Rotate Black (ROBK) 10-Q 2010 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

             (Mark One)

X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

X TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from to

Commission File Number 333-44315 

Rotate Black, Inc.

(Exact name of registrant as specified in its charter)  

Nevada	75-3225181
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

932 Spring Street, Petoskey, Michigan  49770

(Address of principal executive offices)

(231) 347-0777

(Registrant’s telephone number, including area code)  

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

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

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

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 126.2 of the Exchange Act).    Yes      No  X

The number of shares of common stock outstanding as of November 11, 2009 was 74,287,325.

1

ROTATE BLACK, INC. AND SUBSIDIARY

TABLE OF CONTENTS

Page Number

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements	3
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	16
ITEM 4T. Controls and Procedures	16
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings	16
ITEM 1A. Risk Factors	16
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
ITEM 3. Defaults upon Senior Securities	17
ITEM 4. Submission of Matters to a Vote of Security Holders	17
ITEM 5. Other Information	17
ITEM 6. Exhibits	17
SIGNATURES	17

2

Item 1.              Financial Statements

ROTATE BLACK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
		September 30,		June 30,
		2009		2009
		(Unaudited)
ASSETS
Current Assets
	Cash	$	1,253	$	15,453
	Prepaid expenses		112,442		88,902
	Total current assets		113,695		104,355
Unbilled development advances			2,169,759		2,069,499
Fixed assets - net			47,690		49,179
Contract rights			6,323,884		6,323,884
Intangible assets			374,265		374,265
Investment in joint venture			139,781		139,781
Land purchase deposit			7,049,142		7,049,142
Security deposit			3,600		3,600
	TOTAL ASSETS	$	16,221,816	$	16,113,705
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
	Accounts payable and accrued expenses	$	1,883,625	$	1,761,367
	Note payable		243,000		268,000
	Note payable - truck - current portion		5,333		5,213
	Total current liabilities		2,131,958		2,034,580
Note payable - truck			11,350		12,628
Loan payable - stockholder			1,707,600		1,675,932
Deferred revenues			48,321		47,078
Shares to be issued			3,995,467		3,995,467
	TOTAL LIABILITIES		7,894,696		7,765,685
MINORITY INTEREST			1,125,038		1,130,114
STOCKHOLDERS'  EQUITY (DEFICIT)
	Common stock, $0.01 par value, 100,000,000
	shares authorized; 67,696,858 and 67,321,858
	shares issued and outstanding as of
	September 30, 2009 and June 30, 2009,
	respectively		676,969		673,219
	Additional paid-in capital		8,705,435		8,334,185
	Accumulated deficit		(2,180,322)		(1,789,498)
	TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		7,202,082		7,217,906
	TOTAL LIABILITIES AND
	STOCKHOLDERS' EQUITY (DEFICIT)	$	16,221,816	$	16,113,705
See notes to  financial statements

3

ROTATE BLACK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
				August 2, 2006
		Three Months Ended		(Inception)
		September  30,		Through
		2009	2008	September 30, 2009
Operating expenses
	Salary expense	$              51,450	$        82,409	$                    163,688
	Stock based compensation	75,000	735,870	841,570
	General and administrative expenses	256,875	100,522	962,962
	Write-off deferred expenses	-	-	233,960
	Interest expense	12,575	-	52,119
	Total expenses	395,900	918,801	2,254,299
	Loss from operations	(395,900)	(918,801)	(2,254,299)
Minority interest		5,076	-	73,977
	Net loss	$         (390,824)	$   (918,801)	$              (2,180,322)
	Basic and diluted net loss per common share	$               (0.01)	$         (0.09)
	Basic and diluted average
	common shares outstanding	67,451,528	10,425,714
See notes to  financial statements

4

ROTATE BLACK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
		Common Stock				Additional		Stock
		Number of				Paid-in		Subscription		Accumulated
		Shares		Amount		Capital		Receivable		Deficit		Total
August 2, 2006 - Stock subscription receivable		100	$	1	$	99	$	(100)	$	-	$	-
Net loss - June 30, 2007		-		-		-		-		(3,433)		(3,433)
Balance - June 30, 2007		100		1		99		(100)		(3,433)		(3,433)
Net loss - June 30, 2008		-		-		-		-		(2,755)		(2,755)
Balance - June 30, 2008		100		1		99		(100)		(6,188)		(6,188)
August 15, 2008 - Common stock issued in
	connection with the acquisition of BevSystems	1,000,000		10,000		47,009		-		-		57,009
August 15, 2008 - Common stock issued in
	payment of due to stockholder	8,999,900		89,999		422,980		100		-		513,079
August 21, 2008 - Common stock issued in
	connection with employment agreements	8,300,000		83,000		390,100		-		-		473,100
August 27, 2008 - Common stock issued in
	connection with services rendered	4,610,000		46,100		216,670		-		-		262,770
October 3, 2008 - Purchase of Rotate Black
	Gaming, Inc.	26,560,000		265,600		3,331,444		-		-		3,597,044
October 7, 2008 - Purchase of Dayton assets		5,480,900		54,809		164,345		-		-		219,154
October 7, 2008 - Purchase of interest in joint
	venture	8,400,000		84,000		52,121		-		-		136,121
November 16, 2008 - Common stock issued in
	connection with consulting agreement	100,000		1,000		4,700		-		-		5,700
November and December, 2008 - Common stock
	sold for cash	114,000		1,140		55,860		-		-		57,000
December 23, 2008 - Common stock issued in
	payment of due to stockholder	48,283		483		2,269		-		-		2,752
January, February and March, 2009 - Common
	stock sold for cash	285,000		2,850		282,150		-		-		285,000
January 2, 2009 - Common stock issued in
	connection with consulting agreement	50,000		500		24,500		-		-		25,000
May 11, 2009 - Common stock issued in
	connection with land purchase	3,153,675		31,537		3,122,138		-		-		3,153,675
April, May and June, 2009 - Common		220,000		2,200		217,800		-		-		220,000
	stock sold for cash
Net loss - June 30, 2009		-		-		-		-		(1,783,310)		(1,783,310)
Balance at June 30, 2009		67,321,858		673,219		8,334,185		-		(1,789,498)		7,217,906
September 15, 2009 - Common stock issued in
	connection with consulting agreement	75,000		750		74,250		-		-		75,000
July, August and September, 2009 - Common
	stock sold for cash	300,000		3,000		297,000		-		-		300,000
Net loss - September 30, 2009		-		-		-		-		(390,824)		(390,824)
Balance at September 30, 2009 (Unaudited)		67,696,858	$	676,969	$	8,705,435	$	-	$	(2,180,322)	$	7,202,082
See notes to  financial statements

5

ROTATE BLACK, INC. AND  SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED  STATEMENT OF CASH FLOWS
(UNAUDITED)
			August 2, 2006
	Three Months Ended		(Inception)
	September 30,		Through
	2009	2008	September 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$                           (390,824)	$             (918,801)	$                         (2,180,322)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock-based compensation	75,000	735,870	841,570
Write-off of deferred expenses	-	-	233,960
Depreciation and amortization	5,356	1,337	21,852
Minority interest	(5,076)	-	(73,977)
Changes in assets and liabilities:
Prepaid expenses	(23,540)	(42,350)	(8,450)
Unbilled development advances	(100,260)	-	(758,248)
Accounts payable and accrued expenses	122,258	60,121	654,055
Deferred revenues	1,243	-	14,504
Net cash used in operating activities	(315,843)	(163,823)	(1,255,056)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in BevSystems and increase in
deferred acquisition costs (net of
the issuance of common stock of $57,009	-	(228,151)	(317,256)
Purchases of fixed assets (net of note payable
of $20,800 in 2008)	(3,867)	(43,165)	(48,742)
Security deposit	-	(3,600)	(3,600)
Investment in joint venture	-	-	(3,660)
Increase in deferred expenses	-	-	(14,806)
Net cash used in investing activities	(3,867)	(274,916)	(388,064)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loan payable - stockholder	31,668	438,739	811,490
Proceeds from sales of  common stock	300,000	-	862,000
Decrease in note payable	(25,000)	-	(25,000)
Payments of note payable - truck	(1,158)	-	(4,117)
Net cash provided by investing activities	305,510	438,739	1,644,373
Net increase (decrease) in cash	(14,200)	-	1,253
Cash, beginning of period	15,453	-	-
Cash, end of period	$                                 1,253	$                           -	$                                  1,253
Noncash Transaction
Issuance of common stock in payment of due to stockholder		$               513,079
See notes to financial statements

6

Rotate Black, Inc. and Subsidiary

Notes to Consolidated Financial Statements

1.  ORGANIZATION AND OPERATIONS

            Rotate Black, Inc. (Company) was incorporated in Nevada on August 2, 2006 to be the successor by merger of BevSystems International, Inc. and BevSystems International Ltd. (BevSystems) under a plan of reorganization (Plan), effective August 15, 2008, as approved by the United States Bankruptcy Court in Tampa, Florida. Under the terms of the Plan, BevSystems merged into the Company with the Company as the survivor.

On March 31, 2004, BevSystems filed under Chapter 7 of the Bankruptcy Code and, on April 15, 2006, filed a plan of

reorganization under Chapter 11 of the Bankruptcy Code. The Plan provided for the Company to: (1) purchase the intangible assets of

BevSystems for $175,000, (2) pay creditors opting out of the common stock settlement an aggregate of $10,000, (3) pay all legal and

other cost of the Plan of $189,265 and (4) issue 1,000,000 shares of common stock of the Company (10%) to the balance of the

creditors. The shares issued to the creditors were valued at $.057, per share, the value of the shares acquired by the 90% stockholder,

for an aggregate purchase price of $513,079. All costs of the bankruptcy were paid by the 90% stockholder, Rotate Black, LLC (RBL), an entity substantially owned by an officer of the Company and family members. The Company was also required to provide an escrow fund for future operations of $200,000. All outstanding equity shares of BevSystems were cancelled. All requirements under the Plan have been met.

            The Company recorded the purchase of BevSystems under the purchase method of accounting and allocated the entire purchase price to intangible assets.

            On August 15, 2008, the Company commenced operations and all activity prior thereto has been charged to operations. The Company is in the development stage.

Acquisitions

In October 2008, the Company acquired: (1) 75% of the outstanding common stock of Rotate Black-Gaming, Inc. (Gaming), (2) all of the assets of a casino development in Dayton, Nevada (Dayton) and (3) a 50% joint venture interest in Rotate Black India Pvt Ltd. (India) in exchange for 26,560,000, 5,480,900 and 8,400,000 shares of common stock of the Company, respectively, from RBL. The acquisitions have been recorded on the purchase method of accounting at the carrying amounts on RBL of the assets and liabilities acquired as of the date of acquisition as RBL is under common control with the Company.

Gaming

The purchase price of Gaming of $3,597,044 has been allocated as follows:

Development advances	$	1,411,511
Other current assets		3,992
Land		556,000
Contract rights		5,767,884
Accounts payable and accrued expenses		(1,229,570)
Loan payable – stockholder		(1,411,941)
Note payable		(268,000)
Deferred revenue		(33,817)
		4,796,059
Less:  Minority interest		(1,199,015)
	$	3,597,044

 Gaming is under contract to develop and manage a world-class destination casino resort in Sullivan County, New York. Gaming has acquired the property and completed all design layouts.

Dayton

The purchase price of Dayton of $219,154 has been allocated to deferred expenses and included the predevelopment expenses as of the date acquired.

As of September 30, 2009, the Dayton casino development project is on hold and as of June 30, the Company has written-off the deferred expenses of $233,960.

India

The purchase price of India of $136,121 has been allocated to investment in joint venture and includes all the investment of RBL as of the date acquired. The Company has identified potential properties for acquisition, but does not anticipate an acquisition until new Indian gaming laws are solidified.

7

Rotate Black, Inc. and Subsidiary

Notes to Consolidated Financial Statements

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the rules and regulations set forth in Regulation S-X of the Securities and Exchange Commission for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statement presentation. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods have been included. These consolidated financial statements should be read in conjunction with the financial statements of Rotate Black, Inc. and Subsidiary together with Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company's Form 10-K for the year ended June 30, 2009. Interim results are not necessarily indicative of the results for a full year.

Consolidated Financial Statements

The accompanying consolidated financial statements include all of the accounts of the Company and the subsidiary.

Investments in 50% or less owned entities are accounted for using the equity method.  Under the equity method, the Company includes the net income or loss from the equity entity.

All significant intercompany accounts and transactions have been eliminated in consolidation.

 Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates.

 Financial Instruments

The Company considers the carrying amounts of financial instruments, including cash, accounts payable and accrued expenses to approximate their fair values because of their relatively short maturities.

 Property and Equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method.

Maintenance and repairs are charged to operating expenses as they are incurred.  Improvements and betterments which extend the lives of the assets are capitalized.  The cost and accumulated depreciation of assets retired or otherwise disposed of are relieved from the appropriate accounts and any profit or loss on the sale or disposition of such assets is credited or charged to income.

 Contract Rights and Intangible Assets

Contract rights and intangible assets are valued at cost and will be amortized over their estimated useful lives as determined by management. The Company will evaluate the carrying value of the intangible assets for impairment at least annually or upon the occurrence of an event which may indicate that the carrying amount may be greater than its fair value. If impaired, the Company will write-down such impairment.

 Share-Based Compensation

The Company recognizes compensation expense for all share-based payment awards made to employees, directors and others based on the estimated fair values on the date of the grant. Common stock equivalents are valued using the Black-Scholes Option-Pricing Model using the market price of our common stock on the date of valuation, an expected dividend yield of zero, the remaining period or maturity date of the common stock equivalent and the expected volatility of our common stock

 Minority Interest

The Company records adjustments to minority interest for the allocable portion of income or loss that the minority interest holders are entitled based upon their portion of certain of the subsidiaries that they own.  Distributions to holders of minority interests are adjusted to the respective minority interest holders' balance.

The Company suspends allocation of losses to minority interest holders when the minority interest balance for a particular minority interest holder is reduced to zero.  Any excess loss above the minority interest holders' balance is not charged to minority interest as the minority interest holders have no obligation to fund such losses.

 Loss per Common Share

Basic loss per share is calculated using the weighted-average number of common shares outstanding during each period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each period.

8

Rotate Black, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Income Taxes

Deferred income taxes have been provided for temporary differences between financial statement and income tax reporting under the liability method, using expected tax rates and laws that are expected to be in effect when the differences are expected to reverse.  A valuation allowance is provided when realization is not considered more likely than not.

The Company’s policy is to classify income tax assessments, if any, for interest in interest expense and for penalties in general and administrative expenses.

 Consideration of Subsequent Events

The Company evaluated all events and transactions occurring after September 30, 2009 through November 16, 2009, the date these financial statements were issued, to identify subsequent events which may need to be recognized or non-recognizable events which would need disclosure.  No recognizable events were identified. See Note 17 for non-recognizable events identified for disclosure.

 Recent Accounting Pronouncements

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

3.  GOING CONCERN

The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since inception, resulting in an accumulated deficit of $2,180,322 and negative working capital of $2,018,263 as of September 30, 2009 and further losses are anticipated. These factors raise doubt about the Company’s ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations arising from normal business operations when they come due. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue.

4.  PROPERTY AND EQUIPMENT

As of September 30, 2009, property and equipment consisted of the following:

Truck	$	39,761
Furniture and fixtures		8,490
Office equipment		21,291
		69,542
Less accumulated depreciation		(21,852)
	$	47,690

For the three months ended September 30, 2009 and 2008, depreciation expense was $5,356 and $1,337, respectively.

5.  INTANGIBLE ASSETS

The intangible assets acquired under the Plan consisted of a license of patents, pending patents, trade secrets, know-how and other intangibles of Life O2 Oxygenated Water (Life O2) which were assigned to the Company under the Plan. The license grants the Company the exclusive worldwide (as defined), irrevocable, perpetual, royalty-free right to all the intangible assets for use in the production, marketing, distribution, sublicensing and sale of Life O2, subject to certain previously granted licenses, and only for human consumption. The Company has the right to assign the rights under the license to any corporate successor by way of merger, etc. The Company is entitled to sublicense, exclusively or not, or to subcontract the manufacture of products under the license.

The existing License and Trademark Bottling Agreement has been cancelled and the Company is currently arranging another similar license and bottling arrangements.

As of the September 30, 2009, management has determined no impairment of the intangible assets has occurred.

6.  CONTRACT RIGHTS

Contract rights consisted of the various rights acquired under the Development and Management Agreements acquired from RBL.

Development Agreement

On June 22, 2007, Gaming entered into a Development Agreement with the Seneca Nation of Indians (Nation), a Federally recognized Indian tribal government, to act as the Developer to provide managerial expertise and financial resources to assist the Nation in acquiring land and developing and constructing a gaming facility (Facility). The purpose of the Facility for the Nation is to provide employment and improve the social, economic, education, and health needs of its members; to increase its revenues and to enhance the Nation’s economic self-sufficiency.

9

Rotate Black, Inc. and Subsidiary

Notes to Consolidated Financial Statements

The Development Agreement commenced upon execution and continues through the date the Facility is open to the public and operational, until all obligations of the parties have expired, as defined, or until all obligations owed to the Company by the Nation have been satisfied, whichever is later; provided the agreement is not terminated by mutual agreement.

Under the terms of the Development Agreement, the Company is responsible for arranging a limited recourse loan or other arrangements to finance the Facility in an aggregate principal amount of up to $350,000,000. The proceeds of the loan are to be used exclusively for the development, design, construction, furnishing and equipping of the Facility, for start-up and working capital and reimbursing the Company for development advances.  Development advances are the funds advanced by the Company for necessary costs in advance of the facility loan which include expenses for legal, engineering and architectural fees.  A development fee of 2.5% of total development costs will be paid to the Company for services rendered pursuant to the Development Agreement and are in addition to the amounts advanced to cover the development costs.

The Company is committed under an agreement between a financial advisor and the Nation through December 31, 2009, under which the advisor will assist in certain financings, etc. Upon closing of any such financings, the Company shall issue warrants to purchase common stock of the Company to the advisor equal to 7% of the Company's fully diluted shares outstanding.

As of September 30, 2009, unbilled Development Advances were $2,169,759, including $188,595 of interest and $48,321 of developer fees, which have been deferred. The Development Advances will be billed upon the closing of the financing.

In October, 2007, as amended, Gaming acquired land in exchange for $556,000, payable $288,000 in cash and the issuance of a note in the amount of $268,000, payable on August 15, 2009, as extended, with interest payable at 18%, per annum. In August 2009, the Company made a payment of $25,000 against the note.

On November 1, 2009, the Company issued 660,000 shares of common stock in full repayment of the note payable of $243,000 and accrued interest thereon of $87,000, $0.50, per share. The number of shares and price per share are subject to adjustment for stock splits, dividends, exchanges and consideration received by stockholders in the event of an acquisition of the Company by another entity, and dependent on the performance of the stock prices, as defined. In addition, for one year and under certain conditions, the Company is could be liable for certain market loss on these shares, as defined.

On December 23, 2008, under the terms of the Development Agreement, the land was transferred to the Nation, without compensation, and the cost of the land has been included in Contract Rights.

Management Agreement

On June 14, 2008, Gaming entered into a Management Agreement with the Nation for an exclusive right and obligation to manage, operate and maintain the gaming facility to be developed in Sullivan County, New York, commencing on the effective date, as defined, and continuing for a period of seven years after the date on which gaming commences in the facility.  The term will be automatically extended for a period of seven years unless terminated under the provisions of the agreement.

Under the Management Agreement, the Nation will pay the Company a fee based on a percent of gaming revenues, as defined.  As manager, the Company will conduct and direct all business and affairs in connection with the operation, management and maintenance of the Facility, including all commercial gaming business, sale of food, beverages, tobacco and gifts, hotels, parking, resorts, amusement or accommodation operations.

Land Purchase

On May 26, 2009, the Company entered into an agreement to acquire additional real property in Sullivan County, New York. The purchase price for the property was 7,049,142 shares of common stock of the Company, $1,750,000 in cash on escrow and $1,750,000 in cash upon closing. On May 11, 2009, the Company issued 3,153,675 shares of common stock and RBL transferred, on behalf of the Company, 3,895,467 shares of the Company’s common stock to the seller, both in escrow, as a deposit under the agreement. The shares were valued at $7,049,142, $1.00, per share.

In October 2009, the Company issued 3,895,467 shares of common stock to RBL.

As the agreement is cancellable, the time requirements under the agreement have been delayed until certain matters have been resolved.

7.       CASINO PROPERTIES

On August 15, 2009, the Company entered into an agreement to acquire the purchase opportunities (Purchase Opportunities) of certain casino properties in exchange for 5,000,000 shares of common stock of the Company, issuable 2,500,000 upon transfer of the first purchase opportunity and the balance of 2,500,000 shares to be held in escrow until agreements to manage casino property are completed.  The Purchase Opportunities include contact information, work product and due diligence to date on these certain casino properties.

10

Rotate Black, Inc. and Subsidiary

Notes to Consolidated Financial Statements

8.  INVESTMENT IN JOINT VENTURE

Investment in joint venture consists of a 50% interest in India.  The financial statements of India are as follows:

 As of September 30, 2009, the balance sheet of India was as follows:

Total Assets	NONE
Capital Contribution	$272,242
Deficit	(272,242)
Total assets and liabilities	NONE

 For the period October 7, 2008 through September 30, 2009, India was inactive.

9.  LEASE

On August 8, 2008, the Company entered into a lease for office space, commencing on September 1, 2008 through August 31, 2011.  Rent is payable in advance, in annual installments. The initial year’s rent is $46,200, increasing as defined. As of September 30, 2009, $46,200 of the second year’s rent was included in accrued expenses. The Company has an option to extend the lease for an additional three year period.

10.  LOAN PAYABLE – STOCKHOLDER

As of September 30, 2009, loan payable - stockholder primarily consisted of Development Advances incurred by RBL on behalf of the Company and is payable on demand, with interest at 12%, per annum.

11.  NOTE PAYABLE -TRUCK

On September 10, 2008, the Company originally borrowed $20,800 to purchase a truck. The note is payable in equal installments of $520, including interest at 9.19%, per annum, through September 10, 2012.

As of September 30, 2009, minimum annual payments under the loan are:

2010	$5,333
2011	5,415
2012	5,935
	$16,683

12.  COMMON STOCK

On August 2, 2006, the Company issued 100 shares of common stock under a stock subscription receivable for $100 which was paid in August 2008.

On August 2, 2006, the Company authorized 100,000,000, $0.01, par value, shares of common stock.

On August 15, 2008, the Company issued 8,999,900 shares of common stock to RBL in payment of due to stockholder of $513,079.

On August 21, 2008, the Company issued an aggregate of 8,300,000 shares common stock to four officers and an employee of the Company as a one-time incentive in connection with their employment agreements.The shares were valued at $473,100 ($0.057, per share), the value of the shares issued on August 15, 2008, and were charged to operations.

On August 27, 2008, the Company issued an aggregate of 4,610,000 shares of common stock to three individuals for services. The shares were valued at $262,770 ($0.057, per share), the value of the shares issued August 15, 2008, and were charged to operations.

On November 16, 2008 the Company entered into an agreement with a capital markets consultant in exchange for a finder’s fee equal to 10% of the capital the consultant may raise for the Company, payable 5% in cash and 5% in equity. In addition, in March 2009, the Company issued 100,000 shares of common stock as a commencement bonus, valued at $5,700.

On December 23, 2008, the Company issued 48,283 shares of common stock to RBL in payment of due to stockholder, valued at $2,752.

In November and December 2008, the Company sold an aggregate of 114,000 shares of common stock to investors for an aggregate of $57,000, $0.50, per share.

11

Rotate Black, Inc. and Subsidiary

Notes to Consolidated Financial Statements

On January 2, 2009, the Company issued 50,000 shares of common stock for legal services, valued at $25,000, $0.50, per share. The Company is committed to issue an additional 200,000 shares of common stock for future legal services, which have been valued at $100,000, $0.50, per share, and are recorded as prepaid expenses.

In January, February and March 2009, the Company sold an aggregate of 285,000 shares of common stock to investors for $285,000, $1.00, per share.

In April, May and June, 2009, the Company sold an aggregate of 220,000 shares of common stock to investors for $220,000, $1.00, per share.

On September 15, 2009, the Company issued 75,000 shares of common stock for services rendered, valued at $75,000.

In July, August and September, 2009, the Company sold an aggregate of 300,000 shares of common stock to investors for $300,000, $1.00, per share.

13.  MINORITY INTEREST

 The Company records non-controlling interest which reflects the 25% portion of the earnings or losses of Rotate Black Gaming, Inc. allocable to the holders of the minority interest.

 As of September 30, 2009, minority interest was as follows:

Minority interest upon acquisition of Gaming	$	(1,199,015)
Loss allocable to minority interest		73,977
Minority interest, September 30, 2009	$	(1,125,038)

14.  INCOME TAXES

As of September 30, 2009, management has evaluated and concluded that there are no significant uncertain tax positions requiring recognition in the Company’s consolidated financial statements.

15.  ADOPTION OF ACCOUNTING POLICIES

During the quarter ended September 30, 2009, the Company adopted the following accounting pronouncements without a material impact on the financial statements.

 In September 2009, the Financial Accounting Standards Board (FASB) issued ASU No. 2009-08, "Earnings Per Share - Amendments to Section 260-10-S99".  This Codification Update represents technical corrections to Topic 260-10-S99, "Earnings Per Share", based on EITF Topic D-53, "Computation of Earnings Per Share for a Period that Includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock" and EITF Topic D-42, "The Effect of the Calculation of Earnings Per Share For the Redemption or Induced Conversion of Preferred Stock". The Codification Update provides guidance regarding the definition of redemptions and conversions of equity-classified preferred stock instruments in relation to the calculation of earnings per share.

 In August 2009, the FASB issued ASU No. 2009-05, "Measuring Liabilities at Fair Value".  This ASU amends the "Fair Value Measurements and Disclosures" Topic of the Codification to provide further guidance on how to measure the fair value of a liability.  AUS No. 2009-05 is effective for the first reporting period beginning after issuance.

 In June 2009, the FASB issued Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162” (“SFAS 168”).  FAS 168 establishes the FASB Accounting Standards Codification (“Codification”) as the source of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied to rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under federal securities laws as authoritative GAAP for SEC registrants.

 In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”), FSP FAS 107-1 and APB 28-1 amends SFAS 107, “Disclosures about Fair Value of Financial Instruments”, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements.  This FSP also amends APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting periods.  FSP FAS 107-1 and APB 28-1 is effective for interim reporting periods ending after June 15, 2009 and does not require disclosures for earlier periods presented for comparative purposes at initial adoption.  In periods after initial adoption, the FSP requires comparative disclosures only for periods ending after initial adoption.

 Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (“SFAS 141”), which replaced SFAS No. 141, “Business Combinations”, establishes principles and requirements for determining how an enterprise recognizes and measures the fair value of certain assets and liabilities acquired in a business combination, including non-controlling interests, contingent consideration and certain acquired contingencies.  SFAS 141(R) also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized as a component of the business combination.

 Financial Staff Position (“FSP”) 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”, amended and clarified SFAS 141R to address application issues associated with initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination.

12

Rotate Black, Inc. and Subsidiary

Notes to Consolidated Financial Statements

 In April, 2008, the FASB issued Statement of Financial Accounting Standards Staff Position 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB No. 142, “Goodwill and Other Intangible Assets”. FSP SFAS 142-3 is effective for financial statements issued for fiscal years beginning after December 31, 2008 and must be applied prospectively to intangible assets acquired after the effective date.

 FASB No. 160. “Non-controlling Interest in Consolidated Financial Statements – An Amendment of ARB No. 51” (“SFAS 160”), establishes accounting and reporting standards for the non-controlling interest in a subsidiary (previously referred to as minority interests).  SFAS 160 also requires that a retained non-controlling interest upon the deconsolidation of a subsidiary be initially measured at its fair value.  SFAS 160 also requires reporting any non-controlling interests as a separate component of stockholders’ equity and presenting any net income allocable to non-controlling interests and net income attributable to stockholders of the Company separately in its consolidated statements of income.

16. COMMITMENTS AND CONTINGENCIES

On December 2, 2008, the Company entered into an agreement with a consultant to provide lobbying and other related services for $15,000, per month, through December 31, 2009.

On March 25, 2009, the Company entered into an agreement for architectural services to construct a temporary casino in Sullivan County, New York, for $25,000, not including reimbursable expenses, payable monthly based upon the percentage of work completed.

On April 23, 2009, the Company entered into an agreement with a consultant to provide public relations, advertising and marketing services for $5,000, per month, through April 30, 2010.

From April 9, 2009, the Company has agreed to pay a consultant for legislative and regulatory representation of $10,000, per month, through April 9, 2010.

17.  SUBSEQUENT EVENTS

In connection with the Purchase Opportunities, on October 26, 2009, the Company entered into an agreement with a placement agent (Agent) for a proposed offering by the Company of up to $12,500,000 of debt obligations or other financings, on a best-efforts basis. The Company will pay fees to the Agent, as follows:

-   nonrefundable retainer of $25,000, payable $10,000 upon execution and $15,000 upon completion of a term sheet, reimbursable against expenses due to Agent;

-   6% of the maximum amount of any debt securities, including the face value of any committed line of credit, payable at closing;

-    a warrant to purchase common shares of the Company equal to 3% of the number of shares issued of any maximum credit available in any debt obligations or other financings, divided by the closing price of the Company's stock price on the day of closing, as defined.  The warrant will be exercisable at the minimum exercise price of any warrants received by investors in the financing or, in the absence of any warrant issuance, the closing price for the common stock of the Company on the day of the closing for five years.

On November 9, 2009, the Company issued 1,500,000 shares of common stock to RBL as repayment of loan payable – stockholder of $1,500,000, $1.00, per share.

On November 9, 2009, the Company issued 350,000 shares of common stock in accordance with the anti-dilution rights clause of the land purchase agreement.

In November, 2009, the Company issued 100,000 shares of common stock for professional services valued at $100,000, $1.00, per share.

In November 2009, the Company sold 85,000 shares of common stock to an investor for $85,000, $1.00, per share.

13

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

The following discussion should be read in conjunction with, and is qualified in its entirety by, the Unaudited Financial Statements and the Notes thereto included in this report. This discussion contains certain forward-looking statements that involve substantial risks and uncertainties. When used in this report, the words "anticipate," "believe," "estimate," "expect” and similar expressions as they relate to our management or us are intended to identify such forward-looking statements. Our actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. Historical operating results are not necessarily indicative of the trends in operating results for any future period.

OVERVIEW

Rotate Black, Inc. (Company) was incorporated in Nevada on August 2, 2006 to be the successor by merger of BevSystems International, Inc. and BevSystems International Ltd. (BevSystems) under a plan of reorganization (Plan), effective August 15, 2008, as approved by the United States Bankruptcy Court in Tampa, Florida. Under the terms of the Plan, BevSystems merged into the Company with the Company as the survivor.

On March 31, 2004, BevSystems filed under Chapter 7 of the Bankruptcy Code and, on April 15, 2006, filed a plan of reorganization under Chapter 11 of the Bankruptcy Code. The Plan provided for the Company to: (1) purchase the intangible assets of BevSystems for $175,000, (2) pay creditors opting out of the common stock settlement an aggregate of $10,000, (3) pay all legal and other cost of the Plan of $189,265 and (4) issue 1,000,000 shares of common stock of the Company (10%) to the balance of the creditors. The shares issued to the creditors were valued at $.057, per share, the value of the shares acquired by the 90% stockholder, for an aggregate purchase price of $513,079. All costs of the bankruptcy were paid by the 90% stockholder, Rotate Black, LLC (RBL), an entity substantially owned by an officer of the Company and family members. The Company was also required to provide an escrow fund for future operations of $200,000. All outstanding equity shares of BevSystems were cancelled. All requirements under the Plan have been met. The Company recorded the purchase of BevSystems under the purchase method of accounting and allocated the entire purchase price to intangible assets.

 On August 15, 2008, the Company commenced operations and all activity prior thereto has been charged to operations. The Company is in the development stage.

On October 7, 2008, the Company entered into certain agreements with Rotate Black, LLC (“RBL”) a Michigan Limited Liability Company for the acquisition of three of its business units, “Gaming” “Dayton” and “India” (as each is defined in the preceding notes to the financial statements). Under the terms of the agreements, we acquired land, receivables and contract rights for an aggregate of 40,440,900 shares of its common stock.

Transaction Highlights are as follows:

Rotate Black Gaming, Inc.

Under a stock purchase agreement Rotate Black, Inc. acquired a seventy five percent (75%) ownership in RBL’s wholly owned subsidiary Rotate Black Gaming, Inc., a Nevada corporation. Rotate Black Gaming, Inc. is currently under contract with the Seneca Nation of Indians for the exclusive development and management of a world-class casino resort tentatively scheduled to be named “the Seneca Catskills Resort and Casino”. Pursuant to these agreements, the Company has been retained to develop and manage a $1.3 billion destination casino resort to be constructed on 63 acres of land situated off exit 107 of Route 17 in the Town of Thompson in Sullivan County, New York. The project will represent the building of one of the nation’s first “Green” casinos as well as one of the

largest developments in southern New York State. The development plan calls for construction in three phases:

Phase 1 – An interim sprung-structure facility housing a casino with 2,000 slots and 45 table games plus limited food & beverage facilities is planned for completion in 2010.

Phase 2 – Interim facility will remain open during construction of the two phased permanent casino resort construction. The first phase of the permanent structure will host an additional 3,000 slots, and 50 table games, 30 poker tables, plus an expanded food court, feature bar and buffet. Projected completion is in late 2010.

Phase 3 – completion of the world-class casino, resort and spa is planned for completion in 2012. The completed facility will offer 1500 all-suite rooms with about 7,000 slots, 190 table games, 9 restaurants, 10 bars, an entertainment lounge, 10,000 sq. ft. nightclub, a 5,000 - seat event center, a 45,000 sq. ft. full service Spa, 105,000 sq. ft. of banquet space, 30,000 sq. ft. of retail space and many other amenities.

The plans for the project have been designed by Friedmutter & Associates, a leading design, architectural, and master planning firm specializing in casino resorts and Perini Corporation, the leader in both traditional and Native American casino resorts.

14

Rotate Black India Pvt LTD

Under a stock purchase agreement the Company acquired a fifty percent (50%) interest in Rotate Black India Pvt. LTD (“RBIP”), which was formed and registered in Ahmadabad, India. RBIP was created pursuant to a joint venture with Sandesh, Ltd, one of India’s largest media groups, for the acquisition of a Five Star casino resort in the GOA region of India. The Company plans to combine its operating experience with Sandesh’s media and talent capabilities to create India’s premier casino resort.

Results of Operations

As of September 30, 2009, we have had no revenues. Revenues, consisting of development fees, will commence upon the closing of the financing. As of September 31, 2009, we have unbilled development advances of $2,169,759

Operations for the three months ended September 30, 2009 and 2008 are not comparable because, during 2008, the Company was not operational inasmuch as management was pursuing contracts and approvals but not expending capital or incurring expenses while awaiting contracts and approvals.

Cash flows from financing activities for the three months ended September 30, 2009, included $300,000 from proceeds from sales of common stock and $31,668 from an increase in loan payable – stockholder (RBL) as compared to $438,739 from an increase in loan payable – stockholder (RBL) in 2008.

Liquidity and Capital Resources

As of September 30, 2009, we had negative working capital of $2,108,263 compared to negative working capital of $95,293, an accumulated deficit of $2,180,322 and further losses are anticipated.

We do not have sufficient funds to continue our operating activities. Future operating activities are expected to be funded by sales of common stock. Until then the funding will be provided by loans from officers, directors, major stockholders and others until such time that operations will generate sufficient funds.

These factors raise doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations arising from normal business operations when they come due. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event we cannot continue.

Upon the funding of the Facilities financing with CRT Capital, the deferred development cost will be invoiced and we will recognized our deferred revenue.

On October 26, 2009, we entered into an agreement with CapStone Investments to act as placement agent (Agent) for a proposed offering by the Company of up to $12,500,000 of debt obligations or other financings, on a best-efforts basis. We will pay fees to the Agent, as follows:

-   nonrefundable retainer of $25,000, payable $10,000 upon execution and $15,000 upon completion of a term sheet, reimbursable against expenses due to Agent;

-   6% of the maximum amount of any debt securities, including the face value of any committed line of credit, payable at closing;

-    a warrant to purchase shares of our common stock equal to 3% of the number of shares issued of any equity financing and maximum credit available in any debt obligations or other financings, divided by the closing price of the our common stock price on the day of closing, as defined.  The warrant will be exercisable at the minimum exercise price of any warrants received by investors in the financing or, in the absence of any warrant issuance, the closing price of our common stock on the day of the closing for five years.

We plan to utilize the proceeds of the CapStone financing to fund the assets and operations under the Purchase Opportunities.

15

Contractual Obligations

Not applicable as we are a smaller reporting company.

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Impact of Inflation

We believe that inflation has not had a material impact on our results of operations for the three months ended September 30, 2009. We cannot be assured that future inflation will not have an adverse impact on our operating results and financial condition.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable as we are a smaller reporting company.

Item 4(T).  Controls and Procedures

Evaluation of Disclosure Controls and Procedures  

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and the Chief Financial Officer, we have concluded that our disclosure controls and procedures were not effective as of September 30, 2009, based on their evaluation of these controls and procedures. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in reports it files or submits under the Exchange Act is accumulated and communicated to 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.

We have identified certain matters that constitute deficiency (as defined under the Public Company Accounting Oversight Board Auditing Standard No. 2) in our internal controls over financial reporting. The deficiencies that we have identified relate to the fact that that our overall financial reporting structure, internal accounting information systems and current staffing levels are not sufficient to support our financial reporting requirements. We are working to remedy our deficiency.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting that occurred during the first quarter of fiscal 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 PART II. OTHER INFORMATION

Item 1.     Legal Proceedings

      None.

Item 1A.  Risk Factors

      Not applicable as we are a smaller reporting company.

16

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

On September 15, 2009, we issued 75,000 shares of common stock to Hold Fast Advisory, LLP for services rendered, valued at $75,000.

       In July, August and September, 2009, we sold an aggregate of 300,000 shares of common stock, $0.01 par value, to investors for $300,000, $1.00, per share.

Item 3.      Defaults Upon Senior Securities

       None.

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

      None.

Item 5.     Other Information

      None.

Item 6.                      Exhibits

Exhibit No.:                                                                Exhibit

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-15(a) and Rule 15d-
	15(a), promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-15(a) and Rule 15d-
	15(a), promulgated under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

SIGNATURES

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

	ROTATE BLACK, INC. (Registrant)
November 16, 2009	By:	/s/ John Paulsen
		John Paulsen
		Chief Executive Officer (Authorized Officer, Principal Executive Officer and Principal Financial Officer)

17