**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**





x
            **Quarterly Report under
              Section 13 or 15(d) of the Securities Exchange Act of 1934**For the quarterly period ended: March
              31,
              2007o
            **Transition Report under
              Section 13 or 15(d) of the Exchange Act of 1934**For the transition period from ________
              to
              ________Commission File
              Number: 000-31165





**XL
      GENERATION INTERNATIONAL INC.**


(Exact
      Name of Small Business Issuer as specified in its charter)





**NEVADA**
            **20-0909393**(State
                or other Jurisdiction of
              Incorporation
                or Organization)
            (IRS
                Employer
              Identification
                No.)




**Sumpfstrasse
      32**


**6304
      Zug, Switzerland**


(Address
      of principal executive offices)





**4141
      723 1090**


(Issuer’s
      telephone number, including area code)





**N/A**


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





Check
      whether the Issuer (1) filed all reports required to be filed by
      Section 13 or 15(d) of the Exchange Act during the past 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 o





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





The
      Issuer had 34,578,268 shares of Common Stock, par value $.001, outstanding
      as of
      May 15, 2007.





Transitional
      Small Business Disclosure format (Check one):  Yes o No x







**TABLE
      OF CONTENTS**





PART
                IItem
                1.
            Financial
                Statements
            
            1Balance
                Sheet
            
            1Statements
                of Stockholders Deficiency
            
            2Statements
                of Operations
            
            3Statements
                of Cash Flows
            
            4Notes
                to Financial Statements
            
            5Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            
            12Item
                3.
            Controls
                and Procedures
            
            15PART
                IIItem
                1.
            Legal
                Proceedings
            
            16Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            17Item
                3.
            Defaults
                Upon Senior Securities
            
            17Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            17Item
                5.
            Other
                Information
            
            17Item
                6.
            Exhibits
            
            17SIGNATURES
            
            19







**PART
      I: FINANCIAL INFORMATION**




**Item
      1.**  **Financial
      Statements**





XL
      GENERATION INTERNATIONAL INC.


BALANCE
      SHEET


March
      31,
      2007


March
                  31,
              
              December
                  31,2007
              
              2006(unaudited)
              
              (audited)ASSETSCURRENT
                  ASSETS:Cash
              
              $
              51,064
              
              $
              128,607Prepaid
                  expenses and sundry current assets
              
              
              -
              
              
              41,345TOTAL
                  CURRENT ASSETS
              
              
              51,064
              
              
              169,952PROPERTY
                  AND EQUIPMENT, AT COST,LESS
                  ACCUMULATED DEPRECIATION
              
              
              26,308
              
              
              29,352TOTAL
                  ASSETS
              
              $
              77,372
              
              $
              199,304LIABILITIES
                  AND STOCKHOLDERS’ DEFICIENCYCURRENT
                  LIABILITIES:Stock
                  subscription payable
              
              $
              1,000,000
              
              $
              1,000,000Note
                  payable-stockholders
              
              
              2,219,157
              
              
              2,188,332Accounts
                  payable- related party
              
              
              5,061,880
              
              
              5,061,880Accrued
                  expenses and sundry current liabilities
              
              
              3,477,942
              
              
              3,361,365TOTAL
                  CURRENT LIABILITIES
              
              $
              11,758,979
              
              $
              11,611,577STOCKHOLDERS'
                  DEFICIENCYCommon
                  stock
              
              $
              97,502
              
              $
              97,502Additional
                  paid in capital
              
              
              13,750,532
              
              
              13,329,355Accumulated
                  Deficit
              
              
              (25,750,104
              )
              
              (25,059,593
              )Other
                  comprehensive income/loss)
              
              
              220,463
              
              
              220,463TOTAL
                  STOCKHOLDERS' DEFICIENCY
              
              $
              (11,681,607
              )
              $
              (11,412,273
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS’DEFICIENCY
              
              $
              77,372
              
              $
              199,304
  1




XL
      GENERATION INTERNATIONAL INC.


STATEMENTS
      OF STOCKHOLDERS DEFICIENCY


Three
      months period ended March 2007


(unaudited)





Stockholders
                  Deficiency
            
            Shares
            
            Common
                stock
            
            Additional
                paid
              in
                Capital
            
            Accumulated
              Deficit
            
            Other
                Comprehensive
              Income
                (Loss)
            
            TotalJanuary
                1, 2006
            
            
            29,999,333
            
            $
            92,923
            
            $
            4,195,467
            
            $
            (7,311,239
            )
            $
            262,403
            
            $
            (2,760,446
            )Proceeds
                fromthe
                issuance ofcommon
                stock
            
            
            3,342,111
            
            
            3,342
            
            
            8,449,254
            
            
            -
            
            
            -
            
            
            8,452,596Shares
                issued for settlement of a debt
            
            
            1,236,824
            
            
            1,237
            
            
            
            
            
            
            
            
            
            
            
            1,237Stock
                basedcompensation
            
            
            
            
            
            
            
            
            684,634
            
            
            
            
            
            
            
            
            684,634Year
                End Loss
            
            
            
            
            
            -
            
            
            -
            
            
            (17,748,354
            )
            
            
            
            
            (17,748,354
            )Other
                comprehensiveLoss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            41,940
            
            
            41,940January
                1, 2007
            
            
            34,578,268
            
            $
            97,502
            
            $
            13,329,355
            
            $
            (25,059,593
            )
            $
            220,463
            
            $
            (11,412,273
            )Stock
                basedcompensation
            
            
            
            
            
            -
            
            
            421,177
            
            
            -
            
            
            -
            
            
            421,177Year
                End Loss
            
            
            
            
            
            -
            
            
            -
            
            
            (690,511
            )
            
            -
            
            
            (690,511
            )Other
                comprehensiveIncome
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            -March
                31, 2007
            
            
            34,578,268
            
            $
            97,502
            
            $
            13,750,532
            
            $
            (25,750,104
            )
            $
            220,463
            
            $
            (11,681,607
            )





2




XL
      GENERATION INTERNATIONAL INC.


STATEMENTS
      OF OPERATIONS


Three
      months ended March 31, 2007 and 2006


(unaudited)


Three
                  Months ended
              
              Three
                  Months endedMarch
                  31,
              
              March
                  31,2007
              
              2006SALES
              
              $
              7,019
              
              $
              1,210,971COSTS
                  AND EXPENSES:Cost
                  of sales
              
              
              -
              
              
              807,280Selling,
                  general and administrative
              
              
              241,439
              
              
              1,960,624Provision
                  for note receivable
              
              
              (29,737
              )
              
              2,217,607Loss
                  on settlement of debt
              
              
              -Compensation
                  expense
              
              
              421,177Interest
              
              
              66,772
              
              
              42,152Foreign
                  exchange loss
              
              
              (2,121
              )
              
              170TOTAL
                  COSTS AND EXPENSES
              
              
              697,530
              
              
              5,027,833NET
                  LOSS
              
              $
              (690,511
              )
              $
              (3,816,862
              )Net
                  Loss Per Share
              
              $
              (0.02
              )
              $
              (0.12
              )Average
                  weighted Number of Shares
              
              
              34,578,268
              
              
              31,152,691
  3





XL
      GENERATION INTERNATIONAL INC.


STATEMENTS
      OF CASH FLOWS


Three
      months ended March 31, 2007 and 2006


(unaudited)


March
                  31
              
              March
                  312007
              
              2006Net
                  loss
              
              $
              (690,511
              )
              $
              (3,816,862
              )Adjustment
                  to reconcile net income to net cash providedby
                  operating activitiesDepreciation
                  and amortization
              
              
              3,044
              
              
              4,172Write
                  off of related partyNote
                  receivable
              
              
              (29,737
              )Stock
                  based compensation
              
              
              421,177Unrealized
                  foreign exchange
              
              
              -
              
              
              11,037Changes
                  in operating assets and liabilities:Prepaid
                  expenses and sundry current assets
              
              
              41,345
              
              
              (66,880
              )Accrued
                  expenses and sundry current liabilities
              
              
              116,577
              
              
              (37,324
              )Net
                  cash used by operating activities
              
              $
              (138,105
              )
              $
              (3,983,406
              )Investing
                  activitiesAcquisitions
                  of property and equipment
              
              
              0
              
              
              (19,338
              )Net
                  cash used in investing activities
              
              $
              0
              
              $
              (19,338
              )Financing
                  activitiesAdvances
                  to related party
              
              
              29,737
              
              
              0Advances
                  to stockholders
              
              
              
              
              
              0Issuance
                  of common stock
              
              
              -
              
              
              3,551,388Note
                  receivable - Related Party
              
              
              
              
              
              1,047,643Premium
                  on issuance of common stock
              
              
              -
              
              
              0Proceeds
                  of loans payable stockholders
              
              
              30,825
              
              
              154,801Proceeds
                  (repayments) of loans from suppliers
              
              
              -
              
              
              (563,104
              )Net
                  cash provide by financing activities
              
              $
              60,562
              
              $
              4,190,728Increase
                  (decrease) in cash
              
              
              (77,543
              )
              
              187,984Cash-
                  beginning of period
              
              
              128,607
              
              
              262,446Cash-
                  end of period
              
              $
              51,064
              
              $
              450,430
  4


XL
      GENERATION INTERNATIONAL INC.


NOTES
      TO
      FINANCIAL STATEMENTS





NOTE
      1 —
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




NATURE
      OF
      BUSINESS





**Introduction**





XL
      Generation International Inc. is the holding company of a Swiss entity, XL
      Generation AG, which was the manufacturer of an artificial sport surface called
      “XL Turf.” XL Turf is designed to reduce accidents while reproducing the natural
      feeling of playing on grass. Until September 2006, the Company aspired to become
      a leading global force in the artificial turf and flooring markets by building
      on the strength of the XL Generation brand and developing strategic partnerships
      with key regional turf and flooring providers. However, because of worsening
      financial conditions, irregularities regarding registration of certain
      intellectual property rights and deterioration of the brand name of the Company,
      the Board of Directors have decided that it is in the Company’s and investors’
best interest to initiate a complete and total withdrawal from the artificial
      flooring sector, artificial turf and all related business as soon as possible.





**Business
      Development**





The
      Company was incorporated in the State of Nevada on March 18, 2004, as Cygni
      Systems Corporation. It was originally formed with the intent of raising funds
      and entering into business as a software design company. From the date of its
      incorporation until June 17, 2005, the Company was in the development stage
      of
      its business of developing online and network security management software
      and
      online and network security consulting services.





A
      change
      of control occurred on June 17, 2005. In connection with this change of control,
      the Company's purpose became to seek, investigate and, if such investigation
      warranted, merge or acquire an interest in business opportunities presented
      to
      it by persons or companies who or which desired to seek the perceived advantages
      of a Securities Exchange Act of 1934 registered corporation.





On
      June
      29, 2005, the Company entered into a Letter of Intent (the "Letter of Intent")
      regarding a share exchange with XL Generation AG. Pursuant to the terms of
      the
      Letter of Intent, the Company agreed to acquire all of the issued and
      outstanding shares of common stock of XL Generation AG in exchange for the
      issuance at closing of an aggregate of 15 Million shares of restricted common
      stock (the "Common Stock") of the Company (the "Exchange Offer"). The Letter
      of
      Intent provided that in the event that substantially all of XL Generation AG's
      stockholders agreed to participate in the Exchange Offer on that date, such
      stockholders would thereafter collectively own approximately 60% of the issued
      and outstanding shares of the Company's Common Stock as of such date, and the
      Company would hold all or substantially all of the issued and outstanding shares
      of XL Generation AG's common stock. XL Generation AG is domiciled in Zug,
      Switzerland.





On
      August
      19, 2005, the Company entered into and closed a Share Exchange Agreement (the
      "Share Exchange Agreement") with XL Generation AG. Pursuant to the terms of
      the
      Share Exchange Agreement, the Company acquired all of the issued and outstanding
      shares of common stock of XL Generation AG.





On
      August
      23, 2005, the Company filed a Certificate of Amendment with the States of
      Nevada, changing its name to "XL Generation International Inc."





**Our
      Business**





XL
      Generation AG, which was the Company’s sole operating subsidiary, is based in
      Zug, Switzerland, and designed specific flooring products for sports,
      recreational and commercial markets. XL Generation AG developed artificial
      turf
      systems for sports fields. XL Generation AG held the worldwide commercial and
      manufacturing rights for the "XL technology." The “XL technology” consists of
      six patents owned by WKF5/Ltd. However, on October 2, 2006, WKF5/Ltd served
      a
      notice to XL Generation AG terminating the usage of the XL Technology. This
      Notice claimed that WKF/5 Ltd has the right to terminate the License, and
      claimed the alleged insolvency of XL Generation AG as the cause of such right
      of
      termination.





Due
      to
      worsening financial conditions, irregularities regarding registration of certain
      intellectual property rights and deterioration of the brand name of the Company,
      the Company’s Board of Directors have decided that it is in the Company’s and
      investors’ best interest to initiate a complete and total withdrawal from the
      artificial flooring sector, artificial turf and all related concerns as soon
      as
      possible. The Company currently has no employees or production.




5





The
      Company's plan is now to seek, investigate and, if such investigation warrants,
      merge or acquire an interest in business opportunities presented to it by
      persons or companies who or which desired to seek the perceived advantages
      of a
      Securities Exchange Act of 1934 registered corporation. The Company's discretion
      in the selection of business opportunities is unrestricted, subject to the
      availability of such opportunities, economic conditions, and other
      factors.





**Intellectual
      Property**





The
      current relationship between XL Generation AG and the patents, patents pending
      and all the intellectual and industrial property rights (collectively, the
      "Intellectual Property") which XL Generation AG was using is as follows:





The
      Intellectual Property is owned by WKF/5 Ltd, a Maltese corporation controlled
      (and majority owned) by a related party, the Alain Lemieux Trust. Mr. Alain
      Lemieux served as President and CEO of the Company until August 18, 2006. WKF/5
      Ltd owns the worldwide commercial and manufacturing rights for the "XL
      technology." The “XL technology” consists of six patents. Of these six patents,
      one is patented in 38 countries, with patents pending in 6 more countries;
      another is patented in 16 countries, with patents pending in 28 more; two of
      these patents are pending in seven countries; and two of the six patents are
      pending in one country each.





On
      January 1, 2005, XL Generation AG was granted a worldwide exclusive license
      (the
      "License Agreement") to manufacture, assemble, sell, distribute and promote
      all
      the products covered by the Intellectual Property, by WKF5/Ltd. It was provided
      that the License Agreement shall continue in full force and effect until it
      automatically expires upon the later of (a) the termination or expiration date
      of the latest patent granted; or (b) the expiration date of any extension made
      by Licensee pursuant to the License Agreement. On October 2, 2006, WKF5/Ltd
      served a notice to XL Generation AG terminating the License agreement. This
      Notice claims that WKF/5 Ltd has the right to terminate the License, and claims
      the alleged insolvency of XL Generation AG as the cause of such right of
      termination.





There
      was
      no minimum quota required under the License Agreement. The royalty rate had
      been
      determined at 5% of gross sales of XL Generation AG. Subsequently, it was agreed
      by XL Generation AG and WKF/5 Ltd that the initial lump sum royalty fee would
      initially be $416,047. Pursuant to the same agreement entered into by WKF/5
      Ltd,
      the lump sum royalty fee of $416,047 was assumed by a trust controlled by Alain
      Lemieux which assumed XL Generation AG’s duty to pay WKF/5 Ltd.





Irregularities
      concerning the proper registration of the trademarks “XL Turf” and “XL
      Generation” served as the basis of a legal action against WKF/5 Ltd, where the
      Company claimed that the Register of Trade-marks relating to registration no.
      671 108 (application no. 1 266 983) for the trade-mark XLGENERATION, registered
      on August 24, 2006, be struck on the grounds that at the date of the application
      or at the date of registration, the entry as it appears on the Register does
      not
      accurately express or define the existing rights of the person appearing to
      be
      the registered owner of the mark. Furthermore, the Company asked for an order
      declaring that WKF/5 Ltd was not and is not entitled to obtain registration
      of
      any trade-mark containing the word XLGENERATION on the claim that the
      registration in the name of WKF/5 Ltd of the trade-mark XLGENERATION is contrary
      to the Company’s rights, as detailed in Part II, Item 1 of this
      Report.





PRINCIPLES
      OF CONSOLIDATION





The
      consolidated financial statements include the accounts of the Company and its
      subsidiary XL Generation AG after the elimination of inter-company accounts
      and
      transactions. As required by the SEC in Reverse Takeover transactions, the
      operating entity, in this case XL Generation AG, is deemed to be the acquirer
      whose results are reported in these financial statements.





CASH
      AND
      CASH EQUIVALENTS





The
      Company considers all highly liquid debt instruments with original maturities
      not exceeding three months to be cash equivalents.




6





PROPERTY
      & OFFICE EQUIPMENT





Equipment
      is stated at cost. Depreciation is computed using the straight-line method
      over
      3 to 10 years.


March
                  31,2007Computer
                  equipment—3 yrs
              
              $
              2,904Furniture
                  & fixtures—5 yrs
              
              
              46,364$
              49,268Less:
                  accumulated depreciation
              
              
              ($22,960
              )Balance
                  March 31, 2007
              
              $
              26,308





REVENUE
      RECOGNITION





The
      Company recognizes revenue when it is realized or realizable and earned. The
      Company considers revenue realized or realizable and earned when persuasive
      evidence of an arrangement exists, the product has been shipped or the services
      have been provided to the customer, the sales price is fixed or determinable
      and
      collectibles is reasonably assured. The Company reduces revenue for estimated
      customer returns, rotations and sales rebates when such amounts are estimable.
      When not estimable, the Company defers revenue until the product is sold to
      the
      end customer. As part of its product sales price, the Company provides support,
      which is generally utilized by the customer shortly after the sale.





INCOME
      TAXES





The
      asset
      and liability approach is used to account for income taxes by recognizing
      deferred tax assets and liabilities for the expected future tax consequences
      of
      temporary differences between the carrying amounts and the tax bases of assets
      and liabilities. The Company records a valuation allowance to reduce the
      deferred tax assets to the amount that is more likely than not to be
      realized.





LOSS
      PER
      COMMON SHARE





The
      basic
      net loss per common share is computed by dividing the net loss by the weighted
      average number of common shares outstanding.





Diluted
      net loss per common share is computed by dividing the net loss, adjusted on
      an
      "as if converted" basis, by the weighted average number of common shares
      outstanding plus potential dilutive securities.





Warranty
      Provisions





The
      Company provides a reserve based upon management experience and assessment
      of
      potential replacement costs. Company management will continue to monitor the
      stability of its products and will adjust the provision accordingly. As at
      March
      31, 2007 we were due to replace two products in Switzerland and one in
      Vancouver, Canada. The reserves required to replace these products were
      estimated at approximately $1,641,000.





USE
      OF
      ESTIMATES





In
      preparing financial statements, management makes estimates and assumptions
      that
      affect the reported amounts of assets and liabilities in the balance sheet
      and
      revenue and expenses in the income statement. Actual results could differ from
      those estimates.





RECENT
      ACCOUNTING PRONOUNCEMENTS





The
      Company does not expect the adoption of recently issued accounting
      pronouncements to have a significant impact on its results of operations,
      financial position or cash flow. For further information regarding recent
      accounting pronouncements, please see Note 12.





NOTE
      2 —
GOING CONCERN





The
      Company's consolidated financial statements have been prepared on a going
      concern basis, which contemplates the realization of assets and settlement
      of
      liabilities and commitments in the normal course of business for the foreseeable
      future. During the three months ended March 31, 2007 and 2006, the Company
      has
      incurred losses of $690,511 and $3,816,862 respectively. The Company had
      negative working capital of $11,707,915 and $3,076,177 at March 31, 2007 and
      2006, respectively and a stockholders deficiency of $11,681,607 and $3,014,883
      at March 31, 2007 and 2006. These factors among others raise substantial doubt
      about the Company's ability to continue as a going concern.




7





Management's
      plans for the Company's continued existence include selling additional stock
      and
      borrowing additional funds to pay overhead expenses.





The
      Company's plan is now to seek, investigate and, if such investigation warrants,
      merge or acquire an interest in business opportunities presented to it by
      persons or companies who or which desired to seek the perceived advantages
      of a
      Securities Exchange Act of 1934 registered corporation. The Company's discretion
      in the selection of business opportunities is unrestricted, subject to the
      availability of such opportunities, economic conditions, and other
      factors.





The
      Company's future success is dependent upon its ability to achieve profitable
      operations, generate cash from operating activities and obtain additional
      financing. There is no assurance that the Company will be able to generate
      sufficient cash from operations, sell additional shares of common stock or
      borrow additional funds.





The
      Company's inability to obtain additional cash could have a material adverse
      effect on its financial position, results of operations and its ability to
      continue in existence. The consolidated financial statements do not include
      any
      adjustments that might result from the outcome of this
      uncertainty.





NOTE
      3 —
ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES





Accrued
      expenses consisted of the following at March 31, 2007:


Accrued
                  interest
              
              $
              318,772Accrued
                  operating expenses
              
              $
              1,518,170Warranty
              
              $
              1,641,000$
              3,477,942Movement
                  in the Warranty provision:Balance
                  as at January 1, 2007
              
              $
              1,641,000Release
                  of provision
              
              
              -Additional
                  provision
              
              
              -Balance
                  as at March 31, 2007
              
              $
              1,641,000





NOTE
      4 —
STOCK SUBSCRIPTION PAYABLE





The
      Company received a deposit of five hundred thousand dollars ($500,000) from
      Aton
      Select Fund Ltd on July 6, 2006 to purchase from the Company (i) 250,000 shares
      of the Company's common stock. The shares have not been issued as of the date
      of
      the accompanying financial statements. The Company received a deposit of five
      hundred thousand dollars ($500,000) from Emper Overseas S.A. on August 10,
      2006
      to purchase from the Company (i) 400,000 shares of the Company's common stock;
      and (ii) Series A Warrants to purchase up to an additional 400,000 shares of
      the
      company's common stock at an exercise price initially set at $1.25 per share.





NOTE
      5 —
ACCOUNTS PAYABLE- RELATED PARTY





The
      accounts payable are non interest bearing and payable on demand.





NOTE
      6
—PAYABLE
      -
      STOCKHOLDERS





Mr.
      Albert Beerli, a significant stockholder, advanced funds and then was partially
      repaid by the Company during the year ended December 31, 2006. The total note
      balance at March 31, 2007 was $61,477 ($119,858 as of December 31, 2006). The
      note carries an interest of 4.5% and is payable on demand.





On
      December 31, 2006, the Company had received loans from CAPEX Investment Limited,
      a stockholder, in the amount of $2,068,474. In 2007, the Company received
      additional loans from CAPEX Investment Limited in the amount of $89,206. These
      loans carry an interest of 10% and are payable on demand.




8





Amounts
      owed to stockholders at March 31, 2007 are as follows:





Payable
                A. Beerli
            
            $
            61,477Payable
                Capex Investment Ltd
            
            
            2,157,680Payable
                stockholders
            
            $
            2,219,157




NOTE
      7 —
CAPITAL STOCK





The
      company is authorized to issue 100,000,000 shares of common stock (par value
      $0.001) of which 34,578,268 were issued and outstanding as of March 31, 2007.





STOCK-BASED
      COMPENSATION EXPENSE





During
      the year ended December 31, 2006, the Company issued 1,455,000 stock options
      to
      officers and directors of the Company with an average exercise price of $1.05
      per share. Of the stock options issued, 320,000 vested on September 6,
      2006, 150,000 vested on September 7, 2006, 25,000 vested on September 15,
      2006, 150,000 vested on December 25, 2006, 660,000 will vest on September 6,
      2007 and the balance will vest on September 6, 2008. These options will expire
      on September 6, 2008 (240,000), September 15, 2008 (25,000), December 25, 2006
      (150,000), September 6, 2013 (440,000) and September 6, 2016 (600,000). The
      options had a fair value of $1,526,989 at the date of grant. The Company valued
      these options using the Black-Scholes option -pricing valuation model. The
      model
      uses market sourced inputs such as interest rates, stock prices, and option
      volatilities, the selection of which requires Company management’s judgment, and
      which may impact the value of the options. The assumptions used in the
      Black-Scholes valuation model were: a risk-free interest rate of 3.8%, 3.9%
      and
      4.0%; the current stock price at date of issuance of $1.04, $1,10 and $0.90
      per
      share; the exercise price of the options of $1.05 and $0.01 per share; the
      term
      of 2, 7 and 10 years; volatility of 315% and 311%. For the three month period
      ended March 31, 2007, the Company recorded compensation expense of $421,177.
      As
      of March 31, 2007, there was $421,178 of total unrecognized compensation cost
      related to non-vested share-based compensation. No options were exercised during
      the three month period ended March 31, 2007.





A
      summary
      of option activity for the three month period ended March 31, 2007 is presented
      below:





Options
            
            Shares
            
            Weighted-Average
                Exercise Price
            
            Weighted-Average
                Remaining Contractual TermOutstanding
                at December 31, 2006
            
            
            -
            
            
            -
            
            
            -Granted
            
            
            1,455,000
            
            $
            1.48
            
            
            5.72Exercised,
                forfeited, or expired
            
            
            -
            
            
            -
            
            
            -Outstanding
                at March 31, 2007
            
            
            1,455,000
            
            $
            1.48
            
            
            5.72Exercisable
                at March 31, 2007
            
            
            620,000
            
            $
            1.48
            
            
            5.72





The
      weighted-average grant-date fair value of options granted during the period
      ended December 31, 2006 was $1.05 per share.





NOTE
      8 —
INCOME TAXES





Income
      taxes are not due since the Company has incurred a loss since inception. The
      Company has deductible net operating losses of approximately $7,321,193 at
      March
      31, 2007. These losses expire as follows: in 2023 $626,000 will expire and
      in
      2024 $2,142,000 will expire.





Components
      of deferred tax assets and liabilities at March 31, 2007 are as
      follows:


Deferred
                  tax asset
              
              $
              2,768,000Valuation
                  allowance
              
              
              (2,768,000
              )Net
                  deferred tax asset
              
              $
              0
  9





The
      Company has recorded a full valuation allowance against its deferred tax asset
      since it believes it is more likely than not that such deferred tax asset will
      not be realized.





NOTE
      9 —
COMMITMENTS AND CONTINGENCIES





XL
      Generation AG, a wholly owned subsidiary of the Company, is a party to a lease
      for its New York office (the “New York Lease”), at a minimum annual rental of
      approximately $96,000 per year. The New York Lease expires in August 2008.
      In
      August, 2006, the Company decided to close its New York office, and it was
      determined that XL Generation AG would enter into an agreement with a third
      party who would assume XL Generation AG’s obligations under the New York Lease.
      Since that time, a third party has taken over the payment of the rent due under
      the New York Lease, but no formal agreement has been entered into between XL
      Generation AG and the third party.




NOTE
      10 —
RELATED PARTY TRANSACTIONS





Mr.
      Albert Beerli, a significant stockholder, advanced funds and then was partially
      repaid by the Company during the year. The total note balance at March 31,
      2007
      was $61,477 ($119,858 as of December 31, 2006). The note carries an interest
      of
      4.5% and is payable on demand.





The
      Company has reviewed the recoverability of a receivable from XL Generation
      Canada Inc., a related party. The Company has taken a charge of $5,916,694
      in
      respect of such receivable. The funds underlying the receivable were previously
      forwarded to XL Generation Canada Inc. for Company-related activities in Canada,
      including building up inventory with our suppliers to facilitate shorter
      delivery periods. As XL Generation Canada Inc. does not have sufficient cash
      resources to repay the advance, management determined to take a charge for
      the
      full amount of such outstanding advances.





NOTE
      11 —
SUBSEQUENT EVENTS





On
      April
      23, 2007, the Alain Lemieux Trust (Jersey) (the “Seller”) entered into and
      closed a Share Purchase Agreement (the “Share Purchase Agreement”) with DT
      Crystal Holdings Ltd. (the “Purchaser”). Pursuant to the terms of the Share
      Purchase Agreement, the Purchaser acquired 13,500,000 restricted shares (the
      “Shares”) of the common stock of XL Generation International Inc. (the
“Company”) from the Seller. The Purchaser paid a total of $500,000 for the
      Shares. The Shares represent 39% of the 34,578,268 issued and outstanding shares
      of the common stock of the Company.





Subsequent
      to the period covered by this Report, several pending legal proceedings
      involving the Company were resolved. On April 24, 2007, the Company entered
      into
      four settlement agreements to resolve certain disputes. Three of these
      settlement agreements were filed with the Quebec Superior Court and Quebec
      Court, District of Montreal (under court file numbers 500-17-033768-063,
      500-22-129010-065, 500-17-033823-066). One settlement agreement was filed at
      the
      Canadian Federal Court of the District of Montreal (under court file number
      T-1872-06). Neither the Company nor any other party to these settlement
      agreements made any admission of wrongdoing or liability. In each of these
      settlement agreements, the parties agreed to be responsible for their own legal
      fees, court fees or other fees. Each of the settlement agreements shall be
      governed and construed in accordance with the laws of the Province of Quebec,
      Canada.





On
      May
      11, 2007 the Bankruptcy Court of the Québec Superior Court of the District of
      Montreal (court file number 500-11-029010-069) dismissed claims made by XL
      Generation AG seeking to have Polyprod Inc. declared bankrupt pursuant to
      applicable law for an unpaid claim totalling $1,052,069 CAD. This amount
      represented monetary advances towards the production of artificial turf and
      related products, made by XL Generation AG to Polyprod Inc. from January 5,
      2006
      to October 10, 2006. Neither party was awarded costs. XL Generation AG has
      ceased pursuing judicial proceedings seeking injunctive and other relief against
      Polyprod Inc. in the Quebec Superior Court of the District of Montreal (court
      file number 500-17-032933-064) to allow XL Generation AG to halt Polyprod Inc.
      from locking XL Generation AG out of the production site, and to force Polyprod
      Inc. to allow XL Generation AG access to said production site.





On
      May
      14 th ,
      2007
      the Company, acting as XL Generation AG’s sole shareholder, dismissed XL
      Generation AG’s two directors. The Company intends to appoint new directors in
      the near future.





Note
      12 —
RECENTLY ISSUED ACCOUNTING STANDARDS





In
      December 2003, the Financial Accounting Standards Board issued FASB
      Interpretation Number 46-R ("FIN 46-R") "Consolidation of Variable Interest
      Entities." FIN 46-R, which modifies certain provisions and effective dates
      of
      FIN 46, sets forth criteria to be used in determining whether an investment
      in a
      variable interest entity should be consolidated. These provisions are based
      on
      the general premise that if a company controls another entity through interests
      other than voting interests, that company should consolidate the controlled
      entity. The Company believes that currently, it does not have any material
      arrangements that meet the definition of a variable interest entity, which
      would
      require consolidation.




10





In
      November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An Amendment
      of
      ARB No. 43, Chapter 4" (SFAS No. 151). SFAS No. 151 requires all companies
      to
      recognize a current-period charge for abnormal amounts of idle facility expense,
      freight, handling costs and wasted materials. This statement also requires
      that
      the allocation of fixed production overhead to the costs of conversion be based
      on the normal capacity of the production facilities. SFAS No. 151 will be
      effective for fiscal years beginning after June 15, 2005. The Company does
      not
      expect the adoption of this statement to have a material effect on its
      consolidated financial statements.





In
      December 2004, the FASB issued SFAS No.123(R), "Share-Based Payment" (SFAS
      No.
      123(R)). This statement replaces SFAS No. 123 and supersedes APB 25. SFAS 123(R)
      requires all stock-based compensation to be recognized as an expense in the
      financial statements and that such compensation be measured according to the
      grant-date fair value of stock options. SFAS 123 (R) will be effective for
      annual periods beginning after June 15, 2005. The Company currently does not
      provide for any stock-based compensation and it will evaluate the impact this
      statement will have on its consolidated financial statements if such
      compensation were to take place in the future.





In
      December 2004, the FASB issued SFAS No. 153, "Exchanges on Nonmonetary Assets
      An
      Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions" (SFAS
      153) SFAS eliminates the exception from fair value measurement for nonmonetary
      exchanges of similar productive assets in paragraph 21(b) of APB Opinion No.
      29,
      "Accounting for Nonmonetary Transactions," and replaces it with an exception
      for
      exchanges that do not have commercial substance. SFAS 153 specifies that a
      nonmonetary exchange has commercial substance if the future cash flows of the
      entity are expected to change significantly as a result of the exchange. SFAS
      153 is effective for fiscal periods beginning after June 15, 2005. The Company
      does not expect the adoption of this statement to have a material effect on
      its
      consolidated financial statements.





In
      May
      2005, the FASB issued SFAS No. 154, "ACCOUNTING FOR CHANGES AND ERROR
      CORRECTIONS, A REPLACEMENT OF APB OPINION NO. 20 AND FASB STATEMENT NO. 3"
      SFAS
      154 applies to all voluntary changes in accounting principle and requires
      retrospective application to prior periods' financial statements of changes
      in
      accounting principle. This statement also requires that a change in
      depreciation, amortization, or depletion method for long-lived, nonfinancial
      assets be accounted for as a change in accounting estimate effected by a change
      in accounting principle. SFAS 154 carries forward without change the guidance
      contained in Opinion No. 20 for reporting the correction of an error in
      previously issued financial statements and a change in accounting estimate.
      This
      statement is effective for accounting changes and corrections of errors made
      in
      fiscal years beginning after December 15, 2005. The Company does not expect
      the
      adoption of this standard to have a material impact on its financial condition,
      results of operations, or liquidity.


11


**Item
      2.**   **Management’s
      Discussion and Analysis**





**The
      Company's Operations**





The
      following discussion of the financial condition and results of operations of
      XL
      Generation International Inc. (referred to herein as the "Company") should
      be
      read in conjunction with the financial statements and the related notes thereto
      included elsewhere in this Quarterly Report on Form 10-QSB for the period ended
      March 31, 2007 (this “Report”). This Report contains certain forward-looking
      statements and the Company's future operating results could differ materially
      from those discussed herein. Certain statements contained in this Report,
      including, without limitation, statements containing the words "believes,"
      "anticipates," "expects" and the like, constitute "forward-looking statements"
      within the meaning of Section 27A of the Securities Act of 1933, as amended,
      and
      Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”). However, as the Company issues “penny stock,” as such term is defined in
      Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to
      rely on these safe harbor provisions. Such forward-looking statements involve
      known and unknown risks, uncertainties and other factors which may cause the
      actual results, performance or achievements of the Company to be materially
      different from any future results, performance or achievements expressed or
      implied by such forward-looking statements. Given these uncertainties, readers
      are cautioned not to place undue reliance on such forward-looking statements.
      The Company disclaims any obligation to update any such factors or to announce
      publicly the results of any revisions of the forward-looking statements
      contained or incorporated by reference herein to reflect future events or
      developments.





The
      Company was incorporated in the State of Nevada on March 18, 2004 as Cygni
      Systems Corporation. On August 19, 2005, the Company entered into the Share
      Exchange Agreement with XL Generation AG. Pursuant to the terms of the Share
      Exchange Agreement, the Company acquired all of the issued and outstanding
      shares of Common Stock of XL Generation AG in exchange for the issuance at
      closing of an aggregate of fifteen million shares of restricted Common Stock
      of
      the Company.





The
      Company now serves as the holding company for XL Generation AG. Management's
      Discussion and Analysis of Financial Condition and Results of Operations
      describes the financial condition and results of operations for XL Generation
      AG. The Company has no other operations other than XL Generation
      AG.





On
      August
      23, 2005, the Company filed a Certificate of Amendment with the State of Nevada,
      changing its name to "XL Generation International Inc." The Company also changed
      its stock symbol to XLGI.





XL
      Generation AG, based in Zug, Switzerland, designed specific flooring products
      for sports, recreational and commercial markets. XL Generation AG developed
      new
      artificial turf systems for sports fields. XL Generation AG held the worldwide
      commercial and manufacturing rights for the "XL technology." The “XL technology”
consists of six patents owned by WKF5/Ltd. However, on October 2, 2006, WKF5/Ltd
      served a notice to XL Generation AG terminating the usage of the XL Technology.
      This Notice claimed that WKF/5 Ltd has the right to terminate the License,
      and
      claimed the alleged insolvency of XL Generation AG as the cause of such right
      of
      termination.





**Business
      Plan**





Initially,
      XL Generation AG's core business was the production, distribution and sales
      of
      artificial turf sport surfaces, using Expanded Polypropylen (EPP) as a
      replacement for the usual infill (sand and/or rubber) used in the installation
      of artificial sport surfaces.





Due
      to
      worsening financial conditions, irregularities regarding registration of certain
      intellectual property rights and deterioration of the brand name of the Company,
      the Company’s Board of Directors have decided that it is in the Company’s and
      investors’ best interest to initiate a complete and total withdrawal from the
      artificial flooring sector, artificial turf and all related concerns as soon
      as
      possible. The Company currently has no employees or production.





The
      Company's plan is now to seek, investigate and, if such investigation warrants,
      merge or acquire an interest in business opportunities presented to it by
      persons or companies who or which desired to seek the perceived advantages
      of a
      Securities Exchange Act of 1934 registered corporation. The Company's discretion
      in the selection of business opportunities is unrestricted, subject to the
      availability of such opportunities, economic conditions, and other
      factors.




12





**Results
      of Operations**





**For
      the Three Month Period ended March 31, 2007**





**Overview**





The
      Company posted net losses of $690,511 for the three month period ended March
      31,
      2007 as compared to net losses of $3,816,862 for the comparable period of 2006.





**Sales**





For
      the
      three month period ended March 31, 2007, the Company achieved gross revenues
      of
      $7,019. This compared to gross revenues of $1,210,971 for the same period of
      2006.





**Total
      Cost and Expenses**





For
      the
      three month period ended March 31, 2007, the Company incurred total costs and
      expenses of $697,530. This compared to $5,027,833 for the same period of 2006.
      The decrease in total cost and expenses was caused by a significant decrease
      in
      costs related to corporate overhead, reducing expenses related to the sponsoring
      of major events, reducing marketing and merchandising expenses, additional
      provisions for warranty cost and provisions against advances made to a related
      party. The Company has undertaken a review of corporate overhead and implemented
      measures to reduce corporate overhead to a level more sustainable in relation
      to
      current revenue volume and management’s expectations.





**Cost
      of Sales**





There
      were no fields sold during the three month period ended March 31, 2007.





**Selling,
      General and Administration**





For
      the
      three month period ended March 31, 2007, the Company incurred selling, general
      and administration expenses of $241,439. This compared to $1,960,624 for the
      same period last year. The decrease was due to the layoff of all of the
      Company’s staff. The Company has undertaken a review of corporate overhead and
      implemented measures to reduce corporate overhead to a level more sustainable
      in
      relation to current revenue volume and management’s expectations.





**Warranty**





For
      the
      three period ended March 31, 2007, the Company did not incur any warranty
      expenses. In 2006, our management undertook a major review of warranty policies
      and reserves required as a consequence of significant warranty request from
      customers in North America and Europe.  The Company now takes warranty
      reserve based upon management experience and assessment of potential replacement
      costs. The Company’s management will continue to monitor the stability of its
      products and will adjust the provision accordingly.





**Other
      Charges**





The
      Company has reviewed the recoverability of a receivable from XL Generation
      Canada Inc., a related party. For the three period ended March 31, 2007, the
      Company has reduced its provision by $29,737 in respect of such receivable.
      The
      funds underlying the receivable were previously forwarded to XL Generation
      Canada Inc. for Company-related activities in Canada, including the building
      up
      of inventory to facilitate shorter delivery periods. As XL Generation Canada
      Inc. does not have sufficient cash resources to repay the advance, management
      has determined to take a charge for the full amount of such outstanding
      advances.




13





**Depreciation
      and Amortization**





Depreciation
      and amortization for the three month period ended March 31, 2007 were $3,044.





**Interest**





The
      Company calculates interest in accordance with the respective note payable.
      For
      the three month period ended March 31, 2007, the Company incurred a charge
      of
      $66,772. This compared to $42,152 for the same period of the previous year.
      This
      significant increase mirrors the increase liabilities which the Company has
      assumed to finance its operations.





**Liquidity
      and Capital Resources**





At
      March
      31, 2007, the Company had $51,064 in cash, as opposed to $128,607 in cash at
      December 31, 2006. Total cash requirements for operations for the three month
      period ended March 31, 2007 was $138,105. As a result of certain measures
      implemented to reduce corporate overhead, management estimates that cash
      requirements through the end of the fiscal year ended December 31, 2007 will
      be
      between $1.0 million to $1.5 million. As of the date of this Report, the Company
      does not have available resources sufficient to cover the expected cash
      requirements through the end of the second quarter of 2007 or the balance of
      the
      year. As a result, there is substantial doubt that we can continue as an ongoing
      business without obtaining additional financing. Management's plans for
      maintaining Company operations and continued existence include selling
      additional equity securities and borrowing additional funds to pay operational
      expenses. There is no assurance that the Company will be able to generate
      sufficient cash from operations, sell additional shares of Common Stock or
      borrow additional funds. The Company's inability to obtain additional cash
      could
      have a material adverse effect on our financial position, results of
      operations and the Company's ability to continue its existence. If our
      losses continue and we are unable to secure additional financing, we may
      ultimately be required to seek protection from creditors under applicable
      bankruptcy laws.





At
      March
      31, 2007, the Company had total assets of $77,372 compared to total assets
      of
      $199,304 at December 31, 2006. The decrease is mainly due to general and
      administration expenses. The total assets are decrease by provisions made
      against advances to XL Generation Canada Inc., an operational agent based in
      Montreal, providing financial and accounting services for the bureau liaison
      in
      Montreal, Canada.





At
      March
      31, 2007, the Company had total current liabilities of $11,758,979 compared
      to
      total current liabilities of $11,611,577 at December 31, 2006. The liabilities
      are mainly due to (i) accrued operational costs; (ii) loan notes from
      shareholders and suppliers; and (iii) warranty costs.





XL
      Generation AG is a party to a lease for its New York office (the “New York
      Lease”), at a minimum annual rent of approximately $96,000 per year. The New
      York Lease expires in August 2008. In August, 2006, the Company decided to
      close
      its New York office, and it was determined that XL Generation AG would enter
      into an agreement with a third party who would assume XL Generation AG’s
      obligations under the New York Lease. Since that time, a third party has taken
      over the payment of the rent due under the New York Lease, but no formal
      agreement has been entered into between XL Generation AG and the third party.





Since
      its
      formation, XL Generation AG has received advances from Mr. Albert Beerli, a
      stockholder and (since March 2006) a director of the Company, to cover the
      general overhead and running costs of XL Generation AG's offices in Zug,
      Switzerland. The total balance of amounts advanced by Mr. Beerli as of March
      31,
      2007was equal to $61,477. This compared to $119,858 as of December 31, 2006.





On
      December 31, 2006, the Company had received loans from CAPEX Investment Limited,
      a stockholder, in the amount of $2,068,474. In the first three months of 2007,
      the Company received loans from CAPEX Investment Limited, a stockholder, in
      the
      amount of $89,206. These loans carry an interest of 10% and are payable on
      demand. As of March 31, 2007, total loans from CAPEX Investment Limited amounted
      to $2,157,680. This compared to $2,068,474 as of December 31, 2006.




14





The
      financial conditions of the Company raise substantial doubt about the Company's
      ability to continue as a going concern. Management's plan for the Company's
      continued existence includes selling additional stock through private placements
      and borrowing additional funds to pay overhead expenses. The future success
      of
      the Company is dependent upon its ability to achieve profitable operations,
      generate cash from operating activities and obtain additional financing. There
      is no assurance that the Company will be able to generate sufficient cash from
      operations, sell additional shares of Common Stock or borrow additional funds.
      The inability of the Company to obtain additional cash could have a material
      adverse effect on its financial position, results of operations and its ability
      to continue as a going concern.





**Off-Balance
      Sheet Arrangements**





The
      Company is not a party to any off-balance sheet arrangements.





**Subsequent
      Events**





On
      April
      23, 2007, the Alain Lemieux Trust entered into and closed a Share Purchase
      Agreement with DT Crystal Holdings Ltd. Pursuant to the terms of this Share
      Purchase Agreement, DT Crystal Holdings Ltd. acquired 13,500,000 restricted
      shares of the Company’s common stock from the Alain Lemieux Trust. DT Crystal
      Holdings Ltd. paid a total of $500,000 for these shares. These shares represent
      39% of the 34,578,268 issued and outstanding shares of the common stock of
      the
      Company.





**ITEM
      3.**  **Controls
      and Procedures**





As
      of the
      end of the period covered by this Report, an evaluation was carried out under
      the supervision and with the participation of the Company’s management,
      including the Company’s Chief Executive Officer and Chief Financial Officer, of
      the effectiveness of the Company’s disclosure controls and procedures, as
      defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act
      of
      1934 (the “Exchange Act”). Based on their evaluation, the Company’s Chief
      Executive Officer and Chief Financial Officer have concluded that the Company’s
      disclosure controls and procedures are effective to ensure that information
      required to be disclosed by the Company in reports that it files or submits
      under the Exchange Act is accumulated and communicated to the Company's
      management, including the Company's Chief Executive Officer and Chief
      Financial Officer, to allow timely decisions on required disclosure and
      is recorded, processed, summarized and reported within the time periods
      specified in Securities and Exchange Commission rules and forms. There have
      been
      no changes in the Company’s internal controls over financial reporting during
      the Company’s most recently completed fiscal quarter that have materially
      affected, or are reasonably likely to materially affect, our internal controls
      over financial reporting.




15


**PART
      II**   **OTHER
      INFORMATION**





**Item
      1.********Legal
      Proceedings**





**Subsequent
      Events**





Subsequent
      to the period covered by this Report, several pending legal proceedings
      involving the Company were resolved. Most significantly, on April 24, 2007, the
      Company entered into four settlement agreements to resolve certain disputes
      the
      Company was a party to. Three of these settlement agreements were filed with
      the
      Quebec Superior Court and Quebec Court, District of Montreal (under court file
      numbers 500-17-033768-063, 500-22-129010-065, 500-17-033823-066). One settlement
      agreement was filed at the Canadian Federal Court of the District of Montreal
      (under court file number T-1872-06). Neither the Company nor any other party
      to
      these settlement agreements made any admission of wrongdoing or liability.
      In
      each of these settlement agreements, the parties agreed to be responsible for
      their own legal fees, court fees or other fees. Each of the settlement
      agreements shall be governed and construed in accordance with the laws of the
      Province of Quebec, Canada. The four settlements are as follows:





WKF/5
      Ltd





On
      October 26, 2006, the Company filed a motion against WKF/5 Ltd, the Alain
      Lemieux Trust (Jersey) and Professional Trust Company Limited in the Canadian
      Federal Court of the District of Montreal (court file number T-1872-06). The
      Company claimed that the Register of Trade-marks relating to registration no.
      671 108 (application no. 1 266 983) for the trade-mark XLGENERATION, registered
      on August 24, 2006, be struck on the grounds that at the date of the application
      or at the date of registration, the entry as it appears on the Register does
      not
      accurately express or define the existing rights of the person appearing to
      be
      the registered owner of the mark. Furthermore, the Company asked for an order
      declaring that WKF/5 Ltd was not and is not entitled to obtain registration
      of
      any trade-mark containing the word XLGENERATION on the claim that the
      registration in the name of WKF/5 Ltd of the trade-mark XLGENERATION is contrary
      to the Company’s rights.





Pursuant
      to the settlement agreement dated April 24, 2007, the Company has agreed to
      relinquish its license to manufacture products utilizing the technology patented
      by WKF/5 Ltd, retroactively effective October 2, 2006. For up to six (6) months
      from April 24, 2007, the Company may continue to utilize (i) technology created
      by WKF/5 Ltd; and (ii) the trademark XL Generation. Thereafter, the Company
      will
      have no rights to use either the technology owned by WKF/5 Ltd or the trademark
      XL Generation. The Company has agreed that for a period of five (5) years
      thereafter, the Company and its subsidiaries may not engage in any business
      related to the production of artificial turf.





Solutions
      Highmedia Interactif Inc.





On
      November 10, 2006, the Company filed a motion seeking injunctive relief against
      Solutions Highmedia Interactif Inc. and Domenico Malatesta, in the Quebec
      Superior Court of the District of Montreal (court file number 500-17-033768-063)
      to forbid the selling, and prevent the cession of the internet domain name
      and
      emails of the Company and its affiliates, and to reactivate the Company’s and
      its affiliates related internet services. In a related matter, on November
      16,
      2006, Solutions Highmedia Interactif Inc. filed a motion for monetary claim
      against the Company, XL Generation AG and XL Canada, in the Quebec Court of
      the
      District of Montreal (court file number 500-22-129010-065) totalling $54,418
      CAD
      covering expenses for webdesign, printing, translation, and webhosting mandates
      performed towards the website of the Company and its affiliates between January
      1, 2006 and August 15, 2006.





Pursuant
      to the settlement agreement dated April 24, 2007, Solutions Highmedia Interactif
      Inc. and Domenico Malatesta have agreed to release the Company from any amounts
      owed. The Company has agreed that the Company’s domain name will become the
      property of WKF/5 Ltd.




16





Share
      Exchange Agreement





On
      November 14, 2006, the Company filed a motion seeking the annulment of the
      Share
      Exchange Agreement signed on August 19, 2005 between the Company and XL
      Generation AG. In addition, this action seeks to require certain of the
      Company’s former management and affiliated parties to pay $11,000,000 in damages
      and to order the escrow agent and Pacific Stock Transfer Company to deposit
      the
      13,500,000 shares of the Company issued to the Alain Lemieux Trust and
      Professional Trust Company Limited at the Quebec Superior Court of the District
      of Montreal (court file number 500-17-033823-066). This action alleged
      misconduct by former officers and directors of the Company, including
      unjustified and irresponsible spending of the Company’s financial resources.





Pursuant
      to the settlement agreement dated April 24, 2007, all claims for damages and
      for
      the annulment of the Share Exchange Agreement have been dropped, and the Alain
      Lemieux Trust was permitted to receive the disputed 13,500,000 shares of the
      Company’s common stock, and sell such shares to a third party for
      $500,000.





Polyprod
      Litigation





XL
      Generation AG has ceased pursuing judicial proceedings seeking injunctive and
      other relief against Polyprod Inc. in the Quebec Superior Court of the District
      of Montreal (court file number 500-17-032933-064) to allow XL Generation AG
      to
      halt Polyprod Inc. from locking XL Generation AG out of the production site,
      and
      to force Polyprod Inc. to allow XL Generation AG access to said production
      site.


Bankruptcy
      Dismissed





On
      May
      11, 2007 the Bankruptcy Court of the Québec Superior Court of the District of
      Montreal (court file number 500-11-029010-069) dismissed claims made by XL
      Generation AG seeking to have Polyprod Inc. declared bankrupt pursuant to
      applicable law for an unpaid claim totalling $1,052,069 CAD. This amount
      represented monetary advances towards the production of artificial turf and
      related products, made by XL Generation AG to Polyprod Inc. from January 5,
      2006
      to October 10, 2006. Neither party was awarded costs.





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





None.





**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
      and Reports on Form 8-K**





(a)
       Reports on Form 8-K





None.




17





(b)
       Exhibits





Exhibit
                No.
            
            Description
                of ExhibitsExhibit
                31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.Exhibit
                31.2
            
            Certification
                of Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.Exhibit
                32.1
            
            Certification
                of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.Exhibit
                32.2
            
            Certification
                of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




**SUBSEQUENT
      EVENTS**





On
      April
      23, 2007, the Alain Lemieux Trust (the “Seller”) entered into and closed a Share
      Purchase Agreement (the “Share Purchase Agreement”) with DT Crystal Holdings
      Ltd. (the “Purchaser”). Pursuant to the terms of the Share Purchase Agreement,
      the Purchaser acquired 13,500,000 restricted shares (the “Shares”) of the
      Company’s common stock from the Seller. The Purchaser paid a total of $500,000
      for the Shares. The Shares represent 39% of the 34,578,268 issued and
      outstanding shares of the common stock of the Company.





On
      April
      24, 2007, the Company entered into four settlement agreements, as described
      in
      Legal Proceedings, above.




On
      May
      14, 2007, the Company, acting as XL Generation AG’s sole shareholder, dismissed
      XL Generation AG’s two directors. The Company intends to appoint new directors
      in the immediate future.


18





**SIGNATURES**




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


**XL
                GENERATION INTERNATIONAL INC.**May
                18, 2007
            By:
            /s/ Alexander
                C. GilmourName:Alexander
                C. GilmourTitle:Acting
                Principal Executive Officer


By:
            /s/ Michel
                St-PierreName:Michel
              St-PierreTitle:Acting
                Principal Financial Officer and
              Acting
                Principal Accounting Officer





19