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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 29, 2001

                                       OR

[ ]      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: 0-25758

                       MULTI-MEDIA TUTORIAL SERVICES, INC.
                      ------------------------------------
            (Name of small business issuer specified in its charter)

           Delaware                                              73-1293914
---------------------------------                                ----------
(State or other jurisdiction                                  (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                   205 Kings Highway Brooklyn, New York 11223
                   ------------------------------------------
          (Address of principal executive offices, including zip code)

                                  718-234-0404
                                  ------------
                (Issuer's telephone number, including area code)


         Securities registered under Section 12(b) of the Exchange Act:

                                                 Name of each exchange
       Title of each class                       on which registered
       -------------------                       -------------------
              None                                       None

         Securities registered under Section 12(g) of the Exchange Act:


                     Common Stock, $0.01 par value per share
                               Redeemable Warrants
                               -------------------
                                (Title of Class)

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Check whether the issuer: (i) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (ii) has been
subject to such filing requirements for the past 90 days.  Yes [X]  No [ ]

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

The issuer's revenues for the fiscal year ended February 28, 2001 were
$2,072,811.

The number of shares outstanding of the issuer's Common Stock as of July 16,
2001 was 16,567,287 shares. The aggregate market value of the Common Stock
(16,315,893) held by non-affiliates, based on the approximate average of the bid
and asked prices ($.03) of the Common Stock as of July 16, 2001 was $489,477.

Transactional Small Business Disclosure Format (Check one):  Yes [ ]  No [X]

         This Annual Report on Form 10-KSB (the "Report") may be deemed to
contain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Forward-looking statements in
this Report or hereafter included in other publicly available documents filed
with the Securities and Exchange Commission (the "Commission"), reports to the
Company's stockholders and other publicly available statements issued or
released by the Company involve known and unknown risks, uncertainties and other
factors which could cause the Company's actual results, performance (financial
or operating) or achievements to differ from the future results, performance
(financial or operating) or achievements expressed or implied by such
forward-looking statements. Such future results are based upon management's best
estimates based upon current conditions and the most recent results of
operations. These risks include, but are not limited to, the risks set forth
herein, each of which could adversely affect the Company's business and the
accuracy of the forward-looking statements contained herein.

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         As of May 24, 1999, the Company effected a one-for-ten reverse stock
split of its issued and outstanding Common Stock, and increased the Company's
authorized Common Stock to 20,000,000 shares. Except as set forth herein, the
discussion set forth in this Annual Report on Form 10-KSB reflects the effect of
the one-for-ten reverse split.

                                     PART I

ITEM 1.  BUSINESS

GENERAL

         The Company produces, acquires and telemarkets a variety of products to
educational institutions and consumers using direct marketing through
television, radio and print advertising. The Company's principal product to date
has been proprietary tutorial education programs on videotape for use by adults
and children in homes, workplaces, schools, libraries and other locales. This
principal product line, which is marketed under the brand Math Made Easy(TM),
consists of a series of over 100 videotapes and supplemental materials on
mathematics. The Math Made Easy(TM) line uses colorful computer graphics and
real life vignettes and is the most complete line of mathematics videotapes
available.

         The Company offers customized telemarketing services to companies and
institutions who wish to outsource their telemarketing needs. These companies
and institutions can retain the Company on a project by project basis to take
advantage of the Company's telemarketing expertise and infrastructure instead of
having to develop or support telemarketing in their own operations. The fees for
these services are based on either a per minute charge or a combination of
hourly and commission rate. This portion of the business represented 73% of the
Company's revenues for the fiscal year ended February 28, 2001. See "Customized
Telemarketing Services."

         The Company specializes in telemarketing generated by its own
television and radio advertisements, which it places on a "direct response"
basis at the lowest available rates. The Company uses different 800 numbers for
each channel on which it advertises, which permits the Company to track the
effectiveness of its advertising. Payment is made by credit card or direct debit
to a checking account. The product is then shipped by a fulfillment house to the
customer.

         The Company's products are sold principally by an internal sales staff,
and have been purchased by over 250,000 customers over the last five years. The
Company's telemarketing staff is experienced in converting an individual who is
inquiring about an advertised product into a customer who will purchase the
product. This expertise, of converting a "call to inquire" into a sale, was
developed as a result of specialized training of telemarketers to sell the Math
Made Easy(TM) product line. See "Sales, Marketing and Distribution."

         The Company's objective is to expand the scope of its telemarketing
business in a variety of ways. Subject to the availability of additional
financing, the Company intends to expand product offerings for sale to
individual consumers by developing, licensing or acquiring new complementary
educational products. In addition, subject to the availability of additional
financing, the Company anticipates expanding the marketing of its products
through such efforts as co-branding and joint-marketing.

         In March, 2000, the Company launched its e-commerce website, known as
"1800USAMATH.COM" or "MATHMADEEASY.COM." This site offers the Company's tutorial
programs, known as MathMadeEasy(TM)" and "Reading MadeEasy(TM)."

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         The Company is currently developing a model by which it is acquiring
visits to its internet site. The Company is buying a leading position in many
search categories relating to math tutorials on the goto.com search engine. The
Company has concluded an agreement with Princeton Review to be featured on their
website as well as to be a supplier of educational tutorials for their
homeroom.com K-12 internet division. The Company has introduced Webified
telemarketing, whereby visitors to the site have the option to be directly
connected to the Company's call center and be advised as to the appropriate
program by its educational consultants. The Company has also acquired the rights
to distribute SAT CD Rom programs and plans to acquire other products for the
key standardized tests.

         The Company has formed a wholly-owned subsidiary, The Tutorial
Channel.com, to be an amalgamation of various on-line educational services,
which will use a subscription model to create revenues. The Tutorial Channel is
expected to offer on-line interactive programs that will provide an electronic
tutor at a substantial savings to the student as compared to traditional
tutoring. The Company may also offer supplemental "real person" on-line tutoring
to augment its electronic services. The Company expects to launch student and
parent chat rooms and make available counseling services for both parents and
students. The Company requires between $2,000,000 and $5,000,000 to fully
develop these plans. There can be no assurance that the Company will receive
such financing.

THE PRODUCTS

         The Company's products consist of an extensive line of "Math Made
Easy(TM)" and "Reading Made Easy(TM)" videotapes and ancillary material for
direct sale to consumers via direct marketing through national and local TV and
radio advertising. See "Sales Marketing & Distribution"

CURRENT PRODUCTS

         MATH MADE EASY(TM). The Company offers over 100 mathematics videotapes
in the Math Made Easy(TM) series. The series, which was developed and produced
by the Company, is geared to students ranging from pre-school to college and
adult education. Topics covered by the series include number concepts, basic
arithmetic, fractions, decimals, percents, word problems, fundamentals of
pre-algebra, algebra, logic, geometry, statistics and probability, pre-calculus
and calculus, trigonometry and advanced calculus. This product line is marketed
by the Company through television and radio advertising with specific "800MATH
telephone numbers directed to its telemarketing staff and is also sold directly
to schools. The average math consumer order consists of a set of five
educational videotapes at a price of $200. Sets of five video tapes are sold to
schools at a price of $250, and $9.95 per each additional workbook The Company
has also entered into non-exclusive agreements with various companies to
distribute tapes of reading and literacy educational products as part of its
Reading Made Easy(TM) series. The products include reading readiness, letter
identification, grammar, and reading comprehension which cover topics from
preschool through junior high school. The various titles include videotapes,
audiotapes and workbooks and flash cards. The Company purchases these products
at discounted rates from the respective manufacturers or distributors and
distributed through the Company's direct marketing division. The average reading
consumer order consists of five videotapes at a price of $159.

         ON-LINE LEARNING. In June, 2000, the Company completed the first phase
of its transformation of its video product line to on-line learning. This
includes the production of basic skills covering fractions, decimals,
percentages and word problems. The new version consists of flash technology,
where animated characters replace the original screen teachers. The Company
plans to offer these programs for on-line learning.

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PRODUCT DEVELOPMENT

         The Company produces many of its own math videotape products and
supplemental workbooks by commissioning a curriculum from the Company's
educational coordinators. The Company employed Dr. Meryle Kohn, chairperson of
the mathematics and science departments at New York Institute of Technology, as
its curriculum coordinator and headwriter In the production of many of its
programs. The Company's educational writers are independent contractors retained
on a project-by-project basis. Total cost of a videotape production is
approximately $10,000 to $15,000.

         Many of the Company's videotapes include colorful computer graphics and
real life vignettes, certain of which are scripted by professional writers. The
curriculum writers seek to augment comprehension of the materials by numerous
examples, which are solved on a step by step basis. The curriculum invites
interaction by requesting the viewer to pause and to solve designated problems
before restarting the videotape to view the step by step solution.

PRODUCT ACQUISITION

         In addition to developing its own math product, the Company purchases
or licenses product from third parties, such as the Reading Made Easy(TM) line.

ANTICIPATED FUTURE PRODUCTS AND SERVICES

         The launch of new product lines and customized telemarketing services
is subject to the availability of capital to be generated by additional funding.
The potential revenues, costs and margins that may be generated by the increased
product offerings and telemarketing services may cause different margins as
compared to the historical margins as a result of different pricing and costs of
the acquired product and services.

CUSTOMIZED TELEMARKETING SERVICES

         The Company has also begun to expand its telemarketing services by
offering customized telemarketing services to companies and institutions who
wish to outsource their telemarketing needs. These companies and institutions
can retain the Company on a project by project basis to take advantage of the
Company's telemarketing expertise and infrastructure instead of having to
develop or support telemarketing in their own operations. For example, the
Company has handled telephone inquiries from potential customers of Windmere
Corp. who respond to the infomercial or 60 second advertisement for
Windmere's "Littermaid(TM)" product.It also presently services Net2phone, a
leading company in the development of internet telephony.The Company's
telemarketing has ranged from data base cleaning to sales and marketing and
customer service. Among its clients have been Fortune 500 companies and internet
related and telecommunications companies. The fees for these services are based
on either a per minute charge or a combination of hourly and commission rate.
The Company's telemarketing staff is trained and experienced in converting an
individual who is inquiring about an advertised product to a customer who will
purchase the product. This expertise, of converting a "call to inquire" into a
sale, was developed as a result of specialized training of telemarketers to sell
the Math Made Easy(TM) product.

THETUTORIALCHANNEL.COM

         The Company has formed a wholly-owned subsidiary, The Tutorial
Channel.com, to be an amalgamation of various on-line educational services,
which will use a subscription model to create revenues. The Tutorial Channel is
expected to offer on-line interactive programs that will provide an electronic
tutor at a substantial savings to the student as compared to traditional
tutoring. The Company may also offer supplemental "real person" on-line tutoring
to augment its electronic services. The Company expects to launch student and
parent chat rooms and make available counseling services for both parents and
students. The Company requires between $2,000,000 and $5,000,000 to fully
develop these plans. There can be no assurance that the Company will receive
such financing.

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THE MARKET

         GENERAL. Education is second only to health care in annual expenditures
in the U.S. representing almost ten percent of GNP, $400 to $600 billion. Fully
40 percent of students encounter some difficulty at various times mastering
mathematics and science. The loss of individualized instruction in many school
districts places an additional burden on the home, requiring supplemental
education products that are both informative and challenging.

         The situation is against the backdrop of 50 to 75 million students in
our school system at any one time. There are currently 106,000 schools offering
education to students in grades K-12 in the U.S. representing a total of over 52
million children in the U.S. This population has access to the Internet with a
growth rate that has doubled every year since 1996 and is likely to continue
through 2001.

         Much of the activity in the for-profit education industry lies in
post-secondary education and in niches around the margins of traditional
pre-collegiate education. Those niches include tutoring, test preparation,
college counseling, electronic learning and the education of at-risk children.

         The Company's Math Made Easy website lies at the intersection of the
consumer market for educational and developmental products for children, and the
increasing acceptance of Internet-based commerce. Traditional retailers of
educational products, including mass market retailers, typically lack a focus on
education, do not evaluate the products they offer and may not understand the
development needs of individual children.

         In addition, these retailers often have a narrow product selection due
to physical space limitations, have high facilities and staffing costs, offer
limited service, and lack merchandising flexibility and shopping convenience.
Because of the limitations of the traditional retail distribution channel, the
Internet has the potential to become a key resource utilizes by parents to pick
from a broad range of educational products and services to meet their children's
needs.

         Education has boomed as a for-profit industry in the past few years for
the following reasons:

         o        The 1990's and especially the last 12 months saw one report
                  after another decrying the condition of public education.

         o        Parents are more willing than ever to spend money to
                  supplement their children's schooling and give them a leg-up
                  in the college admissions process. That trend has particularly
                  benefited tutoring and test-prep companies.

         o        Strength of the economy has created new wealth that has
                  allowed entrepreneurs to turn their business ideas into
                  realities. Education businesses have raised some $6 billion in
                  private capital over the past decade.

         Specialty educational and creative toy and game retailers that are
focused on education often lack the expertise or time to analyze a child's
specific needs. As a result, the traditional retail channel fails to satisfy
parents' needs for selection, convenience, personalized service , advice and
information.

         EDUCATION AND THE INTERNET. As a result of a number of societal trends,
including constraints on school budgets and the increasing use of standardized
tests, many parents are taking a more active role in their children's education.
In their efforts to help their children learn, improve their children's
standardized test scores and make learning fun, parents are increasingly
purchasing educational books, toys and games, and software over the internet.

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         Parents are faced with the challenge of finding quality educational
products and selecting the right products for their children. With thousands of
educational products to choose from and few reliable sources of information,
finding the appropriate products for a specific child's needs and goals can be
overwhelming and confusing. Parents seek a resource for comprehensive and
trusted educational content and product information to help them make informed
purchase decisions. TheTutorialChannel's Online Education Directory will help
parents fulfill the need to locate the best solutions for their children.

         The education market is considered to be a rapidly growing vertical
market on the web, and is forecast to offer an increasingly attractive and
expanding demographic for advertising and e-commerce. The traffic drive to the
Internet for research and education is steadily increasing, with Internet access
in fifty-one percent of the instructional rooms (classroom computer or other
labs, libraries, and media centers) in U.S. schools, according to a 1998 survey
released by the U.S. Department of Education. The percentage of students who
spend an average of three or more hours a week online has more than doubled,
rising from 5 percent in 1997 to 11 percent in 1998.

          In summary, the next five years should prove to be a major watershed
era in which parents reassert their partnership role in proactively seeking out
resources to boost their children's educational performance. The Company's
management vision is to develop a broad array of focused tutorial program
offered by sale and subscription over the internet and to be identified as the
premier source in this category.

         SUPPLEMENTAL EDUCATION AT HOME. The Company believes that parents are
increasingly concerned about the quality of their children's education and are
seeking to supplement the existing curricula. In particular, they are seeking to
use televisions and videotape players now found in most homes for educational
purposes. In addition, the Company believes that adults going back to school to
prepare for career moves or promotions are an ever growing potential market for
its educational videotapes. The Company has found that its primary customers are
parents with children in the educational system. The Company's efforts to date
have resulted in a database of more than 445,000 names, of which 260,000 ordered
product, and approximately 185,000 names of potential customers.

         SCHOOLS. As part of the drive to improve education, the Company
believes that school districts may increasingly allocate available funds to the
acquisition of educational tools. The Company believes that the possible
expansion of this market and the increased availability of funds may present an
important opportunity for its products.

         In the fiscal year ended February 28, 2001, consumer videotape sales
and school videotape sales constituted approximately 85%, and 15% of total
educational sales, respectively. For the fiscal year ended February 29, 2000,
consumer videotape sales and school videotape sales constituted approximately
85% and 15% of total educational sales, respectively.

         CUSTOMIZED TELEMARKETING SERVICES. In 1996, the WEFA Group conducted a
study for the Direct Marketing Association the total sales generated by
telephone marketing was estimated to be $244 billion. The Company believes that
many companies across the nation are interested in outsourcing their customer
service, sales staff and help desk hotlines. Outsourcing of these specialized
tasks to non-employees has become common in today's business world. The Company
has offered its telemarketing services to clients, for services including data
base cleaning to sales and marketing and customer services. In the fiscal year
ended February 28, 2001, customized telemarketing sales constituted
approximately 73% of total sales. For the fiscal year ended February 29, 2000,
customized telemarketing sales constituted approximately 60% of total sales.

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SALES, MARKETING AND DISTRIBUTION

         The Company markets its videotapes and related materials to consumers
primarily by inbound telemarketing efforts, which are supported by advertising
on radio and television on a national and regional level. Each commercial is
assigned a distinct 800 telephone number to call. The Company tests the
efficiency of each commercial on a daily and weekly basis by sourcing each
incoming call by the phone number that was dialed. The results of tracking
consumer response directly affect the placement of future advertising. The
Company's telemarketing staff, which responds to incoming calls, seeks to
convert into sales all leads, which are generated by the Company's advertising.
The telemarketer attempts to record all pertinent information regarding the
customer who responded to the advertisement, thereby adding the potential
customer to the Company's database even if they do not purchase at that time. If
the customer agrees to purchase the product, the telemarketer will record either
credit card or checking account information, which is then transferred to the
billing department which processes the payment and sends the information to the
fulfillment center for shipping. The Company has documented repeat sales for
additional items for existing customers. The Company believes that many repeat
sales may be a direct response to the commercial that the customer had initially
seen.

         In an effort to maximize efficient use of the telemarketers, the
Company has a predictive dialing system. This system eases the telemarketing
efforts by having the computer dial return calls to prospective customers for
the telemarketers. The Company believes this system facilitates the Company's
efforts to enter into the telemarketing servicing arena. In addition, it allows
the Company to contact prospective customers who have not yet purchased products
from its math and reading videotapes, as well as previous customers on a timely
basis, in a more efficient manner. The Company also utilizes the "predictive
dialing" system in its off-season to generate new contacts from its existing
customer base.

         Credit cards are the preferred method of payment, both for the Company
and for its customers. These cards are either billed in full or in partial
monthly payments. The Company also offers consumers who do not wish to use their
credit card another means of payment; an automatic check debit, in which the
customer is shipped the merchandise after he offers the Company his bank name
and checking account number.

ADVERTISING

         The economic climate in which advertising inventory, which had been
scarce in the hey day of the dot com frenzy has now returned to levels not seen
in several years, resulting in a plethora of advertising opportunities for the
Company and its products. The Company has been able to buy select advertising on
a "per inquiry" basis as well as on a "per order' basis. The Company will
continue to look for additional opportunities as well as engage in selective
buying of direct response advertisement where the cost per thousand compares
favorably to the Company's past "paid for" rates. The Company is currently
discussing with several new advertising agencies plans to relaunch a significant
campaign on behalf of its Math Made Easy products for Fall 2001,subject to the
availability of additional financing or joint venture partners for such a
campaign.

         The Company is currently developing a model by which it is acquiring
visits to its internet site. The Company is buying a leading position in many
search categories relating to math tutorials on the goto.com search engine. The
Company has concluded an agreement with Princeton Review to be featured on their
web site as well as to be a supplier of educational tutorials for their
homeroom.com K-12 internet division. The Company has introduce webified
telemarketing whereby visitors to the site have the option to be directly
connected to the Company's call center and be advised as to the appropriate
program by its educational consultants.

CUSTOMIZED TELEMARKETING SERVICES

         The Company solicits business for its customized telemarketing services
division by advertising in trade magazines as well as through its own internal
efforts. To date, the Company has entered into agreements with .LitterMaid, a
subsidiary of Windmere Corp. and Net2Phone, pursuant to which the Company
provides inbound and outbound telemarketing services. The Company offers its
clients the advantage of a highly trained sales force as well as the capability
to produce accurate telephone and sales reports. In addition, the Company can
offer its expertise in creating and placing advertisements, for which it
receives a commission on all media placed. The Company is actively seeking to
service additional accounts in this area. The Company's telemarketing services
have ranged from database cleaning to sales and marketing and customer service.
The Company's clients have included Fortune 500 companies, and internet related
and telecommunications companies.

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TECHNOLOGY RESOURCES

         The Company has created a customized network to augment the efficiency
of its telemarketing operations. The Company's PABX (Private Automatic Branch
Exchange telephone switch) uses an open ended ISDN (Integrated Services Digital
Network) architecture which allows the Company to link multiple systems together
in an automated fashion, thus gathering numerical data and other information
from every inbound toll-free call. All inbound and outbound calls are tracked
and tagged for later examination and database development. The Company utilizes
an SMDR (Station Message Detail Recorder) specialized call accounting and
tracking software package to record vital call statistics. The Company uses CTI
(Computer Telephony Integration) to combine voice and data and then delivers
this information into the Company's data management systems. These are then
integrated into centrally managed Local Area Networks (LANs) and Wide Area
Networks (WANs).

         The Company utilizes an ACD (Automatic Call Distributor) to help
identify each customer's call and automatically route those calls to specific
telemarketers. The Company's predicative dialer utilizes specific algorithms to
assist in analyzing each telemarketer's performance and the network's
efficiency. The predictive dialer's UNIX processor provides centralized list
management, data consolidation, reporting and interfaces with the LAN as well.

         The Company's location is protected by a fire extinguishing system and
it's primary systems have an uninterruptable power supply. In addition, the
Company has a short-term battery back-up in the event of power outage, reduced
voltage or power surge. Furthermore, instantaneous rerouting of all call traffic
takes place in the event of telecommunication failure, natural disaster or other
emergencies, thus insuring calls are usually answered properly even under
duress.

PERSONNEL AND TRAINING

         The Company believes that the quality of its employees is a key factor
in its effort to develop a profitable telemarketing business. The Company
tailors its recruiting and training techniques towards the industries and
products it services. All telemarketers receive a detailed review of each
product they will be selling. In addition, the Company trains its telemarketers
in the art of converting an inquiry into a sale. A telemarketer is in training
for approximately 5 days, prior to receiving customer calls on a full-time, solo
basis. Furthermore, the Company continually monitors telemarketers'
conversations to assure quality and customer satisfaction. Compensation is based
on a combination of salary and commission. See "Risk Factors."

RETURNS, GUARANTY AND WARRANTY POLICIES

         The Company offers its customers a 30 day money back guarantee during
which period they may return the merchandise for an exchange or full credit. The
Company believes that a money back guaranty policy is essential to the success
of its telemarketing efforts. In addition, management of the Company has
implemented policies and procedures intended to minimize the number of returned
products. These policies and procedures include increasing the appeal of the
Company's products by designing more attractive packaging, and enclosing with
its shipments full color catalogues and parent guides. In addition, the customer
service department, which must be contacted before merchandise is returned, has
been trained to specifically reduce returns. See "Risk Factors."

SEASONALITY

         The Company's educational telemarketing business is highly seasonal.
Demand for its products tends to peak during the first and fourth fiscal
quarters when school is in session. Demand is especially slow during the school
vacation periods. This seasonality greatly affects the Company's advertising
campaigns, which must be timed to coincide with the annual periods when demand
is traditionally high. The Company does not reserve advertising time in advance
and purchases air time at the lowest possible rates. Consequently, its
reservations are subject to last minute cancellation by the radio and television
stations. In addition, as a result of the Company's dependence on the
availability of media time, operating results can be negatively impacted by
difficulty in purchasing cost effective media time. Although the Company has
entered into certain ventures, which may reduce the impact of seasonality on the
Company's business, it will in all likelihood continue to experience a certain
amount of seasonality in its operations.

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PROPRIETARY RIGHTS

         The Company has received certificates of registration with the United
States Trademark Office for the following trademarks: MATH MADE EASY, PASSPORT
TO MATH SUCCESS, LEARNING TRENDS, AND REAL LIFE MATH. The Company has filed
applications with the United States Trademark Office for the registration of
READING MADE EASY.

EMPLOYEES

         As of July 12, 2001, the Company had 57 employees, of whom 3 were
executive officers, 47 were engaged in sales, and 7 were in marketing, support
and administrative staff. The Company has made significant reductions in
personnel in order to reduce overhead expenses. The Company retains outside
consultants to augment its computer, telephone and telemarketing expertise. The
Company also relies on several outside consultants for expertise in hardware,
software and curriculum development. The Company believes that its relationship
with its employees is generally satisfactory.

                                  RISK FACTORS

         The Company's business involves a high degree of risk. Shareholders and
investors should carefully consider the following risk factors and the other
information included in this Report. Financial Condition of the Company; History
of Losses; Going Concern Qualification in Certified Public Accountant's Report;
Company Highly Leveraged.

HISTORY OF OPERATING LOSSES

         The Company has experienced significant losses from operations since
inception. It experienced losses of $ $1,172,500 and $1,492,686 for the fiscal
years ended February 28, 2001 and 2000. As of February 28, 2001, the Company had
a working capital deficit of $4,610,886 and an accumulated deficit of
$16,754,767. The Company's working capital requirements have been met primarily
from loans and private sales of securities provided by management and other
investors, but there can be no assurance the Company will be able to obtain such
funds in the future. As of February 28, 2001, the Company had outstanding
investor loans and advances aggregating $2,191,866 of which a certain amount may
be converted into equity. $761,190 of this amount is currently due and payable,
and there can be no assurance the Company will be able to convert the debt to
equity, or generate the funds from operations or further financings to repay
these obligations. The Company is in default on one of its capitalized leases.
Currently, the Company's sales volume is not sufficient to repay this
indebtedness. In addition, the Company's operating expenses are anticipated to
increase significantly in the future if the Company is able to implement its
expanded marketing strategy. Although the Company is seeking additional funds to
allow it to repay its current debt, expand its customized telemarketing
operations and develop its e-commerce business plan, there can be no assurance
that the Company will not continue to experience such losses or will ever
generate revenues at levels sufficient to support profitable operations. The
Company has received a report from its current and former independent public
accountants, that includes an explanatory paragraph describing the uncertainty
as to the ability of the Company's operations to continue as a going concern.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Consolidated Financial Statements."

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NEED FOR ADDITIONAL FINANCING

         The Company has limited resources and has not been able to finance its
activities with the proceeds from operations and there can be no assurance it
will be able to do so in the future. The Company is seeking additional financing
in order to meet its debt repayment obligations and to maintain and potentially
expand its current operations. Even if the Company is able to obtain funding,
there can be no assurance that a sufficient level of sales will be attained to
fund such operations or that unbudgeted costs will not be incurred. Future
events, including the problems, delays expenses and difficulties frequently
encountered by similarly situated companies, as well as changes in economic,
regulatory or competitive conditions, may lead to cost increases that could make
the net proceeds of any new funding and cash flow from operations insufficient
to fund the Company's capital requirements. There can be no assurances that the
Company will be able to obtain such additional funding from management or other
investors on terms acceptable to the Company, if at all. Additional financings
may result in dilution for then current stockholders. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

FUTURE ISSUANCES OF STOCK; DILUTION TO CURRENT STOCKHOLDERS

         The Company currently has outstanding options, warrants and other
rights to acquire an aggregate of approximately 9,050,060 shares of Common Stock
at exercise or conversion prices ranging from $.05 to $.25 per share. The
Company currently has outstanding 16,567,287 shares of Common Stock and as of
July 16, 2000, the price of the Company's current stock as quoted on the NASD
Electronic Bulletin Board was approximately $.025 per share. Any future
issuances may substantially dilute the holdings of the Company's current
stockholders. Furthermore, such issuances could result in a change of control of
the Company. See "Need for Additional Financing."

UNCERTAINTY OF MARKET ACCEPTANCE

         Consumer acceptance of the Company's products is difficult to predict.
The success of the Company's marketing strategy is dependent on direct responses
to its advertising campaigns. The Company's marketing techniques are therefore
based on an "impulse buy" which is susceptible to any softening in the
consumer's overall confidence caused by economic turndowns, which affect the
consumer. Furthermore, the pool of potential customers for its products
advertised through media may be decreased as a result of market saturation. As a
consequence, there can be no assurance that the Company's present level of sales
will be sustainable in the future. See "Business--Sales, Marketing and
Distribution."

         The Company plans to augment its radio and television advertisement
with internet affiliations and banners on educationally related sites. The
Company will also develop its pay per click advertising on goto.com and other
search engines. This strategy will require the availability of cost effective
advertising rates on the internet and sufficient funds to pay for such
advertising, and there can be no assurance that this will materialize. Failure
of the Company's products to achieve or sustain market acceptance would have a
material adverse effect on the Company's operating results and financial
condition.

           The Company typically experiences returns of 15-20% which is standard
for the industry.

                                       11
<PAGE>

SEASONALITY AND AVAILABILITY OF MEDIA TIME

         The Company's math and reading videotape business is highly seasonal.
Demand for its products tends to peak during the first and fourth fiscal
quarters when school is in session. Demand is especially slow during the school
vacation periods. This seasonality greatly affects the Company's advertising
campaigns, which must be timed to coincide with the annual periods when demand
is traditionally high. In addition, the Company does not reserve advertising
time in advance in order to purchase air time at the lowest possible rates;
rather, it purchases direct response time, which is characterized as remnant
time and is difficult to purchase efficiently. In addition, its reservations are
subject to last minute cancellation by the radio and television stations. As a
result of the Company's dependence on the availability of media time, operating
results can be negatively impacted by difficulty in purchasing media time such
as occurs during elections and holidays. Any significant decrease in sales
during the season when business activity is high could have a material adverse
impact upon the Company's operations. Although the Company is trying to reduce
its dependence on curriculum based products, it will in all likelihood continue
to experience significant seasonality in sales of its educational products.

DISPUTE WITH ATT

         The Company is currently in a dispute with ATT regarding the amount of
the outstanding charges for telephone services. The Company's defenses to ATT's
claims include, but are not limited to, the Company's assertion that ATT billed
the Company for numbers belonging to other parties and for special features and
services, which the Company had requested to be disconnected, and that ATT
failed to make available to the Company discount plans customarily available to
users with comparable volume. There can be no assurances as to the resolution of
this dispute or whether ATT will take legal action against the Company.

INFLUENCES OF THE ECONOMY

         The current softening of the economy may have an adverse impact on the
Company's current clients and their ability to provide the Company with steady
sources of revenue. The economic climate, if it continues to worsen, may, as
well, hinder the Company's recruiting efforts for new telemarketing accounts and
may diminish the performance of the Company's own advertising campaign on behalf
of its own Math Made Easy(TM) products.

LIMITED PRODUCT LINE

         In the fiscal year ended February 28, 2001, most of sales were from the
Math Made Easy(TM) product line. Although the Company is continually seeking to
introduce additional product lines there can be no assurance that these new
product lines will generate significant sales. In the event that the popularity
of the Math Made Easy(TM) product line decreases or faces increased competition,
the Company's sales would be adversely affected and if not replaced by
substantially increased sales from other products, the Company could be forced
to cease operations.

CREDIT CARD FRAUD

         Credit card fraud perpetrated by disreputable telemarketing operations
have increased the reluctance of the consumers to make use of their credit cards
by telephone. This may adversely affect the Company's ability to secure credit
card orders

                                       12
<PAGE>

TURNOVER RATE

         Recruiting, training and retaining qualified telemarketers is essential
for the Company. There is a high turnover rate among telemarketers as a result
of the frustration of the telemarketing process, the high pressure atmosphere,
and the reliance on commissions as a major component of salaries. The training
of telemarketers is a lengthy process, which involves learning a complex product
line and special sales techniques. In addition, it is essential that the Company
utilize the optimal number of telemarketers for its level of advertisements and
the number of clients it is servicing. Too many advertisements may overwhelm the
telemarketers while too few advertisements may lead to a drop in the
commissions, which will cause the telemarketers to leave the Company.
Furthermore, the ability of the Company to convert leads into sales is largely
dependent on the expertise of its telemarketers. There can be no assurance that
the Company will be able to continue to recruit and retain a qualified team of
telemarketers.

NEW PRODUCTS; TECHNOLOGICAL OBSOLESCENCE

         The Company's prospects depend in significant part on its ability to
develop and/or license new products that achieve market acceptance. Most of the
new electronic tutorial products being introduced into the market are based on
computer technology, usually with interactive capabilities. There can be no
assurance that the Company's ability to market its educational products in
videotape, CD ROM or DVD versions will not be materially adversely affected by
the increase in the number and sophistication of computer based educational
products. Furthermore, there can be no assurance that the introduction of such
computer based technologies will not render obsolete the products currently
marketed by the Company. No assurance can be given that the Company can adapt to
such new media technologies. In addition, when the Company may license new
non-educational products there is no guarantee of market acceptance of these new
products. See "Business--Product Acquisition and Development."

COMPETITION

         The Company's educational videotape offerings compete with a variety of
programs, including Hooked on Phonics, Reading Genius, Davidson and The Learning
Co. In the school market, the Company competes with Video Tutor, and Educational
Video Resources. Almost all of these competitors have greater financial
resources, greater public and industry recognition and broader marketing
capabilities than the Company. The market is characterized by numerous small
companies, with whose products the Company may be unfamiliar, and which may be
competitive with the Company's products. The Company's products also compete
with other methods of education such as private tutors and televised programs.
With respect to the Company's new marketing initiatives via its E-commerce
supersite, "MathMadeEasy.com," the Company recognizes that the internet
currently hosts many other educational and children related sites that include
competitive educational videos and software. An example of this is the
Smarterkids.com site, which carries a broad range of educational products.
Kaplan and Sylvan are others which carry competitive products and services.

         The telemarketing industry is intensely competitive and the Company's
principal competition in its primary markets comes from large and small
telemarketing companies including Apac Teleservices, Inc., Sykes Enterprises,
Incorporated, ICT Group, Inc., Precision Response Corporation, Teletech
Teleservices, West Telemarketing, Iti Marketing Services, Inc., Matrixx
Marketing, Inc., West Teleservices Corporation and Dial America. There has also
been, over the last several years, a new entry of competition from overseas call
centers, particularly from the Far East. In countries such as India, where the
primary language is English, call centers have been sprouting which offer their
services at greatly discounted pricing because of the substantially lower wage
base which prevails there. The Company believes, however, that because of the
Company's emphasis of providing high quality sales performance, clients that
need these specialized sales services are willing to pay a premium.

                                       13
<PAGE>

         The Company believes that no one entity dominates this business.
Nevertheless, the Company's competitors in this area have greater financial
resources, greater public and industry recognition, advanced technological
expertise and equipment and broader marketing capabilities than the Company. In
addition, most businesses that are significant consumers of telemarketing
services utilize more than one telemarketing firm at one time and reallocate
work among various firms from time to time. A significant amount of such work is
contracted on an individual project basis, thus increasing the competition in
the industry. Furthermore, the Company believes there is a trend among
businesses with telemarketing operations toward outsourcing the management of
those operations to others and this trend may attract new and substantially
larger competitors. Competition in both the education products and telemarketing
markets may result in loss of sales by the Company or a reduction of the prices
which the Company can charge for its products or services. See "Business
-Competition."

DEPENDENCE ON MANAGEMENT

         The Company's business is significantly dependent upon the personal
efforts and continued availability of Barry Reichman, its Chief Executive
Officer, and Hershel Waldner, its Chief Operating Officer. The loss or
unavailability to the Company of Messrs. Reichman and Waldner could have a
materially adverse effect upon the Company's business operations and prospects.
To the extent that the services of Messrs. Reichman and Waldner are unavailable
to the Company for any reason, the Company would be required to procure other
personnel to manage and operate the Company. There can be no assurance that the
Company would be able to locate or employ such personnel on acceptable terms, if
at all.

GOVERNMENT REGULATION

         In response to the concerns of consumer advocacy groups and as a result
of the practices of a number of unscrupulous telemarketing companies, the
Federal Trade Commission and the Federal Communications Commission have
promulgated rules regulating the telemarketing industry. The Federal Telephone
Consumer Protection Act of 1991 (the "TCPA"), enforced by the Federal
Communications Commission, imposes restrictions on unsolicited telephone calls
to residential telephone subscribers. The rules applicable to the Company
include, among other things, an obligation to advise customers of their rights,
to initiate telephone solicitations to residential telephone customers before
8:00AM or after 9:00PM local time at the customer's location, obligation to ship
merchandise in a timely fashion and an obligation to notify a customer of delays
in shipments and to offer a refund in the event of a delay. In addition, many
states are enacting their own laws regulating the telemarketing industry which
are, to the extent applicable to the Company, similar to the Federal rules in
most respects. Furthermore, there exist both state and federal laws governing
false advertising and deceptive trade practices. Due to the subjective nature of
interpreting and enforcing such laws, there can be no assurance that the Company
will be in compliance with such laws at all times. Although such regulations are
expected to have a minimal impact on the Company's ability to operate its
business in its present form, the nature of which is considered inbound
telemarketing, such regulations generally tend to add significant recordkeeping
requirements and, consequently, expenses.

DELISTING FROM NASDAQ SMALL CAP MARKET; MAINTENANCE CRITERIA FOR NASDAQ
SECURITIES; PENNY STOCK RULES

         On April 17, 1997, the National Association of Securities Dealers, Inc.
Automated Quotation System Stock Market ("NASDAQ") delisted the Company's Common
Stock and Warrants from trading on the NASDAQ Small-Cap Market because the
minimum bid price of the Company's Common Stock had been below the requirement
of $1.00 per share. In order to regain a listing for the Company's securities on
the NASDAQ Small-Cap Market, the Company's Common Stock must have a minimum bid
price of $4.00 per share and at least three market makers for the trading
securities.. In addition, the Company must either have $4,000,000 in net
tangible assets, a market capitalization of at least $50,000,000, or net income
of at least $750,000 in its most recently completed fiscal year or in two of the
three last completed fiscal years, and the Company must have at least 1,000,000
publicly traded shares not held by affiliates of the Company ("public float"),
with a market value of at least $5,000,000, and at least 300 stockholders of
record. There can be no assurances that the Company will be able to meet the
requirements for relisting on the NASDAQ Small Cap Market.

                                       14
<PAGE>

         If the Company's securities are again listed on the NASDAQ Small-Cap
Market, in order to maintain such listing the Company must continue to be
registered under Section 12(g) of the Securities Exchange Act of 1934 (the
"Exchange Act") and have,. In addition, NASDAQ has proposed increasing the
requirements for maintaining a NASDAQ Small-Cap listing to require either: (1)
net tangible assets of at least $2,000,000, (2) a market capitalization of
$35,000,000 or (3) net income in at least two of the last three years of
$500,000, and at least 300 holders of record, a minimum bid price of $1.00 per
share, at least two market makers and a public float of at least 500,000 shares
with a market value of at least $1,000,000. There can be no assurance that the
Company would be able to meet the requirements for maintaining a listing on the
NASDAQ Small-Cap Market.

         Failure to regain or to maintain NASDAQ Small-Cap Market listing will
probably depress the market value of the Common Stock and purchasers likely
would find it more difficult to dispose of, or to obtain accurate quotations as
to the market value of, the Common Stock.

         In addition, if the Company cannot obtain a NASDAQ Small-Cap Market
listing for its securities, and no other exclusion from the definition of a
"penny stock" under the Exchange Act is available, then the Company's stock will
continue to be subject to additional federal and state regulatory requirements.
Rule 15g-9 under the Exchange Act, among other things requires that
broker/dealers satisfy sales practice requirements, including making
individualized written suitability determinations and receiving any purchaser's
written consent prior to any transaction. The Company's securities could also be
deemed penny stocks under the Securities Enforcement and Penny Stock Reform Act
of 1990, which requires additional disclosure in connection with trades in the
Company's securities, including the delivery of a disclosure schedule explaining
the nature and risks of the penny stock market. Such requirements can severely
limit the liquidity of the Company's securities and the ability of purchasers to
sell their securities in the secondary market.

LIMITED PUBLIC TRADING MARKET FOR THE COMPANY'S SECURITIES, VOLATILITY

         There is only a limited public trading market for the Company's
securities and no assurances can be given that a liquid market will develop or,
if developed, that it will continue to be maintained. There can be no assurance
that a more active trading market will develop or, if developed, that it will be
maintained. In addition, there can be no assurance that the Company will obtain
relisting of its securities on NASDAQ. See "Maintenance Criteria for NASDAQ
Securities; Delisting from NASDAQ Small Cap Market; Penny Stock Rules."

LIMITATION OF USE OF NET OPERATING LOSS CARRYFORWARDS

         As of February 28, 2001 and February 29, 2000, the Company had federal
net operating loss carryforwards of approximately $10,483,672 and $9,688,000,
respectively, portions of which expire yearly through 2014 (subject to certain
limitations). This balance gives effect to annual limitations on the utilization
of the loss carryforwards caused by "ownership changes" as defined in Section
382 of the Internal Revenue Code. If there is any additional ownership change,
there can be no assurance as to the specific amount of net operating loss
carryforwards available in any post-change year since the calculation is based
upon a fact-dependent formula. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."

NO DIVIDENDS

         The Company has never paid any dividends on its Common Stock. The
payment of future dividends will be dependent upon earnings, financial
requirements of the Company and other factors deemed relevant by the Company's
Board of Directors. For the foreseeable future it is anticipated that any
earnings which may be generated from operations of the Company will be used to
finance the growth of the Company and that cash dividends will not be paid to
holders of Common Stock.

                                       15
<PAGE>

ISSUANCE OF PREFERRED STOCK; POTENTIAL ANTI-TAKEOVER EFFECT

         Certain provisions of Delaware law and the Company's certificate of
incorporation and by-laws could make more difficult a merger, tender offer or
proxy contest involving the Company, even if such events could be beneficial to
the interests of the stockholders. The Board of Directors has the authority to
issue up to 1,000,000 shares of Preferred Stock in one or more series and to fix
the number of shares constituting any such series, the voting powers,
designation, preferences and relative participation, optional or other special
rights and qualifications, limitations or restrictions thereof, including the
dividend rights and dividend rate, terms of redemption (including sinking fund
provisions), redemption price or prices, conversion rights and liquidation
preferences of the shares constituting any series, without any further vote or
action by the stockholders. The issuance of preferred stock by the Board of
Directors could adversely affect the rights of the holders of Common Stock. For
example, such issuance could result in a class of securities outstanding that
would have preferences with respect to voting rights and dividends and in
liquidation over the Common Stock, and could (upon conversion or otherwise)
enjoy all of the rights appurtenant to Common Stock. The authority possessed by
the Board of Directors to issue preferred stock could potentially be used to
discourage attempts by others to obtain control of the Company through a merger,
tender offer, proxy contest or otherwise by making such attempts more difficult
to achieve or more costly. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of the Company's
Common Stock or preferred stock.

ITEM 2.  PROPERTIES

         The Company leases an approximately 4,700 square foot facility at 205
Kings Highway, Brooklyn, New York, which houses its telemarketing and other
staff. This lease, which currently calls for monthly rentals of $8,661.92
subject to annual increases, is scheduled to expire in June, 2001, with an
option to extend through June, 2003. The Company also leases a 20,000 square
foot warehouse located at 201 Kings Highway in Brooklyn, New York, which calls
for a monthly rent of $1,300.

ITEM 3.  LEGAL PROCEEDINGS

         The Company has made a settlement with one of its creditors that had
begun litigation, whereby it has settled a $235,000 claim for $190,000 with a 29
month payout schedule. In addition, the Company has been sued by a vendor for
approximately $100,000, and the Company has asserted a counterclaim for lack of
maintaining the service contract against the vendor seeking damages in the sum
of $500,000. The Company is also being sued by a vendor for $149,000. The
Company has reached an agreement with this vendor to settle this dispute with a
schedule of payments. The Company has also reached agreements with certain of
its other vendors relating to obligations in the aggregate amount of
approximately $700,000 and has made schedules of payments. The Company's ongoing
revenues are not sufficient to enable the Company to fully comply with these
payment schedules. The Company has been able to receive extensions of these
schedules where it has not been able to comply with the agreed schedules. These
extensions have been in the form of verbal agreements on a week by week basis
with no assurance that any of these creditors will not, at some point in the
future, declare the Company in default of these obligations. The Company has,
from time to time, obtained additional funding from investors which have enabled
it to make up some of the shortages in the scheduled payments. Failure to cure a
default in payment schedules could result in the entry of a judgment against
the Company. In addition, the Company is in arrears for federal and state
payroll tax and unemployment tax in the approximate amount of $100,000. The
Company has made payment arrangement with the New York State Deparment of
Taxation and with the New York State Department of Labor.

         The Company is currently in a dispute with ATT regarding the amount of
the outstanding charges for telephone services. ATT asserts that there is a few
hundred thousand dollars currently due and payable, but the Company believes
that that the amount due and payable is significantly less than $100,000. The
Company's defenses to ATT's claims include, but are not limited to, the
Company's assertion that ATT billed the Company for numbers belonging to other
parties and for special features and services, which the Company had requested
to be disconnected, and that ATT failed to make available to the Company
discount plans customarily available to users with comparable volume. The
Company had entered into discussions with ATT to resolve this dispute but those
discussions have broken off. There can be no assurances as to the resolution of
this dispute or whether ATT will not take legal action against the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

                                       16
<PAGE>

                                     PART II

ITEM 5.  MARKET PRICE OF REGISTRANT'S COMMON EQUITY AND EQUITY AND RELATED
         STOCKHOLDER MATTERS

         The Company's Common Stock and Warrants are listed for trading on the
NASD Electronic Bulletin Board under the symbols MMTS and MMTSW, respectively.

         The following table sets forth the high and low sales price for the
Company's Common Stock in each quarter of the fiscal years ended February 28,
2000 and 2001 and the initial quarter of the fiscal year ending February 28,
2002, and further reflects the period preceding and following May 24, 1999, the
date on which the Company effected a one-for-ten reverse split of the issued and
outstanding Common stock. These quotations have been reported by the National
Association of Securities Dealers, Inc. and represent quotations by dealers
without adjustments for retail mark-ups, mark-downs or commissions and may not
represent actual transactions.

<TABLE>
COMMON STOCK
<CAPTION>

                                                Bid Prices                      Asked Prices
                                                ----------                      ------------
                                           High            Low              High             Low
                                           ----            ---              ----             ---
<S>                                        <C>             <C>              <C>              <C>
Year Ended February 29, 2000

March 1-May 24                             0.11            0.05             0.15             0.06
May 25-May 28                              0.60            0.60             0.96875          0.75
2nd Quarter                                0.60            0.09375          0.75             0.125
3rd Quarter                                0.46875         0.10             0.53125          0.12
4th Quarter                                0.375           0.25             0.53125          0.3125

Year Ending February 28, 2001

1st Quarter                                0.75            0.625            0.96875          0.9375
2nd Quarter                                0.16            0.625            0.28125          0.9
3rd Quarter                                0.09            0.04             0.10             0.55
4th Quarter                                0.10            0.02             0.11             0.25

Year Ending February 29, 2001

1st Quarter                                0.065           0.03             0.08             0.04
</TABLE>

         The closing bid and asked sales prices of the Common Stock, as traded
in the over-the-counter market, on July 16, 2001, were approximately $.025 and
$.035, respectively. These prices are based upon quotations between dealers,
without adjustments for retail mark-ups, mark-downs or commissions, and
therefore may not represent actual transactions.

         The Company has not paid a cash dividend on its Common Stock since its
inception and, by reason of its present financial status and its contemplated
financial requirements, does not anticipate paying and cash dividends in the
foreseeable future. It is anticipated that earnings, if any, which may be
generated from operations will be used to finance the operations of the Company.

                                       17
<PAGE>

SALES OF UNREGISTERED SECURITIES

         As of May 24, 1999, the Company effected a reverse split of its issued
and outstanding Common Stock on a one-for-ten basis. Except as set forth below,
the following discussion gives effects to the reverse split.

         In May and June 1997, the Company secured approximately $350,000 of
loans ("1997 Loans"), which were used for working capital and for debt
repayment. As of June 9, 2000, the noteholders had converted all of the loans
into 5,200,000 shares of Common Stock.

         In 1996, the Company issued an aggregate amount of $1,000,000 principal
amount of convertible promissory notes. $750,000 of principal of these loans
remain outstanding and are currently due and payable. With respect to the
assignment of $600,000 of these notes by the original noteholders to certain
other persons, the Company issued 546,672 shares of Common Stock during the
fiscal year ended February 29, 2000, and recognized interest charges of
$142,135, as of February 29, 2000.

         The Company issued 230,769 shares of Common Stock to an employee in
cancellation of $30,000 of accrued and unpaid salary.

         In December, 1999, the Company entered into an agreement with Gaspra,
Inc., a software development company, to develop a website and to convert a
portion of the Company's "MathMadeEasy" video into on-line learning programs
utilizing flash technology. The Company agreed to pay $130,000 for these
services, and has issued 433,333 shares of Common Stock in satisfaction of
$65,000 of this obligation.

         In May, 1999, the Company issued 670,000 shares of Common Stock in
satisfaction of an obligation of $201,000 to its former counsel, Oscar Folger,
for services rendered.

         In December, 1999, the Company issued 250,000 shares of Common Stock,
as a finance charge of $60,000 for a bridge financing.

         From November, 1999, to July, 2000, the Company issued approximately
$763,000 of convertible, unsecured promissory notes. The notes bear interest at
the rate of 10% per annum, and are due 10-months following the date of issuance.
The notes are convertible into Common Stock at the lesser of: (i) $0.50 per
share, or (ii) 50% of the average of the closing bid price for the Common Stock
during the five (5) days immediately preceding conversion. However, the notes
may not be converted at a price of less than $0.10 per share. The notes may be
converted into a number of shares of common stock of the Company's subsidiary,
The Tutorial Channel.com, equal to 1% of the issued and outstanding shares of
common stock of such subsidiary for each $25,000 principal amount with respect
to $600,000 of certain of these notes (Class A Notes), and equal to 0.25% of the
issued and outstanding shares of common stock of such subsidiary for each
$25,000 principal amount with respect to $163,000 of certain of these notes
(Class B Notes). Each class of these notes is convertible on the earlier of (i)
the last business day preceding the filing of the first registration statement
for the common stock of such subsidiary, or (ii) December 1, 2000. From July,
2000 through September, 2000 $573,361.10 of these notes were converted into
5,733,611 shares of common stock at $.10 per share.

         In March, 2000, the Company issued 150,000 shares of Common Stock to a
public relations consultant for $21,000 of services rendered. The Company
recognized a consulting expense of $10,500 during the fiscal year ended February
29, 2000.

         In March, 2000, the Company issued 52,000 shares of Common Stock to
consultant for $13,000 of services rendered.

         During the year ended February 28, 2001 the Company converted certain
vendor obligations valued at $28,000 into 280,000 shares of common stock.

         During the year ended February 28, 2001, 433,333 shares of common stock
were issued in satisfaction of $65,000 of services in relation to the Gaspra
agreement.

         In September, 2000, the Company received $100,000 for which it issued
1,000,000 common shares and 1,000,000 warrants exercisable at $.25 per share.

                                       18
<PAGE>

         In May, 2001, the Company isuued 110,000 shares of common stock for
$3300 of financing costs.

         In July, 2001, the Company isuued 405,457 common shares in satisfaction
of $16,046 of consulting services.

         In January, 2001, the Company received $25,000 cash and issued 125,000
shares and 125,000 warrants exercisable at $.25 per share and a debenture in the
amount of $25,000.

         In December, 1999, the Company issued 230,769 shares of Common Stock to
Anne Reichman in cancellation of $30,000 of certain obligations.

         In addition to the various issuances of securities referenced above in
this Report, the Company issued options to purchase 3,525,000 shares of Common
Stock at exercise prices ranging from $.06 to $.25 to various employees and
consultants of the Company during the fiscal year ended February 28, 2001 .

         These transactions were exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         THIS REPORT, INCLUDING THE DISCLOSURES BELOW, CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES.
WHEN USED HEREIN, THE TERMS "ANTICIPATES," "EXPECTS," "ESTIMATES," "BELIEVES"
AND SIMILAR EXPRESSIONS, AS THEY RELATE TO THE COMPANY OR ITS MANAGEMENT, ARE
INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED
OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH MATERIAL DIFFERENCES INCLUDE THE FACTORS DISCLOSED IN THE
"RISK FACTORS" SECTION OF THIS ANNUAL REPORT ON FORM 10-KSB, WHICH READERS OF
THIS REPORT SHOULD CONSIDER CAREFULLY.

RESULTS OF OPERATIONS

         RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED FEBRUARY 28, 2001 AND
2000. Net sales for the fiscal year ended February 28, 2001 (the "2001 Period")
were $2,072,811 compared to $2,731,880 in the fiscal year ended February 29,
2000 (the "2000 Period").

         Gross profit was $1,963,632 in the 2001 Period compared to $2,458,273
in the 2000 period. Net sales and related gross profit decreased due to a
reduction in advertising. This reduction was a result of an increase in
advertising prices, which caused the advertising to cease to be cost effective.

         Selling and marketing expenses were $1,170,837 in the 2001 Period
compared to $1,448,156 for the 2000 Period. Selling and marketing expenses were
significantly reduced as the Company eliminated advertising, which had become
inefficient.

         General and administrative expenses were $965,624 in the 2001 Period
compared to $1,320,843 in the 2000 Period. General and administrative expenses
were reduced in the fiscal year ended February 28, 2001, as the Company reduced
its overhead personnel by consolidating its operations under a leaner management
team.

         Interest expense was $733,457 in the 2001 Period compared to $765,131
in the 1999 Period. $608,980 of the interest expense attributable to losses
reported during the fiscal year ended February 29, 2001 resulted from
non-recurring, non-cash interest charges related to securities issued by the
Company in connection with certain debt.

         Net Loss from operations before depreciation, amortization, interest
expense, non-cash charges and a one time charge for settlement of lease
obligation of $140,000 was $82,079 in the 2001 compared to $471,378 in the 2000
period.

         Net loss from operations was $1,172,500 in the 2001 Period compared to
$1,492,686 in the 2000 Period. The non-recurring, non-cash interest charges
constituted $376,828 of the losses in the 2001 Period. Losses before
non-recurring, non-cash interest charges, and depreciation and amortization were
$578,708 and $627,529 for the fiscal years ended February 28, 2001 and February
28, 2000, respectively. The Company also had to add a one time charge of
$140,000 against its earnings as a result of its settlement of a legal dispute
with the EIS Corporation for the Company's default on its lease obligations. In
view of the fact that the Company was able to negotiate a partial reduction of
the EIS claim, as well as work out an extended 29 month payment schedule, the
Company agreed to have its lease terminated and make a final settlement.

                                       19
<PAGE>

         Beginning in the second half of fiscal year ended February 29, 2000 and
continuing through February 28, 2001, management continued to reduce the
Company's dependency on such advertising and restricted its purchasing to those
areas of advertising, which were still available on favorable terms. The Company
also took steps to diversify its revenue base, which included a greater share of
revenue from teleservicing. However, the Company experienced net losses in both
2000 and 2001.

         Management also took steps to transition its educational sales from
off-line advertising to an internet model. The Company developed a fully
functioning e-commerce site and has developed an advertising strategy designed
to procure leads from other educational and family related sites at a lower cost
per lead than what the Company had been paying for off-line leads. Additionally,
the Company is developing its product line for on-line learning, which it
intends to provide on a subscription basis.

         LIQUIDITY AND CAPITAL RESOURCES. The Company's cash and restricted cash
decreased to $10,000 at February 28, 2001 from $50,000 at February 29, 2000. The
Company did not have any cash, other than restricted cash, at February 28, 2001.

         Net cash used in operations in the 2001 Period was $515,360 compared to
$499,665 in the 2000 Period.

         Net cash used in investing activities in the 2001 Period was $50,890
compared to $46,462 in the 2000 Period.

         Net cash provided from financing activities in the 2001 Period was
$548,500, compared to net cash used in financing activities of $617,712 in the
2000 Period.

         As of May 24, 1999, the Company effected a reverse split of its issued
and outstanding Common Stock on a one-for-ten basis.

         In April 1996, the Company received gross proceeds of $500,000 from the
issuance of convertible notes. The notes bear interest at 10% per annum and an
accelerated rate of 17% per annum beginning April 17, 1997. The noteholders have
the right to convert the principal and accrued interest into common shares of
the Company at a price of (i) $1.2656 per share or (ii) 75% of the closing bid
for the five trading days immediately preceding the conversion. In the event of
default, as defined, the Company will not have the right to compel conversion.
The Company placed 909,090 shares of common stock into escrow for the benefit of
the noteholders. During the nine months ended November 30, 1996, $250,000 was
converted into 34,190 shares and $250,000 of principal remain outstanding and
are currently due and payable. As a result of the conversion, 45,455 shares
remained in escrow.

         The Company arranged a six month short term loan that yielded the
Company in the months of September 1996 and October 1996 approximately
$1,000,000 which was used to retire existing debt and fund working capital.
$750,000 of principal of these loans remain outstanding and are currently due
and payable. With respect to the assignment of $600,000 of these notes by the
original noteholders to certain other persons, the Company issued 546,672 shares
of Common Stock during the fiscal year ended February 29, 2000, and recognized
interest charges of $142,135, as of February 29, 2000.

         In May and June 1997, the Company secured approximately $350,000 of
loans ("1997 Loans"), which were used for working capital and for debt
repayment. As of June 9, 2000, the noteholders had converted all of the loans
into 5,200,000 shares of Common Stock.

         The Company has received advances aggregating $375,000, which bear
interest at the rate of 10% per year, and are currently due and payable.

         At February 29, 2000, the Company maintained advances of $83,224 from
Barry and Anne Reichman, who are directors and executive officers of the
Company. The advances were paid in the year ended February 28, 2001. In
December, 1999, the Company issued 230,769 shares of Common Stock toAnne
Reichman (on a post-split basis) in cancellation of $30,000 of these
obligations.

         In December, 1999 the Company entered into a consulting agreement with
a software consulting firm. The consultants were to develop a web site and a cd
Rom program. The agreement was valued at $130,000 and called for an initial fee
of $65,000 with $65,000 due upon completion. Pursuant to the agreement, the
Company will pay all fees with stock. The Company has issued 433,333 shares of
common stock. The web site is operational but the CD Rom is not as yet
completed. The Company is negotiating with the vendor as to the number of shares
that will be issued upon completion of the package.

                                       20
<PAGE>

         In May, 1999, the Company issued 670,000 shares of Common Stock in
satisfaction of an obligation of $201,000 to its former counsel, Oscar Folger,
for services rendered.

         In December, 1999, the Company issued 250,000 shares of Common Stock,
as a finance charge of $60,000 for a bridge financing.

         From November, 1999, to July, 2000, the Company issued approximately
$763,000 of convertible, unsecured promissory notes. The notes bear interest at
the rate of 10% PER ANNUM, and are due 10-months following the date of issuance.
The notes are convertible into Common Stock at the lesser of: (i) $0.50 per
share, or (ii) 50% of the average of the closing bid price for the Common Stock
during the five (5) days immediately preceding conversion. However, the notes
may not be converted at a price of less than $0.10 per share. The notes may be
converted into a number of shares of common stock of the Company's subsidiary,
The Tutorial Channel.com, equal to 1% of the issued and outstanding shares of
common stock of such subsidiary for each $25,000 principal amount with respect
to $600,000 of certain of these notes (Series A Notes), and equal to 0.25% of
the issued and outstanding shares of common stock of such subsidiary for each
$25,000 principal amount with respect to $163,000 of certain of these notes
(Series B Notes). Each class of these notes is convertible on the earlier of (i)
the last business day preceding the filing of the first registration statement
for the common stock of such subsidiary, or (ii) December 1, 2000. From July,
2000 through September, 2000, $573,336.10 of these shares were converted into
5,733,611 shares of common stock at $.10 per share.

         From November, 1999 to February, 2000, the Company issued $100,000 of
unsecured, demand promissory notes, bearing interest at the rate of 10% PER
ANNUM.

         As of February 2, 2000, the Company converted an account payable of
$135,500 due to its former accountants, Holtz Rubenstein & Co., LLP, into a
one-year Series B Note, in the principal amount of $135,500, bearing interest at
the rate of 10% PER ANNUM.

         In March, 2000, the Company issued 150,000 shares of Common Stock for
public relations consultant for $21,000 for services rendered. The Company
recognized a consulting expense of $10,500 during the fiscal year ended February
29, 2000.

         In March, 2000, the Company issued 52,000 shares of Common Stock to
consultant for $13,000 of services rendered.

         During the year ended February 28, 2001 the Company converted certain
vendor obligations valued at $28,000 into 280,000 shares of common stock.

         During the year ended February 28, 2001, 433,333 shares of common stock
were issued in satisfaction of $65,000 of services in relation to the Gaspra
agreement.

         In September, 2000, the Company received $100,000 for which it issued
1,000,000 common shares and 1,000,000 warrants exercisable at $.25 per share.

         In May, 2001, the Company isuued 110,000 shares of common stock for
$3300 of financing costs.

         In July, 2001, the Company isuued 405,457 common shares in satisfaction
of $16,046 of consulting services.

         In January, 2001, the Company received $25,000 cash and issued 125,000
shares and 125,000 warrants exercisable at $.25 per share and a debenture in the
amount of $25,000.

         In December, 1999, the Company issued 230,769 shares of Common Stock to
Anne Reichman in cancellation of $30,000 of certain obligations.

         The Company has made a settlement with one of its creditors that had
begun litigation, whereby it has settled a $235,000 claim for $190,000 with a 29
month payout schedule. In addition, the Company has been sued by a vendor for
approximately $100,000, and the Company has asserted a counterclaim for lack of
maintaining the service contrac against the vendor seeking damages in the sum of
$500,000. The Company is also being sued by a vendor for $149,000. The Company
has reached an agreement with this vendor to settle this dispute with a schedule
of payments.

                                       21
<PAGE>

         The Company has also reached agreements with certain of its other
vendors relating to obligations in the aggregate amount of approximately
$700,000 and has made schedules of payments. The Company's ongoing revenues are
not sufficient to enable the Company to fully comply with these payment
schedules. However, The Company has been able to receive extensions of these
schedules where it has not been able to comply with the agreed schedules. These
extentions have been in the form of agreements on a week by week basis with no
assurance that any of these creditors will not, at some point in the future,
declare the Company in default of its obligations. The Company has, from time to
time, obtained additional funding from investors which have enabled it to make
up some of the shortages in the scheduled payments. Failure to cure a default in
payment schedules could result in the entry of a judgment against the Company.
In addition, the Company is in arrears for federal and state payroll tax and
unemployment tax in the approximate amount of $100,000. The Company has made
payment arrangement with the New York State Deparment of Taxation and with the
New York State Department of Labor.

         The Company is currently in a dispute with ATT regarding the amount of
the outstanding charges for telephone services. ATT asserts that there is a few
hundred thousand dollars currently due and payable, but the Company believes
that that the amount due and payable is significantly less than $100,000. The
Company's defenses to ATT's claims include, but are not limited to, the
Company's assertion that ATT billed the Company for numbers belonging to other
parties and for special features and services, which the Company had requested
to be disconnected, and that ATT failed to make available to the Company
discount plans customarily available to users with comparable volume. The
Company had entered into discussions with ATT to resolve this dispute but those
discussions have broken off. There can be no assurances as to the resolution of
this dispute or whether ATT will not take legal action against the Company.

         The Company continues to meet its working capital requirements through
debt and equity funding from outside sources and internally generated funds. In
September, 2000 the Company received $100,000 in funding and issued 1,000,00
shares of common stock and 1,000,000 warrants. In January 2001, the Company
received $25,000 in funding and issued 125,000 shares and 125,000 warrants and a
debenture in the amount of $25,000. In addition, the Company may have increased
capital requirements as it seeks to expand its product lines and customized
telemarketing services. In order to meet its current and future cash
requirements, the Company is in discussions to negotiate additional debt and
equity financing. There can be no assurance that any financing will be
successful nor that the Company will be able to fund internally its working
capital requirements or meet its debt repayment obligations. In the event that
the Company is unable to secure additional financing, it may be obligated to
significantly reduce its operations and seek to sell assets, which would have a
material adverse affect on the Company's prospects and financial results.

         The Company has received a report from its independent public
accountants, that includes an explanatory paragraph describing the uncertainty
as to the ability of the Company's operations to continue as a going concern.

         The Company's operations have not been materially affected by the
impact of inflation.

YEAR 2000

         The Company has updated its computer systems to address issues related
to year 2000 compliance. Financial and operational systems were developed to
address systems modification requirements to become year 2000 compliant. The
financial impact of making the required systems changes was not material to the
Company's consolidated financial position, liquidity and results of operations.
In the first week of January, 2000, the Company experienced a year 2000 problem
relating to the operations of its voice mail system. The problem has been
resolved with minimal expense, and the problem did not have a material adverse
effect on the operations of the Company during the weeklong period and the
Company does not anticipate that there will be a material adverse effect on the
Company relating to the matter for the foreseeable future.

                                       22
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements are included herein commencing on page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         a. On December 14, 1999, the Company terminated its relationship with
Holtz Rubenstein & Co., LLP ("Holtz Rubenstein"), as principal independent
accountants for the Company.

         In connection with the audits for the two (2) most recent fiscal years
ended February 28, 1999 and 1998 and the subsequent interim periods through
December 14 1999, there were no disagreements between Holtz Rubenstein and the
Company, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements, if
not resolved to the satisfaction of Holtz Rubenstein would have caused Holtz
Rubenstein to make reference in connection with its report for the related
periods with respect to the subject matter of the disagreement.

         Except for a qualification with respect to the ability of the Company
to continue as a going concern stated in the opinion of Holtz Rubenstein, dated
as of April 25, 1997, the audit reports of Holtz Rubenstein on the consolidated
financial statements of the Company, as of and for the fiscal years ended
February 28, 1997 and 1996, did not contain any adverse opinion, or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit scope,
or accounting principles.

         b. As of November 14, 1999, the Company engaged Singer Lewak Greenbaum
& Goldstein ("SLGG"), as the Company's principal independent accountants. Prior
to engaging SLGG, neither the Company nor someone on its behalf consulted SLGG
regarding either: (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements, or (ii) any matter that
was either the subject of a disagreement or a reportable event.

         c. On June 15, 2001, the Company terminated its relationship with
Singer, lewak, Greenbaum and Goldstein ("SLGG"), as principal independent
accountants for the Company.

         In connection with the audits for the two (2) most recent fiscal years
ended February 28, 2000 and 1999 and the subsequent interim periods through June
15, 2000, there were no disagreements between SLGG and the Company, on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of SLGG would have caused SLGG to make reference in connection with
its report for the related periods with respect to the subject matter of the
disagreement.

         Except for a qualification with respect to the ability of the Company
to continue as a going concern stated in the opinion of SLGG, dated as of May
20, 2000, the audit reports of SLGG on the consolidated financial statements of
the Company, as of and for the fiscal years ended February 28, 2000 and 1999,
did not contain any adverse opinion, or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting principles

         d. As of June 15, 2001, The Company engaged Don Fuchs, CPA , as the
Company's principal independent accountant. Prior to engaging Don Fuchs, neither
the Company nor someone on its behalf consulted SLGG regarding either: (i) the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, or (ii) any matter that was either the
subject of a disagreement or a reportable event.

                                       23
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Officers and Directors

         The officers and directors of the Company, as of July 16, 2001, are as
follows:

     NAME                    AGE                    POSITION
     ----                    ---                    --------

 Barry Reichman               50            Chief Executive Officer,
                                            Chief Financial Officer and Director

 Anne Reichman                47            Secretary and Director

 Irving Bader                 61            Director

 Hershel Waldner              50            Chief Operating Officer

         BARRY REICHMAN has been Chief Executive Officer and a Director of the
Company since August 1994, and Chief Financial Officer since September, 1999.
>From 1985 until 1994, he was Secretary and a Director of VTS. Mr. Reichman
holds a B.A. in Economics from Yeshiva University and an M.B.A. from Baruch
College. He is the husband of Anne Reichman, a Director of the Company.

         ANNE REICHMAN has been a Director of the Company since October 1994.
Ms. Reichman was elected Secretary of the Company in March 1995. From 1985 until
1994 she developed and oversaw the computer and order fulfillment system for VTS
and supervised internal accounting. Ms. Reichman was also an assistant producer
in a number of VTS mathematics videotape productions and authored several math
workbooks. Ms. Reichman holds a B.A. in Mathematics from Yeshiva University. Ms.
Reichman is the wife of Barry Reichman, President and a Director of the Company.

         IRVING BADER was elected a Director of the Company in March 1995. Mr.
Bader has been Director of Adaptive Physical Education with the New York City
Board of Education since 1973. He has also been an Adjunct Professor of Physical
Education at Brooklyn College since 1980. In addition, he has been the area
coordinator of the New York Special Olympics since 1985. Mr. Bader holds a B.A.
in English from Yeshiva College and M.S.E. from Yeshiva Graduate School of
Education.

         HERSHEL WALDNER was appointed as Chief Operating Officer in January,
2000. Mr. Waldner's duties include spearheading the Company's restructured
internet based business operations and developing the Company's teleservicing
operations. From 1980 until January, 2000, he served as management consultant
and contract negotiator for a large New York corporation known as Systems
Services of America, Inc. Mr. Waldner holds an MBA from the New York Institute
of Technology and licenses in Nursing Home Administration from both the New York
and New Jersey Department of Health.

AUDIT COMMITTEE

         The Board has designated an Audit Committee consisting of Messrs.
Bader. There were no meetings held for this committee during the most recent
fiscal year.

                                       24
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth information with respect to compensation
paid by the Company for services to the Company during the two (2) fiscal years
ended February 28, 2001, to the Company's Chief Executive Officer and other
officers of the Company who received annual compensation in excess of $100,000.

                           SUMMARY COMPENSATION TABLE

         SUMMARY COMPENSATION TABLE. The following table sets forth certain
information concerning compensation of certain of the Company's executive
officers (the "Named Executives"), including the Company's Chief Executive
Officer and all executive officers whose total annual salary and bonus exceeded
$100,000, for the years ended February 28, 2001 and February 29, 2000:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                 ANNUAL COMPENSATION                        LONG TERM COMPENSATION

                                             Awards                                                  Payouts
-----------------------------------------------------------------------------------------------------------------
                                                          Restricted     Securities
Name and                                   Other annual     Stock        Underlying      LTIP        All other
Principal                                  Compensation    Award(s)     Options/ SARs   Payouts    Compensation
Position        Year    Salary     Bonus        ($)          ($)             (#)          ($)           ($)
-----------------------------------------------------------------------------------------------------------------
<S>             <C>     <C>        <C>         <C>          <C>          <C>              <C>           <C>

Barry
Reichman        2001    $100,000   -0-         -0-          -0-          2,000,000        -             -

Barry           2000    $100,000   -0-         -0-          -0-          1,000,000        -             -
Reichman(1)
</TABLE>

----------
(1)      Mr. Reichman has served as Chief Executive Officer since July 31, 1999.

                                       25
<PAGE>

         OPTIONS/SAR GRANTS TABLE DURING LAST FISCAL YEAR. The following table
sets forth certain information concerning grants of stock options to certain of
the Named Executives, for the fiscal year ended February 28, 2001:

<TABLE>
<CAPTION>
                                                                         Potential Realizable
                                                                         Value at Assumed
                                                                         Annual Rate of
                                                                         Stock Price Appreciation
                    Individuals Grants                                   For Option Term (1)
-------------------------------------------------------------------------------------------------
(a)                (b)          (c)             (d)             (e)           (f)        (g)
                   Number of    % of
                   Securities   Total
                   Underlying   Options/
                   Options/     SARs            Exercise
                   SARs         Granted to      Or Base
                   Granted      Employees       Price           Expiration
Name               (#)          In Fiscal Year  ($/Share) (1)   Date (1)      5% ($)     10% ($)
-------------------------------------------------------------------------------------------------
<S>                 <C>         <C>             <C>             <C>           <C>        <C>
Barry Reichman      2,000,000   63%             0.06            12/2/10       $97,185    $210,113

</TABLE>

----------

         (1) This chart assumes a market price of $0.07 for the Common Stock,
the approximate closing market price for the Company's Common Stock in the over
the counter market, as of February 28, 2001 as the assumed market price for the
Common Stock with respect to determining the "potential realizable value" of the
shares of Common Stock underlying the options described in the chart, as reduced
by any lesser exercise price for such options. Each of the options reflected in
the chart was granted at exercise prices, which the Company believes to have
been determined based on the fair market value of the Common Stock as of the
date of grant. Further, the chart assumes the annual compounding of such assumed
market price over the relevant periods, without giving effect to commissions or
other costs or expenses relating to potential sales of such securities. The
Company's Common Stock has a very limited trading history. These values are not
intended to forecast the possible future appreciation, if any, price or value of
the Common Stock. See "Item 5-Market Price of Common Equity and Related
Stockholder Matters" and "Executive Compensation-Stock Option Plan."

EMPLOYMENT AGREEMENTS

         The Company has entered into employment agreements with Barry Reichman,
Anne Reichman and Harold Reichman pursuant to which they are paid annual base
salaries of $100,000, $50,000 and $75,000, respectively. In addition, Anne
Reichman and Harold Reichman were granted options to purchase up to 500,000 and
200,000 shares of Common Stock, respectively, at an exercise price equal to 50%
of the market price of the Common Stock during the year ended February 29, 2000.
The options vest in 20% increments, on each January 5 of the term of the
agreements, commencing January 5, 2000. The agreements terminate on December 31,
2004.

                                       26
<PAGE>

STOCK OPTION PLAN

         The Company's 1995 Stock Option Plan (the "Stock Option Plan") provides
for the granting of options to purchase not more than an aggregate of 350,000
shares of Common Stock, subject to adjustment under certain circumstances. Such
options may be Incentive Stock Options ("ISO") within the meaning of the
Internal Revenue Code of 1986, as amended, or Non-Qualified Options ("NQO"). The
Stock Option Plan expires on March 31, 2004. The Company has granted 279,953
options under the Stock Option Plan.

         The Stock Option Plan is administered by the Board of Directors or by a
stock option committee (the "Committee") which may be appointed by the Board of
Directors. To date the Board has not appointed a Committee. The Committee has
full power and authority to interpret the provisions, and supervise the
administration, of the Stock Option Plan. The Committee determines, subject to
the provisions of the Stock Option Plan, to whom options are granted, the number
of shares of Common Stock subject to each option, whether an option shall be an
ISO or a NQO and the period during which each option may be exercised. In
addition, the Committee determines the exercise price of each option, subject to
the limitations provided in the Stock Option Plan, including that (i) for a NQO
the exercise price per share may not be less than 85% of the fair market value
per share of Common Stock on the date of grant and (ii) for an ISO the exercise
price per share may not be less than the fair market value per share of Common
Stock on the date of grant (110% of such fair market value if the grantee owns
stock possessing more than 10% of the combined voting power of all classes of
the Company's stock). In determining persons to whom options will be granted and
the number of shares of Common Stock to be covered by each option, the Committee
considers various factors including each eligible person's position and
responsibilities, service and accomplishments, anticipated length of future
service and other relevant factors. Options may be granted under the Stock
Option Plan to all officers, directors and employees of the Company and, in
addition, NQO may be granted to other parties who perform services for the
Company. No options may be granted under the Stock Option Plan, after March 31,
2004. The Stock Option Plan may be amended from time to time by the Board of
Directors of the Company. The Board of Directors may not, however, without
stockholder approval, amend the Stock Option Plan to increase the number of
shares of Common Stock which may be issued under the Stock Option Plan (except
upon changes in capitalization as specified in the Stock Option Plan), decrease
the minimum exercise price provided in the plan or change the class of persons
eligible to participate in the plan.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.

         Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the fiscal year ended February 29, 2000, no reports
required under Section 16 (a) of the Exchange Act were made by any of the
Company's executive officers, directors or 10% beneficial owners, if any, and
that all such reports remain delinquent. The Company intends determine which
reports, if any, are required to be filed by such persons, and to be in
compliance with the filing requirements of Section 16(a).

                                       27
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of July 16, 2001, as adjusted for
the one-for-ten reverse split, information regarding the beneficial ownership of
the Common Stock based upon the most recent information available to the Company
for (i) each person known by the Company to own beneficially more than five
percent of the Common Stock, (ii) each of the Company's directors and (iii) all
officers and directors of the Company as a group. Unless otherwise indicated,
each stockholder's address is c/o the Company, 205 Kings Highway, Brooklyn, New
York, 11223.

Name and Address
of Beneficial Owner               Number of Shares          Percent of Total #
-------------------               ----------------          ------------------

Barry Reichman (1)                    4,501,361                   21.62

Anne Reichman (1)                     4,501,361                   21.62

Irving Bader (2)                        175,000                       *

Custer Company, Inc. (3)              1,685,556                   10.17

Josh B. Scheinfeld
  and Steve G. Martin (4)             3,368,611                   19.04

Jacob Wizman (5)                      2,720,556                   15.60

Paul and Elizabeth Guez (6)           2,500,000                   15.09

All officers and directors
  as a group (4 persons)(7)           4,826,361                   22.29

----------

(FOOTNOTES ON FOLLOWING PAGE)

                                       28
<PAGE>

(FOOTNOTES FROM PRIOR PAGE)

#        Pursuant to the rules of the Commission, shares of Common Stock which
         an individual or group has a right to acquire within 60 days pursuant
         to the exercise of options or warrants are deemed to be outstanding for
         the purpose of computing the percentage ownership of such individual or
         group, but are not deemed to be outstanding for the purpose of
         computing the percentage ownership of any other person shown in the
         table.

*        Less than 1%.

(1)      Mr. and Mrs. Reichman are husband and wife, and are officers and
         directors of the Company. Includes options to purchase up to 3,224,967
         shares granted to Mr. Reichman, options to purchase up to 1,025,000
         shares granted to Mrs. Reichman, 230,769 shares owned by Mrs.
         Reichman, and 20,625 shares owned by Mr. Reichman.

(2)      Mr. Bader is a director of the Company. Includes options to purchase up
         to 25,000 shares.

(3)      The address for Custer Company, Inc. is 10911 Petal Street, Dallas
         Texas 75238.

(4)      The address for Josh Scheinfeld and Steve Martin is 222 Merchandise
         Mart Plaza Suite 9-112 Chicago, IL 60654. Includes warrants to purchase
         1,125,000 shares of common stock.

(5)      The address for Mr. Wizman is 211 South Beverly Drive, Suite 108,
         Beverly Hills, California 90210. Includes promissory notes convertible
         into up to 875,000 shares of Common Stock.

(6)      The address for Mr. and Mrs. Guez is 6205 Busch Drive, Malibu,
         California 90265.

(7)      See Footnotes 1 and 2 above.

                                       29
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         At February 29, 2000, the Company maintained advances of $83,224 from
Barry and Anne Reichman, who are directors and executive officers of the
Company. These advances were paid in the year ended February 28, 2001. In
December, 1999, the Company issued 230,769 shares of Common Stock to Anne
Reichman in cancellation of $30,000 of these obligations. In connection with the
conversion, the Company recognized financing charges of approximately $35,000.

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a)      1.  Financial Statements and Schedules.

                  The financial statements are listed in the Index to Financial
                  Statements on page F-1 and are filed as part of this annual
                  report.

                  2.  Exhibits.

                  The Index to Exhibits set forth below indicates the exhibits
                  which are being filed herewith and the exhibits which are
                  incorporated herein by reference.

                                    EXHIBITS

3.1      Certificate of Incorporation, as amended (1)
3.2      By-Laws (1)
4.1      Form of Warrant Agreement entered into between Registrant and
           American Stock Transfer & Trust Company (1)
4.2      Specimens of Registrant's Stock, Redeemable Warrant and Unit
           Certificate (1)
10.1     Form of 1995 Stock Option Plan (1)
10.2     Employment Agreement between Registrant and Barry Reichman
16.1     Letter  re change in certifying accountant (2)
16.2     Letter re change in certifying accountant

--------------------------------------------------------------------------------

(1)      Incorporated by reference from the Company's Registration Statement on
         Form SB-2 (No. 33-88494) effective April 13, 1995.

(2)      Incorporated by reference from the Company's Annual Report on Form
         10-KSB for the fiscal year ended February 28, 1999.

                                       30
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                                 MULTI MEDIA TUTORIAL SERVICES, INC.


Dated: July 23, 2001             By: /S/ Barry Reichman
                                     -------------------------------------------
                                     Barry Reichman, Chief Executive Officer,
                                     Chief Financial Officer and Director


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below as of July 18, 2001 by the following persons
on behalf of Registrant and in the capacities indicated.


                                     /S/ Barry Reichman
                                     -------------------------------------------
                                     Barry Reichman, Chief Executive Officer
                                     Chief Financial Officer and Director


                                     /S/ Anne Reichman
                                     -------------------------------------------
                                     Anne Reichman, Director


                                       31

<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                                                        CONTENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


                                                                        Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                    F-1 - F-2

FINANCIAL STATEMENTS

     Consolidated Balance Sheet                                       F-3 - F-4

     Consolidated Statements of Operations                               F-5

     Consolidated Statements of Stockholders' Deficit                    F-6

     Consolidated Statements of Cash Flows                            F-7 - F-9

     Notes to Consolidated Financial Statements                      F-10 - F-21

<PAGE>

                                    Don Fuchs
                           CERTIFIED PUBLIC ACCOUNTANT
                                 1040 E 22nd St
                               Brooklyn, NY 11210



INDEPENDENT AUDITOR'S REPORT


Board of Directors
Multimedia Tutorial Services, Inc


I have audited the accompanying consolidated balance sheet of Multimedia
Tutorial Services, Inc. and Subsidiary as of February 28, 2001, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit. The consolidated financial statements of
Multimedia Tutorial Services, Inc. at February 29, 2000 was audited by Singer
Lewak Greenbaum & Goldstein LLP whose report dated May 20, 2000, expressed an
unqualified opinion on those statements.

I conducted my audit in accordance with auditing standards generally accepted in
the United States. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.

In my opinion, the consolidated financial statements referred to above represent
fairly, in all material respects, the financial position of Multimedia Tutorial
Services, Inc. and Subsidiary as of February 28, 2001, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company incurred a net loss of $1,172,500, had
accumulated deficit of $16,754,767 and had negative cash flows from operations
of $515,360 during the year ended February 28, 2001. In addition, the Company is
currently in default on various obligations. These factors, among others, as
discussed in Note 2 to the financial statements, raise doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


/S/ Don Fuchs, CPA

Brooklyn, New York
July 12, 2001

                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Stockholder
Multi-Media Tutorial Services, Inc. and subsidiary


We have audited the accompanying consolidated statements of operations,
stockholders' deficit, and cash flows of Multi-Media Tutorial Services, Inc. and
subsidiary for the year ended February 29, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of its operations and cash flow of
Multi-Media Tutorial Services, Inc. and subsidiary for the year ended February
29, 2000 in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring operating losses, which
as discussed in Note 2 to the financial statements, raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


/S/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
May 20, 2000

                                      F-2
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                                      CONSOLIDATED BALANCE SHEET
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


                                     ASSETS

CURRENT ASSETS
     Accounts receivable                                           $     45,867
     Inventories                                                         82,599
     Prepaid income taxes                                                 3,470
     Prepaid expenses                                                    70,101
     Due from related party                                               1,426
                                                                   -------------

         Total current assets                                           203,463

FURNITURE AND EQUIPMENT, net                                            100,384
INTANGIBLE ASSETS, net                                                  175,075
RESTRICTED CASH                                                          10,000
OTHER ASSETS                                                             21,420
                                                                   -------------

                  TOTAL ASSETS                                     $    510,342
                                                                   =============

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

                                      F-3
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                                      CONSOLIDATED BALANCE SHEET
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
     Book overdraft                                                $     64,442
     Short-term notes payable                                         1,430,676
     Convertible promissory notes                                       761,190
     Capital lease obligation                                           180,000
     Accounts payable                                                 1,393,356
     Accrued payroll and other expenses                                 328,486
     Accrued interest                                                   656,199
                                                                   -------------
          Total liabilities                                        $  4,814,349
                                                                   -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
     Preferred stock, Series A, $0.01 par value
         1,000,000 shares authorized
         no shares issued and outstanding                                     -
     Preferred stock, Series B, $0.01 par value
         50 shares authorized
         no shares issued and outstanding                                     -
     Common stock, $0.01 par value
         20,000,000 shares authorized
         16,457,287 shares issued and outstanding                  $    164,574
     Common stock committed, $0.01 par value
         209,195 shares                                                  25,920
     Additional paid-in capital                                      12,260,266
     Accumulated deficit                                            (16,754,767)
                                                                   -------------

          Total stockholders' deficit                                (4,304,007)
                                                                   -------------

               TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT         $    510,342
                                                                   =============

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

                                      F-4
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                   FOR THE YEARS ENDED FEBRUARY,

--------------------------------------------------------------------------------


                                                     2001              2000
                                                -------------     -------------

NET SALES                                       $  2,072,811      $  2,731,880

COST OF SALES                                        109,179           273,607
                                                -------------     -------------

GROSS PROFIT                                       1,963,632         2,458,273
                                                -------------     -------------

OPERATING EXPENSES
     Selling and marketing                         1,170,837         1,448,156
     General and administrative                      965,624         1,320,843
     Depreciation and amortization                   216,964           256,177
     Stock-based compensation                         49,250           160,652
                                                -------------     -------------

         Total operating expenses                  2,402,675         3,185,828
                                                -------------     -------------

LOSS FROM OPERATIONS                                (439,043)         (727,555)
                                                -------------     -------------

OTHER EXPENSE
     Non-cash interest charges                      (376,828)         (608,980)
     Interest expense                               (356,629)         (156,151)
                                                -------------     -------------

         Total other expense                        (733,457)         (765,131)
                                                -------------     -------------

NET LOSS                                        $ (1,172,500)       (1,492,686)
                                                =============     =============

BASIC LOSS PER SHARE                            $      (0.08)     $      (0.30)
                                                =============     =============

DILUTED LOSS PER SHARE                          $      (0.08)     $      (0.30)
                                                =============     =============

WEIGHTED-AVERAGE SHARES OUTSTANDING               13,994,354         5,042,019
                                                =============     =============

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

                                      F-5
<PAGE>

<TABLE>
                                                                                         MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                                                              AND SUBSIDIARY
                                                                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                                                                               FOR THE YEARS ENDED FEBRUARY,

----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                  Common Stock          Common      Additional
                                            ------------------------     Stock       Paid-In      Accumulated
                                               Shares       Amount     Committed     Capital        Deficit         Total
                                            -----------  -----------  -----------  ------------  -------------  ------------
<S>                                          <C>         <C>          <C>          <C>           <C>            <C>
BALANCE, FEBRUARY 28, 1999                   2,743,646   $   27,437            -   $10,112,002   $(14,089,581)  $(3,950,142)

Issuance of Common Stock for
     Conversion of accounts payable            670,000        6,700                    194,300                      201,000
     Conversion of notes payable             4,011,487       40,115                    209,885                      250,000
     Conversion of stockholder advances        230,769        2,308                     27,692                       30,000
     Services                                  230,769        2,308                     27,692                       30,000
     Extension of notes payable                250,000        2,500                     57,500                       60,000
     Interest charges on extension of debt     546,672        5,467                    136,668                      142,135
Common Stock Committed for Services                                       88,500                                     88,500
Interest Charges On Below-market Conversion
     of Stockholder Advances                                                            34,846                       34,846
Conversion Feature On Convertible Debt                                                 291,647                      291,647
Stock Options Issued for Services                                                       42,152                       42,152
Options Issued for Extension of Bridge Notes                                            80,352                       80,352
Net Loss                                                                                           (1,492,686)   (1,492,686)
                                            -----------  -----------  -----------  ------------  -------------  ------------
BALANCE, FEBRUARY 29, 2000                   8,683,343   $   86,835   $   88,500   $11,214,736   $(15,582,267)  $(4,192,196)

Issuance of Common Stock for
      Prior year shares committed              560,333        5,603      (88,500)       82,897
      Conversion of accounts payable           280,000        2,800                     25,200                       28,000
      Conversion of Notes Payable            5,733,611       57,336                    456,025                      513,361
      Services                                  75,000          750                      9,750                       10,500
      Proceeds from sale of shares           1,125,000       11,250                     95,000                      106,250
Common stock committed for
      Services                                                             7,000
      Interest Expense                                                    18,920
Conversion Feature on Convertible Debt                                                 357,908                      357,908
Stock Options issued for services                                                       18,750                       18,750
Net Loss                                                                                           (1,172,500)   (1,172,500)
                                            -----------  -----------  -----------  ------------  -------------  ------------
BALANCE, FEBRUARY 28, 2001                  16,457,287      $164,574  $   25,920   $12,260,266   $ 16,754,767   $(4,304,007)
                                            ===========  ===========  ===========  ============  =============  ============

                         The accompanying notes are an integral part of these financial statements.
</TABLE>
                                                            F-6
<PAGE>

<TABLE>
                                                        MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                             AND SUBSIDIARY
                                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                              FOR THE YEARS ENDED FEBRUARY,

-------------------------------------------------------------------------------------------
<CAPTION>

                                                                    2001           2000
                                                                ------------   ------------
<S>                                                              <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                      $(1,172,500)   $(1,492,686)
  Adjustments to reconcile net loss to net cash
    used in operating activities
      Depreciation and amortization                                 216,964        256,177
      Interest relating to beneficial conversion of
        stockholder advances                                              -         34,846
      Interest charges on bridge notes                                    -        142,135
      Below-market conversion feature of convertible debt           357,908        291,647
      Common stock issued for services                               10,500         30,000
      Common stock committed for services                            25,920         88,500
      Stock options issued for services                              18,750         42,152
      Stock issued on conversion of bridge notes                          -         60,000
      Stock options issued for extension on debt                          -         80,352
      Stock options issued in connection with financing costs         6,250              -
  (Increase) decrease in
      Restricted cash                                                40,000         30,000
      Accounts receivable                                            (1,262)       172,978
      Inventories                                                     5,503              -
      Prepaid income taxes                                              (17)        (1,104)
      Prepaid expenses                                              (14,500)       (85,923)
      Other assets                                                      261          3,541
  Increase (decrease) in
      Due to related party                                          (84,650)        67,074
      Accounts payable                                             (162,062)      (295,041)
      Accrued payroll and other expenses                             30,486         10,106
      Accrued interest                                              207,089        143,581
Deferred revenue                                                          -        (78,000)
                                                                ------------   ------------

Net cash used in operating activities                              (515,360)      (499,665)
                                                                ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of furniture and equipment                               (14,580)       (45,462)
  Increase in intangibles                                           (36,310)        (1,000)
                                                                ------------   ------------

Net cash used in investing activities                               (50,890)       (46,462)
                                                                ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Repayment of capital lease obligations                                  -        (14,464)
  Proceeds from issuance of stock and debentures                    100,000              -
  Proceeds from issuance of notes payable                           462,500        917,150
  Repayment of notes payable                                        (14,000)      (284,974)
                                                                ------------   ------------

Net cash provided by financing activities                           548,500        617,712
                                                                ------------   ------------

         The accompanying notes are an integral part of these financial statements.
</TABLE>
                                            F-7
<PAGE>

<TABLE>
                                                            MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                                 AND SUBSIDIARY
                                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                  FOR THE YEARS ENDED FEBRUARY,

-----------------------------------------------------------------------------------------------
<CAPTION>

                                                                       2001            2000
                                                                  -------------   -------------
<S>                                                               <C>             <C>
Net increase (decrease) in cash and cash equivalents              $    (17,750)   $     71,585

CASH AND CASH EQUIVALENTS (BOOK OVERDRAFT), BEGINNING OF YEAR          (46,692)       (118,277)
                                                                  -------------   -------------

BOOK OVERDRAFT, END OF YEAR                                       $    (64,442)   $    (46,692)
                                                                  =============   =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     INTEREST PAID                                                $      9,339    $     12,553
                                                                  =============   =============

     INCOME TAXES PAID                                            $      4,561    $      4,661
                                                                  =============   =============

           The accompanying notes are an integral part of these financial statements.
</TABLE>
                                              F-8
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                   FOR THE YEARS ENDED FEBRUARY,

--------------------------------------------------------------------------------


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the year ended February 28, 2001, the Company committed to issue 209,125
shares of common stock for $25,920 of consulting services rendered

During the year ended February 28, 2001, the Company issued 75,000 shares of
common stock for $10,500 of consulting services.

During the year ended February 28, 2001 the Company converted $28,000 of
accounts Payable into 280,000 shares of common stock.

During the year ended February 28, 2001 the Company converted notes carried on
the books at $513,361 into 5,733,611 shares of common stock.


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

                                       F-9
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 1 - DESCRIPTION OF BUSINESS

         Multi-Media Tutorial Services, Inc., a Delaware corporation, is engaged
         in the production and sales of educational videocassettes through its
         wholly-owned subsidiary, Video Tutorial Services, Inc. (collectively,
         the "Company"). The Company also provides telemarketing and webified
         telemarketing to third party customers through its Multi-Media
         Telemarketing Services division. The Company sells its educational
         products and services on the Internet on the Company's website,
         TheTutorialChannel.Com.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation
         ---------------------
         The accompanying consolidated financial statements have been prepared
         in conformity with generally accepted accounting principles, which
         contemplate continuation of the Company as a going concern. The Company
         incurred net losses of $1,172,500 and $1,492,686 during the years ended
         February 28, 2001 and February 29, 2000, respectively. In addition, the
         Company had an accumulated deficit of $16,754,767 and a working capital
         deficit of $4,610,886 as of February 28 2001. Further, the Company is
         currently in default on its capitalized leases. Management recognizes
         that the Company must generate additional resources and the eventual
         achievement of sustained profitable operations. Management's plans
         include obtaining additional capital through debt/equity financing and
         the extension of existing debt. Management is also addressing improved
         collection of customer accounts and the implementation of additional
         products. The consolidated financial statements do not include any
         adjustments that might be necessary if the Company is unable to
         continue as a going concern.

         Principles of Consolidation
         ---------------------------
         The consolidated financial statements include the accounts of
         Multi-Media Tutorial Services, Inc. and its wholly-owned subsidiary,
         Video Tutorial Services, Inc. All significant intercompany transactions
         and balances have been eliminated in consolidation.

         Estimates
         ---------
         In preparing financial statements in conformity with generally accepted
         accounting principles, management makes estimates and assumptions that
         affect the reported amounts of assets and liabilities and disclosures
         of contingent assets and liabilities at the date of the financial
         statements, as well as the reported amounts of revenues and expenses
         during the reporting period. Actual results could differ from those
         estimates.

                                      F-10
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Cash and Cash Equivalents
         -------------------------
         For purposes of the statements of cash flows, the Company considers all
         highly liquid investments purchased with original maturity of three
         months or less to be cash equivalents.

         Advertising
         -----------
         The Company uses direct-response media advertising, consisting
         primarily of television and radio commercials. The Company expenses
         advertising costs as incurred. Advertising expense was $38,094 and
         $431,924 during the years ended February 28, 2001 and February 29,
         2000, respectively.

         Inventories
         -----------
         The cost of inventories is determined by the first-in, first-out method
         and is stated at the lower of cost or market. Inventories are composed
         primarily of videocassettes and textbooks. Inventory carrying values
         are composed entirely of product costs.

         Furniture and Equipment
         -----------------------
         Furniture and equipment are recorded at cost. Depreciation and
         amortization are provided using the straight-line and accelerated
         methods over estimated useful lives as follows:

                  Furniture and fixtures                  5 to 7 years
                  Office equipment                        5 to 7 years
                  Computer equipment and software         3 to 5 years
                  Leasehold Improvements                  1 to 4 years

         Maintenance and minor replacements are charged to expense as incurred.
         Leasehold improvements are amortized over the lease period or the
         useful life of the asset, whichever is shorter.

         Master Production Costs
         -----------------------
         Costs incurred in producing a master video program are capitalized and
         expensed over the estimated life of the program, which is seven years.

         Patents and Copyrights
         ----------------------
         Patents and copyrights, stated at cost less accumulated amortization,
         are amortized using the straight-line method over their estimated
         useful lives of three years.

                                      F-11
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Revenue Recognition
         -------------------
         Sales revenue is recognized when products are shipped to customers. The
         Company provides a reserve for anticipated returns for customers based
         upon historical return levels.

         Stock Split
         -----------
         On May 24, 1999, the Company effected a one-for-10 reverse stock split
         of its common stock. All share and per share data have been
         retroactively restated to reflect this stock split.

         Impairment of Long-Lived Assets
         -------------------------------
         The Company reviews its long-lived assets for impairment whenever
         events or changes in circumstances indicate that the carrying amount of
         an asset may not be recoverable. Recoverability of assets to be held
         and used is measured by a comparison of the carrying amount of the
         assets to future net cash flows expected to be generated by the assets.
         If the assets are considered to be impaired, the impairment to be
         recognized is measured by the amount by which the carrying amount
         exceeds the fair value of the assets. To date, no impairment has
         occurred.

         Income Taxes
         ------------
         The Company utilizes Statement of Financial Accounting Standards
         ("SFAS") No. 109, "Accounting for Income Taxes," which requires the
         recognition of deferred tax assets and liabilities for the expected
         future tax consequences of events that have been included in the
         financial statements or tax returns. Under this method, deferred income
         taxes are recognized for the tax consequences in future years of
         differences between the tax bases of assets and liabilities and their
         financial reporting amounts at each period end based on enacted tax
         laws and statutory tax rates applicable to the periods in which the
         differences are expected to affect taxable income. Valuation allowances
         are established, when necessary, to reduce deferred tax assets to the
         amount expected to be realized.

         Fair Value of Financial Instruments
         -----------------------------------
         The Company measures its financial assets and liabilities in accordance
         with generally accepted accounting principles. For certain of the
         Company's financial instruments, including cash and cash equivalents,
         accounts receivable, accounts payable, and accrued payroll and other
         expenses, the carrying amounts approximate fair value due to their
         short maturities. The amount shown for short-term notes payable also
         approximates fair value because the current interest rates offered to
         the Company for debt of similar maturities are substantially the same.

                                      F-12
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Concentrations of Credit Risk
         -----------------------------
         The financial instrument which potentially subjects the Company to
         concentrations of credit risk is cash. The Company places its cash with
         high quality financial institutions, and at times it may exceed the
         Federal Deposit Insurance Corporation $100,000 insurance limit. As of
         February 28, 2001, there were no uninsured portions.

         Net Loss per Share
         ------------------
         The Company utilizes SFAS No. 128, "Earnings per Share." Basic loss per
         share is computed by dividing loss available to common stockholders by
         the weighted-average number of common shares outstanding. Diluted loss
         per share is computed similar to basic loss per share except that the
         denominator is increased to include the number of additional common
         shares that would have been outstanding if the potential common shares
         had been issued and if the additional common shares were dilutive. For
         the years ended February 28, 2001 and February 29, 2000, the Company
         incurred net losses; therefore, basic and diluted loss per share are
         the same.

         Comprehensive Income
         --------------------
         The Company utilizes SFAS No. 130, "Reporting Comprehensive Income."
         This statement establishes standards for reporting comprehensive income
         and its components in a financial statement. Comprehensive income as
         defined includes all changes in equity (net assets) during a period
         from non-owner sources. Examples of items to be included in
         comprehensive income, which are excluded from net income, include
         foreign currency translation adjustments and unrealized gains and
         losses on available-for-sale securities. Comprehensive income is not
         presented in the Company's financials statements since the Company did
         not have any of the items of comprehensive income in any period
         presented.

                                      F-13
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 3 - FURNITURE AND EQUIPMENT

         Furniture and equipment at February 28, 2001 consisted of the
         following:

            Furniture and fixtures                                 $     55,565
            Office equipment                                             19,338
            Computer equipment and software                             846,602
            Leasehold improvements                                      113,960
                                                                   -------------

                                                                      1,035,465
            Less accumulated depreciation and amortization              935,081
                                                                   -------------

                     TOTAL                                         $    100,384
                                                                   =============

         Depreciation and amortization expense was $216,964 and $166,120 for the
         years ended February 28, 2001 and February 29, 2000, respectively.


NOTE 4 - INTANGIBLE ASSETS

         Intangible assets at February 28, 2001 consisted of the following:

             Master video production costs                         $  1,143,505
                  Web Site Development Costs                             68,030
                                                                   -------------
                                                                      1,211,535

             Less accumulated amortization                            1,036,460
                                                                   -------------

                      TOTAL                                        $    175,075
                                                                   =============

                                      F-14
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 5 - SHORT-TERM NOTES PAYABLE

         At February 28, 2001, the Company maintained short term, unsecured
         promissory notes in the amount of $750,000. The notes bear interest at
         8% per annum and were issued September and October 1996 with a six
         month original maturity. The maturity dates were subsequently extended
         and the notes are currently due and payable. Related to the extension
         of the due dates on these notes, the Company issued 546,672 shares of
         common stock to the debtholders during the year ended February 29,
         2000.

         At February 28, 2001, the Company maintained short term, non interest
         bearing unsecured promissory notes in the amount of $205,676 which are
         payable on demand.

         During a previous year the Company raised $475,000 through short term
         unsecured bridge financing. The notes bear interest at 10% per annum
         and had a six month maturity date. These notes are currently due and
         payable. During the year ended February 28, 2001 $100,000 of these
         notes were converted into common stock.

         During the year ended February 28, 2000 the Company raised $100,000
         through the issuance of short term notes. The notes bear interest at
         10% per annum and are payable on demand. These notes are outstanding as
         of February 28, 2001.


NOTE 6 - CONVERTIBLE PROMISSORY NOTES

         At February 28, 2001, the Company maintained short-term, convertible
         promissory notes in the amount of $250,000. The notes bear interest at
         10% per annum and an accelerated interest rate of 17% per annum
         beginning April 17, 1997, expired on December 31, 1997, and are
         convertible into common stock at a price of (i) $1.2656 per share or
         (ii) 75% of the closing bid for the five trading days prior to the
         conversion. Related to this debt, the Company maintains 45,455 shares
         of its common stock in escrow.

         During the year ended February 29, 2000, the Company raised $312,500
         through the placement of short-term, unsecured, convertible promissory
         notes. The notes bear interest at 10% per annum, had 10-month original
         maturity dates. The notes are convertible into common stock at a price
         of (i) $0.50 or (ii) 50% of the average of the closing bid price for
         the five days immediately preceding the conversion. The notes cannot be
         converted at a price less than $0.10 per share. The shares are
         convertible at a par value of $0.01 of the Company's stock or at a par
         value of $0.001 of the common stock of TheTutorialChannel.Com. During
         the year ended February 28, 2001, the noteholders converted all of this
         debt into common shares. Additionally, the Company obtained $475,690
         through short term promissory notes. The conversion terms of these
         notes are the same as the aforementioned notes. Of these amounts
         $100,000 was converted to common shares in the current period.

                                      F-15
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 6 - CONVERTIBLE PROMISSORY NOTES (CONTINUED)

         During the year ended February 29, 2000, the Company converted $135,500
         of accounts payable into short term convertible promissory notes. The
         notes bear interest at 10% per annum and are outstanding as of February
         28, 2001.

         In accordance with generally accepted accounting principles, the
         Company accounts for the beneficial conversion feature of convertible
         debt securities based on the difference between the conversion price
         and the fair value of the common stock into which the security is
         convertible, multiplied by the number of shares into which the security
         is convertible. The amount attributable to the beneficial conversion
         feature is recognized as additional interest expense over the most
         beneficial conversion period.


NOTE 7 - RELATED PARTY TRANSACTIONS

         During the year ended February 28,2001, officers received payments of
         approximately $73,000 which were categorized as a return of officers'
         loans.


NOTE 8 - COMMITMENTS AND CONTINGENCIES

         Leases
         ------
         The Company is obligated under an operating lease for facilities.

         The lease expires in September 2001 with an option to renew for the
         year ending February 2002. The Company is obligated to pay a total of
         $57,743 for the rental of its facilities.

         The Company was in default on its capital lease agreements at February
         28, 2001 and as such, has classified the entire amount representing
         principal as a current liability.

         Rent expense was $148,347 and $151,372 for the years ended February 28,
         2001 and February 29, 2000, respectively.

                                      F-16
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 8 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         Software Development Agreement
         ------------------------------
         In December 1999, the Company entered into a consulting agreement with
         a software consulting firm. The consultants were to develop a web site
         and a CD Rom program. The agreement was valued at $130,000 and called
         for an initial fee of $65,000 with $65,000 due upon completion.
         Pursuant to the agreement, the Company will pay all fees with stock.
         The Company has issued 433,333 shares of common stock and recorded the
         expenditure as web site development costs valued at $65,000. The web
         site is operational but the CD Rom is not as of yet completed The
         Company is negotiating with the vendor as to the number of shares that
         will be issued upon completion of this package. In the current period
         the asset has not been increased nor the liability recorded for the
         additional anticipated stock issuance. The Company amortized $7,289 of
         these web site development costs in the current period.

         Litigation
         ----------
         The Company is involved in a breach of contract claim pertaining to a
         service agreement. The outcome cannot be determined at February 28,
         2001, and the potential loss is estimated at $100,000.

         The Company is in default on a promissory note payable in the amount o
         $149,050. This note was due February 1, 2001

         The Company is also involved in various other legal proceedings and
         claims which arise in the ordinary course of its business. Management
         does not believe that the outcome of these matters will have a material
         adverse effect on the Company's consolidated position or results of
         operations.


NOTE 9 - INCOME TAXES

         Significant components of the Company's deferred tax assets and
         liabilities for income taxes consisted of the following:

                  Deferred tax assets
                      Operating losses                             $  4,204,400
                  Valuation allowance                                (4,204,400)
                                                                   -------------

                           NET DEFERRED TAX ASSET                  $          -
                                                                   =============

         Deferred tax assets consisted of net operating loss carryforwards. The
         federal operating loss carryforwards at February 28, 2001 were
         approximately $10,511,000.

                                      F-17
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 10 - STOCKHOLDERS' DEFICIT

         Stock Purchase Warrants
         -----------------------
         Stock purchase warrants outstanding at February 28, 2001 consisted of
         the following:

              Exercise Price             Outstanding            Exercisable
             ----------------           -------------          -------------
             $   .25                       1,125,000              1,125,000
             $ 10.00 - 15.00                  45,750                 45,750
             $         15.00                 242,462                242,462
             $         56.00                 390,625                390,625
                                        -------------          -------------

                TOTAL                      1,803,837              1,803,837
                                        =============          =============

         Common Stock
         ------------
         During the year ended February 28, 2001, the Company converted certain
         vendor obligations valued at $28,000 into 280,000 shares of common
         stock at $.10 per share, which approximated the value of the services
         rendered.

         In March, 2000, the Company issued 75,000 shares of common stock in
         relation to $10,500 of consulting services rendered during the year. In
         addition, 560,733 shares were issued in satisfaction of committed
         common stock.

         In September, 2000, the Company received $100,000 for which it issued
         1,000,000 common shares and 1,000,000 warrants exercisable at $.25 per
         share.

         During the year ended February 28, 2001, various debenture holders
         converted $513,361 of debt into 5,733,611 shares of common stock.

         During the year ended February 28, 2001, the Company committed to issue
         209,195 common shares in relation to $25,920 of consulting services
         rendered.

         In January 2001, the Company received $25,000 cash and issued 125,000
         shares and 125,000 warrants and a debenture in the amount of $25,000.

                                      F-18
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2001

--------------------------------------------------------------------------------


NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

         Stock Option Plan
         -----------------
         In addition, the Stock Option Committee determines the exercise price
         of each option, subject to the limitations provided in the Stock Option
         Plan, including that (i) for a NQO, the exercise price per share may
         not be less than 85% of the fair market value per share of common stock
         on the date of grant and (ii) for an ISO, the exercise price per share
         may not be less than the fair market value per share of common stock on
         the date of grant (11% of such fair market value if the grantee owns
         stock possessing more than 10% of the combined voting power of all
         classes of the Company's stock).

         In determining persons to whom options will be granted and the number
         of shares of common stock to be covered by each option, the Stock
         Option Committee considers various factors, including each eligible
         person's position and responsibilities, service, and accomplishments,
         present and future value to the Company, anticipated length of future
         service, and other relevant factors. Options may be granted under the
         Plan to all officers, directors, and employees of the Company. No
         options may be granted under the Plan after March 31, 2004. To date,
         the Board of Directors has not appointed a Stock Option Committee.

         The Company has adopted only the disclosure provisions of SFAS No. 123,
         "Accounting for Stock-Based Compensation." It applies Accounting
         Principles Bulletin ("APB") Opinion No. 25, "Accounting for Stock
         Issued to Employees," and related interpretations in accounting for its
         plans and does not recognize compensation expense for its stock-based
         compensation plans other than for restricted stock and options/warrants
         issued to outside third parties. If the Company had elected to
         recognize compensation expense based upon the fair value at the grant
         date for awards under its plan consistent with the methodology
         prescribed by SFAS No. 123, the Company's net loss and loss per share
         would be increased to the pro forma amounts indicated below for the
         years ended February 28, 2001 and February 29, 2000:

                                                         2001           2000
                                                    -------------  -------------
           Net loss
               As reported                          $ (1,172,500)  $ (1,492,686)
               Pro forma                            $ (1,215,140)  $ (1,720,685)

           Basic and diluted loss per common share
               As reported                          $      (0.08)  $      (0.30)
               Pro forma                            $      (0.09)  $      (0.34)

                                      F-19
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 29, 2001

--------------------------------------------------------------------------------


NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

         Stock Option Plan (Continued)
         -----------------
         These pro forma amounts may not be representative of future disclosures
         because they do not take into effect pro forma compensation expense
         related to grants made before 1995. The fair value of these options was
         estimated at the date of grant using the Black-Scholes option-pricing
         model with the following weighted-average assumptions for the years
         ended February 28, 2001 and February 29, 2000: dividend yields of 0%
         and 0%, respectively; expected volatility of 100% and 100%,
         respectively; risk-free interest rates of 6% and 6%, respectively;
         values of $0.16 and $0.14, respectively; and expected lives of five and
         five years, respectively.

         The Black-Scholes option valuation model was developed for use in
         estimating the fair value of traded options which have no vesting
         restrictions and are fully transferable. In addition, option valuation
         models require the input of highly subjective assumptions including the
         expected stock price volatility. Because the Company's employee stock
         options have characteristics significantly different from those of
         traded options, and because changes in the subjective input assumptions
         can materially affect the fair value estimate, in management's opinion,
         the existing models do not necessarily provide a reliable single
         measure of the fair value of its employee stock options.

         The following summarizes the stock option transactions:

<TABLE>
<CAPTION>
                                                                               Outside Option Plan
                                                                           ----------------------------
                                                              Weighted-                      Weighted-
                                                              Average                        Average
                                             Stock Options    Exercise     Stock Options     Exercise
                                              Outstanding      Price        Outstanding       Price
                                             -------------  -------------  -------------  -------------
            <S>                                 <C>         <C>               <C>         <C>
            BALANCE, FEBRUARY 28, 1999            279,953   $       0.82      2,500,000   $       0.18

            BALANCE, FEBRUARY 29, 2000            279,953   $       0.82      2,500,000   $       0.18
               Granted                            400,000                     3,125,000

            BALANCE, FEBRUARY 28, 2001            679,953   $       0.72      5,625,000   $       0.12
                 Granted                     =============                 =============
</TABLE>

         The weighted-average remaining contractual life of the options
         outstanding is 8.24 years at February 28, 2001.

                                      F-20
<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 29, 2001

--------------------------------------------------------------------------------


NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

         Stock Option Plan (Continued)
         -----------------
         During the year ended February 28, 2001, the Company issued 3,125,000
         stock options to employees outside of the Company's stock option plan
         when the exercise price was more than or equal to the fair value of the
         Company's common stock at the date of grant.

         Other Options
         -------------
         During the year ended February 28, 2001, the Company issued 400,000
         options to two former employees. The Company recognized $18,750 of
         consulting expense related to these options.

         During the year ended February 28, 2001, 117,171 options expired.


NOTE 11 - INTEREST CHARGES

         An adjustment to additional paid-in capital amounting to $357,908 was
         made to record interest charges on convertible debt securities,
         representing a beneficial conversion feature.


NOTE 12 - SUBSEQUENT EVENTS

         In April, 2001, a noteholder of the Company started litigation in
         reference to a defaulted note owed by the Company.

         In May and July, 2001, the Company issued 460,000 common shares for
         consulting in satisfaction of consulting services rendered.

         In June, 2001, the Company issued 694,000 options at an exercise price
         ranging from $.04 to $.07. These options were issued for consulting
         services and to employees.

                                      F-21