneously because approximately 39.9 million of these equity instruments have an exercise price significantly above recent close of day market prices, which have ranged from $0.01 to $0.003 per share. In addition, 33,249,000 warrants are due to expire on June 30, 2009.

Note 10 – Supplemental Cash Flows Information

Supplemental disclosures of cash flows information for the Company are summarized as follows:


	Six months ended March 31,
	2009		2008

Non-Cash Investing and Financing
Stock authorized, but unissued, for notes payable and accrued interest	$	130,394	$	—
Issuance of common stock in settlement of account payable		54,297		—
Security deposit released in settlement of account payable		2,134		—
Issuance of common stock in settlement of accrued liabilities		—		67,500
Rescission of 2.0 million shares of canceled stock at par value		—		2,000
Cancellation of 250,000 shares		—		(3	)

Cash Paid for Interest and Taxes
Interest	$	—	$	118,357
Taxes		—		—

Note 11 – Commitments and Contingencies

Collection Notice on Outstanding Judgment

The Company was notified in January 2009 that a Judgment was entered against it for approximately $105,000 (the “Judgment”), which represents the balance due on an obligation that the Company had incurred prior to the merger with Gotaplay Interactive, Inc. (The Company had merged with Gotaplay Interactive, Inc. and then changed its name to Gottaplay Interactive, Inc.) This liability was originally settled for $200,000 in July 2006. On August 1, 2007, the Company sold the assets of the ISP Division to a company (“buyer”) in which a former director and officer of the Company is a principal in exchange for the assumption of the liabilities of that Division. Substantially all the obligations of the ISP Division at the date of sale were assumed by the buyer. Pursuant to terms of the sale agreement, Focus is to indemnify the Company in the event that the Company would have to pay any of the liabilities of the sold ISP Division. Accordingly, the Company recognized a contingent liability of $105,000 in the accompanying Consolidated Condensed Balance Sheets in accrued liabilities. The Company has notified the buyer about this Judgment and will attempt to enforce rights of indemnification should the Company be forced to settle this claim.

Other

The Company is also subject to various business disputes involving ordinary and routine claims. The ultimate legal and financial liability with respect to such matters cannot be estimated with certainty and requires the judgment of legal counsel and the use of estimates in recognizing and recording liabilities for potential litigation settlements. Estimates for losses from litigation are made only after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, the Company may be required to recognize either more or less litigation related expense.

The Company has received many notices from various collection agencies and legal firms regarding certain unpaid, past due accounts payables. These notices are evaluated for propriety and accuracy and then reconciled to the vendor’s account payable. As of March 31, 2009 and as of the date of this report, the Company is not in a position to pay these obligations associated with these claims and/or notices.

Claim for Wages and Expenses

The Company was notified in June 2008 by a State that a former employee filed in their State of residence a “claim” for unpaid wages, expenses and other items totaling $70,160. The Company believes it has reached an agreement in principal with the former employee to settle this claim for cash and the issuance of shares of common stock for a value at less than the full claim filed. Accordingly, on January 23, 2009, the State issued a Notice of Dismissal.

Consulting/Management Agreement

The Directors of the Board have been in negotiations with an individual, also a stockholder, to assist the Company in: (a.) managing the Company operations, (b.) raising capital and (c.) re-structuring the equity and the debts of the Company. As of the date of this report, the parties have not agreed to all terms and conditions, to include the compensation arrangement, of the agreement. The individual has been performing certain managerial functions without consummating the agreement. Accordingly, since no binding agreement exists, the Company has not made any provision in the accompanying consolidated condensed financial statements for compensation. Both parties expect an agreement will be reached in May 2009.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with our consolidated condensed financial statements, including notes thereto, appearing in this Form 10-Q and in our Annual Report on Form 10-KSB for the fiscal year ended September 30, 2008 filed on January 12, 2009.

The statements in this report include forward-looking statements. These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology, including words such as “may”, “will”‘, “believes”, “anticipates”, “estimates”, “expects”, “continues”, “should”, “seeks”, “intends”, “plans”, and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: our sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to maintain and develop relationship with our existing and potential future customers; and, our ability to maintain a level of investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: variability of our revenues and financial performance; risks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption of operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates and conditions in the gaming/entertainment industry in particular; and, the continued employment of our key personnel and other risks associated with competition.

For a discussion of the factors that could cause actual results to differ materially from the forward-looking statements see the “Liquidity and Capital Resources” section under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this item of this report and the other risks and uncertainties that are set forth elsewhere in this report or detailed in our other Securities and Exchange Commission reports and filings. We believe it is important to communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are an on-line video game rental subscription business dedicated to providing customers with a quality rental experience through our web site, www.gottaplay.com. This service is an alternative to store based gaming rentals. We seek to provide our customers with a large selection of video game rental choices on a monthly subscription basis. Customers can sign-up via our web page to rent video games of their choice. Once they have made their selection(s), the titles are then shipped to the customer via USPS first class mail. Active subscribers can retain the games for an indefinite period of time as long as they are paying subscribers. Customers can exchange their selections at anytime by returning their game(s) in our pre-paid and pre-addressed envelope. We also offer gamers a trading platform in which they can trade their personal games with other active subscribers and we have purchased and wholesaled previously owned games.

Results for the Quarter Ended March 31, 2009

Revenue

Subscriber revenue

For the quarter ended March 31, 2009 we recognized $33,600 as compared to $147,141 for the same quarter ended one year ago. Revenues for the six months ended March 31, 2009 and 2008 were $69,259 and $325,944, respectively.

Other revenue

We also earned another $12,531 and $30,750, respectively, for the three and six periods ended March 31, 2009 on incidental: (a.) sales of used DVD’s, (b.) processing fees earned from Play N Trade, and (c.) fees from unreturned and lost DVD’s. For the same periods one year ago, we recorded $465,450 in wholesale revenues.

The following table illustrates the change in the number of our active (paying) subscriber levels from October 1, 2008 through March 31, 2009:


	Fiscal 2009			Fiscal 2008			Changes

Active members at beginning of period		985			4,771			(3,786	)
Decrease in membership - 1st quarter		(267	)		(208	)		(59	)
Decrease in membership - 2^nd quarter		(39	)		(306	)		267

Active members at end of period		679			4,257			(3,578	)

We had predicted this downward trend in sales and membership enrollments. The loss of our subscribers can be directly attributed to lack of: (a) advertising, (b) marketing, (c) participation in promotional events, (d) inventory of new releases, and (e) the current state of the depressed national economy. We have renewed and intensified our efforts to capture new subscribers by improving and updating the design and utility of our website. We hope these efforts will attract new subscribers, and mitigate the erosion of our core business.

We believe that with a reasonable capital investment in marketing/advertising and rebuilding our video game library with new releases, we will begin to realize long-term positive results in subscriber memberships and increased revenues. However, unless we are able to: (a.) purchase new releases quickly in order to re-build our library with contemporary titles, (b.) purchase sufficient quantities necessary to meet gamers’ demands, and (c.) effectively market our business to consumers, our business and our revenues will continue to suffer.

Cost of Revenues

Cost of revenues primarily includes all direct costs in generating our membership fees and includes such items as amortization of DVD’s, postage, two-way mailers, and other direct expenses. The following table presents comparative data for the periods presented:


	Three months ended March 31,				Six months ended March 31,

	2009		2008		2009		2008

Shipping materials, postage and miscellaneous	$	3,917	$	11,784	$	5,945	$	35,944
Credit card processing fees		2,845		6,375		6,384		16,572
Basis and cost of DVD’s sold		1,866		—		1,866		—
DVD amortization		84		40,560		1,414		118,455
Cost of wholesale sales		—		435,000		—		435,000

	$	8,712	$	493,719	$	15,609	$	605,971

The decrease in comparable expenses may be attributable to:


	a.	A lack of new DVD’s. Without new games, amortization will continue to decline because of the estimated economic short lifespan of a game. Also, as of March 31, 2009 substantially all DVD’s in our library held for rent are fully amortized.

	b.	The decrease in our subscriber base. Because there is less subscriber demand for our product, this means the frequency and multiples of mailing out DVD’s and the consumption of mailing supplies, correspondingly decreases as well.

	c.	The decrease number of transactions for credit card processing. This translates into lower charges, which is directly proportionate to the number of subscribers we submit each month for processing.

	d.	The wholesale transaction one year ago appears to be an isolated instance.

Operating Expenses

Our operating expenses decreased more than $407,000 this quarter over the same quarter ended one year ago, and for the six months ended March 31, 2009 our expenses decreased approximately $630,000. Several factors contributed to the reduced operating costs during this interim period as compared to the prior interim period:


	a.	We closed all distribution centers and consolidated all operations to one facility located in Garden City, New York. By this effort alone, we have reduced fulfillment, and its related labor and burden, rent and utilities’ expenses significantly. However, on April 14, 2009, we closed the Garden City, NY distribution center and moved the entire DVD library and equipment to Englewood Cliffs, New Jersey. By moving our distribution center operation to New Jersey, we anticipate a minimum monthly savings of approximately $3,000.

	b.	Currently, we do not pay officer wages.

	c.	We have limited the engagements of all non-essential professionals.

	d.	Rent/lease expense for corporate and administration offices has been eliminated.

Fulfillment

Fulfillment expenses for the quarter ended March 31, 2009 were $33,797 as compared to $87,198 one year ago. For the six months ended March 31, 2009 and 2008, fulfillment expenses were $77,842 and $178,227, respectively. The most significant reason for the decrease of expenses in this category may be attributed to reduced contract labor, wages and burden at the distribution centers. For the six months ended, the decrease in this expense category was approximately $90,000. Because our membership levels have decreased significantly, we did not need all the different DC’s and the labor force necessary to support these operations. We now have one employee assigned in this category who is responsible for customer support. Through April 14, 2009, we had used hourly-based independent contractors at our Garden City distribution center and had a $3,000 per month rental obligation. However, at the new DC located in New Jersey, we will pay only $2,500 per month for all fulfillment services and the storage of our library and equipment.

Technology and Development

This category was primarily comprised of expenses for developing our website and maintenance on our GDS proprietary software. Because of lack of working capital, no development and programming was initiated during the quarter ended March 31, 2009.

Advertising and Marketing

Advertising and marketing is not in our budget currently because of the lack of working capital. As such, we were only able to commit to updating our website with relevant and pertinent information and developing links to other websites, such search engine sites, and other sites as deemed necessary.

General and Administrative Expenses

General and administrative expenses are broadly categorized in the following table:


	Three months ended March 31,					Six months ended March 31,

	2009			2008		2009			2008


Compensation and burden	$	40,560		$	90,800	$	76,449		$	170,502
Facilities and related		2,544			16,865		5,088			35,274
Audit, legal and other professional fees		15,140			171,863		83,818			304,733
Taxes, fees and related		2,144			5,432		3,803			9,752
Communications and connectivity		119			4,837		396			10,921
Office, travel and general		1,842			3,174		3,467			18,967
Settlements and other		(11,260	)		48,338		(2,847	)		6,709
Depreciation and amortization		33,261			37,449		66,521			74,897

	$	84,350		$	378,758	$	236,695		$	631,755

Overview of General and Administrative Expenses

Under the circumstances, we believe our general and administrative expenses were under control, as expected, and, within the proximate range of management’s anticipation. Any comparison of expenses between periods may be considered as grossly skewed because the scale at which our business activity was conducted for the prior interim periods does not correlate to the survival mode we are experiencing this fiscal year.

Interest Expense

The following table reports the components of interest expense for the following periods:


	Three months ended March 31,				Six months ended March 31,

	2009		2008		2009		2008


Notes payable	$	83,218	$	72,815	$	167,589	$	122,203
Valuation/amortization of discounts on warrants		143,800		21,934		244,995		204,653
Finance charges on past due accounts		72		2,310		501		3,245

	$	227,090	$	97,059	$	413,085	$	330,101

Income Taxes

Because we incurred significant operating losses during prior reporting periods, no material Federal or State income taxes have been recognized. We have provided a full valuation allowance on the net deferred tax asset, which consists of net operating loss carryforwards because we believe it is more-likely-than-not that we will not earn income sufficient to realize these deferred tax assets within the foreseeable future.

Summary of Consolidated Condensed Results of Operations

Any measurement and comparison of revenues and expenses from continuing operations should not be considered necessarily indicative or interpolated as the trend to forecast our future revenues and results of operations.

Liquid Market

There is currently a limited trading market for our shares of common stock, and there can be no assurance that a more substantial market will ever develop or be maintained. Any market price for our shares of common stock is likely to be very volatile and number factors beyond our control may have a significant adverse effect. In addition, the stock markets generally have experienced, and continue to experience, extreme price and volume fluctuations which have often been unrelated to the operating performance of these small companies. These fluctuations have inversely affected the market price of many small capital companies. These broad market fluctuations, as well as general current economic and political conditions, may also adversely affect the market price of our common stock. Further, there is no correlation between the present limited market price of our common stock and our revenues, book value, assets and other established criteria of value. The present limited quotations of our common stock should not be considered indicative of the actual value of our common stock.

Impact of Inflation

We believe that inflation has had negligible effect on our operations. We have the flexibility to offset inflationary increases of various expenses such as the cost of labor and direct payroll taxes. We can arbitrarily increase our subscriber plan fees to offset these anticipated increases, all the while trying to increase our subscriber base and continue the improvement of our overall operating procedures and systems. By these elements alone, we can absorb most, if not all, increased non-controlled operating costs with increased fees and more efficient operations.

Liquidity and Capital Resources

Recent national and global economic conditions have been challenging and unprecedented, particularly in the investment, credit and financial markets. Concerns continue about the impact and the effect the Federal government’s stimulus packages, inflation, volatile energy costs, availability and expenses of credit, stock market swings and the ever increasing national unemployment roles. Businesses today are at risk due to limited credit, illiquid credit markets and wide credit spreads. All of which leads many institutional investors and private investors to reduce and/or cease funding to borrowers. If the current economic and credit market conditions continue in this manner more businesses will close and consumer’s confidence will wane even further. Our company is experiencing a direct impact of the above mentioned conditions because certain private investors, although they are optimistic of our industry and our business model/plan, are unwilling at this time to commit funds until they see an upturn in national economy. Many individuals who are facing uncertainties with their employment and higher living costs are curtailing their discretionary spending, such as the likes our membership.

Our consolidated condensed financial statements as of and for the six months ended March 31, 2009 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the six months ended March 31, 2009, we had a net loss of $644,778 and negative cash flows from operations of $12,734. Also at March 31, 2009, we had a working capital deficit of $3,840,309 and a stockholders’ deficit of $3,448,171. Our working capital deficit at March 31, 2009 may not enable us to meet certain financial objectives as presently structured.

We had a cash balance of $14,062 at March 31, 2009. In the past, we financed our operations and capital requirements primarily through private debt and equity offerings. Our current forecast anticipates substantial negative cash flows from operations. Therefore, we will have to raise capital through either equity instruments and/or debt, not only to sustain our operations but to grow and improve our operations.

At March 31, 2009, the book value of our common stock was a negative $0.08 per share, our current ratio was 0.04, our cash to debt ratio was a 0.004 and our acid-test ratio was 0.04. These are unacceptable ratios/results, and if we are going to survive and run a successful business we will have to improve our performance quickly and attract favorable financing/equity arrangements immediately.

Our level of indebtedness at March 31, 2009 was approximately $4.0 million and all debts are classified as current liabilities. The following table illustrates the composition of our debts:


	Balance		Accrued Interest		Totals		Percent

Secured notes payable – past due	$	1,157,873	$	66,712	$	1,224,585		30.6	%
Unsecured notes payable – past due		110,000		94,867		204,867		5.1
Unsecured notes payable - current		1,255,000		238,707		1,493,707		37.3
Accounts payable - current		11,591		—		11,591		.3
Accounts payable – past due		675,677		—		675,677		16.9
Accrued liabilities - current		21,369		—		21,369		.5
Accrued liabilities – past due		375,241				375,241		9.3

	$	3,606,751	$	400,286	$	4,007,037		100.0	%


Past due	$	2,318,791	$	161,579	$	2,480,370		61.9	%
Current		1,287,960		238,707		1,526,667		38.1

	$	3,606,751	$	400,286	$	4,007,037		100.0	%

Approximately $1.23 million of secured notes and related accrued interest is in default and if we do not negotiate new terms or convert these notes into new debt and/or equity immediately, the note holders can exercise their collateral position and take over our company. In addition, $1,255,000 of notes payable, plus related accrued interest estimated at $291,450 will be due on June 30, 2009. Currently, we do not have the resources, nor the means, to pay these obligations.

If we incur more debt, without substantially paying off/down and/or converting the current debts into common stock, this act will greatly intensify the risk of our failure. New debt would require us to pay interest and we cannot pay our current interest obligations. If we did pay interest, that would reduce our available funds available for operations, working capital, certain capital expenditures, product development and other general purposes. Any additional debt may also decrease our ability to refinance or restructure our current indebtedness and further limit our ability to adjust to changing market conditions. Our excessive debt limits our ability and flexibility to: (a.) meet changing business and industry initiatives, (b.) invest in strategic initiatives, (c.) negotiate favorable credit terms and services, (d.) enjoy low interest rates, and (e.) attract qualified investors.

Our continuation as a going concern is dependent on our ability to collect our account receivable, grow revenues, obtain additional equity and/or favorable financing, and, generate sufficient cash flows from operations to meet our obligations on a timely basis.

We need financing with favorable terms and equity infusion. We need to increase our membership quickly, which in turn will provide much needed working capital. If we cannot obtain such financing on terms acceptable to us, our ability to fund our on-going operations will be materially adversely affected. If we incur debt, the risks associated with our business and with owning our common stock would also increase. If we raise capital through the sale of equity securities, the percentage ownership of our stockholders will be diluted accordingly. In addition, any new equity securities may have rights, preferences, or privileges senior to those of our common stock.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “Smaller Reporting Company”, we are not required to provide the information by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission (“SEC”) rules and forms, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Interim Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that because of inherent limitations, our disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.

In connection with the preparation of this Quarterly Report on Form 10-Q, our management, with the participation of our Interim Chief Executive Officer and Interim Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Rule 13a – 15(b) of the Exchange Act, as of March 31, 2009. Based on this evaluation our Interim Chief Executive Officer and Interim Chief Financial Officer concluded our disclosure controls and procedures ( as defined in Rule 13a -15(e) of the Exchange Act were effective as of March 31, 2009.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting during the interim period ended March 31, 2009, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Wage and Expense Claim

We were notified in June 2008 by the State of California that a former employee filed a “claim” for unpaid wages, expenses and other items totaling $70,160. We have reached an agreement in principal with the former employee whereby a reasonable settlement will be achieved shortly. Accordingly, on January 23, 2009 the State of California dismissed this claim without prejudice.

Collection Notice on Outstanding Judgment

We were notified that a Judgment was entered against us for approximately $105,000 (the “Judgment”), which represents the balance due on an obligation that the Company had incurred prior to our merger with Gotaplay Interactive, Inc. (The Company merged with Gotaplay Interactive, Inc. and then changed its name to Gottaplay Interactive, Inc.) This liability was originally settled with Donobi, Inc., also known as the “ISP Division” for $200,000 in July 2006. On August 1, 2007, we sold the assets of the ISP Division to Focus Systems, Inc. (“Focus”), a company in which a former director and officer of the Gottaplay is a principal, in exchange for the assumption of the liabilities of that Division. Substantially all the obligations of the ISP Division at the date of sale were assumed by Focus. Pursuant to terms of the sale agreement, Focus is to indemnify us in the event that the Company would have to pay any of the liabilities of the sold ISP Division. Accordingly, we have recognized a contingent liability of $105,000 in the accompanying consolidated condensed balance sheets for the periods presented. We have notified Focus about this Judgment and we will attempt to enforce our rights of indemnification should the Company be forced to settle this claim.

ITEM 1A. RISK FACTORS

As a “Smaller Reporting Company”, we are not required to provide the information required by this item.

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

On October 20, 2008, we issued 5,200,176 shares of common stock to eight note holders for accrued liabilities and accrued interest. The stock was valued at $0.03 per share.

On November 7, 2008, we issued 232,500 shares of common stock to Nextrental, Inc. in a negotiated settlement of $75,464 of total debts we owed it.

On November 24, 2008, we issued 600,000 shares of common stock to Insynq, Inc. in a negotiated settlement of $64,297 of accounts payable we owed it.

On December 23, 2008, we issued 500,000 shares of common stock, to Stephan Müller, a prior director, as an award for services rendered. The stock was valued at $0.03 per share.

On December 26, 2008, we granted an additional 41,031,000 warrants to eighteen investors who loaned us $126,900 in July 2008. Total of 42,300,000 warrants were granted to these investors and are equally distributed between Series A and Series B warrants. Each investor was granted equal number of warrants per series and the grants were factored at 5,000 warrants per each share of common stock issued for the amount of their loan. Series A warrants total 21,1500, expire on June 30, 2009, with an exercise price of $0.005. Series B warrants total 21,150,000, expire on January 31, 2010, with an exercise price of $0.05 The loans and accrued interest were authorized and approved to be converted into 4,346,461 shares of common stock on December 26, 2008. Issuance of the shares was in January 2009.

On March 19, 2009, the Board passed a resolution granting 9,480,000 warrants to purchase shares of our common stock to thirteen bridge note holders and Douglas Rapoport, interim manager of the Company. These warrants were issued in consideration to the note holders for extending the original due dates on $1,255,000 of promissory notes to June 30, 2009. The warrants are exercisable at $0.005 per share and will expire on June 30, 2009.

During the quarter ended March 31, 2009, a correction was made to the number of warrants issued to eight convertible note holders. The correction was made upon an in-depth review of an August 2008 agreement between the board and these note holders. We added a total of 2,718,896 warrants: (a.) 1,389,448 warrants exercisable at $0.60 and expiring in October 2008 and January 2009, and, (b.) 1,329,448 warrants exercisable at $.075 and expiring in October 2009 and January 2010.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

As of March 31, 2009, we are in default on two promissory notes, totaling $110,000, as detailed: (a) $95,000 was due on April 8, 2007 and (b) $15,000 was due on February 5, 2005. Related accrued interest totaled $94,867.

As of March 31, 2009, we are in default on eight secured convertible promissory notes totaling $1,157,873. Related accrued interest totaled $66,712. These notes were due on August 15, 2008.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


31.1	Certification of Interim Chief Executive and Interim Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of Interim Chief Executive and Interim Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Reports on Form 8-K

1.	On October 8, 2008 Form 8-K was filed in connection with the resignation of a member of the board of directors, John P. Gorst.

2.	On December 23, 2008 Form 8-K was filed in connection with the resignation of a member of the board of directors, Stephan Müller.

3.	On March 27, 2009, Form 8-K was filed in connection with the appointment of Pauline Rubis to our board of directors.

SIGNATURES

In accordance with the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GOTTAPLAY INTERACTIVE, INC.
(Registrant)

Date: May 8, 2009


By:	/s/ Matthew Skidell

Matthew Skidell
Interim Chief Executive Officer, Interim Chief Financial Officer,
Interim Principal Accounting Officer and Director

Gottaplay Interactive, Inc. 10-Q