**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**




**FORM
      10-QSB**




(Mark
      One)


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




**For
      the period ended: March 31, 2007**


o
            
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




**For
      the transition period from** **** **to** ****




**Commission
      File Number:** **0-49649**




**PLAYLOGIC
      ENTERTAINMENT, INC.**


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


**Delaware**
            
            **23-3083371**(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)**Concertgebouwplein
                13, 1071 LL Amsterdam, The Netherlands**
            
            **1071
                LL**(Address
                of principal executive offices)
            
            (Zip
                Code)




**31-20-676-0304**


(Issuer’s
      telephone number)




Check
      whether the issuer (1) has 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. þ Yes o No




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




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


Class
            
            Outstanding
                at March 31, 2007Common
                Stock, par value $.001 per share
            
            25,332,109
                shares




Transitional
      Small Business Disclosure Format (check one): Yes o No þ










**PLAYLOGIC
      ENTERTAINMENT, INC.**




**FORM
      10-QSB**




**CONTENTS**




**PART
                  I -- FINANCIAL INFORMATION**
              Page
                  No.Item
                  1.
              Financial
                  Statements
              3Item
                  2.
              Management’s
                  Discussion and Analysis
              13Item
                  3.
              Quantitative
                  and Qualitative Disclosures about Market Risk
              18Irem
                  4
              Controls
                  and Procedures
              18**PART
                  II -- OTHER INFORMATION**Item
                  1.
              Legal
                  Proceedings
              18Item
                  1A.
              Risk
                  Factors
              19Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              19Item
                  3.
              Defaults
                  Upon Senior Securities
              19Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              19Item
                  5.
              Other
                  Information
              19Item
                  6.
              Exhibits
              19Signatures20Exhibit
                  Index21Certifications
              Attached


*-
          2
          -*


**PART
      I. FINANCIAL INFORMATION**


**Item
        1. Financial Statements**
 **PLAYLOGIC
            ENTERTAINMENT INC. AND SUBSIDIARIES**
 **CONDENSED
            CONSOLIDATED BALANCE SHEET**
 (UNAUDITED)
 March
            31,
            2007
  **ASSETS****Current
                      Assets**Cash
                  
                  $
                  6,601Accounts
                      receivableTrade,
                      net of allowance for doubtful accounts
                  
                  
                  1,031,723Receivable
                      from officers
                  
                  
                  47,935Value
                      Added Taxes from foreign governments
                  
                  
                  704,391Software
                      development costs
                  
                  
                  5,268,294Prepaid
                      expenses and other
                  
                  
                  1,211,246**Total
                      current assets**
                  
                  
                  8,270,190**Net
                      property and equipment**
                  
                  
                  853,709**Other
                      assets**Software
                      development costs, net of current portion
                  
                  
                  509,037Restricted
                      cash
                  
                  
                  155,551**Total
                      other assets**
                  
                  
                  664,588**Total
                      Assets**
                  
                  $
                  9,788,487**LIABILITIES
                      AND SHAREHOLDERS' DEFICIT****Current
                      Liabilites**Bank
                      line of credit
                  
                  $
                  1,841,720Short-term
                      debts
                  
                  
                  532,920Warrant
                      derivatives
                  
                  
                  7,373Current
                      maturities of long-term debt
                  
                  
                  39,969Accounts
                      payable - trade
                  
                  
                  5,193,007Other
                      accrued liabilities
                  
                  
                  6,672,501Deferred
                      revenues
                  
                  
                  450,757Loan
                      from shareholders
                  
                  
                  5,228,566**Total
                      current liabilities**
                  
                  
                  19,966,813**Long-term
                      debt, less current maturities**
                  
                  
                  229,822**Total
                      Liabilities**
                  
                  
                  20,196,635**Commitments
                      and contingencies****Shareholders'
                      Deficit**Preferred
                      stock - $0.001 par value. 20,000,000 shares authorized. None
                      issued and
                      outstanding
                  
                  
                  -Common
                      stock - $0.001 par value.100,000,000 shares authorized. 25,332,109
                      shares
                      issued and outstanding
                  
                  
                  25,332Additional
                      paid-in capital
                  
                  
                  42,621,112Deferred
                      Compensation-Employee Stock Options
                  
                  
                  216,287Accumulated
                      currency translation adjustments reserve
                  
                  
                  (2,544,208
                  )Accumulated
                      deficit
                  
                  
                  (50,726,671
                  )(10,408,148
                  )Stock
                      subscriptions receivable
                  
                  
                  -**Total
                      shareholders' deficit**
                  
                  
                  (10,408,148
                  )**Total
                      Liabilities and Shareholders' Deficit**
                  
                  $
                  9,788,487
 See
          accompanying Notes to Unaudited Condensed Consolidated Financial
          Statements
 *-
            3
            -*






**PLAYLOGIC
        ENTERTAINMENT INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 (UNAUDITED)
 Three
                    months ended March 31,2007
                
                2006
                    (restated)**Revenues**Net
                    Revenue
                
                $
                3,482,596
                
                $
                2,719,610**Cost
                    of sales**Direct
                    costs of production
                
                
                (1,086,401
                )
                
                (1,761,625
                )**Gross
                    profit**
                
                
                **2,396,195**
                
                
                **957,985****Operating
                    expenses**Research
                    and development
                
                
                22,719
                
                
                343,691Selling
                    and marketing
                
                
                464,792
                
                
                89,670General
                    and administrative
                
                
                748,604
                
                
                1,602,021Depreciation
                
                
                81,690
                
                
                78,498**Total
                    operating expenses**
                
                
                1,317,805
                
                
                2,113,880**Income /
                    (Loss) from operations**
                
                
                **1,078,390**
                
                
                **(1,155,895**
                **)****Other
                    income/(expense)**Interest
                    expense
                
                
                (319,446
                )
                
                (76,827
                )Realized
                    and unrealized exchange losses
                
                
                -
                
                
                35,217**Income/(Loss)
                    before provision for income taxes**
                
                
                758,944
                
                
                (1,197,505
                )Provision
                    for Income Taxes
                
                
                -
                
                
                -**Net
                    Income / (loss)**
                
                
                758,944
                
                
                (1,197,505
                )Net
                    loss per weighted-average share of common stock outstanding,
                    computed on
                    Net Loss-
                    basic and fully diluted
                
                
                0.03
                
                
                (0.05
                )Weighted-average
                    number of shares of common stock outstanding-
                    basic and fully diluted
                
                
                25,332,109
                
                
                22,865,402


See
        accompanying Notes to Unaudited Condensed Consolidated Financial
        Statements




*-
          4
          -*
 
  **PLAYLOGIC
          ENTERTAINMENT, INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS**
 (UNAUDITED)
  Three
                    months ended March 31,2007
                
                2006
                    (restated)**Net
                    cash provided by (used in) operating activities**
                
                $
                23,101
                
                $
                (1,195,288
                )**CASH
                    FLOWS FROM INVESTING ACTIVITIES**Cash
                    paid for software development
                
                
                (1,696,303
                )
                
                (1,431,504
                )Cash
                    paid to acquire property and equipment
                
                
                (42,314
                )
                
                (108,288
                )**Net
                    cash used in investing activities**
                
                
                **(1,738,617**
                **)**
                
                **(1,539,793**
                **)****CASH
                    FLOWS FROM FINANCING ACTIVITIES**Payments
                    on bank line of credit
                
                
                30,229
                
                
                (23,571
                )Net
                    activity on short term notes
                
                
                (407,132
                )Principal
                    payments on long-term debt
                
                
                (9,850
                )
                
                6,552Cash
                    advanced by affiliated entities
                
                
                -
                
                
                495,743Cash
                    received from shareholder loans
                
                
                2,090,418
                
                
                (114,683
                )Proceeds
                    from sales of common stock
                
                
                -
                
                
                1,178,065Collections
                    on stock subscriptions receivable
                
                
                -
                
                
                1,200,000Cash
                    paid to acquire capital
                
                
                -
                
                
                (4,399
                )**Net
                    cash provided by financing activities**
                
                
                **1,703,665**
                
                
                **2,737,708****Effect
                    of foreign exchange on cash**
                
                
                **1,915**
                
                
                **-****Decrease
                    in Cash**
                
                
                (9,936
                )
                
                2,627Cash
                    at beginning of period
                
                
                16,537
                
                
                139,760**Cash
                    at end of period**
                
                $
                6,601
                
                $
                142,387**Supplemental
                    disclosures of interest and income taxes paid**Interest
                    paid during the period
                
                $
                -
                
                $
                76,827Income
                    taxes paid (refunded)
                
                
                -
                
                
                -**Supplemental
                    disclosures of non-cash investing and financing
                    activities**Common
                    stock issued to repay notes payable
                
                $
                -
                
                $
                918,652Cost
                    of acquiring capital paid with issuance of common stock
                
                $
                -
                
                $
                13,200
 See
          accompanying Notes to Unaudited Condensed Consolidated Financial
          Statements
 *-
            5
            -*
 
  **PLAYLOGIC
            ENTERTAINMENT, INC. AND SUBSIDIARIES**
 **CONDENSED
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**
 
 
 
 **NOTE
            A - ORGANIZATION AND DESCRIPTION OF BUSINESS**
 
  Playlogic
            Entertainment, Inc. (“the Company, “we”, “us” or similar pronouns) is a
            developer and publisher of interactive entertainment products, such as
            video
            game software and other digital entertainment products. We publish for
            most
            major interactive entertainment hardware platforms, such as Sony’s PlayStation 3
            and Playstation2, Microsoft’s Xbox and Xbox360, Nintendo’s Wii, PCs and handheld
            devices (such as Nintendo DS, and PSP) and mobile devices.
  Our
            principal sources of revenue are derived from publishing operations.
            Publishing
            revenues are derived from the sale of our digital entertainment products.
            We own
            most of the intellectual properties of our products.
 
 As
            a
            publisher, we are responsible for publishing, sales and marketing of
            our
            products. We sell our products to distributors, who sell to retail. Furthermore,
            we sell directly to consumers through online distribution channels, at
            least two
            months after the product was made available at retail.
 
 
 **NOTE
            B - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
            POLICIES**
 
 **Basis
            of Presentation**
 
 The
            accompanying condensed consolidated financial statements include the
            accounts of
            the Company and reflect all adjustments necessary for fair presentation
            of our
            financial position, results of operations and cash flows. Inter-company
            accounts
            and transactions have been eliminated. The preparation of these condensed
            consolidated financial statements in conformity with accounting principles
            generally accepted in the United States requires management to make estimates
            and assumptions that affect the amounts reported in these condensed consolidated
            financial statements and accompanying notes. We adhere to the same accounting
            policies in preparation of interim financial statements. As permitted
            under
            generally accepted accounting principles, interim accounting for certain
            expenses, including income taxes are based on full year assumptions when
            appropriate. Actual results could differ materially from those estimates.
 
 Certain
            information and footnote disclosures normally included in financial statements
            prepared in accordance with accounting principles generally accepted
            in the
            United States have been omitted pursuant to the rules and regulations
            of the
            Securities and Exchange Commission (“SEC”), although we believe that the
            disclosures are adequate to make the information presented not misleading.
            These
            condensed consolidated financial statements and accompanying notes should
            be
            read in conjunction with our annual consolidated financial statements
            and the
            notes thereto for the fiscal year ended December 31, 2006, included in
            our
            Annual Report on Form 10-KSB for the year ended December 31, 2006.
 
 **Reclassifications**
 
 Certain
            prior year amounts have been reclassified to conform to current year
            presentation.
  *-
                6
                -*
  **Earnings
            Per Share**
 
  SFAS
            No. 128, “Earnings Per Share”, requires dual presentation of basic and
            diluted income per share for all periods presented. Basic income per
            share
            excludes dilution and is computed by dividing earnings available to common
            shareholders by the weighted-average number of common shares outstanding
            during
            the period. Diluted earnings per share reflects the potential dilution
            that
            could occur if securities or other contracts to issue common stock were
            exercised or converted into common stock or resulted in the issuance of common
            stock that then shared in the earnings of the Company.
  Unexercised
            stock options to purchase 350,000 shares of the Company’s common stock as of
            March 31, 2007, respectively, were not included in the computation of
            diluted earnings per share because the exercise of the stock options
            would be
            anti-dilutive to earnings per share.
 
 Unexercised
            warrants to purchase 1,097,962 shares of the Company’s common stock as of
            March 31, 2007, were not included in the computation of diluted earnings
            per share because the exercise of the warrants would be anti-dilutive
            to
            earnings per share. The 900,000 warrants issued in connection with a
            loan as per
            note L our Annual Report on Form 10-KSB for the year ended December 31,
            2006 are
            excluded from the computation and reflected as a liability as they are
            used as
            collateral for the loan.
 
  **Restatements**
 During
            the course of preparing the unaudited financial statements for the three
            months
            ended September 30, 2006, Management of the Company determined that the
            Company’s accounting for the reimbursement of certain expenses incurred during
            the second and third quarter of 2005 had not been properly reflected
            in
            accordance with U.S. generally accepted accounting principles. Certain
            operating
            expenses and transaction costs associated with the Company’s Share Exchange
            Agreement entered into in June 2005, which were initially paid by the
            Company
            and reimbursed by certain shareholders, were not included in the Company’s
            consolidated statements of operations for each of the six and three months
            ended
            June 30, 2005, the nine and three months ended September 30, 2005 and
            the year
            ended December 31, 2005. The corrections to this situation resulted in
            the
            recognition of expenses in connection with the Share Exchange Agreement
            as well
            as either the recognition of additional contributed capital and/or a
            reduction
            in amounts due from shareholder(s) for unrelated advances made prior
            to the
            aforementioned Share Exchange Agreement
  The
            restated numbers have been included in the consolidated statement of
            operations.
 
 These
            restatements to the Company’s financial statements were, in part, caused by a
            material weakness in the Company’s internal control over financial reporting due
            to the limitations in the capacity of the Company’s accounting resources to
            appropriately identify and react in a timely manner to non-routine, complex
            and
            related party transactions and communicate said occurrences to it’s independent
            auditors, as well as the adequate understanding of the disclosure requirements
            relating to these types of transactions. In order to remediate this material
            weaknesses, Management of the Company has designed and implemented improvements
            to it’s internal controls over financial reporting and to better define the
            most
            appropriate protocols to enhance the preparation, review, presentation
            and
            disclosures of the Company’s financial statements.
 
 
  *-
                7
                -*
  **NOTE
            C - GOING CONCERN UNCERTAINTY**
 
 The
            Company is a global publisher of interactive software games designed
            for
            personal computers, and video game consoles and handheld platforms manufactured
            by Sony, Microsoft and Nintendo. Its principal sources of revenue are
            derived
            from publishing and distribution operations. Publishing revenues are
            derived
            from the sale of internally developed software titles or software titles
            developed by third parties. Operating margins in its publishing business
            are
            dependent upon its ability to continually release new, commercially successful
            products. Operating margins for titles based on licensed properties are
            affected
            by the company's costs to acquire licenses. The Company pursues a growth
            strategy by capitalizing on the widespread market acceptance of video
            game
            consoles, as well as the growing popularity of innovative action games
            that
            appeal to mature audiences.
 
 The
            accompanying condensed consolidated financial statements have been prepared
            assuming the Company will continue as a going concern. At March 31, 2007,
            the
            Company had an accumulated deficit of approximately $50.7 million, a
            shareholders’ deficit of approximately $10.4 million and a working capital
            deficit of approximately $16.9 million. Although the Company realized
            a net
            profit of $ 759,000 and positive operating cash flows of approximately
            $23,000
            during the three months ended March 31, 2007, the financial position
            raises
            uncertainties about the Company’s ability to continue as a going
            concern.
 
 While
            the
            Company has contracts in place with several third-party developers and
            is
            developing titles through its Playlogic Game Factory B.V. subsidiary,
            and
            anticipates successful debuts of such titles; the market for interactive
            entertainment software is characterized by short product lifecycles and
            frequent
            introduction of new products. Many software titles do not achieve sustained
            market acceptance or do not generate a sufficient level of sales to offset
            the
            costs associated with product development. A significant percentage of
            the sales
            of new titles generally occur within the first three months following
            their
            release. Therefore, the Company’s profitability depends upon the Company’s
            ability to develop and sell new, commercially successful titles and to
            replace
            revenues from titles in the later stages of their lifecycles. Any competitive,
            financial, technological or other factor which delays or impairs the
            Company’s
            ability to introduce and sell the Company’s software could adversely affect
            future operating results.
 
 The
            Company’s continued existence is dependent upon its ability to generate
            sufficient cash flows from operations to support its daily operations
            as well as
            provide sufficient resources to retire existing liabilities and obligations
            on a
            timely basis and its ability to raise debt and/or equity financing.
 favorable
            to or affordable by the Company.
 
 If
            no
            additional funding is received during the next twelve months, the Company
            will
            be forced to rely on additional funds loaned by management and/or significant
            stockholders to preserve the integrity of the corporate entity at this
            time. In
            the event, the Company is unable to acquire advances from management
            and/or
            significant stockholders, the Company’s ongoing operations would be negatively
            impacted to the point that all operating activities are ceased.
 
 While
            the
            Company is of the opinion that good faith estimates of the Company’s ability to
            secure additional capital in the future to reach the Company’s goals have been
            made, *there* is no
            guarantee that the Company will receive sufficient funding to sustain
            operations
            or implement any future business plan steps.
 
 No
            adjustment has been made in the accompanying financial statements to
            the amounts
            and classification of assets and liabilities which could result should
            the
            Company be unable to continue as a going concern.
 
 
  *-
                8
                -*
  **NOTE
            D - FAIR VALUE OF FINANCIAL INSTRUMENTS**
 
 The
            carrying amount of cash, accounts receivable, accounts payable and notes
            payable, as applicable, approximates fair value due to the short term
            nature of
            these items and/or the current interest rates payable in relation to
            current
            market conditions.
 
 Interest
            rate risk is the risk that the Company’s earnings are subject to fluctuations in
            interest rates on either investments or on debt and is fully dependent
            upon the
            volatility of these rates. The Company does not use derivative instruments
            to
            moderate its exposure to interest rate risk, if any.
 
 Financial
            risk is the risk that the Company’s earnings are subject to fluctuations in
            interest rates or foreign exchange rates and are fully dependent upon
            the
            volatility of these rates. The company does not use derivative instruments
            to
            moderate its exposure to financial risk, if any.
  **NOTE E
            - COMPREHENSIVE INCOME/(LOSS)**
  Components
            of comprehensive income/(loss) are as follows:
  Three
                      months ended March 31,2007
                  
                  2006Net income
                      / (loss)
                  
                  $
                  58,944
                  
                  $
                  1,197,505
                  )Foreign
                      currency translation adjustment
                  
                  
                  (104,667
                  )
                  
                  (107,619
                  )Comprehensive income
                      / (loss)
                  
                  $
                  54,277
                  
                  $
                  1,305,124
                  )
   **NOTE
            F - SOFTWARE DEVELOPMENT COSTS**
  The
            following table provides the details of software development costs for
            the three
            months ended March 31, 2007:
  ****Beginning
                      balance
                  **$**
                  4,463,430Additions
                  1,693,280Amortization
                  (446,829)Write
                      down
                  0Foreign
                      exchange
                  67,047Ending
                      balance
                  5,777,331Less:
                      current portion
                  5,268,294Non-current
                      portion
                  **$**
                  509,037
 
  The
            amount of software development costs resulting from advance payments
            and
            guarantees to third-party developers was $4,888,490 at March 31, 2007. In
            addition, software development costs at March 31, 2007 included an amounts
            of $1,353,190, related to titles that have not been released yet.
  The
            non-current portion of the capitalized software development costs is
            expected to
            be amortized in 2008.
   *-
                9
                -*
  **NOTE G
            - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**
 
 Accrued
            expenses and other current liabilities consist of the following:
 Payroll
                      taxes payable
                  
                  $
                  2,835,642
                  a)Deferred
                      payroll taxes
                  
                  
                  521,400Loan
                      penalty expense
                  
                  
                  1,318,600Accrued
                      interest
                  
                  
                  529,957Royalties
                      to be paid
                  
                  
                  200,391Deferred
                      Rent
                  
                  
                  458,572Accrued
                      wages and related personnel costs
                  
                  
                  435,725Invoices
                      to be received
                  
                  
                  205,174Board
                      remuneration to be paid
                  
                  
                  129,261Other
                      accrued liabilities
                  
                  
                  37,778**$**
                  **6,672,501**
 
 _________________
  a)
            Payroll taxes payable can be partly offset against VAT refund claimed
            as
            included in other receivables.
 
 
 **NOTE H
            - LOAN FROM SHAREHOLDERS**
 
 On
            February 23, 2007, the Company entered into a loan agreement with a lender
            based
            in the Netherlands, pursuant to which the Company borrowed the principal
            amount
            of €1,600,000, or approximately $2,100,000. This loan bears compound interest
            at
            a rate of 10% per annum. The principle and the interest will be repaid
            in full
            by the end of August 2007. Under this loan agreement, the Company pledged
            all
            its IP as collateral and assigned all its receivables.
 
 Loans
            from shareholder at March 31, 2007 are comprised of the following:
 
 Loan
                      with a lender based in Andorra
                  
                  $
                  53,292Loans
                      with a lender based in the Netherlands
                  
                  
                  5,182,647Less:
                      unamortized debt discount
                  
                  
                  (7,373
                  )Loans
                      from shareholder, less unamortized debt discount
                  
                  $
                  5,228,566
 
 
 **NOTE I
            - COMMITMENTS AND CONTINGENCIES**
  Litigation
 On
            March
            30, 2007, Fortis Vastgoed B.V. (plaintiff) filed a motion to institute
            accelerated proceedings against Playlogic International
            N.V.(defendant)  with the Court of Amsterdam (Kantongerecht) the
            Netherlands. Fortis claims evacuation of the offices at Amstelveenseweg
            639-710
            in Amstelveen with immediate effect and damages in the amount of € 142,249 plus
€ 91,626 for each quarter following April 1, 2007 till the end of the lease
            term
            expiring on May 31, 2011 in case Fortis is unable to agree on a lease
            for the
            offices with a third party (or approximately $ 187,569 using December
            31, 2006
            exchange rates) in view of the alleged unlawful non performance by Playlogic
            under the lease agreement dated June 1, 2005. On April 17 the Court of
            Amsterdam
            (Kantongerecht) the Netherlands issued a permanent injunction that the
            Company
            has to evacuate the offices at Amstelveenseweg 639-710 in Amstelveen
            within
            fourteen (14) days following registered notice of injunction to defenfant
            unless
            payment of all amounts due have been made by defendant to plaintiff within
            one
            month following April 17, 2007.
  Moreover
            the Company is involved in a number of minor legal actions incidental
            to its
            ordinary course of business.
   *-
                10
                -*
   With
            respect to the above matter, the Company believes that it has adequate
            legal
            claims or defenses and/or provided adequate accruals for related costs
            such that
            the ultimate outcome will not have a material adverse effect on the Company’s
            future financial position or results of operations.
  Office
            leases
 The
            Company leases it’s executive offices located at Concertgebouwplein 13 in
            Amsterdam from Mr. Prof. Dr. D. Valerio. This lease agreement expired
            on March
            31, 2007. This lease agreement contained an extension option, which has
            extended
            the expiration date to March 31, 2012. The lease requires annual payments
            of
            approximately$81,000 (€59,000) per year, to be paid in quarterly
            installments.
 
 Our
            subsidiary, Playlogic Game Factory, B. V., previously operated in leased
            offices, located at Hoge Mosten 16-24 in Breda, from Kantoren Fonds Nederland
            B.V. pursuant to a lease agreement which expired on February 28, 2007.
            Playlogic
            Game Factory, B. V., leases offices located at Hambroeklaan 1 in Breda
            from
            Neglinge BV pursuant to a lease agreement which expires on October 1,
            2013. This
            lease agreement contains an extension option, which if exercised, will
            extend
            the expiration date to October 1, 2018. At the execution of this lease
            agreement, the landlord committed itself to invest approximately $409,000
            (€300,000) in leasehold improvements which are scheduled to be repaid by
            Playlogic Game Factory B.V. over a 10 year period. The lease requires
            annual
            payments of approximately$41,000 (€30,000) per year, payable in quarterly
            installments.
 
 On
            June
            1, 2005, the Company entered into a new lease agreement for new corporate
            offices at Amstelveenseweg 639-710 in Amstelveen. The move of our offices
            to
            this location has been delayed following late commissioning of entrance
            and
            elevators. We will start using this office now as from June 2007.
 The
            lease
            requires annual payments of approximately$273 (€200.00) per square meter for
            rent and $34.00 (€25.00) per square meter for service costs. Payment started
            December 1, 2006 for approximately 1⁄2 of the leased premises (approximately 750
            square meters) and in June 2007, payment will start on the second 1⁄2 of the
            leased premises (approximately 750 square meters). Payment of the service
            costs
            for each of the 750 square meter segments began at the execution of the
            lease
            agreement. The lease expires in June 2011.
  Transportation
            leases
 
 The
            Company leases 23 automobiles for certain officers and employees pursuant
            to the
            terms of their individual employment agreements under operating lease
            agreements. These agreements are for terms of 3 to 4 years and begin
            to expire
            in 2007. The leases require monthly aggregate payments of approximately
            $24,760.
 
  **NOTE J
            — OTHER RELATED PARTY TRANSACTIONS**
  Willem
            M.
            Smit, the Company’s Chief Executive Officer, has agreed to not receive any cash
            compensation until such time that the Company achieves positive cash
            flows from
            operations. However, the Company does reimburse Mr. Smit for his business
            related expenses and provides him with an automobile. As Mr. Smit provides
            executive management and oversight services to the Company, an amount
            of
            $100,000 per annum (or $25,000 per quarter) is imputed as the value of
            his
            services and recorded as additional contributed capital to the
            Company.
  Furthermore
            Mr. Willem M. Smit has a current account with the Company, the balance of
            which is recorded as a receivable from officers. Given the nature of
            the
            transactions that resulted in this balance management believes this is
            no
            violation of section 4.02 of the Sarbanes Oxley Act. However, it is management’s
            policy that no receivables from officers exist and management will ensure
            this
            amount to be reduced to zero during 2007.
  *-
                11
                -*
   Effective
            January 1, 2006 the Company entered into a service agreement with Altaville
            Investments B.V., a company beneficially owned by its CEO Willem M. Smit.
            The
            Company pays for certain service among others house keeping and cleaning
            services provided by Altaville to the Company an annual aggregate amount
            of $
            49,843 which is paid in twelve monthly installments.
 
 **NOTE K
            - SEGMENT INFORMATION AND REVENUE CONCENTRATIONS**
 
 The
            Company sells it’s products to wholesale distributors in various domestic and
            foreign markets. The following table shows the Company’s gross revenue
            composition:
  Three
                      months ended March 31,2007
                  
                  2006Europe
                      and United KingdomCustomer
                      A
                  
                  2,211,950
                  70%
                  
                  558,181
                  31%Customer
                      B
                  
                  433,398
                  10%
                  
                  262,529
                  14%Customer
                      C
                  
                  525,331
                  12%
                  
                  0
                  0%Others
                  
                  311,911
                  7%
                  
                  616,636
                  34%3,482,596
                  100%
                  
                  1,437,346
                  79%Middle
                      East/AfricaOthers
                  
                  0
                  0%
                  
                  13,982
                  1%0
                  0%
                  
                  13,982
                  1%AsiaOthers
                  
                  0
                  0%
                  
                  0
                  0%0
                  0%
                  
                  0
                  0%United
                      States & CanadaCustomer
                      D
                  
                  0
                  0%
                  
                  353,817
                  19%Customer
                      E
                  
                  0
                  0%
                  
                  0
                  0%others
                  
                  0
                  0%
                  
                  19,054
                  1%0
                  0%
                  
                  372,871
                  20%South
                      AmericaOthers
                  
                  0
                  0%
                  
                  0
                  0%0
                  0%
                  
                  0
                  0%Total
                  
                  3,482,596
                  100%
                  
                  1,824,199
                  100%
  *-
                12
                -*
  **Item
            2. Management’s Discussion and Analyses of Financial Condition and Results of
            Operation**
 
 Playlogic
            is a publisher of interactive entertainment products, such as video game
            software and other digital entertainment products. We publish for most
            major
            interactive entertainment hardware platforms, like Sony’s PlayStation 3,and
            Playstation2, Microsoft’s Xbox 360 and Nintendo’s Wii, PCs and handheld devices
            (such as Nintendo DS, and PSP) and mobile devices.
 Our
            principal sources of revenue are derived from publishing operations.
            Publishing
            revenues are derived from the sale of our digital entertainment products.
            We own
            most of the intellectual properties of our products, which we believe
            positions
            us to maximize profitability.
  As
            a
            publisher, we are responsible for publishing, sales and marketing of
            our
            products. We sell our products to distributors, who sell to retail. Furthermore,
            we sell directly to consumers through online distribution channels, at
            least two
            months after the product was made available at retail.
  Various
            studios throughout the world develop games which we publish. One of these
            studios is our subsidiary, Playlogic Game Factory B.V., located in The
            Netherlands. Other independent studios in various countries develop our
            games
            under development contracts. These development contracts generally provide
            that
            we pay the studio an upfront payment, which is an advance on future royalties,
            earned, and a payment upon achievement of various milestones. In addition,
            we
            license the rights to our existing titles to other studios who then develop
            those titles for other platforms.
  Different
            studios and developers frequently contact us requesting financing and
            publishing
            of their games. We evaluate each of these offers based on several factors,
            including sales potential (primarily based on past performance by the
            studio or
            developer), technology used, track record and human resources of the
            studio.
  We
            select
            which games we develop, based on our analysis of consumer trends and
            behavior
            and our experience with similar or competitive products. Once we select
            a game
            to develop, we then assign a development studio, based upon its qualifications,
            previous experience and prior performance. Once developed, we distribute
            our
            games worldwide through existing distribution channels with experienced
            distributors. We generally aim to release our titles simultaneously across
            a
            range of hardware formats in order to spread development risks and increase
            and
            increase with a minimum augmentation in development time and
            resources.
  We
            believe that greater online functionalities, applications and distribution
            on
            the new platforms will improve revenues and help our industry grow. In
            addition,
            according to DFC Intelligence, new sales potential, revenue opportunities
            from
            wireless gaming, online console gaming, and in-game advertising are expected
            to
            grow from $1 billion in 2005 to $5 billion in 2009.
 
 ***Industry
            Overview***
 
 Over
            the
            past two decades, the video game industry has advanced and become a valuable
            contributor to the entertainment consumption business. The estimated
            break-down
            of gamers in US households is 61% male and 39% female, with 47% of gamers
            between 13 and 24 years old, 30% between 25 and 39 years old; and 23%
            over 40
            years old.
 
 Worldwide,
            the video game market is projected to increase from $26.2 billion in
            2004 to
            $46.5 billion in 2010, growing at an 11.4 percent compound annual rate.
            Asia
            Pacific, currently the largest market at $9.6 billion in 2004, is projected
            to
            maintain its dominance, growing at a 12.3 percent compound annual rate
            through
            2010 to reach $17.4 billion. The United States has the second largest
            market and
            is expected to grow from $8.4 billion in 2005 to $13.0 billion in 2010,
            an 8.9
            percent compounded annual according to *Company
            Annual Reports of* Crandell
& Sidak
 The
            video
            game market reflects consumer spending on console games (including handheld
            games), personal computer (PC) games, online games, and wireless games.
            The
            category excludes spending on the hardware and accessories used to play
            the
            games.
  *-
                13
                -*
  
 The
            launch of the Nintendo Wii and Sony PlayStation 3, the gaming industry
            had a
            record-breaking year in 2006. According to NPD Group's industry tracking
            sales
            figures, overall profits are up 19 percent, and the combined hardware,
            software,
            and accessories sales reached $12.5 billion in the U.S. alone, making
            it the
            highest grossing year in the video game industry to date.
 
 ***Market
            Trends - Worldwide***
  In
            the
            U.S. wireless games will experience the fastest rate of growth, increasing
            from
            $646 million in 2005 to $2.3 billion in 2010, a 28.6 percent compound
            annual
            increase. In EMEA the online game market will be driven by increased
            penetration
            of the broadband subscriber market as well as by the new consoles, which
            will
            emphasize online play. In the Asia Pacific region online games became
            the
            second-largest category in 2005, passing the PC game total, and will
            increase by
            23.0 percent compounded annually, reaching $4.4 billion in 2010 as compared
            with
            $1.6 billion in 2005.As a result of lack of competition from the newer
            online
            and wireless technologies, PC games are relatively more important in
            Latin
            America and are not exhibiting the declines evident elsewhere in the
            world.
            Canada has one of the highest broadband penetration rates in the world,
            spurring
            growth in the online game segment, according to the 2006 report commissioned
            by
            the Entertainment Software Association exam
 Console
            Installed Base
 
 Since
            the
            introduction of PlayStation 2 in 2000, the console has sold over 100
            million
            units worldwide according to games industry. biz. The PlayStation 3 has
            been introduced to the market in the second half of 2006. Microsoft
            introduced its next generation console, the Xbox 360, in November 2005.
 
 Microsoft’s
            Xbox360 has sold more than 10 million units so far. Sony sold almost
            3 million
            units of its Playstation 3.Nintendo’s next generation console, called ‘Wii’ has
            been sold more than 6 million units so far. Wed bush Morgan Securities
            expects
            next generation hardware shipments through the end of 2007 will reach
            46 million
            units in the U.S. and Europe.
 
 Nintendo
            Dual Screens (‘Nintendo DS’) and PlayStation Portable (‘PSP’) were both
            successfully introduced to the market. The sales volume of the Nintendo
            DS
            reached 13 million units by January 1, 2006, and PSP reached the sales
            volume of
            10 million units by the end of October 2005.
 
 ***PC
            Games***
 
 Playlogic
            will continue its focus on PC games because in comparison to next generation
            consoles, PC games are less expensive to develop and address a much wider
            target
            audience. Furthermore Playlogic will focus on handheld games, because
            of the
            large big installed base, Nintendo especially of the DS. Playlogic will
            continue  development of PlayStation2 titles, because of their large installed
            base of
            over 100 million units.
 
 ***Consumer
            Facts***
  Thirty
            percent of most frequent game players are under eighteen years old while
            twenty-six percent of most frequent game players are between 18 and 35
            years old. Forty-four percent of most frequent game players are over
            35 years
            old. Forty percent of most frequent console game players are under eighteen
            years old while thirty-five percent of most frequent game players are
            between 18 and 35 years old. Twenty-five percent of most frequent
            console game players are over 35 years old. Thirty-eight percent of game
            players are women. Women age 18 or older represent a significantly greater
            portion of the game-playing population (30%) than boys age 17 or younger
            (23%).The average adult woman plays games 7.4 hours per week.  The average
            adult man plays 7.6 hours per week. Though males spend more time playing
            than do
            females, the gender/time gap has narrowed significantly.  Whereas in 2003,
            males spent an average of 18 more minutes a day playing games than did
            their
            female counterparts, in 2004 they spent only six minutes more each day
            doing
            so.  Females spend an average of two hours more per week playing games now
            than they did a year ago. Forty-four percent of most frequent game players
            say
            they play games online, up from 31% in 2002.
  *-
                14
                -*
  We
            believe the demographics of game players will widen, and be a major source
            of
            the growth of the industry. The first generation gamers are now in their
            30s and
            are still playing games and new consumers enter the market, including
            children
            at the age of 6 to 8 and an increasing number of women players.
  *Release
            Overview*
  ***Expected
                      release******Game***
                  
                  ***Studio***
                  
                  ***Platform***
                  
                  ***date
                      to retail*****Completed
                      Games**Alpha
                      Black Zero
                  
                  Khaeon
                      (NL)
                  
                  PC
                  
                  ReleasedAirborne
                      Troops
                  
                  Widescreen
                      Games (F)
                  
                  PS2,
                      PC
                  
                  ReleasedCyclone
                      Circus
                  
                  Playlogic
                      Game Factory (NL)
                  
                  PS2
                  
                  ReleasedXyanide
                  
                  Overloaded
                      (NL)
                  
                  Mobile
                      Phones
                  
                  ReleasedWorld
                      Racing 2
                  
                  Synetic
                      (G)
                  
                  PS2,
                      Xbox, PC
                  
                  ReleasedKnights
                      of the Temple 2
                  
                  Cauldron
                      (SK)
                  
                  PS2,
                      Xbox, PC
                  
                  Released
                      1Gene
                      Troopers
                  
                  Cauldron
                      (SK)
                  
                  PS2,
                      Xbox, PC
                  
                  Released
                      1Xyanide
                  
                  Playlogic
                      Game Factory (NL)
                  
                  Xbox
                  
                  ReleasedAge
                      of Pirates: Caribbean Tales
                  
                  Akella
                      (Russia)
                  
                  PC
                  
                  ReleasedInfernal
                  
                  Metropolis
                      (Poland)
                  
                  PC
                  
                  Released2**Under
                      Development**Ancient
                      Wars: Sparta
                  
                  World
                      Forge (Russia)
                  
                  PC
                  
                  Q2
                      2007Xyanide
                      Resurrection
                  
                  Playlogic
                      Game Factory (NL)
                  
                  PSP
                  
                  Q2
                      2007Evil
                      Days Of Luckless John
                  
                  3A
                      Entertainment (Great Britain)
                  
                  PC
                  
                  Q2
                      2007Xyanide
                      Resurrection
                  
                  Playlogic
                      Game Factory (NL)
                  
                  PS2
                  
                  Q3
                      2007Obscure
                      2
                  
                  Hydravision
                      (F)
                  
                  PC
                  
                  Q3
                      2007Obscure
                      2
                  
                  Hydravision
                      (F)
                  
                  PS2
                  
                  Q3
                      2007Obscure
                      2
                  
                  Hydravision
                      (F)
                  
                  Wii
                  
                  Q3
                      2007Officers
                  
                  GFI
                      (Russia)
                  
                  PC
                  
                  Q3
                      2007Age
                      of Pirates:CT the Sequel
                  
                  Akella
                      (Russia)
                  
                  
                  
                  Q3
                      2007Age
                      of Pirates: Captain Blood*
                  
                  Akella
                      (Russia)
                  
                  PC
                  
                  Q4
                      2007Age
                      of Pirates: Captain Blood*
                  
                  Akella
                      (Russia)
                  
                  Xbox360
                  
                  Q4
                      2007Aggression
                      1914
                  
                  Buka
                      (Russia)
                  
                  PC
                  
                  Q4
                      2007Manhunter*
                  
                  L’Art/PLGF
                  
                  PC
                  
                  Q4
                      2007Collapse
                  
                  Buka
                      (Russia)
                  
                  PC
                  
                  Q1
                      2008Red
                      Bull Break dancing
                  
                  TBC
                  
                  TBC
                  
                  TBCInfernal
                      2
                  
                  Metropolis
                      (Poland)
                  
                  TBC
                  
                  TBCInfernal
                  
                  Metropolis
                      (Poland)
                  
                  Wii
                  
                  TBC
 
 
 
 _______________
 
 1
 
                Released in Europe only.
 2
 
                Final decision on Next Generation options to be made.
 *
 
              working title
  *-
                15
                -*
  
 
 Currently
            Playlogic is mainly focusing on PC titles. Some major publishers have
            posted
            higher losses than the previous year recently. These losses are primarily
            caused
            by their high investments in games for the next generation consoles.
            Playlogic
            has intentionally focused on publishing PC titles during the transition
            period,
            since the installed base of the Xbox 360 is too low for Playlogic to
            make
            sufficient return on investments. Playlogic intends to start publishing
            for the
            next generation consoles in the second half of 2007.
  *Material
            agreements*
  We
            entered into the following material agreements in the three months ended
            March
            31, 2007:
 
 *Obscure
            2 agreement.* On March 13, 2007, we signed an agreement with the
            French Developer Hydravision to publish the game Obscure
            2 worldwide excluding Russia and Japan. Obscure 2 is a survival horror
            game.
  **Critical
            Accounting Policies and Estimates**
  Our
            most
            critical accounting policies, which are those that require significant
            judgment,
            include: capitalization and recognition of software development costs
            and
            licenses; share-based compensation and revenue recognition. In-depth
            descriptions of these can be found in our Annual Report on Form 10-KSB
            for the
            fiscal year ended December 31, 2006 (the “2006 Form 10-K”). There have been no
            material changes in our existing accounting policies from the disclosures
            included in our 2006 Form 10-K.
  **Recently
            Issued Accounting Pronouncements**
 In
              September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
              No. 157, *Fair
              Value Measurements* (“SFAS
              157”), which clarifies the definition of fair value, establishes a framework
              for
              measuring fair value in generally accepted accounting principles, and
              expands
              disclosures about fair value measurement.  SFAS 157 does not require any
              new fair value measurements and eliminates inconsistencies in guidance
              found in
              various prior accounting pronouncements.  SFAS 157 will be effective for us
              on November 1, 2008. We are currently assessing whether the adoption
              of SFAS 157
              will have an impact on our financial statements.
  In
              September 2006, the SEC released Staff Accounting Bulletin No. 108, *Considering
              the Effects of Prior Year Misstatements when Quantifying Misstatements
              in
              Current Year Financial Statements* (“SAB
              108”). SAB 108 provides interpretive guidance on the SEC’s views on how the
              effects of the carryover or reversal of prior year misstatements should
              be
              considered in quantifying a current year misstatement. The provisions
              of SAB 108
              will be effective for us on November 1, 2007. We are currently evaluating
              the
              impact of applying SAB 108 but do not believe that its application
              will have a
              material effect on our financial position, cash flows, or results of
              operations.
  In
              June
              2006, the FASB issued Interpretation No. 48, *Accounting
              for Uncertainty in Income Taxes, an interpretation of SFAS No. 109* (“FIN
              48”), to create a single model to address the accounting for uncertainty
              in tax
              positions. FIN 48 clarifies the accounting for income taxes by prescribing
              the
              minimum recognition threshold a tax position is required to meet before
              being
              recognized in the financial statements. FIN 48 also provides guidance
              on
              derecognition, measurement, classification, interest and penalties,
              accounting
              in interim periods, disclosure, and transition. FIN 48 will be effective
              for us
              beginning November 1, 2007. The cumulative-effect of adopting FIN 48
              will be
              recorded to opening retained earnings. Management is currently evaluating
              the
              effect, if any, that the adoption of FIN 48 will have on our consolidated
              financial statements.
 **Results
            of Operations**
  *Three
            Months Ended March 31, 2007 Compared to Three Months Ended March 31,
            2006*
  Net
            sales. Net sales for the three months ended March 31, 2007 were $3,482,596
            as compared to $2,719,610 for the three months ended March 31, 2006. This
            increase in revenue is primarily related to the release of Infernal and
            Sparta
            Ancient Wars through our global distribution agreement with Eidos.
  Gross
            Profit. Gross profit totaled $2,396,195 for the three months ended
            March 31, 2007. For the three months ended March 31, 2006, gross
            profit totaled $957,985. This increase in gross profit is primarily the
            result
            of the increase in net sales.
  Selling,
            Marketing, General and Administrative Expenses. Selling, marketing, general
            and
            administrative expenses totaled $1,213,396, for the three months ended
            March 31, 2007. For the three months ended March 31, 2006, selling,
            general and administrative expenses totaled $1,691,691. This represents
            a
            decrease of $478,295 or 28%. This decrease in selling, general and
            administrative expenses is due to managements’ focus on cost control and debt
            restructuring.
  Research
            and Development. Research and development expenses totaled $22,719 for
            the three
            months ended March 31, 2007. For the three months ended March 31,
            2006, research and development totaled $343,691. This represents a decrease
            of
            $320,972 or 93%. This decrease is due to costs in relation to 3 rd party
            development activities being classified as Cost of Sales.
  Depreciation.
            Depreciation expenses totaled $81,690 for the three months ended March 31,
            2007. For the three months ended March 31, 2006, the depreciation expense
            totaled $78,498.
  *-
                16
                -*
   
  Interest
            Expense. Interest expense totaled $319,446 for the three months ended
            March 31, 2007. For the three months ended March 31, 2006, interest
            expense totaled $76,827. This represents an increase of $242,619, or
            315%. This
            increase in interest expense is primarily due to the increase of interest
            bearing short term loans.
  Net
            Result. Our net profit was $758,944 for the three months ended March 31,
            2007. For the three months ended March 31, 2005, the net loss totaled
            $1,197,505. The increase of the result is primarily the result of new
            titles
            released to market in the first quarter of Fiscal 2007. Furthermore,
            the Company
            continues to focus on controlling operating expenses and debt
            restructuring.
  Other
            comprehensive income. Other comprehensive income represents the change
            of the
            Currency Translation Adjustments balance during the reporting period.
            The
            Currency Translation Adjustments balance that appears in the stockholders’
equity section is cumulative in nature and is a consequence from translating
            all
            assets and liabilities at current rate whereas the stockholders’ equity accounts
            are translated at the appropriate historical rate and revenues and expenses
            being translated at the weighted-average rate for the reporting period.
            The
            Change in currency translation adjustments was $(104,667) for the three
            months
            ended March 31, 2007 and $(107,619) for the three months ended
            March 31, 2006.
  **Liquidity
            and Capital Resources**
  As
            of
            March 31, 2007, our cash balance was $6,601.
  In
            order
            to cover our working capital requirements through the second quarter
            of 2007, we
            will need to obtain additional financing. The Company is currently in
            negotiation with several parties in this respect. The Company is presently
            in
            contact with private investors. The company anticipates closing during
            the
            second quarter a private placement composed of both the issuance of new
            shares
            and debt instruments in the maximum total amount of 10 million USD. If the
            Company does not obtain any necessary financing in the future, it may
            need to
            cease operations.
  We
            expect
            our capital requirements to increase over the next several years as we
            continue
            to develop new products both internally and through our third-party developers,
            increase marketing and administration infrastructure, and embark on in-house
            business capabilities and facilities. Our future liquidity and capital
            funding
            requirements will depend on numerous factors, including, but not limited
            to, the
            cash generation from the released games, the cost of hiring and training
            production personnel who will produce our titles, the cost of hiring
            and
            training additional sales and marketing personnel to promote our products,
            and
            the cost of hiring and training administrative staff to support current
            management.
  Our
            net
            accounts receivable, after providing an allowance for doubtful accounts,
            at
            March 31, 2007 was $1,031,723.
  **Fluctuations
            in Quarterly Operating Results and Seasonality**
   We
            have
            experienced fluctuations in quarterly operating results as a result of
            the
            timing of the introduction of new titles; variations in sales of titles
            developed for particular platforms; market acceptance of our titles;
            development
            and promotional expenses relating to the introduction of new titles;
            sequels or
            enhancements of existing titles; projected and actual changes in platforms;
            the
            timing and success of title introductions by our competitors; product
            returns;
            changes in pricing policies by us and our competitors; the accuracy of
            retailers’ forecasts of consumer demand; the size and timing of acquisitions;
            the timing of orders from major customers; and order cancellations and
            delays in
            product shipment. Quarterly comparisons of operating results are not
            necessarily
            indicative of future operating results.
     *-
                17
                -*
   **Item
            3. Quantitative and Qualitative Disclosures about Market Risk**
   We
            transact business in foreign currencies and are exposed to risks resulting
            from
            fluctuations in foreign currency exchange rates. Accounts relating to
            foreign
            operations are translated into United States dollars using prevailing
            exchange
            rates at the relevant quarter end. Translation adjustments are included
            as a
            separate component of stockholders’ equity. For the three months ended March 31,
            2007, our accumulated foreign currency translation adjustment loss was
            approximately $2.5 million. The foreign exchange transaction loss recognized
            in
            our statement of operations for the three months ended March 31, 2007 was
            approximately $ 104,000.
   **Item 4.
            Controls and Procedures**
  *Evaluation
            of Disclosure Controls and Procedures*
  Based
            on
            an evaluation under the supervision and with the participation of management,
            our principal executive officer and principal financial officer have
            concluded
            that our disclosure controls and procedures as defined in rules 13a-15(e)
            and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange
            Act”) were effective as of March 31, 2007 to ensure that information
            required to be disclosed by us in reports that we file or submit under
            the
            Exchange Act is (i) recorded, processed, summarized and reported within the
            time periods specified in the Securities and Exchange Commission rules
            and forms
            and (ii) accumulated and communicated to our management, including our
            principal executive officer and principal financial officer, as appropriate
            to
            allow timely decisions regarding required disclosure.
  *Changes
            in Internal Control over Financial Reporting*
  There
            were no changes in our internal control over financial reporting during
            the
            first quarter of 2007, which were identified in connection with management’s
            evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under
            the Exchange Act, that have materially affected, or are reasonably likely
            to
            materially affect, our internal control over financial reporting.
   **PART
            II — OTHER INFORMATION**
  **Item
            1. Legal Proceedings**
 
 On
            June
            1, 2005, we entered into a lease for new offices at Amstelveenseweg 639-710
            in
            Amstelveen. The move of our offices to this location has been delayed
            following
            late commissioning of entrance and elevators. The Company now intends
            to start
            using this office now as from June 2007.
  On
            March
            30, 2007, Fortis Vastgoed B.V. (plaintiff) filed a motion to institute
            accelerated proceedings against Playlogic International
            N.V.(defendant)  with the Court of Amsterdam (Kantongerecht) the
            Netherlands. Fortis claims evacuation of the offices at Amstelveenseweg
            639-710
            in Amstelveen with immediate effect and damages in the amount of € 142,249,
            which is included in the accrued liabilities, plus € 91,626 for each quarter
            following April 1, 2007 till the end of the lease term expiring on May
            31, 2011
            in case Fortis is unable to agree on a lease for the offices with a third
            party
            (or approximately $ 187,569 using December 31, 2006 exchange rates) in
            view of
            the alleged unlawful non performance by Playlogic under the lease agreement
            dated June 1, 2005. On April 17 the Court of Amsterdam (Kantongerecht)
            the
            Netherlands issued a permanent injunction that the Company has to evacuate
            the
            offices at Amstelveenseweg 639-710 in Amstelveen within fourteen (14)
            days
            following registered notice of injunction to defenfant unless payment
            of all
            amounts due have been made by defendant to plaintiff within one month
            following
            April 17, 2007.
  *-
                18
                -*
   Except
            as
            referred to above there were no new material legal proceedings or material
            developments to the pending legal proceedings that have been previously
            reported in Part I, Item 3 of our 2007 Form 10-K.  A full
            discussion of our pending legal proceedings is also contained in Part I,
            Item 1, “Notes to Unaudited Condensed Consolidated Financial Statements” of
            this Report.
   **Item
            1A. Risk Factors**
  There
            have been no material changes to the Risk Factors disclosed in Item 1A of
            our Annual Report on Form 10-K for the year ended December 31, 2006.
  **Item
              2 - Changes in Securities.**
 
 No
              response required.
 
 
 **Item
              3 - Defaults Upon Senior Securities.**
 
 No
              response required.
 
 
 **Item
              4 - Submission of Matters to a Vote of Security Holders.**
 
 No
              response required.
  
 **Item
              5 - Other Information.**
 
 No
              response required.
   **Item
            6. Exhibits**
  ****
                  **Exhibits:**
                  ****
                  ****31.1
                  
                  Chief
                      Executive Officer Certification Pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002.31.2
                  
                  Chief
                      Financial Officer Certification Pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002.32.1
                  
                  Chief
                      Executive Officer Certification pursuant to 18 U.S.C.
                      Section 1350, as adopted Pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002.32.2
                  
                  Chief
                      Financial Officer Certification pursuant to 18 U.S.C.
                      Section 1350, as adopted Pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002.
 
   *-
                19
                -*
  SIGNATURES
  Pursuant
              to
              the requirements of Section 13 or 15(d) of the Securities Exchange
              Act of 1934,
              the registrant has duly caused this report to be signed on its behalf
              by the
              undersigned, thereunto duly authorized.
  **Playlogic
                      International, Inc.**Dated:
                    April 25, 2007
                  By:
                  /s/ Willem
                    M.
                    SmitWillem M. Smit
                    Chief Executive Officer
 
  *-
                20
                -*
 
  **Exhibit
                Index**
  ****
                        **Exhibits:**
                        ****
                        ****31.1
                        
                        Chief
                            Executive Officer Certification Pursuant to Section 302 of the
                            Sarbanes-Oxley Act of 2002.31.2
                        
                        Chief
                            Financial Officer Certification Pursuant to Section 302 of the
                            Sarbanes-Oxley Act of 2002.32.1
                        
                        Chief
                            Executive Officer Certification pursuant to 18 U.S.C.
                            Section 1350, as adopted Pursuant to Section 906 of the
                            Sarbanes-Oxley Act of 2002.32.2
                        
                        Chief
                            Financial Officer Certification pursuant to 18 U.S.C.
                            Section 1350, as adopted Pursuant to Section 906 of the
                            Sarbanes-Oxley Act of 2002.
  *-
                    21
                    -*