UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended: June 30, 2005
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 0-49649
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PLAYLOGIC ENTERTAINMENT, INC.
-----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 23-3083371
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Concertgebouwplein 13, 1071 LL Amsterdam, The Netherlands 1071 LL
(Address of principal executive offices) (Zip Code)
(011) 31-20-676-0304
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. X Yes No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at August 19, 2005
----- ------------------------------
Common Stock, par value $.001 per share 23,063,994 shares
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
PLAYLOGIC ENTERTAINMENT, INC.
FORM 10-QSB
CONTENTS
PART I -- FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements 3
Consolidated Balance Sheets at June 30, 2005 (unaudited) 3
Consolidated Statements of Operations and
Comprehensive Income (unaudited) for the six months
ended June 30, 2005 and June 30, 2004 and for three
months ended June 30, 2005 and 2004 4
Consolidated Statements of Cash Flows (unaudited) for the
six months ended June 30, 2005 and 2004 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis 15
Item 3. Controls and Procedures 21
PART II -- OTHER INFORMATION 22
Item 1. Legal Proceedings 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits 22
Signatures 23
Exhibit Index 24
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Playlogic Entertainment, Inc. and Subsidiaries
Balance Sheets
June 30, 2005
(Unaudited)
June 30, 2005
-------------
ASSETS
------
Current Assets
Cash on hand and in bank $ 144,031
Accounts Receivable
Trade, net of allowance for doubtful accounts 703,430
Taxes 301,740
Affiliated entities 491,115
Prepaid expenses 784,499
Deferred tax asset 584,837
-------------
Total current assets 3,009,652
-------------
Software development costs 1,838,512
-------------
Property and equipment - at cost, net of accumulated depreciation 503,666
-------------
Other Assets 584,837
-------------
Total Assets $ 6,046,249
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Bank overdraft $ 393,896
Short term loans from third parties 187,023
Software development financing 241,320
Accounts payable - trade 2,450,847
Accrued salaries, wages and related payroll taxes 745,263
Other accrued liabilities 415,339
Income tax due to shares for management 85,251
-------------
Total Current Liabilities 4,518,939
-------------
Commitments and Contingencies
Shareholders' Equity
Preferred stock - $0.001 par value
20,000,000 shares authorized
None issued and outstanding
Common stock - $0.001 par value
100,000,000 shares authorized
23,063,994 and 22,801,894 shares
issued and outstanding, respectively 23,064
Additional paid-in capital 32,127,823
Currency translation adjustment 1,171,721
Accumulated deficit (32,066,783)
-------------
Total shareholders' equity 1,255,825
-------------
Total Liabilities and Shareholders' Equity $ 6,046,249
=============
The accompanying notes are an integral part of these consolidated financial
statements.
3
Playlogic Entertainment, Inc. and Subsidiaries
Statements of Operations and Comprehensive Income
Six and Three months ended June 30, 2005 and 2004
(Unaudited)
Six months Six months Three months Three months
ended ended ended ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
------------- ------------- ------------- -------------
Revenues $ 736,559 $ -- $ 204,421 $ --
Cost of Sales 139,769 -- 16,692 --
------------- ------------- ------------- -------------
Gross Profit 596,790 -- 187,729 --
------------- ------------- ------------- -------------
Expenses
Research and development costs 485,937 1,809,483 123,668 1,010,310
Sales and marketing expenses 500,585 386,999 494,665 372,255
General and administrative expenses 1,300,367 10,360,091 649,388 775,682
Depreciation 204,968 154,038 100,901 80,591
Compensation expense related to
common stock issuances at less
than "fair value" 90,000 -- 90,000 --
------------- ------------- ------------- -------------
Total operating expenses 2,581,857 12,710,611 1,458,622 2,238,838
------------- ------------- ------------- -------------
Loss from operations (1,985,067) (12,710,611) (1,270,893) (2,238,838)
Other Income (Expense)
Interest expense (197,775) (752,349) (94,445) (416,238)
------------- ------------- ------------- -------------
Loss before Income Taxes (2,182,842) (13,462,960) (1,365,338) (2,655,076)
Provision for Income Tax Benefit 623,404 -- 365,890 --
------------- ------------- ------------- -------------
Net Loss (1,559,438) (13,462,960) (999,448) (2,655,523)
Other comprehensive income
Change in foreign currency translation (3,958,188) (466,735) (2,271,116) (198,138)
------------- ------------- ------------- -------------
Comprehensive Loss $ (5,517,626) $ (13,929,965) $ (3,270,564) $ (2,853,214)
============= ============= ============= =============
Loss per weighted-average share of
common stock outstanding,
computed on Net Loss - basic
and fully diluted $ (0.07) $ (0.56) $ (0.04) $ (0.12)
============= ============= ============= =============
Weighted-average number of shares of
common stock outstanding 22,821,155 22,676,120 22,840,205 22,759,290
============= ============= ============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
4
Playlogic Entertainment, Inc. and Subsidiaries
Statements of Cash Flows
Six months ended June 30, 2005 and 2004
(Unaudited)
Three months Three months
ended ended
June 30, 2005 June 30, 2004
------------- -------------
Cash Flows from Operating Activities
Net Loss $ (1,604,310) $ (13,462,960)
Adjustments to reconcile net income to net cash
provided by operating activities
Currency translation adjustment 3,958,188 466,734
Depreciation 204,968 154,038
Compensation expense related to common stock
issuances at less than "fair value" 90,000 --
(Increase) Decrease in
Accounts receivable - trade (703,430) (79,897)
Value added taxes receivable (301,740) (276,413)
Prepaid expenses (1,237,843) 164,490
Deferred tax asset (584,837) --
Increase (Decrease) in
Accounts payable - trade (736,746) 949,609
Other current liabilities 437,547 356,428
------------- -------------
Net cash provided by (used in) operating activities (478,203) (11,727,971)
------------- -------------
Cash Flows from Investing Activities
Cash paid for software development (664,115) (471,556)
Cash advanced to affiliated entities (402,357) --
Cash paid to acquire property and equipment -- (319,300)
Cash received from disposition of property and
equipment 12,838 --
------------- -------------
Net cash used in investing activities (1,053,634) (790,856)
------------- -------------
Cash Flows from Financing Activities
Increase in cash overdraft (539,121) 1,510,736
Principal payments on short term notes to third parties (25,995) --
Principal payments on long-term debt (56,235) (29,250)
Cash advanced or repaid to shareholder (8,291,548) 2,940,867
Proceeds from sales of common stock 10,524,700 8,951,268
Cash contributed by shareholder to support operations 45,341 --
Cash paid to acquire capital (3,500) --
------------- -------------
Net cash provided by (used in) financing activities 1,653,642 13,373,621
------------- -------------
Increase (Decrease) in Cash and Cash Equivalents 121,805 854,794
Cash and cash equivalents at beginning of period 22,226 81,711
------------- -------------
Cash and cash equivalents at end of period $ 144,031 $ 936,505
------------- -------------
Supplemental Disclosures of Interest and Income
Taxes Paid
Interest paid during the period $ 197,775 $ 752,349
============= =============
Income taxes paid (refunded) $ -- $ --
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
5
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note A - Organization and Description of Business
Playlogic Entertainment, Inc. (PEI) was incorporated on May 25, 2001 in
accordance with the Laws of the State of Delaware as Donar Enterprises, Inc.
PEI's initial business plan was to provide the conversion and filing of various
documents prepared in accordance with either the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, for small to
mid-sized public companies with the U.S. Securities and Exchange Commission
(SEC) electronically through EDGAR, the SEC's Electronic Data Gathering,
Analysis, and Retrieval system. The Company has never been affiliated with the
SEC in any manner.
On February 27, 2002, PEI's Registration Statement on Form SB-2 (SEC File No.
333-68702), registering 2,000,000 pre-reverse split shares to be sold at a price
of $0.05 per share, was declared effective. Between July and December 2002, PEI
sold an aggregate 656,000 pre-reverse split shares of stock under this
Registration Statement.
In June 2004 and December 2004, respectively, PEI experienced separate changes
in control and abandoned its business plan related to providing electronic
filing services for small to mid-sized public companies and began a search to
seek a suitable reverse acquisition candidate through acquisition, merger or
other suitable business combination method.
On June 30, 2005, pursuant to a Securities Exchange Agreement (Exchange
Agreement) by and among the Company and Playlogic International N.V., a
corporation formed under the laws of The Netherlands (Playlogic), and the
shareholders of Playlogic (Playlogic Shareholders); the Playlogic Shareholders
exchanged 100.0% of the issued and outstanding ordinary shares and preferred
shares of Playlogic for an aggregate 21,836,924 shares of the Company's common
stock. As a result of this transaction, Playlogic became the Company's
wholly-owned subsidiary, now represents all of the Company's commercial
operations, and the Playlogic Shareholders control approximately 91.0% of the
outstanding common stock of the Company, post-transaction.
Playlogic International N.V. was incorporated in the Netherlands in May 2002.
Playlogic publishes interactive entertainment software for video game consoles,
personal computers (PCs) and other handheld and mobile electronic devices
developed by its internal studio and by third parties.
In subsequent notes, the consolidated entity is referred to as "Company".
Note B - Preparation of Financial Statements
The acquisition of Playlogic International N. V. on June 30, 2005, by Playlogic
Entertainment, Inc. (formerly Donar Enterprises, Inc.) effected a change in
control and was accounted for as a "reverse acquisition" whereby Playlogic N. V.
is the accounting acquiror for financial statement purposes. Accordingly, for
all periods subsequent to the June 30, 2005, the financial statements of the
Company reflect the historical financial statements of Playlogic N. V. since its
inception and the operations of Playlogic Entertainment (formerly Donar)
subsequent to the June 30, 2005.
6
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - Continued
Note B - Preparation of Financial Statements - Continued
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
a year-end of December 31.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Management acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
For segment reporting purposes, the Company operated in only one industry
segment during the periods represented in the accompanying financial statements
and makes all operating decisions and allocates resources based on the best
benefit to the Company as a whole.
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements filed with the U. S. Securities and
Exchange Commission on its Current Report on Form 8-K as filed on July 15, 2005
containing the Playlogic financial statements as of and for the year ended
December 31, 2004. The information presented within these interim financial
statements may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-QSB, are unaudited and contain all material
adjustments, consisting only of normal recurring adjustments necessary to
present fairly the financial condition, results of operations and cash flows of
the Company for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending December 31, 2005.
These financial statements reflect the books and records of Playlogic
Entertainment, Inc. (formerly Donar Enterprises, Inc.), Playlogic International
N.V. (a corporation domiciled in The Netherlands) and its 100%-subsidiary
Playlogic Game Factory B.V. All significant intercompany transactions have been
eliminated in combination. The consolidated entities are referred to as Company.
7
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - Continued
Note C - Going Concern Contingency
The Company's management believes that the current cash on hand and additional
cash expected from operations will be sufficient order to cover its working
capital requirements through the third quarter of 2005. After that time, it will
need to obtain additional financing from third parties. If it does obtain any
necessary financing in the future, it may need to cease operations.
Note D - Summary of Significant Accounting Policies
1. Currency translation
--------------------
The Company incurs expenses in both US Dollar and Euro transaction
accounts. The Euro is the functional currency of the Company's operating
subsidiaries domiciled in The Netherlands. All transactions reflected in
the accompanying financial statements have been converted into US Dollar
equivalents. For balance sheet purposes, at the end of any accounting
cycle, the exchange rate at the balance sheet is used for all assets and
liabilities. The utilized conversion rates are:
June 30, 2004: $1.21500
December 31, 2004: $1.36450
June 30, 2005: $1.20660
For revenues, expenses, gains and losses during a respective reporting
period, an weighted average exchange rate for the respective reporting
period is used to translate those elements. The Company's management
considers the Euro to be a stable currency. Accordingly, the Company
calculates the weighted average exchange rate using the first day of the
period being converted, the 15th of each respective month and the last day
of each respective month in the reporting period. The exchange rates used
for all revenues, expenses, gains and losses during the year-to-date
periods ended, as noted, are:
June 30, 2004: $1.22618
December 31, 2004: $1.24829
June 30, 2005: $1.28617
2. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, certificates of
deposit and other highly-liquid investments with maturities of three months
or less, when purchased, to be cash and cash equivalents.
Cash overdrafts may occur from time-to-time depending upon management's
cash management policies.
3. Accounts receivable - trade
---------------------------
The Company's current customers are located principally within Europe. The
Company typically makes sales to most of its retailers and some
distributors on unsecured credit, with terms that vary depending upon the
customer's credit history, solvency, credit limits and sales history. From
time to time, distributors and retailers in the interactive entertainment
software industry have experienced significant fluctuations in their
business operations and a number of them have failed. The insolvency or
business failure of any significant Company customer could have a material
negative impact on the Company's business and financial results.
8
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - Continued
Note D - Summary of Significant Accounting Policies - Continued
3. Accounts receivable - trade - continued
---------------------------
Because of the credit risk involved, management has provided an allowance
for doubtful accounts which reflects its opinion of amounts which will
eventually become uncollectible. In the event of complete non-performance,
the maximum exposure to the Company is the recorded amount of trade
accounts receivable shown on the balance sheet at the date of
non-performance.
4. Property and equipment
----------------------
Property and equipment is recorded at cost and is depreciated on a
straight-line basis, over the estimated useful lives (generally 3 to 10
years) of the respective asset. Major additions and betterments are
capitalized and depreciated over the estimated useful lives of the related
assets. Maintenance, repairs, and minor improvements are charged to expense
as incurred.
5. Software development costs
--------------------------
Capitalized software development costs include payments made to independent
software developers under development agreements, as well as direct costs
incurred for internally developed products. The Company accounts for
software development costs in accordance with Statement of Financial
Accounting Standards No. 86 - "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed". Software development
costs are capitalized once technological feasibility of a product is
established and such costs are determined to be recoverable. The Company
utilizes both internal development teams and third-party software
developers to develop its products. The Company also capitalizes internal
software development costs and other content costs subsequent to
establishing technological feasibility of a title. Amortization of such
costs as a component of cost of sales is recorded on a title-by-title basis
based on the greater of the proportion of current year sales to the total
of current and estimated future sales for the title or the straight-line
method over the remaining estimated useful life of the title. At each
balance sheet date, the company evaluates the recoverability of capitalized
software costs based on undiscounted future cash flows and charge to cost
of sales any amounts that are deemed unrecoverable. The Company's
agreements with third-party developers generally provide it with exclusive
publishing and distribution rights and require it to make advance payments
that are recouped against royalties due to the developer based on the
contractual amounts of product sales, adjusted for certain costs.
9
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - Continued
Note D - Summary of Significant Accounting Policies - Continued
6. Prepaid royalties
-----------------
The Company capitalizes external software development costs (prepaid
royalties) and other content costs subsequent to establishing technological
feasibility of a title. Advance payments are amortized as royalties in cost
of sales on a title-by-title basis based on the greater of the proportion
of current year sales to the total of current and estimated future sales
for that title or the contractual royalty rate based on actual net product
sales as defined in the respective agreements. At each balance sheet date,
the company evaluates the recoverability of advanced development payments
and unrecognized minimum commitments not yet paid to determine the amounts
unlikely to be realized through product sales. Advance payments are charged
to cost of sales in the amount that management determines is unrecoverable
in the period in which such determination is made or if management
determines that it will cancel a development project.
7. Organization and reorganization costs
-------------------------------------
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organizational
and initial costs incurred with the incorporation and initial
capitalization of the Company were charged to operations as incurred.
8. Research and development expenses
---------------------------------
Research and development expenses are charged to operations as incurred.
9. Advertising expenses
--------------------
The Company does not utilize direct solicitation advertising. All other
advertising and marketing expenses are charged to operations as incurred.
10. Income Taxes
------------
The Company utilizes the asset and liability method of accounting for
income taxes. At June 30, 2005 and 2004, the deferred tax asset and
deferred tax liability accounts, as recorded when material, are entirely
the result of temporary differences. Temporary differences represent
differences in the recognition of assets and liabilities for tax and
financial reporting purposes, primarily accumulated depreciation and
amortization and the anticipated utilization of net operating loss
carryforwards to offset current taxable income..
11. Share-Based Payments
--------------------
The Company utilizes the fair-value method of accounting for the payment
for goods and/or services with the issuance of equity shares in lieu of
cash.
12. Earnings (loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) available to common shareholders by the weighted-average number of
common shares outstanding during the respective period presented in our
accompanying financial statements.
10
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - Continued
Note D - Summary of Significant Accounting Policies - Continued
12. Earnings (loss) per share - continued
-------------------------
Fully diluted earnings (loss) per share is computed similar to basic income
(loss) per share except that the denominator is increased to include the
number of common stock equivalents (primarily outstanding options and
warrants).
Common stock equivalents represent the dilutive effect of the assumed
exercise of the outstanding stock options and warrants, using the treasury
stock method, at either the beginning of the respective period presented or
the date of issuance, whichever is later, and only if the common stock
equivalents are considered dilutive based upon the Company's net income
(loss) position at the calculation date.
As of June 30, 2005 and 2004, the Company has no outstanding stock options
and the Company's outstanding stock warrants are anti-dilutive due to the
Company's net operating loss position.
13. Revenue recognition
-------------------
The Company evaluates the recognition of revenue based on the criteria set
forth in SOP 97-2, "Software Revenue Recognition", as amended by SOP 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, With Respect to
Certain Transactions" and Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements", as revised by SAB 104,
"Revenue Recognition". The Company evaluates revenue recognition using the
following basic criteria:
* Evidence of an arrangement: The Company recognizes revenue when it has
evidence of an agreement with the customer reflecting the terms and
conditions to deliver products.
* Delivery: Delivery is considered to occur when the products are
shipped and risk of loss has been transferred to the customer.
* Fixed or determinable fee: If a portion of the arrangement fee is not
fixed or determinable, the Company recognizes that amount as revenue
when the amount becomes fixed or determinable.
* Collection is deemed probable: At the time of the transaction, the
Company conducts a credit review of each customer involved in a
significant transaction to determine the creditworthiness of the
customer. Collection is deemed probable if the Company expects the
customer to be able to pay amounts under the arrangement as those
amounts become due. If the Company determines that collection is not
probable, it recognizes revenue when collection becomes probable
(generally upon cash collection).
11
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - Continued
Note D - Summary of Significant Accounting Policies - Continued
14. New accounting pronouncements
-----------------------------
In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123 (revised 2004),
"Share-Based Payment" which revised Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation". This
statement supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees". The revised statement addresses the accounting for share-based
payment transactions with employees and other third parties, eliminates the
ability to account for share-based compensation transactions using APB 25
and requires that the compensation costs relating to such transactions be
recognized in the condensed consolidated statement of operations. The
revised statement is effective as of the first fiscal year beginning after
June 15, 2005. Although the Company is currently analyzing the method of
adoption and impact of the adoption of this standard, effective January 1,
2006, it is expected to have an impact on the Company's consolidated
financial statements similar to the pro forma disclosure under Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123").
Note E - Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
Interest rate risk is the risk that the Company's earnings are subject to
fluctuations in interest rates on either investments or on debt and is fully
dependent upon the volatility of these rates. The Company does not use
derivative instruments to moderate its exposure to interest rate risk, if any.
Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the volatility of these rates. The company does not use derivative
instruments to moderate its exposure to financial risk, if any.
Note F - Concentrations of Credit Risk
The Company maintains its cash accounts in a financial institution subject to
insurance coverage issued by the Federal Deposit Insurance Corporation (FDIC).
Under FDIC rules, the Company is entitled to aggregate coverage of $100,000 per
account type per separate legal entity per financial institution. Through June
30, 2005, the Company maintained deposits in various financial institutions with
credit risk exposures in excess of statutory FDIC coverage. The Company has
incurred no losses during 2004 or 2003, or subsequent thereto, as a result of
any unsecured bank balance.
12
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - Continued
Note F - Concentration of credit Risk - Continued
The Company is exposed to currency risks. The Company is particularly exposed to
fluctuations in the exchange rate between the U.S. Dollar and the Euro, as it
incurs manufacturing costs and prices its products in the Euro (the Company's
operating subsidiary's functional currency) while a portion of its revenue is
denominated in U.S. Dollars. A substantial portion of the company's assets,
liabilities and operating results are denominated in Euros, and a minor portion
of its assets, liabilities and operating results are denominated in currencies
other than the Euro. The Company's consolidated financial statements are
expressed in US Dollars. Accordingly, its results of operations are exposed to
fluctuations in various exchange rates. As of the applicable balance sheet
dates, the exposure was very limited, hence, no hedging activities were deemed
necessary by management. In the Company's exchange rate agreements, it uses
fixed interest rates.
Note G - Common Stock Transactions
On February 21, 2005, by written consent in lieu of meeting, stockholders
representing 78.9% of the issued and outstanding shares of our common stock
approved a recommendation of our Board of Directors to effect a one share for
ten shares reverse stock split of our common stock, par value $.001 per share,
with all fractional shares rounded down to the nearest whole share. The reverse
split became effective on April 15, 2005. As a result of the reverse split, the
total number of issued and outstanding shares of our common stock decreased from
9,289,647 shares to 928,964 shares, after giving effect to rounding for
fractional shares. In the reverse split calculation, all fractional shares were
rounded down to the nearest whole share. Holders of less than ten shares, prior
to the reverse split, shall receive $0.30 per share as compensation. The effect
of this action is reflected in the Company's financial statements as of the
first day of the first period.
In conjunction with the above discussed reverse stock split, all share
references in the following paragraphs reflect the post-April 15, 2005 reverse
split action.
On June 30, 2005, pursuant to a Securities Exchange Agreement (Exchange
Agreement) by and among the Company and Playlogic International N.V., a
corporation formed under the laws of The Netherlands (Playlogic), and the
shareholders of Playlogic (Playlogic Shareholders); the Playlogic Shareholders
exchanged 100.0% of the issued and outstanding ordinary shares and preferred
shares of Playlogic for an aggregate 21,836,924 shares of the Company's common
stock. As a result of this transaction, Playlogic became the Company's
wholly-owned subsidiary, now represents all of the Company's commercial
operations, and the Playlogic Shareholders control approximately 91.0% of the
outstanding common stock of the Company, post-transaction.
On March 10, 2004, the Company issued 32,080 shares of restricted, unregistered
common stock to Michael Tay, son of then-President and controlling shareholder,
William Tay, as compensation for various services provided to the Company. This
transaction was valued at approximately $16,040 (or $0.50 per reverse split
share). The Company relied upon the exemptions provided by Section 4(2) of the
Securities Act of 1933, as amended, for this transaction.
On April 22, 2004, the Company issued an aggregate 184,618 shares of common
stock to William Tay as consideration of approximately $85,000 in accrued, but
unpaid, officer compensation, reimbursement of trade accounts payable paid by
Mr. Tay on behalf of the Company and in repayment of approximately $7,000 in
unsecured advances made to the Company for working capital. The Company relied
upon the exemptions provided by Section 4(2) of the Securities Act of 1933, as
amended, for this transaction.
13
Playlogic Entertainment, Inc. and Subsidiaries
Notes to Financial Statements - Continued
Note G - Common Stock Transactions - Continued
As a result of the December 15, 2004 change in control and in consideration for
agreeing to serve as an officer and director of the Company, Timothy P. Halter
was granted a stock warrant to purchase up to 100,000 post-reverse split shares
of the Company's restricted, unregistered common stock at an effective price of
$0.60 per share, in reliance upon the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933, as amended. Mr. Halter may exercise
the warrants, in whole or in part, at any time after the issuance of the
warrants and prior to the expiration of the warrants on December 15, 2007. On
June 1, 2005, Mr. Halter exercised all of the outstanding warrants for $60,000
cash.
The following table presents warrant activity through June 30, 2005:
Weighted
Average
Number of Exercise
Shares Price
--------- ---------
Balance at December 31, 2004 100,000 $0.60
Issued --
Exercised (100,000)
---------
Balance at June 30, 2005 --
=========
On June 29, 2005, the Company sold 162,100 shares of its common stock to
Johannes Wilhelmus Kluijtmans for aggregate consideration of $608,000, or
approximately $3.75 per share. The sale was made pursuant to the terms of a
Subscription Agreement, dated as of June 28, 2005, which agreement contained
confidentiality and non-disclosure agreements and covenants. The sale was made
without registration in reliance upon the exemption afforded by Section 4(2) of
the Securities Act of 1933, as amended. The shares are "restricted securities"
in that they are legended with reference to Rule 144. The Company never utilized
an underwriter for this offering of its securities and no sales commissions were
paid to any third party in connection with the above-referenced sale.
Note H - Commitments and Contingencies
Security agreement
- ------------------
Playlogic Game Factory B.V., on August 31, 2004, signed a security agreement in
favor of the Dutch Tax Authorities for the amount $98,394 concerning Engine
Software B.V.
Transactions with related parties
- ---------------------------------
In 2004, Sloterhof Investments N.V. and Castilla Investments B.V., entities
owned and controlled by members of the Company's current management were
previously granted a stock option right to acquire up to a total of 8,609,189
shares in Playlogic International N. V. with an exercise price at par value of
EURO 0.05. The intrinsic value of this option right was charged to operations
upon it's grant during 2004.
Sloterhof Investments N.V. agreed with the company to reimburse the company for
certain expenses incurred in connection with the reverse-share exchange
transaction with Playlogic Entertainment, Inc., previously discussed.
14
Item 2. Management's Discussion and Analysis
Forward-Looking Statements
The Information in this registration statement contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. This Act provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information about themselves so long
as they identify these statements as forward looking and provide meaningful
cautionary statements identifying important factors that could cause actual
results to differ from the projected results. All statements, other than
statements of historical fact, made in this registration statement are forward
looking. In particular, the statements herein regarding industry prospects and
future results of operations or financial position are forward-looking
statements. Forward-looking statements reflect management's current expectations
and are inherently uncertain. Our actual results may differ significantly from
management's expectations.
The following discussion and analysis should be read in conjunction
with our financial statements included herewith. This discussion should not be
construed to imply that the results discussed herein will necessarily continue
into the future, or that any conclusion reached herein will necessarily be
indicative of actual operating results in the future. Such discussion represents
only the best present assessment of our management.
Management's Overview of Historical and Prospective Business Trends
Increased Console Installed Base. As consumers purchase the current
generation of consoles, either as first time buyers or by upgrading from a
previous generation, the console installed base increases. As the installed base
for a particular console increases, we believe we will generally able to
increase our unit volume. However, as consumers anticipate the next generation
of consoles, unit volumes often decrease. In March 2004, Microsoft reduced there
tail price of its box consoles in the US, and in May and December 2004, Sony did
the same with its PlayStation2 consoles. As price reductions drive sales of
consoles and the related installed base of these current generation consoles
increases during fiscal 2005, we believe that our unit sales of current
generation titles are likely to be increased.
Software Prices. As current generation console prices decrease, we
expect more value-oriented consumers to become part of the interactive
entertainment software market. We believe that hit titles will continue to be
launched at premium price points and will maintain those premium price points
longer than less popular games. However, as a result of a more value-oriented
consumer base, and a greater number of software titles being published, we
expect average software prices to gradually come down, which we expect to
negatively impact our gross margin. To offset this, as the installed base
increases, total volume of software sales are expected to increase, compensating
for the lower margins on software sales.
Increasing Cost of Titles. Hit titles have become increasingly more
expensive to produce and market as the platforms on which they are played
continue to advance technologically and consumers demand continual improvements
in the overall game play experience. We expect this trend to continue as we
require larger production teams to create our titles, the technology needed to
develop titles becomes more complex, we continue to develop and expand the
online gaming capabilities included in our products and we develop new methods
to distribute our content via the Internet. Any increase in the cost of
licensing third-party intellectual property used in our products would also make
these products more expensive to publish.
15
Critical Accounting Policies
General
The unaudited condensed consolidated financial statements of the company have
been prepared in accordance with the instructions to Regulation S-X.
Accordingly, the financial statements do not include all information and
disclosures necessary for a presentation of the company's financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles in the United States of America. In the opinion of
management, the financial statements reflect all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the company's
financial position, results of operations and cash flows. The results of
operations for any interim periods are not necessarily indicative of the results
for the full year. The unaudited financial statements should be read in
conjunction with the audited financial statements and notes thereto contained in
this prospectus.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of net sales and expenses during the
reporting periods. The most significant estimates and assumptions relate to the
recoverability of prepaid royalties, capitalized software development costs and
intangibles, inventories, realization of deferred income taxes and the adequacy
of allowances for doubtful accounts. Actual amounts could differ significantly
from these estimates.
Accounts receivable
Accounts receivable are shown after deduction of a provision for bad
and doubtful debts where appropriate.
Software Development Costs
Capitalized software development costs include payments made to
independent software developers under development agreements, as well as direct
costs incurred for internally developed products. We account for software
development costs in accordance with SFAS No. 86 "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed". Software
development costs are capitalized once technological feasibility of a product is
established and such costs are determined to be recoverable.
We utilize both internal development teams and third-party software
developers to develop our products.
We capitalize internal software development costs and other content
costs subsequent to establishing technological feasibility of a title.
Amortization of such costs as a component of cost of sales is recorded on a
title-by-title basis based on the greater of the proportion of current year
sales to the total of current and estimated future sales for the title or the
straight-line method over the remaining estimated useful life of the title. At
16
each balance sheet date, we evaluate the recoverability of capitalized software
costs based on undiscounted future cash flows and charge to cost of sales any
amounts that are deemed unrecoverable. Our agreements with third-party
developers generally provide us with exclusive publishing and distribution
rights and require us to make advance payments that are recouped against
royalties due to the developer based on the contractual amounts of product
sales, adjusted for certain costs.
Prepaid royalties
We capitalize external software development costs (prepaid royalties)
and other content costs subsequent to establishing technological feasibility of
a title.
Advance payments are amortized as royalties in cost of sales on a
title-by-title basis based on the greater of the proportion of current year
sales to the total of current and estimated future sales for that title or the
contractual royalty rate based on actual net product sales as defined in the
respective agreements. At each balance sheet date, we evaluate the
recoverability of advanced development payments and unrecognized minimum
commitments not yet paid to determine the amounts unlikely to be realized
through product sales. Advance payments are charged to cost of sales in the
amount that management determines is unrecoverable in the period in which such
determination is made or if management determines that it will cancel a
development project.
Revenue Recognition
We evaluate the recognition of revenue based on the criteria set forth
in SOP 97-2, "Software Revenue Recognition", as amended by SOP 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain
Transactions" and Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition in Financial Statements", as revised by SAB 104, "Revenue
Recognition". We evaluate revenue recognition using the following basic
criteria:
o Evidence of an arrangement: We recognize revenue when we have
evidence of an agreement with the customer reflecting the
terms and conditions to deliver products.
o Delivery: Delivery is considered to occur when the products
are shipped and risk of loss has been transferred to the
customer.
o Fixed or determinable fee: If a portion of the arrangement fee
is not fixed or determinable, we recognize that amount as
revenue when the amount becomes fixed or determinable.
o Collection is deemed probable: At the time of the transaction,
we conduct a credit review of each customer involved in a
significant transaction to determine the creditworthiness of
the customer.
o Collection is deemed probable if we expect the customer to be
able to pay amounts under the arrangement as those amounts
become due. If we determine that collection is not probable,
we recognize revenue when collection becomes probable
(generally upon cash collection).
17
Product Revenue
Product revenue, including sales to resellers and distributors, is
recognized when the above criteria are met. We reduce product revenue for
estimated customer returns by distributing our products through experienced
distributors with whom we had previously worked.
New Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 123 (R), "Share-Based
Payment" which revised Statement of Financial Accounting Standards No. 123 (R),
"Accounting for Stock-Based Compensation". This statement supercedes APB Opinion
No. 25, "Accounting for Stock Issued to Employees". The revised statement
addresses the accounting for share-based payment transactions with employees and
other third parties, eliminates the ability to account for share-based
compensation transactions using APB 25 and requires that the compensation costs
relating to such transactions be recognized in the condensed consolidated
statement of operations. The revised statement is effective as of the first
fiscal year beginning after June 15, 2005.
Although we are currently analyzing the method of adoption and impact
of the adoption of this standard, effective January 1, 2006, we expect it will
have an impact on our condensed consolidated financial statements similar to the
pro forma disclosure under Statement of Financial Accounting Standards No. 123
(R), "Accounting for Stock-Based Compensation" ("SFAS 123 (R)").
Results of Operations
Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004.
Net sales. Net sales for the three months ended June 30, 2005 were
$204,421, as compared to $0 for the three months ended June 30, 2004. This
increase in revenue is primarily the result of starting sales of Playlogic's
games in the fourth quarter of 2004. $204,421 of the revenues for the three
months ended June 30, 2005 were from Europe, and $0 were from the US. All of
these revenues were derived from Playlogic's game distributors.
Gross Profit. Gross profit totaled approximately $187,729 for the three
months ended June 30, 2005. For the three months ended June 30, 2004, gross
profit totaled $0. This increase in gross profit is primarily the result of an
increase in net sales.
Selling, Marketing, General and Administrative Expenses. Selling,
marketing, general and administrative expenses totaled $1,144,053, for the three
months ended June 30, 2005. For the three months ended June 30, 2004, selling,
general and administrative expenses totaled $1,147,937. This represents a
decrease of $3,884, or 0.3%.
Research and development. Research and development expenses totaled
$123,668 for the three months ended June 30, 2005. For the three months ended
June 30, 2004, research and development totaled $1,010,310. This represents a
decrease of $886,642, or 87%. This decrease was due to a higher amount of our
research and development expenses being capitalized.
Depreciation. Depreciation expenses totaled $100,901 for the three
months ended June 30, 2005. For the three months ended June 30, 2004, the
depreciation expense totaled $80,591. The increase of $20,310 or 25.2% was
caused by an increase in fixed assets that are depreciated on a straight line
basis over the economic life time.
18
Interest Expense. Interest expense totaled $94,445 for the three months
ended June 30, 2005. For the three months ended June 30, 2004, interest expense
totaled $416,238. This represents a decrease of $321,793, or 77.3%. This
decrease in interest expense is primarily the result of Playlogic's debt holders
converting their loans into ordinary shares of Playlogic.
Benefit from income taxes. The benefit from income taxes totaled
$365,890 for the three months ended June 30, 2005 and $0 for the three months
ended June 30, 2004. This increase was caused by our entering into contracts to
purchase finished products and for distribution of these games; therefore,
deferred tax income has been recognized.
Net Loss. Our net loss was $999,448 for the three months ended June 30,
2005. For the three months ended June 30, 2004, net loss totaled $2,655,076.
This was primarily due to a one-time charge related to the grant of stock
options to certain stockholders in 2004, recognition of benefits from income
taxes, increased gross profit, lower interest expenses and lower research and
development costs.
Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004.
Net sales. Net sales for the six months ended June 30, 2005 were
$736,559, as compared to $0 for the six months ended June 30, 2004. This
increase in revenue is primarily the result of increased sales of our games.
$394,468 of the revenues for the six months ended June 30, 2005 were from Europe
and $342,091 were from the US. All of these revenues were derived from our game
distributors.
Gross Profit. Gross profit totaled $596,790 for the six months ended
June 30, 2005. For the six months ended June 30, 2004, gross profit totaled $0.
This increase in gross profit is primarily the result of an increase in net
sales.
Selling, Marketing, General and Administrative Expenses. Selling,
marketing, general and administrative expenses totaled $1,800,952 for the six
months ended June 30, 2005. For the six months ended June 30, 3004, selling,
general and administrative expenses totaled $10,747,090. This represents a
decrease of $8,946,138, or 83%. This decrease in selling, general and
administrative expenses is primarily the result of a one-time charge of granted
options to certain stock holders in 2004. No options have been granted in the
first six months ended June 30, 2005.
Research and development. Research and development expenses totaled
$485,937 for the six months ended June 30, 2005. For the six months ended June
30, 2004, research and development expenses totaled $1,809,483. This represents
a decrease $1,323,546, or 73%. This decrease is due to our research and
development expenses not being able to be capitalized.
Depreciation. Depreciation expense totaled $204,968 for the six months
ended June 30, 2005. For the six months ended June 30, 2004, depreciation
expense totaled $154,038. The increase of $50,930, or 33% was caused by an
increase in fixed assets that are depreciated on a straight line basis over the
economic life time.
19
Interest Expense. Interest expense totaled $197,775 for the six months
ended June 30, 2005. For the six months ended June 30, 2004, interest expense
totaled $752,349. This represents a decrease of $554,574, or 74%. This decrease
in interest expense is primarily the result of our debt holders converting their
loans into ordinary shares of Playlogic.
Benefit from income taxes. Benefit from income taxes totaled $623,404
for the six months ended June 30, 2005. For the six months ended June 30, 2004,
benefit from income taxes totaled $0. This increase was caused by our entering
into contracts to purchase finished products and for distribution of these
games; therefore deferred tax income has been recognized.
Net Loss. Our net loss was $1,559,438 for the six months ended June 30,
2005. For the six months ended June 30, 2004, net loss totaled $13,462,960. This
was primarily due to a one-time charge related to the grant of stock options to
certain stockholders in 2004, recognition of benefits from income taxes,
increased gross profit, lower interest expenses and lower research and
development costs.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003.
Net sales. For the fiscal year ended December 31, 2004, we had total
revenue of $109,764 compared to revenue of $0 for the fiscal year ended December
31, 2003. This increase in revenue of is a primarily the result of starting
sales of our games in the fourth quarter of 2004. All of the revenues for the
year ended December 31, 2004 were from Europe. All of these revenues were from
our game distributors.
Gross Profit. Gross profit totaled $73,768 for the fiscal year ended
December 31, 2004 as compared to $0 for the fiscal year ended December 31, 2003.
The increase in our gross profit is a result of increased sales.
Selling, Marketing, General and Administrative Expenses. Selling,
marketing, general and administrative expenses totaled $12,864,286 for the
fiscal year December 31, 2004. For the fiscal year ended December 31, 2003,
selling, general and administrative expenses totaled $2,884,942. This represents
an increase of $9,979,344, or 346%. This increase in selling, general and
administrative expenses is primarily the result of a one-time charge of granted
options to certain stock holders and the increased number of employees and
related costs.
Interest Expense. Interest expense totaled $2,505,423 for the fiscal
year ended December 31, 2004. For the fiscal year ended December 31, 2003,
interest expense totaled $176,238. This represents an increase of $2,329,185, or
1,322%. This increase in interest expense is primarily the result of our
increased loan commitments and related interest rates.
Net Loss. Our net loss was $20,213,899 for the fiscal year ended
December 31, 2004. For the fiscal year ended December 31, 2003, net loss totaled
$7,657,536. This decrease in profitability is primarily the result of our
increased costs incurred with research and development and increased loan
commitments and an expense related to granted options to certain shareholders.
20
Liquidity And Capital Resources
June 30, 2005
As of June 30, 2005, we had $141,031 of cash on hand.
Our management believes that the current cash on hand and additional
cash expected from operations will be sufficient order to cover our working
capital requirements through the third quarter of 2005. After that time, we will
need to obtain additional financing from third parties. We are currently in
negotiations for a revolving credit line for game financing, and we are also
seeking bank financing. In addition, we may raise funds through equity
financings. If we do not obtain any necessary financing in the future, we may
need to cease operations.
We expect our capital requirements to increase over the next several
years as we continue to develop new products both internally and through our
third-party developers, increase marketing and administration infrastructure,
and embark on in-house business capabilities and facilities. Our future
liquidity and capital funding requirements will depend on numerous factors,
including, but not limited to, the cost of hiring and training production
personnel who will produce our titles, the cost of hiring and training
additional sales and marketing personnel to promote our products, and the cost
of hiring and training administrative staff to support current management.
December 31, 2004
As of December 31, 2004, our cash balance was $22,226, as compared to
$81,711 at December 31, 2003.
Cash flows from operating activities 2004 2003
---- ----
(In US$) (In US$)
-------- --------
Net cash used in operating activities (8,482,740) (4,863,542)
Cash flows from investing activities (445,729) (308,448)
Cash flow provided by financing activities 8,861,980 5,195,464
Increase (decrease) in cash 66,489 23,474
The net cash used in operating activities increased $3,619,198 in 2004.
The majority of this increase was caused by more general and administrative,
research and development and interest expenses. The increase in net cash
provided by financing activities was caused by the payment.
Our accounts receivable at December 31, 2004 was $0, as compared to
$11,733 at December 31, 2003.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that are reasonably
likely to have a current or future effect on our financial condition, revenues,
results of operations, liquidity or capital expenditures.
Item 3. Controls and Procedures.
As of the end of the period covered by this report, the Company
conducted an evaluation, under the supervision and with the participation of our
principal executive officer and principal financial officer, of the
effectiveness of the Company's disclosure controls and procedures (as defined in
Rules 13a-15 and 15d-15 of the Exchange Act). Based on this evaluation, our
21
principal executive officer and principal financial officer concluded that our
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 the Securities and Exchange Commission rules and
forms. It should be noted that the design of any system of controls is based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions, regardless of how remote.
There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal controls over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Each issuance set forth below was made in reliance upon the exemptions
from registration requirements of the Securities Act of 1933, as amended,
contained in Section 4(2) on the basis that such transactions did not involve a
public offering. When appropriate, we determined that the purchasers of
securities described below were sophisticated investors who had the financial
ability to assume the risk of their investment in our securities and acquired
such securities for their own account and not with a view to any distribution
thereof to the public. Where required by applicable law, the certificates
evidencing the securities bear legends stating that the securities are not to be
offered, sold or transferred other than pursuant to an effective registration
statement under the Securities Act or an exemption from such registration
requirements.
-------------------------------- --------------- ----------------------
NAME SHARES DATE
Johannes W. M. Kluijtmans 162,100 June 29, 2005
-------------------------------- --------------- ----------------------
We sold the 162,100 restricted shares to Johannes W. M. Kluijtmans at a
price of $3.75 per share for a total of $607,875.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
The exhibits are listed in the Exhibit Index appearing at page 26
herein.
22
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Playlogic Entertainment, Inc.
-----------------------------
(Registrant)
Date: August 19, 2005 By: /s/ Willem M. Smit
-------------------
Willem M. Smit
Chief Executive Officer
Date: August 19, 2005 By: /s/ Leo van de Voort
---------------------
Leo van de Voort
Chief Financial Officer
(Principal Financial and Accounting Officer)
23
PLAYLOGIC ENTERTAINMENT, INC.
EXHIBIT INDEX
Exhibit Number Description
2.1 Share Exchange Agreement, dated June 30, 20005 between the
Registrant and the Shareholders of Playlogic International
N.V. (incorporated by reference to the Registrant's Form 8-K
filed July 1, 2005)
3.1 Certificate of Incorporation of the Registrant, as filed
with the Secretary of State of the State of Delaware
(incorporated by reference to the Registrant's form SB-2/A
filed September 5, 2001)
3.2 Amendment to the Certificate of Incorporation of the
Registrant, as filed with the Secretary of State of the
State of Delaware (incorporated by reference to the
Registrant's Form 8-K dated April 15, 2005)
3.3 Bylaws of the Registrant (incorporated by reference to the
Registrant's form SB-2/A filed September 5, 2001)
10.1 Lease for Office Space between Kantoren Fonds Nederland
B.V., as the Lessor, and Playlogic Game Factory B.V. as the
Lessee dated March 11, 2002 (incorporated by reference from
the Registrant's Registration Statement on Form SB-2
previously filed with the Commission on July 20, 2005)
10.2 Lease for Office Accommodation between Fortis Vastgoed B.V.,
as the Landlord, and Playlogic International N.V. as the
Tenant dated April 25, 2005 (incorporated by reference from
the Registrant's Registration Statement on Form SB-2
previously filed with the Commission on July 20, 2005)
10.3 Lease for Office Space between Pr. Dr. D. Valerio, as the
Lessor, and Mr. W.M. Smit company director, handling in the
function of president of the company Playlogic International
N.V., as the Lessee dated March 12, 2002 (incorporated by
reference from the Registrant's Registration Statement on
Form SB-2 previously filed with the Commission on July 20,
2005)
10.4 Lease for Office Space between Mr. Endstra, as the Lessor,
and Playlogic Game Factory B.V. as the Lessee dated April
23, 2003 (incorporated by reference from the Registrant's
Registration Statement on Form SB-2 previously filed with
the Commission on July 20, 2005)
10.5 Employment Contract between Playlogic International, N.V.
and Stefan Layer dated January 12, 2005 (incorporated by
reference from the Registrant's Registration Statement on
Form SB-2 previously filed with the Commission on July 20,
2005)
10.6 Employment Contract between Playlogic International, N.V.
and Leo van de Voort dated April 4, 2005 (incorporated by
reference from the Registrant's Registration Statement on
Form SB-2 previously filed with the Commission on July 20,
2005)
24
10.7 Employment Contract between Playlogic International, N.V.
and Rogier Smit dated July 1, 2005 (incorporated by
reference from the Registrant's Registration Statement on
Form SB-2 previously filed with the Commission on July 20,
2005)
31.1 Certifications of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certifications of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications of Chief Executive Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
32.2 Certifications of Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
25