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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-QSB/A
 Amendment No. 1
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the period ended: September 30, 2006
 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.
  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
 þ o
 o þ
  Class
    
    Outstanding at September 30, 2006Common Stock, par value $.001 per share
    
    24,593,733 shares
 o þ




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EXPLANATORY NOTE
 RESTATEMENT OF FINANCIAL STATEMENTS
  Restatements
   Changes Reflected in this Form 10-QSB/A
  
   2




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3




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##### 



PLAYLOGIC ENTERTAINMENT, INC.
 FORM
10-QSB/A
 CONTENTS
 Page No.PART I  FINANCIAL INFORMATIONItem 1. Financial Statements

5Item 2. Managements Discussion and Analysis

21Item 3. Controls and Procedures

27PART II  OTHER INFORMATIONItem 6. Exhibits

29Signatures

30Exhibit IndexCertificationsEX-31.1:
CERTIFICATIONSEX-31.2:
CERTIFICATIONSEX-32.1:
CERTIFICATIONSEX-32.2:
CERTIFICATIONSEX-31.1: CERTIFICATIONSEX-31.2: CERTIFICATIONSEX-32.1: CERTIFICATIONSEX-32.2: CERTIFICATIONS
  4




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Part I  FINANCIAL INFORMATION
 
 Item 1. Financial statements
 PLAYLOGIC ENTERTAINMENT INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEET
  (Unaudited)
 ASSETSCurrent AssetsCash
    
    $
    2,577Accounts receivableTrade, net of allowance for doubtful accounts
    
    
    1,704,635Value Added Taxes from foreign governments
    
    
    445,234Prepaid expenses and other
    
    
    600,816Total current assets
    
    
    2,753,262Net property and equipment
    
    
    845,891Other assetsCapitalized software development costs
    
    
    4,771,855Restricted cash
    
    
    147,786Total other assets
    
    
    4,919,641Total Assets
    
    $
    8,518,794LIABILITIES AND SHAREHOLDERS DEFICITCurrent LiabilitesBank line of credit
    
    $
    1,065,140Short-term debts
    
    
    379,740Warrant derivatives
    
    
    8,800Current maturities of long-term debt
    
    
    37,974Accounts payable  trade
    
    
    3,341,432Other accrued liabilities
    
    
    5,547,853Deferred revenues
    
    
    1,269,730Loan from shareholders
    
    
    4,015,911Total current liabilities
    
    
    15,666,580Long-term debt, less current maturities
    
    
    237,338Total Liabilities
    
    
    15,903,918Shareholders DeficitPreferred 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. 24,593,733 shares issued and outstanding
    
    
    24,594Additional paid-in capital
    
    
    41,965,811Accumulated currency translation adjustments reserve
    
    
    (1,893,009
    )Accumulated deficit
    
    
    (47,482,520
    )Total shareholders deficit
    
    
    (7,385,124
    )Total Liabilities and Shareholders Deficit
    
    $
    8,518,794
  5




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PLAYLOGIC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
 Three months
    
    
    Three months
    
    
    Nine months
    
    
    Nine monthsended
    
    
    ended
    
    
    ended
    
    
    endedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2006
    
    
    2005 (restated)
    
    
    2006
    
    
    2005 (restated)RevenuesGame software
    
    $
    1,461,194
    
    
    $
    542,579
    
    
    $
    4,593,865
    
    
    $
    1,288,361Cost of salesDirect costs of production
    
    
    (664,582
    )
    
    
    (206,199
    )
    
    
    (2,592,495
    )
    
    
    (351,827
    )Gross profit
    
    
    796,612
    
    
    
    336,380
    
    
    
    2,001,370
    
    
    
    936,534Operating expensesResearch and development
    
    
    975,810
    
    
    
    (3,322
    )
    
    
    2,262,975
    
    
    
    474,323Selling and marketing
    
    
    330,392
    
    
    
    263,623
    
    
    
    1,068,394
    
    
    
    758,742General and administrative
    
    
    1,170,223
    
    
    
    1,034,985
    
    
    
    3,961,870
    
    
    
    2,894,518Depreciation
    
    
    72,127
    
    
    
    (5,033
    )
    
    
    226,490
    
    
    
    196,293Asset impairment charges
    
    
    785,494
    
    
    
    
    
    
    
    1,123,439
    
    
    
    Total operating expenses
    
    
    3,334,046
    
    
    
    1,290,253
    
    
    
    8,643,168
    
    
    
    4,323,876Loss from operations
    
    
    (2,537,434
    )
    
    
    (953,873
    )
    
    
    (6,641,798
    )
    
    
    (3,387,342
    )Other income/(expense)Interest expense
    
    
    (439,715
    )
    
    
    (59,477
    )
    
    
    (611,804
    )
    
    
    (256,297
    )Loan penalty expense
    
    
    (1,242,400
    )
    
    
    
    
    
    
    (1,242,400
    )
    
    
    Realized and unrealized exchange losses
    
    
    (360,471
    )
    
    
    
    
    
    
    (49,305
    )
    
    
    Reorganization expenses
    
    
    
    
    
    
    (255,155
    )
    
    
    
    
    
    
    (912,681
    )Income/(Loss) before provision for income
taxes
    
    
    (4,580,020
    )
    
    
    (1,268,505
    )
    
    
    (8,545,307
    )
    
    
    (4,556,320
    )Provision for Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    612,934Net loss
    
    
    (4,580,020
    )
    
    
    (1,268,505
    )
    
    
    (8,545,307
    )
    
    
    (3,943,386
    )Other comprehensive income/(loss)Foreign currency adjustment
    
    
    364
    
    
    
    2,252,114
    
    
    
    (460,639
    )
    
    
    3,945,130Comprehensive Income/(Loss)
    
    $
    (4,579,656
    )
    
    $
    983,609
    
    
    $
    (9,005,946
    )
    
    $
    1,744Net loss per weighted-average share of
common stock outstanding, computed on Net
Loss- basic and fully diluted
    
    
    (0.19
    )
    
    
    (0.05
    )
    
    
    (0.35
    )
    
    
    (0.17
    )Weighted-average number of shares of
common stock outstanding- basic and fully diluted
    
    
    24,593,733
    
    
    
    23,098,429
    
    
    
    24,445,768
    
    
    
    22,914,595
  6




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PLAYLOGIC ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS   (Unaudited)
 Nine months
    
    Nine monthsended
    
    endedSeptember 30,
    
    September 30,2006
    
    2005 (restated)CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (8,545,307
    )
    
    $
    (3,943,386
    )Adjustments to reconcile net loss to net cash used in operating activitiesRealized and unrealized exchange losses
    
    
    49,305
    
    
    
    Depreciation
    
    
    226,490
    
    
    
    196,293Asset impairment charge
    
    
    1,123,439
    
    
    
    Bad debt expense
    
    
    67,558
    
    
    
    Expense charges for stock options
    
    
    186,147
    
    
    
    Expense related to common stock issuances at less than fair value
    
    
    
    
    
    
    153,000Deferred income taxes
    
    
    
    
    
    
    (584,741
    )Non-cash interest charge related to fair value of warrants issued in conjunction
with debt
    
    
    123,760
    
    
    
    Warrant derivatives
    
    
    8,800Loan penalty expense
    
    
    1,242,400
    
    
    
    Management fees contributed as capital
    
    
    75,000
    
    
    
    Increase (decrease) in cash attributable to changes in operating assets and liabilitiesAccounts receivable  trade and other
    
    
    (994,093
    )
    
    
    (561,803
    )Prepaid expenses and other
    
    
    805,339
    
    
    
    (2,141,098
    )Cash overdraft
    
    
    
    
    
    
    4,534Accounts payable  trade
    
    
    580,874
    
    
    
    91,302Other accrued liabilities
    
    
    642,274
    
    
    
    647,051Deferred revenues
    
    
    998,784
    
    
    
    Net cash used in operating activities
    
    
    (3,409,230
    )
    
    
    (6,138,848
    )CASH FLOWS FROM INVESTING ACTIVITIESRestricted cash
    
    
    
    
    
    
    (147,642
    )Cash paid for software development
    
    
    (1,854,507
    )
    
    
    (1,919,927
    )Cash paid to acquire property and equipment
    
    
    (269,357
    )
    
    
    (206,476
    )Net cash used in investing activities
    
    
    (2,123,864
    )
    
    
    (2,274,045
    )CASH FLOWS FROM FINANCING ACTIVITIESPayments on bank line of credit
    
    
    (562,632
    )
    
    
    (349,198
    )Net activity on short term notes
    
    
    372,733
    
    
    
    (197,273
    )Principal payments on long-term debt
    
    
    (27,955
    )
    
    
    (41,104
    )Proceeds from loans from shareholder
    
    
    3,970,713
    
    
    
    (4,688,041
    )Payments on loans to shareholder
    
    
    (75,091
    )
    
    
    Proceeds from sales of common stock
    
    
    823,759
    
    
    
    13,938,534Collections on stock subscriptions receivable
    
    
    1,229,344
    
    
    
    (29,344
    )Net cash provided by financing activities
    
    
    5,730,871
    
    
    
    8,633,574Effect of foreign exchange on cash
    
    
    (334,960
    )
    
    
    (242,907
    )Decrease in Cash
    
    
    (137,183
    )
    
    
    (22,226
    )Cash at beginning of period
    
    
    139,760
    
    
    
    22,226Cash at end of period
    
    $
    2,577
    
    
    $
    (0
    )Supplemental disclosures of interest and income taxes paidInterest paid during the period
    
    $
    74,534
    
    
    $
    256,297Supplemental disclosures of non-cash investing and financing activitiesCommon stock issued to repay notes payable
    
    $
    737,700
    
    
    $
    Cost of acquiring capital paid with issuance of common stock
    
    $
    13,200
    
    
    $
    
  7




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PLAYLOGIC ENTERTAINMENT INC. AND SUBSIDIARIES
 CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 NOTE A  ORGANIZATION AND DESCRIPTION OF BUSINESS
     NOTE B  BASIS OF PRESENTATION AND RESTATEMENTS
 Basis of presentation
     Restatements
  8




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Nine months endedSix months ended
    
    
    September 30
    
    
    Year endedJune 30, 2005
    
    
    ,2005
    
    
    December 31, 2005Net loss, as previously reported
    
    $
    (1,559,438
    )
    
    $
    (2,212,068
    )
    
    $
    (7,967,316
    )(Increase)/Decrease in Net Loss
by financial statement line item:Operating expensesRecognition of previously unrecorded
reorganization expenses
    
    
    (668,757
    )
    
    
    (912,681
    )
    
    
    (899,697
    )Recognition of previously
unrecorded selling expenses
    
    
    
    
    
    
    (189,685
    )
    
    
    (186,987
    )Recognition of previously unrecorded general
and administrative expenses
    
    
    (468,670
    )
    
    
    (628,952
    )
    
    
    (620,004
    )Total effect of changes onLoss from Operations and Net Loss
    
    
    (1,137,427
    )
    
    
    (1,731,318
    )
    
    
    (1,706,688
    )Net loss, as restated
    
    $
    (2,696,865
    )
    
    $
    (3,943,386
    )
    
    $
    (9,674,004
    )Earnings per share, as previously reported
    
    $
    (0.07
    )
    
    $
    (0.10
    )
    
    $
    (0.30
    )Total effect of changes
    
    $
    (0.05
    )
    
    $
    (0.08
    )
    
    $
    (0.07
    )Earnings per share, as restated
    
    $
    (0.12
    )
    
    $
    (0.18
    )
    
    $
    (0.37
    )
  Six monthsSix months
    
    
    
    
    
    ended June 30,ended June 30,
    
    
    
    
    
    2005,2005
    
    Restatement
    
    RestatedOther assetsAccounts receivable shareholder
    
    $
    694,419
    
    
    $
    (603,300
    )
    
    $
    91,119Total assets
    
    $
    6,046,249
    
    
    $
    (603,300
    )
    
    $
    5,442,949Stockholders deficitAdditional paid-in capital
    
    $
    32,127,823
    
    
    $
    534,127
    
    
    $
    32,661,950Accumulated deficit
    
    $
    (32,066,783
    )
    
    $
    (1,137,427
    )
    
    $
    (33,204,210
    )Total Stockholders deficit
    
    $
    1,255,825
    
    
    $
    (603,300
    )
    
    $
    652,525
 9




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Nine monthsNine months
    
    
    
    
    
    ended Septemberended September
    
    
    
    
    
    30,2005,30,2005
    
    Restatement
    
    RestatedCurrent liabilitiesDue to shareholders
    
    $
    646,237
    
    
    $
    603,200
    
    
    $
    1,249,437Total current liabilities
    
    $
    6,187,146
    
    
    $
    603,200
    
    
    $
    6,790,346Total liabilities
    
    $
    6,449,538
    
    
    $
    603,200
    
    
    $
    7,052,738Stockholders deficitAdditional paid-in capital
    
    $
    32,326,016
    
    
    $
    1,147,120
    
    
    $
    33,473,136Currency translation adjustments
    
    $
    1,172,460
    
    
    $
    (19,002
    )
    
    $
    1,153,458Accumulated deficit
    
    $
    (32,719,411
    )
    
    $
    (1,731,318
    )
    
    $
    (34,450,729
    )Total Stockholders deficit
    
    $
    802,165
    
    
    $
    (603,200
    )
    
    $
    198,965
  Year endedYear ended
    
    
    
    
    
    December 31,December 31,
    
    
    
    
    
    20052005
    
    Restatement
    
    RestatedCurrent liabilitiesDue to shareholders
    
    $
    163,091
    
    
    $
    591,450
    
    
    $
    754,541Total current liabilities
    
    $
    7,699,076
    
    
    $
    591,450
    
    
    $
    8,290,526Total liabilities
    
    $
    7,947,485
    
    
    $
    591,450
    
    
    $
    8,538,935Stockholders deficitAdditional paid-in capital
    
    $
    37,549,545
    
    
    $
    1,147,120
    
    
    $
    38,696,665Currency translation adjustments
    
    $
    (1,499,641
    )
    
    $
    (31,882
    )
    
    $
    (1,531,523
    )Accumulated deficit
    
    $
    (37,230,526
    )
    
    $
    (1,706,688
    )
    
    $
    (38,937,214
    )Total Stockholders deficit
    
    $
    109,804
    
    
    $
    (591,450
    )
    
    $
    (481,646
    )
  Three monthsThree months
    
    
    
    
    
    
    ended Marchended March
    
    
    
    
    
    
    31,2006,31,2006
    
    
    Restatement
    
    
    RestatedCurrent liabilitiesDue to shareholders
    
    $
    48,908
    
    
    $
    605,100
    
    
    $
    654,008Total current liabilities
    
    $
    8,656,314
    
    
    $
    605,100
    
    
    $
    9,261,414Total liabilities
    
    $
    8,910,456
    
    
    $
    605,100
    
    
    $
    9,515,556Stockholders deficitAdditional paid-in capital
    
    $
    38,361,250
    
    
    $
    1,147,121
    
    
    $
    39,508,371Currency translation adjustments
    
    $
    (1,607,260
    )
    
    $
    (45,532
    )
    
    $
    (1,652,792
    )Accumulated deficit
    
    $
    (38,428,032
    )
    
    $
    (1,706,689
    )
    
    $
    (40,134,721
    )Total Stockholders deficit
    
    $
    41,260
    
    
    $
    (605,100
    )
    
    $
    (563,840
    )
 10




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Six monthsSix months
    
    
    
    
    
    
    ended June 30,ended June 30,
    
    
    
    
    
    
    2006,2006
    
    
    Restatement
    
    
    RestatedCurrent liabilitiesDue to shareholders
    
    $
    50,852
    
    
    $
    605,100
    
    
    $
    655,952Total current liabilities
    
    $
    11,934,409
    
    
    $
    605,100
    
    
    $
    12,539,509Total liabilities
    
    $
    12,182,312
    
    
    $
    605,100
    
    
    $
    12,787,412Stockholders deficitAdditional paid-in capital
    
    $
    38,600,034
    
    
    $
    1,147,121
    
    
    $
    39,747,155Currency translation adjustments
    
    $
    (1,960,638
    )
    
    $
    (45,532
    )
    
    $
    (2,006,170
    )Accumulated deficit
    
    $
    (41,195,811
    )
    
    $
    (1,706,689
    )
    
    $
    (42,902,500
    )Total Stockholders deficit
    
    $
    (2,664,046
    )
    
    $
    (605,100
    )
    
    $
    (3,269,146
    )
  Nine months ended
    
    
    
    
    
    
    Nine months endedSeptember 30,
    
    
    
    
    
    
    September 30,2006
    
    
    Restatement
    
    
    2006 RestatedOther assetsCapitalized software development costs
    
    $
    4,598,348
    
    
    $
    173,507
    
    
    $
    4,771,855Total assets
    
    $
    8,345,287
    
    
    $
    173,507
    
    
    $
    8,518,794Current liabilitiesWarrant derivatives
    
    $
    
    
    
    $
    8,800
    
    
    $
    8,800Other accrued liabilities
    
    $
    5,319,094
    
    
    $
    228,759
    
    
    $
    5,547,853Deferred revenues
    
    $
    1,027,973
    
    
    $
    241,757
    
    
    $
    1,269,730Loan from shareholders
    
    $
    4,024,711
    
    
    $
    (8,800
    )
    
    $
    4,015,911Total current liabilities
    
    $
    15,196,064
    
    
    $
    470,516
    
    
    $
    15,666,580Total liabilities
    
    $
    15,433,402
    
    
    $
    470,516
    
    
    $
    15,903,918Stockholders deficitAdditional paid-in capital
    
    $
    41,997,831
    
    
    $
    (32,020
    )
    
    $
    41,965,811Currency translation adjustments
    
    $
    (1,956,046
    )
    
    $
    63,037
    
    
    $
    (1,893,009
    )Accumulated deficit
    
    $
    (47,154,494
    )
    
    $
    (328,026
    )
    
    $
    (47,482,520
    )Total Stockholders deficit
    
    $
    (7,088,115
    )
    
    $
    (297,009
    )
    
    $
    (7,385,124
    )  Nine months ended
    
    
    
    
    
    
    Nine months endedSeptember 30,
    
    
    
    
    
    
    September 30,2006
    
    
    Restatement
    
    
    2006 Restated(Increase)/Decrease in revenues, cost of salesRevenues
    
    $
    4,835,622
   
    
    $
    (241,757
   )
    
    $
    4,593,865Cost of sales
    
    $
    (2,766,002
    )
    
    $
    173,507
    
    
    $
    (2,592,495
   )Gross profit
    
    $
    2,069,620
   
    
    $
    (68,250
   )
    
    $
    2,001,370(Increase)/Decrease in operating expensesGeneral and administrative expenses
    
    $
    3,932,100
   
    
    $
    29,770
   
    
    $
    3,961,870Total operating expenses
    
    $
    8,613,398
    
    
    $
    29,770
    

    $
    8,643,168(Increase)/Decrease in other income/(expenses)Interest expense
    
    $
    (1,629,665
   )
    
    $
    1,017,861
   
    
    $
    (611,804
   )Loan penalty expense
    
    $
    
    
    
    $
    (1,242,400
    )

    $
    (1,242,400
   )Total other income/(expense)
    
    $
    (1,678,970
   )
    
    $
    (224,539
   )
    
    $
    (1,903,509
   )Net loss
    
    $
    (8,222,748
   )
    
    $
    (322,559
   )
    
    $
    (8,545,307
   )Earnings per share
    
    $
    (0.34
   )
    
    $
    (0.01
   )
    
    $
    (0.35
   )
  11




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##### Table of Contents



NOTE C  GOING CONCERN UNCERTAINTY
       NOTE D  SUMMARY OF SELECTED SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS
 12




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##### Table of Contents



Currency translation
   September 30, 2006:
    
    $
    1.26580September 30, 2005:
    
    $
    1.20640
  September 30, 2006:
    
    $
    1.24244September 30, 2005:
    
    $
    1.26457
 Software development costs
   Earnings (loss) per share
    13




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##### Table of Contents



New Accounting Pronouncements
 Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements.
   Reclassifications
  NOTE E  BANK LINE OF CREDIT AND SHORT-TERM DEBT
 Bank line of credit
 
 Short-term debt
 
 NOTE F  OTHER ACCRUED LIABILITIES
  Payroll taxes payable
    
    $
    2,351,187Loan penalty expense
    
    
    1,242,440Accrued interest
    
    
    375,197Royalties to be paid
    
    
    558,886Deferred Rent
    
    
    370,703Accrued wages and related personnel costs
    
    
    342,934Board remuneration to be paid
    
    
    110,758Other
    
    
    195,748$
    5,547,853
 14




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##### Table of Contents



NOTE G  LOANS FROM SHAREHOLDERS
 
 
 
  Loans from a lender based in the Netherlands
 
    
   
 15




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##### Table of Contents



  
   Loan with a lender based in Spain
    
    $
    632,900Loan with a lender based in the Netherlands
    
    
    126,580Loan with a lender based in Andorra
    
    
    50,632Loan with a lender based in the Netherlands
    
    
    3,214,5994,024,711Less: unamortized debt discount
    
    
    (8,800
    )Loans from shareholder, less unamortized debt discount
    
    $
    4,015,911
 NOTE H  LONG-TERM DEBT
  Note payable
    
    $
    275.312Less current maturities
    
    
    37.974Long term debt, less current maturities
    
    $
    237.338
 NOTE I  SHAREHOLDERS EQUITY TRANSACTIONS
 Common stock
  16




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##### Table of Contents



17




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##### Table of Contents



Option grants
      Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2006
    
    
    September 30, 2006Net loss before stock option expense
    
    $
    (4,498,662
    )
    
    $
    (8,359,160
    )Less stock option expense
    
    
    81,358
    
    
    
    186,147Net loss as reported
    
    $
    (4,580,020
    )
    
    $
    (8,545,307
    )
  Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2005 (restated)
    
    
    2005 (restated)Net loss applicable to common shareholders, as reported
    
    $
    (1,268,505
    )
    
    $
    (3,943,386
    )Deduct: total stock-based compensation expense under fair
Value method for awards, net of related tax effect
    
    
    (2,315
    )
    
    
    (2,315
    )Net loss applicable to common shareholders, pro forma
    
    $
    (1,270,820
    )
    
    $
    (3,945,701
    )Loss per share:Basic and diluted loss, as reported
    
    $
    (0.05
    )
    
    $
    (0.17
    )Basic and diluted loss, pro forma
    
    $
    (0.05
    )
    
    $
    (0.17
    )
 18




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##### Table of Contents



NOTE J  OTHER RELATED PARTY TRANSACTIONS
   NOTE K COMMITMENTS AND CONTINGENCIES
 Litigation
      NOTE L SUBSEQUENT EVENTS
  19




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##### Table of Contents



Employment Agreements
  
 20




---



##### Table of Contents



Item 2. Managements Discussion and Analysis
 Forward-Looking Statements
   Our Business
         21




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##### Table of Contents



Release Schedule
 Expected releaseGame
    
    Studio
    
    Platform
    
    date to retailCompleted GamesAlpha 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 (D)
    
    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
    
    ReleasedUnder DevelopmentAncient Wars: Sparta
    
    World Forge (Russia)
    
    PC
    
    Q1 2007Infernal
    
    Metropolis
    
    PC
    
    Q1 2007Xyanide Resurrection
    
    Playlogic Game Factory (NL)
    
    PSP
    
    Q1 2007Age of Pirates: Captain Blood
    
    Akella
    
    PC & Next Gen
    
    Q2/Q3 2007Red Bull Break Dance Game
    
    JGI Games
    
    Various
    
    Q3 2007Infernal
    
    Metropolis
    
    Next Gen
    
    Q3/Q4 2007 2Voodoo Nights
    
    Mindware
    
    PC & Next Gen
    
    Q4 2007 2P.R.I.S.M.  Threat Level: Red
    
    Rebellion (UK)
    
    PC
    
    To be announced
 
 1
    
    Released in Europe only.2
    
    Final decision on Next Generation options to be made.    Managements Overview of Historical and Prospective Business Trends
 Increased Console Installed Base.
  Software Prices.
 22




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##### Table of Contents



Increasing Cost of Titles.
 Uncertainties and Other Risk Factors that May Affect our Future Results and Financial
Condition
     Critical Accounting Policies
 General
  Estimates
  Accounts receivable
  23




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##### Table of Contents



Software Development Costs
      Revenue Recognition
  
    
    Evidence of an arrangement: We recognize revenue when we
have evidence of an agreement with the customer reflecting
the terms and conditions to deliver products.
    
    Delivery: Delivery is considered to occur when the products
are shipped and risk of loss has been transferred to the
customer.
    
    Fixed or determinable fee: If a portion of the arrangement
fee is not fixed or determinable, we recognize that amount
as revenue when the amount becomes fixed or determinable.
    
    Collection is deemed probable: At the time of the
transaction, we conduct a credit review of each customer
involved in a significant transaction to determine the
creditworthiness of the customer.
    
    Collection is deemed probable if we expect the customer to
be able to pay amounts under the arrangement as those
amounts become due. If we determine that collection is not
probable, we recognize revenue when collection becomes
probable (generally upon cash collection).
 Product Revenue
  24




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##### Table of Contents



New Accounting Pronouncements
 Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements.
   Restatements
  Results of Operations
 Three and Nine Ended September 30, 2006 Compared to Three and Nine Months Ended September
30, 2005.
       25




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##### Table of Contents



Liquidity and Capital Resources
 September 30, 26
    Table of Contents  Off Balance Sheet Arrangements
  
 Item 3. Controls and Procedures.
       27
    Table of Contents  Limitations on the Effectiveness of Controls
  28
    Table of Contents  PART II. OTHER INFORMATION
 
 Item 6. Exhibits.
  29
    Table of Contents  SIGNATURES
  Playlogic Entertainment, Inc.(Registrant)Date: December 21, 2006
    
    By:
    
    /s/ Willem M. Smit

Willem M. SmitChief Executive Officer
 30
    Table of Contents  PLAYLOGIC ENTERTAINMENT, INC.
 
 EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    Certifications of the Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certifications of the Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certifications of Chief Executive Officer pursuant to
18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 200232.2
    
    Certifications of Chief Financial Officer pursuant to
18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002