**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: June 30, 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 June 30, 2007Common
                Stock, par value $.001 per share
            
            26,783,232
                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
            12Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            17Irem
                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
            19Signatures
            20Exhibit
                Index
            21Certifications
            Attached










*-
          2
          -*




**PART
      I.  FINANCIAL INFORMATION**





**Item
      1. Financial Statements**






**PLAYLOGIC
                  ENTERTAINMENT INC. AND
                  SUBSIDIARIES****CONDENSED
                  CONSOLIDATED BALANCE SHEETS**(UNAUDITED)June
                  30, 2007**ASSETS****Current
                  Assets**Cash
              
              $
              9,487Accounts
                  receivableTrade,
                  net of allowance for doubtful accounts
              
              
              701,101Receivable
                  from officers
              
              
              73,781Value
                  Added Taxes from foreign governments
              
              
              821,397Software
                  development costs
              
              
              4,157,460Prepaid
                  expenses and other
              
              
              1,150,612**Total
                  current assets**
              
              
              6,913,838**Net
                  property and equipment**
              
              
              801,787**Other
                  assets**Software
                  development costs, net of current portion
              
              
              1,718,512Restricted
                  cash
              
              
              157,664**Total
                  other assets**
              
              
              1,876,176**Total
                  Assets**
              
              $
              9,591,801**LIABILITIES
                  AND SHAREHOLDERS' DEFICIT****Current
                  Liabilites**Bank
                  line of credit
              
              $
              1,623,254Short-term
                  debts
              
              
              540,160Warrant
                  derivatives
              
              
              7,373Current
                  maturities of long-term debt
              
              
              40,512Accounts
                  payable - trade
              
              
              5,073,249Other
                  accrued liabilities
              
              
              7,036,456Deferred
                  revenues
              
              
              410,442Loan
                  from shareholders
              
              
              5,366,443**Total
                  current liabilities**
              
              
              20,097,888**Long-term
                  debt, less current maturities**
              
              
              222,816**Total
                  Liabilities**
              
              
              20,320,704**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.  26,783,232 shares issued and
                  outstanding
              
              
              26,783Additional
                  paid-in capital
              
              
              44,003,221Deferred
                  Compensation-Employee Stock Options
              
              
              248,413Accumulated
                  currency translation adjustments reserve
              
              
              (2,698,586
              )Accumulated
                  deficit
              
              
              (51,950,444
              )(10,370,613
              )Stock
                  subscriptions receivable
              
              
              (358,290
              )**Total
                  shareholders' deficit**
              
              
              (10,728,903
              )**Total
                  Liabilities and Shareholders' Deficit**
              
              $
              9,591,801




See
      accompanying Notes to Unaudited Condensed Consolidated Financial
      Statements





*-
          3
          -*






**PLAYLOGIC
                  ENTERTAINMENT INC. AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS**(UNAUDITED)Three
                  months ended June 30,
              
              
              Six
                  months ended June 30,2007
              
              
              2006
                  (restated)
              
              
              
              2007
              
              
              2006
                  (restated)**Revenues**Net
                  Revenue
              
              $
              1,101,432
              
              
              $
              413,061
              
              
              $
              4,584,028
              
              
              $
              3,132,671**Cost
                  of sales**Direct
                  costs of production
              
              $
              (765,897
              )
              
              $
              (166,288
              )
              
              $
              (1,852,298
              )
              
              $
              (1,927,913
              )**Gross
                  profit**
              
              **$**
              **335,535**
              
              
              **$**
              **246,773**
              
              
              **$**
              **2,731,730**
              
              
              **$**
              **1,204,758****Operating
                  expenses**Research
                  and development
              
              $
              344,036
              
              
              $
              1,281,418
              
              
              $
              366,755
              
              
              $
              1,625,110Selling
                  and marketing
              
              $
              65,831
              
              
              $
              648,333
              
              
              $
              530,623
              
              
              $
              738,002General
                  and administrative
              
              $
              889,827
              
              
              $
              1,189,625
              
              
              $
              1,638,431
              
              
              $
              2,791,646Depreciation
              
              $
              70,934
              
              
              $
              75,866
              
              
              $
              152,624
              
              
              $
              154,364**Total
                  operating expenses**
              
              $
              1,370,628
              
              
              $
              3,195,242
              
              
              $
              2,688,433
              
              
              $
              5,309,122**Profit
                  / (Loss) from operations**
              
              **$**
              **(1,035,093**
              **)**
              
              **$**
              **(2,948,469**
              **)**
              
              **$**
              **43,297**
              
              
              **$**
              **(4,104,364**
              **)****Other
                  income/(expense)**Interest
                  expense
              
              $
              (188,678
              )
              
              $
              (95,260
              )
              
              $
              (508,124
              )
              
              $
              (172,087
              )Realized
                  and unrealized exchange losses
              
              
              -
              
              
              $
              275,949
              
              
              
              -
              
              
              $
              311,166**Income/(Loss)
                  before provision for income taxes**
              
              $
              (1,223,771
              )
              
              $
              (2,767,780
              )
              
              $
              (464,827
              )
              
              $
              (3,965,285
              )Provision
                  for Income Taxes
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -**Net
                  Profit / (loss)**
              
              $
              (1,223,771
              )
              
              $
              (2,767,780
              )
              
              $
              (464,827
              )
              
              $
              (3,965,285
              )Net
                  loss per weighted-average share of common stock outstanding, computed
                  on
                  Net Loss-
                  basic and fully diluted
              
              
              (0.05
              )
              
              
              (0.11
              )
              
              
              (0.02
              )
              
              
              (0.16
              )Weighted-average
                  number of shares of common stock outstanding-
                  basic and fully diluted
              
              
              26,006,149
              
              
              
              24,507,931
              
              
              
              25,670,991
              
              
              
              24,391,068




See
      accompanying Notes to Unaudited Condensed Consolidated Financial
      Statements


*-
          4
          -*


**PLAYLOGIC
                  ENTERTAINMENT, INC. AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS**(UNAUDITED)Six
                  months ended June 30,2007
              
              
              2006
                  (restated)**CASH
                  FLOWS FROM OPERATING ACTIVITIES****Net
                  cash used in operating activities**
              
              **$**
              **(585,185**
              **)**
              
              **$**
              **(2,769,292**
              **)****CASH
                  FLOWS FROM INVESTING ACTIVITIES**Cash
                  paid for software development
              
              
              (1,898,565
              )
              
              
              (1,692,407
              )Cash
                  paid to acquire property and equipment
              
              
              (50,199
              )
              
              
              (208,854
              )**Net
                  cash used in investing activities**
              
              ****
              **(1,948,764**
              **)**
              
              ****
              **(1,901,262**
              **)****CASH
                  FLOWS FROM FINANCING ACTIVITIES**Payments
                  on bank line of credit
              
              
              (209,175
              )
              
              
              98,516Net
                  activity on short term notes
              
              
              (851,116
              )Principal
                  payments on long-term debt
              
              
              (19,948
              )
              
              
              2,147Cash
                  advanced by affiliated entities
              
              
              -
              
              
              
              495,743Cash
                  received from shareholder loans
              
              
              2,607,540
              
              
              
              1,184,487Proceeds
                  from sales of common stock
              
              
              997,402
              
              
              
              1,892,053Collections
                  on stock subscriptions receivable
              
              
              -
              
              
              
              1,013,839Cash
                  paid to acquire capital
              
              
              -
              
              
              
              (4,399
              )**Net
                  cash provided by financing activities**
              
              ****
              **2,524,703**
              
              
              ****
              **4,682,387****Effect
                  of foreign exchange on cash**
              
              ****
              **2,196**
              
              
              ****
              **-****Increase/(Decrease)
                  in Cash**
              
              
              (7,050
              )
              
              
              11,833Cash
                  at beginning of period
              
              
              16,537
              
              
              
              139,760**Cash
                  at end of period**
              
              $
              9,487
              
              
              $
              151,593**Supplemental
                  disclosures of interest and income taxes paid**Interest
                  paid during the period
              
              $
              282,728
              
              
              $
              172,087Income
                  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.





**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.


*-
          6
          -*







Unexercised
      stock options to purchase 350,000 shares of the Company’s common stock as of
      June 30, 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 1,688,525 shares of the Company’s common stock as of
      June 30, 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.








**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 June 30, 2007, the
      Company had an accumulated deficit of approximately $51.3 million, a
      shareholders’ deficit of approximately $10.1 million and a working capital
      deficit of approximately $12.9 million. As the Company realized a net loss
      of $
      651,025 during the six months ended June 30, 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.


*-
          7
          -*








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.








**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:





Six
                months ended June 30,2007
            
            
            2006Net income
                / (loss)
            
            $
            (464,827
            )
            
            $
            (3,965,285
            )Foreign
                currency translation adjustment
            
            
            (258,776
            )
            
            
            (461,003
            )Comprehensive income
                / (loss)
            
            $
            (723,603
            )
            
            $
            (4,4261,288
            )






*-
          8
          -*





**NOTE
      F - SOFTWARE DEVELOPMENT COSTS**




The
      following table provides the details of software development costs for the
      six
      months ended June 30, 2007:




Beginning
                balance
            
            $
            4,463,430Additions
            
            
            1,992,518Amortization
            
            
            (723,225
            )Write
                down
            
            
            0Foreign
                exchange
            
            
            143,249Ending
                balance
            
            
            5,875,972Less:
                current portion
            
            
            4,157,460Non-current
                portion
            
            $
            1,718,512







The
      amount of software development costs resulting from advance payments and
      guarantees to third-party developers was $5,254,948 at June 30, 2007. In
      addition, software development costs at June 30, 2007 included an amounts
      of $1,647,225 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.







**NOTE G
      – SHORT TERM LOANS**





On
      June
      13, 2007, the Company entered into a brigde loan agreement with a lender based
      in the Netherlands, pursuant to which the Company borrowed the principal amount
      of €270,000, or approximately $360,000. This loan bears compound interest at a
      rate of 5% per annum. The principle and the interest will be repaid in full
      by
      September 30, 2007. The collection of the stock subscription receivable will
      be
      used for repayment of this loan.








**NOTE
      H - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**





Accrued
      expenses and other current liabilities consist of the following:


Payroll
                taxes payable
            
            $
            3,284,742
            a)Deferred
                payroll taxes
            
            
            521,400Loan
                penalty expense
            
            
            1,318,600Accrued
                interest
            
            
            685.062Royalties
                to be paid
            
            
            200,391Deferred
                Rent
            
            
            458,572Accrued
                wages and related personnel costs
            
            
            285,840Invoices
                to be received
            
            
            113,434Board
                remuneration to be paid
            
            
            131,017Other
                accrued liabilities
            
            
            37,778**$**
            **7,036,457**





_________________




a)
      Payroll taxes payable can be partly offset against VAT refund claimed as
      included in other receivables.








**NOTE I
      - 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.






*-
          9
          -*







Loans
      from shareholder at June 31, 2007 are comprised of the following:





Loan
                with a lender based in Andorra
            
            $
            53,292Loans
                with a lender based in the Netherlands
            
            
            5,320,524Less:
                unamortized debt discount
            
            
            (7,373
            )Loans
                from shareholder, less unamortized debt discount
            
            $
            5,366,443








**NOTE J
      - COMMITMENTS AND CONTINGENCIES**




Litigation




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 in the course of  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 defendant unless payment of all
      amounts due have been made by defendant to plaintiff within one month following
      April 17, 2007. Meanwhile, the evacuation has been completed but no irreversible
      effects have taken place. Furthermore, Playlogic is still in discussion with
      Fortis with respect to a possible revival of the lease agreement.





In
      June
      2007, Playlogic Entertainment Inc. was sued in class action before the US
      district court in Manhattan, with respect to alleged damage as a result of
      copy
      protection software included in Age of Pirates – Caribbean Tales. We do not
      foresee any liability in this matter, as plaintiffs have clearly sued the wrong
      company and the wrong entity. Playlogic acts only as a publisher of the game
      and
      therefore is not liable for possible faults in production or distribution.
      Moreover, as far as any claim could be brought against Playlogic, it would
      be
      the Dutch subsidiary Playlogic International NV, with its statutory seat in
      Amsterdam, The Netherlands, that would have to be sued. As a consequence, the
      pending case should fail on both grounds and any new action against the Dutch
      subsidiary would have to be brought before the Dutch courts that are even more
      likely than the US courts to reject class actions like this.





Moreover
      the Company is involved in a number of minor legal actions incidental to its
      ordinary course of business.




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$410,000 (€300,000) per year, payable in quarterly
      installments.


*-
          10
          -*








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
      during  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.




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 in the course of  2007.




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 K
      — 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.





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.





*-
          11
          -*


**NOTE L
      - 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:




Six
                months ended June 30,2007
            
            2006Europe
                and United KingdomCustomer
                A
            
            2.491.740
            54%
            
            951.849
            30%Customer
                B
            
            957.507
            21%
            
            391.408
            12%Customer
                C
            
            531.948
            12%
            
            0
            0%Others
            
            602.833
            13%
            
            783.242
            25%4.584.028
            100%
            
            2.126.499
            68%Middle
                East/AfricaOthers
            
            0
            0%
            
            53.538
            2%0
            0%
            
            53.538
            2%AsiaOthers
            
            0
            0%
            
            0
            0%0
            0%
            
            0
            0%United
                States & CanadaCustomer
                D
            
            0
            0%
            
            942.331
            30%Customer
                E
            
            0
            0%
            
            0
            0%Others
            
            0
            0%
            
            10.303
            0%0
            0%
            
            952.634
            30%South
                AmericaOthers
            
            0
            0%
            
            0
            0%0
            0%
            
            0
            0%Total
            
            4.584.028
            100%
            
            3.132.671
            100%





**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.




*-
          12
          -*


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 combined US and European software markets will grow at
      a 13.5% CAGR over the 2006-2008 period. (WedBush Morgan).





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.





With
      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***





The
      fastest-growing segment during the next five years, global video game spending
      will increase to $55.6 billion in 2008, at a 20.1 percent CAGR.
      (PricewaterhouseCoopers). By 2008, online and wireless will be major
      distribution channels, spurred by broadband penetration and new mobile phones
      that will be used as much for entertainment as for communication. The PC game
      market will shrink, and console game spending will grow as next generation
      consoles are introduced.







The
      video
      game market was in a transition year in 2005, awaiting the introduction of
      the
      next-generation consoles. Growth slumped to 3.3 percent, the slowest increase
      during the past five years. The next generation of consoles and recently
      introduced handheld games will spur the console/handheld market in the U.S.,
      EMEA, Asia Pacific, and Canada, while PC games will continue to decline or
      see
      little growth in the U.S. and EMEA. The introduction of new wireless phones
      capable of downloading games will boost the wireless game market in the U.S.,
      EMEA, Asia Pacific, and Canada. Overall, the video game market will expand
      at an
      11.4 percent CAGR to $46 billion in 2010 from $27 billion in 2005.





***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.





*-
          13
          -*


Microsoft’s
      Xbox360 has sold 11.6
      million units so far. As ofApril 1,2007,
      Sony has shipped approximately 5.5
      million Playstation 3 units worldwide.   Nintendo’s next
      generation console, called ‘Wii’ has sold more than 9.27 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**47.27**million units by June 30, 2007, and
      PSP reached the sales volume of 25.39 million units sold as ofMarch 31,2007.
      .





***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 120 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.





Females
        are being significantly attracted to playing certain online multi-user video
        games that offer a more communal experience, and a small hardcore group of
        young
        females are playing aggressive games that are usually thought of as being
        "traditionally male" games. The most loyal fan-base is reported to be for
        large
role-playing games(Nielsen
        Active
        Gamer Study).


According
        to the ESRB almost 41% of video and PC gamers are women.





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.


*-
          14
          -*




*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
            
            Released2Ancient
                Wars: Sparta
            
            World
                Forge (Russia)
            
            PC
            
            ReleasedXyanide
                Resurrection
            
            Playlogic
                Game Factory (NL)
            
            PSP
            
            Released**Under
                Development**Evil
                Days Of Luckless John
            
            3A
                Entertainment (Great Britain)
            
            PC
            
            Q3
                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
            
            Q1
                2008Officers
            
            GFI
                (Russia)
            
            PC
            
            Q1
                2008Age
                of Pirates:CT the Sequel
            
            Akella
                (Russia)
            
            
            
            Q1
                2008Age
                of Pirates: Captain Blood*
            
            Akella
                (Russia)
            
            PC
            
            Q1
                2008Age
                of Pirates: Captain Blood*
            
            Akella
                (Russia)
            
            Xbox360
            
            Q1
                2008Aggression
                1914
            
            Buka
                (Russia)
            
            PC
            
            Q1
                2008Red
                Bull Break dancing
            
            TBC
            
            TBC
            
            Q2
                2008Infernal
                2
            
            Metropolis
                (Poland)
            
            TBC
            
            Q2
                2008Infernal
            
            Metropolis
                (Poland)
            
            Wii
            
            TBC


_______________





1
 
          Released in Europe only.


2
 
          Final decision on Next Generation options to be made.


*
 
        working title





The
      games
      industry is currently in a transition period. The current and Next Gen consoles
      (Xbox360, PlayStation 3, Wii) and PC platform have broadened the market,
      appealing to an even larger mass consumer audience than ever before, providing
      increased publishing opportunities. The investments in next generation platforms
      are however larger than for the previous generation platforms. Playlogic has
      created a healthy balance between games available for the current and the next
      generation platforms. To spread risk and broaden its portfolio, PC games and
      handheld titles are a substantial part of the line-up for the coming
      year.




*Material
      agreements*




We
      entered into the following material agreements in the three months ended June
      30, 2007:





On
      April
      25, 2007, Playlogic Entertainment, Inc. announced that it is expecting to raise
      $10 million in a private placement from accredited investors. The Company
      expects to formalize this private placement within weeks. Approximately $4.5
      million will be equity and $5.5 million will be in loans. Two loans have been
      received; one of $3.4 million was received last year. The second loan of $2.1
      million at an annual interest of 10% was received in the first quarter of this
      year. To date, a total of $8.7 million has been committed and/or
      received.


*-
          15
          -*





On
      June
      28, 2007, Playlogic Entertainment, Inc. issued a press release reporting
      they signed a worldwide 3 year license with a 2 year extension, on all
      platforms, based on the popular franchise***Dragon********Hunters*******with**Futurikon**
      (France).





**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**




*Six
      Months Ended June 30, 2007 Compared to Six Months Ended June 30,
      2006*




Net
      sales. Net sales for the six months ended June 30, 2007 were $4,584,028 as
      compared to $3,132,671 for the six months ended June 30, 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 $2,731,730 for the six months ended June 30,
      2007. For the six months ended June 30, 2006, gross profit totaled
      $1,204,758. This increase in gross profit is primarily the result of the
      increase in net sales. Gross
        Profit as a percentage of sales can vary significantly from period to period
        due
        to the sales mix and the type of  sales deals included.




Selling,
      Marketing, General and Administrative Expenses. Selling, marketing, general
      and
      administrative expenses totaled $2,169,054, for the six months ended
      June 30, 2007. For the six months ended June 30, 2006, selling,
      general and administrative expenses totaled $3,529,648. This represents a
      decrease of $1,360,594 or 39%. 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 $366,755 for the
      six
      months ended June 30, 2007. For the six months ended June 30, 2006,
      research and development totaled $1,625,110. This represents a decrease of
      $1,258,355 or 77%. This decrease is due to costs in relation to 3 rd party development
      activities being classified as Cost of Sales.




Depreciation.
      Depreciation expenses totaled $152,624 for the six months ended June 30, 2007.
      For the six months ended June 30, 2006, the depreciation expense totaled
      $154,364.


*-
          16
          -*




Interest
      Expense. Interest expense totaled $508,125 for the six months ended
      June 30, 2007. For the six months ended June 30, 2006, interest
      expense totaled $172,087. This represents an increase of $336,038, or 195%.
      This
      increase in interest expense is primarily due to the increase of interest
      bearing short term loans.




Net
      Result. Our net loss was $464,827 for the six months ended June 30, 2007.
      For the six months ended June 30, 2006, the net loss totaled $3.965.285.
      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 $(258,776) for the six months
      ended June 30, 2007 and $(461,003) for the six months ended June 30,
      2006.




**Liquidity
      and Capital Resources**




As
      of  June 30, 2007, our cash balance was $9,487.




In
      order
      to cover our working capital requirements through the third 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 both private investors and institutional investors. 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
      June 30, 2007 was $701,101.




**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.






**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 six months ended June 30,
      2007, our accumulated foreign currency translation adjustment loss was
      approximately $2.7 million.




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**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 in the course of  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. Meanwhile, the evacuation has been completed but no irreversible
      effects have taken place. Furthermore, Playlogic is still in discussion with
      Fortis with respect to a possible revival of the lease agreement.





In
      June
      2007, Playlogic Entertainment Inc. was sued in class action before the US
      district court in Manhattan, with respect to alleged damage as a result of
      copy
      protection software included in Age of Pirates – Caribbean Tales. We do not
      foresee any liability in this matter, as plaintiffs have clearly sued the wrong
      company and the wrong entity. Playlogic acts only as a publisher of the game
      and
      therefore is not liable for possible faults in production or distribution.
      Moreover, as far as any claim could be brought against Playlogic, it would
      be
      the Dutch subsidiary Playlogic International NV, with its statutory seat in
      Amsterdam, The Netherlands, that would have to be sued. As a consequence, the
      pending case should fail on both grounds and any new action against the Dutch
      subsidiary would have to be brought before the Dutch courts that are even more
      likely than the US courts to reject class actions like this.







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.




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          18
          -*


**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.








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          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:
                August 20, 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.









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          21
          -*