SecProbe.io

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               [LETTERHEAD OF CADWALADER, WICKERSHAM & TAFT LLP]

December 22, 2004

VIA EDGAR

Barbara C. Jacobs, Assistant Director
Division of Corporation Finance
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0409

Re:      PowerHouse  Technologies  Group, Inc.;
         Amendment No. 3 to Registration  Statement on
         Form SB-2 (File No. 333-118242)
         ---------------------------------------------

Dear Ms. Jacobs:

On behalf of PowerHouse  Technologies  Group, Inc., a Delaware  corporation (the
"Company"),  we hereby transmit for filing Amendment No. 3 (the  "Amendment") to
the Registration Statement on Form SB-2 (the "Registration Statement") under the
Securities Act of 1933, as amended (the  "Securities  Act"),  and this letter in
response to comments of the Staff of the Securities and Exchange Commission (the
"Commission")  to the Registration  Statement,  set forth in your letters to Jay
Elliot dated December 16, 2004 and December 21, 2004. To facilitate your review,
we have also provided you with three clean copies and three  blacklined  copies,
which  compare the most recent  version of the  Registration  Statement  against
Amendment No. 2 of the  Registration  Statement  filed on December 8, 2004.  The
Company, in consultation with its legal, financial and accounting advisors, have
prepared the  following  responses to the  questions  and comments the Staff has
raised.  For your convenience,  we have set forth below in italics your numbered
comments in their entirety, followed by the responses thereto. Capitalized terms
used herein and not otherwise  defined have the meanings  ascribed to such terms
in the Amendment.

The Company  registered  8,281,041 shares of common stock, par value $0.0001 per
share (the "Common  Stock"),  pursuant to the  Registration  Statement  filed on
August 13, 2004,  and  registered an additional  954,992  shares of Common Stock
pursuant to Amendment No. 1 filed on October 27, 2004.  This  Amendment does not
register any additional shares of Common Stock.
<PAGE>

Barbara C. Jacobs                                              December 22, 2004

DECEMBER 16, 2004 COMMENTS AND RESPONSES:

FORM SB-2

Risk Factors, page 5

         Litigation Risks, page 9

1.       We  refer  you to prior  comment  7.  Please  revise  the  risk  factor
         addressing the Proctor  Litigation to include a descriptive  subheading
         that  specifically  discloses the risk to  investors.  Also, to put the
         risk in context,  please provide a brief description of the litigation,
         including an  explanation of why the litigation may result in increased
         capital of the company and could deflate the market price of the common
         stock.  Also, revise to expand your discussion  regarding the potential
         "adverse  impact"  on  your   shareholders.   For  example,   would  an
         unsuccessful  result in the  proctor  litigation  result in a change in
         control or dilute the interest of shareholders? If so, please explain.

              Response:

              In response to the Staff's  request,  on page 9 of the  Amendment,
              the  Company  revised the risk factor  subheading  addressing  the
              Proctor Litigation by including a description that an unsuccessful
              result in the  Proctor  Litigation  could have a material  adverse
              impact  on the  market  for the  Company's  securities  and  could
              deflate the voting and other rights of its  stockholders.  A brief
              description  of the Proctor  Litigation  has also been included to
              provide better context for the risk.  Specifically,  the Amendment
              explains  that an  unsuccessful  result in the Proctor  Litigation
              could materially affect the Company's capitalization by increasing
              the  number  of   outstanding   shares  of  Common  Stock  without
              increasing the amount of equity invested into the Company. Because
              the  Company's  total  market value would  remain  unchanged,  the
              increase in the number of outstanding shares of Common Stock would
              deflate the per share market price of the Common Stock and thereby
              decrease the Company's  ability to raise  additional funds through
              equity  investments,  which would materially  adversely affect the
              Company.

              The Amendment  further  elaborates on the potential adverse impact
              on the Company's stockholders by discussing the potential dilutive
              effect of an unsuccessful  result in the Proctor  Litigation.  For
              example, in the event that the Proctor Group Shares are reinstated
              into the Company's capitalization,  the holders of the outstanding
              Senior A  Preferred  Stock and Junior A  Preferred  Stock would be
              protected  against  dilution  through an automatic  conversion  in
              their voting rights. This automatic conversion of voting rights of
              the  Senior A  Preferred  Stock and Junior A  Preferred  Stock was
              intentionally  negotiated  to  counter  any  potential  change  of
              control  that would  occur upon the  reinstatement  of the Proctor
              Group Shares into the Company's  capitalization.  However, holders
              of Common Stock who are

                                      -2-
<PAGE>

Barbara C. Jacobs                                              December 22, 2004

              not  members  of the  Proctor  Group  are not  afforded  any  such
              protection and would be subject to  substantial  dilution of their
              voting and equity rights in the Company  because they would hold a
              substantially  smaller  percentage  of the  Company's  outstanding
              common stock.

FORM 10-QSB/A FOR THE PERIOD ENDED SEPTEMBER 30, 2004

Item 3: Controls and Procedures, page 15

2.       Please  expand your  disclosure  to explain when the material  weakness
         first occurred and when the material weakness was discovered. Since you
         disclosed that your controls and procedures  were not effective for the
         period ended June 30,  2004,  is the amended  quarterly  report for the
         period ended June 30, 2004  inconsistent  with the  disclosure  that is
         provided in this quarterly report?

              Response:

              In response to the Staff's  request,  on page 33 of the Amendment,
              the Company  discloses that in connection  with its preparation of
              the Quarterly Report on Form 10-QSB for the quarter ended June 30,
              2004 (the "June 30th Quarterly Report"), the Company discovered it
              had material  weaknesses in its disclosure controls and procedures
              with  respect to its  ability to  properly  and timely  record and
              account for certain  transactions,  each of which was significant,
              complex and non-recurring in nature.

              Specifically, subsequent to June 30, 2004, the Company presented a
              draft of the June 30th Quarterly  Report to the Company's  outside
              accountants  for  review.  Commencing  in July  2004  and  through
              approximately  August  17,  2004,   management   re-evaluated  its
              disclosure   controls  and  procedures   based  upon  the  outside
              accountant's review and comment that certain accounting  treatment
              of  certain   transactions   was  not  proper.   Based  upon  this
              re-evaluation,  the Company  determined that because the Company's
              internal  staff lacked the necessary  knowledge and  experience to
              initially   properly  record  the   transactions,   the  Company's
              disclosure  controls and procedures were not effective,  which, in
              turn,  impacted on the  Company's  ability to timely file its June
              30th Quarterly Report.

              The Company has amended its June 30th Quarterly Report, to provide
              a more accurate description of the effectiveness of its disclosure
              controls and procedures as of the quarter ended June 30, 2004.

3.       We note that you retained an outside form of accounting  consultants to
         support  and extend the  capabilities  of the  internal  staff.  Please
         describe what these consultants did and how these actions supported and
         extended the capabilities of the internal staff.  What capabilities and
         activities  of  the  internal  staff  needed  the  enhancement  of  the
         consultants?  Clarify  whether the  consultants  were  responsible  for
         creating the  comprehensive set of accounting  procedures.

                                      -3-
<PAGE>

Barbara C. Jacobs                                              December 22, 2004

         What do you mean in  referring  to a  "comprehensive  set of  financial
         procedures"  and how do they  differ  from  the  procedures  that  were
         previously in place?  Also, if applicable,  disclose whether your audit
         committee was involved in establishing the accounting  procedures,  and
         if so, explain the audit committees' role.

              Response:

              In response to the Staff's  request,  on page 33 of the Amendment,
              the Company discloses that the Company's management concluded that
              the materially  weaknesses  stemmed from the fact that the Company
              lacked adequate accounting resources,  in terms both of the number
              of its internal  accounting  staff and their  experience  with and
              expertise in accounting for transactions of the type in question.

              With respect to the Company's  accounting of its Rescission Offer,
              the Company's  internal  staff lacked the necessary  knowledge and
              experience  with  respect to the proper  accounting  treatment  of
              dividends  related  to the  issuance  of the  Junior  A  Preferred
              Warrants and the required disclosure of the transaction.  In order
              to provide the proper  accounting  treatment for the  transaction,
              the Company  would have had to first value the Common  Stock being
              exchanged,  and then  record the  correct  allocation  between the
              value of the new Junior A Preferred Stock being issued, along with
              the dividend  value  associated  with the issuance of the Junior A
              Preferred Warrants.

              With respect to the  Company's  accounting of its  acquisition  of
              First  Person  Software,  Inc.,  the  Company  did  not  have  the
              requisite  knowledge to properly  calculate  the  purchase  price,
              properly  allocate the purchase  price to the acquired  assets and
              assumed  liabilities,  and properly disclose the accounting of the
              transaction.  As a result, the Company retained the services of an
              outside firm to assist in correcting the accounting  deficiencies.
              This outside firm assisted the Company in  reallocating  the prior
              investment  made by the  Company  into the  acquired  entity,  and
              conform  the  new  investment  to  the  proper  accounting  for an
              acquisition in accordance with FASB 141.

              With respect to the Company's  accounting of its Convertible  Note
              and Bridge Note financing and Senior A Units Offering, the Company
              did not  have  the  necessary  resources,  including  the  lack of
              adequate  internal  staff  and lack of  accounting  knowledge,  to
              properly account and disclose such transactions. Specifically, the
              Company was unable to properly calculate the beneficial conversion
              features  of the  Senior  A  Preferred  Stock  and  the  Senior  A
              Preferred Warrants issued in the Senior A Units Offering. Further,
              the  Company  was unable to  properly  allocate  the  proceeds  of
              certain  prior loans in  connection  with the issuance of Senior A
              Units upon the conversion of  Convertible  Notes and Bridge Notes.
              Specifically,  accounting  guidelines  determine that a beneficial
              conversion feature exists

                                      -4-
<PAGE>

Barbara C. Jacobs                                              December 22, 2004

              whenever  the  non-detachable  features  are in the  money  at the
              commitment  date.  At June 14, 2004,  it was  determined  that the
              feature was in the money and, as such, the  beneficial  conversion
              feature  needed to be accounted  for  separately  and charged when
              issued.   The  outside  firm  assisted  the  Company  in  properly
              determining  the fair  value of the  various  components  and then
              account for these items.

              After reaching the conclusions referred to above,  management took
              steps  it  believed  necessary  and  appropriate  to  correct  the
              weaknesses in the Company's  internal  accounting  procedures  and
              controls that had been found.  These steps included  expanding the
              Company's internal accounting staff and engaging  consultants with
              considerable  accounting  experience,  and  developing  a  set  of
              accounting  procedures  that mandate expert review promptly of all
              transactions  in  order  that  they be  properly  recorded  at the
              earliest   possible  time,   expert  review   immediately  of  the
              appropriate   accounting   principles   to  be   applied  to  each
              transaction,  immediate  closing of the Company's books of account
              at the end of each quarter or other appropriate  accounting period
              and the prompt preparation of draft financial  statements in order
              that  the  review  and  final  preparation   process  can  proceed
              efficiently  to enable the timely  filing of accurate and complete
              financial statements.

              In this  regard,  the  Company has hired an  additional  full-time
              accounting staff member at the Manager level and has retained Hood
              & Strong LLP ("Hood & Strong"),  an  accounting  consultancy  firm
              that the Company  believes has the requisite  skill and experience
              to  assure  that  the  weaknesses  in its  internal  controls  and
              procedures  will be cured.  Hood & Strong is  registered  with the
              PCAOB and has  extensive  current and prior  experience  providing
              both attest and non-attest  services to publicly listed companies.
              While  developing  the  foregoing,  the  Company  also  retained a
              part-time consultant to assist it with certain specific tasks. The
              Company continues to retain Hood & Strong.

              Specifically,  Hood & Strong  assists  management  with respect to
              accounting  issues  related  to  the  Company's  monthly  internal
              closings.  Hood & Strong  also  reviews  the  Company's  financial
              statements, supporting documentation, conclusions on treatment for
              complicated  transactions,  and the Company's Quart