U.S. 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: ~~January~~July 31, 2009

o¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

NEW MEDIA LOTTERY SERVICES, INC.

(Exact name of small business issuer as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

87-0705063

(I.R.S. Employer Identification No.)

~~370~~1400 ~~Neff~~Technology ~~Avenue – Suite L~~Drive, Harrisonburg, Virginia ~~22801~~22802

(Address of principal executive offices)

(540) 437-1688

(Issuer's telephone number)

~~____________________________________________~~370 Neff Avenue – Suite L, Harrisonburg, Virginia 22801

(Former name, former address and former

fiscal year, if changed since last report)

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

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. ~~x Yes ¨ No~~

x Yes ¨ No

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

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ¨ Yes ¨ No

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

At ~~April~~ 3September 16, 2009 there were 2131,~~442~~247,~~143~~843 shares of common stock outstanding.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

NEW MEDIA LOTTERY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheets
ASSETS
	January 31,			April 30,
	July 31,			April 30,
	2009			~~2008~~2009
CURRENT ASSETS	(~~unaudited~~Unaudited)
Cash and cash equivalents	$	~~320~~118,~~926~~274		$	~~215~~69,~~746~~233
Accounts receivable, net		~~102~~41,~~874~~612			~~333~~88,~~777~~122
Marketable securities		-			3,000
Prepaid assets		18,299			17,280
Prepaid assets		20,041			82,508
Total Current Assets		178,185			174,635
Total Current Assets		443,841			635,031
PROPERTY AND EQUIPMENT, NET		70,035			93,287
PROPERTY AND EQUIPMENT, NET		111,848			161,510
DEFERRED LOAN FEES		443,901			472,904
OTHER ASSETS, NET		518,239			-
TOTAL ASSETS	$	692,121		$	740,826
TOTAL ASSETS	$	1,073,928		$	796,541
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	~~980~~797,~~975~~171		$	~~826~~702,~~260~~595
Other payable		5498,~~252~~196			9269,~~425~~713
Deferred compensation		62,500			62,500
Due to related parties		202,465			202,465
Notes payable		5,766,821			4,000,000
Notes payable, net		-			5,625,120
Loans payable - related parties		12,~~983~~051,~~177~~285			2,~~183~~293,177
Total Current Liabilities		93,~~050~~211,~~190~~617			78,~~366~~955,~~827~~570
NOTES PAYABLE - LONG-TERM PORTION		874,699			-
NOTES PAYABLE - LONG-TERM PORTION, NET		338,607			515,620
TOTAL LIABILITIES		93,~~924~~550,~~889~~224			79,~~366~~471,~~827~~190
MINORITY INTEREST		23,~~449~~620,~~592~~853			23,~~887~~525,~~722~~870
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; 50,000,000 shares
Common stock, $0.001 par value; 150,000,000 shares
authorized, 21,442,143 shares issued and outstanding		21,442			21,442
authorized, 31,247,843 shares issued and outstanding		31,248			21,442
Additional paid-in capital		39,~~335~~807,~~688~~945			3,335,688
Accumulated deficit		(14,966,273	)		(12,923,096	)
Prepaid consulting equity		(15,726	)		-
Accumulated other comprehensive income
Accumulated deficit		(16,880,513	)		(15,886,684	)
Foreign currency translation adjustment		308,590			104,958
Accumulated other comprehensive income		578,090			273,320
Unrealized gain on marketable securities		-			3,000
Total Stockholders' Deficit		(6,478,956	)		(12,256,234	)
Total Stockholders' Deficit		(11,300,553	)		(9,458,008	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	692,121		$	740,826
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,073,928		$	796,541

NEW MEDIA LOTTERY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
	For the Three Months Ended						For the Nine Months Ended
	January 31,						January 31,
	2009			2008			2009			2008
NET REVENUES	$	233,394		$	361,922		$	825,380		$	892,031
OPERATING EXPENSES
Depreciation and amortization expense		132,291			38,321			304,677			103,750
General and administrative		166,952			261,400			850,667			787,483
Management fees		18,898			22,165			60,379			67,052
Professional fees		106,462			108,257			457,142			486,744
Programming fees		140,967			182,844			480,755			559,403
Rent expense		23,319			32,787			73,391			92,510
Contract development		-			3,000			3,000			3,000
Website expense		197,979			395,337			680,186			883,726
Total Operating Expenses		786,868			1,044,111			2,910,197			2,983,668
LOSS FROM OPERATIONS		(553,474	)		(682,189	)		(2,084,817	)		(2,091,637	)
OTHER INCOME (EXPENSES)
Loss on sale of property and equipment		400			-			400			-
Interest income		1,512			38			1,585			114
Interest expense		(151,879	)		(100,735	)		(447,354	)		(280,094	)
Total Other Income (Expenses)		(149,967	)		(100,697	)		(445,369	)		(279,980	)
NET LOSS BEFORE INCOME TAXES AND
MINORITY INTEREST		(703,441	)		(782,886	)		(2,530,186	)		(2,371,617	)
PROVISION FOR INCOME TAXES		-			-			-			-
MINORITY INTEREST IN SUBSIDIARIES LOSSES		137,109			142,379			487,009			425,589
NET LOSS	$	(566,332	)	$	(640,507	)	$	(2,043,177	)	$	(1,946,028	)
BASIC AND DILUTED NET LOSS PER SHARE	$	(0.03	)	$	(0.03	)	$	(0.10	)	$	(0.09	)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING		21,442,143			21,442,143			21,442,143			21,442,143
OTHER COMPREHENSIVE INCOME
NET LOSS	$	(566,332	)	$	(640,507	)	$	(2,043,177	)	$	(1,946,028	)
Foreign currency translation adjustment		(90,230	)		24,889			203,632			38,560
Unrealized gain (loss) on marketable securities		-			(5,400	)		(3,000	)		(14,400	)
COMPREHENSIVE LOSS	$	(656,562	)	$	(621,018	)	$	(1,842,545	)	$	(1,921,868	)

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

NEW MEDIA LOTTERY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Condensed Consolidated Statements of Operations
(unaudited)
(Unaudited)
	For the Nine Months Ended
	For the Three Months Ended
	January 31,
	July 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
NET REVENUES	$	260,227		$	337,102
Net loss	$	(2,043,177	)	$	(1,946,028	)
OPERATING EXPENSES
Adjustments to reconcile net loss to
Depreciation and amortization expense		120,552			77,773
net cash used by operating activities:
General and administrative		456,615			305,656
Depreciation and amortization expense		304,677			103,750
Management fees		7,500			22,025
Minority interest in subsidiaries losses		(487,009	)		(425,590	)
Professional fees		196,214			167,549
Change in operating assets and liabilities:
Programming fees		124,110			196,266
Accounts receivable		230,903			(72,969	)
Rent expense		29,688			25,812
VAT receivable		(38,173	)		132,538
Contract development		-			3,000
Accounts payable and accrued expenses		154,715			168,297
Website expense		177,946			306,670
Prepaid assets		62,467			12,974
Total Operating Expenses		1,112,625			1,104,751
Net Cash Used by Operating Activities		(1,815,597	)		(2,027,028	)
LOSS FROM OPERATIONS		(852,398	)		(767,649	)
CASH FLOWS FROM INVESTING ACTIVITIES
OTHER INCOME (EXPENSES)
Purchases of property and equipment		(39,460	)		(38,887	)
Gain (loss) on sale of property and equipment		(52	)		-
Net Cash Used by Investing Activities		(39,460	)		(38,887	)
Interest income		270			36
CASH FLOWS FROM FINANCING ACTIVITIES
Interest expense		(121,558	)		(139,116	)
Loan costs		(668,430	)		-
Interest expense - beneficial conversion feature		(158,806	)		-
Proceeds from issuance of notes payable		3,139,920			750,000
Total Other Income (Expenses)		(280,146	)		(139,080	)
Proceeds from issuance of notes
NET LOSS BEFORE INCOME TAXES AND
payable, related parties		300,000			1,215,000
MINORITY INTEREST		(1,132,544	)		(906,729	)
Payments on notes payable, related parties		(500,000	)		-
PROVISION FOR INCOME TAXES		-			-
Payments on notes payable		(498,400	)		-
MINORITY INTEREST IN SUBSIDIARIES LOSSES		138,715			171,704
Net Cash Provided by Financing Activities		1,773,090			1,965,000
NET LOSS	$	(993,829	)	$	(735,025	)
EFFECT OF FOREIGN CURRENCY
BASIC AND DILUTED NET LOSS PER SHARE	$	(0.03	)	$	(0.03	)
TRANSLATION ADJUSTMENT		187,147			26,572
WEIGHTED AVERAGE NUMBER OF
NET INCREASE IN CASH
SHARES OUTSTANDING		31,247,843			21,442,143
AND CASH EQUIVALENTS		105,180			(74,344	)
OTHER COMPREHENSIVE INCOME
CASH AND CASH EQUIVALENTS,
NET LOSS	$	(993,829	)	$	(735,025	)
BEGINNING OF PERIOD		215,746			196,257
Foreign currency translation adjustment		304,770			(16,942	)
CASH AND CASH EQUIVALENTS,
Unrealized gain (loss) on marketable securities		-			(2,970	)
END OF PERIOD	$	320,926		$	121,913
COMPREHENSIVE LOSS	$	(689,059	)	$	(754,937	)
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	318,685		$	228,417
Cash paid for income taxes	$	-		$	-

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

NEW MEDIA LOTTERY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Deficit
For the period May 1, 2008 through July 31, 2009
(Unaudited)

													Accumulated
					Additional								Other
	Common Stock				Paid-in		Prepaid			Accumulated			Comprehensive			Minority
	Shares		Amount		Capital		Equity			Deficit			Income			Interest

Balance, April 30, 2008		21,442,143	$	21,442	$	3,335,688	$	-		$	(12,923,096	)	$	107,958		$	2,887,722

Consolidation of subsidiaries		-		-		-		-			-			-			638,148

Unrealized loss on marketable securities		-		-		-		-			-			(3,000	)		-

Foreign currency translation		-		-		-		-			-			168,362			-

Net loss for the year ended
April 30, 2009		-		-		-		-			(2,963,588	)		-			-

Balance, April 30, 2009		21,442,143	$	21,442	$	3,335,688	$	-		$	(15,886,684	)	$	273,320		$	3,525,870

Consolidation of subsidiaries		-		-		-		-			-			-			94,983

Common stock issued for conversion of debt		9,005,700		9,006		6,103,627		-			-			-			-

Common stock issued for services		800,000		800		28,200		(20,000	)		-			-			-

Valuation of options and warrants		-		-		340,430		-			-			-			-

Amortization of prepaid equity		-		-		-		4,274			-			-			-

Foreign currency translation		-		-		-		-			-			304,770			-

Net loss for the year ended
April 30, 2009		-		-		-		-			(993,829	)		-			-

Balance, July 31, 2009		31,247,843	$	31,248	$	9,807,945	$	(15,726	)	$	(16,880,513	)	$	578,090		$	3,620,853

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

NEW MEDIA LOTTERY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)


	For the Three Months Ended
	July 31,
	2009			2008

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss	$	(993,829	)	$	(735,024	)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization expense		120,552			77,773
Loss (gain) on disposition of assets		52			-
Non-cash expense		545,224			-
Minority interest in subsidiaries losses		(138,715	)		(187,325	)
Change in operating assets and liabilities:
Accounts receivable		46,510			(36,348	)
VAT receivable		28,483			(42,612	)
Accounts payable and accrued expenses		43,578			262,190
Prepaid assets		-			37,942

Net Cash Used by Operating Activities		(348,145	)		(623,404	)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property and equipment		2,200			-

Net Cash Used by Investing Activities		2,200			-

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of notes payable					2,029,430
Loan fees paid		(40,000	)		(535,015	)
Proceeds from issuance of notes
payable, related parties		360,000			100,000
Payments on notes payable, related parties		(70,000	)		(300,000	)
Payments on notes payable		-			(169,119	)

Net Cash Provided by Financing Activities		250,000			1,125,296

EFFECT OF FOREIGN CURRENCY
TRANSLATION ADJUSTMENT		144,986			(16,028	)

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS		49,041			485,864

CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD		69,233			215,746

CASH AND CASH EQUIVALENTS,
END OF PERIOD	$	118,274		$	701,610

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest	$	988		$	101,924
Cash paid for income taxes	$	-		$	-

NON-CASH INVESTING & FINANCING ACTIVITIES:

Common stock issued for services	$	29,000		$	-
Common Stock issued to convert debt	$	6,112,633		$	-
Warrants and options granted for services	$	248,273		$	-

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

NEW MEDIA LOTTERY SERVICES, INC. & SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 -

BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company’s audited financial statements and notes thereto included in its April 30, ~~2008~~2009 Annual Report on Form 10-~~KSB~~K. Operating results for the ~~nine~~three-months ended ~~January~~July 31, 2009 are not necessarily indicative of the results to be expected for year ending April 30, ~~2009~~2010. ~~NOTE 2 - GOING CONCERN CONSIDERATIONS~~

~~The accompanying~~NOTE ~~condensed~~2 consolidated financial statements have been prepared using 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. As reported in its Annual Report on Form 10-~~KSB,~~ ~~for~~GOING ~~the~~CONCERN year ended April 30, 2008, the Company has incurred operating losses of $12,923,096 (excluding minority interest and other comprehensive loss) from inception of the Company through April 30, 2008. The Company’s stockholders’ deficit at April 30, 2008 was $9,458,008. Additionally, the Company has sustained additional operating losses for the nine months ended January 31, 2009 of $2,084,817, has a working capital deficit of $8,606,349, negative cash flows from operations, and no known borrowing capacity. These factors combined, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to address and alleviate these concerns are as follows:CONSIDERATIONS

~~Management is continually striving to overcome our~~The ~~operating~~accompanying ~~losses~~condensed byconsolidated ~~expanding~~financial ~~the~~statements ~~player~~have ~~base~~been ~~of its various projects and~~prepared ~~thereby~~using ~~increasing~~generally ~~its~~accepted ~~operating~~accounting ~~income. While~~principles ~~revenues~~applicable ~~from~~to ~~Irish~~a ~~lottery~~going ~~client have~~concern ~~remained~~which ~~steady~~contemplates ~~over~~ the ~~last~~realization ~~few~~of ~~quarters,~~assets ~~our~~and ~~depleted~~liquidation ~~cash~~of ~~position~~liabilities ~~has~~in ~~forced~~the usnormal tocourse ~~reduce~~of ~~our~~business. As ~~marketing~~reported ~~efforts~~in ~~for~~its ~~this~~Annual ~~client. We~~Report ~~are not~~on ~~certain~~Form ~~how~~10-K, ~~worldwide~~for ~~economic~~the ~~conditions~~year ~~will~~ended ~~impact~~April ~~lottery~~30, ~~operations~~2009, ~~and~~ the ~~revenues~~ weCompany ~~derive~~has ~~from~~incurred ~~this client. We have limited capital~~operating ~~resources~~losses ~~and~~of ~~our~~$15,886,684 ~~operations~~(excluding tominority ~~date~~interest ~~have~~and ~~been~~other ~~funded~~comprehensive ~~primarily with the~~loss) ~~proceeds~~ from ~~the~~inception ~~sale~~ of ~~equity~~the inCompany ~~NM-PLC~~through ~~and~~April ~~debt~~30, ~~financings~~2009. WeThe Company’s ~~have~~stockholders’ nodeficit ~~lines~~at ofApril ~~credit~~30, ~~available~~2009 towas $12,256,234. Additionally, usthe ~~and~~Company ~~our~~has ~~principal~~sustained ~~stockholders,~~additional operating ~~who~~losses ~~had been~~for ~~supplying~~the ~~capital~~three ~~since~~months ~~our~~ended ~~inception~~July to31, ~~fund~~2009 ~~our~~of ~~operations~~$993,829, ~~are~~has ~~no longer~~a ~~making~~working ~~credit~~capital ~~available~~deficit toof us$3,033,432, ~~either~~and ~~directly~~negative orcash byflows ~~guaranteeing loans~~ from ~~third~~ ~~parties~~operations. WeThese ~~have~~factors ~~not~~combined, ~~identified~~raise ~~any~~substantial ~~other~~doubt ~~sources~~about ofthe Company’s ~~capital~~ability ~~and,~~to ~~in light~~continue ofas ~~our~~a ~~financial~~going ~~condition,~~concern. Management’s itplans to isaddress ~~unlikely~~and ~~that~~alleviate ~~we will.~~these concerns are as follows:

Management is continually striving to overcome our operating losses by expanding the player base of its various projects and thereby increasing its operating income. The ability to expand the player base is principally contingent on raising additional capital for marketing and new project developments.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NEW MEDIA LOTTERY SERVICES, INC. & SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

NOTE 2 -

GOING CONCERN CONSIDERATIONS (Continued)

The ability of the Company to continue as a going concern is dependent upon its ability to attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 -

MATERIAL EVENTS

OnDuring ~~June~~the 1three months ended July 31, ~~2008~~2009, the Company ~~refinanced~~issued ~~their~~the ~~$2.5~~following ~~million Comerica bank~~equity ~~loans. The~~securities ~~loans~~in ~~now~~transactions ~~mature~~exempt onfrom ~~June~~the 1,registration ~~2009~~requirements ~~and~~of ~~bear~~ the Securities ~~same~~Act ~~terms~~ of 1933, as ~~the~~amended, ~~original~~afforded ~~loans~~by Section 4(2) thereof:.

OnDuring ~~June~~May 62009, ~~2008,~~we ~~New~~issued ~~Media~~an ~~Lottery~~aggregate ~~Services,~~of ~~PLC~~300,000 anshares ~~Irish~~of ~~corporation~~common ~~("New~~stock ~~Media PLC"),~~to ~~80.23%~~U-mex ofGmbH for ~~the~~services ~~common~~rendered ~~shares~~in ofconnection ~~which~~with ~~are~~structuring ~~owned~~a byproposed ~~New~~offering ~~Media Lottery~~of ~~Services,~~securities ~~Inc~~in Germany. We ~~(the~~also ~~"Registrant"),~~issued ~~executed~~to aU-mex ~~Convertible~~options ~~Loan~~to ~~Agreement~~purchase ~~with~~an ~~Trafalgar~~additional ~~Capital~~600,000 ~~Specialized~~shares ~~Investment~~of ~~Fund-FIS~~common ~~under~~stock. The ~~which~~options itare exercisable ~~will~~at ~~borrow~~any ~~an aggregate~~time ofthrough €1May 12,~~300~~ 2011,~~000~~ (subject to the ~~"Loan"). The~~conditions described ~~Loan~~in ~~bears~~the ~~interest~~following atsentence. Of the ~~rate~~ ofoptions 8%issued, ~~per~~200,000 are ~~year~~exercisable ~~and~~immediately isat ~~evidenced~~$.30 byper ashare, ~~Debenture~~200,000 ~~which~~are ~~also~~exercisable ~~provides~~at ~~for the~~$.60 ~~grant~~per ofshare aand ~~security~~vest ~~interest~~only in ~~all~~the ofevent ~~New~~that ~~Media~~the ~~PLC's~~Company ~~property,~~receives ~~assets~~minimum ~~and~~net ~~receivables~~proceeds (from the ~~"Debenture"). The~~proposed ~~Loan~~offering ~~matures~~of on€1.5 ~~May~~million 30and 200,000 ~~2010~~are exercisable ~~(twenty~~at ~~four~~$.90 ~~months~~per ~~from~~share ~~the~~and ~~date~~vest ofonly ~~disbursement)~~in ~~and~~the isevent ~~convertible~~that at the Company receives minimum ~~option~~net ofproceeds from the ~~lender~~proposed ~~into~~offering ~~ordinary~~of ~~shares~~€2 million. The estimated value of ~~New~~the ~~Media~~compensatory ~~PLC,~~common ~~provided~~stock ~~that~~purchase ~~such~~options granted to U-mex in ~~shares~~exchange ~~are~~for ~~eligible~~services towas ~~trade~~determined onusing the ~~AIM~~Black-Scholes ~~market~~pricing model. The ~~operated~~Company bycalculated ~~London~~and ~~Stock~~expensed ~~Exchange~~$4,278 ~~plc~~as compensation expense.

AsDuring ~~additional~~May ~~consideration~~2009, ~~for~~we ~~the~~issued ~~Loan,~~an ~~New~~aggregate ~~Media~~of ~~PLC~~500,000 ~~issued~~shares toof ~~the~~common ~~lender warrants~~stock to ~~purchase~~Thomas Chown upfor toservices ~~1,500,000~~rendered ~~ordinary~~in ~~shares~~connection atwith structuring a ~~price~~proposed 5offering of ~~pence~~securities ~~per~~in Germany. The agreement with Mr. Chown is in effect ~~share~~for ~~through~~a ~~May~~period ~~30,~~of ~~2010~~one year. IfThe ~~the~~shares ~~warrants~~that ~~are~~were ~~not~~issued ~~exercised,~~were ~~New~~recorded ~~Media~~as ~~PLC~~prepaid isequity ~~required~~and toas ~~pay~~of ~~the~~July ~~lender~~31, ~~£60~~2009,~~000~~ ~~(British~~$4,274 ~~Pounds~~of this equity had been ~~Sterling)~~expensed as consulting expense.

InOn May ~~November~~29, ~~2008~~2009, wethe ~~received~~Company ~~gross~~issued ~~proceeds~~options ~~of €1.15 million from a loan made~~ to ~~NM-PLC~~ ~~from~~purchase ~~Trafalgar~~an ~~Capital~~aggregate ~~Specialized~~of ~~Investment Fund-FIS (the~~3,475,000 ~~"Loan"). The~~shares ~~Loan~~of ~~bears~~common ~~interest~~stock atto ~~the~~five ~~rate~~employees of 8%the ~~per year~~Company, ~~payable in~~including ~~monthly~~John ~~installments~~Carson and ofSterling ~~principal~~Herbst, ~~accrued~~affiliates ~~interest~~of ~~and~~the ~~redemption~~Company. The ~~premium,~~options are ~~and~~exercisable isat ~~evidenced by~~ a ~~Debenture~~price ~~which~~of ~~also~~$.10 ~~provides~~per ~~for~~share ~~the~~at ~~grant~~any oftime athrough ~~security~~May 28, ~~interest~~2019. The inestimated ~~all~~value of ~~New~~the ~~Media~~compensatory ~~PLC's~~common ~~property,~~stock ~~assets~~purchase options ~~and~~granted ~~receivables~~above ~~(the "Debenture"). The~~in ~~Loan~~exchange ~~matures~~for onservices ~~April~~was ~~30,~~determined ~~2010~~using ~~and~~the Black-Scholes ispricing ~~convertible at~~model. ~~the~~The ~~option~~amount of the ~~lender~~expense ~~into~~charged ~~ordinary~~to ~~shares~~operations offor these ~~New~~compensatory ~~Media~~options ~~PLC,~~granted ~~provided~~in ~~that such~~exchange ~~shares~~for ~~are~~services ~~eligible~~was to$100,834 ~~trade on~~ during the ~~AIM~~three ~~market~~months ~~operated~~ended byJuly ~~London~~31, ~~Stock Exchange plc~~2009.

AsOn July ~~additional~~23, ~~consideration~~2009, ~~for~~we ~~the~~issued ~~Loan~~4,502,850 ~~New~~shares ~~Media~~of ~~PLC~~common ~~issued~~stock to ~~the~~Milton ~~lender~~Dresner in ~~warrants~~consideration toof ~~purchase~~the upconversion toof $3,~~000~~230,~~000~~133 ~~ordinary~~in principal amount of debt and 4,502,850 shares of common stock to Joseph Dresner in consideration of the conversion of $2,882,500 in principal amount of debt. Milton Dresner converted at a price 5of ~~pence~~$0.71735 per share ~~through~~and ~~April~~Joseph ~~30,~~Dresner ~~2010~~converted at a price of $0.64015 per share. IfAlso in connection with the conversion of their debt, the Company issued warrants to purchase 750,000 shares of common stock to each of Milton Dresner and Joseph Dresner. The warrants are exercisable ~~not~~at ~~exercised~~a price of $.05 per share at any time through July 23, 2012. The ~~New~~estimated value of these compensatory common stock purchase ~~Media~~warrants ~~PLC~~was isdetermined ~~required~~using tothe ~~pay~~Black-Scholes pricing model. The amount of the expense ~~lender~~charged ~~£120,000~~to ~~(British~~operations ~~Pounds~~for these compensatory warrants was $143,161 ~~Sterling)~~during the three months ended July 31, 2009.

~~All~~In May ~~finance~~2009, ~~costs~~the ~~related~~Company toborrowed ~~the~~$60,000 from Trafalgar ~~loans~~Capital ~~have~~on ~~been~~a ~~capitalized~~short ~~and~~term basis. The ~~will~~loan ~~be amortized~~was ~~over~~repaid ~~the~~in ~~life~~its ofentirety ~~the~~in ~~loan~~July 2009.

During the three months ended July 31, 2009 the Company entered into a $1 million credit facility, under which $300,000 was outstanding at July 31, 2009 with Trafalgar Capital. All draw downs under the credit facility are and will be evidenced by Secured Convertible Redeemable Debentures ("Debentures") that mature on July 20, 2011, at which time the credit facility expires. The balance outstanding under each Debenture bears interest at the rate of 10% per annum. The Company received the first draw down under the credit facility as of July 20, 2009 in the amount of $300,000.

Using guidance from EITF 98-05 and EITF 00-27 the Company analyzed the beneficial conversion feature of their debt agreements. The value of the beneficial conversion feature was determined using the intrinsic value method. As of July 31, 2009, the Company recognized a beneficial conversion feature of $92,157 of which $1,120 has been accreted in the financial statements.

NEW MEDIA LOTTERY SERVICES, INC. & SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

As of January 1, 2009, NM-PLC was in default under two convertible loan agreements in the aggregate current principal amount of €2,061,111 payable to Trafalgar Capital Specialized Investment Fund-FIS

NOTE 4 -

SUBSEQUENT EVENTS

~~Comerica~~On August ~~Bank~~24, ~~extended~~2009, the ~~due~~Company ~~date~~received on a ~~promissory~~second ~~note~~draw indown under the ~~principal~~credit ~~amount of $1.9~~facility ~~million~~described ~~from~~above ~~February~~under ~~29, 2009 to February 20, 2010. In consideration of~~ the ~~extension,~~heading ~~Comerica~~"Liquidity ~~modified~~and ~~the~~Capital ~~manner~~Resources-Debt" in ~~which interest is calculated~~the ~~under~~principal ~~the~~amount ~~note~~of $275,000. AsWe ~~originally~~will ~~drafted,~~commence ~~the~~making ~~note~~monthly payments ~~accrued interest~~ on the ~~basis~~August of2009 anDebenture ~~intricate formula based~~ on ~~the~~October ~~floating Eurodollar rate. As amended~~30, ~~interest~~2009 isin ~~calculated~~an onamount ~~the~~equal ~~note based upon the~~to ~~daily~~(i) ~~adjusted LIBOR rate~~$12, ~~as reported by Bloomberg~~056. We16 ~~believe~~of ~~that the~~outstanding ~~net~~principal, ~~affect~~plus of(ii) ~~the~~applicable ~~modification~~accrued tointerest on the ~~interest~~outstanding ~~rate~~balance ~~provision~~as of ~~this~~such ~~note is~~payment andate, ~~indeterminable~~plus ~~increase~~(iii) in the ~~annual~~redemption premium ~~interest rate we pay~~ on the principal ~~balance~~amount ~~outstanding~~redeemed.).

~~In order~~Also pursuant to ~~cure~~ the ~~default~~Purchase ~~under~~Agreement, the ~~loan~~Company ~~agreements,~~agreed onto ~~March~~issue ~~24,~~2 ~~2009,~~million ~~NM-US and~~shares ~~NM-PLC~~of ~~entered~~convertible, ~~into~~redeemable apreferred ~~Restructuring~~stock ~~Agreement~~to ~~in favor of~~ Trafalgar ~~under~~Capital ~~which~~Specialized ~~payments~~Investment ~~during~~Fund-FIS ~~the~~("Trafalgar"). On ~~period~~August ~~beginning on December 30~~21, ~~2008 through June 30,~~ 2009 ~~would be deferred and recommence as of July 31~~, ~~2009 in~~ the ~~amounts provided for~~parties inagreed on the ~~agreement. In~~terms ~~consideration~~ of the ~~indulgence~~preferred ~~granted~~stock ~~by Trafalgar~~and on that date, the Company ~~agreed~~filed ~~(i) to pay Trafalgar~~ a ~~restructuring fee of~~ ~~€150,000,~~certificate ~~half~~ of ~~which~~designation ~~was~~with ~~to be added to~~ the ~~principal~~State ~~amounts outstanding~~ of ~~each~~ ~~loan~~Delaware ~~made~~setting ~~under~~forth the ~~loan~~terms and ~~agreements,~~restrictions ~~(ii) the maturity date~~ of the ~~November~~Series ~~2008 Loan~~A ~~was~~Convertible ~~extended~~Preferred ~~from~~Stock ~~April~~("Series ~~30,~~A Preferred ~~2010~~Stock") to ~~October~~be ~~31,~~issued ~~2010 and (iii) NM-US agreed~~ to ~~enter into each of a Pledge Agreement and Corporate Guaranty in favor of~~ Trafalgar. InOn ~~addition~~August 24, ~~each~~2009, ~~of Milton Dresner and Joseph Dresner~~the ~~agreed~~Company toissued ~~transfer~~2 ~~9,005,700~~million shares of ~~NM-US~~Series ~~common~~A ~~stock~~Preferred ~~registered~~Stock into ~~their~~Trafalgar ~~names~~pursuant to ~~Trafalgar~~the soexemption ~~that~~from ~~after~~ the ~~transfer,~~registration ~~Trafalgar~~requirements ~~would~~of ~~own~~the ~~approximately~~Securities ~~42%~~Act of ~~the~~1933, ~~outstanding~~as ~~shares~~amended, ofafforded ~~NM-US~~by Section 4(2) thereof.

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

Forward Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Report contain forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995 that are based on current expectations, estimates and projections about our business, management’s beliefs, and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “could”, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors including our ability to obtain capital to repay our debt and fund ongoing operations; our ability to fully implement our business plan; our ability to take advantage of new business opportunities as they arise; general economic and business conditions, both nationally and in our markets; the effect of government regulation on our industry in each country in which we conduct business; financing plans and the impact of competition; anticipated trends in our business; and other risks discussed from time to time in our other Securities and Exchange Commission filings and reports, including our Annual Report on Form 10-K for the year ended April 30, 2009. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Report.

Overview.

New Media Lottery Services, Inc. (the “NM-US”), through its direct and indirect subsidiaries, New Media Lottery Services plc (“NM-PLC”) and New Media Lottery Services (International), ~~Services~~ Ltd. (“~~NMLS~~NM-LTD” ~~and~~ )(collectively, ~~with NM-US and NM-PLC,~~ “we”, “us” the “Company” or like terms), designs, builds, implements, manages, hosts and supports web, kiosk and wireless device based lottery programs operated by governments and charitable organizations outside of the United States. We commenced providing services to clients in August 2003 and began generating revenues from long-term agreements with our clients during the 2006 fiscal year. We also develop and provide lottery products and content to Internet-based kiosks for third parties.

Our business is highly regulated and the competition to secure new contracts is intense. All of our clients are outside the United States. In addition, substantially all of our assets, primarily consisting of equipment we use to operate online lottery systems for our customers, are held outside of the United States. Accordingly, we are subject to all of the risks of international operations, including increased governmental regulation of the online lottery industry in the markets where we operate or propose to operate; exchange controls or other currency restrictions and exchange rate risks; and political instability. Unless we begin recognizing substantially more revenue from operations or develop an additional source of revenue, we will have difficulty repaying our outstanding debt.

~~During~~First ~~the~~Quarter quarter ended January 31, 2009 and in the subsequent period through the date of this report, the Company had been in default under the terms of two convertible loan agreements in the original aggregate principal amount of €2.45 million (with an outstanding principal balance of €2,061,111, as of December 31, 2009). On March 24, 2009, the Company entered into a series of restructuring agreements with the lender, as more fully described below. Upon execution of the restructuring agreements, the lender withdrew the default notices to NM-PLC. The defaults under these instruments are indicative of our declining financial condition.Operations

~~Current~~On July ~~Financial~~23, ~~Condition~~2009, each constituent entity comprising Milton Dresner and Joseph Dresner agreed to convert an aggregate of approximately $6,112,633 of principal owed to them by the Company into shares of the common stock of NM-US. The debt converted included (i) the amounts owed to them under a series of promissory notes made by the Company during the period March 2006 through May 2009, (ii) the amount of principal paid by the Dresners on behalf of the Company to satisfy amounts due to Comerica Bank under certain promissory notes dated June 1, 2008 in the aggregate amount of $2.1 million and (iii) the amount of principal assumed by the Dresners under a promissory note made by the Company in favor of Comerica Bank in the amount of $1.9 million dated February 20, 2009 (the "Comerica Note"). In consideration of the benefits conferred upon the Company as a result of the actions taken by the Dresners in (i), (ii) and (iii), above, the Company issued an aggregate of 9,005,700 shares of Common Stock to them. The elimination of the debt described above significantly improved our balance sheet.

~~Our current financial condition has~~During ~~deteriorated significantly over~~ the ~~last~~first fiscal quarter~~. Projects~~, ~~that~~ we ~~had~~ ~~been~~continued ~~developing~~to ~~over~~focus ~~the last several years and which factored significantly into~~ our ~~revenue~~efforts ~~forecasts~~on ~~for~~the ~~fiscal~~growth ~~2009~~ and implementation ~~beyond~~of ~~have~~programs ~~not come~~ to ~~fruition. In~~ ~~some~~expand ~~cases, we have abandoned these projects entirely and recognized~~ the ~~loss~~reach of ~~our~~Rehab ~~entire~~Ireland's ~~investment~~site, ~~(lottery projects in Brazil and~~within ~~Venezuela). In other cases~~Ireland, the ~~projects~~United ~~have~~Kingdom ~~not~~and ~~progressed~~beyond, ~~as quickly as we had been lead~~ to ~~believe~~acquire ornew weplayers. Our business ~~had~~is ~~expected~~built ~~they~~upon ~~would (~~the ~~wide-scale~~ ~~release~~number of ~~server~~players ~~based~~that ~~gaming~~deposit ~~terminals~~funds ~~in Ireland~~ and ~~England~~play ~~under~~games on our ~~contract~~client's ~~with Inspired Gaming Network)~~site. WeOur ~~attribute~~objective ~~the~~is ~~failure of the projects~~ to ~~progress~~acquire asnew weplayers ~~had~~at ~~expected to governmental regulatory actions that have directly impacted our industry and frustrated~~ the ~~development~~ oflowest ~~the~~cost ~~projects~~per ~~entirely or that have delayed significantly the advancement of the programs with which we are involved~~player. The ~~downturn~~internet inprovides ~~the~~an ~~world economy~~effective ~~over~~means ~~the last twelve months also has brought to an unsuccessful~~of ~~conclusion~~achieving ~~our~~this ~~efforts~~goal, toboth ~~win~~by away ~~contract~~of tosites ~~operate~~we amaintain ~~national~~and ~~online~~through ~~lottery~~partnerships ~~for~~with ahigh ~~European~~traffic ~~country~~sites ~~that~~maintained ~~elected~~by tothird ~~defer spending on new ventures until financial conditions improved~~parties. WeOur ~~had~~efforts have been ~~developing~~directed ~~this~~at ~~prospect for~~establishing ~~nearly~~partnerships ~~one~~with ~~year and believed this business would have represented a significant near~~well-~~term~~known ~~source~~brands ~~of revenues, given that we believe that we could have implemented the program rapidly~~ and ~~realized revenues upon implementation~~ oforganizations ~~the system given~~ that weoperate ~~would~~Web ~~have~~sites ~~enjoyed~~with ~~the~~high ~~support of the~~user ~~government~~traffic. ~~Our~~Partnerships ~~inability~~either totake ~~generate revenue from~~ the ~~projects~~form ~~to which we had allocated resources, some~~ of ~~which~~"white ~~had~~label" ~~been~~sites ~~under development for~~or up"affiliate ~~to three years, has materially and negatively impacted our results of operations and prevented us from achieving our financial expectations~~programs."

WeA typical ~~believe~~"white ~~that~~label" ifprogram entails our ~~projects~~partner's ~~had~~Web ~~reached~~site ~~operational~~linking ~~maturity,~~to wea ~~would~~Web bepage which ~~generating~~we ~~revenue~~develop, ~~sufficient~~allowing its customers to ~~support~~play games offered by our ~~administrative~~lottery ~~overhead~~client. The linked page retains the atmosphere of the partner's branded Web site, allowing ~~service~~users to feel that they have not left the sponsor's home site. Essentially, our ~~debt~~gaming ~~and~~site is rebranded to ~~grow~~appear ~~our~~as ~~business~~the partner’s offering. ~~Specifically~~Players enroll, bydeposit ~~the~~funds, ~~date~~wager ~~hereof,~~and collect wewinnings ~~had~~exactly ~~expected~~as ~~Inspired~~players on our client's Web site. Players directed to ~~have~~the ~~placed~~white ~~its~~label ~~server~~site ~~based~~from ~~gaming~~our ~~terminals~~partner's inWeb site are playing the ~~significantly~~same ~~more~~games ~~locations~~being ~~than~~played ~~its~~by ~~current~~customers ~~circulation~~on ~~and~~our ~~that~~client's weweb ~~would~~site ~~have~~in the same "room" ~~been~~(the ~~operating~~Web ~~profitable~~page ~~lotteries~~on which a particular game is played). The more players in ~~Brazil~~the playing room, the larger and ~~Venezuela~~more attractive the potential prizes. ~~Revenues~~ Players from ~~these~~many ~~operations~~white ~~would~~label ~~have~~sites ~~provided~~may ~~cash~~be toplaying ~~promote~~in ~~our~~the same ~~Irish~~room ~~and~~without ~~UK lotteries~~being ~~and~~aware ~~possibly~~of ~~would~~that fact because they feel as if they have ~~been~~not left ~~sufficient~~the tosponsor's ~~allow~~Web ussite. Compensation arrangements typically comprise the payment of a monthly fee to ~~pursue~~a ~~new~~partner as well as a percentage of the revenues ~~business~~derived from players originating from a partner's white label site.

InWe ~~anticipation~~currently ofhave ~~the~~established ~~projects~~white ~~referenced~~label ~~above~~programs ~~coming~~with ~~into~~such ~~profitable~~companies ~~operation, we~~as ~~sought~~The aIrish Post ~~listing~~newspaper ~~for~~in ~~NM-PLC~~the onUK (the ~~AIM~~voice ~~Market,~~of ~~from which~~ the ~~company's shares~~Irish ~~were~~in ~~suspended~~Britain) ~~from~~to ~~trading~~service ~~on March 13, 2009. The listing was~~the ~~achieved~~expansive atIrish ~~great~~ex-patriot ~~initial~~community ~~and~~in ~~ongoing~~the ~~expense~~UK; TV3, ~~consisting~~Ireland’s ~~primarily of~~leading ~~investment~~independent ~~banking~~television ~~fees~~station, ~~professional~~to ~~fees~~provide ~~and~~our ~~salaries~~client's ofcontent ~~independent~~to ~~directors~~its popular ~~(whose~~and ~~position~~award-winning onweb ~~the~~site; ~~board~~and ~~was~~Pigsback, ~~required~~Ireland’s ~~under~~leading ~~AIM~~consumer ~~regulations), that~~networking ~~aggregated exceeded $2~~site.~~6 million.~~ We ~~believe~~expect ~~that we never derived the benefits we were lead~~ to ~~believe~~enter ~~would~~into ~~accrue~~several ~~from~~additional ~~the~~white ~~AIM~~label ~~listing,~~programs ~~including~~with ~~exposure~~well-known toWeb asites ~~market~~over ~~and~~the ~~investment~~coming ~~community that understood and would be receptive to our business model~~months.

We ~~also~~enter ~~have~~into ~~incurred~~affiliate ~~significant~~programs ~~debt,~~with ~~the~~niche/vertical ~~last~~content ~~two~~driven ~~tranches~~web ofsites ~~which~~that ~~were on less than~~have ~~favorable~~similar ~~terms~~target toaudience/customers whereby our ~~Company~~affiliates ~~and~~create ata ~~considerable~~hyperlink ~~cost to the~~on ~~Company. Direct~~their ~~fees~~page ~~and~~that ~~expenses~~points ~~payable in connection with the two loans, consisting principally of facility commitment fees, structuring fees, due diligence fees and professional fees payable~~ to ~~the~~our ~~lender~~lottery ~~and finder~~client's ~~fees~~Web ~~in each instance payable to a third party, which aggregated approximately €367,565~~page. ~~Over~~These ~~the last fiscal quarter, the monthly costs and~~links ~~expenses associated with these loans and in connection with our operations~~ have ~~exceeded~~ ~~our~~begun ~~revenue and financial resources and we have been applying a portion of the funds borrowed~~ to ~~pay~~drive ~~ongoing~~traffic ~~principal and interest expenses, as well as~~ to ~~pay "redemption premiums" payable with each principal payment. Our resort to these credit facilities is representative of~~ our ~~financial predicament. We~~site ~~have no leads for additional capital~~ and ~~our principal~~compete ~~stockholders,~~very ~~who~~competitively ~~had~~in ~~been supplying capital as necessary since our~~the ~~inception~~market ~~to fund our operations, are no longer making credit available to us, either directly or by guaranteeing new loans from third parties~~place.

~~Our~~White ~~auditors~~label ~~have~~and ~~issued~~affiliate aprograms ~~going concern opinion~~ in ~~their~~partnership ~~previous~~with ~~audits~~third ofparties ~~our financial~~allow ~~statements~~us ~~and continue~~ to ~~express such an opinion~~ ~~herewith. The~~leverage ~~accompanying~~our ~~condensed~~partners' ~~consolidated~~customers ~~financial statements~~and ~~have~~acquire ~~been~~players ~~prepared~~at ~~using generally accepted accounting principles applicable to~~ a ~~going~~significantly ~~concern which contemplates the realization of assets and~~lower ~~liquidation~~cost ofthan ~~liabilities~~direct ~~in the normal course of business~~advertising. ~~As reported~~The inprograms ~~its~~offer ~~Annual~~our ~~Report~~partners onaccess to ~~Form~~our ~~10-KSB,~~games ~~for~~and ~~the year ended April 30~~services, ~~2008, the~~essentially ~~Company~~our ~~has~~client’s ~~incurred~~government ~~operating~~gaming ~~losses of $12~~license,~~923,096 (excluding minority~~ ~~interest~~ and ~~other~~allows ~~comprehensive~~them ~~loss)~~to ~~from~~widen ~~inception~~their ofproduct ~~the~~offering ~~Company~~and ~~through April~~create ~~30,~~a ~~2008. The Company’s stockholders’ deficit at April 30, 2008~~better ~~was~~cross-selling ~~$9,458,008. Additionally,~~platform ~~the Company has sustained further operating losses~~ for ~~the~~their ~~nine~~own ~~months~~products ~~ended~~or ~~January~~services ~~31,~~without ~~2009~~having ~~of $2,084,817, at~~to ~~which~~invest ~~date~~in wecreating ~~had~~the atechnology ~~working capital deficit of $8,606,349, negative cash flows from operations,~~ and noinfrastructure ~~known borrowing capacity~~itself. ~~These~~The program ~~factors~~allows ~~combined,~~all ~~raise~~parties ~~substantial doubt~~to ~~about~~leverage and monetize the ~~Company’~~partner's ~~ability~~existing customer tobase ~~continue~~for asan aadditional ~~going~~revenue ~~concern~~stream.

~~The~~During ~~ability of~~ the ~~Company~~quarter, towe ~~continue~~commenced asdeveloping asoftware ~~going~~modifications ~~concern~~for isInspired ~~dependent upon its~~Gaming ~~ability~~Group's toserver ~~eventually~~based ~~attain~~gaming ~~profitable operations~~terminals. ~~Unless~~We we are ~~generating~~ ~~significantly~~advised ~~more~~these modifications ~~revenue~~were ~~from~~requested ~~our~~by ~~operations~~distributors orand ~~identify~~hope ~~a source of cash, we expect~~ that ~~over the next twelve months~~ our ~~obligations~~efforts will ~~significantly~~accelerate ~~exceed~~the ~~our~~deployment ~~revenue. However, we may expend all~~ of ~~our cash and/or be in default under our outstanding credit instruments more quickly than that, in which case we may have to discontinue operations within~~ the ~~year. The~~ ~~accompanying~~terminals ~~financial~~over ~~statements do not include any adjustments that might be necessary if~~ the ~~Company~~next isseveral ~~unable to continue as a~~fiscal ~~going concern~~quarters.

~~Current~~We ~~Operations~~continue to negotiate with the officials in a mid-European country to win a contract to operate a national lottery but cannot state with any certainty whether our efforts will be successful.

~~Our current operations comprise~~Critical ~~operating~~Accounting anPolicies ~~online lottery system for our Irish client~~ and developing games for use on server based terminals (Internet-based kiosks) being distributed by Inspired. During the last quarter, the Company continued to increase the capabilities of its Irish gaming sites by consolidating the separate bingo and gaming websites. This affords us the ability to "white-label" this site so that marketing partners can offer gaming products under our client's banner. Otherwise, in light of our current financial condition, we are seeking to service our clients at existing expenditure levels. Current economic conditions have impacted the market for our services and prompted several prospective clients to defer entering into new ventures. Moreover, our lack of cash has caused us to suspend pursuing new business opportunities.Estimates

~~While~~The discussion ~~revenues~~and ~~from~~analysis of our ~~Irish~~financial ~~lottery~~condition and results of operations are ~~client~~based upon our consolidated financial statements, which have ~~remained~~been ~~steady~~prepared ~~over~~in accordance ~~the~~with ~~last~~accounting ~~few~~principles ~~quarters,~~generally ~~our~~accepted ~~depleted~~in ~~cash~~the United ~~position~~States. The ~~has~~preparation ~~forced~~of these financial statements requires us to make ~~reduce~~estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our ~~marketing~~estimates ~~efforts~~on ~~for~~an ~~this~~on-going ~~client~~basis. We base our estimates on historical experience and on various other assumptions that are ~~not~~believed ~~certain~~to ~~how~~be ~~worldwide~~reasonable ~~economic~~under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For ~~will~~a description of our ~~impact~~critical ~~lottery~~accounting ~~operations~~policies and related judgments and estimates that affect the preparation ~~revenues~~of weour ~~derive~~condensed ~~from~~consolidated ~~this~~financial statements, see Note 2 of ~~client~~the footnotes thereto included in our April 30, 2009 Annual Report on Form 10-K.

~~We continue to develop games for~~Recent ~~Inspired's~~Accounting server based gaming terminals and are advised by Inspired that it continues to install these devices at pubs and other social establishments in Ireland. Inspired has informed us that it has retained independent distributors throughout Ireland to expedite the deployment of these machines. We anticipate that these distributors will be compensated for their efforts by participating in a share of the revenues generated from the machines they place, thereby reducing the potential revenue stream to us (our revenues from these devices are calculated as a percentage of the net revenues generated from each device on a monthly basis). Deployment of these devices has not occurred as rapidly as we would have hoped or as we were lead to believe and we are not certain as to when a significant number of these devices will have been deployed or that meaningful revenue would be generated from these devices, given that we can not be certain they will be well-received by the public.Pronouncements

~~Restructuring~~See Note 2 of ~~Trafalgar~~the ~~Debt~~footnotes thereto included in our April 30, 2009 Annual Report on Form 10-K for a description of recent accounting pronouncements.

~~During~~Results ~~June and October 2008, NM-PLC borrowed an aggregate~~ of ~~€2.45~~Operations ~~million~~for ~~principal amount from Trafalgar Capital Specialized Investment Fund-FIS (Trafalgar) in two tranches. Each loan is governed by~~ the ~~terms~~Three ofMonths aended ~~Convertible~~July ~~Loan Agreement that bears interest at the rate of 8% per annum. Amounts of principal and interest under the loan agreements are payable monthly as provided in the applicable document~~31, ~~each~~2009 ofcompared ~~which payments is subject~~ to ~~a redemption premium of 12.5%. The loan made in June 2008 matures in May 2010 and~~ the ~~loan made in October 2008 matures in April 2010. NM-PLC granted a~~three ~~security~~months ~~interest~~ended toJuly ~~Trafalgar in all of its assets pursuant to the terms of the debenture described below. As of December~~ 31, 2008~~,, the principal outstanding balance on these loans was €2,061,111~~.

~~Pursuant~~As toreported ~~the~~in ~~terms~~our offinancial astatements ~~debenture~~to ~~executed~~this ~~concurrently~~Quarterly ~~with~~Report ~~the~~on ~~loan~~Form ~~agreements, NM~~10-~~PLC~~Q ~~granted~~for the athree ~~security~~months ~~interest~~ended inJuly ~~all~~31, of2009, ~~its~~the ~~property~~Company reported a $993,829 ~~assets~~net ~~and~~loss ~~receivables~~after tominority ~~Trafalgar. Under~~interest ~~the~~on ~~debenture~~$260,227 ~~Trafalgar~~in ~~has~~net ~~the right,~~revenues ~~among~~as ~~other~~compared ~~things,~~ to ~~seize~~net ~~all~~ revenues of ~~NM-PLC's~~$337,102 ~~assets~~on ~~upon~~losses aafter ~~default,~~minority ~~to operate~~interest ~~its~~of ~~business~~$735,025 ~~and~~for ~~sell~~the ~~all~~first orquarter of ~~any~~fiscal ~~part~~2010. The ofCompany ~~its~~used ~~assets~~$348,145 toin ~~collect~~cash isfor ~~debts~~operating ~~and~~activities, ~~prosecute~~leaving ~~any~~$118,274 ~~rights~~in itcash ~~may~~at ~~have~~July ~~under~~31, ~~any agreement~~2009.

~~NM-PLC~~Net ~~failed~~revenues todecreased ~~make~~by ~~the~~$76,875 ~~payments~~to of$260,227 ~~principal~~or ~~under~~about ~~the~~23% ~~June~~over ~~and~~the ~~October~~first ~~2008~~quarter ~~loan~~of ~~agreements~~the ~~due~~2010 onfiscal ~~December~~period. During 31the last quarter, ~~2008~~the number of transactions recorded and ~~was~~the inamount ~~default~~wagered ~~thereunder~~on ~~for~~our ~~failing~~Irish ~~to make~~client's ~~such~~lottery ~~payments~~site remained ~~owed~~steady ~~when~~with ~~due. Upon~~the aprevious ~~default~~quarters. However, ~~the~~given ~~entire~~that ~~amount~~revenues ~~due~~are recognized in Euros and ~~owing~~reported ~~under~~in dollars, the ~~agreements~~amount ~~automatically~~of ~~became~~revenue ~~immediately~~(in comparison ~~due~~to ~~and payable. The~~the ~~default~~first ~~under~~quarter of the ~~loan~~fiscal ~~agreements~~year ~~occasioned~~ended aApril ~~default~~30, 2009) we ~~under~~recorded ~~the~~last ~~debenture~~quarter ~~and~~was asimpacted ofmaterially by the ~~default~~steep ~~date~~decline ~~Trafalgar~~in ~~had~~ the ~~right~~value of tothe ~~take control~~Euro ofagainst ~~our~~the ~~assets~~US Dollar.

~~As a~~Operating ~~further~~expenses ~~result~~remained comparable with the operating expenses from the first quarter of the ~~defaults~~last ~~under~~fiscal period at $1,112,625. The Company reported increases in depreciation and amortization expenses, but decreased its website expenses. Included in operating expenses for the ~~Trafalgar~~period ~~convertible~~ended ~~loan~~July ~~agreements:~~31, 2009, are $545,224 in non-cash expenses associated financing, and the issuances of warrants and stock options, as well as stock.

·Liquidity and ~~NM-PLC~~Capital ~~was in default under the terms of a share pledge agreement under which it pledged all of the shares it owns in NM-LTD to Trafalgar; and~~Resources

~~· NM-LTD was in default under the terms of each of security agreement (styled a "Debenture")~~ Sources and aUses ~~guaranty it executed in favor~~ of ~~Trafalgar on January 26, 2009.~~Cash

~~In order~~Liquidity tois ~~cure~~ the ~~default~~ability ~~under~~of ~~the loan agreements, on March 24, 2009, NM-US and NM-PLC entered into~~ a ~~Restructuring~~company ~~Agreement~~to ingenerate ~~favor~~adequate amounts of ~~Trafalgar~~cash ~~under~~to ~~which payments~~meet ~~during the period beginning on December 30, 2008 through June 30, 2009~~its ~~would~~needs ~~be deferred and recommence as of July 31, 2009 in the amounts provided~~ for in ~~the agreement~~cash. In Over ~~addition,~~the ~~Trafalgar~~last ~~extended~~fiscal ~~the~~quarter ~~maturity~~our ~~date~~principal sources of ~~the~~liquidity ~~October~~encompassed ~~2008~~cash ~~loan~~provided from ~~April~~third ~~30,~~party ~~2010~~loans toand ~~October~~operating ~~31, 2010. In~~cash ~~consideration~~flow. ofOur ~~the~~principal ~~indulgence~~uses ~~granted~~of byliquidity ~~Trafalgar,~~generally ~~the~~include ~~Company~~payroll ~~agreed~~and ~~(i) to~~related ~~pay Trafalgar a restructuring fee of €150~~expenses,~~000,~~ ~~half~~professional offees ~~which~~and ~~was~~marketing toexpenses. beInformation ~~added~~regarding toour ~~the~~cash ~~principal~~flows ~~amounts~~for ~~outstanding~~the ~~principal~~three ~~balance~~months ofended ~~each~~July 31, ~~loan~~2009 ~~and~~is ~~(ii)~~presented ~~NM-US agreed to enter into each of a pledge agreement and corporate guaranty agreement~~ in ~~favor of Trafalgar. In addition, Milton Dresner and Joseph Dresner~~our ~~agreed~~condensed toconsolidated ~~transfer~~statements ~~an aggregate~~ of ~~9,005,700~~cash ~~shares~~flows ofcontained ~~NM-US common stock registered~~ in ~~their~~this ~~names~~Form ~~to Trafalgar so that after the transfer~~10-Q, ~~Trafalgar~~and ~~would~~is ~~own~~further ~~approximately~~discussed ~~42% of the outstanding shares of NM-US~~below.

~~Under~~At ~~the~~July ~~Pledge~~31, ~~Agreement~~2009, ~~NM-US~~the ~~pledged~~Company’s ~~all~~cash ofand ~~the~~accounts ~~common~~receivable ~~shares~~equaled it$159,886 ~~owns~~ in available ~~NM-PLC~~resources to ~~Trafalgar~~ ~~and~~fund ~~upon~~$895,367 ~~any~~in ~~default~~accounts ~~under~~payable ~~any~~and ~~of the loan documents (the loan~~accrued ~~agreements,~~expenses. While ~~the~~Rehab ~~debenture~~Bingo orshould ~~the~~continue ~~guaranty)~~to itgenerate ~~would~~cash ~~transfer title~~ to ~~said~~ ~~shares~~partially tofund ~~Trafalgar. Under the Corporate Guaranty~~operations, ~~upon~~expenses awill ~~default~~exceed ~~by NM-PLC~~revenues infor the ~~payment~~foreseeable future. Additional sources of ~~any~~cash ~~amount~~will ~~due~~be tonecessary ~~Trafalgar~~in ~~under~~fiscal ~~the loan documents,~~year ~~NM-US~~2010 ~~would be required~~ to ~~pay~~fund ~~any~~the ~~amount~~cash ~~not paid when required to be paid~~shortfall.

~~Extension~~We continue to trim expenditures in the interest of ~~Due~~retaining ~~Date~~cash. Over the past two quarters, we have reduced our staff by five persons and the remaining management and staff accepted a 10%-20% cut in salary. In furtherance of $1our efforts to reduce expenditures we have decreased website expenses, which are primarily advertising, by 42% compared to the first quarter of fiscal 2009.9 We ~~Million~~do ~~Comerica~~not ~~Promissory~~believe ~~Note~~that the reduction in staff or website expenditures will materially affect our business in the long term.

~~During~~As ~~the last quarter, Comerica extended the due date on a promissory note in the principal amount~~ of ~~$1.9~~ ~~million from February 29~~July 31, 2009 ~~to February 20~~, ~~2010. In~~we ~~consideration of~~had ~~the~~a ~~extension,~~working ~~Comerica~~capital ~~modified~~(current ~~the~~assets ~~manner~~minus ~~in which interest is calculated~~current ~~under~~liabilities) ~~the~~deficit ~~note. As~~of ~~originally drafted~~$3,033,432 ~~the~~as ~~note~~compared ~~accrued~~to ~~interest~~a ~~on the~~deficit ~~basis~~ of ~~an intricate formula based on the floating Eurodollar rate. As amended~~$8, ~~interest is calculated on the note based upon the daily adjusted LIBOR rate~~780,935 as ~~reported by Bloomberg. We believe that the net affect~~ of ~~the modification to the interest rate provision of this note~~ isApril 30, an2009 ~~indeterminable~~(our ~~increase~~fiscal inyear ~~the annual interest rate we pay on the principal balance outstanding~~end).

~~Liquidity~~Net cash used by operating activities in the first three months of fiscal 2010 was $348,145. The development and ~~Capital~~implementation ~~Resources~~of new lotteries is capital intensive and we do not possess sufficient capital to pursue or develop new opportunities if presented to us.

~~Liquidity~~Net cash isprovided ~~the~~by ~~ability~~investing ofactivities ain ~~company~~the tofirst ~~generate~~three ~~adequate~~months ~~amounts~~ of ~~cash~~fiscal to2010 ~~meet its~~was ~~needs for cash~~$2,200. ~~The~~Capital ~~following~~expenditures ~~table~~are ~~provides~~expected ~~certain~~to ~~selected~~be ~~balance sheet~~minimal ~~comparisons~~in ~~between~~the remainder ~~January~~of ~~31, 2009 and April 30, 2008, respectively~~2010.

~~All~~Net cash ~~amounts~~provided ~~set~~by ~~forth~~financing activities in the ~~table~~first ~~below~~three ~~are~~months ~~delineated~~of infiscal US2010 ~~Dollars~~was $250,000, which resulted primarily from $360,000 related party loans.

	31-Jan-09			30-Apr-08			$ Difference			% Difference
	(Unaudited)			(Audited)
Working Capital (deficit)		(8,606,349	)		(6,570,286	)		(2,036,063	)		-31%
Cash		320,926			215,746			105,179			49%
Accounts receivable		102,874			333,777			(230,903	)		-69%
Prepaid assets		20,041			82,508			(62,467	)		-76%
Total Current Assets		443,841			635,031			(191,190	)		-30%
Property and Equipment		111,848			161,510			(49,662	)		-31%
Total Assets		1,073,928			796,541			277,387			35%
Accounts payable and accrued expenses		980,975			826,260			154,715			19%
Total Current Liabilities		9,050,190			7,366,827			1,683,363			23%
Total Liabilities		9,924,889			7,366,827			2,558,062			35%

Debt

~~We estimate our cash requirements, for operating expenses and debt service, for the next twelve-month period to be approximately $3.6 million.~~ As atof ~~January~~July 31, 2009, we had aoutstanding ~~cumulative~~debt ~~deficit~~in the principal amount of $142,~~966~~389,~~273 and we expect to~~892 ~~incur~~(net ~~losses during the last three months~~ of ~~our~~discounts), ~~fiscal~~all ~~year~~but ~~ending April 30~~$183, ~~2009. We~~177 ~~have~~of ~~historically~~which ~~supported~~is ~~our~~in ~~operations~~favor ~~from cash provided from the sale~~ of ~~securities~~Trafalgar ~~by NM-PLC and from third party loans~~Capital ~~extended~~Specialized toInvestment NMFund-~~PLC~~FIS ~~as well as from loans provided or guaranteed by our principal stockholders~~(Trafalgar). As of ~~January~~said 31date, ~~2009,~~our debt weconsisted ~~had~~of ~~borrowed~~the anfollowing ~~aggregate~~significant ~~of $8.6 million.~~components:

~~The Company~~· ~~has~~A ~~used approximately~~ $1.8 million ofcredit ~~cash~~facility, inunder ~~operating~~which ~~activities during~~$300,000 ~~the~~was ~~last~~outstanding ~~nine~~at ~~months~~July ~~and~~31, ~~approximately $4~~2009.3 ~~million~~All ofdraw ~~cash~~downs inunder ~~operating activities~~the ~~over~~credit ~~the~~facility ~~last~~are ~~twenty-one~~and ~~months. In~~will anbe ~~effort~~evidenced toby ~~curtail spending,~~Secured weConvertible ~~have~~Redeemable ~~expended~~Debentures ~~only~~("Debentures") ~~$79,377~~that ~~for~~mature ~~the~~on ~~purchase~~July of20, ~~property~~2011, ~~and equipment~~at ~~over~~which time the ~~last~~credit ~~twenty-one~~facility ~~months~~expires. In ~~addition,~~The inbalance ~~order~~outstanding ~~to reduce~~under ~~operating~~each ~~overhead,~~Debenture ~~management~~bears ~~and~~interest ~~staff~~at of the ~~Company~~rate ~~accepted~~of a 10%~~-20%~~ ~~cut~~per ~~in salary~~annum. ~~Over~~ ~~the~~The ~~last~~Company ~~twenty-one~~received ~~months,~~the wefirst ~~have allocated~~draw ~~approximately~~down ~~$4.4~~under ~~million~~the ofcredit ~~our~~facility ~~available~~as ~~cash~~of toJuly ~~operating activities~~20, ~~and~~2009 in the ~~purchase~~amount of ~~property and equipment~~$300,000. ~~During~~ ~~the past~~The ~~twenty-one~~Company ~~months,~~will ~~cash~~commence ~~has~~making ~~been~~monthly ~~provided~~payments ~~from~~on ~~financing through~~ the ~~issuance~~ ofDebenture ~~$3,889,920~~issued in ~~notes~~connection ~~payable~~with tosuch ~~third~~draw ~~parties~~down ~~and~~on $2October 30,~~150,000~~ ~~to related~~2009 ~~parties. Since~~in ~~issuance,~~an weamount ~~have~~equal ~~repaid~~to an(i) ~~aggregate of~~ $~~998~~13,~~400~~864.58 of outstanding principal, plus (ii) applicable accrued interest on ~~these~~the ~~notes. Additionally,~~outstanding webalance ~~expended $668~~as of such payment date,~~430~~ inplus ~~acquiring~~(iii) the ~~third~~redemption ~~party~~premium ~~debt~~on the principal amount redeemed. ~~Thus,~~ ~~for~~Future draw downs under the ~~past twenty-one~~credit ~~months,~~facility ~~there~~are ~~has~~at ~~been~~the ~~$4,373,090~~sole discretion of ~~cash~~Trafalgar. ~~provided~~Each ~~from~~Debenture ~~financing~~issued ~~and $4,413,861~~in evidence of ~~cash~~a ~~used~~draw indown ~~operations,~~will ~~including~~bear ~~purchases~~similar ofcharges ~~property~~ and ~~equipment~~ fees. ~~With~~ ~~$320,926~~(A inmore ~~cash~~complete atdescription ~~January~~of ~~31,~~the ~~2009~~credit facility, ~~and~~the ~~no identified~~Debentures ~~source~~and ofthe ~~capital~~other todocuments beexecuted ~~provided~~by ~~from~~the ~~financing~~Company in ~~future~~connection ~~periods, the~~with ~~cash~~this ~~used~~transaction is set forth in ~~operations~~Part ~~will~~II ~~absorb~~– ~~any~~Item ~~remaining~~5 ~~cash~~– byOther ~~May 2009~~Information.)

~~The Company~~· ~~continues~~Approximately ~~its~~€2.21 ~~efforts~~million toprincipal ~~recover~~amount ~~cash~~under ~~from~~two ~~its~~Convertible ~~bank~~Loan ~~accounts~~Agreements ~~in Brazil~~("Loan Agreements"). ~~Based~~ This principal loan amount does not include loan discounts shown on the ~~expectation~~consolidated ~~that~~balance ~~some~~sheet debt. Under the terms of ~~this~~the ~~cash~~Loan ~~may~~Agreements ~~not~~principal ~~be recoverable~~and interest were amortized and payable on a monthly basis. As a result of defaults under these instruments and the execution of restructuring agreements with Trafalgar, payments under the ~~sum~~agreements ~~has~~had been ~~discounted~~suspended bycommencing ~~20%~~as of January 1, ~~equating~~2009 and are scheduled to $1 resume commencing October 30,~~233~~ 2009.

~~Obligations~~The Debentures and the Loan Agreements are collateralized by all of our assets.

~~The table~~Capital below presents our financial obligations and commercial commitments as of January 31, 2009 and for each of the ensuing four quarters. The table does not reflect the fact that the Company failed to pay amounts due under instruments evidencing two loans prior or subsequent to January 31, 2009 and the possibility of that the lenders could, at any time, call a default under such instruments, which has not occurred as of the date of this report.Requirements

Payments Due By Period (all amounts in $)
Contractual Cash Obligations	At January 31, 2009	At April 30, 2009	At July 31, 2009	At October 30, 2009	At January 31, 2010
Capital Leases	-0-	-0-	-0-	-0-	-0-
Operating Leases	$37,829	$43,462	$43,462	$43,462	$39,836
Loans Payable	$544,363	$554,390	$2,645,312	$536,234	$527,156
Total Contractual Cash Obligations	$582,192	$597,852	$2,688,774	$579,696	$566,992

During the next twelve months, we expect to allocate the majority of our available operating capital to the repayment of debt outstanding to Trafalgar and expenses related thereto. We also will require funds to pay salaries and consulting fees; for marketing expenses attributable to our lottery operations and for other service fees in connection with our lottery operations, including website hosting and site maintenance.

AtWe expect ~~January 31,~~to ~~2009,~~generate cash for operations principally from revenue from managing our client's ~~available~~lottery. We ~~cash~~believe that the affiliate programs now in place and that we expect to initiate over the next twelve months, ~~receivables~~will continue to increase player traffic on our client's sites that will result in more revenue to us. We also expect to experience an upswing in fees from gaming terminals as our operating system and ~~liquid~~games ~~assets~~are ~~totaled~~now established and seemingly ~~$423,800~~are being well-received by the industry. We ~~had~~hope ~~total~~to ~~outstanding~~receive ~~loans~~proceeds under the Trafalgar credit facility, of which there is up to $8425,~~624,697~~000 ~~(not including~~available ~~accrued~~to ~~interest),~~us ~~including~~as $6of September 16,~~641~~ 2009,~~520~~ inthough ~~principal~~any ~~amount~~further todraw ~~unrelated~~downs ~~parties~~under the facility are at Trafalgar's sole discretion and ~~outstanding~~we ~~loans~~cannot be certain it will extend further credit to us. We will seek to leverage our OTC Bulletin Board listing by raising funds from the sale of ~~$1,983,177~~securities in ~~principal~~the ~~amount~~United States. We also will seek to ~~related~~secure funding from off-shore and ~~parties~~non-traditional sources. To the extent we have an opportunity to develop a lottery for a new client; we will seek to fund it through local investors who have a vested interest in the success of the operation.

We ~~have~~are ~~limited~~not ~~capital~~certain ~~resources~~we ~~and~~will ~~our~~have ~~operations~~or be able to ~~date~~identify ~~have~~capital ~~been~~sufficient ~~funded~~for ~~primarily with~~all the purposes ~~proceeds~~we ~~from~~require. We ~~the~~expect ~~sale~~to ofincur ~~equity~~losses infor ~~NM-PLC~~the ~~and~~remainder ~~debt~~of ~~financings~~2010 fiscal year. WeIn ~~have~~light ~~no lines~~ of ~~credit~~our ~~available~~financial toperformance us and ~~our~~condition ~~principal~~and ~~stockholders~~debt structure, ~~who~~it ~~had~~will ~~been~~be ~~supplying~~difficult to access capital. Affiliates ~~since~~who ~~our~~had ~~inception~~loaned funds to our Company or guaranteed ~~fund~~third party loans made to our ~~operations,~~Company ~~are~~have indicated that they will no longer make ~~making~~funds ~~credit~~ available to us, ~~either directly~~ or byguarantee ~~guaranteeing~~any further loans ~~from third parties~~. We have ~~not~~granted ~~identified~~a ~~any~~security ~~other~~interest ~~sources~~in all of ~~capital~~our ~~and,~~properties to Trafalgar in ~~light~~connection with all of ~~our~~the ~~financial condition,~~loans outstanding to it isand ~~unlikely~~if ~~that~~we are unable to pay principal and/or interest under these loans as it becomes due, we ~~will~~may default under the loans and lose all of our assets.

We anticipate that our existing ~~capital~~cash ~~resources~~and cash equivalents, ~~without~~and ~~implementing~~amounts ~~further~~available ~~cost~~under ~~reductions,~~our ~~raising~~credit ~~additional~~agreement ~~capital~~will ornot ~~obtaining~~be ~~substantial~~adequate ~~cash inflows~~to ~~from~~fund our ~~existing~~working ~~lottery~~capital ~~client~~and capital orrequirements ~~though~~over ~~our~~the ~~contract~~next ~~with~~twelve ~~Inspired, will~~months. We ~~enable~~also usexpect to continue ~~operations~~to ~~through~~rely ~~approximately~~on ~~May~~cash ~~2009~~generated ~~unless unforeseen~~from ~~events~~operations ~~arise~~and ~~that~~other ~~negatively~~sources ~~impact our liquidity. These~~of ~~conditions~~available ~~raise~~funds ~~substantial~~to ~~doubt~~make ~~about~~required ~~our~~principal ~~ability~~payments tounder ~~continue~~our aslong aterm ~~going~~debt ~~concern~~during 2009. ~~Consequently,~~ To the ~~audit~~extent ~~report~~necessary, ~~prepared~~we bymay ~~our~~also ~~independent public~~satisfy ~~accounting~~capital ~~firm~~requirements through ~~relating~~additional tobank ~~our~~borrowings, ~~financial~~senior ~~statements~~notes, ~~for~~term ~~the~~notes, ~~year~~capital ~~ended~~and ~~April~~operating 30leases, ~~2008~~convertible ~~included~~notes aand ~~going~~equity ~~concern~~offerings, ~~explanatory~~if ~~paragraph~~such resources are available.

~~Recent~~Off ~~Accounting~~Balance ~~Developments.~~Sheet Arrangements

~~None~~We are not party to any off balance sheet arrangements.

~~Critical~~Subsequent ~~Accounting Policies.~~Events

~~None~~On August 24, 2009, the Company received a second draw down under the credit facility described above under the heading "Liquidity and Capital Resources-Debt" in the principal amount of $275,000. We will commence making monthly payments on the August 2009 Debenture on October 30, 2009 in an amount equal to (i) $12,056.16 of outstanding principal, plus (ii) applicable accrued interest on the outstanding balance as of such payment date, plus (iii) the redemption premium on the principal amount redeemed.). As of September 16, 2009, there was $575,000 outstanding under the credit facility and $425,000 of credit available, at the discretion of Trafalgar.

Foreign Currency Translation.

The Company’s foreign currency translation policy is that for all significant non-U.S. operations, the functional currency is the local currency. Assets and liabilities of those operations are translated into U.S. Dollars using period-end, historical exchange rates; income and expenses are translated using the average exchange rates for the reporting period. Translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders' deficit. Currently, we generate all of our revenues in euros.

Revenue Recognition.

We currently generate the majority of our revenue from gross sales of lottery tickets by our client’s lotteries. For accounting purposes, our net revenue, which is calculated after settlement of all discounts, refunds, and adjustments, in accordance with the provisions of the contracts with our clients and which varies from client to client, is deemed to be a "commission."

Additionally, the Company will, in certain contracts, advance marketing costs and prize seeding funds to a lottery. To the extent the Company reasonably anticipates repayment; these advanced funds are recorded as an asset. Where repayment is not ascertainable, these advanced funds are expensed. For lotteries where marketing funds and prize seeding are expensed, any repayment of those funds will be recognized as revenue upon receipt.

Results of Operations for the Three Months ended January 31, 2009 Compared to the Three Months Ended January 31, 2008.

As reported in our financial statements to this Quarterly Report on Form 10-Q for the three months ended January 31, 2009, the Company reported a $566,332 net loss after minority interest on $233,394 in net revenues as compared to net revenues of $361,922 on losses after minority interest of $640,507 for the third quarter of fiscal 2008. The Company used $590,809 in cash for operating activities, leaving $320,926 in cash at January 31, 2009.

At January 31, 2009, the Company’s cash and accounts receivable equaled $423,800 in available resources to fund $1,035,227 in accounts payable and accrued expenses. While Rehab Bingo should continue to generate cash to partially fund operations, expenses will exceed revenues for the foreseeable future. Additional sources of cash will be necessary in fiscal year 2009 to fund the cash shortfall. The Company will need to refinance its $4 million (principal amount) third party debt in calendar year 2009. As of January 31, 2009, current liabilities exceeded current assets by $8,606,349.

Net revenues decreased by $128,528 to $233,394 or about 36% over the third quarter of the 2008 fiscal period. During the last quarter, the number of transactions recorded and the amount wagered on our Irish client's lottery site remained steady with the previous quarter. However, given that revenues are recognized in Euros, the amount of revenue (in comparison to the third quarter of the fiscal year end April 30, 2008) we recorded last quarter was impacted materially by the steep decline in the value of the Euro against the US Dollar.

Operating expenses decreased by $257,243 to $786,868, representing a 25% decrease from the third quarter of the last fiscal period. The Company reported increases in depreciation and amortization expenses, but decreased its website expenses and general and administrative expenses. The increase in amortization costs was a result of the loan cost amortization which did not exist in previous fiscal periods.

Financing Activities During the Last Quarter.

In November 2008, we received €1.15 million gross proceeds from a loan made to NM-PLC from Trafalgar Capital Specialized Investment Fund-FIS (the "Loan"). The Loan documents provide that the amount outstanding bears interest at the rate of 8% per year, payable in equal monthly installments of principal and accrued interest, and is evidenced by a Convertible Loan Agreement. The Company also executed a Debenture in favor of the lender under which it granted a security interest in all of New Media PLC's property, assets and receivables (the "Debenture," and together with the Convertible Loan Agreement, the "November Loan Documents"). We failed to make the payment of principal due on December 31, 2008 and we were in default under the November Loan Documents as of January 1, 2009. In March 2009, we entered into a series of restructuring agreements with Trafalgar, as described above under the heading "Restructuring of Trafalgar Debt."

The Loan, which originally matured on April 30, 2010, is convertible at the option of the lender into ordinary shares of New Media PLC, provided that such shares are eligible to trade on the AIM market operated by London Stock Exchange plc. At the date of this report, such shares were suspended from trading on the AIM market (see discussion under “Obligations”). The Loan is convertible at a conversion price equal to the lower of (i) the 120% of the VWAP (as defined below) on October 30, 2008 or if no VWAP is available on such date, the closing bid price on such date and (ii) 85% of the lowest daily closing VWAP for the five consecutive trading days prior to the date on which lender gives notice of its intention to convert. For purposes of the Loan Agreement, the term "VWAP" means the volume weighted average price (as reported by Bloomberg) of the ordinary shares on AIM for that trading day.

The Company is required to redeem the Loan in monthly installments together with accrued interest commencing in November 2008. Each such mandatory repayment is subject to a redemption premium of 12.5%. In the event that any such mandatory repayment is not made in full within 5 days of its due date, the lender shall have the option to receive ordinary shares in lieu of the cash payment at a conversion price equal to 120% of the VWAP on October 30, 2008 or if no VWAP is available on such date, the closing bid price on such date.

The Company may redeem any and all outstanding amounts of the Loan at a premium of 12.5% at any time on three days advance notice.

The lender is entitled to convert outstanding amounts due under the Loan at its discretion provided that New Media PLC ordinary shares are trading at a price equal to 120% of the VWAP on May 29, 2008. The lender is not permitted to convert the Loan into or receive ordinary shares if it would own in excess of 2.99% of the total number of ordinary shares outstanding, unless New Media PLC is in default under the loan documents.

As additional consideration for the Loan, New Media PLC issued to the lender warrants to purchase up to 3,000,000 ordinary shares at a price 5 pence per share through April 2010. If the warrants are not exercised, New Media PLC is required to pay the lender £120,000 (British Pounds Sterling).

New Media PLC received net proceeds from the loan of €958,352 after deducting all fees and expenses associated with the transaction and after the payment of two months of interest on the Loan (€15,333), a commitment fee of €69,000 and a finder's fee of €57,500.

Under the Debenture, the lender as the secured party may enforce its rights against New Media PLC and upon the secured property upon and at any time after the occurrence of any of the following events: if New Media PLC has failed to pay all or any of the Loan following a demand for payment by the lender; any step is taken by New Media PLC or by any other person to appoint an administrator in respect of New Media PLC; any step is taken by New Media PLC or by any other person to wind up or dissolve New Media PLC or to appoint a liquidator, trustee, receiver, administrative receiver or similar officer of New Media PLC or any part of its undertaking or assets; the making of a request by New Media PLC for the appointment of a receiver or administrator; if New Media PLC breaches any of the provisions of the Debenture.

In connection with the Loan, certain existing lenders to the Company and a subsidiary of New Medial PLC, including Milton Dresner and Joseph Dresner, who are affiliates of the Registrant, agreed to subordinate their loans and Milton Dresner agreed to guarantee all amounts due to Comerica Bank under various promissory notes in the aggregate principal amount of $4 million.

We have been using the proceeds of the Loan for working capital and, as required, to pay amounts due under the loan agreements.

As described elsewhere herein, in March 2009, we entered into a series of restructuring agreements with Trafalgar that cured the continuing defaults and materially modified the November Loan Documents. Under the restructuring agreements, among other things, the maturity date of the November 2008 Loan was extended from April 30, 2010 to October 31, 2010 and the monthly payments of principal and interest were suspended until July 2009.

Off-Balance Sheet Arrangements.

We do not have any off-balance sheet arrangements or commitments.

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe harbor for forward-looking statements made by or on behalf of our company. From time to time, our representatives and we may make written or verbal forward-looking statements, including statements contained in this report and other company filings with the SEC and in our reports to stockholders. Statements that relate to other than strictly historical facts, such as statements about our plans and strategies, expectations for future financial performance, new and existing products and technologies, and markets for our products are forward-looking statements within the meaning of the Act. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "will" and other similar expressions identify forward-looking statements. The forward-looking statements are and will be based on our then-current views and assumptions regarding future events and operating performance, and speak only as of their dates. Investors are cautioned that such statements involve risks and uncertainties that could cause actual results to differ materially from historical or anticipated results due to many factors including, but not limited to, our limited revenues, our future capital needs, uncertainty of capital funding, acceptance of our product offerings, the effects of government regulations on our business, competition, and other risks. We undertake no obligation to publicly update or revise any forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Not applicable.

Item 4(T). Controls and Procedures.

Our management is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)), designed to ensure that information we are required to bedisclose ~~disclosed by us~~ 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’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of ~~January~~July 31, 2009 (the “Evaluation Date”). Such evaluation was conducted by the Company’s principal ~~executive~~ executive officer who also is our principal financial officer. Based upon such evaluation, the Company’s principal executive officer has concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective. There have been no changes in the Company’s internal controls over financial reporting that occurred during the Company’s most recent ~~fiscal~~ fiscal quarter, that have materially affected, or are reasonably likely to ~~materially~~ materially affect, the Company’s internal controls over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

As of ~~January~~July 31, 2009, we were not party to any litigation or other legal proceeding.

Item 1A. Risk Factors.

InWe refer ~~addition~~readers to the risk factors set forth in our annual report on Form 10-~~KSB~~K for ~~the~~ the year ended April 30, ~~2008~~2009, ~~investors~~as ~~should~~filed ~~consider~~with the ~~following~~Securities ~~risks prior~~and toExchange ~~making~~Commission on anAugust ~~investment~~13, ~~in our Company~~2009.

Our financial condition is precarious and we have no access to capital to repay our debt or fund our current or ongoing operations. Unless we can secure additional capital and renegotiate the terms of our outstanding debt, we may be required to discontinue our operations at any time.

As of January 31, 2009, we had cash and accounts receivable of $423,800, owed $8,624,697 under the terms of debt instruments and had a negative working capital of $8,606,349. Our monthly expenses exceed our monthly revenue. We do not have any credit available to us nor have we identified other sources of capital and it is unlikely, given our current financial condition, that we will secure any additional credit or capital. Give our current and anticipated near-term expenses, we believe that our available cash and cash equivalents will be sufficient to enable us to continue operations through approximately May 2009, unless events arise that negatively impact our liquidity or unless we experience a significant increase revenues or locate another source of capital, neither of which is likely. If we discontinue operations, investors will lose the entire amount of their investment in our Company.

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

(a) During the three months ended ~~January~~July 31, 2009, the Company ~~did~~issued ~~not~~the ~~issue~~following ~~any~~equity securities in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(2) thereof:.

During May 2009, we issued an aggregate of 300,000 shares of common stock to U-mex GmbH for services rendered in connection with structuring a proposed offering of securities in Germany. We also issued to U-mex options to purchase an additional 600,000 shares of common stock. The options are exercisable at any time through May 12, 2011, subject to the conditions described in the following sentence. Of the options issued, 200,000 are exercisable immediately at $.30 per share, 200,000 are exercisable at $.60 per share and vest only in the event that the Company receives minimum net proceeds from the proposed offering of €1.5 million and 200,000 are exercisable at $.90 per share and vest only in the event that the Company receives minimum net proceeds from the proposed offering of €2 million.

During May 2009, we issued an aggregate of 500,000 shares of common stock to Thomas Chown for services rendered in connection with structuring a proposed offering of securities in Germany.

On July 23, 2009, we issued 4,502,850 shares of common stock to Milton Dresner in consideration of the conversion of $3,230,133 in principal amount of debt and 4,502,850 shares of common stock to Joseph Dresner in consideration of the conversion of $2,882,500 in principal amount of debt. Milton Dresner converted at a price of $0.71735 per share and Joseph Dresner converted at a price of $0.64015 per share. Also in connection with the conversion of their debt, the Company issued warrants to purchase 750,000 shares of common stock to each of Milton Dresner and Joseph Dresner. The warrants are exercisable at a price of $.05 per share at any time through July 23, 2012.

On May 29, 2009, the Company issued options to purchase an aggregate of 3,475,000 shares of common stock to five employees of the Company, including John Carson and Sterling Herbst, affiliates of the Company. The options are exercisable at a price of $.10 per share at any time through May 28, 2019.

Sale of Unregistered Equity Securities Subsequent to the end of the period Covered by this Report:

Also pursuant to the Purchase Agreement, the Company agreed to issue 2 million shares of convertible, redeemable preferred stock to Trafalgar Capital Specialized Investment Fund-FIS ("Trafalgar"). On August 21, 2009, the parties agreed on the terms of the preferred stock and on that date, the Company filed a certificate of designation with the State of Delaware setting forth the terms and restrictions of the Series A Convertible Preferred Stock ("Series A Preferred Stock") to be issued to Trafalgar. On August 24, 2009, the Company issued 2 million shares of Series A Preferred Stock to Trafalgar pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(2) thereof.

Set forth below is a summary of the terms of the Series A Preferred Stock:

(i) Name, Class and Stated Value: The name of the class of preferred shares is "Series A Convertible Preferred Stock." The number of shares comprising the class is two million with an initial stated value of $1.00.

(ii) Dividends: If the Company declares a dividend on the common stock, the holders of shares of Series A Preferred Stock are entitled to receive, and the Board of Directors must declare, dividends in an amount equal to the amount of dividends such holders would have received if each share of Series A Preferred Stock had been converted into a number of shares of the Company’s common stock calculated by dividing the stated value ($1) by $.05 (the "Fixed Conversion Price").

(iii) Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales:

(A) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Preferred Stock will be entitled to be paid, out of the assets of the Company available for distribution, before any payment is made to the holders of any junior securities (including the common stock), an amount per share equal to $1.00 per share (the "Base Amount") plus any accrued but unpaid dividends. If upon any such liquidation, dissolution or winding up of the Company, the assets available for distribution to its stockholders are insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they are entitled, they will share ratably in any distribution of the assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares held by them.

(B) Deemed Liquidation Events. The entry by the Company into a merger or consolidation in which either (1) the Company is a constituent party, or (2) a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation (a "Deemed Liquidation Event"). The foregoing does not include any merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such transaction continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such transaction, at least a majority, by voting power, of the capital stock or other equity interests of (x) the surviving entity or (y) if the surviving entity is a wholly owned subsidiary of another entity immediately following such merger or consolidation, the parent entity of such surviving entity (after giving effect to the issuance of shares of common stock upon exercise of options or warrants and the conversion of convertible securities, in each case outstanding immediately prior to such merger or consolidation); or the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary, of all or a majority of the assets or revenue or earnings generating capacity of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if a majority of the assets or revenue or earnings generating capacity of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company. Unless the holders of a majority of the outstanding shares of Series A Preferred Stock elect otherwise, they shall be entitled to receive from the proceeds of the Deemed Liquidation Event an amount per share of outstanding Series A Preferred Stock equal to what they would have received under an event described in section (c)(i), above.

The Company may not affect a Deemed Liquidation Event unless the agreement for such transaction provides that the consideration payable to the stockholders of the Company will be allocated among the holders of capital stock of the Company as if it were a voluntary liquidation as provided in section (a), above. In the event of a Deemed Liquidation Event, if the Company does not effect a dissolution of the Company within ninety days after such event, (i) the Company must so advise the holders of Series A Preferred Stock and advise them that they have a right to require the Company to redeem their shares of Series A Preferred Stock using the proceeds from any Deemed Liquidation Event, together with any other assets of the Company available for distribution to its at a price per share equal to the “Redemption Price” (as defined below. If the available proceeds are not sufficient to redeem all outstanding shares of Series A Preferred Stock, the Company will redeem a pro rata portion of each holder’s shares of Series A Preferred Stock to the fullest extent of available proceeds.

If a holder of Series A Convertible Preferred Stock advised the Company of its election to be excluded from the redemption provided above, then the shares of Series A Convertible Preferred Stock registered on the books of the Company in the name of such holder at the time of the Company’s receipt of such notice will thereafter be “Excluded Shares.” Excluded Shares will not be redeemed, whether in such Deemed Liquidation Event or thereafter.

(iv) Voting. Holders of shares of Series A Preferred Stock are entitled to votes the number of whole shares of Common Stock into which their shares of Series A Preferred Stock are convertible if converted at the Fixed Conversion Price (as defined below) on all matters presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting).

(v) Optional Conversion. Holders of Series A Preferred Stock have the right to convert their shares at any time into a number of shares of common stock as shall be determined by dividing $1 (the Base Amount) by the lower of (A) $0.05 (the “Fixed Conversion Price”) and (B) a fifteen percent (15%) discount to the lowest daily closing Volume Weighted Average Price of the Common Stock as reported by Bloomberg, LP during the five (5) trading days after the conversion date (the “Series A Conversion Price”). In the event of a liquidation, dissolution or winding up of the Company or a Deemed Liquidation Event, the conversion rights will terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series A Preferred Stock.

The Company has agreed that it will at all times keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series A Preferred Stock, such number of its duly authorized shares of common stock as will from time to time be sufficient to effect the conversion of all outstanding shares of Series A Preferred Stock at the Fixed Conversion Price; and if at any time the number of authorized but unissued shares of common stock is not sufficient to effect such conversion, the Company will take such action as may be necessary to increase its authorized but unissued shares of common stock to such number of shares as will be sufficient for such purposes,

If there occurs any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the common stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash or other property, then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Series A Preferred Stock will be convertible in lieu of the common stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of common stock of the Company issuable upon conversion of one share of Series A Preferred Stock immediately prior to such event would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Company) will be made with respect to the rights and interests thereafter of the holders of the Series A Preferred Stock.

(vi) Redemption of Shares. Each share of Series A Preferred Stock will be redeemable, at the option of the Company, at any time at the redemption price of $1.00 per share.

(b) N/A

Item 3. Defaults Upon Senior Securities.

Our direct and indirect subsidiaries had been in default and recently restructured two debt instruments, as more fully described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations – Restructuring of Trafalgar Debt," which discussion is incorporated herein in its entiretyNone.

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

None.

Item 5. Other Information.

~~Change~~Sale of Secured Convertible inRedeemable ~~Control~~Debentures:

InSubsequent to ~~connection with~~ the ~~restructuring~~end of the ~~Trafalgar~~period ~~loans~~covered ~~discussed~~by ~~elsewhere in~~ this report, ~~Milton~~the ~~Dresner~~Company ~~and~~issued the ~~Joseph~~following ~~Dresner,~~securities ~~principal~~without ~~stockholders~~registration ofunder ~~NM-US,~~the ~~agreed~~Securities toAct ~~transfer an aggregate~~ of 91933,~~005,700~~ ~~shares~~as amended of(the ~~common~~"Securities ~~stock~~Act"), ~~they~~pursuant ~~own in NM-US~~ to ~~Trafalgar, representing approximately 42% of~~ the ~~outstanding~~exemption ~~shares~~from ~~of common stock of~~registration ~~NM-US. As~~afforded aby ~~result,~~Section ~~the~~4(2) ~~Dresners no longer control the company.~~thereof:

~~Resignation~~On August 13, 2009, the Company entered into each of ~~Directors~~a ~~from~~Securities ~~NM-PLC~~Purchase Agreement, a Secured Convertible Redeemable Debenture in the principal amount of $300,000 and a Security Agreement with Trafalgar, each of which is deemed to be effective as of July 20, 2009.

~~Over~~Under the ~~last~~Securities ~~several~~Purchase ~~months~~Agreement, ~~all~~or ofPurchase Agreement, Trafalgar agreed to make available to the ~~non-executive~~Company ~~directors~~credit in the amount of ~~NM-PLC~~up to $1 million for a period of two years ending on July 20, ~~including~~2011, which credit is and shall be evidenced by ~~Paula~~Secured ~~Horan~~Convertible ~~(January~~Redeemable 5Debentures, ~~2009)~~or Debentures. The Company may exercise draw downs under the Purchase Agreement by delivering a draw down notice to Trafalgar, ~~Nigel~~which ~~Blythe-Tinker~~shall ~~(February~~be 27subject to acceptance or rejection by Trafalgar, ~~2009)~~in its sole discretion, ~~Jane~~within five calendar days. Once ~~Dresner-Sadaka~~accepted, ~~(March~~Trafalgar 10is obligated to deposit the amount of the funding into an escrow account to be released upon the issuance of a Debenture in the principal sum of the draw down, ~~2009)~~which must be within five calendar days of acceptance of a draw down notice. If a Debenture is not timely delivered by the Company, the Company shall pay to Trafalgar, as liquidated damages for such failure to deliver and ~~Lord~~not ~~Benjamin~~as ~~Mancroft~~a ~~(March~~penalty, 122% of the amount of the draw down for each seven calendar day period, ~~2009)~~or ~~have~~part thereof, following such failure, in ~~resigned~~cash, until the Debentures have been delivered. ~~None~~Such ofamount may be subtracted by Trafalgar from the ~~directors~~amount ~~cited~~of ~~any~~the ~~reason~~draw down for ~~their~~which the Debenture ~~resignation~~is being delivered.

~~Suspension~~In connection with the sale of ~~NM-PLC's~~the ~~Ordinary~~Debentures, ~~Shares~~the ~~From~~Company ~~Trading~~agreed onto issue shares of preferred stock to Trafalgar under the ~~AIM~~Purchase ~~Market~~Agreement, as described below.

~~On March~~The 13Debentures bear interest at the rate of 10% per annum and mature on July 20, 2011. In ~~2009~~addition, upon the ~~AIM~~completion ~~Market~~of ~~suspended~~any ~~the~~capital ~~ordinary~~raise ~~shares~~in excess of ~~NM-PLC~~$1,000,000, ~~from~~all unpaid principal and accrued but unpaid interest under ~~trading~~outstanding Debentures plus the applicable redemption premium (as described below) on the amount redeemed will become immediately due and payable. The principal ~~suspension~~amount of the Debenture, plus accrued interest thereon, is convertible, ain ~~result~~whole or in part of the, ~~resignation~~into shares of ~~the~~common stock in an ~~company's~~amount ~~nominated~~equal ~~advisor,~~to ~~Zimmerman~~the ~~Adams~~quotient ~~International~~obtained ~~Limited,~~by ~~upon~~dividing the outstanding amount of the ~~resignation~~Debenture to be converted by the Conversion Price. “Conversion Price” means the lower of ~~NM-PLC's~~(a) 100% ~~last~~of ~~non-executive~~the ~~director~~Volume Weighted Average Price (“VWAP”) of the common stock on ~~March~~the 12day prior to July 20, 2009~~. The~~ ~~ordinary~~and ~~shares~~(b) ~~will~~a befifteen ~~delisted~~percent (15%) ~~from~~discount to the ~~AIM~~lowest ~~Market~~daily inclosing VWAP of the ~~event~~ ~~that~~common ~~NM-PLC~~stock ~~does~~during ~~not~~the five ~~retain~~trading adays ~~new~~after ~~nominated~~the ~~advisor~~date byset ~~April~~forth ~~12,~~in the conversion ~~2009~~notice.

The ~~suspension~~holder of ~~trading~~the inDebentures ~~NM-PLC's~~will ~~ordinary~~not ~~shares~~have onthe right to convert more than $50,000 of the ~~AIM~~principal ~~Market~~amount isof anthe ~~event~~Debenture plus accrued interest per week. In addition the Company may not affect any conversions of Debentures ~~default~~and ~~under~~the holder shall not have the ~~terms~~right to convert any portion of its Debenture or receive shares of common stock as payment of interest hereunder to the ~~various~~extent ~~documents~~that ~~governing~~after ~~our~~giving ~~loans~~effect ~~from~~to such conversion or receipt of such ~~Trafalgar~~interest payment the holder (when aggregated with any its affiliates) would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to such conversion or receipt of shares as payment of interest.

The Company may redeem the Debentures, in whole or in part, at any time by providing the holder with three days advance notice and by paying the unpaid principal and interest accrued to the date of a redemption and a 12.5% redemption premium on the amount redeemed so long as our common stock is trading below the fixed conversion price (as defined in the Debenture) at the time it receives the redemption notice.

The Debentures are subject to provisions to protect a holder in the event that the Euro strengthens against the U.S. Dollar during the life of a Debenture, in which case, the holder will be afforded an adjustment to compensate for any such rise in the exchange rate.

The Company will be in default under a Debenture: (a) if it fails to pay amounts due within two calendar days of the required payment date; (b) if it fails to issue freely tradable common stock within five calendar days of a conversion date; (c) if it fails for ten calendar days after notice to comply with any of its other agreements in the Debentures; (d) upon any event of bankruptcy or insolvency of the Company; (e) if it breaches its obligations under any of the transaction documents (as such term is defined in the Purchase Agreement) which is not cured within ten calendar days after receipt of written notice thereof. Upon the occurrence of an event of default, the holder may, in its sole discretion, accelerate full repayment of all Debentures outstanding and accrued interest thereon or may, notwithstanding any limitations contained in this Debenture, the Purchase Agreement or any other document governing the transaction ("Transaction Documents"), convert all Debentures outstanding and accrued interest thereon into shares of common stock.

Under the terms of a Security Agreement, the Company pledged to Trafalgar and granted a security interest in and to all of its property (broadly defined) during such time as any of its obligations under the Transaction Documents are paid in full. Trafalgar is entitled to all of the benefits typically granted to a secured party under such agreement, provided that while there was no default under the Transaction Documents, the Company could operate its business in the ordinary course.

The Company will be in default under the Security Agreement if: (a) it fails to pay any amount of principal, interest or other item comprising the obligations under any Transaction Document; (b) it fails to observe or perform any of its obligations or other covenants, terms or provisions to be performed under the Transaction Documents; (c) if any representation or warranty made or furnished in connection with any of the Transaction Document proves to have been incorrect or misleading in any material respect when made or furnished; (d) if Trafalgar, reasonably and in good faith, deems itself to be insecure; (v) if the Company (1) makes a general assignment for the benefit of its creditors; (2) applies for or consents to the appointment of a receiver, trustee or similar official for itself or any of its assets and properties; (3) commences a voluntary case for relief as a debtor under the US Bankruptcy Code; (4) files with or otherwise submits to any governmental authority any petition, answer or other document seeking: (A) reorganization, (B) an arrangement with creditors or (C) seeks to take advantage of any other present or future applicable law respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief of debtors, dissolution or liquidation; (5) files or otherwise submit any answer or other document admitting or failing to contest the material allegations of a petition or other document filed or otherwise submitted against it in any of the proceedings described in the Security Agreement, or (6) is adjudicated a bankrupt or insolvent by a court of competent jurisdiction; or any case, proceeding or other action shall be commenced against the Company for the purpose of effecting, or an order, judgment or decree shall be entered by any court of competent jurisdiction approving anything specified above, or any receiver, trustee, liquidator or other official shall be appointed with respect to the Company, is appointed to take or otherwise acquires possession or control of all or a substantial part of the Company's assets and properties and any of the foregoing shall continue unstayed and in effect for any period of thirty calendar days.

Upon the occurrence and during the continuance of an event of default under the Security Agreement, Trafalgar is entitled to act as the Company's attorney-in-fact to do all such things the Company could do with its property, including collect its debts or sell its properties and exercise all of its other rights as a secured creditor. In the event that the Company receives any asset during the pendancy of the security interest, it is required to hold such asset for the benefit of Trafalgar.

As of the date hereof, Trafalgar has loaned the Company an aggregate of $575,000 pursuant to the terms of the Purchase Agreement, which sum is evidenced by Debentures dated as of August 13, 2009 (effective as of July 20, 2009) and August 24, 2009 in the principal amounts of $300,000 and $275,000, respectively. The Company has received $135,000 of the amount loaned pursuant to the second debenture on August 24, 2009 and expects to receive the balance due, less certain fees and expenses of Trafalgar, as provided in the Purchase Agreement, in the next several weeks. After giving effect to the sale of the debenture described herein, there remains available to the Company the sum of $425,000 under the credit facility described in the Purchase Agreement.

Related Party Transactions

On May 12, 2009, NM-US and NM-PLC each appointed Jeffrey Sternberg to serve as a member of its board of directors at the request of management of Trafalgar, the holder of 9,005,700 shares of the NM-US's common stock, or approximately 42% of the class as of such date. There are no written or oral agreements in place to nominate or vote for Mr. Sternberg or any representative of Trafalgar to serve on the board of directors in the future. The Company and Mr. Sternberg have not discussed compensation arrangements or his appointment to any committees of the board of directors.

On July 20, 2009, the Company entered into a letter agreement under which Trafalgar agreed to make available $1 million working capital line of credit whereby it agreed to purchase convertible debentures from the Company up to such amount for a period of up to two years ending on July 20, 2011, subject to the execution of definitive agreements that are described in the following paragraph (the "July 20 Letter Agreement"). As a material inducement for Trafalgar to enter into this agreement, the Company agreed to issue to Trafalgar 2,000,000 shares of preferred stock having a stated value of $1.00. The July 20 Letter Agreement makes reference to preliminary terms with respect to the preferred stock, the terms of which are described above under "Part II - Item 2. Unregistered Sales of Equity Securities and Use of Proceeds." The July 20 Letter Agreement also provided for the sale and issuance of the Debentures and the other agreements executed by the parties in connection with the line of credit and the purchase of the debentures, as more fully described above.

On July 23, 2009, each constituent entity comprising the Company, Milton Dresner, Joseph Dresner and Trafalgar (a current affiliate of the Company) entered into a letter agreement to restructure all of the Company's debt (the "July 23 Letter Agreement"). Under this agreement, Milton Dresner and Joseph Dresner, former affiliates of the Company, agreed to convert an aggregate of approximately $6,112,633 of principal owed to them by the Company into shares of the common stock of NM-US. The debt converted included (i) the amounts owed to them under a series of promissory notes made by the Company during the period March 2006 through March 2008, (ii) the amount of principal paid by the Dresners on behalf of the Company to satisfy amounts due to Comerica Bank under certain promissory notes dated June 1, 2008 in the aggregate amount of $2.1 million and (iii) the amount of principal assumed by the Dresners under a promissory note made by the Company in favor of Comerica Bank in the amount of $1.9 million dated February 20, 2009 (the "Comerica Note"). In consideration of the benefits conferred upon the Company as a result of the actions taken by the Dresners in (i), (ii) and (iii), above, the Company issued an aggregate of 9,005,700 shares of Common Stock to them.

Also pursuant to the July 23 Letter Agreement, among other things, the parties agreed as follows:

·	The Company issued warrants to purchase 750,000 shares of common stock to each of Milton Dresner and Joseph Dresner that are exercisable for a period of three years at a price of $.05 per share;
·	NM-US, NM-PLC, NM-LTD agreed not to issue any shares of common stock, other than in connection with a capital raising transaction, without first obtaining the written approval of the Dresners, who are entitled to customary anti-dilution protection as to such issuances for a period of one year;
·	Milton Dresner agreed to resign from the boards of directors of each board of directors of the Company;
·	Trafalgar agreed to make available to the Company a $1,000,000 credit facility for a period of one year commencing as of the date of the agreement, with the first draw down in the gross amount of $300,000, which the Company received on July 22, 2009.
·	During the one-year period after the date of the agreement, Trafalgar agreed not to (i) issue any shares of the common stock to itself for any purposes (if it acquired the power to do so), (ii) convert any outstanding debt owed to it by any member of the Group into securities of any member of the Group or to exercise any outstanding securities it held in any member of the Group or (iii) convert any convertible securities into shares of common stock of any member of the Group.

In March 2009, we entered into a series of restructuring agreements with Trafalgar to cure the continuing defaults under loan documents we entered with Trafalgar governing the loans made in May and October 2008. Under the restructuring agreements, among other things, the maturity date of the November 2008 Loan was extended from April 30, 2010 to October 31, 2010 and the monthly payments of principal and interest were suspended until July 2009. We did not make the payments required under the Trafalgar loan documents that had been deferred until July 31, 2009 pursuant to the Restructuring Agreement described above. We had advised Trafalgar of our inability to make such payment prior thereto and Trafalgar did not call a default under the Restructuring Agreement or amended Loan Documents. Rather, by letter dated August 11, 2009, Trafalgar agreed to further defer and also restructure the payments due under the May 2008 and October 2008 loan documents which are to resume commencing October 30, 2009.

Item 6. Exhibits.

(a) Exhibits.

Exhibit No.	~~Description~~	Description
10.32	Convertible Loan Agreement dated October 31, 2008 between Trafalgar Capital Specialized Investment Fund-FIS and New Media Lottery Services, plc
4.1		Secured Convertible Redeemable Debenture effective July 20, 2009 in the principal amount of $300,000 made by the Company in favor of Trafalgar Capital Specialized Investment Fund-FIS
10.33	Amended and Restated Debenture made by New Media Lottery Services, plc in favor of Trafalgar Capital Specialized Investment Fund-FIS
4.2		Secured Convertible Redeemable Debenture dated August 24, 2009 in the principal amount of $275,000 made by the Company in favor of Trafalgar Capital Specialized Investment Fund-FIS
10.34	Cross Corporate Guarantee, dated January 26, 2009 between New Media Lottery Services (International), Ltd., and Trafalgar Capital Specialized Investment Fund-FIS
10.44		Securities Purchase Agreement effective as of July 20, 2009, between the Company and Trafalgar Capital Specialized Investment Fund-FIS.
10.35	Debenture made by New Media Lottery Services (International), Ltd. in favor of Trafalgar Capital Specialized Investment Fund-FIS
10.45		Security Agreement effective as of July 20, 2009, between the Company and Trafalgar Capital Specialized Investment Fund-FIS.
10.36	Comerica Bank $1.9 million Amended & Restated Single Payment Note dated February 20, 2009
31.1		Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.37	Loan Facility Restructuring Agreement, dated March 24, 2009 between New Media Lottery Services, Inc., New Media Lottery Services, plc and Trafalgar Capital Specialized Investment Fund-FIS
32.1		Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
10.38	Share Pledge Agreement, dated March 24, 2009 between New Media Lottery Services, Inc., and Trafalgar Capital Specialized Investment Fund-FIS
10.39	Cross Corporate Guarantee, dated March 24, 2009 between New Media Lottery Services, Inc., and Trafalgar Capital Specialized Investment Fund-FIS
31.1	Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

SIGNATURES

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

	NEW MEDIA LOTTERY SERVICES, INC.
Date: April 3, 2009	By:	/s/	John T. Carson
Date: September 21, 2009	By:	/s/ John T. Carson
		John T. Carson,	~~John T. Carson,~~
		President,	~~President,~~
		Principal Executive Officer and Principal Financial Officer	~~Principal Executive Officer and Principal Financial Officer~~

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