PART I
Item 1.	Financial Statements
	Balance Sheet	3
	Statements of Stockholders Deficiency	4
	Statements of Operations	5
	Statements of Cash Flows	6
	Notes to Financial Statements	7
Item 2.	Management’s Discussion and Analysis or Plan of Operation	13
Item 3.	Controls and Procedures	15
PART II
Item 1.	Legal Proceedings	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Submission of Matters to a Vote of Security Holders	17
Item 5.	Other Information	17
Item 6.	Exhibits	17
SIGNATURES		19

- 2 -

	June 30,			December 31,
	2007			2006
	(unaudited)			(audited)
ASSETS

CURRENT ASSETS
Cash	$	0		$	128,607
Prepaid expenses and sundry current assets		0			41,345
TOTAL CURRENT ASSETS		0			169,952
PROPERTY AND EQUIPMENT, AT COST,
LESS ACCUMULATED DEPRECIATION		0			29,352
TOTAL ASSETS	$	0		$	199,304
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
CURRENT LIABILITIES:
Stock subscription payable	$	0		$	1,000,000
Note payable-stockholders		2,354,526			2,188,332
Accounts payable- related party		0			5,061,880
Accrued expenses and sundry current liabilities		478,559			3,361,365
TOTAL CURRENT LIABILITIES	$	2,833,085		$	11,611,577
STOCKHOLDERS' DEFICIENCY
Common stock	$	98,152		$	97,502
Additional paid in capital		15,171,059			13,329,355
Accumulated Deficit		(18,322,759	)		(25,059,593	)
Other comprehensive income (loss)		220,463			220,463
TOTAL STOCKHOLDERS' DEFICIENCY	$	(2,833,085	)	$	(11,412,273	)
TOTAL LIABILITIES AND STOCKHOLDERS’
DEFICIENCY	$	0		$	199,304

Stockholders Deficiency	Shares		Common stock		Additional paid in Capital		Accumulated Deficit			Other Comprehensive Income (Loss)		Total

Balance January 1,2006		29,999,333	$	92,923	$	4,195,467		($7,311,239	)	$	262,403		($2,760,446	)
Proceeds from the issuance of common stock		3,342,111		3,342		8,449,254		-			-		8,452,596
Shares issued for settlement of a debt		1,236,824		1,237									1,237
Stock based compensation						684,634							684,634
Net Loss				-		-		(17,748,354	)				(17,748,354	)
Other comprehensive Loss											41,940		41,940
Balance December 31,2006		34,578,268	$	97,502	$	13,329,355		($25,059,593	)	$	220,463		($11,412,273	)
Proceeds from the issuance of common stock		650,000		650		999,350							1,000,000
Stock based compensation				-		842,354		-			-		842,354
Net Income				-		-		6,736,834			-		6,736,834
Other comprehensive Income											-		-
Balance June 30,2007		35,228,268	$	98,152	$	15,171,059		($18,322,759	)	$	220,463		($2,833,085	)

- 4 -

	Six Months ended						Three Months ended
	June 30,			June 30,			June 30,			June 30,
	2007			2006			2007			2006

SALES	$	-		$	1,789,665		$	-		$	578,694
COSTS AND EXPENSES:
Cost of sales		-			1,274,935			-			467,655
Selling, general and administrative		379,199			4,229,826			379,199			2,276,129
Provision for note receivable		-			2,321,020			-			103,413
Gain on settlement of debts-foreign
subsidiary (see note 9)		(8,013,125	)		-			(8,013,125	)		-
Forgiveness of accounts payable		-			-			-			-
Compensation expense		842,354						421,177
Interest		54,738			88,041			54,738			45,889
Foreign exchange loss		-			7,386			-			291
TOTAL COSTS AND EXPENSES		(6,736,834	)		7,921,210			(7,158,011	)		2,893,377

NET INCOME (NET LOSS)	$	6,736,834		$	(6,131,544	)	$	7,158,011		$	(2,314,682	)

Net Income (Loss) Per Share	$	0.20		$	(0.18	)	$	0.21		$	(0.07	)

Average weighted Number of Shares		34,639,379			34,044,725			34,700,490			34,044,725

- 5 -

	June 30			June 30
	2007			2006


Net Income (Loss)	$	6,736,834		$	(6,131,544	)

Adjustment to reconcile net income to net cash provided by operating activities

Depreciation and amortization		0			8,539

Inventory					(3,740	)
Note receivable		0			1,047,643
Stock based compensation		842,354
Unrealized foreign exchange		-			127,125

Changes in operating assets and liabilities:

Prepaid expenses and sundry current assets		41,345			(126,949	)
Accrued expenses and sundry current liabilities		(2,884,100	)		598,670

Net cash used by operating activities	$	4,736,433		$	(4,479,696	)

Investing activities
(Acquisitions)Dispositions of property and equipment		29,352			(23,038	)


Net cash used in investing activities	$	0		$	(19,338	)

Financing activities

Stock payable		(1,000,000	)		0
Issuance of common stock		650			9,855
Premium on issuance of common stock		999,350			4,547,547
Proceeds of loans payable stockholders		166,194			226,674
Proceeds (repayments) of loans from suppliers		(5,060,586	)		(436,108	)
Net cash provide by financing activities	$	(4,894,392	)	$	4,347,968

Increase (decrease) in cash		(128,607	)		(154,966	)

Cash- beginning of period		128,607			262,446

Cash- end of period	$	0		$	107,680

XL Generation International Inc. is the holding company of a Swiss entity, XL Generation AG, which was 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. Until September 2006, the Company aspired 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. However, because of worsening financial conditions, irregularities regarding registration of certain intellectual property rights and deterioration of the brand name of the Company, the Board of Directors have decided that it is in the Company’s and the stockholders’ best interest to initiate a complete and total withdrawal from the artificial flooring sector, artificial turf and all related business as soon as reasonably possible.

The Company was incorporated in the State of Nevada on March 18, 2004, as Cygni Systems Corporation. It 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 on June 17, 2005. 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. 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 currently has no employees or production. The Company's plan is now to seek, investigate and, if such investigation warrants, 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. The Company's discretion in the selection of business opportunities is unrestricted, subject to the availability of such opportunities, economic conditions, and other factors.

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 served as President and CEO of the Company until August 18, 2006. 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.

On January 1, 2005, XL Generation AG was granted a worldwide exclusive license (the "License Agreement") to manufacture, assemble, sell, distribute and promote all the products covered by the Intellectual Property, by WKF5/Ltd. It was provided that 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. On October 2, 2006, WKF5/Ltd served a notice to XL Generation AG terminating the License agreement. This Notice claims that WKF/5 Ltd has the right to terminate the License, and claims the alleged insolvency of XL Generation AG as the cause of such right of termination.

There was no minimum quota required under the License Agreement. The royalty rate had been determined at 5% of gross sales of XL Generation AG. Subsequently, it was agreed by XL Generation AG and WKF/5 Ltd that the initial lump sum royalty fee would initially be $416,047. Pursuant to the same agreement entered into by WKF/5 Ltd, the lump sum royalty fee of $416,047 was assumed by a trust controlled by Alain Lemieux which assumed XL Generation AG’s duty to pay WKF/5 Ltd.

Irregularities concerning the proper registration of the trademarks “XL Turf” and “XL Generation” served as the basis of a legal action against WKF/5 Ltd, where the Company claimed that the Register of Trade-marks relating to registration no. 671 108 (application no. 1 266 983) for the trade-mark XLGENERATION, registered on August 24, 2006, be struck on the grounds that at the date of the application or at the date of registration, the entry as it appears on the Register does not accurately express or define the existing rights of the person appearing to be the registered owner of the mark. Furthermore, the Company asked for an order declaring that WKF/5 Ltd was not and is not entitled to obtain registration of any trade-mark containing the word XLGENERATION on the claim that the registration in the name of WKF/5 Ltd of the trade-mark XLGENERATION is contrary to the Company’s rights, as detailed in Part II, Item 1 of this Report.

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, rotations and sales rebates when such amounts are estimable. When not estimable, 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.

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.

The Company accounts for stock options and similar equity instruments issued in accordance with SFAS No. 123(revised), "Share-Based Payment". Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. Transactions in which goods or services are received in exchange for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. SFAS No. 123(revised) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.

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 for the foreseeable future. During the three months ended June 30, 2007 and 2006, the Company has incurred gain of $7,158,011 and loss of $2,314,682 respectively. The Company had negative working capital of $2,833,085 and $11,441,625 at June 30, 2007 and 2006, respectively and a stockholders deficiency of $2,833,085 and $11,412,273 at June 30, 2007 and 2006. These factors among others raise substantial doubt about the Company's ability to continue as a going concern.

The Company's plan is now to seek, investigate and, if such investigation warrants, 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. The Company's discretion in the selection of business opportunities is unrestricted, subject to the availability of such opportunities, economic conditions, and other factors.

The Company received a deposit of five hundred thousand dollars ($500,000) from Aton Select Fund Ltd on July 6, 2006 to purchase from the Company (i) 250,000 shares of the Company's common stock. The shares have not been issued as of the date of the accompanying financial statements. The Company received a deposit of five hundred thousand dollars ($500,000) from Emper Overseas S.A. on August 10, 2006 to purchase from the Company (i) 400,000 shares of the Company's common stock; and (ii) Series A Warrants to purchase up to an additional 400,000 shares of the company's common stock at an exercise price initially set at $1.25 per share. The shares were issued on May 22, 2007.

During the year ended December 31, 2006, the Company issued 1,455,000 stock options to officers and directors of the Company with an average exercise price of $1.05 per share. Of the stock options issued, 320,000 vested on September 6, 2006, 150,000 vested on September 7, 2006, 25,000 vested on September 15, 2006, 150,000 vested on December 25, 2006, 660,000 will vest on September 6, 2007 and the balance will vest on September 6, 2008. These options will expire on September 6, 2008 (240,000), September 15, 2008 (25,000), December 25, 2006 (150,000), September 6, 2013 (440,000) and September 6, 2016 (600,000). The options had a fair value of $1,526,989 at the date of grant. The Company valued these options using the Black-Scholes option -pricing valuation model. The model uses market sourced inputs such as interest rates, stock prices, and option volatilities, the selection of which requires Company management’s judgment, and which may impact the value of the options. The assumptions used in the Black-Scholes valuation model were: a risk-free interest rate of 3.8%, 3.9% and 4.0%; the current stock price at date of issuance of $1.04, $1,10 and $0.90 per share; the exercise price of the options of $1.05 and $0.01 per share; the term of 2, 7 and 10 years; volatility of 315% and 311%. For the three month period ended June 30, 2007, the Company recorded compensation expense of $421,177. As of June 30, 2007, there was no unrecognized compensation cost related to non-vested share-based compensation. No options were exercised during the three month period ended June 30, 2007.

Mr. Albert Beerli, a significant stockholder, advanced funds and then was partially repaid by the Company during the year. The total note balance at June 30, 2007 was $0 ($119,858 as of December 31, 2006). The note carries an interest of 4.5% and is payable on demand.

The Company has reviewed the recoverability of a receivable from XL Generation Canada Inc., a related party. The Company had taken a charge of $5,916,694 in respect of such receivable as of December 31, 2006. The funds underlying the receivable were previously forwarded to XL Generation Canada Inc. for Company-related activities in Canada, including building up inventory with our suppliers to facilitate shorter delivery periods. As XL Generation Canada Inc. does not have sufficient cash resources to repay the advance, management determined to take a charge for the full amount of such outstanding advances.

The Company has experienced a number of unresolved matters regarding certain individuals and entities involved in the August 2005 reverse takeover (RTO) through which it entered the artificial turf business. Efforts to resolve these matters lead to the filing of five actions against these individuals and entities in Quebec Provincial or Canadian Federal courts between September and November 2006 seeking a variety of relief and remedies. Discussions subsequent to these filings resulted in settlement of all matters of controversy and in April 2007 notices of settlement and discharge were filed with the courts. Among the outcomes from the foregoing was the cancellations of various operating agreements and understanding entered into as part of the RTO and the Board’s decision to cancel 15,000,000 unregistered shares of the Company’ issued at the time of the above RTO. While the Company believes there are no impediments to such cancellation and intends to cancel such shares, it has referred the matter to its legal counsel for final review prior to effecting cancellation.

The cancellation of various operating agreements and understandings referred to above lead to the May 2007 resignation of the Directors of the Company’s wholly-owned Swiss subsidiary XLG AG and the inability of the Company to replace such Directors (required by law to be Swiss residents). This situation was reported to the Cantonal Commerce Register Office in Zug, Switzerland which, after a statutory waiting period when public notices concerning the matter were posted, delivered the XLG AG entity to the Swiss courts in order to wind up its affairs. Swiss Counsel has advised the Company that under Swiss law concerning such matters a shareholder’s liability is limited to the amount of stated capital of the entity being delivered to the Swiss Courts and, as in the case of XLG AG, where all of the stated capital had been paid in by the shareholders, the law does not provide for further claims against the shareholders. Counsel has also advised that while Swiss law does not provide for further liabilities and/or claims against the shareholders when stated capital is fully paid, aggrieved parties may from time to time file claims in Swiss courts against the former management and directors of the entity whose affairs are being settled by the Court as well as its former shareholders.

In accounting for the above settlements and possible legal actions in Switzerland the Company has (1) recognized the winding up of the affairs of XLG AG by the Swiss courts and (2) provided for the possible costs of litigation. The effects of these actions beyond the Company’s exit from the artificial turf business within the Company’s balance sheet at June 30, 2007 are summarized below. The Company has recognized approximately $8,000,000 in gain on settlement of debts-foreign subsidiary.

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.

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 Quarterly Report on Form 10-QSB for the period ended June 30, 2007 (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. 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 at closing of an aggregate of fifteen million shares of restricted Common Stock of the Company.

XL Generation AG, based in Zug, Switzerland, designed specific flooring products for sports, recreational and commercial markets. XL Generation AG developed new artificial turf systems for sports fields. XL Generation AG held the worldwide commercial and manufacturing rights for the "XL technology." The “XL technology” consists of six patents owned by WKF5/Ltd. However, on October 2, 2006, WKF5/Ltd served a notice to XL Generation AG terminating the usage of the XL Technology. This Notice claimed that WKF/5 Ltd has the right to terminate the License, and claimed the alleged insolvency of XL Generation AG as the cause of such right of termination.

Due to worsening financial conditions, irregularities regarding registration of certain intellectual property rights and deterioration of the brand name of the Company, the Company’s Board of Directors have decided that it is in the Company’s and investors’ best interest to initiate a complete and total withdrawal from the artificial flooring sector, artificial turf and all related concerns as soon as possible. The Company currently has no employees or production.

The Company posted for the three and six month periods ended June 30, 2007 net profit of $7,158,011 and $6,736,834, respectively, as compared to net losses of $2,314,682 and $6,131,544 for the comparable period of 2006. The reason for the increase in the profits of the Company was as a result of the settlement of various debts of the Company’s former Swiss subsidiary. See note 9 for the details of this event.

For the three and six month periods ended June 30, 2007, the Company incurred total costs and expenses of $(7,158,011) and $(6,736,834), respectively. This compared to $2,893,377 and $7,921,210 for the same periods last year. The decrease in total cost and expenses was caused by the gain on settlement of debts-foreign subsidiary related to the winding up of the affairs of XLG AG.

There were no fields sold during the three and six month periods ended June 30, 2007. For the three and six month periods ended June 30, 2006, the Company realized gross margins of 19% and 28%, respectively. These margins reflect substantial improvements against what the Company previously achieved in any reported quarter. This improvement in the Company’s gross margins is mostly attributable the continuous production of highly similar products over a long period of time. Management efficiencies obtained in our supply chain facilitated improvement in the Company’s position to buy in bulk and obtain better prices.

For the three and six month periods ended June 30, 2007, the Company incurred selling, general and administration expenses of $379,199 and $379,199, respectively. This compared to $2,276,129 and $4,229,826 for the same periods last year. The decrease was due to the layoff of all of the Company’s staff. The Company has undertaken a review of corporate overhead and implemented measures to reduce corporate overhead to a level more sustainable in relation to current revenue volume and management’s expectations.

The Company calculates interest in accordance with the respective note payable. For the three and six month periods ended June 30, 2007, the Company incurred a charge of $54,738. This compared to $45,889 and $88,041 for the same periods of the previous year. This increase mirrors the increase liabilities which the Company has assumed to finance its operations.

At June 30, 2007, the Company had $0 in cash, as opposed to $128,607 in cash at December 31, 2006. Total cash requirements for operations for the six month period ended June 30, 2007 was $128,607. As a result of certain measures implemented to reduce corporate overhead, management estimates that cash requirements through the end of the fiscal year ended December 31, 2007 will be between $1.0 million to $1.2 million. As of the date of this Report, the Company does not have available resources sufficient to cover the expected cash requirements through the end of the second quarter of 2007 or the balance of the year. As a result, there is substantial doubt that we can continue as an ongoing business without obtaining additional financing. Management's plans for maintaining Company operations and continued existence include selling additional equity securities and borrowing additional funds to pay operational expenses. 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 our financial position, results of operations and the Company's ability to continue its existence. If our losses continue and we are unable to secure additional financing, we may ultimately be required to seek protection from creditors under applicable bankruptcy laws.

On December 31, 2006, the Company had received loans from CAPEX Investment Limited, a stockholder, in the amount of $2,068,474. In the first six months of 2007, the Company received loans from CAPEX Investment Limited, a stockholder, in the amount of $286,052. These loans carry an interest of 10% and are payable on demand. As of June 30, 2007, total loans from CAPEX Investment Limited amounted to $2,354,526. This compared to $2,068,474 as of December 31, 2006.

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. 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 as a going concern.

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 accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions on required disclosure and 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.

Several pending legal proceedings involving the Company were resolved during the quarter-ended June 30 2007. On April 24, 2007, the Company entered into four settlement agreements to resolve certain disputes. Three of these settlement agreements were filed with the Quebec Superior Court and Quebec Court, District of Montreal (under court file numbers 500-17-033768-063, 500-22-129010-065, 500-17-033823-066). One settlement agreement was filed at the Canadian Federal Court of the District of Montreal (under court file number T-1872-06). Neither the Company nor any other party to these settlement agreements made any admission of wrongdoing or liability. In each of these settlement agreements, the parties agreed to be responsible for their own legal fees, court fees or other fees. Each of the settlement agreements shall be governed and construed in accordance with the laws of the Province of Quebec, Canada. The settlements and a related dismissal of a bankruptcy action are summarized as follows:

On October 26, 2006, the Company filed a motion against WKF/5 Ltd, the Alain Lemieux Trust (Jersey) and Professional Trust Company Limited in the Canadian Federal Court of the District of Montreal (court file number T-1872-06). The Company claimed that the Register of Trade-marks relating to registration no. 671 108 (application no. 1 266 983) for the trade-mark XLGENERATION, registered on August 24, 2006, be struck on the grounds that at the date of the application or at the date of registration, the entry as it appears on the Register does not accurately express or define the existing rights of the person appearing to be the registered owner of the mark. Furthermore, the Company asked for an order declaring that WKF/5 Ltd was not and is not entitled to obtain registration of any trade-mark containing the word XLGENERATION on the claim that the registration in the name of WKF/5 Ltd of the trade-mark XLGENERATION is contrary to the Company’s rights. Pursuant to the settlement agreement dated April 24, 2007, the Company has agreed to relinquish its license to manufacture products utilizing the technology patented by WKF/5 Ltd, retroactively effective October 2, 2006. For up to six (6) months from April 24, 2007, the Company may continue to utilize (i) technology created by WKF/5 Ltd; and (ii) the trademark XL Generation. Thereafter, the Company will have no rights to use either the technology owned by WKF/5 Ltd or the trademark XL Generation. The Company has agreed that for a period of five (5) years thereafter, the Company and its subsidiaries may not engage in any business related to the production of artificial turf.

On November 10, 2006, the Company filed a motion seeking injunctive relief against Solutions Highmedia Interactif Inc. and Domenico Malatesta, in the Quebec Superior Court of the District of Montreal (court file number 500-17-033768-063) to forbid the selling, and prevent the cession of the internet domain name and emails of the Company and its affiliates, and to reactivate the Company’s and its affiliates related internet services. In a related matter, on November 16, 2006, Solutions Highmedia Interactif Inc. filed a motion for monetary claim against the Company, XL Generation AG and XL Canada, in the Quebec Court of the District of Montreal (court file number 500-22-129010-065) totalling $54,418 CAD covering expenses for webdesign, printing, translation, and webhosting mandates performed towards the website of the Company and its affiliates between January 1, 2006 and August 15, 2006. Pursuant to the settlement agreement dated April 24, 2007, Solutions Highmedia Interactif Inc. and Domenico Malatesta have agreed to release the Company from any amounts owed. The Company has agreed that the Company’s domain name will become the property of WKF/5 Ltd.

On November 14, 2006, the Company filed a motion seeking the annulment of the Share Exchange Agreement signed on August 19, 2005 between the Company and XL Generation AG. In addition, this action seeks to require certain of the Company’s former management and affiliated parties to pay $11,000,000 in damages and to order the escrow agent and Pacific Stock Transfer Company to deposit the 13,500,000 shares of the Company issued to the Alain Lemieux Trust and Professional Trust Company Limited at the Quebec Superior Court of the District of Montreal (court file number 500-17-033823-066). This action alleged misconduct by former officers and directors of the Company, including unjustified and irresponsible spending of the Company’s financial resources. Pursuant to the settlement agreement dated April 24, 2007, all claims for damages and for the annulment of the Share Exchange Agreement have been dropped, and the Alain Lemieux Trust was permitted to receive the disputed 13,500,000 shares of the Company’s common stock, and sell such shares to a third party for $500,000.

XL Generation AG has ceased pursuing judicial proceedings seeking injunctive and other relief against Polyprod Inc. in the Quebec Superior Court of the District of Montreal (court file number 500-17-032933-064) to allow XL Generation AG to halt Polyprod Inc. from locking XL Generation AG out of the production site, and to force Polyprod Inc. to allow XL Generation AG access to said production site.

On May 11, 2007 the Bankruptcy Court of the Québec Superior Court of the District of Montreal (court file number 500-11-029010-069) dismissed claims made by XL Generation AG seeking to have Polyprod Inc. declared bankrupt pursuant to applicable law for an unpaid claim totalling $1,052,069 CAD. This amount represented monetary advances towards the production of artificial turf and related products, made by XL Generation AG to Polyprod Inc. from January 5, 2006 to October 10, 2006. Neither party was awarded costs.

The Company received a deposit of five hundred thousand dollars ($500,000) from Emper Overseas S.A. on August 10, 2006 to purchase from the Company (i) 400,000 shares of the Company's common stock; and (ii) Series A Warrants to purchase up to an additional 400,000 shares of the company's common stock at an exercise price initially set at $1.25 per share. The shares of the Company's common stock were issued on May 22, 2007 pursuant to the exemption from registration provided by Regulation S.

Exhibit No.		Description of Exhibits

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.

NEVADA	20-0909393
(State or other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

	June 30,			December 31
	2007			2006


Computer equipment--3 yrs	$	0		$	2,904
Furniture & fixtures--5 yrs		0			46,364
	$	0		$	49,268
Less: accumulated depreciation		($0	)		($19,916	)
Balance June 30, 2007	$	0		$	29,352

Accrued interest	$	54,738	$	252,000
Accrued operating expenses		423,821		1,468,365
Warranty	$	-	$	1,641,000
	$	478,559	$	3,361,365

Options	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term
Outstanding at December 31, 2006	-		-		-
Granted		1,455,000	$	1.48		5.72
Exercised, forfeited, or expired		-		-		-
Outstanding at June 30, 2007		1,455,000	$	1.48		5.72

Exercisable at June 30, 2007		620,000	$	1.48		5.72

Deferred tax asset	$	2,768,000
Valuation allowance		(2,768,000	)
Net deferred tax asset	$	0


Payable Capex Investment Ltd		2,354,526
Payable stockholders	$	2,354,526

	Effects of Settlement
	Before			After
Outstanding Common Shares		34,578,268			34,578,268

Wind up of XLG AG affairs

Asset		77,372			0
Liabilities*		11,758,979			2,649,148
Shareholder Deficiency		(11,681,607	)		(2,649,148	)


	XL GENERATION INTERNATIONAL INC.

August 19, 2007	By:	/s/ Alexander C. Gilmour
		Name: Alexander C. Gilmour
		Title: Acting Principal Executive Officer



	By:	/s/ Michel St-Pierre
		Name: Michel St-Pierre
		Title: Acting Principal Financial Officer and Acting Principal Accounting Officer