================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q


     [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

                     For the period ended February 28, 2007


     [ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

           For the transition period from ____________ to ____________


                         Commission File Number: 0-8656
                                                 ------

                                    TSR, Inc.

             (Exact name of registrant as specified in its charter)


            Delaware                                     13-2635899
--------------------------------------------------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                      400 Oser Avenue, Hauppauge, NY 11788
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


                                  631-231-0333
--------------------------------------------------------------------------------
                         (Registrant's telephone number)

                                      None
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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

Indicate by check mark whether the Registrant is large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

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

                               SHARES OUTSTANDING
                               ------------------

4,568,012 shares of common stock, par value $.01 per share, as of March 31, 2007
================================================================================

                                     Page 1
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
                                      INDEX

<TABLE><CAPTION>

                                                                                                         Page
                                                                                                        Number
                                                                                                        ------
<S>                                                                                                       <C>
Part I.  Financial Information:

     Item 1. Financial Statements:

             Condensed Consolidated Balance Sheets -
              February 28, 2007 and May 31, 2006.....................................................      3

             Condensed Consolidated Statements of Income -
              For the three months and nine months ended February 28, 2007 and 2006..................      4

             Condensed Consolidated Statements of Cash Flows -
              For the nine months ended February 28, 2007 and 2006...................................      5

             Notes to Condensed Consolidated Financial Statements....................................      6

     Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...     10

     Item 3. Quantitative and Qualitative Disclosure About Market Risk...............................     16

     Item 4. Controls and Procedures..................................................................    16

Part II.  Other Information...........................................................................    17

     Item 1A. Risk Factors............................................................................    17

     Item 6. Exhibits.................................................................................    17

Signatures............................................................................................    17
</TABLE>


                                     Page 2
<PAGE>

Part I. Financial Information
        Item 1.  Financial Statements

                           TSR, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE><CAPTION>

ASSETS                                                                February 28,      May 31,
                                                                          2007           2006
                                                                      -----------     -----------
                                                                      (Unaudited)
<S>                                                                   <C>             <C>
Current Assets:
     Cash and cash equivalents (Note 3) .........................     $ 2,109,166     $ 2,660,739
     Marketable securities (Note 5) .............................       6,390,606       5,406,830
     Accounts receivable (net of allowance for
          doubtful accounts of $355,000) ........................       8,208,416       8,272,963
     Other receivables ..........................................          95,932          90,172
     Prepaid expenses ...........................................          65,645          48,793
     Prepaid and recoverable income taxes .......................          79,271         320,156
     Deferred income taxes ......................................         150,000         150,000
                                                                      -----------     -----------
          Total current assets ..................................      17,099,036      16,949,653

Marketable securities (Note 5) ..................................         998,125       1,490,547
Equipment and leasehold improvements, at cost (net of accumulated
     depreciation and amortization of $541,583 and $544,946) ....          46,987          36,134
Other assets ....................................................          49,653          49,653
Deferred income taxes ...........................................         109,000         109,000
                                                                      -----------     -----------

                                                                      $18,302,801     $18,634,987
                                                                      ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts and other payables ................................     $   286,503     $   209,840
     Accrued expenses and other current liabilities .............       2,487,498       2,730,202
     Advances from customers ....................................       1,541,443       1,538,985
     Income taxes payable .......................................            --           102,974
                                                                      -----------     -----------
          Total current liabilities .............................       4,315,444       4,582,001
                                                                      -----------     -----------

Minority Interest ...............................................           4,975          31,751
                                                                      -----------     -----------

Stockholders' Equity:
     Preferred stock, $1 par value, authorized
          1,000,000 shares; none issued .........................            --              --
     Common stock, $.01 par value, authorized
          25,000,000 shares; issued 6,228,326 shares ............          62,283          62,283
     Additional paid-in capital .................................       5,071,727       5,071,727
     Retained earnings ..........................................      20,879,673      20,918,526
                                                                      -----------     -----------
                                                                       26,013,683      26,052,536
     Less: Treasury stock, 1,660,314 shares, at cost ............      12,031,301      12,031,301
                                                                      -----------     -----------
                                                                       13,982,382      14,021,235
                                                                      -----------     -----------

                                                                      $18,302,801     $18,634,987
                                                                      ===========     ===========
</TABLE>
              The accompanying notes are an integral part of these
                  Condensed Consolidated Financial Statements.

                                     Page 3
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
         FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 28, 2007 AND 2006
                                   (UNAUDITED)
<TABLE><CAPTION>

                                                                  Three Months Ended                   Nine Months Ended
                                                             February 28,      February 28,      February 28,      February 28,
                                                                 2007              2006              2007              2006
                                                             ------------      ------------      ------------      ------------
<S>                                                          <C>               <C>               <C>               <C>
Revenues, net ..........................................     $ 11,773,704      $ 11,594,872      $ 36,775,393      $ 35,888,975

Cost of sales ..........................................        9,722,403         9,486,969        29,977,510        28,886,196

Selling, general and administrative expenses ...........        1,777,553         1,683,686         5,331,297         5,025,334
                                                             ------------      ------------      ------------      ------------
                                                               11,499,956        11,170,655        35,308,807        33,911,530
                                                             ------------      ------------      ------------      ------------

Income from operations .................................          273,748           424,217         1,466,586         1,977,445

Other income (expense):
     Interest and dividend income ......................          118,965            93,644           346,214           255,243
     Realized and unrealized gain (loss) from marketable
       securities, net .................................           (1,228)           (4,864)            1,472            (5,088)
     Minority interest in subsidiary operating profits .           (6,227)           (9,377)          (36,802)          (57,245)
                                                             ------------      ------------      ------------      ------------

Income before income taxes .............................          385,258           503,620         1,777,470         2,170,355
Provision  for income taxes ............................          184,000           214,000           720,000           923,000
                                                             ------------      ------------      ------------      ------------
  Net  income ..........................................     $    201,258      $    289,620      $  1,057,470      $  1,247,355
                                                             ============      ============      ============      ============

Basic and diluted net income per common share ..........     $       0.04      $       0.06      $       0.23      $       0.27
                                                             ============      ============      ============      ============

Weighted average number of basic common shares
outstanding ............................................        4,568,012         4,568,012         4,568,012         4,568,012
                                                             ============      ============      ============      ============
Weighted average number of diluted common
  shares outstanding ...................................        4,568,012         4,568,012         4,568,012         4,568,012
                                                             ============      ============      ============      ============
</TABLE>

              The accompanying notes are an integral part of these
                  consolidated condensed financial statements.

                                     Page 4
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED FEBRUARY 28, 2007 AND 2006
                                   (UNAUDITED)
<TABLE><CAPTION>
                                                                              Nine Months Ended
                                                                                 February 28,
                                                                            2007              2006
                                                                        ------------      ------------
<S>                                                                     <C>               <C>
Cash flows from operating activities:
     Net income ...................................................     $  1,057,470      $  1,247,355
     Adjustments to reconcile net income to net cash
       provided by operating activities:
        Depreciation and amortization .............................           20,546            16,100
        Realized and unrealized (gain) loss from
          marketable securities, net ..............................           (1,472)            5,088

        Minority interest in subsidiary  operating profits ........           36,802            57,245
        Deferred income tax benefit ...............................             --              69,000
        Recovery of bad debt expense ..............................             --             (75,000)

Changes in assets and liabilities:
          Accounts receivable - trade .............................           64,547          (513,586)
          Other receivables .......................................           (5,760)           (9,063)
          Prepaid expenses ........................................          (16,852)            9,845
          Prepaid and recoverable income taxes ....................          240,885           (69,253)
          Other assets ............................................             --                 240
          Accounts payable and accrued expenses ...................         (166,041)         (464,318)
          Income taxes payable ....................................         (102,974)           11,276
          Advances from  customers ................................            2,458            15,552
                                                                        ------------      ------------

     Net cash  provided by operating activities ...................        1,129,609           300,481
                                                                        ------------      ------------

Cash flows from investing activities:
        Proceeds from maturities and sales of marketable securities        7,332,461        10,342,372
        Purchases of marketable securities ........................       (7,822,343)       (9,330,925)
        Purchases of fixed assets .................................          (31,399)          (15,783)
                                                                        ------------      ------------
    Net cash (used in) provided by investing activities ...........         (521,281)          995,664
                                                                        ------------      ------------

Cash flows from financing activities:
        Distributions to minority interest ........................          (63,578)          (61,318)
        Cash  dividends paid ......................................       (1,096,323)       (1,416,084)
                                                                        ------------      ------------

    Net cash used in financing activities .........................       (1,159,901)       (1,477,402)
                                                                        ------------      ------------

Net decrease in cash and cash equivalents .........................         (551,573)         (181,257)
Cash and cash equivalents at beginning of period ..................        2,660,739         2,571,276
                                                                        ------------      ------------

Cash and cash equivalents at end of period ........................     $  2,109,166      $  2,390,019
                                                                        ============      ============

Supplemental Disclosures:
       Income tax payments ........................................     $    576,000      $    912,000
                                                                        ============      ============
</TABLE>

              The accompanying notes are an integral part of these
                  consolidated condensed financial statements.

                                     Page 5
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 2007
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     The accompanying condensed consolidated interim financial statements
     include the accounts of TSR, Inc. and its subsidiaries (the "Company"). All
     significant inter-company balances and transactions have been eliminated in
     consolidation. These interim financial statements have been prepared in
     accordance with accounting principles generally accepted in the United
     States of America applying to interim financial information and with the
     instructions to Form 10-Q of Regulation S-X of the Securities and Exchange
     Commission. Accordingly, certain information and footnote disclosures
     required by accounting principles generally accepted in the United States
     of America and normally included in the Company's annual financial
     statements have been condensed or omitted. These interim financial
     statements as of and for the three and nine months ended February 28, 2007,
     are unaudited; however, in the opinion of management, such statements
     include all adjustments (consisting of normal recurring accruals) necessary
     to present fairly the consolidated financial position, results of
     operations, and cash flows of the Company for the periods presented. The
     results of operations for the interim periods presented are not necessarily
     indicative of the results that might be expected for future interim periods
     or for the full year ending May 31, 2007. These interim financial
     statements should be read in conjunction with the Company's consolidated
     financial statements and notes thereto included in the Company's Annual
     Report on Form 10-K for the year ended May 31, 2006.

2.   NET INCOME PER COMMON SHARE

     Basic net income per common share is computed by dividing income available
     to common stockholders (which for the Company equals its net income) by the
     weighted average number of common shares outstanding, and diluted net
     income per common share adds the dilutive effect of stock options and other
     common stock equivalents. No options covering shares of common stock have
     been omitted from the calculations of diluted net income per common share
     for the three and nine month periods ended February 28, 2007 and 2006,
     respectively, because there are no options outstanding.

3    CASH AND CASH EQUIVALENTS

     The Company considers short-term highly liquid investments with maturities
     of three months or less at the time of purchase to be cash equivalents.
     Cash and cash equivalents were comprised of the following as of February
     28, 2007:

                    Cash in banks .............................   $       --
                    Money Market Funds ........................     2,109,166
                                                                  -----------
                                                                  $ 2,109,166

4.   REVENUE RECOGNITION

     The Company's contract computer programming services are generally provided
     under time and materials agreements with customers. Accordingly, the
     Company recognizes such revenues as services are provided. Advances from
     customers represent amounts received from customers prior to the Company's
     provision of the related services, credit balances from overpayments and
     certain escheat liabilities.

     Reimbursements received by the Company for out-of-pocket expenses are
     characterized as revenue in accordance with Emerging Issues Task Force
     (EITF) Issue 01-14 "Income Statement of Characterization of Reimbursements
     Received for `Out-of-Pocket' Expenses Incurred."

                                     Page 6
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                FEBRUARY 28, 2007
                                   (UNAUDITED)


5.   MARKETABLE SECURITIES

     The Company accounts for its marketable securities in accordance with
     Statement of Financial Accounting Standards No. 115 "Accounting for Certain
     Investments in Debt and Equity Securities." Accordingly, the Company
     classifies its marketable securities at acquisition as either (i)
     held-to-maturity, (ii) trading, or (iii) available-for-sale. Based upon the
     Company's intent and ability to hold its US Treasury securities to maturity
     (which maturities are mostly less than one year), such securities have been
     classified as held-to -maturity and are carried at amortized cost. The
     Company's equity securities are classified as trading securities, which are
     carried at fair value with unrealized gains and losses included in
     earnings. The Company's marketable securities are summarized as follows:

                                               Gross       Gross
                                             Unrealized  Unrealized
                                 Amortized    Holding      Holding    Recorded
     Current                       Cost        Gains       Losses      Value

     United States Treasury
       Securities              $ 6,374,719          --        --    $ 6,374,719

     Equity Securities              16,866          --       (979)       15,887
                               -----------   ----------   -------   -----------

                               $ 6,391,585   $      --    $  (979)  $ 6,390,606
                               ===========   ==========   =======   ===========

     Long - Term

     United States Treasury
       Securities              $   998,125   $      --    $   --    $   998,125
                               ===========   ==========   =======   ===========



                                     Page 7
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                FEBRUARY 28, 2007
                                   (UNAUDITED)

6.   STOCK OPTIONS

     The Company has one stock-based employee compensation plan in effect.
     Effective June 1, 2006, the Company accounts for all transactions under
     which employees receive shares of stock or other equity instruments in the
     Company in accordance with the revised provisions of SFAS No. 123,
     "Statement of Financial Accounting Standards No. 123 (FAS123 (R))," which
     requires that the fair market value of all share based payment transactions
     be recognized in the financial statements. This Statement establishes fair
     value as the measurement objective in accounting for share based payment
     arrangements and requires all entities to apply a fair value based
     measurement method in accounting for share based transactions with
     employees except for equity instruments held by employee share ownership
     plans. The Company adopted FAS123(R) at the beginning of fiscal 2007. The
     Company has not issued any share based payments as of February 28, 2007.
     The Company previously accounted for share-based employee compensation in
     accordance with the provisions of Accounting Principles Board Opinion No.
     25, "Accounting for Stock Issued to Employees".

7.   RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
     Interpretation No. 48 - "Accounting for Uncertainty in Income Taxes" (FIN
     48). This guidance is intended to provide increased consistency in the
     application of FASB Statement No. 109 - "Accounting for Income Taxes" by
     providing guidance with regard to the recognition and measurement of tax
     positions, and provide increased disclosure requirements. In particular,
     this interpretation requires uncertain tax positions to be recognized only
     if they are "more-likely-than-not" to be upheld based on their technical
     merits. Additionally, the measurement of the tax position will be based on
     the largest amount that is determined to have greater than a 50% likelihood
     of realization upon ultimate settlement. Any resulting cumulative effect of
     applying the provisions of FIN 48 upon adoption would be reported as an
     adjustment to the beginning balance of retained earnings (deficit) in the
     period of adoption. Management is in the process of evaluating the effects
     of this guidance which is effective for fiscal years beginning after
     December 15, 2006.

     On September 15, 2006, the FASB issued SFAS No. 157, "Fair Value
     Measurements". SFAS No. 157 is effective for fiscal years beginning after
     November 15, 2007, and interim periods within those fiscal years. SFAS No.
     157 provides guidance related to estimating fair value and requires
     expanded disclosures. The standard applies whenever other standards require
     (or permit) assets or liabilities to be measured at fair value. The
     standard does not expand the use of fair value in any new circumstances.
     The Company is evaluating SFAS No. 157 and its impact on the Company's
     consolidated financial statements.

                                     Page 8
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                FEBRUARY 28, 2007
                                   (UNAUDITED)


8.   DIVIDENDS

     On March 30, 2007 the Board of Directors of the Company declared that a
     regular quarterly cash dividend of $0.08 per share for the quarter ended
     February 28, 2007 would be paid on May 1, 2007 to shareholders of record as
     of April 16, 2007. This dividend will amount to approximately $365,000 and
     will be paid from the Company's cash and marketable securities.

9.   MAJOR CUSTOMER

     In June 2006, the New York State Office of General Services, Procurement
     Services Group ("OGS") terminated its contract with the Company. The OGS
     actions were due to the report of an investigation by the Office of the
     Special Commissioner of Investigation of the New York City Department of
     Education ("DOE"). The investigative report concluded that the Company
     operated improperly from 2001 through the spring of 2003 by using a
     subcontracting arrangement to obtain programmers for positions with the
     DOE. The subcontracting was with a small firm that was owned by an
     individual who worked as a consultant under contract at the DOE in a
     supervising capacity and sometimes was involved in decisions to select
     consultants that financially benefited both him and the Company. The
     investigative report also suggested that the Company received advanced
     information as to new positions from this individual and that the
     subcontracting increased the costs to the DOE since two firms, instead of
     one, profited from this arrangement.

     All new placements with the DOE, including renewals of existing placements,
     were being made under this OGS contract prior to its termination. As a
     result, until a new OGS contract is entered into, the Company will not be
     able to make new placements or renew existing placements with the DOE. The
     termination does not affect existing placements with the DOE until the date
     such positions are scheduled to expire. At May 31, 2006 the Company had
     forty-one consultants placed with the DOE. As a result of the termination,
     consultants placed with the DOE who came up for renewal have not been
     renewed.

     DOE also asserted a claim against the Company for a reimbursement due to
     the Company's subcontracting without written authorization. On August 29,
     2006, the DOE and the Company agreed in principle to resolve these claims
     and permit the Company to be treated as a "responsible vendor" upon making
     a payment to DOE and appointment of an independent compliance monitor to
     monitor the Company's compliance with the DOE agreement. Due to the claim
     asserted by DOE and the proposed settlement, the Company established a
     reserve of $900,000 as of May 31, 2006. While the Company believes that its
     subcontracting did not result in overcharges to DOE, it has agreed to
     settle the matter in order to avoid the expense and uncertainty of
     litigation. In addition to the settlement of the claim, the Company and the
     DOE were also negotiating an agreement which would have enabled the Company
     to continue placing new consultants with the DOE, which included, among
     other things, a monitoring agreement. The Company and the DOE have not been
     able to finalize the terms of this agreement. The Company does not expect
     the failure to reach this agreement to affect the agreement in principle to
     settle the DOE claim. As a result, the DOE has advised the Company that the
     11 remaining consultants will be terminated in the near future.


                                     Page 9
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 2.

                           TSR, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements and the notes to such financial
statements.

Forward-Looking Statements
--------------------------

Certain statements contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations, including statements concerning
the Company's future prospects and the Company's future cash flow requirements
are forward looking statements, as defined in the Private Securities Litigation
Reform Act of 1995. Actual results may differ materially from those projections
in the forward looking statements which statements involve risks and
uncertainties, including but not limited to the following: risks relating to the
competitive nature of the markets for contract computer programming services;
the extent to which market conditions for the Company's contract computer
consulting services will continue to adversely affect the Company's business;
the concentration of the Company's business with certain customers; uncertainty
as to the Company's ability to maintain its relations with existing customers
and expand its contract computer consulting services business; the settlement
with the NYC Department of Education (DOE) and the Company's ability to continue
to provide consultants to the DOE; the impact on the Company's business due to
the merger of AT&T and SBC Communications, Inc.; the impact of changes in the
industry, such as the use of vendor management companies in connection with the
consulting procurement process, the increase in customers moving IT operations
offshore and other risks and uncertainties set forth in the Company's filings
with the Securities and Exchange Commission.

Results of Operations
---------------------

The following table sets forth for the periods indicated certain financial
information derived from the Company's condensed consolidated statements of
earnings. There can be no assurance that trends in operating results will
continue in the future:

Three months ended February 28, 2007 compared with three months ended February
------------------------------------------------------------------------------
28, 2006
--------

                                             (Dollar amounts in Thousands)
                                                   Three Months Ended
                                                      February 28,
                                               2007                 2006
                                               ----                 ----
                                                     % of                 % of
                                        Amount     Revenues   Amount    Revenues

Revenues ............................   $11,774      100.0    $11,595     100.0
Cost of sales .......................     9,722      82.6       9,487      81.8
                                        -------     -----     -------     -----
Gross profit ........................     2,052      17.4       2,108      18.2


Selling, general, and administrative
  expenses ..........................     1,778      15.1       1,684      14.5
                                        -------     -----     -------     -----
Income from operations ..............       274       2.3         424       3.7


Other income ........................       111       1.0          80       0.6
                                        -------     -----     -------     -----
Income before income taxes ..........       385       3.3         504       4.3
Provision for income taxes ..........       184       1.6         214       1.8
                                        -------     -----     -------     -----
Net income ..........................   $   201       1.7     $   290       2.5
                                        =======     =====     =======     =====



                                     Page 10
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
REVENUES

Revenues consist primarily of revenues from computer programming consulting
services. Revenues for the quarter ended February 28, 2007 increased $179,000 or
1.5% from the comparable period in fiscal 2006. Due to the contract suspension
with the NYC Department of Education (DOE), the consultants on billing with DOE
decreased from 41 at May 31, 2006 to 11 at the end of the current quarter.
Despite this reduction in the number of consultants on billing at DOE, the
overall average number of consultants on billing only decreased from 342 in the
prior year quarter to 326 for the current quarter. Additional placements at
other accounts, many at higher billing rates, have offset much of the reduction
at DOE and, therefore, revenues have increased. After the end of the quarter, as
described in Footnote 9 to the Condensed Consolidated Financial Statements, the
DOE has advised the Company that the 11 remaining consultants will be terminated
in the near future.

As a result of the merger of AT&T with SBC Communications, Inc., Procurestaff,
which had been the vendor management company for AT&T is currently one of many
vendors to the new AT&T and no longer serves as the primary vendor manager. Due
to these changes, the Company experienced a decrease in new placements with AT&T
beginning in the second fiscal quarter. This has reduced the number of
consultants on billing with AT&T from 90 at November 30, 2006 to 79 at February
28, 2007. The Company is unable to predict whether this change of relationship
will continue to impact the Company's business relationship with AT&T.

COST OF SALES

Cost of sales for the quarter ended February 28, 2007, increased $235,000 or
2.5% to $9,722,000 from $9,487,000 in the prior year period. Cost of sales as a
percentage of revenues increased from 81.8% in the quarter ended February 28,
2006 to 82.6% in the quarter ended February 28, 2007. The increase in cost of
sales as a percentage of revenues was primarily attributable to discount
programs instituted or expanded by customers. These discount programs decrease
revenues without allowing offsetting cost reductions.

Cost of sales as a percentage of revenues increased, in part, because of a
decline in revenues at AT&T, the Company's largest customer, due to Procurestaff
offering further discounts to AT&T to maintain its relationship. This required
the Company to reduce what it received from Procurestaff, which further reduced
the Company's margins on its AT&T business.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses consist primarily of expenses
relating to account executives, technical recruiters, facilities costs,
management and corporate overhead. These expenses increased $94,000 or 5.6% from
$1,684,000 in the quarter ended February 28, 2006 to $1,778,000 in the quarter
ended February 28, 2007. This increase was primarily attributable to an increase
in the number of technical recruiters and sales executives. Additional personnel
have been hired to address increasing competition. The Company expects to
continue to hire additional experienced sales executives and technical
recruiters.

INCOME FROM OPERATIONS

In spite of the increase in revenues, income from operations decreased $150,000
or 35.4% from $424,000 in the quarter ended February 28, 2006 to $274,000 in the
quarter ended February 28, 2007. The discount programs which have caused an
increase in cost of sales as a percentage of revenues, along with the expenses
related to the hiring of additional sales and recruiting personnel, have reduced
income from operations.

                                     Page 11
<PAGE>

                           TSR, INC. AND SUBSIDIARIES

OTHER INCOME

Other income resulted primarily from interest and dividend income, which
increased by $25,000 to $119,000 due to higher interest rates in the quarter
ended February 28, 2007. Additionally, the Company had an unrealized loss of
$1,000 in the quarter ended February 28, 2007 versus a net unrealized loss of
$5,000 in the quarter ended February 28, 2006 from marketable securities due to
market adjustments of its trading securities equity portfolio.

INCOME TAXES

The effective income tax rate of 47.8% for the quarter ended February 28, 2007
increased from a rate of 42.5% in the quarter ended February 28, 2007 due to an
adjustment to the reversal of prior years' income tax over accruals taken in the
first two quarters of fiscal 2007.


Nine months ended February 28, 2007 compared with nine months ended February 28,
--------------------------------------------------------------------------------
2006
----
                                               (Dollar amounts in Thousands)
                                                    Nine Months Ended
                                                       February 28,
                                                2007                  2006
                                                ----                  ----
                                         % of                  % of
                                        Amount    Revenues    Amount    Revenues

Revenues ............................   $36,775     100.0     $35,889     100.0

Cost of sales .......................    29,978      81.5      28,886      80.5
                                        -------     -----     -------     -----

Gross profit ........................     6,797      18.5       7,003      19.5

Selling, general, and administrative
 expenses                                 5,331      14.5       5,026      14.0
                                        -------     -----     -------     -----
Income from operations ..............     1,466       4.0       1,977       5.5

Other income ........................       311       0.8         193       0.5
                                        -------     -----     -------     -----
Income before income taxes ..........     1,777       4.8       2,170       6.0
Provision for income taxes ..........       720       1.9         923       2.5
                                        -------     -----     -------     -----
Net income ..........................   $ 1,057       2.9     $ 1,247       3.5
                                        =======     =====     =======     =====

REVENUES

Revenues consist primarily of revenues from computer programming consulting
services. Revenues for the nine months ended February 28, 2007 increased
$886,000 or 2.5% from the comparable period in fiscal 2006. Due to the contract
suspension with the NYC Department of Education (DOE), the consultants on
billing with DOE decreased from 41 at May 31, 2006 to 11 at the end of the
current period. Despite this reduction in the number of consultants on billing
at DOE, the overall average number of consultants on billing only decreased from
345 in the prior year period to 339 for the current period. Additional
placements at other accounts, many at higher billing rates, have offset most of
the reduction at DOE and, therefore, revenues have increased. After the end of
the quarter, as described in Footnote 9 to the Condensed Consolidated Financial
Statements, the DOE has advised the Company that the 11 remaining consultants
will be terminated in the near future.

                                     Page 12
<PAGE>

COST OF SALES

Cost of sales for the nine months ended February 28, 2007, increased $1,092,000
or 3.8% to $29,978,000 from $28,886,000 in the prior year period. Cost of sales
as a percentage of revenues increased from 80.5% in the nine months ended
February 28, 2006 to 81.5% in the nine months ended February 28, 2007. The
increase in cost of sales as a percentage of revenues was primarily attributable
to discount programs instituted or expanded by customers. These discount
programs decrease revenues without allowing offsetting cost reductions.

Cost of sales as a percentage of revenues increased in part, because of a
decline in revenues at AT&T, the Company's largest customer, due to Procurestaff
offering further discounts to AT&T to maintain its relationship. This required
the Company to reduce what it received from Procurestaff, which further reduced
the Company's margins on its AT&T business.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses consist primarily of expenses
relating to account executives, technical recruiters, facilities costs,
management and corporate overhead. These expenses increased $305,000 or 6.1%
from $5,026,000 in the nine months ended February 28, 2006 to $5,331,000 in the
nine months ended February 28, 2007. This increase was primarily attributable to
an increase in the number of technical recruiters and sales executives.
Additional personnel have been hired to address increasing competition. The
Company expects to continue to hire additional sales executives and technical
recruiters.

INCOME FROM OPERATIONS

In spite of the increase in revenues, income from operations decreased $511,000
or 25.8% from $1,977,000 in the nine months ended February 28, 2006 to
$1,466,000 in the nine months ended February 28, 2007. The discount programs
which have caused an increase in cost of sales as a percentage of revenues,
along with the expenses related to the hiring of additional sales and recruiting
personnel, have reduced income from operations.

OTHER INCOME

Other income resulted primarily from interest and dividend income, which
increased by $91,000 to $346,000 due to higher interest rates in the nine months
ended February 28, 2007. Additionally, the Company had an unrealized gain of
$1,000 in the nine months ended February 28, 2007 versus a net unrealized loss
of $5,000 in the nine months ended February 28, 2006 from marketable securities
due to market adjustments of its trading securities equity portfolio.

INCOME TAXES

The effective income tax rate of 40.5% for the nine months ended February 28,
2007 decreased from a rate of 42.5% in the nine months ended February 28, 2006
due to lower state and local taxes and reversal of prior years' income tax over
accruals.

                                     Page 13
<PAGE>

                           TSR, INC. AND SUBSIDIARIES

LIQUIDITY AND CAPITAL RESOURCES

The Company expects that cash flow generated from operations together with its
cash and marketable securities will be sufficient to provide the Company with
adequate resources to meet its liquidity requirements for the foreseeable
future.

At February 28, 2007, the Company had working capital of $12,784,000 and cash
and cash equivalents of $2,109,000 as compared to working capital of $12,368,000
and cash and cash equivalents of $2,661,000 at May 31, 2006. The Company's
working capital also included $6,391,000 and $5,407,000 of marketable securities
with maturities of less than one year at February 28, 2007 and May 31, 2006,
respectively. The working capital and marketable securities increased primarily
due to the reclassification of a security from long-term to current.

Net cash provided by operating activities of $1,130,000 for the nine months
ended February 28, 2007, compared to $300,000 of cash provided for the nine
months ended February 28, 2006. The cash provided by operating activities in the
nine months ended February 28, 2007 resulted primarily from the Company's net
income. In the nine months ended February 28, 2006 an increase in accounts
receivable and a decrease in accrued expenses significantly reduced the cash
flow provided by the Company's net income.

Net cash used in investing activities of $521,000 for the nine months ended
February 28, 2007 primarily resulted from purchasing US Treasury Securities in
excess of maturities. Net cash provided by investment activities of $996,000 for
the nine months ended February 28, 2006 primarily resulted from maturities of US
Treasury Securities in excess of purchases.

Net cash used in financing activities of $1,160,000 and $1,477,000 for the nine
month periods ended February 28, 2007 and 2006, respectively, resulted primarily
from cash dividends.

The Company's capital resource commitments at February 28, 2007 consisted of
lease obligations on its branch and corporate facilities. The Company intends to
finance these lease commitments from cash flow provided by operations, available
cash and short-term marketable securities.

The Company's cash and marketable securities were sufficient to enable it to
meet its cash requirements during the nine months ended February 28, 2007. The
Company has available a revolving line of credit of $5,000,000 with a major
money center bank through October 6, 2007. As of February 28, 2007, no amounts
were outstanding under this line of credit.

                  TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
<TABLE><CAPTION>
                                                                   PAYMENTS DUE BY PERIOD

                                                             LESS THAN                            MORE THAN
  Contractual Obligations                           TOTAL      1 YEAR     1-3 YEARS   3-5 YEARS    5 YEARS
  -----------------------                           -----      ------     ---------   ---------    -------
<S>                                               <C>          <C>          <C>          <C>        <C>
Long-Term Debt ................................      --            --           --          --        --
Capital Lease Obligations .....................      --            --           --          --        --
Operating Leases ..............................   533,000      256,000      219,000      58,000       --
Purchase Obligations ..........................      --            --           --          --        --
Consulting Contract ...........................    50,000       50,000          --          --        --
Other Long-Term Liabilities Reflected on
the Registrant's Balance Sheet under GAAP .....      --           --            --          --        --
                                                 --------     --------     --------     -------     ------
Total .........................................  $583,000     $306,000     $219,000     $58,000     $ --
                                                 ========     ========     ========     =======     ======
</TABLE>


                                     Page 14
<PAGE>

                           TSR, INC. AND SUBSIDIARIES

RECENT ACCOUNT PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48 - "Accounting for Uncertainty in Income Taxes" (FIN 48).
This guidance is intended to provide increased consistency in the application of
FASB Statement No. 109 - "Accounting for Income Taxes" by providing guidance
with regard to the recognition and measurement of tax positions, and provide
increased disclosure requirements. In particular, this interpretation requires
uncertain tax positions to be recognized only if they are "more-likely-than-not"
to be upheld based on their technical merits. Additionally, the measurement of
the tax position will be based on the largest amount that is determined to have
greater than a 50% likelihood of realization upon ultimate settlement. Any
resulting cumulative effect of applying the provisions of FIN 48 upon adoption
would be reported as an adjustment to the beginning balance of retained earnings
(deficit) in the period of adoption. Management is in the process of evaluating
the effects of this guidance which is effective for fiscal years beginning after
December 15, 2006.

On September 15, 2006, the FASB issued SFAS No. 157, "Fair Value Measurements".
SFAS No. 157 is effective for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. SFAS No. 157 provides guidance
related to estimating fair value and requires expanded disclosures. The standard
applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value. The standard does not expand the use of fair value in
any new circumstances. The Company is evaluating SFAS No. 157 and its impact on
the Company's consolidated financial statements.



                                     Page 15
<PAGE>

                           TSR, INC. AND SUBSIDIARIES

CRITICAL ACCOUNTING POLICIES

The SEC defines "critical accounting policies" as those that require the
application of management's most difficult, subjective or complex judgments,
often as a result of the need to make estimates about the effect of matters that
are inherently uncertain and may change in subsequent periods.

The Company's significant accounting policies are described in Note 1 to the
Company's consolidated financial statements, contained in its May 31, 2006
Annual Report on Form 10-K, as filed with the SEC. The Company believes that
those accounting policies require the application of management's most
difficult, subjective or complex judgments. There have been no changes in the
Company's significant accounting policies as of February 28, 2007.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company's earnings and cash flows are subject to fluctuations due to (i)
changes in interest rates primarily affecting its income from the investment of
available cash balances in money market funds and (ii) changes in market values
of its investments in trading equity securities. Under its current policies, the
Company does not use interest rate derivative instruments to manage exposure to
interest rate changes. The Company's present exposure to changes in the market
value of its investments in equity securities is not significant.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES. The Company conducted an evaluation, under
the supervision and with the participation of the principal executive officer
and principal financial officer, of the Company's disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act")). Based on this evaluation, the principal executive
officer and principal financial officer concluded that, as of the end of the
period covered by this report, the Company's disclosure controls and procedures
are effective.

INTERNAL CONTROL OVER FINANCIAL REPORTING. There was no change in the Company's
internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) during the Company's most recently reported
completed fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.

                                     Page 16
<PAGE>

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

     There are no material changes to the risk factors described in the Form
     10-K, filed on September 12, 2006, except as follows:

     DEPENDENCE ON SIGNIFICANT CUSTOMERS

     As described under Part I, Item 2, the Company's relationship with AT&T has
     changed due to the merger of AT&T with SBC Communications and the resulting
     change in the relationship with AT&T of Procurestaff, through which the
     Company contracts with AT&T. This change has had a further impact on the
     Company's profit margins on consultants placed with AT&T and recently
     created a decrease in new placements with AT&T. The Company cannot predict
     the extent to which this change will adversely affect the number of
     consultants placed with AT&T.

     As more fully described Footnote 9 to the Company's Condensed Consolidated
     Financial Statements, the Company has agreed in principle to settle a claim
     by the New York City Department of Education (DOE). This settlement has not
     been finalized. At the end of the quarter ended February 28, 2007, there
     were 11 consultants remaining on billing at DOE. In addition to the
     settlement of the claim, the Company and the DOE were also negotiating an
     agreement which would have enabled the Company to continue placing new
     consultants with the DOE. The Company and the DOE have not been able to
     finalize the terms of this agreement. The Company does not expect the
     failure to reach this agreement to affect the agreement in principle to
     settle the DOE claim. However, as a result, the DOE has advised the Company
     that the 11 remaining consultants will be terminated in the near future.

ITEM 6. EXHIBITS

     (a). Exhibit 10.1 - Employment Agreement between Christopher Hughes and TSR
          Inc. dated March 1, 2007 incorporated by reference to the Form 8-K
          filed March 6, 2007.

          Exhibit 31.1 - Certification by J.F. Hughes pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
          Act of 2002.

          Exhibit 31.2 - Certification by John G. Sharkey pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
          Act of 2002.

          Exhibit 32.1 - Certification by J.F. Hughes 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 by John G. Sharkey pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002.


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                TSR Inc.
                                              ------------
                                              (Registrant)


Date: April 2, 2007                  /s/ J.F. Hughes
                                     ---------------------------
                                     J.F. Hughes, Chairman and President



Date: April 2, 2007                  /s/ John G. Sharkey
                                     ---------------------------
                                     John G. Sharkey, Vice President Finance


                                     Page 17