**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB/A**


**(Amendment
      No. 1)**





x  **Annual
      Report under Section 13 or 15(d) of the Securities Exchange Act of 1934**


For
      the
      fiscal period ended: December 31, 2005





o  **Transition
      Report under Section 13 or 15(d) of the Exchange Act of
      1934**


For
      the
      transition period from ________ to _________





Commission
      File Number: 000-31165








**XL
      GENERATION INTERNATIONAL INC.**


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





**NEVADA**
            **20-0909393**(State
                or other jurisdiction of Identification Number)
            (IRS
                Employer incorporation or
                organization)








**Sumpfstrasse
      32**


**6304
      Zug, Switzerland**


(Address
      of principal executive offices)





**4141
      723 1090**


(Issuer’s
      telephone number, including area code)





Securities
      registered under Section
      12( b )
      of the Exchange Act: None





Securities
      registered under Section
      12(g) of the Exchange Act: Common
      Stock, par value $.001 per share





Check
      whether the Issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





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





State
      issuer's revenues for its most recent fiscal year: $2,892,513





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of a
      specified date within the past 60 days: $47,680,698 as of March 31,
      2006





The
      Issuer had 32,891,444 shares of Common Stock, par value $.001, outstanding
      as of
      March 31, 2006.





Documents
      incorporated by reference: None.





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










Explanatory
      Note: This Amendment No. 1 to the Annual Report of XL Generation International
      Inc. for the fiscal year ended December 31, 2005 is filed to correct technical
      electronic filing deficiencies which caused portions of the Form
      10-KSB to be unreadable on the SEC EDGAR website.  This Amendment does not
      make any changes from disclosures set forth in the original filing.






2








**TABLE
      OF CONTENTS**





PART
                I
            
            4Item
                1.
            Description
                of Business
            4Item
                2.
            Description
                of Property
            6Item
                3.
            Legal
                Proceedings
            7Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            7PART
                II
            
            7Item
                5.
            Market
                for Common Equity, Related Stockholder Matters and Small Business
                Issuer
                Purchases of Equity Securities
            7Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operation
            10Item
                7.
            Financial
                Statements
            12Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            12Item
                8A.
            Controls
                and Procedures
            12Item
                8B.
            Other
                Information
            12PART
                III
            
            13Item
                9.
            Directors,
                Executive Officers, promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange
                Act
            13Item
                10.
            Executive
                Compensation
            15Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            17Item
                12.
            Certain
                Relationships and Related Transactions
            18Item
                13.
            Exhibits
            22Item
                14.
            Principal
                Accountant Fees and Services
            25Subsequent
                Events
            
            26SIGNATURES
            
            38




3




**PART
      I**





**Item
      1.**  **Description
      of Business**





**Introduction**





XL
      Generation International Inc. (referred to herein as “we,” “us,” or the
“Company”) is the holding company of a Swiss entity, XL Generation AG, which is
      the manufacturer of an artificial sport surface called “XL Turf.” XL Turf is
      designed to reduce accidents while reproducing the natural feeling of playing
      on
      grass. The Company aspires to become a leading global force in the artificial
      turf and flooring markets by building on the strength of the XL Generation
      brand
      and developing strategic partnerships with key regional turf and flooring
      providers.





**Business
      Development**





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





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





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





On
      August
      19, 2005, the Company entered into and closed a Share Exchange Agreement (the
      "Share Exchange Agreement") with XL Generation AG. Pursuant to the terms of
      the
      Share Exchange Agreement, the Company acquired all of the issued and outstanding
      shares of common stock of XL Generation AG. In connection with the closing
      of
      the Exchange Offer, the Company appointed Mr. Alain Lemieux, as President and
      CEO, Mr. Daniel Courteau, as Secretary, and Mr. Flemming Munck, as Chief
      Financial Officer. Four new directors joined Mr. Pellerin on the Company’s Board
      of Directors. These new directors were Mr. Lemieux, Mr. Munck, Mr. Courteau,
      and
      Alexander C. Gilmour.





On
      August
      23, 2005, the Company filed a Certificate of Amendment with the States of
      Nevada, changing its name to "XL Generation International Inc." The Company
      changed its stock symbol to XLGI. The Company has also changed its fiscal year
      end from April 30 th to
      December 31 st .





**Our
      Business**





XL
      Generation AG, the Company’s sole operating subsidiary, is based in Zug,
      Switzerland, and designs specific flooring products for sports, recreational
      and
      commercial markets. XL Generation AG has developed new artificial turf systems
      for sports fields. XL Generation AG holds the worldwide commercial and
      manufacturing rights for the "XL technology." The “XL technology” consists of
      six patents. XL Generation AG produces product lines under the "XL Generation"
      trademark, including the "genuine" XLTURF sport systems. XL Generation AG also
      distributes its products worldwide through a licensed distribution network,
      designing and manufacturing private labeled products using the "XL technology".




4





The
      Company has no employees other than those employed by XL Generation AG. XL
      Generation AG currently has 18 employees.





At
      the
      present time, XL Generation AG's core business is the production, distribution
      and sales of artificial turf sport surfaces, using Expanded Polypropylen (EPP)
      as a replacement for the usual infill (sand and/or rubber) used in the
      installation of artificial sport surfaces (and used by a number of our
      competitors). These products can be used for European football (soccer), field
      hockey, baseball, American football, tennis and paintball. At the present time,
      XL Generation AG produces 3 soccer products on a commercial scale, 1 rugby
      product, 1 American football product, 1 tennis product, 1 baseball product,
      1
      paintball product and 1 landscape product. XL Generation AG anticipates
      launching playground products in the near future. The XL Turf market is
      presently based mainly in Europe and North America.





XL
      Generation AG has a range of all weather and indoor sports surface products
      which satisfy the criteria of certain sports organizations including the
      Federation International de Football Association (FIFA) and the Union des
      associations europeennes de football (UEFA), as well as having been endorsed
      by
      a number of professional soccer players. XL Generation AG believes that the
      XL
      range of synthetic sports surfaces offer customers a safer, environmentally
      friendly, weather resistant and more athlete-friendly option than competitors'
      products. In early 2005, UEFA and FIFA approved the use of products with no
      infill (such as rubber and sand), and the ISSS (International sport surfaces
      sciences) supported biomechanics standards as developed by XL Generation AG's
      head of product development.





XL
      Generation AG's products are distributed through either independent distributors
      or direct sales to the end users. XL Generation AG has distribution agreements
      in place in the United States, Sweden and South Korea. Distributors have
      non-exclusive rights in their own country of residence and some distributors
      are
      also entitled to sell XL Generation AG products in other countries. These
      distribution agreements typically have three (3) year terms, with automatic
      renewal in the event that neither party gives notice to the contrary. Our
      distribution agreement for Sweden is for five (5) years.





We
      aspire
      to become a leading global force in the artificial turf and flooring markets
      by
      building both the strength of the XL brand and strategic partnerships with
      key
      regional turf and flooring providers. Our vision is to develop a variety of
      products other than for sports, aimed at all types of play space, including
      for
      landscape and playgrounds.





**Competition
      of XL Generation AG**





Our
      products for soccer, football and rugby compete with companies and brands
      including FieldTurf, Tarkett Group, Polytan, Greenfield, Italgreen, Domo, and
      Desso. Our product for tennis competes with Tiger-Turf. Our playground product
      competes with Softile, Sportplay, Rubber-Cal, and Silisport.





**Suppliers
      of Raw Material**





XL
      Generation AG is party to a Supply Contract with Febra-Kunststoffe GmbH
      (“Febra”) and BASF Aktiengesellschaft (“BASF”). Pursuant to this agreement,
      Febra purchases certain raw materials from BASF, and in turn provides XL
      Generation AG with molded EPP padding sheets. XL Generation AG has agreed to
      purchase at least 100 metric tons of padding sheets per year. The term of this
      agreement will end on December 31, 2006.





Polyform
      Inc., a Canadian corporation, is our main supplier of molded EPP blocks, but
      these beads can be molded into EPP block of different sizes by other molders
      around the world. XL Generation AG has no written agreement with Polyform Inc.,
      and purchases EPP blocks as needed pursuant to purchase orders.





Polyprod
      Inc., a Canadian corporation, provides the assembly of the final product, using
      a combination of turf, glue, and EPP. Pursuant to an Exclusive Manufacturing
      License Agreement entered into as of January 2, 2005, between XL Generation
      AG
      and Polyprod Inc., Polyprod Inc. manufactures XL Generation AG’s products on a
      cost plus basis. This Exclusive Manufacturing License Agreement shall be for
      a
      term of ten (10) years. The Company has determined that Polyprod Inc. is a
      related party due to the control of Polyprod Inc. by XL Generation AG through
      this contractual relationship.





The
      fiber
      used in XL Generation AG's products is produced by Ten Cate Thiolon, one of
      the
      main producers of synthetic fiber in the world. XL Generation AG has no written
      agreement with Ten Cate Thiolon. XL Generation AG uses the services of several
      "tufters" based in Dalton, Georgia, who add this fiber to the final product.




5





The
      Company believes that it has adequate alternative suppliers at the present
      time.
      However, there can be no guarantee that the loss of a supplier would not have
      an
      adverse impact on the operations of the Company.





**Intellectual
      Property**





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





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





XL
      Generation AG has been granted a worldwide exclusive license (the "License
      Agreement") to manufacture, assemble, sell, distribute and promote all the
      products covered by the Intellectual Property. The License Agreement shall
      continue in full force and effect until it automatically expires upon the later
      of (a) the termination or expiration date of the latest patent granted; or
      (b)
      the expiration date of any extension made by Licensee pursuant to the License
      Agreement. There is no minimum quota required the License Agreement. The royalty
      rate has been determined at 5% of gross sales of XL Generation AG. It was agreed
      by XL Generation AG and WKF/5 Ltd that an initial lump sum royalty fee of
      $416,047 would be paid by XL Generation AG to WKF/5 Ltd and an annual renewal
      fee of one Euro will be owed. Pursuant to an agreement entered into by WKF/5
      Ltd, the lump sum royalty fee of $416,047 was paid to a Quebec, Canada trust
      controlled by Alain Lemieux which assumed XL Generation AG’s duty to pay WKF/5
      Ltd.





XL
      Generation AG has granted to Polyprod Inc., an exclusive license only to
      manufacture and assemble certain products at the request of XL Generation AG.





As
      part
      of our confidentiality procedures, we generally enter into nondisclosure
      agreements with our employees, consultants, distributors and partners and limit
      the dissemination and access to our technical documentation and other
      proprietary information.





The
      Company has registered, or applied to register, the trademarks “XLTurf” (in 18
      countries) and “XLGeneration” (in 14 countries).








**Item
      2.**  **Description
      of Property**





The
      Company does not own any real estate. The Company does not plan on investing
      in
      real estate in the near future.





At
      the
      present time, the Company's operations are being conducted out of three
      locations. One of the Company's directors, Albert Beerli, has been renting
      XL
      Generation AG office space at his offices in Zug, Switzerland. Mr. Beerli
      currently charges 2,000 Swiss Francs per month (approximately U.S. $1,538)
      for
      this space.





XL
      Generation AG is currently renting office space from Polyprod Inc. in Montreal.
      Polyprod Inc. is a Canadian corporation. Pursuant to an Exclusive Manufacturing
      License Agreement entered into as of January 2, 2005, between XL Generation
      AG
      and Polyprod Inc., Polyprod Inc. manufactures XL Generation AG’s products. XL
      Generation AG pays Polyprod $2,500 a month in rent. There is no lease.





XL
      Generation AG has entered into a lease for office space in New York City. The
      term of this lease shall run until September 14, 2008, and has a base rent
      of
      $8,046.00 per month.





The
      Company believes that the three current office facilities will be sufficient
      for
      the foreseeable future.




6








**Item
      3.** ****  **Legal
      Proceedings**





The
      Issuer is not, and has not been during the period covered by this report, a
      party to any legal proceedings.








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





In
      the
      fourth quarter of the fiscal year ended December 31, 2005, no matters were
      submitted to the Company's security holders for a vote.








**PART
      II**





**Item
          5.** **** **Market
          for Common Equity, Related Stockholder Matters and Small Business Issuer
          Purchases of Equity Securities**







**MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





***(a)
      Market Information.***





The
      Company's common equity is traded on the over-the-counter bulletin board under
      the symbol XLGI.





The
      following table sets forth for the periods indicated the high and low close
      prices for the Common Shares in U.S. Dollars. These quotations reflect only
      inter dealer prices, without retail mark up, mark down or commissions and may
      not represent actual transactions.





Quarter
                Ended
            
            High
            
            LowDecember
                31, 2005
            
            $
            4.18
            
            $
            2.07September
                30, 2005
            
            $
            2.55
            
            $
            2.04





The
      trading data available for the quarter ended June 30, 2005 indicates that shares
      of the Company's stock were traded for $.10 a share and $.12 a share on June
      12,
      2005. To the Company’s knowledge, there was no active trading market in the
      Company’s stock and no earlier trading data is reasonably
      available.





***(b)
      Holders.***





As
      of
      March 31, 2006, the Company had approximately 10 shareholders of
      record.





***(c)
      Dividends.***





The
      Company has never declared or paid cash dividends. There are currently no
      restrictions which limit the ability of the Company to pay dividends in the
      future.





***(d)
      Securities authorized for issuance under equity compensation
      plans.***





The
      Company has never paid equity compensation to any officer, director, or
      employee. During the fiscal year ended December 31, 2005, the Company did not
      have an authorized equity compensation plan. On March 30, 2006, the Company
      adopted its 2006 Equity Incentive Plan.





***(e)
      Stock Recapitalization.***





In
      connection with the August 19, 2005 Share Exchange Agreement, the Company
      commenced actions to provide for the revision of the Company's capital
      structure. Pursuant to such actions, DT Crystal Holdings Ltd., the controlling
      shareholder of the Company prior to entry into the Share Exchange Agreement,
      as
      inducement to the shareholders of XL Generation AG to enter into the Share
      Exchange Agreement, agreed to cancel four million shares of the Company’s Common
      Stock and accept in consideration thereof an option exercisable for 500,000
      shares of the Company. In addition, the Company made a stock dividend to
      shareholders of record of the Company of 9 shares of Common Stock for each
      share
      of Common Stock currently held, provided, however, each of DT Crystal Holdings
      Ltd. and the Alain Lemieux Trust, a trust formed in the Jersey Islands, and
      Mr.
      Albert Beerli waived their respective rights to such stock dividend (the record
      date for such dividend was set as August 29, 2005). After giving effect to
      this
      cancellation of shares, payment of a stock dividend and stock dividend waivers,
      the Alain Lemieux Trust, a trust formed in the Jersey Islands, and Mr. Albert
      Beerli jointly controlled approximately 60% of the Company's issued and
      outstanding stock and DT Crystal Holdings Ltd. held the right to acquire
      approximately 2% of the Company's issued and outstanding stock upon exercise
      of
      an option at an exercise price of $1.00 per share.




7








**RECENT
      SALES OF UNREGISTERED SECURITIES**





**August
      19, 2005 issuance of Common Stock**





On
      August
      19, 2005, the Company entered into and closed the Share Exchange Agreement
      with
      XL Generation AG. Pursuant to the terms of the Share Exchange Agreement, the
      Company acquired all of the issued and outstanding shares of common stock of
      XL
      Generation AG in exchange for the issuance to XL Generation AG's shareholders
      of
      15,000,000 shares of restricted common stock (the "Common Stock") of the Company
      (the "Exchange Offer"). Upon the issuance of the Common Stock, shares of the
      Company’s common stock had most recently traded on the over-the-counter bulletin
      board for $.12 per share. No cash compensation was received for the Common
      Stock; the consideration received in respect of such issuance consisted of
      all
      of the issued and outstanding common stock of XL Generation AG.





The
      Exchange Offer was made to the shareholders of the common stock of XL Generation
      AG pursuant to the exemption from registration provided by Regulation S
      promulgated under the U.S. Securities Act of 1933, as amended. All of XL
      Generation AG shareholders who have exchanged their shares are non-U.S. persons.
      These shares of common stock of XL Generation AG were acquired from the Alain
      Lemieux Trust, a trust formed in the Jersey Islands, and from Mr. Albert Beerli,
      a resident of Switzerland.





**August
      19, 2005 issuance of an Option (Option exercised December 19,
      2005)**





On
      August
      19, 2005, in connection with the Share Exchange Agreement, DT Crystal Holdings
      Ltd., the controlling shareholder of the Company prior to the closing of the
      Share Exchange Agreement, as inducement to the shareholders of XL Generation
      AG
      to enter into the Share Exchange Agreement, agreed to cancel four million shares
      of the Company’s Common Stock and accept in consideration thereof an option
      exercisable for 500,000 shares of the Company at an exercise price of $1 per
      share (the “Option”). The Company entered into the aforementioned transaction in
      reliance upon the exemption from securities registration afforded by Section
      4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
      regulations promulgated thereunder, including Regulation S promulgated
      thereunder. DT Crystal Holdings Ltd. exercised the Option on December 19, 2005,
      paying $500,000 to the Company for 500,000 shares of the Company’s common
      stock.





**November
      8, 2005 issuance of Common Stock and Series A Warrants (Warrants exercised
      February 17, 2006 and March 30, 2006)**





On
      November 8, 2005, the Company entered into a Common Stock Purchase Agreement
      with each of Capex Investments Limited, Aton Select Fund Limited and Asset
      Protection Fund Limited (each a "Purchaser," and collectively, the
      "Purchasers"). Pursuant to the Common Stock Purchase Agreements, each Purchaser
      agreed to pay one million dollars ($1,000,000) to purchase from the Company
      (i)
      1,111,111 shares of the Company's common stock; and (ii) Series A Warrants
      entitling each Purchaser to purchase up to an additional 1,111,111 shares of
      the
      Company's common stock at an exercise price initially set at $1.25 per share.
      The Series A Warrants were to expire on November 8, 2007, and contained
      customary adjustment provisions in the event of changes in the capitalization
      of
      the Company. In connection with these Common Stock Purchase Agreements, the
      Company entered into a Registration Rights Agreement with each of the
      Purchasers, pursuant to which the Company agreed to register a total of
      2,222,222 shares for each Purchaser, representing the total number of shares
      of
      common stock sold to such Purchaser and those shares of common stock to be
      issued to the Purchaser upon the exercise of the Series A Warrant.





The
      offering price for the aggregate of 3,333,333 shares of the Company's common
      stock and Series A Warrants to purchase up to an additional 3,333,333 shares
      of
      the Company' common stock was a total of $3,000,000 (consisting of $1,000,000
      from each of the Purchasers). No underwriting commissions were paid or discounts
      granted to underwriters.




8





The
      Company entered into the aforementioned transaction in reliance upon the
      exemption from securities registration afforded by Section 4(2) of the U.S.
      Securities Act of 1933, as amended, and the rules and regulations promulgated
      thereunder, including Rule 506 of Regulation D and Regulation S promulgated
      thereunder. Each of the Purchasers have represented in their respective Common
      Stock Purchase Agreements that they are an "accredited investor" (as defined
      in
      Rule 501 of Regulation D) and that they are not a "U.S. Person" (as such term
      is
      defined in Regulation S).





On
      December 5, 2005, the Company and two of the three Purchasers agreed to an
      amendment of the terms of the aforementioned transaction. Aton Select Fund
      Limited agreed to the cancellation of the Series A Warrant it was granted
      pursuant to the Common Stock Purchase Agreement executed on November 8, 2005,
      and relinquished its right to purchase up to an additional 1,111,111 shares
      of
      the Company's common stock at $1.25 per share. Asset Protection Fund Limited
      agreed to reduce the number of shares of the Company's common stock it is
      entitled to purchase pursuant to the Series A Warrants from 1,111,111 to 330,000
      shares.





On
      February 17, 2006, Asset Protection Fund Limited exercised its Series A
      Warrants, paying the Company $412,500 to acquire 330,000 shares of the Company’s
      common stock.





On
      March
      30, 2006, Capex Investments Limited exercised its Series A Warrants, paying
      the
      Company $1,388,888.75 to acquire 1,111,111 shares of the Company’s common
      stock.





**December
      6, 2005 issuance of Common Stock and Series B Warrants (Warrants exercised
      January 31, 2006)**





On
      December 6, 2005, the Company entered into a Common Stock Purchase Agreement
      with Professional Trading Services SA. Pursuant to the Common Stock Purchase
      Agreements, Professional Trading Services SA agreed to pay four hundred thousand
      dollars ($400,000) to purchase from the Company (i) 400,000 shares of the
      Company's common stock; and (ii) Series B Warrants entitling Professional
      Trading Services SA to purchase up to an additional 800,000 shares of the
      Company's common stock at an exercise price initially set at $1.25 per share.
      The Series B Warrants were to expire on June 6, 2006, and contained customary
      adjustment provisions in the event of changes in the capitalization of the
      Company. In connection with this Common Stock Purchase Agreement, the Company
      entered into a Registration Rights Agreement with Professional Trading Services
      SA, pursuant to which the Company agreed to register 1,200,000 shares for
      Professional Trading Services SA, representing the total number of shares of
      common stock sold to such Professional Trading Services SA and those shares
      of
      common stock to be issued to Professional Trading Services SA upon the exercise
      of the Series B Warrant.





The
      offering price for the 400,000 shares of the Company's common stock and Series
      B
      Warrants to purchase up to an additional 800,000 shares of the Company' common
      stock was a total of $400,000. No underwriting commissions were paid or
      discounts granted to underwriters.





The
      Company entered into the aforementioned transaction in accordance with and
      in
      reliance upon the exemption from securities registration afforded by Section
      4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
      regulations promulgated thereunder, including Regulation D and Regulation S
      promulgated thereunder. Professional Trading Services SA represented in the
      Common Stock Purchase Agreements that it is an "accredited investor" (as defined
      in Rule 501 of Regulation D) and that it is not a "U.S. Person" (as such term
      is
      defined in Regulation S).





On
      January 31, 2006, Professional Trading Services SA exercised its Series A
      Warrants, paying the Company $1,000,000 to acquire 800,000 shares of the
      Company’s common stock.





**December
      27, 2005 issuance of Common Stock and Series B Warrants (Warrants exercised
      February 2, 2006)**





On
      December 27, 2005, the Company entered into an Amended and Restated Common
      Stock
      Purchase Agreement with Bank Sal. Oppenheim jr. & Cie. (Switzerland)
      Limited. Pursuant to this Common Stock Purchase Agreement, Bank Sal. Oppenheim
      jr. & Cie. (Switzerland) Limited agreed to pay three hundred thousand
      dollars ($300,000) to purchase from the Company (i) 300,000 shares of the
      Company's common stock; and (ii) Series B Warrants entitling Bank Sal. Oppenheim
      jr. & Cie. (Switzerland) Limited to purchase up to an additional 600,000
      shares of the Company's common stock at an exercise price initially set at
      $1.25
      per share. The Series B Warrants were to expire on June 6, 2006, and contained
      customary adjustment provisions in the event of changes in the capitalization
      of
      the Company.




9





The
      offering price for the 300,000 shares of the Company's common stock and Series
      B
      Warrants to purchase up to an additional 600,000 shares of the Company's common
      stock was a total of $300,000. No underwriting commissions were paid or
      discounts granted to underwriters.





The
      Company entered into the aforementioned transaction in accordance with and
      in
      reliance upon the exemption from securities registration afforded by Section
      4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
      regulations promulgated thereunder, including Regulation S. Bank Sal. Oppenheim
      jr. & Cie. (Switzerland) Limited represented in the Common Stock Purchase
      Agreements that it is not a "U.S. Person" (as such term is defined in Regulation
      S).




On
      February 2, 2006, Bank Sal. Oppenheim jr. & Cie. (Switzerland) Limited
      exercised its Series A Warrants, paying the Company $750,000 to acquire 600,000
      shares of the Company’s common stock.








**PURCHASES
      OF EQUITY SECURITIES BY THE COMPANY AND AFFILIATED
      PURCHASERS**





None.








**Item
      6.** ****  **Management’s
      Discussion and Analysis or Plan of Operation**





**The
      Company's Operations**





The
      following discussion of the financial condition and results of operations of
      XL
      Generation International Inc. (referred to herein as the "Company") should
      be
      read in conjunction with the financial statements and the related notes thereto
      included elsewhere in this Annual Report on Form 10-KSB for the period ended
      December 31, 2005 (this “Report”). This Report contains certain forward-looking
      statements and the Company's future operating results could differ materially
      from those discussed herein. Certain statements contained in this Report,
      including, without limitation, statements containing the words "believes",
      "anticipates," "expects" and the like, constitute "forward-looking statements"
      within the meaning of Section 27A of the Securities Act of 1933, as amended,
      and
      Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”). However, as the Company issues “penny stock,” as such term is defined in
      Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to
      rely on these safe harbor provisions. Such forward-looking statements involve
      known and unknown risks, uncertainties and other factors which may cause the
      actual results, performance or achievements of the Company to be materially
      different from any future results, performance or achievements expressed or
      implied by such forward-looking statements. Given these uncertainties, readers
      are cautioned not to place undue reliance on such forward-looking statements.
      The Company disclaims any obligation to update any such factors or to announce
      publicly the results of any revisions of the forward-looking statements
      contained or incorporated by reference herein to reflect future events or
      developments.





The
      Company was incorporated in the State of Nevada on March 18, 2004 as Cygni
      Systems Corporation. On August 19, 2005, the Company entered into the Share
      Exchange Agreement with XL Generation AG ("XLG"). Pursuant to the terms of
      the
      Share Exchange Agreement, the Company acquired all of the issued and outstanding
      shares of common stock of XLG in exchange for the issuance at closing of an
      aggregate of 15 Million shares of restricted Common Stock of the Company.





In
      connection with the Share Exchange Agreement, the Company commenced actions
      to
      provide for the revision of the Company's capital structure. Pursuant to such
      actions, DT Crystal Holdings Ltd., the controlling shareholder of the Company
      prior to entry into the Share Exchange Agreement, as inducement to the
      shareholders of XLG to enter into the Share Exchange Agreement, agreed to cancel
      four million shares of the Company’s Common Stock and accept in consideration
      thereof an option exercisable for 500,000 shares of the Company. In addition,
      the Company made a stock dividend to shareholders of record of the Company
      of 9
      shares of Common Stock for each share of Common Stock held, provided, however,
      each of DT Crystal Holdings Ltd. and the Alain Lemieux Trust, a trust formed
      in
      the Jersey Islands, and Mr. Albert Beerli waived their respective rights to
      such
      stock dividend (the record date for such dividend was set as August 29, 2005).





XLG,
      based in Zug, Switzerland, designs specific flooring products for sports,
      recreational and commercial markets. XLG has developed new artificial turf
      systems for sports fields. XLG holds the worldwide commercial and manufacturing
      rights for the "XL technology." The “XL technology” consists of six patents. XLG
      produces its owned product lines under the "XL Generation" trademark, including
      the "genuine" XLTURF sport systems. XLG also distributes its products worldwide
      through an extensive licensed distribution network, designing and manufacturing
      private labeled products using the "XL technology."




10





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





The
      Company now serves as the holding company for XLG. The Company has adopted
      XLG's
      fiscal year end and the following Management's Discussion and Analysis of
      Financial Condition and Results of Operations describes the financial condition
      and results of operations for XLG. The Company has no other operations other
      than XLG and has no employees other those employed by XLG.





XLG
      was
      incorporated in 1991, and was inactive until March of 2004, when WKF/5 Ltd
      granted it the exclusive worldwide right to manufacture, promote and sell XL
      Turf products. XL Turf is an artificial pitch used primarily in soccer stadiums
      and indoor recreational facilities.





**Results
      of Operations**





**Twelve
      Months Ended December 31, 2005 and 2004**





The
      Company posted a net loss of $5,356,281 for the full year ending December 31,
      2005, compared to a net loss of $1,570,607 for the year ending December 31,
      2004. Total sales for the twelve months ended December 31, 2005 were $2,892,513,
      compared to total sales for the year ended December 31, 2004 of $1,349,319.
      Total costs and expenses for the year ended December 31, 2005 were $8,248,794,
      compared to total costs and expenses for the nine months ended December 31,
      2004
      of $2,919,926. The increases in costs and losses were caused in part by costs
      associated with the reorganization of the Company. New staff positions were
      created while the responsibilities of other staff positions were altered to
      improve the Company’s ability to respond to regulatory and market requirements.
      Additional management positions were created in the sales & marketing and
      operations areas to work towards the Company’s goals of producing quality
      products, increasing sales, and lowering prices.




**Liquidity
      and Capital Resources**





At
      December 31, 2005, the Company had $262,446 in cash, as opposed to $434,194
      in
      cash at December 31, 2004.





At
      December 31, 2005, the Company had total assets of $1,568,533 compared to total
      assets of $901,364 at December 31, 2004. The increase in is mainly due to
      advances to XL Generation Canada Inc, an operational agent based in Montreal,
      providing financial and accounting services for the bureau Liason in Montreal,
      Canada.





At
      December 31, 2005, the Company had total current liabilities of $4,328,978
      compared to total current liabilities of $2,917,828 at December 31, 2004. The
      increase in liabilities is mainly due to (i) increased operational costs; and
      (ii) warranty costs, in particular for fields in Vancouver, Canada and Wohlen,
      Switzerland, of $500,000.





Since
      its
      formation, XL Generation AG has received advances from Mr. Albert Beerli, a
      stockholder and (since March of 2006) director, to cover the general overhead
      and running costs of XL Generation AG's offices in Zug, Switzerland. The total
      balance of amounts advanced as of December 31, 2005 was equal to $676,873
      (compared to $489,220 at December 31, 2004).





Between
      April of 2005 and September of 2005, Capex Investments Limited (which is
      affiliated with Capex Investments (Canada) Limited) loaned the Company
      $1,500,000. On September 12, 2005, Capex Investments Limited entered into a
      Loan
      Agreement with the Company, pursuant to which Capex Investments Limited loaned
      the Company an additional $500,000.





In
      late
      December of 2005, the Company received an advance of $300,000 on the exercise
      of
      warrants.





In
      the
      fourth quarter of 2005, the Company focused considerable resources on further
      developing its outdoor turf products. In addition the Company also experienced
      increased costs of sales and marketing, employee travel and operational expenses
      in connection with entering into new sales agreements. Since that time, the
      Company has raised funds through private placements to ensure its
      liquidity.





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




11








**Off-Balance
      Sheet Arrangements**





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








**Item
      7.**  **Financial
      Statements**





The
      information called for by this Item 7 is included under "Financial Statements"
      contained on page 28 of this Annual Report on Form 10-KSB.








**Item
      8.**  **Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure**





On
      November 2, 2005, the Company dismissed its independent auditor, Malone &
Bailey, PC.





During
      the Company's two most recent fiscal years, the opinion of Malone & Bailey,
      PC on the Company's financial statements did not contain an adverse opinion
      or
      disclaimer of opinion and was not qualified or modified as to uncertainty,
      audit
      scope or accounting principles, except as follows. Each of the independent
      auditor's reports of Malone & Bailey, PC dated June 13, 2005 (for the year
      ended April 30, 2005) and May 20, 2004 (for the year ended April 30, 2004)
      contain "going concern" qualifications. These qualifications stated that the
      Company's assets did not provide adequate working capital for the Company,
      and
      thus raised substantial doubt about the Company's ability to continue as a
      going
      concern.





There
      were no disagreements with Malone & Bailey, PC, whether or not resolved, on
      any matter of accounting principles or practices, financial statement
      disclosure, or auditing scope or procedure, which, if not resolved to Malone
      & Bailey, PC's satisfaction, would have caused it to make reference to the
      subject matter of the disagreement(s) in connection with this report.





Effective
      as of November 2, 2005, the Company has retained Paritz & Company, P.A., as
      its independent auditor.








**Item
      8A.**  **Controls
      and Procedures**





As
      of the
      end of the period covered by this report, an evaluation was carried out under
      the supervision and with the participation of the Company’s management,
      including the Company’s Chief Executive Officer and Chief Financial Officer, of
      the effectiveness of the Company’s disclosure controls and procedures, as
      defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act
      of
      1934 (the “Exchange Act”). Based on their evaluation, the Company’s Chief
      Executive Officer and Chief Financial Officer have concluded that the Company’s
      disclosure controls and procedures are effective to ensure that information
      required to be disclosed by the Company in reports that it files or submits
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in Securities and Exchange Commission rules and
      forms.





There
      have been no changes in the Company’s internal controls over financial reporting
      during the Company’s most recently completed fiscal quarter that have materially
      affected, or are reasonably likely to materially affect, our internal controls
      over financial reporting.








**Item
      8B.**  **Other
      Information**





None.




12








**PART
      III**





**Item
      9.**  **Directors,
      Executive Officers, promoters and Control Persons; Compliance with Section
      16(a)
      of the Exchange Act**





The
      following table presents information with respect to our officers, directors
      and
      significant employees as of the date of this Report:





Name
            Age
            PositionAlexander
                C. Gilmour CVO
            74
            Chairman
                of the BoardAlain
                Lemieux
            47
            CEO,
                President and DirectorFlemming
                Munck
            42
            CFO
                and DirectorDaniel
                Courteau
            49
            Secretary
                and DirectorClaude
                Pellerin
            35
            DirectorAlbert
                Beerli
            64
            DirectorEric
                Giguere
            45
            Chief
                Operating Officer of XL Generation AG
                (Subsidiary(1))





Each
      director serves until our next annual meeting of the stockholders or unless
      they
      resign earlier. The Board of Directors elects officers and their terms of office
      are at the discretion of the Board of Directors.





Each
      of
      our directors serves until his or her successor is elected and qualified. Each
      of our officers is elected by the board of directors to a term of one (1) year
      and serves until his or her successor is duly elected and qualified, or until
      he
      or she is removed from office. The board of directors has a compensation
      committee consisting of Mr. Gilmour and Mr. Courteau. The board of directors
      has
      no nominating committee. At the present time, members of the board of directors
      are not compensated for their services to the board. The board has an audit
      committee consisting of Mr. Courteau. The Company does not currently have an
      audit committee financial expert serving on its audit committee, but intends
      to
      appoint one in the future.





(1)  Mr.
      Giguere is Chief Operating Officer of XL Generation AG, and thus may be deemed
      to be a significant employee of the Company. He is not an executive officer
      or
      director of the Company.






**BIOGRAPHICAL
      INFORMATION REGARDING OFFICERS AND DIRECTORS**





Alexander
      Clement Gilmour, Director and Chairman of the Board. Mr. Gilmour has served
      as a
      director of the Company since August, 2005. Mr. Gilmour was a corporate finance
      stockbroker with Joseph Sebag and Carr Sebag from 1957 until 1982. Since then
      he
      has served on the Board of several companies in the United Kingdom and Hungary,
      including Konzum, from 1996 until 2000, and Pharma Ltd. from 1997 until 1999.
      His other activities have included serving as a Governor of the London School
      of
      Economics for over 25 years (he is now an Honorary Fellow), Chairman of the
      National Playing Fields Association for 13 years, President of the South London
      Chamber of Commerce, Director of the Tate Gallery Foundation, as well as being
      associated with the Community Foundation movement and other charities in the
      United Kingdom. For his volunteer work he was made a Commander of the Royal
      Victorian Order (CVO). He has recently been made a Trustee of the British Garden
      in Hanover Square, New York. Since 2003, he has served as a consultant to the
      eye2 group of companies in the United Kingdom.





Alain
      Lemieux, Director, President and CEO. Mr. Lemieux has served as an officer
      and
      director of the Company since August, 2005. Mr. Lemieux is also President and
      CEO of XL Generation AG, positions he has held since February of 2004. Mr.
      Lemieux is the inventor of the XL Turf technology used by XL Generation AG.
      Mr.
      Lemieux continues to oversee XL Generation AG's research and development. In
      1998, Mr. Lemieux founded NuGreen surfaces, a company dedicated to researching
      and developing the use of molded Expanded Polypropylene for different surfaces
      which would be used for sports, residential purposes and roofing. From January
      of 2001 until April of 2002, Mr. Lemieux was the Chief Executive Officer of
      XL
      Turf Inc. From April, 2002 until March, 2004, Mr. Lemieux was the President
      and
      a director of Symbior Technologies Inc. of Montreal, Canada, which became
      bankrupt in October of 2004. In 2005, Mr. Lemieux was appointed Ambassador
      Extraordinary Plenipotentiary & Vice-Secretary General of CISRI-ISP, an
      Observer Mission to the United Nations.




13





Flemming
      Munck, Director, CFO and Treasurer. Mr. Munck has served as an officer and
      director of the Company since August, 2005. He served as a consultant to XL
      Generation AG from April, 2005 to August, 2005. Mr. Munck is an accountant
      who
      has held an extensive range of financial management postings for prominent
      global corporations. His most recent positions have included serving as Interim
      Finance Director for Business Development for Stagecoach Group from May, 2004
      to
      February, 2005, Finance Director for the Sheffield Supertram system from May,
      2004 to February, 2005, Corporate Controller for Bookham Technology Inc. from
      December, 2003 to May, 2004, Divisional Finance Director for Serco Group Plc.
      from January, 2003 to December, 2003, Project Manager for Catalyst Housing
      Group
      from April 2002 to January 2003, and Finance Director for Gate Gourmet from
      March 2001 to March 2002.





Daniel
      Courteau, Director and Secretary. Mr. Courteau has served as a director of
      the
      Company since August, 2005, and is a member of the Company's audit committee.
      Mr. Courteau is a tax attorney. Since 2000, Mr. Courteau has also served as
      a
      Director and Secretary of Junex, an oil and gas corporation, formed in Quebec
      and listed on the Toronto Stock Exchange. From April of 2002 until November,
      2003, Mr. Courteau was a director of Symbior Technologies Inc., of Montreal,
      Canada, which became bankrupt in October of 2004.





Claude
      Pellerin, Director. Mr. Pellerin is a corporate attorney and a partner in the
      law firm of Hovington Pellerin S.e.n.c. Since 2002, Mr. Pellerin has served
      as
      Director, President, Treasurer and Secretary of Capex Investments (Canada)
      Limited, an investments and financing corporation based in Montreal, Quebec.
      From 2001-2002, Mr. Pellerin served as a Secretary for Equilar Capital
      Corporation, an Ontario Corporation listed on the Toronto Stock exchange.
      Between 2002 and 2004, Mr. Pellerin served as Vice President for legal affairs
      for Manaris Corporation, a Nevada corporation listed on the OTCBB. Since 2003,
      Mr. Pellerin has served as Secretary of Gourmet Flash Inc., a Quebec
      corporation, and from 2004-2005 served as a Director to Canadian Security Agency
      (2004) Inc. Mr. Pellerin served as the Company's President, Secretary and
      Treasurer from June 17, 2005 until August 19, 2005, at which time he resigned
      as
      an officer but remained a director of the Company.





Albert
      Beerli, Director. Mr. Beerli has served as a director of the Company since
      March, 2006. Mr. Beerli is a scientist, having received his Ph.D in chemical
      engineering in 1969. Since 1988 Mr. Beerli has been the Chief Executive Officer
      of Zenwex AG in Zug, Switzerland. Zenwex AG provides consulting services on
      scientific and technical matters.





Eric
      Giguere, Chief Operating Officer, XL Generation AG. Mr. Giguere has served
      as
      Chief Operating Officer of XL Generation AG, the Company’s subsidiary, since
      November of 2005. From March, 2004 to November, 2005, Mr. Giguere was Vice
      President for Navigation Systems and Surgical Instruments for Orthosoft in
      Montreal, Quebec. There he was responsible for the overall performance of the
      Orthosoft Navigation Systems and Surgical Instruments business unit. From March,
      2003 until November, 2003, Mr. Giguere was a consultant specializing in lean
      manufacturing and operations strategic planning for Northwestel in Whitehorse,
      Yukon. From May, 2000 until March, 2003, Mr. Giguere was General Manager for
      Supply Chain and Strategic Planning for Bell Canada in Montreal, Quebec.








**SECTION
      16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**





Section
      16(a) of the Exchange Act requires our executive officers and directors, and
      persons who beneficially own more than 10% of our equity securities, to file
      reports of ownership and changes in ownership with the Securities and Exchange
      Commission. Officers, directors and greater than 10% shareholders are required
      by SEC regulation to furnish the Company with copies of all Section 16(a) forms
      they file. Based on our review of the copies of such forms we received, we
      believe that during the fiscal year ended December 31, 2005 all such filing
      requirements applicable to our officers and directors were complied with, except
      that reports were filed late by the following persons:





Name
                and principal position
            Number
                of Late Reports
            Transactions
                Not Timely Reported
            Known
                Failures to File a Required FormAndrea
                Meakin (1)
            2
            2
            0Kim
                Freisen (2)
            2
            2
            0Alain
                Lemieux Trust (3)
            1
            1
            0





(1)
            Andrea
                Meakin was an officer, director and 10% shareholder of the Company
                until
                June 17, 2005, at which time Ms. Meakin sold all of her shares of
                the
                Company’s common stock to DT Crystal Holdings Ltd. and resigned as an
                officer and director of the Company. Ms. Meakin did not file a Form
                3 in
                connection with her status as an officer, director and 10% shareholder
                of
                the Company until March 1, 2006, which Form 3 was subsequently amended
                on
                March 20, 2006. Ms. Meakin did not file a Form 4 in connection with
                the
                June 17, 2005 sale of her shares of the Company’s common stock and her
                resignation as an officer and director of the Company until March
                1, 2006,
                which Form 4 was subsequently amended on March 20,
                2006.




14




(2)
            Kim
                Freisen was an officer, director and 10% shareholder of the Company
                until
                June 17, 2005, at which time Kim Freisen sold all of his shares of
                the
                Company’s common stock to DT Crystal Holdings Ltd. and resigned as an
                officer and director of the Company. Mr. Freisen did not file a Form
                3 in
                connection with his status as an officer, director and 10% shareholder
                of
                the Company until March 1, 2006, which Form 3 was subsequently amended
                on
                March 20, 2006. Mr. Freisen did not file a Form 4 in connection with
                the
                June 17, 2005 sale of his shares of the Company’s common stock and his
                resignation as an officer and director of the Company until March
                1, 2006,
                which Form 4 was subsequently amended on March 20,
                2006.





(3)
            The
                Alain Lemieux Trust became a 10% shareholder of the Company on August
                19,
                2005. The Alain Lemieux Trust did not file a Form 3 until September
                6,
                2005.








**CODE
      OF ETHICS**





The
      Company has not adopted a code of ethics at the present time, due to the
      complexities inherent in developing such a code for an entity, which, like
      ours,
      has offices in Switzerland, Canada and the United States, employs individuals
      who are citizens of several different countries, and conducts business
      throughout the world. The Company is currently reviewing and assessing codes
      for
      entities similarly situated to the Company, and intends to adopt such a code
      of
      ethics in the second quarter of 2006.








**Item
      10.**  **Executive
      Compensation**





The
      following table sets forth compensation for each of the past three fiscal years
      with respect to each person who served as Chief Executive Officer of the Company
      and each of the four most highly-compensated executive officers of the Company
      who earned a total annual salary and bonuses that exceeded $100,000 in any
      of
      the three preceding fiscal years.





**Summary
      Compensation Table**





**Annual
                Compensation (1)****(a)**
            **(b)**
            **(c)**
            **(d)**
            **(e)**
            **(f)****Salary**
            **Bonus**
            **Other
                Annual Compensation**
            **All
                Other Compensation****Name
                and Principal**
              **Position**
            **Year
                (2)**
            **($)**
            **($)**
            **($)**
            **($)**Alain
                Lemieux (3)(4)
              Director,
                President and CEO
            2005
            60,000(5)
            0
            0
            0Claude
                Pellerin (6)
              Director,
                President and CEO
            2005
            0
            0
            0
            0Kim
                Friesen (7)
              Director,
                President and CEO
            2005
              2004
            0
              0
            0
              0
            0
              0
            0
              0





(1)
            No
                officers earned over $100,000 in any of the three preceding years.
                No long
                term compensation was paid to any officers.


(2)
            Prior
                to the acquisition of XL Generation AG, the Company's fiscal year
                ended
                April 30th. XL Generation AG, the Company's wholly-owned subsidiary,
                has a
                fiscal year ending December 31st. In connection with the acquisition
                of XL
                Generation AG, the Company has adopted the fiscal year end of XL
                Generation AG.


(3)
            The
                Company has not paid compensation to the officers and directors listed
                herein during the periods covered by this
                table.


(4)
            Mr.
                Lemieux has been President and CEO of the Company since August 19,
                2005.
                He has been President and CEO of XL Generation AG since February,
                2004.


(5)
            Mr.
                Lemieux was paid $65,000 in the year ended December 31, 2005 by XL
                Generation AG.


(6)
            Mr.
                Pellerin was the Company's President, CEO and a Director from June
                17,
                2005 until August 19, 2005. He remains a Director of the
                Company.


(7)
            Ms.
                Friesen was the Company's President, CEO and a Director from the
                date of
                its inception, on March 18, 2004, until her resignation on June 17,
                2005.





15




No
      Option/SAR Grants have been made by the Company to officers, directors or
      employees in the last fiscal year.





**Compensation
      of Directors**





In
      the
      year ended December 31, 2005, the Company's directors were not compensated
      for
      their services to the Company as directors.





**Employment
      Contracts**





During
      the fiscal year ended December 31, 2005, the Company did not have employment
      agreements with Kim Freisen or Claude Pellerin.





On
      March
      30, 2006, XL Generation AG, the sole operating subsidiary of XL Generation
      International Inc. (the “Company”), entered into employment agreements with
      three individuals who are officers and directors of the Company. Set forth
      below
      is a description of the terms and conditions of these agreements.





On
      March
      30, 2006, XL Generation AG entered into an employment agreement with Alain
      Lemieux. Mr. Lemieux is the President and Chief Executive Officer of the
      Company. Mr. Lemieux is also a director of the Company, and 13,000,000 of the
      Company’s outstanding shares (which are held by the Alain Lemieux Trust) may be
      deemed to be beneficially owned by Mr. Lemieux (this represents 39.5% of the
      Company’s currently outstanding common stock). Although this agreement was
      executed and delivered as of March 30, 2006, the parties have agreed that its
      terms will be effective retroactive to October 1, 2005. This agreement has
      no
      set termination date; however, this agreement may be terminated at any time
      by
      either of the parties, subject to certain termination provisions documented
      below. Pursuant to this agreement, Mr. Lemieux is entitled to receive $240,000
      USD annually, indexed according to the rate of the Consumer Price Index. Mr.
      Lemieux is also entitled to a housing allocation of 3,500 Swiss Francs
      (approximately $2,695.35) per month and an automobile allowance of 7,500 Swiss
      Francs (approximately $5,775.75) per year. In the event that certain sales
      targets are met, Mr. Lemieux will be entitled to an increase in salary based
      on
      a formula set forth in the agreement. Mr. Lemieux may terminate this agreement
      at any time, with a minimum of six (6) months notice. Mr. Lemieux may be
      terminated without cause, with three (3) months notice. In the event of Mr.
      Lemieux’s termination without cause, he shall be entitled under this agreement
      to severance pay for three years equal to his average salary over the past
      five
      years. Furthermore, in the event of his dismissal without cause, Mr. Lemieux
      shall also be entitled, for every year until his 60 th birthday, to receive options permitting him to purchase 100,000 shares of the
      Company’s common stock, for a purchase price equal to 25% of the average closing
      price of the Company’s common stock as calculated by reference to the thirty
      trading days prior to the date of anniversary of his dismissal.





On
      March
      30, 2006, XL Generation AG entered into an employment agreement with Daniel
      Courteau, the Company’s Vice President, legal affairs. Mr. Courteau is also a
      director of the Company. This agreement will commence as of January 1, 2007.
      This agreement has no set termination date; however, this agreement may be
      terminated at any time by either of the parties, subject to certain termination
      provisions documented below. Pursuant to this agreement, Mr. Courteau is
      entitled to receive $175,000 USD annually. Mr. Courteau is also entitled to
      a
      housing allocation of 3,500 Swiss Francs (approximately $2,695.35) per month
      and
      an automobile allowance of 7,500 Swiss Francs (approximately $5,775.75) per
      year. In the event that certain sales targets are met, Mr. Courteau will be
      entitled to an increase in salary based on a formula set forth in the agreement.
      Mr. Courteau may terminate this agreement at any time, with a minimum of six
      (6)
      months notice. Mr. Courteau may be terminated without cause, with three (3)
      months notice. In the event of Mr. Courteau’s termination without cause, he
      shall be entitled under this agreement to severance pay for three years equal
      to
      his average salary over the past five years. Furthermore, in the event of his
      dismissal without cause, Mr. Courteau shall also be entitled, for every year
      until his 60 th birthday, to receive options permitting him to purchase 75,000 shares of the
      Company’s common stock, for a purchase price equal to 25% of the average closing
      price of the Company’s common stock as calculated by reference to the thirty
      trading days prior to the date of anniversary of his dismissal.





On
      March
      30, 2006, XL Generation AG entered into an employment agreement with Flemming
      Munck, the Company’s Chief Financial Officer. Mr. Munck is also a director of
      the Company. Although this agreement was executed and delivered as of March
      30,
      2006, the parties have agreed that its terms will be effective retroactive
      to
      October 1, 2005. This agreement has no set termination date; however, this
      agreement may be terminated at any time by either of the parties, subject to
      certain termination provisions documented below. Pursuant to this agreement,
      Mr.
      Munck is entitled to receive $150,000 USD annually. Mr. Munck is also entitled
      to a housing allocation of 3,500 Swiss Francs (approximately $2,695.35) per
      month and an automobile allowance of 7,500 Swiss Francs (approximately
      $5,775.75) per year. In the event that certain sales targets are met, Mr. Munck
      will be entitled to an increase in salary based on a formula set forth in the
      agreement. Mr. Munck may terminate this agreement at any time, with a minimum
      of
      six (6) months notice. Mr. Munck may be terminated without cause, with three
      (3)
      months notice. In the event of Mr. Munck’s termination without cause, he shall
      be entitled under this agreement to severance pay for three years equal to
      his
      average salary over the past five years. Furthermore, in the event of his
      dismissal without cause, Mr. Munck shall also be entitled, for every year until
      his 60 th birthday, to receive options permitting him to purchase 50,000 shares of the
      Company’s common stock, for a purchase price equal to 25% of the average closing
      price of the Company’s common stock as calculated by reference to the thirty
      trading days prior to the date of anniversary of his dismissal.




16





XL
      Generation AG entered into an employment agreement dated October 20, 2005 with
      Eric Giguere, the Chief Operating Officer of XL Generation AG. This agreement
      terminates in April of 2007. Pursuant to this agreement, Mr. Giguere is entitled
      to receive 150,000 CAD annually (approximately $128,310) until April 30, 2006,
      and then 165,000 CAD annually (approximately $141,141) until April 30, 2007.
      Mr.
      Giguere is also entitled to the use of an automobile at XL Generation AG’s
      expense, has received a signing bonus of 7,500 CAD (approximately $6,416),
      and
      will be entitled to receive an additional bonus of the same amount in November
      of 2006 if he is still an employee of XL Generation AG at that time. In the
      event that certain sales targets are met, Mr. Giguere will be entitled to a
      bonus of 50,000 CAD (approximately $42,770). Upon the establishment of a stock
      option plan by the Company, Mr. Giguere will be entitled to receive an option
      grant for 50,000 shares during each year of his employment.








**Item
      11.**  **Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters**





**SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**





The
      following table sets forth certain information regarding the beneficial
      ownership of Common Stock as of the date of this Report by (i) each director
      of
      the Company, (ii) each of the Company's officers named in the Summary
      Compensation Table, (iii) each person who is known by the Company to be the
      beneficial owner of more than five percent of the Company's outstanding Common
      Stock, and (iv) all directors and executive officers as a group. Except as
      otherwise indicated below, each person named has sole voting and investment
      power with respect to the shares indicated. The percentage of ownership set
      forth below reflects each holder's ownership interest in the 32,891,444 shares
      of the Company's common stock outstanding as of March 30, 2006.





Amount
      and Nature of Beneficial Ownership


Name
                  and Address of Beneficial Owner (1)
              Shares
              Options/
                  Warrants
              Total
              PercentAlain
                  Lemieux (2)(3)
              13,000,000
              0
              13,000,000
              39.5%Flemming
                  Munck (4)
              0
              0
              0
              0%Alexander
                  C. Gilmour (5)
              0
              0
              0
              0%Daniel
                  Courteau (2)(6)
              500,000
              0
              500,000
              1.5%Claude
                  Pellerin (7)
              0
              0
              0
              0%Albert
                  Beerli (8)
              1,500,000
              0
              1,500,000
              4.6%Capex
                  Investments Limited (9)
              2,272,222
              0
              2,272,222
              6.9%All
                  executive officers and directors as a group (6 persons)
              15,000,000
              0
              15,000,000
              45.6%





(1)
      The
      mailing address for each of the listed individuals is c/o XL Generation
      International Inc., Sumpfstrasse 32, 6304 Zug, Switzerland.





(2)
      13,500,000 shares of the Company's common stock are held by the Alain Lemieux
      Trust. Of these shares, 13,000,000 may be deemed to be beneficially owned by
      Mr.
      Lemieux and 500,000 may be deemed to be beneficially owned by Mr. Courteau.
      Mr.
      Peter Nicole, of Professional Trust Company Limited, has voting and investment
      control over the securities held by the Alain Lemieux Trust and is therefore
      deemed to be the beneficial owner of such securities.





(3)
      CEO,
      President, Director and owner of 5% or more of the Company's common
      stock.




17





(4)
      CFO
      and Director.





(5)
      Chairman of the Board of Directors.





(6)
      Secretary and Director.





(7)
      Director.





(8)
      Director.





(9)
      Owner
      of 5% or more of the Company's common stock. Mr. Robert Clarke, President and
      Sole Director of Capex Investments Limited, has voting and investment control
      over the securities held by Capex Investments Limited, and is therefore deemed
      to be the beneficial owner of such securities.








**SECURITIES
      AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**





The
      Company, from inception through December 31, 2005, has not paid equity
      compensation to any officer, director, or employee. During the fiscal year
      ended
      December 31, 2005, the Company did not have an authorized equity compensation
      plan. On March 30, 2006, the Company adopted its 2006 Equity Incentive
      Plan.








**Item
      12.**  **Certain
      Relationships and Related Transactions**





**Advances
      from Albert Beerli**





Since
      the
      date of its formation, XL Generation AG has received advances from Mr. Albert
      Beerli to cover general overhead and running costs of XL Generation AG's offices
      in Zug, Switzerland. Mr.
      Beerli provides XL Generation AG office space at his personal offices, for
      which
      he currently charges 2,000 Swiss Francs per month (approximately US $1,538).
      The
      total amount charged by Mr. Beerli to XL Generation AG for rent in 2005 was
      24,000 Swiss Francs (approximately US $18,454). The
      total balance of amounts advanced as of December 31, 2005 was equal to US
      $676,873.





**Pascal
      Beerli**





Mr.
      Pascal Beerli, the son of Albert Beerli, serves on the Board of Directors of
      the
      Company’s subsidiary, XL Generation AG. For his services to XL Generation AG,
      Pascal Beerli received 40,000 Swiss Francs (approximately US $30,757) from
      XL
      Generation AG in 2005.





**Transactions
      with Polyprod Inc.**





Pursuant
      to an Exclusive Manufacturing License Agreement entered into as of January
      2,
      2005, between XL Generation AG and Polyprod Inc., a Canadian corporation,
      Polyprod Inc. manufactures XL Generation AG’s products on a cost plus basis.
      This Exclusive Manufacturing License Agreement shall be for a term of ten (10)
      years. In addition, XL Generation AG is currently renting office space from
      Polyprod Inc. in Montreal. XL Generation AG pays Polyprod $2,500 a month in
      rent. There is no lease. The Company has determined that Polyprod Inc. is a
      related party due to the control of Polyprod Inc. by XL Generation AG through
      the contractual relationship.




18





**Share
      Exchange Agreement**





On
      June
      29, 2005, the Company entered into a Letter of Intent (the "Letter of Intent")
      regarding a share exchange with XL Generation AG. Pursuant to the terms of
      the
      Letter of Intent, the Company agreed to acquire all of the issued and
      outstanding shares of common stock of XL Generation AG in exchange for the
      issuance of an aggregate of 15 Million shares of restricted common stock (the
      "Common Stock") of the Company (the "Exchange Offer"). On August 19, 2005,
      the
      Company entered into and closed a Share Exchange Agreement (the "Share Exchange
      Agreement"), as contemplated by the Letter of Intent. Pursuant to the terms
      of
      the Share Exchange Agreement, the Company acquired all of the issued and
      outstanding shares of common stock of XL Generation AG. The two stockholders
      of
      XL Generation AG who entered into the Share Exchange Agreement are (i) the
      Alain
      Lemieux Trust and (ii) Albert Beerli. The Alain Lemieux Trust, a trust formed
      in
      the Jersey Islands, holds 13,500,000 shares of the Company's common stock.
      Of
      the shares owned by the Alain Lemieux Trust, 13,000,000 may be deemed to be
      beneficially owned by Mr. Alain Lemieux (who is currently the Company's CEO,
      President and Director) and 500,000 may be deemed to be beneficially owned
      by
      Mr. Daniel Courteau (who is currently the Company's Secretary and Director).
      Mr.
      Albert Beerli (who is currently a Director of the Company) owns 1,500,000 shares
      of the Company's common stock. In connection with the Share Exchange Agreement,
      the Company commenced actions to provide for the revision of the Company's
      capital structure. Pursuant to such actions, DT Crystal Holdings Ltd., the
      controlling shareholder of the Company prior to entry into the Share Exchange
      Agreement, as inducement to the shareholders of XL Generation AG to enter into
      the Share Exchange Agreement, agreed to cancel four million shares of the
      Company’s Common Stock and accept in consideration thereof an option exercisable
      for 500,000 shares of the Company at an exercise price of $1.00 per share.
      In
      addition, the Company made a stock dividend to shareholders of record of the
      Company of 9 shares of Common Stock for each share of Common Stock currently
      held, provided, however, each of DT Crystal Holdings Ltd. and the Alain Lemieux
      Trust, a trust formed in the Jersey Islands, and Mr. Albert Beerli waived their
      respective rights to such stock dividend (the record date for such dividend
      was
      set as August 29, 2005). After giving effect to such cancellation, stock
      dividend and such dividend waivers, the Alain Lemieux Trust and Mr. Albert
      Beerli jointly controlled approximately 60% of the Company's issued and
      outstanding stock and DT Crystal Holdings Ltd. held the right to acquire
      approximately 2% of the Company's issued and outstanding stock.




**Transactions
      with Capex Investments (Canada) Limited**





In
      connection with the completion of the aforementioned Exchange Offer, the Company
      incurred certain legal expenses, and the Company borrowed a total amount of
      $10,000 from Capex Investments (Canada) Limited, a Canadian Federal Corporation.
      Claude Pellerin, who was at that time the Company's sole officer and director
      (and currently remains a director of the Company) is also the President and
      a
      Director of Capex Investments (Canada) Limited.





Between
      April of 2005 and September of 2005, Capex Investments Limited (which is
      affiliated with Capex Investments (Canada) Limited) loaned XL Generation AG
      $1,500,000. On September 12, 2005, Capex Investments Limited entered into a
      Loan
      Agreement with XL Generation AG, pursuant to which Capex Investments Limited
      loaned XL Generation AG an additional $500,000.





On
      November 8, 2005, the Company entered into a Common Stock Purchase Agreement
      with Capex Investments Limited and certain other purchasers. Pursuant to the
      Common Stock Purchase Agreement, Capex Investments Limited agreed to pay one
      million dollars ($1,000,000) to purchase from the Company (i) 1,111,111 shares
      of the Company's common stock; and (ii) Series A Warrants entitling Capex
      Investments Limited to purchase up to an additional 1,111,111 shares of the
      Company's common stock at an exercise price initially set at $1.25 per share.
      The Series A Warrants shall expire on November 8, 2007, and contain customary
      adjustment provisions in the event of changes in the capitalization of the
      Company. In connection with this Common Stock Purchase Agreement, the Company
      entered into a Registration Rights Agreement with Capex Investments Limited,
      pursuant to which the Company agreed to register 2,222,222 shares for Capex
      Investments Limited, representing the total number of shares of common stock
      sold to Capex Investments Limited and those shares of common stock to be issued
      to Capex Investments Limited upon the exercise of the Series A Warrant.




19





**License
      Agreement with WKF/5 Ltd**





XL
      Generation AG has been granted a worldwide exclusive license (the "License
      Agreement") to manufacture, assemble, sell, distribute and promote all the
      products (the “Products”) covered by all the intellectual property and
      industrial property rights (collectively, the "Intellectual Property") which
      XL
      Generation AG is currently utilizing. The Intellectual Property is owned by
      WKF/5 Ltd, a Maltese corporation controlled (and majority-owned) by the Alain
      Lemieux Trust, a Jersey trust. The Alain Lemieux Trust is the owner of
      13,500,000 shares of the Company's common stock, constituting approximately
      41%
      of all issued and outstanding common stock as of the date of this report. Of
      such shares owned by the Alain Lemieux Trust, 13,000,000 shares may be deemed
      to
      be beneficially owned by Mr. Alain Lemieux, who is currently the Company’s CEO,
      President and a Director. The balance of 500,000 shares owned by the Alain
      Lemieux Trust may be deemed to be beneficially owned by Mr. Daniel Courteau,
      who
      serves as the Company's Secretary and Director. The License Agreement shall
      continue in full force and effect until it automatically expires upon the later
      of (a) the termination or expiration date of the latest patent granted within
      the scope of the Intellectual Property; or (b) the expiration date of any
      extension made by the Licensee pursuant to the License Agreement. Pursuant
      to
      the License Agreement, XL Generation AG must comply with certain quality control
      standards in the production of the Products. Such quality control standards
      shall be set by WKF/5 Ltd and must, pursuant to License Agreement, be
      reasonable. XL Generation AG may not produce and sell goods which compete with
      the Products. WKF/5 Ltd is obligated to maintain all intellectual property
      rights related to the Intellectual Property. The License Agreement required
      that
      XL Generation pay WKF/5 Ltd (i) an initial lump sum royalty fee, which was
      subsequently mutually set at $416,047; (ii) an annual renewal fee of one Euro;
      and (iii) royalties at rate of 5% of the gross sales of XL Generation AG, with
      no minimum royalty. WKF/5 Ltd has the right to audit the books and records
      of XL
      Generation AG in connection with such royalties. XL Generation AG advanced
      $416,047 to Fiducie Alain Lemieux, a trust in Quebec as to which Alain Lemieux
      is the main beneficiary (the “Quebec Trust”), as of December 31, 2004 as
      mutually agreed between XL Generation AG and the Quebec Trust. Pursuant to
      a
      supplement to the License Agreement, dated June 30, 2005, the Quebec Trust
      agreed to assume the XL Generation AG obligation of payment of $416,047 to
      WKF/5
      Ltd. The Board of Directors of the Company has ratified and approved of the
      foregoing License Agreement transactions among the Company and Messrs. Lemieux
      and Courteau as related parties to the Company. In the course of review for
      such
      ratification and approval, Messrs. Lemieux and Courteau recused themselves
      from
      all deliberations and voting. On the basis of its review, the Board of Directors
      concluded that the terms and conditions of the License Agreement and the related
      agreements are fair and reasonable to the Company. The Board of Directors of
      the
      Company furthermore concluded that the License Agreement and related agreements
      will ultimately benefit the Company’s shareholders notwithstanding the
      related-party aspect of the transactions.




**Services
      received from Greendale Consulting Limited**





In
      April
      of 2005, XL Generation AG entered into a verbal agreement, pursuant to which
      Greendale Consulting Limited, an entity formed in the United Kingdom, would
      provide financial and commercial consulting and support services to the Company.
      Greendale Consulting Limited is controlled by Flemming Munck, who is a director
      of the Company, as well as the Company's CFO and Treasurer. Since May of 2005,
      XL Generation AG has been paying 6,600 GBP (approximately $11,638) per month
      to
      Greendale Consulting Limited. The total amount received in fees in 2005 by
      Greendale Consulting Limited was equal to 52,800 GBP (approximately $93,104).
      Greendale Consulting Limited also received the reimbursement of certain expenses
      equaling approximately $53,196.





**Law
      Firm of Degrandpre, Chait**





In
      the
      fiscal year ended December 31, 2005, the law firm of Degrandpre, Chait
      (Montreal) received CAD $110,000 (approximately US $94,050) from XL Generation
      AG for legal services rendered. Most of these legal services involved the
      intellectual property utilized by XL Generation AG. Mr. Daniel Courteau, one
      of
      the Company’s directors, is a partner of the law firm of Degrandpre, Chait,
      although the majority of the legal services were provided to XL Generation
      AG by
      other attorneys at the law firm.




20





**XL
      Generation Canada Inc. Management Agreement**





In
      February of 2004, XL Generation AG entered into a Management Agreement (the
      “Management Agreement”) with XL Generation Canada Inc. (“XL Canada”), a Canadian
      company which was, at such date, a wholly-owned subsidiary of XL Generation
      AG.
      The Management Agreement provided that XL Canada would act as XL Generation
      AG’s
      representative in Canada. The Management Agreement provided that XL Canada
      would
      (i) register with Canadian tax authorities; (ii) employ the staff required
      by XL
      Generation AG in Canada; (iii) pay the salary of XL Generation AG’s Canadian
      staff; (iv) reimburse employees of XL Generation AG, upon the approval of XL
      Generation AG; (v) pay certain consulting fees on behalf of XL Generation AG;
      (vi) pay certain fees to Polyprod Inc.; (vii) maintain a separate bank account;
      (viii) represent XL Generation AG in transactions with Polyprod Inc.; and (ix)
      serve as the vendor for any sales of XL Generation AG products in Canada. The
      Management Agreement further provides that in the event of a change of control,
      XL Canada would continue to act on behalf of XL Generation AG in Canadian,
      but
      any profits would be paid to XL Generation AG. In the event of a change of
      control, XL Generation AG would have the right to appoint another party to
      act
      as its agent in Canada. The Management Agreement provided that in the event
      of a
      change of control, in consideration for the services to be rendered by XL Canada
      to XL Generation AG, a fee would be negotiated by the parties which shall
      represent the fair market value of services rendered. The Management Agreement
      has no set termination date, but may be terminated at any time by a written
      notice sent to the other party at least two (2) months prior to the termination
      date. In September of 2004, a change of control occurred, whereby the ownership
      of XL Canada was transferred to Mr. Albert Beerli for a nominal sum. Mr. Beerli
      was at that time a stockholder and director of XL Generation AG, and is
      currently a stockholder and director of the Company. XL Canada has never charged
      a fee to XL Generation AG for services rendered. Mr. Beerli, acting both on
      his
      own behalf and on behalf of XL Generation AG, has executed a memorandum (the
      “Memorandum”) with XL Generation AG and XL Generation International Inc.,
      memorializing certain oral agreements previously reached between the Company,
      XL
      Generation AG and XL Canada. Pursuant to the Memorandum, Mr. Beerli is not
      entitled to receive any compensation or equity benefit from XL Canada or for
      his
      ownership of XL Canada. Any profits from the sales of products of XL Generation
      AG in Canada shall pass-through XL Canada to XL Generation AG. All advances
      made
      to XL Canada shall be allocated solely for the benefit of XL Generation AG.




21


**Item
      13.**  **Exhibits**





The
      following documents have been filed as a part of this Report:





Exhibit
                No.
            Description
                of ExhibitsExhibit
                3.1
            Articles
                of Incorporation, as amended, incorporated by reference to Exhibit
                3.1 to
                the Company's Registration Statement on Form SB-2 filed with the
                Securities and Exchange commission on May 28, 2004.Exhibit
                3.2
            Bylaws,
                incorporated by reference to Exhibit 3.2 to the Company's Registration
                Statement on Form SB-2 filed with the Securities and Exchange Commission
                on May 28, 2004.Exhibit
                3.3
            Certificate
                of Amendment to Articles of Incorporation, as filed with the State
                of
                Nevada on August 23, 2005, incorporated by reference to Exhibit 3.3
                to the
                Company's Quarterly Report on Form 10-QSB, filed with the Securities
                and
                Exchange Commission on December 30, 2005.Exhibit
                3.4
            Bylaws,
                as amended on March 17, 2006, incorporated by reference to Exhibit
                3.4 to
                the Company's Annual Report on Form 10-KSB filed with the Securities
                and
                Exchange Commission on April 13, 2006.Exhibit
                10.1
            Letter
                of Intent, dated as of June 29, 2005, between the Company and XL
                Generation AG, incorporated by reference to Exhibit 99.1 to the Company's
                Report on Form 8-K, filed with the Securities and Exchange Commission
                on
                July 6, 2005.Exhibit
                10.2
            Share
                Exchange Agreement, dated as of August 19, 2005, between the Company
                and
                XL Generation AG, incorporated by reference to Exhibit 99.1 to the
                Company's Report on Form 8-K, filed with the Securities and Exchange
                Commission on August 19, 2005.Exhibit
                10.3
            Loan
                Agreement, dated as of September 12, 2005, between Capex Investments
                Limited and XL Generation AG, incorporated by reference to Exhibit
                99.1 to
                the Company's Report on Form 8-K, filed with the Securities and Exchange
                Commission on September 14, 2005.Exhibit
                10.4
            Form
                of Indemnification Agreement, entered into between XL Generation
                International Inc. and the Company's officers and directors, incorporated
                by reference to Exhibit 10.4 to the Company's Report on Form 8-K/A,
                filed
                with the Securities and Exchange Commission on November 1,
                2005.Exhibit
                10.5
            Common
                Stock Purchase Agreement, dated as of November 8, 2005, by and among
                XL
                Generation International Inc. and Capex Investments Limited, incorporated
                by reference to Exhibit 10.5 to the Company's Report on Form 8-K,
                filed
                with the Securities and Exchange Commission on November 15,
                2005.Exhibit
                10.6
            Common
                Stock Purchase Agreement, dated as of November 8, 2005, by and among
                XL
                Generation International Inc. and Aton Select Fund Limited, incorporated
                by reference to Exhibit 10.6 to the Company's Report on Form 8-K,
                filed
                with the Securities and Exchange Commission on November 15,
                2005.Exhibit
                10.7
            Common
                Stock Purchase Agreement, dated as of November 8, 2005, by and among
                XL
                Generation International Inc. and Asset Protection Fund Limited,
                incorporated by reference to Exhibit 10.7 to the Company's Report
                on Form
                8-K, filed with the Securities and Exchange Commission on November
                15,
                2005.Exhibit
                10.8
            Series
                A Warrant to Purchase Shares of Common Stock of XL Generation
                International Inc., issued as of November 8, 2005 to Capex Investments
                Limited, incorporated by reference to Exhibit 10.8 to the Company's
                Report
                on Form 8-K, filed with the Securities and Exchange Commission on
                November
                15, 2005.Exhibit
                10.9
            Series
                A Warrant to Purchase Shares of Common Stock of XL Generation
                International Inc., issued as of November 8, 2005 to Aton Select
                Fund
                Limited, incorporated by reference to Exhibit 10.9 to the Company's
                Report
                on Form 8-K, filed with the Securities and Exchange Commission on
                November
                15, 2005.




22






Exhibit
                10.10
            Series
                A Warrant to Purchase Shares of Common Stock of XL Generation
                International Inc., issued as of November 8, 2005 to Asset Protection
                Fund
                Limited, incorporated by reference to Exhibit 10.10 to the Company's
                Report on Form 8-K, filed with the Securities and Exchange Commission
                on
                November 15, 2005.Exhibit
                10.11
            Registration
                Rights Agreement, dated as of November 8, 2005, by and among XL Generation
                International Inc. and Capex Investments Limited, incorporated by
                reference to Exhibit 10.11 to the Company's Report on Form 8-K, filed
                with
                the Securities and Exchange Commission on November 15,
                2005.Exhibit
                10.12
            Registration
                Rights Agreement, dated as of November 8, 2005, by and among XL Generation
                International Inc. and Aton Select Fund Limited, incorporated by
                reference
                to Exhibit 10.12 to the Company's Report on Form 8-K, filed with
                the
                Securities and Exchange Commission on November 15,
                2005.Exhibit
                10.13
            Registration
                Rights Agreement, dated as of November 8, 2005, by and among XL Generation
                International Inc. and Asset Protection Fund Limited, incorporated
                by
                reference to Exhibit 10.13 to the Company's Report on Form 8-K, filed
                with
                the Securities and Exchange Commission on November 15,
                2005.Exhibit
                10.14
            Amendment
                to the Common Stock Purchase Agreement by and between XL Generation
                International Inc. and Aton Select Fund Limited, dated as of December
                5,
                2005, incorporated by reference to Exhibit 10.14 to the Company's
                Report
                on Form 8-K, filed with the Securities and Exchange Commission on
                December
                8, 2005.Exhibit
                10.15
            Amendment
                to the Common Stock Purchase Agreement by and between XL Generation
                International Inc. and Asset Protection Fund Limited, dated as of
                December
                5, 2005, incorporated by reference to Exhibit 10.15 to the Company's
                Report on Form 8-K, filed with the Securities and Exchange Commission
                on
                December 8, 2005.Exhibit
                10.16
            Lease
                Agreement, dated as of August, 2005, between 866 U.N. Plaza Associates
                LLC
                and XL Generation AG, incorporated by reference to Exhibit 10.16
                to the
                Company's Quarterly Report on Form 10-QSB, filed with the Securities
                and
                Exchange Commission on December 30, 2005.Exhibit
                10.17
            Exclusive
              Manufacturing
              License Agreement and Non Exclusive Distribution Agreement, dated as
              of
              September 23, 2005, by and between APW Inc. and XL Generation AG,
              incorporated by reference to Exhibit 10.17 to the Company's Quarterly
              Report on Form 10-QSB, filed with the Securities and Exchange Commission
              on December 30, 2005.Exhibit
                10.18
            Common
                Stock Purchase Agreement, dated as of December 6, 2005, by and among
                XL
                Generation International Inc. and Professional Trading Services SA,
                incorporated by reference to Exhibit 10.18 to the Company's Registration
                Statement on Form SB-2 filed with the Securities and Exchange Commission
                on January 13, 2006.Exhibit
                10.19
            Series
                B Warrant to Purchase Shares of Common Stock of XL Generation
                International Inc., issued as of December 6, 2005 to Professional
                Trading
                Services SA, incorporated by reference to Exhibit 10.19 to the Company's
                Registration Statement on Form SB-2 filed with the Securities and
                Exchange
                Commission on January 13, 2006.Exhibit
                10.20
            Registration
                Rights Agreement, dated as of December 6, 2005, by and among XL Generation
                International Inc. and Professional Trading Services SA, incorporated
                by
                reference to Exhibit 10.20 to the Company's Registration Statement
                on Form
                SB-2 filed with the Securities and Exchange Commission on January
                13,
                2006.Exhibit
                10.21
            Amended
                and Restated Common Stock Purchase Agreement, dated as of December
                27,
                2005, by and among XL Generation International Inc. and Bank Sal.
                Oppenheim jr. & Cie. (Switzerland) Limited, incorporated by reference
                to Exhibit 10.21 to the Company's Registration Statement on Form
                SB-2
                filed with the Securities and Exchange Commission on January 13,
                2006.




23






Exhibit
                10.22
            Series
                B Warrant to Purchase Shares of Common Stock of XL Generation
                International Inc., issued as of December 27, 2005 to Bank Sal. Oppenheim
                jr. & Cie. (Switzerland) Limited, incorporated by reference to Exhibit
                10.22 to the Company's Registration Statement on Form SB-2 filed
                with the
                Securities and Exchange Commission on January 13, 2006.Exhibit
                10.23
            Agreement
                of Withdrawal from Stadium SA, by and between Stadium SA and XL Generation
                AG, incorporated by reference to Exhibit 10.23 to the Company's
                Registration Statement on Form SB-2 filed with the Securities and
                Exchange
                Commission on January 13, 2006.Exhibit
                10.24
            License
                Agreement, dated January 2005, between XL Generation AG and WKF/5
                Ltd,
                incorporated by reference to Exhibit 10.24 to the Company's Registration
                Statement on Form SB-2 filed with the Securities and Exchange Commission
                on January 13, 2006.Exhibit
                10.25
            Amendment
                to License Agreement, dated June 30, 2005, between XL Generation
                AG, WKF/5
                Ltd and Alain Lemieux, incorporated by reference to Exhibit 10.25
                to the
                Company's Registration Statement on Form SB-2 filed with the Securities
                and Exchange Commission on January 13, 2006.Exhibit
                10.26
            Form
                of Subscription Agreement, incorporated by reference to Exhibit 99.1
                to
                the Company's Registration Statement on Form SB-2 filed with the
                Securities and Exchange Commission on May 28, 2004.Exhibit
                10.27
            Employment
                Agreement, dated as of March 30, 2006, by and among XL Generation
                AG and
                Alain Lemieux, incorporated by reference to Exhibit 10.27 to the
                Company's
                Annual Report on Form 10-KSB filed with the Securities and Exchange
                Commission on April 13, 2006.Exhibit
                10.28
            Employment
                Agreement, dated as of March 30, 2006, by and among XL Generation
                AG and
                Daniel Courteau, incorporated by reference to Exhibit 10.28 to the
                Company's Annual Report on Form 10-KSB filed with the Securities
                and
                Exchange Commission on April 13, 2006.Exhibit
                10.29
            Employment
                Agreement, dated as of March 30, 2006, by and among XL Generation
                AG and
                Flemming Munck, incorporated by reference to Exhibit 10.29 to the
                Company's Annual Report on Form 10-KSB filed with the Securities
                and
                Exchange Commission on April 13, 2006.Exhibit
                10.30
            Employment
                Agreement, dated as of October 20, 2005, by and among XL Generation
                AG and
                Eric Giguère, incorporated by reference to Exhibit 10.30 to the Company's
                Annual Report on Form 10-KSB filed with the Securities and Exchange
                Commission on April 13, 2006.Exhibit
                10.31
            Endorsement
                Agreement, by and between La Societe 421 Productions and XL Generation
                AG,
                incorporated by reference to Exhibit 10.31 to the Company's Annual
                Report
                on Form 10-KSB filed with the Securities and Exchange Commission
                on April
                13, 2006.Exhibit
                10.32
            Summary
                of terms and conditions of Oral Consulting Agreement by and between
                XL
                Generation AG and Greendale Consulting Limited, incorporated by reference
                to Exhibit 10.32 to the Company's Annual Report on Form 10-KSB filed
                with
                the Securities and Exchange Commission on April 13,
                2006.Exhibit
                10.33
            Exclusive
                Manufacturing License Agreement, dated as of January 2, 2005, by
                and
                between XL Generation AG and Polyprod Inc., incorporated by reference
                to
                Exhibit 10.33 to the Company's Annual Report on Form 10-KSB filed
                with the
                Securities and Exchange Commission on April 13, 2006.Exhibit
                10.34
            Management
                Fee Arrangement, dated as of January 2006, by and between XL Generation
                AG
                and Polyprod Inc., incorporated by reference to Exhibit 10.34 to
                the
                Company's Annual Report on Form 10-KSB filed with the Securities
                and
                Exchange Commission on April 13, 2006.Exhibit
                10.35
            Supply
                Contract, effective as of April 1, 2005, by and between Febra-Kunststoffe
                GmbH, XL Generation AG and BASF Aktiengesellschaft, incorporated
                by
                reference to Exhibit 10.35 to the Company's Annual Report on Form
                10-KSB
                filed with the Securities and Exchange Commission on April 13,
                2006.




24




Exhibit
                10.36
            Loan
                Agreement by and between XL Generation AG and Fiducie Alain Lemieux,
                incorporated by reference to Exhibit 10.36 to the Company's Annual
                Report
                on Form 10-KSB filed with the Securities and Exchange Commission
                on April
                13, 2006.Exhibit
                10.37
            Confirmation
                of Debt, addressed to XL Generation AG, incorporated by reference
                to
                Exhibit 10.37 to the Company's Annual Report on Form 10-KSB filed
                with the
                Securities and Exchange Commission on April 13, 2006.Exhibit
                10.38
            Agreement
                dated as of May 25, 2005, by and between XL Generation AG and Daniel
                Courteau regarding Repayment of loans to Symbior Technologies Inc.,
                incorporated by reference to Exhibit 10.38 to the Company's Annual
                Report
                on Form 10-KSB filed with the Securities and Exchange Commission
                on April
                13, 2006.Exhibit
                10.39
            XL
                Generation International Inc. 2006 Equity Incentive Plan, incorporated
                by
                reference to Exhibit 10.39 to the Company's Annual Report on Form
                10-KSB
                filed with the Securities and Exchange Commission on April 13,
                2006.Exhibit
                10.40
            Loan
                Agreement by and between XL Generation AG and Albert Beerli, incorporated
                by reference to Exhibit 10.40 to the Company's Annual Report on Form
                10-KSB filed with the Securities and Exchange Commission on April
                13,
                2006.Exhibit
                10.41
            Summary
                of terms and conditions of Loan Agreement by and between XL Generation
                AG
                and Albert Beerli, incorporated by reference to Exhibit 10.41 to
                the
                Company's Annual Report on Form 10-KSB filed with the Securities
                and
                Exchange Commission on April 13, 2006.Exhibit
                10.42
            Lease
                Agreement dated as of April 1, 2004, by and between XL Generation
                AG and
                Albert Beerli, incorporated by reference to Exhibit 10.42 to the
                Company's
                Annual Report on Form 10-KSB filed with the Securities and Exchange
                Commission on April 13, 2006.Exhibit
                10.43
            Memorandum
                regarding XL Generation Canada Inc., incorporated by reference to
                Exhibit
                10.43 to the Company's Annual Report on Form 10-KSB filed with the
                Securities and Exchange Commission on April 13, 2006.Exhibit
                10.44
            Stock
                Purchase Agreement, executed as of April 6, 2006, by and among XL
                Generation International Inc., XL Generation AG and Stadium SA,
                incorporated by reference to Exhibit 10.44 to the Company's Annual
                Report
                on Form 10-KSB filed with the Securities and Exchange Commission
                on April
                13, 2006.Exhibit
                21
            Subsidiaries
                of XL Generation International Inc., incorporated by reference to
                Exhibit
                21 to the Company's Annual Report on Form 10-KSB filed with the Securities
                and Exchange Commission on April 13, 2006.Exhibit
                31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.Exhibit
                31.2
            Certification
                of Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.Exhibit
                32.1
            Certification
                of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.Exhibit
                32.2
            Certification
                of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.








25





**Item
      14.**  **Principal
      Accountant Fees and Services**





The
      Company’s financial statements for the year ended December 31, 2005 were audited
      by Paritz & Company, P.A.





**Audit
      Fees**





The
      aggregate fees of Paritz & Company, P.A. for professional services rendered
      for the audit of the Company's annual financial statements for the year ended
      December 31, 2005 totaled $25,000.





**Audit-Related
      Fees**





The
      aggregate fees billed by Paritz
      & Company, P.A. for
      audit
      related services for the year ended December 31 ,
      2005 ,
      and
      which are not disclosed in "Audit Fees" above, were $15,000.





**Tax
      Fees**





The
      aggregate fees billed by Paritz
      & Company, P.A. for
      tax
      compliance for the year ended December 31 ,
      2005 was
      $0.





**All
      Other Fees**





The
      aggregate fees billed by Paritz
      & Company, P.A. or
      services other than those described above, for the year ended December
      31 ,
      2005 ,
      were
      $0.





**Audit
      Committee Pre-Approval Policies**





Our
      Audit
      Committee reviewed the audit and non-audit services rendered by Paritz
      & Company, P.A. during
      the periods set forth above and concluded that such services were compatible
      with maintaining the auditors’ independence. All audit and non-audit services
      performed by our independent accountants are pre-approved by our Audit Committee
      to assure that such services do not impair the auditors’ independence from
      us.








**SUBSEQUENT
      EVENTS**





**Employment
      Agreements**





Subsequent
      to the fiscal year ended December 31, 2005, XL Generation AG, the sole operating
      subsidiary of the Company, entered into employment agreements with three
      individuals who are officers and directors of the Company, including Alain
      Lemieux, Daniel Courteau and Flemming Munck. Two of these three agreements,
      those of Alain Lemieux and Flemming Munck, were entered into on March 30, 2006
      but were deemed to be retroactively effective as of October 1, 2005. Set forth
      below is a description of the terms and conditions of these
      agreements.





On
      March
      30, 2006, XL Generation AG entered into an employment agreement with Alain
      Lemieux. Mr. Lemieux is the President and Chief Executive Officer of the
      Company. Mr. Lemieux is also a director of the Company, and 13,000,000 of the
      Company’s outstanding shares (which are held by the Alain Lemieux Trust) may be
      deemed to be beneficially owned by Mr. Lemieux (representing 39.5% of the
      Company’s currently outstanding common stock). Although the agreement was
      executed and delivered as of March 30, 2006, the parties have agreed that its
      terms will be effective retroactive to October 1, 2005. The agreement has no
      set
      termination date; however, the agreement may be terminated at any time by either
      of the parties, subject to certain termination provisions documented below.
      Pursuant to this agreement, Mr. Lemieux is entitled to receive USD $240,000
      annually, indexed according to the rate of the Consumer Price Index. Mr. Lemieux
      is also entitled to a housing allocation of 3,500 Swiss Francs (approximately
      $2,695.35) per month and an automobile allowance of 7,500 Swiss Francs
      (approximately $5,775.75) per year. In the event that certain sales targets
      are
      met, Mr. Lemieux will be entitled to an increase in salary based on a formula
      set forth in the agreement. Mr. Lemieux may terminate this agreement at any
      time, with a minimum of six (6) months notice. Mr. Lemieux may be terminated
      without cause, with three (3) months notice. In the event of Mr. Lemieux’s
      termination without cause, he shall be entitled under this agreement to
      severance pay for three years equal to his average salary over the past five
      years. Furthermore, in the event of his dismissal without cause, Mr. Lemieux
      shall also be entitled, for every year until his 60 th birthday, to receive options permitting him to purchase 100,000 shares of the
      Company’s common stock, for a purchase price equal to 25% of the average closing
      price of the Company’s common stock as calculated by reference to the thirty
      trading days prior to the date of anniversary of his dismissal.




26





On
      March
      30, 2006, XL Generation AG entered into an employment agreement with Daniel
      Courteau, the Company’s Vice President, legal affairs. Mr. Courteau is also a
      director of the Company. This agreement will commence as of January 1, 2007.
      This agreement has no set termination date; however, this agreement may be
      terminated at any time by either of the parties, subject to certain termination
      provisions documented below. Pursuant to this agreement, Mr. Courteau is
      entitled to receive $175,000 USD annually. Mr. Courteau is also entitled to
      a
      housing allocation of 3,500 Swiss Francs (approximately $2,695.35) per month
      and
      an automobile allowance of 7,500 Swiss Francs (approximately $5,775.75) per
      year. In the event that certain sales targets are met, Mr. Courteau will be
      entitled to an increase in salary based on a formula set forth in the agreement.
      Mr. Courteau may terminate this agreement at any time, with a minimum of six
      (6)
      months notice. Mr. Courteau may be terminated without cause, with three (3)
      months notice. In the event of Mr. Courteau’s termination without cause, he
      shall be entitled under this agreement to severance pay for three years equal
      to
      his average salary over the past five years. Furthermore, in the event of his
      dismissal without cause, Mr. Courteau shall also be entitled, for every year
      until his 60 th birthday, to receive options permitting him to purchase 75,000 shares of the
      Company’s common stock, for a purchase price equal to 25% of the average closing
      price of the Company’s common stock as calculated by reference to the thirty
      trading days prior to the date of anniversary of his dismissal.





On
      March
      30, 2006, XL Generation AG entered into an employment agreement with Flemming
      Munck, the Company’s Chief Financial Officer. Mr. Munck is also a director of
      the Company. Although this agreement was executed and delivered as of March
      30,
      2006, the parties have agreed that its terms will be effective retroactive
      to
      October 1, 2005. This agreement has no set termination date; however, this
      agreement may be terminated at any time by either of the parties, subject to
      certain termination provisions documented below. Pursuant to this agreement,
      Mr.
      Munck is entitled to receive $150,000 USD annually. Mr. Munck is also entitled
      to a housing allocation of 3,500 Swiss Francs (approximately $2,695.35) per
      month and an automobile allowance of 7,500 Swiss Francs (approximately
      $5,775.75) per year. In the event that certain sales targets are met, Mr. Munck
      will be entitled to an increase in salary based on a formula set forth in the
      agreement. Mr. Munck may terminate this agreement at any time, with a minimum
      of
      six (6) months notice. Mr. Munck may be terminated without cause, with three
      (3)
      months notice. In the event of Mr. Munck’s termination without cause, he shall
      be entitled under this agreement to severance pay for three years equal to
      his
      average salary over the past five years. Furthermore, in the event of his
      dismissal without cause, Mr. Munck shall also be entitled, for every year until
      his 60 th birthday, to receive options permitting him to purchase 50,000 shares of the
      Company’s common stock, for a purchase price equal to 25% of the average closing
      price of the Company’s common stock as calculated by reference to the thirty
      trading days prior to the date of anniversary of his dismissal.





**2006
      Equity Incentive Plan**





The
      Company, from its inception through December 31, 2005, has not paid equity
      compensation to any officer, director, or employee. During the fiscal year
      ended
      December 31, 2005, the Company did not have an authorized equity compensation
      plan. On March 30, 2006, the Company adopted a 2006 Equity Incentive Plan (the
      “Plan”). Under the Plan, the Company may issue options, stock appreciation
      rights, restricted shares, deferred shares or performance shares. The maximum
      number of such shares of the Company’s common stock that may be issued under the
      Plan is 2,000,000 shares. The Company’s officers, directors, employees and
      consultants, as well as those of its subsidiaries, may participate in the Plan,
      as the Company’s Compensation Committee may deem to be advisable and in the best
      interests of the Company. No one individual may be awarded options to purchase
      more than 500,000 shares in any one fiscal year. No one individual may be
      granted more than 250,000 shares in any one fiscal year. The terms and
      conditions of each grant shall be as set forth in an award agreement approved
      by
      the Compensation Committee.





**Stock
      Purchase Agreement**





On
      April
      6, 2006, the Company, XL Generation AG and Stadium SA entered into a Stock
      Purchase Agreement (the ÒStock Purchase AgreementÓ) pursuant to which the
      Company agreed to exchange a debt of 2,950,000 Euros (approximately $3,584,545)
      in exchange for 1,236,824 restricted shares of the Company’s common stock.
      Previously, the Terenvi Society had loaned XL Generation AG 1,600,000 euros
      pursuant to a loan agreement dated December 16, 2004. The Terenvi Society
      subsequently transferred the right to receive re-payment of this loan to Stadium
      SA. In addition, XL Generation AG had entered into a distribution agreement
      with
      the Soreve Society on April 13, 2004. The Soreve Society also subsequently
      transferred its rights to paid pursuant to this distribution agreement to
      Stadium SA. Pursuant to the Stock Purchase Agreement, the Company agreed to
      intervene in the debt of its sole operating subsidiary, XL Generation AG. The
      Company entered into the aforementioned transaction in accordance with and
      in
      reliance upon the exemption from securities registration afforded by Section
      4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
      regulations promulgated thereunder, including Regulation S.




27


**FINANCIAL
      STATEMENTS**





**Paritz
                    & Company, P.A.**
                15
                    Warren Street, Suite 25
                  Hackensack,
                    New Jersey 07601
                  (201)342-7753
                  Fax:
                    (201) 342-7598
                  E-Mail:
                    paritz @paritz.comCertified
                    Public Accountants
 
 **REPORT
            OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 Board
            of
            Directors
 XL
            Generation International Inc.
 
 
 
 We
            have
            audited the accompanying balance sheet **** as
            of
            December 31, 2005 and the related statements of operations, changes in
            stockholders’ deficiency and cash flows for the year ended December 31, 2005.
            These financial statements are the responsibility of the Company's management.
            Our responsibility is to express an opinion on these financial statements
            based
            on our audit. The financial statements of XL Generation International
            Inc.,
            formerly known as Cygni Systems Corporation, as of April 30, 2005 were
            audited
            by other auditors whose report dated June 13, 2005 expressed an unqualified
            opinion on those statements.
 
 We
            conducted our audit in accordance with the standards of the Public Company
            Accounting Oversight Board (United States). Those standards require that
            we plan
            and perform the audit to obtain reasonable assurance about whether the
            financial
            statements are free of material misstatement. An audit includes examining,
            on a
            test basis, evidence supporting the amounts and disclosures in the financial
            statements. An audit also includes assessing the accounting principles
            used and
            significant estimates made by management, as well as evaluating the overall
            financial statement presentation. We believe that our audit provides
            a
            reasonable basis for our opinion.
 
 In
            our
            opinion, the 2005 financial statement referred to above presents fairly,
            in all
            material respects, the financial position of XL Generation International
            Inc. as
            of December 31, 2005 and the results of its operations and its cash flows
            for
            the year then ended in conformity with accounting principles generally
            accepted
            in the United States of America.
 
 The
            accompanying financial statements have been prepared assuming that the
            Company
            will continue as a going concern. The Company has suffered recurring
            net losses
            and as of December 31, 2005 its current liabilities exceeded its current
            assets
            by $2,806,574 and its total liabilities exceed its total assets by $2,760,446.
            These factors raise substantial doubt about the Company’s ability to continue as
            a going concern. The accompanying financial statements do not include
            any
            adjustments that might result from the outcome of this uncertainty.
 
 
 
 /s/
            Paritz & Company, P.A.
 
 Hackensack,
            New Jersey
 28
   XL
        GENERATION INTERNATIONAL INC.
 (formerly
        CYGNI SYSTEMS CORPORATION)
 BALANCE
        SHEET
 (Audited)
  December
                  31,
              
              December
                  31,2005
              
              2004ASSETSCURRENT
                  ASSETS:Cash
              
              $
              262,446
              
              $
              434,194Inventory
              
              
              54,971
              
              
              0Note
                  receivable - related party
              
              
              1,047,643
              
              
              0Due
                  from shareholder
              
              
              0
              
              
              416,047Prepaid
                  expenses and sundry current assets
              
              
              157,344
              
              
              49,355TOTAL
                  CURRENT ASSETS
              
              
              1,522,404
              
              
              899,596PROPERTY
                  AND EQUIPMENT, AT COST,LESS
                  ACCUMULATED DEPRECIATION
              
              
              46,128
              
              
              1,768TOTAL
                  ASSETS
              
              $
              1,568,532
              
              $
              901,364LIABILITIES
                  AND STOCKHOLDERS’ DEFICIENCYCURRENT
                  LIABILITIES:Note
                  payable stockholders
              
              $
              976,873
              
              $
              489,220Note
                  payable- supplier
              
              
              2,332,037
              
              
              2,352,333Accrued
                  expenses and sundry current liabilities
              
              
              1,020,068
              
              
              76,276TOTAL
                  CURRENT LIABILITIES
              
              
              4,328,978
              
              
              2,917,829STOCKHOLDERS'
                  DEFICIENCYCommon
                  stock
              
              
              92,923
              
              
              88,390Additional
                  paid in capital
              
              
              4,195,467Accumulated
                  Deficit
              
              
              (7,311,239
              )
              
              (1,954,958
              )Other
                  comprehensive income/(loss)
              
              
              262,403
              
              
              (149,897
              )TOTAL
                  STOCKHOLDERS' DEFICIENCY
              
              
              (2,760,446
              )
              
              (2,016,465
              )TOTAL
                    LIABILITIES AND STOCKHOLDERSDEFICIENCY
              
              $
              1,568,532
              
              $
              901,364
   29
 XL
          GENERATION INTERNATIONAL INC.
 (formerly
          CYGNI SYSTEMS CORPORATION)
 STATEMENTS
          OF STOCKHOLDERS DEFICIENCY
 Year
          ended December 2005 and 2004
 (audited)
 Stockholders
        Deficiency
 Stockholders
                  Deficiency
                
                Common
                    stock
                
                Additional
                  paid
                  in
                    Capital
                
                Accumulated
                  Deficit
                
                Other
                    Comprehensive
                  Income
                    (Loss)
                
                TotalBalance
                    January 1,2004
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0Proceeds
                    from
                  the
                    issuance of
                  common
                    stock
                
                
                88,390
                
                
                —
                
                
                —
                
                
                —
                
                
                88,390Net
                    loss
                
                
                —
                
                
                —
                
                
                (1,954,958
                )
                
                
                
                
                (1,954,958
                )Other
                    comprehensive
                  Loss
                
                
                
                
                
                
                
                
                
                
                
                (149,897
                )
                
                (149,897
                )Balance
                    January 1,2005
                
                
                88,390
                
                
                —
                
                
                (1,954,958
                )
                
                (149,897
                )
                
                (2,016,465
                )Proceeds
                    from
                  the
                    issuance of
                  Common
                    stock
                
                
                4,533
                
                
                4,195,467
                
                
                —
                
                
                —
                
                
                4,200,000Net
                    Loss
                
                
                —
                
                
                —
                
                
                (5,356,281
                )
                
                
                
                
                (5,356,281
                )Other
                    comprehensive
                  Income
                
                
                
                
                
                
                
                
                
                
                
                412,300
                
                
                412,300Balance
                    December 31,2005
                
                
                92,923
                
                
                4,195,467
                
                
                (7,311,239
                )
                
                262,403
                
                
                (2,760,445
                )
   30
  XL
        GENERATION INTERNATIONAL INC.
 (formerly
            CYGNI SYSTEMS CORPORATION)
 STATEMENTS
            OF OPERATIONS
 Year
            ended December 2005 and 2004
 (audited)
 (audited)
 Year
                    endedDecember
                    31
                
                December
                    312005
                
                2004SALES
                
                
                2,892,513
                
                
                1,349,319COSTS
                    AND EXPENSES:Cost
                    of sales
                
                
                2,067,412
                
                
                1,676,785Selling,
                    general and administrative
                
                
                5,989,302
                
                
                1,042,776Interest
                
                
                158,774
                
                
                50,468Foreign
                    exchange loss
                
                
                33,306
                
                
                149,897TOTAL
                    COSTS AND EXPENSES
                
                
                8,248,794
                
                
                2,919,926NET
                    LOSS
                
                
                (5,356,281
                )
                
                (1,570,607Earnings
                    Per Share
                
                $
                0.56
                
                $
                31.41Average
                    weighted Number of Shares
                
                
                9,533,903
                
                
                50,000
   31
 XL
          GENERATION INTERNATIONAL INC.
 (formerly
          CYGNI SYSTEMS CORPORATION)
 STATEMENTS
          OF CASH FLOWS
 Year
          ended December 31, 2005 and 2004
 (audited)
 December
                    31
                
                
                December
                    312005
                
                
                2004Net
                    loss
                
                $
                (5,356,281
                )
                $
                (1,565,497
                )Adjustment
                    to reconcile net income to net cash providedby
                    operating activitiesDepreciation
                    and amortization
                
                
                2,004
                
                
                1,136Reclassification
                    of stockholdersloan
                    to royalty fee expense
                
                
                470,695Changes
                    in operating assets and liabilities:Inventory
                
                
                (72,340
                )Prepaid
                    expenses and sundry current assets
                
                
                (73,378
                )
                
                (49,355
                )Accrued
                    expenses and sundry current liabilities
                
                
                1,304,735
                
                
                76,275Net
                    cash used by operating activities
                
                
                (3,724,565
                )
                
                (1,537,441
                )Investing
                    activitiesAcquisitions
                    of property and equipment
                
                
                (58,703
                )
                
                (2,903
                )Net
                    cash used in investing activities
                
                
                (58,703
                )
                
                (2,903
                )Financing
                    activitiesAdvances
                    to related party
                
                
                293,573
                
                
                (539,357
                )Advances
                    to stockholders
                
                
                (377,832
                )
                
                (416,047
                )Proceeds
                    from issuance of common stock
                
                
                4,200,000
                
                
                88,390Note
                    receivable - Related party
                
                
                (1,378,658
                )Proceeds
                    of loans payable shareholder
                
                
                337,262
                
                
                489,220Proceeds
                    (repayments) of loans from suppliers
                
                
                541,189
                
                
                2,352,333Net
                    cash provide by financing activities
                
                
                3,615,534
                
                
                1,974,538Effect
                    of exchange rate on cash
                
                
                4,014Increase
                    (decrease) in cash
                
                
                (171,748
                )
                
                434,194Cash-
                    beginning of period
                
                
                434,194
                
                
                0Cash-
                    end of period
                
                $
                262,446
                
                $
                434,194
   32
  XL
        GENERATION INTERNATIONAL INC.
 (formerly
        CYGNI SYSTEMS CORPORATION)
 NOTES
        TO
        FINANCIAL STATEMENTS
  
 NOTE
        1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 NATURE
        OF
        BUSINESS
 
 XL
        Generation International Inc. (the "Company") was incorporated in Nevada
        on
        March 18, 2004 as Cygni Systems Corporation and changed its name to XL
        Generation International Inc. on August 23, 2005. On August 19, 2005, the
        Company entered into a Share Exchange Agreement (”SEA”) with XL Generation AG
        ("XLG") pursuant to which the Company acquired all of the issued and outstanding
        shares of common stock of XLG in exchange for the issuance of 15 Million
        shares
        of restricted common stock (the "Common Stock").
 
 In
        connection with the SEA, the Company commenced actions to provide for the
        revision of the Company's capital structure. Pursuant to such actions, DT
        Crystal Holdings Ltd., the controlling shareholder of the Company prior to
        entry
        into the Share Exchange Agreement, as inducement to the shareholders of XLG
        to
        enter into the Share Exchange Agreement, agreed to cancel four million shares
        of
        the Company’s Common Stock and accept in consideration thereof an option
        exercisable for 500,000 shares of the Company. In addition, the Company made
        a
        stock dividend to shareholders of record of the Company of 9 shares of Common
        Stock for each share of Common Stock held, provided, however, each of DT
        Crystal
        Holdings Ltd. and the Alain Lemieux Trust, a trust formed in the Jersey Islands,
        and Mr. Albert Beerli waived their respective rights to such stock dividend
        (the
        record date for such dividend was set as August 29, 2005).
 
 The
        Company now serves as the holding company for XLG. The Company has no other
        operations other than XLG.
 
 XLG
        was
        incorporated in 1991, and was inactive until March of 2004, when it was granted
        the exclusive worldwide right to manufacture, promote and sell XL Turf products.
        XL Turf is an artificial pitch used primarily in soccer stadiums and indoor
        recreational facilities. XLG has its operational headquarters in Zug,
        Switzerland. XLG is a provider of artificial turf to international soccer
        clubs,
        educational institutions and other leisure providers across North America,
        Europe and Asia. XLG has developed new artificial turf systems for sports
        fields. XLG holds the worldwide commercial and manufacturing rights for the
        "XL
        technology." The “XL technology” consists of six patents. Of these six patents,
        one is patented in 38 countries, with patents pending in 6 more countries;
        another is patented in 16 countries, with patents pending in 28 more; two
        of
        these patents are pending in seven countries; and two of the six patents
        are
        pending in one country each. XLG produces its owned product lines under the
        "XL
        Generation" trademark, including the "genuine" XLTURF sport systems. XLG
        also
        distributes its products worldwide through an extensive licensed distribution
        network, designing and manufacturing private labeled products using the "XL
        technology."
  PRINCIPLES
        OF CONSOLIDATION
 
 The
        consolidated financial statements include the accounts of the Company and
        its
        subsidiary XLG after the elimination of inter-company accounts and transactions
        up to the transaction date. As required by the SEC in Reverse Takeover
        transactions, the operating entity, in this case XLG, is deemed to be the
        acquirer whose results are reported in these financial statements. Any
        additional stock issued after August 19, 2005 will be recorded as additional
        share capital, as if it was XLG issuing the stock. Any inter company assets,
        liabilities and internal transactions are eliminated, including any profit
        based
        on inter company trading.
  CASH
        AND
        CASH EQUIVALENTS
 
 The
        Company considers all highly liquid debt instruments with original maturities
        not exceeding three months to be cash equivalents.
 
 INVENTORIES
 
 Inventories,
        consisting of finished rolls of artificial turf products, are valued at the
        lower of cost determined on the first-in, first-out method or market.
 
 33
  PROPERTY
        & OFFICE EQUIPMENT
 
 Equipment
        is stated at cost. Depreciation is computed using the straight-line method
        over
        3 to 10 years.
  December
                    31
                
                
                December
                    312005
                
                
                2004Computer
                    equipment--3 yrs.
                
                $
                2,904
                
                $
                2,904Furniture
                    & fixtures--5 yrs
                
                
                46,364
                
                
                —$
                49,268
                
                $
                2,904Less:
                    accumulated depreciation
                
                $
                (3,140
                )
                $
                (1,136
                )Balance
                    December 31, 2005
                
                $
                46,128
                
                $
                1,768
 REVENUE
        RECOGNITION
 
 The
        Company recognizes revenue when it is realized or realizable and earned.
        The
        Company considers revenue realized or realizable and earned when persuasive
        evidence of an arrangement exists, the product has been shipped or the services
        have been provided to the customer, the sales price is fixed or determinable
        and
        collectibles is reasonably assured. The Company reduces revenue for estimated
        customer returns, and sales rebates when such amounts can
        be estimated. When such amounts cannot be estimated, the Company defers
        revenue until the product is sold to the end customer. As part of its product
        sales price, the Company provides support, which is generally utilized by
        the
        customer shortly after the sale.
  INCOME
        TAXES
 
 The
        asset
        and liability approach is used to account for income taxes by recognizing
        deferred tax assets and liabilities for the expected future tax consequences
        of
        temporary differences between the carrying amounts and the tax bases of assets
        and liabilities. The Company records a valuation allowance to reduce the
        deferred tax assets to the amount that is more likely than not to be
        realized.
  LOSS
        PER
        COMMON SHARE
 
 The
        basic
        net loss per common share is computed by dividing the net loss by the weighted
        average number of common shares outstanding.
 
 Diluted
        net loss per common share is computed by dividing the net loss, adjusted
        on an
        "as if converted" basis, by the weighted average number of common shares
        outstanding plus potential dilutive securities.
 
 WARRANTY
          PROVISIONS
  The
        Company provides a reserve based upon management view and experience of
        potential replacement cost. The management will continue to monitor the
        stability of its products and will adjust the provision accordingly.
  During
        2005 the management undertook a major review of the warranty policies and
        reserves required as a consequence of significant warranty request from
        customers in North America and Europe. In second half of the year we found
        that
        our product during warm weather and direct sun did not did not withstand
        the
        expansion of the product’s sub-base. As a result the Company developed a “roll
        system” to counter the problem and improved the malleability of the product.
        During second half of 2005 we commence a replacement process by replacing
        problematic outdoor products with the new roll system. As at December 31,
        2005
        we were due to replace two products in Switzerland and Vancouver, Canada.
        The
        reserve required to replace these products were estimated at approximate
        $500,000.
  USE
        OF
        ESTIMATES
 
 In
        preparing financial statements, management makes estimates and assumptions
        that
        affect the reported amounts of assets and liabilities in the balance sheet
        and
        revenue and expenses in the income statement. Actual results could differ
        from
        those estimates.
  Foreign Currency
  For the Company's international operations,
        the
        local currency is designated as the functional currency. Accordingly, assets
        and
        liabilities are translated into U.S. Dollars at year-end exchange rates,
        and
        revenues and expenses are translated at average exchange rates prevailing
        during
        the year. Currency translation adjustments from local functional currency
        countries resulting from fluctuations in exchange rates are recorded in other
        comprehensive income.
  34
  RECENT
        ACCOUNTING PRONOUNCEMENTS
 
 The
        Company does not expect the adoption of recently issued accounting
        pronouncements to have a significant impact on its results of operations,
        financial position or cash flow. For further information regarding recent
        accounting pronouncements, please see Note 12.
  NOTE
        2--GOING CONCERN
 
 The
        Company's consolidated financial statements have been prepared on a going
        concern basis, which contemplates the realization of assets and settlement
        of
        liabilities and commitments in the normal course of business. During the
        years
        ended December 31, 2005 and 2004, the Company incurred losses of $5,356,281
        and
        $1,570,607, respectively. The Company had negative working capital of $3,745,098
        and $1,537,441 at December 31, 2005 and 2004, respectively and a stockholders
        deficiency of $ 2,760,445 and $2,016,465 at December 31, 2005 and 2004. These
        factors, among others, raise substantial doubt about the Company's ability
        to
        continue as a going concern.
 
 Management's
        plans for the Company's continued existence include selling additional stock
        and
        borrowing additional funds to pay overhead expenses while current marketing
        efforts continue to raise its sales volume.
 
 The
        Company's future success is dependent upon its ability to achieve profitable
        operations, generate cash from operating activities and obtain additional
        financing. There is no assurance that the Company will be able to generate
        sufficient cash from operations, sell additional shares of common stock or
        borrow additional funds.
 
 The
        Company's inability to obtain additional cash could have a material adverse
        effect on its financial position, results of operations and its ability to
        continue in existence. The consolidated financial statements do not include
        any
        adjustments that might result from the outcome of this uncertainty.
  NOTE
        3
        -NOTE RECEIVABLE - Related party
 
 The
        Company advanced $1,047,643 to XLG Canada Inc as advances for services. The
        note
        bear interest at a rate based upon a percentage of sales pursuant to a related
        sales agreement and is due on demand. The agreement became effective in December
        2005 and no accrual was required as of this date..
  NOTE
        4--ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES
 
 Accrued
        expenses consisted of the following at December 31, 2005:
  December
                    31, 2005:
                
                December
                    31 , 2004:Accrued
                    interest
                
                $
                100,000
                
                
                23,999Accrued
                    operating expenses
                
                
                420,068
                
                
                52,276Warranty
                
                $
                500,000
                
                
                —$
                1,020,068
                
                $
                76,275
 NOTE
        5--NOTE PAYABLE - SUPPLIER
 
 During
        2004, the Company borrowed $2,352,333 note from the former parent company
        of its
        French distributor. The note bear interest at a rate based upon a percentage
        of
        sales pursuant to a related sales agreement. The interest charged under this
        agreement was $67,000 and $12,000 for the years ended December 31, 2005 and
        2004
        respectively.
  NOTE
        6--PAYABLE - SHARE HOLDERS
 
 The
        note
        payable incurred interest at 4.5% per annum and is payable on demand.
 
 On
        the 30
        December of 2005 the Company received loans from shareholder, CAPEX Investment
        Limited of $300,000. This loan was an advance against the Warrants components
        of
        the Private Placements which was executed on November 17, 2005. These warrants
        executed in first quarter of 2006 (see note 11).The loan carries an interest
        of
        10% and will be converted to shares during 1sr quarter of 2006.
 
 35
 
 NOTE
        7
        -CAPITAL STOCK
 
 The
        company is authorized to issue 100,000,000 shares of common stock (par value
        $0.001) of which 30,050,333 were issued and outstanding at of December 31,
        2005.
        During the fourth quarter, the Company issued a total of 4,533,333 new shares
        in
        connection with various private placements.
  NOTE
        8
        -INCOME TAXES
 
 No
        provision for income taxes has been made due to the utilization of net operating
        loss carryforwards. The Company has deductible net operating losses of
        $7,300,000 at December 31, 2005. These tax losses expire as follows: in 2023
        $1,900,000 will expire and in 2024 $5,400,000 will expire.
  Components
        of deferred tax assets and liabilities at December 31, 2005 are as
        follows:
 
 December
        31, 2005: December 31 , 2004:
 December
                    31, 2005:
                
                December
                    31 , 2004:Net
                    operating loss carried forward
                
                $
                2,768,000
                
                $
                626,200Valuation
                    allowance
                
                
                (2,768,000
                )
                
                (626,200
                )Net
                    deferred tax asset
                
                $
                0
                
                $
                0
  The
        Company has recorded a full valuation allowance against its deferred tax
        asset
        since it believes it is more likely than not that such deferred tax asset
        will
        not be realized.
  NOTE
        9
        -COMMITMENTS AND CONTINGENCIES
 
 The
        Company is committed under an operating lease for its New York office
        that requires for minimum annual rental of approx $96,000 per year and
        expire August 2008. Rental expense for the year ended December 31, 2005
        approximated $24,000.
  NOTE
        10
        -RELATED PARTY TRANSACTIONS
 
 Mr.
        Beerli undertook to advance payments during the year to cover general overheads
        and running cost of the of Zug office. The balance as of December 31, 2005
        was
        $676,873 ($489,220 for 2004).
 
 An
        amount
        of CAD 150,000 (2004: CAD 476,000) was advanced to Feduciare Alain Lemieux
        Trust, Canada for the period January to September 2005. The President and
        CEO,
        H.E. Ambassador Alain Lemieux, of the Company is the trust’s main beneficiary.
        There was no outstanding amount as of December 31, 2005 ($0 for
        2004).
 
 XLG
        was
        charged during 2005 $146,300 ($0 for 2004) for fees and expenses for the
        period
        May to December 2005 by Greendale Consult Ltd. The CFO and Director of
        the Company, Mr. Flemming Munck, is a significant shareholder in
        Greendale Consult Ltd. The outstanding amount owed to Greendale Consult Ltd
        as
        of December 31, 2005 was $0 ($0 for 2004).
 
 The
        Company signed an agreement with Mr. Daniel Courteau for the transfer of
        his
        rights in the bankruptcy of Symbior Technology Ltd for an amount of Canadian
        Dollars (CAD) 60,000. The outstanding amount as at December 31, 2005 was
        $50,000.
  During
        2005 the Company decided to write off the balance owed from a related party
        of
        approximately $170,000. The management viewed the outstanding balance as
        uncollectible and for financial prudence made a charge for 100% of the
        outstanding receivables.
  NOTE
        11
        -SUBSEQUENT EVENTS
 
 On
        February 14, 2006, the Company issued 1,400,000 shares of common stock
        previously underlying Series B Warrants. On February 26, 2006, the Company
        issued 330,000 shares of common stock previously underlying Series A Warrants.
        On March 30, 2006, the Company issued 1,111,111 shares of common stock
        previously underlying Series A Warrants. All warrants had at purchase price
        of
        $1.25 making the proceeds $3,551,388.75. The Company has undertaken to register
        for resale all of the foregoing shares.
  36
  Note
        12 -
        RECENTLY ISSUED ACCOUNTING STANDARDS
 
 In
        December 2003, the Financial Accounting Standards Board issued FASB
        Interpretation Number 46-R ("FIN 46-R") "Consolidation of Variable Interest
        Entities." FIN 46-R, which modifies certain provisions and effective dates
        of
        FIN 46, sets forth criteria to be used in determining whether an investment
        in a
        variable interest entity should be consolidated. These provisions are based
        on
        the general premise that if a company controls another entity through interests
        other than voting interests, that company should consolidate the controlled
        entity. The Company believes that currently, it does not have any material
        arrangements that meet the definition of a variable interest entity, which
        would
        require consolidation.
 
 In
        November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An Amendment
        of
        ARB No. 43, Chapter 4" (SFAS No. 151). SFAS No. 151 requires all companies
        to
        recognize a current-period charge for abnormal amounts of idle facility expense,
        freight, handling costs and wasted materials. This statement also requires
        that
        the allocation of fixed production overhead to the costs of conversion be
        based
        on the normal capacity of the production facilities. SFAS No. 151 will be
        effective for fiscal years beginning after June 15, 2005. The Company does
        not
        expect the adoption of this statement to have a material effect on its
        consolidated financial statements.
 
 In
        December 2004, the FASB issued SFAS No.123(R), "Share-Based Payment" (SFAS
        No.
        123(R). This statement replaces SFAS No. 123 and supersedes APB 25. SFAS
        123 (R)
        requires all stock-based compensation to be recognized as an expense in the
        financial statements and that such compensation be measured according to
        the
        grant-date fair value of stock options. SFAS 123 (R) will be effective for
        annual periods beginning after June 15, 2005. The Company currently does
        not
        provide for any stock-based compensation and it will evaluate the impact
        this
        statement will have on its consolidated financial statements if such
        compensation were to take place in the future.
 
 In
        December 2004, the FASB issued SFAS No. 153, "Exchanges on Nonmonetary Assets
        An
        Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions"
        (SFAS
        153) SFAS eliminates the exception from fair value measurement for nonmonetary
        exchanges of similar productive assets in paragraph 21(b) of APB Opinion
        No. 29,
        "Accounting for Nonmonetary Transactions," and replaces it with an exception
        for
        exchanges that do not have commercial substance. SFAS 153 specifies that
        a
        nonmonetary exchange has commercial substance if the future cash flows of
        the
        entity are expected to change significantly as a result of the exchange.
        SFAS
        153 is effective for fiscal periods beginning after June 15, 2005. The Company
        does not expect the adoption of this statement to have a material effect
        on its
        consolidated financial statements.
 
 In
        May
        2005, the FASB issued SFAS No. 154, "ACCOUNTING FOR CHANGES AND ERROR
        CORRECTIONS, A REPLACEMENT OF APB OPINION NO. 20 AND FASB STATEMENT NO. 3"
        SFAS
        154 applies to all voluntary changes in accounting principle and requires
        retrospective application to prior periods' financial statements of changes
        in
        accounting principle. This statement also requires that a change in
        depreciation, amortization, or depletion method for long-lived, nonfinancial
        assets be accounted for as a change in accounting estimate effected by a
        change
        in accounting principle. SFAS 154 carries forward without change the guidance
        contained in Opinion No. 20 for reporting the correction of an error in
        previously issued financial statements and a change in accounting estimate.
        This
        statement is effective for accounting changes and corrections of errors made
        in
        fiscal years beginning after December 15, 2005. The Company does not expect
        the
        adoption of this standard to have a material impact on its financial condition,
        results of operations, or liquidity.
  37




**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





**XL
                GENERATION INTERNATIONAL INC.**April 14, 2006By:
              /s/ Alain
                LemieuxName:Alain
                LemieuxTitle:  
                Principal
                Executive Officer
 
 By:
              /s/ Flemming
                MunckName:
Flemming
                MunckTitle:Principal
                  Financial Officer andPrincipal
                  Accounting Officer





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.








/s/
      Alain Lemieux


Name: Alain
      Lemieux


Title: CEO,
      President and Director


Dated: April
      14,
      2006








/s/
      Flemming Munck


Name: Flemming
      Munck


Title: CFO
      and
      Director


Dated: April
      14,
      2006








/s/
      Alexander C. Gilmour, CVO


Name: Alexander
      C. Gilmour, CVO


Title: Chairman
      of the Board


Dated: April
      14,
      2006








/s/
      Daniel Courteau


Name: Daniel
      Courteau


Title: Secretary
      and Director


Dated: April
      14,
      2006








/s/
      Claude Pellerin


Name: Claude
      Pellerin


Title: Director


Dated: April
      14,
      2006








/s/
      Albert Beerli


Name: Albert
      Beerli


Title: Director


Dated: April
      14,
      2006




38