UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549





FORM
10-Q





þQUARTERLY
REPORT UNDER SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934


For the
quarterly period ended March 31, 2009





OR





o    TRANSITION
REPORT UNDER SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934


For the
transition period from _______ to _______





Commission
File Number 0-16686





POKER
MAGIC, INC.





(Exact
name of registrant as specified in its charter)





Minnesota
            20-4709758(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)





130 West
Lake Street, Suite 300, Wayzata, MN


(Address
of Principal Executive Offices)





(952)
473-3442


(Registrant’s
telephone number, including area code)





(Former
name, former address and former fiscal year, if changed from last
report)





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





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes o  No o





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 o                                                                                                         Accelerated
filer o


Non-accelerated
filer o                                                                                                           Smaller
reporting company þ





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes o  No þ





As of May
7, 2009 there were 8,900,274 shares of the issuer’s common stock, $0.001 par
value, outstanding.





Table of
Contents





PagePART
      I – FINANCIAL INFORMATIONItem
      1.
                Financial
      Statements
                1Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                8Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                13Item
      4T.
                Controls
      and Procedures
                14PART
      II – OTHER INFORMATIONItem
      1.
                Legal
      Proceedings
                14Item
      1A.
                Risk
      Factors
                14Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                14Item
      3.
                Defaults
      Upon Senior Securities
                15Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                15Item
      5.
                Other
      Information
                15Item
      6.
                Exhibits
                15SIGNATURES
                15EXHIBIT
      INDEX
                16








PART
I – FINANCIAL INFORMATION





Item
1.  Financial Statements.




Poker
Magic, Inc.
 (A
Development Stage Company)
 Balance
Sheets




March
      31, 2009
                (unaudited)
              
              
              December
      31, 2008
                (audited)ASSETSCurrent
      AssetsCash
              
              $
              22,221
              
              
              $
              145,117Accounts
      Receivable
              
              
              200
              
              
              
              -Inventory
              
              
              300
              
              
              
              750Prepaid
      Expense
              
              
              1,667
              
              
              
              2,916Total
      Current Assets
              
              
              24,388
              
              
              
              148,783Intangible
      Assets, Net of Amortization
              
              
              16,543
              
              
              
              18,611Total
      Assets
              
              $
              40,931
              
              
              $
              167,394LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      LiabilitiesAccounts
      Payable
              
              $
              14,733
              
              
              
              2,016Accrued
      Royalty
              
              
              81
              
              
              
              166Total
      Current Liabilities
              
              
              14,814
              
              
              
              2,182Total
      Liabilities
              
              
              14,814
              
              
              
              2,182Shareholders’
      EquityCommon
      Stock, $.001 par value: Authorized 250,000,000 shares:
                Issued
      and outstanding 8,900,724 and 9,267,391 shares.
              
              
              8,900
              
              
              
              9,267Additional
      Paid-in Capital
              
              
              602,065
              
              
              
              681,365Deficit
      Accumulated During the Development Stage
              
              
              (584,848
              )
              
              
              (525,420
              )Total
      Shareholders’ Equity
              
              
              26,117
              
              
              
              165,212Total
      Liabilities and Shareholders’ Equity
              
              $
              40,931
              
              
              $
              167,394





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


1





Poker
Magic, Inc.


(A
Development Stage Company)


Statements
of Operations


(unaudited)





Three MonthsEnded
                  March
      31, 2009
                
                
                Three
      Months
                  Ended
                  March
      31, 2008
                
                
                Period
      from January
                  10,
      2006 (inception)
                  to
      March 31, 2009Revenues
                
                $
                1,625
                
                
                $
                -
                
                
                $
                4,950Cost
      of Revenues
                
                
                4,448
                
                
                
                -
                
                
                
                41,221Gross
      Loss
                
                
                (2,823
                )
                
                
                -
                
                
                
                (36,271
                )Operating
      Expenses:
                  Selling,
      General and
                  Administrative
                
                
                56,786
                
                
                
                56,244
                
                
                
                550,769Operating
      Loss:
                
                
                (59,609
                )
                
                
                (56,244
                )
                
                
                (587,040
                )Other
      IncomeInterest
      Income
                
                
                181
                
                
                
                -
                
                
                
                2,192Net
      Loss
                
                $
                (59,428
                )
                
                $
                (56,244
                )
                
                $
                (584,848
                )Basic
      and diluted net loss per
                  common
      share
                
                $
                (0.01
                )
                
                $
                (0.01
                )
                
                $
                (0.08
                )Weighted-average
      number of
                  common
      shares outstanding
                
                
                9,128,872
                
                
                
                7,755,101
                
                
                
                7,219,411





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


2





Poker
Magic, Inc.


(A
Development Stage Company)


Statements
of Cash Flows


(unaudited)





Three
      Months
                        Ended
                        March
      31, 2009
                      
                      
                      Three
      Months
                        Ended
                        March
      31, 2008
                      
                      
                      Period
      from January
                        10,
      2006 (inception)
                        to
      March 31, 2009Cash
      flows from operating activities:Net
      loss
                      
                      $
                      (59,428
                      )
                      
                      $
                      (56,244
                      )
                      
                      $
                      (584,848
                      )Adjustments
      to reconcile net loss to net cash provided by operating
      activities:Amortization
      of intangible asset
                      
                      
                      2,068
                      
                      
                      
                      2,068
                      
                      
                      
                      24,814Common
      stock issued for services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      6,500Consulting
      service expense paid in stock
                      
                      
                      1,249
                      
                      
                      
                      8,534
                      
                      
                      
                      120,299Officers
      compensation expense paid in stock
                      
                      
                      -
                      
                      
                      
                      2,000
                      
                      
                      
                      56,000Officers
      compensation expense as
                        contributed
      capital
                      
                      
                      12,000
                      
                      
                      
                      10,000
                      
                      
                      
                      50,000Changes
      in operating assets and liabilities:Accounts
      receivable
                      
                      
                      (200
                      )
                      
                      
                      -
                      
                      
                      
                      (200
                      )Inventory
                      
                      
                      450
                      
                      
                      
                      -
                      
                      
                      
                      450Prepaid
      expense
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      5,434Accounts
      payable
                      
                      
                      12,717
                      
                      
                      
                      (15,783
                      )
                      
                      
                      14,733Accrued
      royalty
                      
                      
                      (85
                      )
                      
                      
                      -
                      
                      
                      
                      81Net
      cash used in operating activities
                      
                      
                      (31,229
                      )
                      
                      
                      (49,425
                      )
                      
                      
                      (306,737
                      )Cash
      flows from investing activities:Acquisition
      of Select Video assets
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (17,000
                      )Net
      cash used in investing activities
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (17,000
                      )Cash
      flows from financing activities:Proceeds
      from subscription receivable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      14,000Proceeds
      from issuance of common stock
                      
                      
                      -
                      
                      
                      
                      25,000
                      
                      
                      
                      426,000Redemption
      of common stock
                      
                      
                      (91,667
                      )
                      
                      
                      -
                      
                      
                      
                      (91,667
                      )Payment
      of short-term debt
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (2,375
                      )Net
      cash provided by (used in) financial activities
                      
                      
                      (91,667
                      )
                      
                      
                      25,000
                      
                      
                      
                      345,958Net
      increase (decrease) in cash
                      
                      
                      (122,896
                      )
                      
                      
                      (24,425
                      )
                      
                      
                      22,221Cash,
      beginning of the period
                      
                      
                      145,117
                      
                      
                      
                      37,003
                      
                      
                      
                      -Cash,
      end of the period
                      
                      $
                      22,221
                      
                      
                      $
                      12,578
                      
                      
                      $
                      22,221Non-cash
      investing and financing activities:Acquisition
      of certain assets and liabilities of
                        Select
      Video in exchange for common stockInventory
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      750Intangible
      Asset
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      24,357Accounts
      Payable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (32,000
                      )Note
      Payable
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (7,084
                      )Stock
      issued in lieu of cash for note payable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      19,709Stock
      issued in lieu of cash for prepaid services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      175,400Stock
      subscriptions received for common stock
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      14,000





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


3





Poker
Magic, Inc.


(A
Development Stage Company)


Notes to
Financial Statements


March 31,
2009





NOTE
1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Description
of operations and basis of presentation





Poker
Magic, Inc. (the “Company”) is a development stage company that was incorporated
in the State of Minnesota on January 10, 2006.  Our business consists
primarily of marketing and licensing a new form of poker-based table game to
casinos and on-line gaming facilities in the United States.





Interim
financial information





The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States and pursuant
to the rules and regulations of the Securities and Exchange Commission (the
“SEC”) for interim financial information. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been omitted pursuant to such rules and regulations. Operating results for
the three months ended March 31, 2009 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2009 or any other
period. The accompanying financial statements and related notes should be read
in conjunction with the audited Financial Statements of the Company, and notes
thereto, contained in this filing for the year ended December 31,
2008.





Liquidity




The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern that contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. For the period
from January 10, 2006 (inception) to March 31, 2009, the Company incurred a net
loss of $584,848. The Company’s ability to continue as a going concern is
dependent on it ultimately achieving profitability, producing additional
revenues and/or raising additional capital. Management intends to obtain
additional debt or equity capital to meet all of its existing cash obligations
and to support the revenue generating process; however, there can be no
assurance that the sources will be available on terms favorable to the Company,
if at all.




Intangible
assets





On March
10, 2006, the Company purchased certain assets and assumed certain liabilities
of Select Video, Inc. (Select Video). Three patents were acquired as a part of
the March 10, 2006 purchase. The patents are stated at cost and are amortized on
a straight-line basis over 60 months. Amortization expense was $2,068 for both
of the three months ended March 31, 2009 and 2008 and $24,814 for the period
from January 10, 2006 (inception) to March 31, 2009. Estimated amortization
expense for the next three years of patents issued as of March 31, 2009 is as
follows:





Remainder
      of 2009
                    
                    $
                    6,2032010
                    
                    
                    8,2712011
                    
                    
                    2,069Total
                    
                    $
                    16,543





Impairment
of long-lived assets




Management
reviews the Company’s long-lived assets for impairment when events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. If impairment indicators are present and the estimated future
undiscounted cash flows are less than the carrying value of the assets, the
asset’s value will be adjusted appropriately. No impairment indicators were
present as of March 31, 2009 or December 31, 2008.


4





NOTE
2—NET LOSS PER COMMON SHARE





Basic net
loss per common share is computed by dividing net loss by the weighted average
number of common shares outstanding during the period. A reconciliation of the
numerator and denominator used in the calculation of basic and diluted net loss
per common share follows:





Three
      Months
                  Ended
                  March
      31, 2009
                
                
                Three
      Months
                  Ended
                  March
      31, 2008
                
                
                Period
      from
                  January
      10, 2006
                  (inception)
      to
                  March
      31, 2009Numerator:  Net
      Loss
                
                $
                (59,428
                )
                
                $
                (56,244
                )
                
                $
                (584,848
                )Denominator:  Weighted-average
      number of common shares outstanding
                
                
                9,128,872
                
                
                
                7,755,101
                
                
                
                7,219,411Basic
      and diluted net loss per common share
                
                $
                (.01
                )
                
                $
                (.01
                )
                
                $
                (.08
                )





The
outstanding warrants issued during the three months ended March 31, 2009 and the
period from January 10, 2006 (inception) to March 31, 2009 were excluded from
the calculation of diluted loss per share as their effects were anti-dilutive
due to the Company’s net losses for the periods.





NOTE
3—COMMITMENTS AND CONTINGENCIES




The asset
purchase agreement with Select Video dated March 10, 2006, states that when the
Company receives any revenue generated by Winners Pot Poker and other similar
games, Select Video shall receive an amount equal to five percent (5%) of all
gross proceeds generated by these games.





As of
March 31, 2009 and December 31, 2008, $81 and $166 were owed to Select Video
under this agreement.





NOTE
4—SHAREHOLDERS’ EQUITY




Common
stock





On
January 10, 2006, the founders of the Company purchased 2,500,000 shares of
common stock for $2,500.





On March
10, 2006, the Company purchased certain assets and assumed certain liabilities
of Select Video in exchange for 3,022,991 shares of common stock issued at the
deemed fair market value of $.001 per share or $3,023.





On May
23, 2006, the Company issued 60,000 shares of common stock at $0.25 per share in
lieu of cash for liabilities assumed.





During
2006, the Company raised additional cash of $87,500 at $0.25 per share through
the issuance of 350,000 shares of common stock.





During
2006, the Company issued 22,000 shares to various consultants at $0.25 per share
for services rendered.





During
2006, the Company issued 100,000 shares valued at $4,000 (value of the services
to be provided) for services rendered and to be rendered.





On
January 15, 2007, the Company issued 600,000 shares of common stock to two
consultants for services to be provided over a 12 month period commencing on
January 15, 2007.  These services were valued at $50,000.





On
January 15, 2007, the Company issued 500,000 shares of common stock to the two
founders for their services to be provided over a 12 month period commencing
January 15, 2007.  These services were valued at
$48,000.


5





On July
26, 2007, the Company settled the note payable of $7,084 for a cash payment of
$2,375 and the issuance of 20,000 shares of common stock valued at $4,709 for
payment in full on the note.





In July
2007, the Company raised cash of $20,000 at $0.25 per share through the issuance
of 80,000 shares of common stock.





On August
1, 2007, the Company issued 65,000 shares of common stock for services to be
provided over a twelve month period commencing retroactively on June 1,
2007.  These services were valued at $5,000.





On August
1, 2007, the Company issued 100,000 shares of common stock to a consultant for
services to be provided over a twelve month period commencing on August 1,
2007.  These services were valued at $8,300.





On August
1, 2007, the Company issued 25,000 shares of common stock for
services.  These services were valued at $1,000.





On
November 26, 2007, the Company issued 50,000 shares of common stock to a
consultant for services to be provided over a twelve month period commencing on
November 26, 2007.  These services were valued at
$12,500.





In
December 2007, the Company raised cash of $30,000 at $0.25 per share through the
issuance of 120,000 shares of common stock.





In
January 2008, the Company raised cash of $25,000 at $0.25 per share through the
issuance of 100,000 shares of common stock.





On May
28, 2008, the Company raised cash of $250,000 at $0.25 per share through the
issuance of 1,000,000 shares of common stock together with a warrant to purchase
up to 1,000,000 shares of common stock, which was immediately
exercisable.  The exercise price was $0.25 per share if purchased
within six months of issuance.  The exercise price increased to $0.425
for months seven through twelve (after the date of issuance) and increases to
$0.50 after twelve months.  The warrant expires on May 27,
2010.





In May
2008, the Company raised cash of $12,500 at $0.25 per share through the issuance
of 50,000 shares of common stock.





On August
26, 2008, the Company issued 200,000 shares of common stock to a consultant for
services to be provided over a five month period commencing on August 1,
2008.  These services were valued at $20,000.





On August
26, 2008, the Company issued 60,000 shares of common stock for services to be
provided over a five month period commencing retroactively on August 1,
2008.  These services were valued at $5,000.





On August
26, 2008, the Company issued 60,000 shares of common stock for services to be
provided over a twelve month period commencing retroactively on August 1,
2008.  These services were valued at $5,000.





On August
26, 2008, the Company issued 10,000 shares of common stock for
services.  These services were valued at $2,500.





On August
26, 2008, the Company issued 50,000 shares of common stock for
services.  These services were valued at $5,000.





On
December 16, 2008, the Company issued 40,400 shares of common stock for
services.  These services were valued at $10,100.





On
December 31, 2008, the Company issued 32,000 shares of common stock for officer
compensation.  These services were valued at $8,000.





On
February 25, 2009, the Company redeemed 366,667 shares of common stock held by a
single shareholder, for a price of $.25 per share, for a total amount of
$91,667.


6





At March
31, 2009, a total of 8,900,724 shares of common stock were issued and
outstanding.  1,000,000 warrants to purchase additional common stock
at $0.425 per share are also outstanding as of March 31, 2009.





NOTE
5—INCOME TAXES





The
Company applies the provisions of FIN 48, “Accounting for Uncertainty in Income
Taxes” (FIN 48) which clarifies the accounting for uncertainty in income tax
positions. This interpretation requires the Company to recognize in the
financial statements only those tax positions determined to be more likely than
not of being sustained upon examination, based on the technical merits of the
positions. Interest and penalties are expensed as incurred as operating
expenses.





At March
31, 2009, the Company had federal and state net operating loss carryforward of
approximately $570,000 available to offset future taxable income. The Company’s
federal and state net operating loss carryforwards will begin to expire in 2026
if not used before such time to offset future taxable income or tax liabilities.
Current and future changes in the stock ownership of the Company may place
limitations on the use of these net operating loss
carryforwards.


7





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





Our
Management’s Discussion and Analysis of Financial Condition and Results of
Operations set forth below should be read in conjunction with our
audited  financial statements, and notes thereto, contained in our
Annual Report on Form 10-K filed with the SEC on March 27, 2009 and related to
our year ended December 31, 2008, and the period from January 10, 2006
(inception) to December 31, 2008.





Forward-Looking
Statements





Some of
the statements made in this section of our report are forward-looking
statements. These forward-looking statements generally relate to and are based
upon our current plans, expectations, assumptions and projections about future
events.  Our management currently believes that the various plans,
expectations, and assumptions reflected in or suggested by these forward-looking
statements are reasonable.  Nevertheless, all forward-looking
statements involve risks and uncertainties and our actual actions or future
results may be materially different from the plans, objectives or expectations,
or our assumptions and projections underlying our present plans, objectives and
expectations, which are expressed in this report.  Examples of
specific factors that might cause our actual results to differ from our current
expectations include but are not limited to:





·
            Our
      lack of a significant prior operating history to provide our management
      with a basis to better evaluate certain
  likelihoods





·
            Our
      need for additional financing





·
            The
      significant risk that our game may not be accepted by casinos or gaming
      establishments or, ultimately, by gaming consumers and
      enthusiasts





·
            Our
      inability to obtain required registrations, licenses and approvals with or
      from appropriate state gaming
authorities





·
            Changes
      in legal and regulatory regimes applicable to our business or our
      games





·
            Our
      inability to effectively protect our intellectual property,
    or





·
            Our
      inability, for any reason, to retain our executive management
      personnel.





The
foregoing list is not exhaustive.  In light of the foregoing,
prospective investors are cautioned that the forward-looking statements included
in this filing may ultimately prove to be inaccurate—even materially
inaccurate.  Because of the significant uncertainties inherent in such
forward-looking statements, the inclusion of such information should not be
regarded as a representation or warranty by Poker Magic, Inc. or any other
person that our objectives, plans, expectations or projections that are
contained in this filing will be achieved in any specified time frame, if
ever.





General Overview





Poker Magic Inc. is a Minnesota
corporation formed in January 2006.  In this report, we refer to Poker
Magic, Inc. as“we,”“us,”“Poker Magic”or the“Company.”We are a development-stage
company focused on promoting and placing our Winner’s Pot Poker game into casinos and
entertainment facilities country-wide, including those located in Native
American tribal lands.  We believe that the long-term success of our
operations will be determined by our ability to bring new and innovative
products, game play and services to the market.


8


Our current gaming product is“Winner’s Pot Poker,”which is a table game form of five-card
stud poker.  In the Winner’s Pot Poker game, the dealer deals each
player, and the dealer himself, two cards face down and three cards face
up.  Each player“antes”before the deal to be eligible to
receive cards in the game.  After each player has received his or her
first three cards from the dealer, each player may either fold or place a first
bet equal to the ante.  The first bet may not be any more or less than
the ante.  After the next card is dealt, each of the remaining players
has a choice between folding or placing a second bet that must be equal to twice
the ante.  The dealer may not fold.  After the last card is
dealt, the hands are compared and the winning hand (determined by using standard
poker rankings) takes a predetermined percentage of the total bets and antes
made in the course of the game.  In addition, players are entitled to
make certain optional“bonus bets.”





We had no revenues from January 10, 2006
(inception) through December 31, 2007, or from January 1, 2008 through August
27, 2008.  We began generating revenues August 28, 2008 underourlicense agreement with
Bally’s Park Place, Inc. discussed further in
the“Trends and
Uncertainties” section below, under the caption“Revenues.”





For the three months endedMarch 31, 2009, we incurred $4,448in revenue-related costs and
$56,786in operating
expenses.Our expenses related primarily to our
efforts to market our Winner’s Pot Poker game to casinos and gaming
establishments, generate revenues and expand our revenue base, as well as other
selling, general and administrative expenses.  The most significant
components of these other selling, general and administrative expenses were (i)
compensation expense attributable to share issuances to third-party consultants
and executive management for services rendered, and (ii) expenses for
professional services such as legal and accounting services.





As ofMarch 31, 2009, we had $22,221in cash on hand and current liabilities
of $14,814.  As of the date of this
filing, we had $9,383in cash on hand, and our management
presently believes this cash will be sufficient to continue operations through
June 2009.  Thereafter, we expect we will require additional
capital.  If our present expectations relating to our expenses prove
inaccurate and we incur more expenses than anticipated, we will be required to
seek additional financing prior to June 2009.





Management believes that the most
significant uncertainties facing the Company relate to our ability to increase
our revenues, the accuracy of our expense forecast, our ability to acquire
necessary licenses, registrations and approvals, and our ability to obtain
financing when and as needed and on terms acceptable to us.  These
uncertainties are discussed in greater detail under the caption“Trends and Uncertainties.”





Results of Operations for the Three
Months EndedMarch 31,
2009Compared to the Three
Months EndedMarch 31,
2008





Three
      Months EndedItem
                
                3/31/09
                
                
                3/31/08
                
                
                %
      Change
                  (Year
      Over Year)
                
                
                %
      of 2009
                  Net
      Loss
                
                
                %
      of 2008
                  Net
      LossRevenue
                
                $
                1,625
                
                
                $
                -
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                N/AOther
      Income
                
                
                181
                
                
                
                -
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                N/ACost
      of Revenue
                
                
                4,448
                
                
                
                -
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                N/AGeneral
      Operating Expenses
                
                
                6,189
                
                
                
                5,832
                
                
                
                6.1
                %
                
                
                10.41
                %
                
                
                10.37
                %Legal
      and Accounting
      Expenses
                
                
                38,597
                
                
                
                21,878
                
                
                
                76.4
                %
                
                
                64.95
                %
                
                
                38.90
                %Consulting
      Expenses
                
                
                -
                
                
                
                8,534
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                15.17
                %Executive
      Management Compensation
                
                
                12,000
                
                
                
                20,000
                
                
                
                (40
                )%
                
                
                20.19
                %
                
                
                35.56
                %Net
      Loss
                
                
                59,428
                
                
                
                56,244
                
                
                
                5.7
                %
                
                
                N/A
                
                
                
                N/A





As the table above demonstrates, duringthe three months ended
March 31,2009and 2008,we had revenues of $1,625and $0 respectively,and incurred $4,448and $0, respectively, in
revenue-related costs.During bothperiods, we were focused primarily on efforts
to (i) ensure temporary regulatory approval and compliance of the
Winner’s Pot Poker game, and (ii) obtain the
agreement of casinos and gaming establishments to provide gaming table space to
the Winner’s Pot Poker game.  During
2008, we were also focused on completing the process of filing and amending our
Registration Statement on Form 10 (originally filed with the SEC on January 29,
2008) in response to comments received from the SEC.  Amendments to
our Registration Statement were completed and filed with the SEC on March 11 and
August 6, 2008.We currently have one
contract with one client.





Our
selling, general and administrative expenses overall remained equivalent in the
three months ended March 31, 2009 compared to the three months ended March 31,
2008 and are expected to remain stable throughout 2009.


9





Our legal and accounting expenses
increased 76.4% for the three months ended March 31, 2009 compared to the three
months ended March 31, 2008.  This significant increase was mainly due
to one-time expenses related to amending our Registration Statement on Form 10
filed with the SEC, our initial compliance with the Sarbanes-Oxley Act of 2002,
and working with broker-dealers to complete an application with FINRA and obtain
our trading symbol.  As we continue to seek gaming regulatory
compliance and licenses, prepare and file periodic reports with the SEC under
the Securities and Exchange Act of 1934, and generally seek to comply with the
various legal, accounting and governance rules and regulations applicable to
public reporting companies,
we anticipate our professional fees expenses will remain high but less than the
amounts reached during fiscal 2008.





We presently expect that compensation
expenseforour executive management willremain consistent with our
fiscal 2008.We
have recorded an expense for our estimated officer compensation as an addition
to paid-in capitalfor the
three months ended March 31, 2009, and will continue to do so each period in
fiscal 2009 in the event we do not issue shares to our executive management as
compensation.  We
expect that we will continue to issue shares to consultants to compensate them
for services rendered, primarily as a means to conserve our cash
resources.  In this regard, we do not anticipate hiring employees in
the near future and expect instead, where necessary or appropriate, to rely on
services provided by consultants through at least fiscal 2009.





Finally, we anticipate that the portion
of our selling, general and administrative expenses relating to the general
operations and the marketing of our Winner’s Pot Poker game to casinos and gaming
establishments will increase during fiscal 2009.





Liquidity and Capital
Resources





Summary
cash flow data is as follows:




Three
      Months Ended March 31,2009
                            
                            2008Cash
      flows provided (used) by :Operating
      activities
                            
                            $
                            (31,229
                            )
                            
                            $
                            (49,425
                            )Investing
      activities
                            
                            
                            -
                            
                            
                            
                            -Financing
      activities
                            
                            
                            (91,667
                            )
                            
                            
                            25,000Net
      increase in cash
                            
                            
                            (122,896
                            )
                            
                            
                            (24,425
                            )Cash,
      beginning of period
                            
                            
                            145,117
                            
                            
                            
                            37,003Cash,
      end of period
                            
                            $
                            22,221
                            
                            
                            $
                            12,578




Thedecreasein cash usedin operating activitieswas primarily the result ofa reduction in consulting service
expense paid in stock.Thedecreasein the most recent period relates toa stock redemption that
occurred in February 2009.





As ofMarch 31, 2009, we had $22,221cash on hand and current liabilities
of$14,814.  As of the date of this
filing, our management believes we have sufficient capital to continue
operations through June 2009.  Thereafter, we expect we will require additional
capital.





Presently,
we anticipate that additional financing could be sought from a number of
sources, including but not limited to additional sales of equity or debt
securities, or loans from banks, other financial institutions or affiliates of
the Company.  We cannot, however, be certain that any such financing
will be available on terms favorable to us if at all.  If additional
funds are raised by the issuance of our equity securities, such as through the
issuance of stock, convertible securities, or the issuance and exercise of
warrants, then the ownership interest of our existing shareholders will be
diluted. If additional funds are raised by the issuance of debt or preferred
equity instruments, we may become subject to certain operational limitations,
and such securities would likely have material rights that are senior to the
rights of our common shareholders. If we are unable to obtain additional
financing when needed, we may be required to abandon our business or our status
as a public reporting company.


10





Our primary non-cash asset atMarch 31, 2009was intellectual property rights and
trademarks, which are the foundation for our product offerings.  We
currently own the rights to United States Patent Number 5,839,732, issued on
November 24, 1998, that relates to our current Winner’s Pot Poker table game.  This
patent was acquired from Select Video, Inc., a Delaware corporation, pursuant to
an Asset Purchase Agreement dated March 10, 2006.  In addition, we own
a federally registered trademark for“WINNER’S POT POKER,”Registration Number 2,172,043, issued
on July 7, 1998, which was acquired pursuant to that same agreement. Finally, we
also own registered trademarks for“POKER MAGIC”and to“AC (ATLANTIC CITY) STUD
POKER,”which we similarly acquired pursuant to
the Asset Purchase Agreement with Select Video.  Other than the
trademark“Poker Magic”which we have adopted as our corporate
name, we do not have any current plans for the sale or license of such other
trademarks.  We do not have any currently pending applications for
un-issued patents, trademarks or copyrights.  The expiration dates of
our patent rights vary based on their filing and issuance dates.  We
intend to continue to actively file for patent protection, where reasonable,
within the United States.  We expect also to seek protection for our
future products by filing for copyrights and trademarks in the United
States.





Currently, we do not have any employees.
Mr. Douglas M. Polinsky, the Chief Executive Officer and Chairman of our Board
of Directors, and Joseph A. Geraci, II, our Chief Financial Officer and a
director of the Company, both serve as consultants to the Company in their
officer capacities.  We rely on sales and marketing agents and outside
professional services on an as-needed basis.  We believe that using
consultants to perform necessary operational functions is currently more cost
effective than hiring full-time employees, and such practice affords us
flexibility in directing our resources during our development
stage.   We plan to develop new gaming products primarily by
utilizing the services of outside developers, sales agents and regulatory and
compliance service providers in an effort to minimize capital expenditures and
corporate expenses.  We presently do not expect to incur any material
capital expenditures in the near future or during the next 12
months.  At this time, we do not anticipate purchasing or selling any
significant equipment or other assets in the near term.





Trends and
Uncertainties





As a development-stage company involved
in the gaming business, we believe we can identify certain broad trends in our
revenues and expenses, and components thereof.  We also believe that
the most significant risks and uncertainties surrounding our business relate to
revenues and expenses, and regulatory and financing matters.  These
trends and uncertainties are discussed below.





Revenues





From
inception through March 31, 2009 (and presently), the Company has been focused
sequentially on the acquisition of the intellectual property forming the basis
for its Winner’s Pot Poker table game and, thereafter, efforts to ensure at
least temporary regulatory compliance of the game and obtain the agreement of
casinos and gaming establishments to provide gaming table space to the Winner’s
Pot Poker game.





These
efforts culminated in our license agreement with Bally’s Park Place, Inc. d/b/a/
Bally’s Atlantic City, permitting Bally’s, on a non-exclusive basis, to use one
unit of the Winner’s Pot Poker game on a trial basis at no charge until such
time that the New Jersey Casino Control Commission ended the test period for the
game. We entered into that license agreement on December 26, 2007. We had
earlier (on August 22, 2007) secured the issuance of temporary rules and
amendments governing the implementation of Winner’s Pot Poker in Atlantic City
casinos. The amendments and rules added Winner’s Pot Poker to the list of
authorized table games in New Jersey, governed the physical characteristics of
the Winner’s Pot Poker game layout, defined the card deck for use with the
Winner’s Pot Poker game, specified the terms of the use of the cards during
Winner’s Pot Poker game play, and contained technical proposals governing the
operation of Winner’s Pot Poker. We had also earlier obtained a transactional
waiver from the New Jersey Casino Control Commission for the licensure
requirement applicable to casino service industry (CSI), which waiver permitted
us to legally license to Bally’s Park Place, Inc. the play of our Winner’s Pot
Poker game in Bally’s Atlantic City casinos.


11





After a
successful trial period, we amended our license agreement with Bally’s Park
Place, Inc. on June 26, 2008. Under the amended license agreement, Bally’s Park
Place, Inc. pays the Company a license fee in the amount of (i) $475 per month
for the right to use our Winner’s Pot Poker game in the Atlantic City casinos
for up to seven days per week, and (ii) $200 per month for the right to use of
our Winner’s Pot Poker game in the Atlantic City casinos on weekends only during
that month. The amendment currently contemplates the licensure of only two
Winner’s Pot Poker game units—one for the seven days per week use and the other
for the weekend-only use. This amendment was entered into after the adoption by
the New Jersey Casino Control Commission of temporary regulations governing the
rules of the Winner’s Pot Poker game. The amended license agreement is a
month-to-month agreement that may be cancelled by either party at any
time.  The month-to-month character of this licensing arrangement,
which is currently our only revenue-generating license, presents a material
uncertainty in our ability to accurately forecast revenues for
2009.





We
continue our focus on securing Winner’s Pot Poker licensing arrangements with
various other casinos and gaming establishments. In particular, we have met with
the management or representatives of numerous casinos or gaming establishments
in an effort to secure additional licensing arrangements, focusing on expanding
our licensing in New Jersey and breaking into the Minnesota and Nevada
markets.





Based on
our recent amendment of the license agreement with Bally’s Park Place, Inc., we
began to recognize revenue from operations during fiscal 2008. Given that the
present terms of the license agreement, as amended, provide only that Bally’s
Park Place, Inc. will license the right to use two game units of our Winner’s
Pot Poker product, we do not expect that our initial revenues will be
significant. Instead, we expect that we must continue to market our game to
casinos and gaming establishments that present suitable opportunities for us,
and that the most efficient way for us to begin generating more significant
revenues will be to consummate a definitive license agreement with Harrah’s
Entertainment or some other enterprise that involves a wider group of
gaming-related affiliates and establishments. For example, Harrah’s
Entertainment, indirectly (through subsidiaries and other affiliates) operates
approximately 40 casinos across the United States.  It is extremely
difficult to anticipate, however, how much success we will have in our efforts
to license our games to establishments other than Bally’s Park Place, Inc., if
any at all, and thereby generate additional revenues.





Expenses





As
indicated above under the caption “Results of Operations for the Three
Months Ended March 31, 2009 Compared to the Three Months Ended March 31,
2008,” our selling, general and administrative expenses overall remained
equivalent in the three months ended March 31, 2009 compared to the three months
ended March 31, 2008 and are expected to remain stable throughout
2009.  We expect to make applications and seek gaming regulatory
compliance and licenses that will increase that component of our selling,
general and administrative expenses for 2009.  Because our business
has a short operating history and our present revenues are limited, in general
it is difficult to accurately forecast our expenses and impact of those expenses
on our operating results.





Regulation





As part
of our marketing efforts for the Winner’s Pot Poker game, our management has met
with the management or representatives of over ten different casinos or gaming
establishments during the past year in an effort to secure additional licensing
arrangements.  To date, our efforts have been focused on entering into
such agreements with casinos and gaming establishments in New Jersey, Nevada and
Minnesota. On August 22, 2007, the New Jersey Casino Control Commission adopted
temporary regulations governing the Winner’s Pot Poker game.  We have
yet to obtain the final casino service industry (CSI) supplier license from the
New Jersey Casino Control Commission, which is more broad and flexible than the
current transactional waiver which we have thus far secured.  On
January 23, 2009, the New Jersey Casino Control Commission approved our
petition to continue conducting business with Bally’s while the issuance of the
final license is underway, with the extended term set to expire on July 24,
2009. We also
have yet to obtain the final licensure required in the states of Nevada and
Minnesota.  In sum, we expect that we will require at least the
following licenses, registrations and approvals in the near future to permit us
to license our gaming products to casinos and gaming establishments in the
relevant jurisdictions:





·
            Casino
      service industry (CSI) supplier license issued by the New Jersey Casino
      Control Commission (described
above)


12





·
            Distribution
      licenses permitting us to distribute Winner’s Pot Poker game units (i.e.,
      table layouts) to casinos and gaming establishments in Nevada, issued by
      the Nevada State Gaming Control
Board





·
            Registration
      with the Nevada Gaming Commission as a publicly traded
    company





·
            Distribution
      licenses permitting us to distribute Winner’s Pot Poker game units to
      casinos and gaming establishments in
Minnesota





·
            Approval
      from the applicable Tribal Councils permitting us to distribute Winner’s
      Pot Poker game units to casinos and gaming establishments located in
      tribal lands in Minnesota.





As we
seek to begin operations in other states and, where applicable, Native American
tribal lands, we will be subject to additional state and Native American laws
and regulations that affect both our general commercial relationships with our
customers as well as the products and services provided to them.





Financing





As
discussed above under the caption “Liquidity and Capital Resources,” our
management believes we have sufficient capital to continue operations through
June 2009.  Thereafter, we expect we will require additional
capital.  Our current forecast for financing needs is largely based on
our understanding of the expenses we anticipate incurring in our efforts to
comply with gaming regulatory and public reporting company disclosure
requirements.  In this regard, we note that our current forecasts are
largely based on our past experience with other enterprises and proposed budgets
proposed by our professional consultants.  If our actual expenses
significantly exceed our present expectations we will likely require additional
financing prior to June 2009.





Once
needed, we cannot be certain that any required additional financing will be
available on terms favorable to us, if at all.  This is especially
true in light of the current poor state of the U.S. capital markets and the
general economic downturn that has occurred.   If adequate funds are
not available on acceptable terms, we may be unable to expand, develop or
enhance products or to respond to competitive pressures.  If we are
unable to obtain additional financing when needed, we may be required to abandon
our business or our status as a public reporting company.





Going Concern





We have
incurred operating losses, accumulated deficit and negative cash flows from
operations since January 10, 2006 (inception). As of March 31, 2009, we had an
accumulated deficit of $584,848. These factors, among others, raise substantial
doubt about our ability to continue as a going concern. Our financial statements
included in this filing do not include any adjustments related to recoverability
and classification of asset carrying amounts, or the amount and classification
of liabilities that might result, should we be unable to continue as a going
concern. Our ability to continue as a going concern ultimately depends on
achieving profitability, producing revenues or raising additional capital to
sustain operations. Although we intend to obtain additional financing to meet
our cash needs and to support the revenue-generating process, we may be unable
to secure any additional financing on terms that are favorable or acceptable to
us, if at all.





Critical Accounting
Policies





For detailed information on our critical
accounting policies and estimates, please see our financial statements and notes
thereto included in this report and in ourreport Form 10-Kfiled with the SEC inMarch2009.  There have been no material
changes to our critical accounting policies and estimates from those disclosed
in ourreport Form
10-K.




Item 3.   Quantitative and Qualitative Disclosures
About Market Risk.





Not applicable.


13




Item 4T.  Controls and
Procedures.





Evaluation
of Disclosure Controls and Procedures





We
maintain disclosure controls and procedures designed to provide reasonable
assurance that information required to be disclosed in our reports filed
pursuant to the Securities Exchange Act of 1934 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 our
management, including our Chief Executive Officer and Chief Financial Officer as
appropriate, to allow timely decisions regarding required
disclosure.  A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance the objectives of
the control system are met.





As of
March 31, 2009, our Chief Executive Officer and Chief Financial Officer carried
out an evaluation of the effectiveness of our disclosure controls and procedures
as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act
of 1934.  Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer recognized the additional risks to an effective internal
control environment posed by a limited accounting staff and the inability to
fully segregate all duties within our accounting and financial functions,
including the financial reporting and quarterly close
process.  Nevertheless, management has concluded that, with certain
oversight controls that are in place and the duties we have been able to
successfully segregate, the remaining risks associated with the lack of
segregation of duties are not sufficient to justify the costs of potential
benefits to be gained by adding additional employees given our development
stage, the limited scope of our operations, and the number of business
transactions we currently process, nor do these remaining risks rise to the
level of a material weakness.  Management intends to periodically
reevaluate this situation and continue to assess ways in which duties can be
further segregated as our business evolves.  Based on these
evaluations, our Chief Executive Officer and Chief Financial Officer concluded
our disclosure controls and procedures are effective as of March 31,
2009.





Changes
in Internal Controls





There
were no changes in our internal control over financial reporting during the
quarter ended March 31, 2009 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.





PART II – OTHER
INFORMATION





Item 1.    
Legal
Proceedings





None.




Item 1A.  Risk
Factors.





There have been no material changes to
our risk factors during or since the period covered by this
report.  For a discussion of risk factors applicable tous and ourbusiness, please refer to the“Risk Factors”section of ourAnnual ReportonForm 10-K filed with the SEC on March
27, 2009.




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





We made
no sales of unregistered equity securities during the period covered by this
report.  We did, however, redeem a total of 366,667 shares from our
shareholder Alexander Gruye on February 25, 2009.  Information
respecting this transaction is set forth in the table below:


14





Period
              
              Total
      Number of Shares
                Purchased
              
              
              Average
                Price
      Paid
                per Share
              
              
              Total
      Number of
                Shares
      Purchased as
                Part
      of Publicly
                Announced
                Plans or Programs
              
              
              Maximum
      Number
                (or Approximate
      Dollar
                Value)
      of Shares that
                May
      Yet Be Purchased
                Under
      the
                Plans or ProgramsJanuary
      2009
              
              
              0
              
              
              
              -
              
              
              
              0
              
              
              $
              0February
      2009
              
              
              366,667
              
              
              $
              .25
              
              
              
              0
              
              
              $
              0March
      2009
              
              
              0
              
              
              
              -
              
              
              
              0
              
              
              $
              0




Item
3.     Defaults Upon Senior Securities





None.




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





None.




Item
5.     Other Information.





None.




Item 6.  
Exhibits.





Exhibit No.
              
              Description31.1
              
              Certification
      of Chief Executive Officer31.2
              
              Certification
      of Chief Financial Officer32
              
              Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002





SIGNATURES





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





POKER
      MAGIC, INC./s/
      Douglas PolinskyDouglas
      PolinskyChief
      Executive OfficerDated:  May
      15, 2009/s/
      Joseph A. Geraci, IIJoseph
      A. Geraci, IIChief
      Financial OfficerDated:  May
      15, 2009


15


INDEX TO EXHIBITS FILED WITH THIS
REPORT





Exhibit No.
              
              Description31.1
              
              Certification
      of Chief Executive Officer31.2
              
              Certification
      of Chief Financial Officer32
              
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002


16